Bouygues S.A.

Martin Bouygues - CEO Olivier Roussat - Chairman Philippe Marien - Deputy CEO

Eric Lemarie - Analyst Nicolas Cote-Colisson - HSBC Vincent Maulay - Analyst Nicolas Didio - Analyst Thomas Coudry - Analyst

Ladies and gentlemen, thank you for being here. Let's begin as is customary now with the highlights of 2017.

You'll see in greater detail our results and our profitability have increased sharply year-on-year. All our targets for 2017 were met or exceeded, and I'll come at that in detail a little bit further on.

The group's businesses have strengthened their positions in their markets, and finally, the Board of Directors has proposed that the AGM approve a dividend increase of €0.10 to bring it to €1.70 for the 2017 period. But before going into the details of this presentation, I'd like to tell you how happy and how proud we are to tell you that Bouygues is the first group in France to have been certified as a Top Employer 2018 for all its businesses.

For your information, the Top Employer Institute carries out an in-depth international survey every year to identify the top employers. There are 600 different HR items that are audited or subjected to critical analysis.

So this certification actually crowns the group's human resources policy, mainly in the field of talent and career management, but also training and compensation. The certification also pays tribute to Bouygues management culture and as you know, our culture is very longstanding, very specific, and they have a very strong culture.

This culture is based on very strong values that I'd like to recall. First and foremost, respect, but also confidence, trust and fairness.

And this culture is truly our strength, the best asset is the men and women in the group, which means that mindset and their skills are really the foundations upon which our success and progress are built. Let me come back to the great success of the year to which all of our businesses contributed by meeting or exceeding their targets.

On the left-hand side you'll see the targets for 2017 and on the right-hand side, we are showing you what we actually achieved. Our target was to continue improving the group's profitability in 2017, while our current operating margin was 4.3%, that's up 80 basis points on 2016 and up 1.4 of a percentage point on 2015.

In the construction sector, the target was to increase our current operating margin and current operating profit. And on the right-hand side, you'll see what we achieved, current operating profit, up €69 million, current operating margin excluding Nextdoor at 3.6%, that's up 0.1% on 2016 and 0.4% on 2015.

In television, the plan was to generate recurring savings of €25 million to €30 million, that's excluding the cost of programs, while we actually achieved €27 million. As for Bouygues Telecom, the target was an additional 1 million fixed line customers but compares to the end of 2014, and EBITDA margin of 25%, which was then raised to between 26% and 27%, that was in April.

We actually achieved in excess of 1 million fixed line customers more and an EBITDA margin of 27.2%, which is 4.6 percentage points up on 2016. In 2017, the group's businesses also strengthened their positions in their respective markets.

Construction activities performed very well commercially in France and outside of France, bringing the backlog to a record level, while remaining very selective about the projects. In particular, our businesses reinforced their position as major player in sustainable neighborhoods in France and Switzerland, and in the smart cities market with the awarding of the first smart city in France, the first smart city would be in Dijon.

We also continue to expand in groups where we have a long-standing presence, and obviously, I'm thinking of Canada among others but an acquisition underway by - of the Miller and McAsphalt group by Colas, this should be completed before the end of the first quarter, so in the very, very near future. As for TF1, it continued its production activity in Europe.

Newen acquired a majority stake in Tuvalu, which is the foremost independent producer in Netherlands and diversified its customer portfolio with new clients like Netflix or TF1. In digital, TF1 continued to grow signing in particular, in January of this year an agreement to acquire Aufeminin.com.

Now, Aufeminin is a digital player with a higher viewership, high viewer ratings, a very powerful committed community and expert skills in the marketing and transformation of an advertising space. Finally, Bouygues Telecom gained market share in fixed lines and accelerated the roll-out of its FTTH network, also continued to market its fiber offer.

2017 was marked by a strong improvement in the group's results and profitability year-on-year. Revenue was up 4% at €32.9 billion, up 5% in France and 2% outside of France.

Current operating income totaled €1.42 billion, up 27%, a good reflection of the excellent performance of all three activities. The current operating margin rose 80 basis points to 4.3% in 2017.

The operating profit, up 62%, included the sale of Cellnex sites by Bouygues Telecom. And finally, net profit attributable to the group totaled €1.085 billion up 48%, and you will see, explained on the slide that, after non-recurring items, the net profit excluding exceptional items also rose by 48%.

At €828 million the group's free cash flow more than doubled by comparison with 2016. It's back at the level it was at in 2013.

So 2017 confirms the return to long-term growth of the group's free cash flow. On this slide, we've shown you the group's financial structure, which is very strong as it has always been, but it has been further reinforced.

You see that net debt at year end which does not include the acquisitions of Miller and McAsphalt, which are yet to be closed out, nor the acquisition of Aufeminin.com by TF1. The strength of the financial structure provides the Group with the means to fund its development.

And as I told you earlier on, the Board of Directors is proposing a dividend of €1.70 per share, through the AGM, that's an increase of €0.10 per share. Now I'm going to give the floor to Olivier Roussat who will give you a review of operations.

Good morning, everyone. Let us start with the construction business.

Starting with the backlog, we have now a backlog at a record level €31.9 billion at end-December, up 8% on the like - on the constant exchange rate basis. We have excellent visibility on the long-term business, Bouygues Construction and Colas damach present overseas.

The portion of the backlog internationally stands at 57% of the total. In France, we have a much better environment in 2017.

Again, the backlog was up 9% year-on-year looking at Bouygues Immobilier. Bouygues Immobilier gained market shares with an increase of 14% of property reservations, residential property reservations supported by the market.

We have the P&L provisions, the expansion of the zero rate loans and very low rate environment and good visibility on the market, because the French Government gave us a guidance of 4 years. The backlog for Bouygues Construction and Colas are respectively high up 8% and 9% year-on-year.

So the highest level for three years. Bouygues Construction gained more than €1 billion in projects as part of Grand Paris Express and such contracts as the three Fontaines shopping mall, €128 million in Q4 and Colas took advantage of a rebound in the road business, public orders and of course the new projects as part of Grand Paris.

The International environment is also buoyant for the construction business, our various businesses have taken advantage again of high-demand in infrastructure, urban renovation and rehabilitation around the world. Our order intake end-2017 was up 7% on the constant exchange rate basis, it does include significant orders, the building of the metro in Melbourne, Australia €1.1 billion.

Our number of contracts at Coals, were €330 million for the motorway in Hungary or, - €255 million in the UK for rail maintenance contracts. On this slide, you have the various parts of the world where we have active order intake for Colas and Bouygues Construction in 2017.

This is a snapshot of our development strategy focused on high profile, high potential countries and low risk countries where we have permanent presence, France, of course Hong Kong, but also Australia or indeed Canada. France, the orders were up 8% year-on-year, €11.6 billion you have Colas and Bouygues Construction order intakes.

France's weight has increased in 2017, it now accounts for 48% of all the order intake in 2017, compared with 45% in 2016. In Central Europe, the orders doubled in Europe mostly thanks to Colas.

That part of the world has highway programs financed by the European Union in North America, order intakes were up 11% and in Asia Bouygues Construction again has long standing presence there, we have developed a business in Hong Kong with Dragages, also in Singapore and Australia. In Australia, orders €1.5 billion with the building of the Metro Melbourne, with a number of solar farms that were taken an order for Australia.

Australia is a very promising country in terms of infrastructure, because there a number of plans that are again supported by the government. We, before moving on, we'd like to zoom in on one business where Bouygues has recognized expertise and that is tunnel building.

On this page, you have a picture of the Tuen Mun-Chek Lap Kok tunnel which connects the Tuen Mun Island to Lantao Island where the international airport is located. And this tunnel has the widest diameter in the world for TBM 17.6 meters wide.

Our know-how is recognized worldwide, we are present along the entire value chain, including in the design of the TBMs themselves, the machines themselves. We use all the digging or excavating techniques and we have significant references, the Channel Tunnel, by the Port of Miami Tunnel, we have the extension of MTR West Island metro line in Hong Kong, and so these are highly urban areas and of course these delicate areas.

We have 14 tunnels being excavated, nine by TBMs in operation, we have three in Hong Kong, four in Middle East in Qatar and Cairo and two in France. We have highly skilled staff working there, we have our own training program, CFA Gustave Eiffel where we can train TBM drivers and of course there is a dire need for manpower for this very specialized business.

Now to build these projects, we are constantly innovating, we have what is known as a tunnel lab enabling us to innovate on two aspects, one is automation, we have a system called Telemach, that's a robot that enables us to change the disc cutters on the cutterhead of TBMs, this may not - you will understand more about this in a minute seeing the movie showing these cutterheads and then there is this thing called MobyDic, which is a tunnel driving system which recognizes not just the wear and tear of the cutter disc but also recognizes ground, the soil itself as it progresses. Let's have a look at this film.

Well there you have it, these are remarkable machines, but these machines are designed based on each project. And so when you have a CapEx variations, well you have to understand that when a new tunnel project starts you have to build a new TBM.

Some key figures we have €25.8 billion in sales in the construction business up 3% and 4% on a constant FX basis. The construction business improved their current operating profit and indeed their profitability in 2017.

At Colas operating profit improvement in Q4 compensate partly the offset in the first nine months of 2016, that lag was because of unfavorable weather conditions in Canada and some challenges in the railway business. Current operating margins for Bouygues Immobilier and Bouygues Construction were up significantly compared to 2016.

Current operating margin for Bouygues Immobilier went from 6.5% to 7.2%, not including Nextdoor. Nextdoor was a one-off.

And that of Bouygues Construction grew from 2.8% to 3.1% in 2017. TF1, I will not go into details of that, because Gilles presented the results last week, but TF1 sales was up 3% compared to 2016 because of additional advertising revenue, but also other businesses including studio and entertainment.

The current operating margin stood at 8.7% up 2.4 percentage points year-on-year, this is partly because of Gilles Pelisson's new strategy introduced in 2016 that was savings, which Martin Bouygues referred to Slide 1, but of course the absence of major sporting events in 2017. Moving on to Bouygues Telecom now.

Bouygues Telecom enjoyed sustained growth in the mobile business. The year-ended with 14.4 million customers at end-December, 10.3 million mobile plan customers excluding machine-to-machine, that's an additional 500,000 compared to 2017, 150,000 of which came in Q4 2017.

That was a very, very active quarter and then 1.7 additional million customers in three years. On October 2015, on Capital Market Day, we said we would gain an additional 1 million, well we are up to 1.7 million.

The conversion for to 4G has reached now 7.9 million customers at end-December. So 1 million more compared to end 2016, 72% of all customers excluding Machine-to-Machine 4G expansion goes hand in hand with more usage at year-end, you have 4G users using 5.7 gigabyte per month compared to 4.1 gigabyte per month last year.

And regarding the fixed line business, again outstanding commercial performance. The number of customers stand at 3.4 million customers at end-December 2017, that's an additional 340,000 more than in 2016, out of which 98,000 were acquired in Q4.

Again, we reached the target that was set at the beginning of 2015 for the three years, so we have reached this additional million customers for fixed line. FTTH is also being rolled out.

We are looking at 265,000 FTTH customers 2.2x more, than a year ago and 58% of the net growth in Q4 was in FTTH. And that is of course the largest offer since we launched the fiber offer, that accounted for 40% of all the growth in 2017.

And that is the reason why we've decided to step up the rolling out of FTTH. At end-December 2017, we had 20 million secured premises.

So these are premises that are being rolled out or ordered at the connecting point of when they are - we ourselves or other players may use them, we only had 11 million, that's an additional 11 million compared to 2016. We have 4 million premises marketed at end-December 2017 twice as many as in 2016 and of course we have a target of 12 million premises marketed by end-2019 and 20 million marketed premises by 2022, which means that our investment will allow us to have then 98% of the deployed area and 100% of the medium dense areas, which is of course our objective.

This means that we have an increase of 6.8% in sales compared to 2017 - to 2016. We have the figures, not including incoming traffic because that is basically what we are billing our customers.

So that's how we come up with that revenue. That is up 6.4% compared with 2016.

This is because of course we have more and more customers both in fixed and mobile but also we have the full impact of the price increases on the premium mobile offers, but indeed on all fixed offers as well. Let's look into the details.

Now we have a significant improvement in profitability for Bouygues Telecom. EBITDA margin stood at 27.2%, up 4.6 percentage points, way beyond the objectives that we had already re-visited upwards to 26% or 27%.

EBITDA up €246 million year-on-year. Operating profit includes €223 million in capital gains on the sales of sites to Cellnex.

This is a project that we've started. And then the net profit attributable to the group was up €168 million.

But that includes €33 million that we had to pay out as exceptional tax, you may remember that companies beyond certain revenue had to pay an extra tax and we had to pay €33 million even though we didn't pay out dividends in the previous year. The gross CapEx stood at €1.2 billion.

Now Bouygues Telecom is looking at profitable growth thanks to the strategy that we've introduced as early as 2014. It was based in being the leaders in 4G, in investing in very high-speed mobile and also very high-speed fixed connections and we have also the Cellnex contract where we are disposing of our sites.

So, we are also developing competitive offers in the fixed line business to have the same market share as for the mobile phones. And we have transformed the company, while keeping our employees loyal to the company.

We had an outstanding year in 2017 since we have reached or indeed overpassed all the objectives that we set out in October 2015. We are looking at profitable growth and we expect to generate free cash flow to the tune of €300 million by 2019.

Bouygues Telecom's ambitions are as follows. We propose to stand out from a customer by offering an outstanding experience, as simple and through the experience we want to have a steady base of the mobile premium customers, and also we want to roll out our FTTH recruitment and reach 4 million customers.

We want to have quality FTTH in all of the country. We will have 99% 4G coverage by end-2018.

We will have 12 million FTTH premises marketed at end-2019 and 20 million by 2022, and we will step up the marketing of premises. The thing with the - optic fiber premises are being rolled out on a street-by-street basis, and so we have to be very locally active in certain cities.

And of course, we have acquired a mobile network and we have to be present in areas where we used to not be present because there was not even enough coverage. So this we have to step up.

We also are setting up our presence in B2B, especially for the fixed line business. And in the Internet of things we want to be one of the leaders of connected objects, thanks to our subsidiary known as Objenious.

I'll give the floor to Philippe Marien, who will now introduce the numbers.

Good morning, ladies and gentlemen. In addition to the copy that you have in your handout, you can of course, as always find all the consolidated financial statements on the website, including the annexes, including the Group consolidated accounts for all the businesses and for Bouygues SA.

A few comments on these financial statements at year-end 2017. I'm not going to elaborate the sales or current operating profit figures.

Olivier Roussat explained them business-by-business. Moving on to other operating income and expenses that's an income of €113 million net comprised of three main components.

First of all the capital gain by Bouygues Telecom from the sale of sites to Cellnex for a total of €223 million. The second component is the non-recurring expense brought about by the accelerated amortization subsequent to the network sharing with SFR this we talked about last year, this year and we'll have it again in 2018, because in the course of this year the full program sharing program will have been completed.

The third component is TF1. This is the amortization of broadcasting rights subsequent to the acquisition of Newen.

Again this was present in 2016, 2017, will again for one last time exist in 2018. The exceptional amortization totaled €79 million by Bouygues Telecom and the - or the broadcasting rights subsequent to the acquisition of Newen amounted to €23 million.

The cost of net debt did not change in any way substantially. Cost of net debt was relatively stable.

Continuing, income tax was up to €303 million, that's an increase of €54 million, of course this is a consequence of our improved earnings, but this gives us an effective rate of tax that's low at 22.5% and that's considerably lower than our usual effective rate, which is in the region of 30% to 33%. And I have two reasons for this, our tax burden was reduced by two factors.

First of all the refund in the course of 2017 of the 3% tax on dividends, this is a tax that we were liable for in previous periods, it was deemed anti-constitutional and the French State refunded us. The second explanation is the favorable outcome of Colas' discussions with the Canadian tax authorities regarding technical services to its Canadian subsidiary, which again reduced our tax burden.

Now if we factor in these two nonrecurring items, this would give us an effective rate of tax 30.6%, which is much more consistent with our usual tax rate. Now the share of joint ventures and associates, these are and is accounted for with the equity method totaling €163 million, now this is mainly comprised of the share of Alstom and the Bouygues Group and the share of Tipco.

Tipco is a Colas subsidiary established in Asia. Tipco does asphalt refining but also the marketing and distribution of our asphalt in Asia.

Now, this figure is lower than last year, but remember that last year on the same item, we had the proceeds from the sale of our stake in A41 highway concession companies. This explains the negative variation in 2017.

So after minority interests, as we saw earlier on, net profit grew up 48% on last year, rising to €1.085 billion. As Martin Bouygues said earlier on, there is a very important and interesting fact that restated for non-recurring items in 2016 and 2017, the improvement would be exactly the same, that's a plus 48% improvement on net profit attributable to the Group when we factor out exceptional items.

This is consistent with what we said at the start of the year, in other words a goal of structurally improving the Group's profitability and I think it can be said that we have delivered on our promise. Moving on to the balance sheet, a number of rapid comments now.

Non-current assets, up €345 million, €292 million of this amount relates to tangible fixed assets, this is the increase in Bouygues Telecom's tangibles as a result of the investments it made in 2017. Entities accounted for with the equity method and joint ventures rose €73 million in terms of non-current assets, these are main contributions to the distribution of dividend, that's Alstom and Tipco, explain this variation.

The disposal of AB is an important consideration, but you saw this in the first quarter of 2017. And then, of course, a number of acquisitions and Minute Buzz mainly acquired by TF1 and a number of acquisitions by Colas, the biggest being the one we mentioned last September, namely the Moly quarries in the Southwest France.

Current assets were at €672 million, while the cash line has improved, cash and cash equivalents up €71 million, but most importantly current operating assets are up. If you prefer trade receivables at €602 million, and that's €662 million increase.

This explains the major contribution in Q4 by Colas in particular, when you invoice your costs in Q4, it's very unlikely that you will be paid in that same quarter, hence the increase in this trade receivables account. One final account, - one final comment rather on the balance sheet.

This is concerning assets held for sale at €121 million at year-end 2016, that was reduced to €38 million at the year-end. This is the remainder of the 1800 sites we were scheduled to sell Cellnex.

We sold 1,085 by the end of 2017. So there are slightly over 700 left for sale, and here you have the book value of these sites held for sale.

Incidentally we've signed a rider to this initial agreement concerning the possibility of selling an additional 600 sites. At this point in the closing of our accounts, these 600 sites have not been fully identified and are not quite ready for sale, which is why they are not accounted for under assets held for sale.

We'll review that in 2018 when matters become clear. Moving on to liabilities, you will see that shareholders equity is up sharply by €790 million.

You have the usual variations, net profit which increases, shareholders' equity, dividends, which - the dividends are paid to big shareholders of course, but paid to the minority interests in TF1 and Colas. A total of €606 million in dividends, two more significant items or components of shareholders equity.

First of all, capital transactions for a total of €362 million, this was Bouygues Construction, the employee's savings scheme or share of ownership scheme for €150 million and given the very good performance of the share price throughout 2017, and there were significant number of stock options raised particularly towards the end of the year. Of course, this contributed to the increase of our shareholders' equity, because stock options when raised mean that new shares are created.

The other significant impact on shareholders' equity in 2017 concerns income and expenses recognized directly in equity that's a minus €196 million, of which €180 million are due to the currency translation or foreign exchange rates. This is on the net situation of our foreign subsidiaries when converted into euro.

I am sure you will have noticed that in the course of 2017, the vast majority of currency, certainly the main currencies that we deal in the - dollar region, the U.S. Canadian, Hong Kong, Singaporean dollar, all these currencies, all these dollar currencies weakened against the euro as did Sterling.

This of course led to a negative currency translation impact and attendant impact of shareholders equity. That said, at the end of the day, our shareholders' equity was substantially up in 2017.

Few brief comments on the remaining liabilities on the balance sheet. Non-current liabilities down €518 million.

This is mainly because of the reclassification of the €500 million bond issue that was redeemed in February. We paid or repaid that last week.

So this became a non-current liability for the accounts in 2017. There is a plus €652 million that you will find in current assets, that's all I wanted to say about the liabilities side of the balance sheet.

So overall, net debt of €1.914 billion, that's virtually stable, when compared with year-end 2016. Let's take a closer look and how net debt varied in 2017.

At the end of 2016, €1.866 billion. The net impact of acquisitions and disposals was a negative €21 million.

So despite significant investments, significant external growth in the course of the year, most of these acquisitions were funded by disposals. The next item is others, which account for plus €363 million, we've the various positive impacts on shareholders' equity.

Bouygues Confiance no9 subscribed at the end of the year. Bouygues Confiance no8 which dates back to the end of 2016 regarding cash impact is spread over two years.

We enable employees to subscribe to these capital increases in stages, once in December, once in January. The cash impact on a given financial period is, of course Bouygues Confiance no9 will have an impact on the end of 2017, and the balance on the 2016.

And of course, stock options exercised, together these two factors give us €363 million increase in cash. Here is our dividends paid out €606 million.

€117 million in the 700 megahertz frequencies which were payable in four stages, four equal stages, two paid in 2016, one at the end of 2017 and the outstanding payment at the end of 2018. And of course, operations which generated €333 million in cash.

Let's have a look at the breakdown of this cash contribution. Net cash flow, up, substantially up by €322 million, that's net cash flow up €322 million on 2016.

This is the consequence of our better profitability, better results. So we're very satisfied with the fact that these improved results actually convert into cash, that's a very good rate of cash conversion.

Second component is CapEx. Down fractionally, down by about €100 million.

And the change in working capital requirements, well I mean this is not - it was actually quite close to the forecast we gave you on the guidance. I'm not sure this is good news, but we have nonetheless delivered as promised, not particularly good news, but we did as promised.

In my comments on the balance sheet, this was also because of the fact that a very good level of business in construction in Q4 actually had an adverse effect on working capital requirements because we invoiced but didn't receive payment. So overall, an improvement in cash of €333 million, that's operating cash flow.

Few word on CapEx, as I told you, we spent about €100 million less than in 2016, you shouldn't be jumping to conclusions here because most of this decrease in CapEx was in the construction business. And in the construction business, the biggest chunk was in reconstruction.

With reconstruction, as with Colas as we stand CapEx will almost depend on the pace of which works will begin, we invest in projects, virtually all our investment is in reconstruction and depending on when works begin, at what point of the year, this will have that type of consequence. You saw the sort of investment we make in the tunneling in the video, very significant investment.

So in 2017 we invested a little bit less than in 2016, in fact a little bit less than we expected, which is one of the reasons that our net debt has improved. In fact, even more so than we expected, even by comparison with what we announced at the end of September.

This are due to the scheduling and the time year that works actually start. No other consequence.

The Group's cash flow, which is one of the great source of satisfaction in 2016, because our free cash flow totaled €828 million, we improved in all sectors of business. All our entities contributed to the improved free cash flow.

But just a few words about Bouygues Telecom, which ended up with a free cash flow of €17 million. Bouygues Telecom wasn't as fortunate as the other entities in terms of a tax benefit.

Bouygues Telecom did not unfortunately pay dividend in previous periods. So it did not receive any reimbursement of 3% tax on dividends.

However, given the level of its sales, it did have to pay this rather hefty additional tax that enabled the French state to balance its books. So, additional tax of the €33 million paid by Bouygues Telecom that is the additional tax burden by comparison with the normal rate of taxation.

If you add €33 million or factor in the €33 million, which was actually generated by Bouygues Telecom in free cash flow, you will see that saving in 2016, about €50 million in 2017. Clearly that means that we are in line for the targeted €300 million that we've been announcing for quite some time, that's the target for 2019.

As for the Group's cash situation, not much to say, we have a substantial amount of available cash, €10.7 billion, partly the cash situation €4.6 billion and un-drawn medium to long-term facilities of over €6 billion with no trigger events that can be drawn down at any point in time. The up-shot being that we're capable of handling any developments or any significant development or investment.

As for the debt maturity schedule, most of our debt is in bonds. Last week we redeemed the February maturity date and of course our maturity schedule is well spread.

No single year representing more than €1 billion, which means that we have no particular problem with the cash. 2018 will be characterized by a number of substantial changes in the accounting standards, particularly the application of IFRS 9 on financial instruments and the IFRS 15 on revenue recognition.

Now we have reported based on the financial statements and standards in force at 2017. But to ensure that everything is comparable from one financial period to the next, in the accounts you will find the 2017 accounts restated not just for the full year but for each of the quarters showing you the impact of these new standards on our accounts.

So if you look at the chart, you see that there is no material impact with the exception of IFRS 15. IFRS 9 has no significant impact on the Group.

But the revenue recognition has an impact in just businesses, Bouygues Immobilier and Bouygues Telecom. Now there is a material impact, because there are a lot of things to be reviewed and restated, but when you look at the consequence of all this, you see that the overall impact is quite limited.

At group level, these new standards would generate an additional €19 million in sales, would also bring about €14 million less in current operating profit, and €3 million less in net profit attributable to group. So I think we can say that these standards will not have a very significant impact on our main aggregates.

Now, so far as I am dealing with experts, I have drawn up two slides to show you a broad outline, how things will happen. First of all, a focus on Bouygues Immobilier.

We must now recognize land in calculating a completion of our project. Up to now in calculating the sales we simply calculate the rate of completion of works.

Now we are building the fact that each apartment has a portion of land and that is part of the completion, to be calculated. This means that we are advancing.

This means that we adjust the sales figure accordingly. For Bouygues Immobilier the impact isn't exactly an upheaval, an additional €37 million and €5 million less in current operating profit.

It is significant all the same, and so far does have an impact on our operating margin, now 7.2% which is the guidance we gave you for 2017 and the guidance that we talked about all year long. When we stated this current operating margin would stand at 6.9%.

More significantly, the impact is on the backlog. Insofar as we have advanced sales in the reported figures for 2017, these are amounts that we will now find in 2018.

So the backlog as reported at the end of 2017, the one that Olivier Roussat commented would be amputated so to speak by €450 million, which is the amount concerned by the restatement. As for Bouygues Telecom, the change of the pattern of recognition of revenue concerns handset subsidies, which are to be deducted from revenue.

They can be deducted in the form of discount and these subsidies are then spread over the projected life of Bouygues Telecom's customer's account. Subsidies were an expense beforehand.

We must also spread user access fees, in other words when we invoice access fees to customers, this includes the link-up, it's not just a one-off. This is something that we spread over the foreseeable life of the customer account.

This is among the great charms of IFRS, there are a lot of things that we have to anticipate over the life of a customer account. Well, we did what we were asked to do.

Next impact is the spreading of variable costs. Again, you don't build in cost straightaway, they too must be spread over the foreseeable life of the customer accounts.

Here again, the impact on the 2017 financial statements are not very significant, sales down €26 million out of a of the total of €5.06 billion. I'm sure we will recover.

EBITDA down €65 million, CapEx too would be down. And free cash flow, while the impact is not substantial, it's a €40 million improvement, but you'll find this in working capital requirement because this is a cash neutral impact.

So if you change the items in between, it is not going to change the bottom line. So you'll find this in the cash and cash equivalents line.

All that to say as far as we are concerned, we do not anticipate any substantial impact on our accounts as a result of the - coming into force of these two standards. However, this means that we will be tweaking performance indicators.

We will be talking about sales from networks. We won't be talking about ARPU because of these accounting principles or changes in accounting principles, these are indicators that won't have any great sense.

We will be talking sales from services and we have given you the definition here, it is not complicated. It's the sales from network plus sales from services provided to business customers minus the spread of the subsidy.

Now, we won't be talking about ARPU anymore, but ABPU, average billing per user, which is sales invoiced to customers, remember. And sales invoiced customers, you do not have the incoming revenue for the number of the sales that are not included.

And that will be divided by the average number of customers over the periods. So in future, these are the two indicators that we'll be communicating with you.

When we give you guidance, we will be giving you guidance based on these new indicators and in accordance with the new accounting standards. Thank you for your attention.

Thank you Philippe. And it is for me to tell you about the outlook.

What I will say is that our group is in a good position to meet the major ecological demographic and technological challenges ahead. There is a demographic challenge, there is an increased need for infrastructure, but also for structures that are environment friendly.

There is also an ecological challenge, we need to make cities less energy intensive, more pleasant to live in and there is a technological challenge in particular with the revolution of digital users and the need to connect regions. Now, because of all these new requirements, we are developing innovative solutions, construction methods that consume fewer resources but also the design and building of sustainable neighborhoods and Smart Cities, we are developing 4G, FTTH and the Internet of Things.

And we are in the media business and developing digital advertising offers to boost our advertisers brands. Digital technology are the core of Group's transformation in 2018.

We are one of the companies that is experiencing the fastest digital transformation to develop new products and services to take into account, say the secular economy factors for the business cycle of buildings, but also to better use data in designing, buildings, but also we have a closer look at our customers' requirements, 3D immersion visits. We have been building information methods and digitizing the equipment management systems.

In terms of career development, we want to increase the portion of women in managerial positions in France to reach 20% by 2020, up 4 percentage points compared to where we were in 2015, but we find that with different training backgrounds and degrees this is diversity we should take advantage of when hiring new people, when developing careers and we want to encourage entrepreneurship developing the entrepreneur business among our employees, we had a plan that started in January 2017, and it is called How to Innovate like a Startup. Now, this Group should improve its - gradually improve its productivity and profitability in 2018.

We have a buoyant environment in France for the construction business. We will be selective, we will go for profitable deals rather than big businesses.

Construction should be improving in 2018 compared to 2018. TF1 is now confirming its target to improve profitability.

In 2018, we expect a higher current operating margin, not including major sporting events. For 2019, we are looking at double digit current operating margin, plus non-advertising revenues for the five unencrypted channels and that should account for about 1/3 of our sales.

The average cost of the program should be brought down to €960 million, 2018 to 2020 for the five unencrypted channels. For Bouygues Telecom we want to generate profitable growth and reach €300 million in free cash flows by 2019.

In 2018 sales from services should grow more than 3% compared to 2017. Our EBITDA margin should be higher than that in 2017 and growth CapEx is expected to reach €1.2 billion.

Now, as you can see the Group is well positioned in the high growth potential business activities, which of course ensures a promising outlook for all its businesses. Having said all that we will be now more than happy to try and answer your questions.

Yes?

I have three questions. Number one on digitizing your construction sites, you mentioned this earlier on.

I would like to know to what percentage of your sites are actually digitized and what are the benefits out there, are you saving on construction equipment or materials? Second question regarding property development.

Nexity is looking at a downward market for residential property reservations in 2018 anywhere between 4% and 8% down, what is your own take on that? Do you expect residential property reservations to go up?

And then a question about Grand Paris, the Greater Paris projects, how do you see the risks inherent in these projects, not just in terms of implementing the projects, but there may be an increase in costs including payroll and equipment?

While Grand Paris is an excellent initiative, because this is what you need if you want to generate economic growth. This is true around the world, this has been true for more than a century and this certainly still is the case today.

Grand Paris, the Greater Paris project, is a project which will create high potential economic areas. Look at [indiscernible] we had university and complex with institutes of higher education and we will arrive at a more consistent result.

Now had land been acquired say 20 years or 30 years ago, now the self [indiscernible] projects could be completed at a lower cost, but well that's the way things are, we have to buy land now at the current prices. The Prime Minister has just announced that the program will be somewhat spread out over time.

Let me just tell you that our program as it stands is pretty heavy already, a number of tunnels. You have to remember that TBM projects are not huge in terms of jobs.

I mean there are a number of jobs, but these are long and big projects. The machines have to build, the tunnel boring machines are - need time building and designing.

Having said that, we have a lot of work on our plate, we are doing TBM projects around the world in Asia and Australia, everywhere. So Nexity is now announcing a decline.

Bouygues Immobilier sees a rather flat market for 2018, well we are reasonably cautiously confident and optimistic for the property market in 2018. We don't expect much of a decline.

Regarding the digitization of construction sites, you have to remember that the - what is known as the digital model, is also a quality factor, because if you're in a position to work out your plans and layouts including all aspects of equipment, the design of the tools required, the working out the materials with a real-time update of the plan, and making sure that everybody has access to all the information while needless to say, that will make for more quality and that is the whole purpose of BIM, the building information model. Bouygues is very much involved in this, but you have to see that this is for us today a positive environment because Bouygues Telecom itself in its business has a significant digital portion, but Bouygues Construction, Colas are also digitizing their processes.

The percentage of construction sites that are fully digitized, about 60%, 60% of our sites use digital models, but this is growing very fast indeed.

We are looking at €170 for the dividend. Maybe I am being picky here, is that enough.

And also is Bouygues Telecom at last going to pay out a dividend? There have been any acquisitions in concessions in 2017?

You have an existing portfolio, will you be selling some, disposing of some of these concessions in 2018. And then the impacts of IFRS 15 on Bouygues Telecom, this €300 million free cash flow for 2019, now there is an €14 million impact, will that have - does this €300 million figure need to be updated?

Well, Martin will answer about the €1.70 dividend per share. Regarding €300 million cash flow the guidance remains there, that will not change.

Now, it will not change because, while you may have noted that we have an agreement with the French government to step up capital expenditure in a number of areas, so as to better cover the French territory in terms of Telecoms, that is mobile phones, fiber, or the LOT and this will bring about an increased pace of capital expenditure. When we announced €300 million a year ago, so the €40 million or so in 2017 will be used in an effective way to meet the government's expectations in terms of a faster rollout of telecom infrastructures.

Regarding the dividends, Bouygues Telecom, as of this year will be paying out dividends €50 million in dividends, and that's the €17 million from free cash flows, free cash flow that was published, plus the €33 million effect. And so there was €50 million cash flow generated and so there will be dividend.

On concessions, Bouygues, I haven't changed views on that. On dividend, well I am in the first line here myself, but I think all Bouygues employees are also concerned because, and this is what makes us unique, our employees are the second largest shareholders, a large number of shareholders - of employees are shareholders and that accounts for a significant portion of our equity.

Now we have to draw the line between on the one hand compensating our shareholders and preparing for the future. We went through very challenging times where we had two economic crisis in a row, we had the telecom crisis as well.

And during these challenging times, we remained - we kept dividends at a stable level. And that was a signal from us announcing that we were confident, we should be able to see the crisis through and we were also confident in the future.

And we are even more confident today and that is why we are sending a first signal in this sense, with an increased dividend. Now it remains modest, nonetheless, it's not nothing and if you work out the payout, it's pretty good too.

I have a question about the construction business, not including Bouygues Immobilier and Colas. Is it fair to say that even though the order book was stable at, at end 2017, does it make sense to look at lower revenue in 2018, 1% to 1.5% in organic and almost 2% drop.

And on profit margin, does it also makes sense to say that as things stand, things are bit tougher now than 9 months or 12 months ago to increase margins in the construction business, either because competitors are more aggressive or I mean because they are smaller or bigger or because there is inflation in increasing cost on a number of tunnel projects where your own talents are being sought out by the competition. Regarding cash generation when the Alstom events deal is completed as a minority interest, does it make for you to pull out of the capital, that would give you a nice steady additional cash by end 2019.

What you will be doing with that cash? This would be an opportunity to consolidate the business in France, make acquisitions in the business or would you be returning the cash to the shareholders?

Let me answer your question about Alstom first. We have been under our - alongside the Alstom management in the necessary consolidation of the railway sector in Europe.

Remember that the Chinese, with the two biggest companies merging into one, they didn't ask anybody for approval. They just decided to merge in the morning and that evening it was done.

Here in Europe things are much more complex, because we need to get approval from the Chinese, from the whole planet and it's a major undertaking, it is very complex. It's already underway.

We are playing a supporting role and hope that this will materialize let's say, towards the end of the year. As for what we'll do when the time comes, we don't know, we will see.

What we do know is that we will have a 14% stake or thereabouts in the new entity, that there will be an industrial player in this new entity and theoretically there is no reason for us to remain on - in the capital of Alstom indefinitely. Now when additional things happen, I'll tell you about it, but I can't be any more specific at this point in time.

As for consolidation let's give up on this, this is a pain - there are four operators in the sector. In 2017, almost all four have reported improved profits.

So, come on. I didn't ask for a fourth operator and I'm not going to do anything about reducing the number, let's be clear about that.

Now you can count whatever you want, fantasizing whatever way you want. Probably we have say to the French people, I'd say, rather than three players, I prefer a situation where we would be alone, a monopoly situation.

But I doubt if that's going to happen, it's all very fine in fantasizing, but that's not going to happen. As for the rest Philippe will give you the information.

Concerning the construction sector. First of all, concerning margins we can confirm that the construction businesses are on a positive trend, a gradual improvement of margins year-on-year and we expect to continue on that front.

We don't give you margin targets, but I can confirm that we expect our margin to continue to improve gradually in the years to come. As for sales, I imagine you are talking about construction, not including the Bouygues Media and Colas, even Bouygues Construction.

As we said the market is very buoyant, we have a very good backlog in terms of coverage, similar to last year. It's not - we still need to seek out a little more revenue, but as we take a selective approach we do not feel that because our backlog is comparable to last year, that our sales figure would necessarily be similar or higher, it could actually be fractionally below last year depending on how things pan out.

It will not be very significant either way. What is important is the fact that we take a selective approach to projects and the fact that we are gradually and regularly improving our margins.

Remember in construction, the goal is not to post a record year, the goal is to be consistent year-on-year and continue to improve gradually. So that is the goal to continue to improve our margins.

The sales figure, we don't expect any substantial increase in construction as a sector. We will take a very selective approach to the projects we tender on, we will only be looking at projects with good margins and projects that are easier to complete, we're not going to take on everything for the sake of taking on more projects.

So I think that answers your question. As for the difficulty in improving margins well, the construction market is competitive.

It is now, was in the past, it always has been and it will be in the future. The good news is that the market is very buoyant.

And when the market is faring well, competition isn't as fiercest when the competition isn't buoyant. That said, it's still a very competitive market.

And yes, on every call for tenders, you have to be the lowest bidder, you have to be the smartest. And if you are the lowest bidder you must ensure that your costs are as low as possible.

Thanks to original innovative solutions and solutions that save on costs. Yes, the market is competitive, it always been.

Once again the strong point in construction now is that we can be selective because the prospects are good.

Let's come to the Bouygues Telecom's CapEx, you were talking about €2 billion growth in the 2018, given the acceleration in optical fibers and the plan with the French government. Can we still expect below €1 billion 2019 as you initially said, over €1 billion growth, is that a normative level for Bouygues Telecom?

And another question, in your financial statements you talk about your network sharing with SFR and you say that from the end of 2018, you're talking about profits. I was wondering what level those profits might be at this year and next year?

And a quick final question on the commitments regarding tunnels, also the handsets. Is there any major change in the handset subsidies, so could you tell us what that signifies for in terms of your marketing strategy in 2018?

I am going to answer the first two questions. We had a little - an aside here during the third, so you maybe repeat your third question in a minute.

So on your first question, the level of CapEx in 2019, [indiscernible] been absorbing the CapEx since 2015, will've be 94% completed at the end of this year as well as we will have some 700 sites remaining in 2019. This compares with close to 3,000 every year over a full year.

So this will - this means the CapEx will be lower. Did you hear my answer to the first question.

Okay. Second question - your second question was on customer benefits.

Structurally we changed the coverage we offer our clients, because - thanks to Cruz, we are making an additional 4,000 sites available, these are 4,000 well adjacent communities which we were present. So this is really a benefit to improve our coverage and the induced effect from the marketing point of view is that the new areas we cover there will be a six months adjustment period.

But after that, we see our sales increase in those periods. The reason comes to mind is Mayane, which once adjusted.

So the total assets increased substantially. Your third question concerns the handset purchases?

Would you mind repeating that question? No, we can look at that later on, but if I could just come back to what you said about the network sharing.

I was thinking in terms of more economic costs. The idea of network sharing is to reduce costs.

Well the saving in cash flow was an annual €100 million approximately. This we can expect from 2019.

But it's not the customer, what we call the customer benefit, this is for us. The customer benefit is the coverage.

Our customers do not invest alongside us. So they do not receive an economic benefit.

I have three questions. Firstly, concerning the dividend, but also a question of intra-group transactions.

How are we to understand this change in dividend? My understanding is that the subsidiaries paid a lower dividend to the parent company than last year, here in 2017 than in 2016.

So how are we to interpret that? My second question, for our CFO, because he gave us a very good projection on changes in working capital requirements in 2017, would he like to give us some guidance for 2018?

And the third question concerning Colas. You alluded to the difficulties in Canada in the railway sector in 2017.

Have these difficulties been ranging or are there any new - guidance can you give us for the year?

Okay. Concerning the dividend there was a very unusual change in 2017.

I think, I mean we anticipated taxation on transaction and moneys between the subsidiaries and parent company, so we - you'll see it all in the accounts in 2016. We - the upshot of that is that there was less money paid in dividends to the parent company, it was simply offsetting the higher level of dividends in 2016.

And in 2018 we will be back to or we'll call it our usual regime of dividends to the parent company from the subsidiaries. Concerning Colas, your question concerning Colas, no new bad news in recent months.

A big challenge facing Colas is the integration of Miller and McAsphalt in Ontario. This is a beautiful, a wonderful acquisition, which will materialize in the next few years.

We expect to close the deal in the next few days. But the whole group, the whole Colas group I should say, the opportunity of integrating a large subsidiary, that is going to be a major challenge and one of the big challenges of 2018.

We are very confident about that and don't expect the integration to be a particular problem. As for Colas Railways, well we have reinforced the organization, and we now feel that Colas Railways can expand in a sector where there is a lot of demand, lot of needs in the world.

Railways are expanding everywhere in the world, be it in urban or intra-urban segments. I think Colas is in a good strong position to meet those needs.

You see that the French railways have a major needs in not just French railways. As for our working capital requirements in 2018, I don't know if Philippe has the scope for it.

Yes, we have a forecast. We don't know whether they will come to pass or not.

I think in 10 years they've got it wrong nine times, so let's remain in modest about this. So, yes, in 2018, we expect our working capital requirements to increase that's the way we see things now in February.

We'll see how we stand at the end of the year, but structurally speaking, the number of projects at Bouygues Immobilier and Colas, which will require outflows, more outflows than in the past. So all these major environment-friendly neighborhoods require large outflows by comparison with smaller projects, smaller and individual projects.

But if I could just say a few words more to continue on your question, I know that question is coming, forecast of net debt at the end of the year is in the region of €3.3 billion, bearing in mind that in those €3.3 billion, we have €1.1 billion for the two major acquisitions in the offering namely Miller and McAsphalt and aufeminin.com respectively at Colas and TF1. If you prefer we are at €2 billion and we intend to increase net debt to €3.3 billion, so that, we will be using up a further €200 million cash.

And then just say a word about Canada. Colas did not of any difficulties in Canada.

It was a bad weather in Canada. So they are not difficulties, it is simply the fact that the weather prevented Colas from doing its job, that's not foreseeable for 2018.

It's a seasonality, seasonal effect. In construction there is much less seasonal effect .

Colas is a reality. It's one thing in Europe, but I will say even more so the case in Canada, the weather as a very important part in the sector in Canada.

One of the difficulties Colas Railways had was in freight and Colas Railways has done - they've taken all the measures required to adjust the impact of Colas Railways. The rest of the its business did well.

You saw the most recent contract signed by Colas Railways with SNCF in France. As a matter agreed I just said there are projects all over the world, major renovation works are, railway construction.

So the outlook for Colas Railways is good. Once we have addressed this freight issue and once we have taken the measures and have their impact, a number of the smaller projects that are not going as well as they might have, but the outlook is very good and we expect to be back to the very satisfactory level of profitability very soon.

Two questions on Telecoms please. You expect services, certain services to slow down in 2018.

You expect the growth level to drop. Are the data really comparable given the implementation of the IFRS 15 and a few words about the growth dynamics.

Do you expect any pressure on volumes and in particular with regards to ARPU? My second question concerns Bouygues Telecom and the B2B sector.

You told us about developments in B2B, what about regulatory developments which were working in your favor? I was just wondering what the impact would be.

Will this be in the form of external growth or will have an impact on infrastructure or services? Thank you.

Olivier Roussat will answer that.

Well, to answer your first question. I think we've already told you wanted to say and that's we are not giving you any guidance on our ABPU.

The important thing is the guidance on sales and we've given you that. Concerning your second question, yes we do intend to expand in B2B, particularly in fixed lines because our market share is 22% or 23% in mobile but it is very small B2B fixed lines, this means that we have room to improve.

Yes, external growth could be meaningful if it contributes particular expertise in the field of security or safety. A lot of areas in B2B that do not exist in the retail market.

So probably the best way to proceed would be to acquire these skills through external growth.

No more questions? In that case ladies and gentlemen, thank you.

Good day.