Bureau Veritas S.A.

Good morning, good afternoon and good evening to everyone. Thank you for joining Bureau Veritas Full Year 2019 results on the webcast and on the call.

François Chabas, our Group CFO, is here with me to present our half year results. We closed the excellent operational and financial performance, record revenues and cash generation were delivered.

We achieved the highest quarterly organic growth for seven years, which took our original to the €5 billion mark for the first time ever. Cash generation was close to €620 million, a record performance cementing our strong financial credentials.

2019 was first year of the rollout of our strategic plan and the momentum has continued. We made further significant steps in the diversification of our portfolio with selective bolt-on acquisitions and targeted disposals.

The growth momentum across our businesses demonstrate strong fundamentals that have been built over the past four years. Buildings & Infrastructure grew 6.8%, Agri-Food & Commodities 7.9%, Industry 6.3%, while Marine & Offshore achieved 5%.

We have delivered all the objectives we set for 2019. Bureau Veritas delivered 4.3% organic growth in 2019 accelerated compared to 2018, and margin of 16.3%, up 20 basis points at constant current currency and strong free cash flow of €618 million represent a record of 12.1% of the group revenue.

Looking at our portfolio at the end of 2019 it has much better resilience then four years ago and is way balanced from the cyclical perspective. We estimate that as of December, 2019 45% of the group revenue is OpEx from systems arrive from existing assets.

Here we are talking about high visibility, retail business, driven by regulations of standards. 33% is products related it comprises our Agri-Food and commodities business which is volume driven with notably healthy prospects in food and consumer products which relies on innovation and technological challenges.

Lastly, 22% of our revenue or relies on our clients CapEx decisions the combination of new buildings and infrastructure spread across many geographies, new energy projects and new ships. All these markets are today recovering, availability shown by a solid backlog.

A growing pillar to our resilience on building long-term relationship is our clients is in supporting there regulatory and voluntary CSR commitments. Ever since founded in 1828 Bureau Veritas’ ambition has been to build trust between businesses, governments and clients.

In this field we do far more than verify compliance. We act as independent impartial guarantors and thereby play a crucial role in building and protecting companies reputations.

Our clients expect us to understand there complex business and variance and risk. For example, the trust ability of their supply chain, concerns around technological advances impacting the various industries, the regulations, making them responsible for the recycling of their end products.

The need impartial experts to ensure quality, safety and sustainability vital to remain uncompetitive. To assume this whole, Bureau Veritas must lead by example.

to this term we are focusing on four key CSR areas, safety, ethics, inclusion and environmental protection. I believe that BV is uniquely positioned to share the trust between our clients and society and to help them promote more responsible progress.

François, will now walk us through the excellent financial performance. Thank you François.

Thank you. Didier.

Before doing a deep dive into the numbers, the few words on the key financial achievement for 2019. We continue our key portfolio management strategy by divesting non-strategic businesses.

This contributed to margin improvement. We delivered another year or strong free cash flow sayings to the continuing positive effects from a move forecasts program.

This contributed to a material decrease in our leverage ratio down to 1.9 times, which are the lowest levels in 2014. We pursued a proactive and opportunistic financing strategy allowing us to optimize the cost of our debt, delivering a 20 bps decline compared to last year to 2.8%, and we have also lengthened the average maturity of the debt and now have maturities which are longer until 2023.

Looking at the revenue breach. We delivered €5.1 billion in full year 2019, breaking the €5 billion threshold for the first time with external growth of 6.3%.

Organic growth reached 4.3% in comparison with 4% in 2018. This should traits to steady resilience of our portfolio.

Indeed, we have consistently delivered above 4% organic growth over the past six quarters. External growth contributed 1.2% on basis.

And finally ForEx had a slightly positive impact of 0.8% which is mainly attributes to the appreciation of the U.S. dollar and currencies against the euro while slightly mitigated by the weaknesses of some emerging countries currencies.

Turning for the revenue growth by business for the full year. Five out of our six businesses, reached a solid pace of organic growth of 4.8% on average.

Only certification remain indeed in negative territory. Agri-Food & Commodities and Industry both clearly outperformed the average at plus 6.7% and plus 6.4% respectively.

We have benefited here from strong drivers in Agri-Food and then mixed performance in energy-related activities. At the same time, our Marine & Offshore business recovered about 4.9%, since to our positioning in the more dynamic segments.

Consumer Products grew 2.3% notably affected by the wait-and-see situation triggered by the tariff discussions. And finally as expected, certification declined minus 1.5%, reflecting the transition year posts standards.

In the last quarter to zoom on it, we delivered 5.3% organic growth. This is our best quarterly persimmons since the third quarter of 2012.

In the quarter, all businesses grew organically without exception with Industry the best performer up 9.3%, delivering the full benefits of the OpEx and CapEx related activities. Agri-Food & Commodities maintaining a strong 6.6% organic growth, notably shown by double-digit growth of our Agri-Food business.

And finally certification was up plus 6.7%, benefiting from strong momentum on SKUs. If we focus on the M&A, we continue our active performance augment with objective of seizing attractive acquisition opportunities and divesting non-strategic businesses with big margins.

In 2019, we added €46 million of revenue with signed acquisitions, notably reinforcing our footprint in the U.S. and in Asia, that support our Buildings & Infrastructure and Agri-Food growth initiatives.

In the quarter, we completed the disposal of our consulting business unit, providing agency services in North America. We also divested a number of laboratories and offices notably North America and Europe and focused on underperforming units.

Moving forwards, we continue to deploy a very seductive bolt on acquisition strategy, alongside targeted disposals. Now if you keep on getting the full year 2019 results.

I would comment on the numbers after application of IFRS 16 on the business, as you know the new norm. Adjusted margin increased by 50 basis points to 16.3% off which 45 basis points at constant currency.

It is fully consistent with our full year guidance 2019. Adjusted net profit is up 8%.

Free cash flow is up 29% and we come back to the detailed cash flow in a minute. Adjusted net debt is down minus 14% versus last year benefiting from the strong free cash flow performance of the year.

Turning to adjusted operating margin in the full year 2019 it improve to 16.3% it reflects a combination of certain business point of organic improvements, seven basis points of scope impact as a result of our targeted disposals and five basis points positive ForEx impact. Finally the 25 basis points from FY16.

So an overall gain of 50 basis points versus 2018. Focusing on the businesses, three out of them posted improving margin of constant currency.

This was driven by a significant improvement in Agri commodities plus 120 basis points, Marine and offshore contributed plus 20 basis points and building infrastructure for 30 basis points. This improvements in the result of a combination of operating leverage, strict cost control, restructuring payback of course an active portfolio management.

For consumer products and certification lower organic gross margin and negative mix weighted on the performance. Looking at operating profits on Slide 19, it is up 13.2% at €721 million.

In 2019 we further implemented structural margin improvement actions and continued to adjust our cost base. This resulted in a restructuring challenge of €24.4 million materially down from €42.1 million in 2018.

Action were taken in community related activities, building infrastructure, operations and industry businesses. Next, financial expenses increase in 2019 many due to IFRS with a €16.8 million impact.

Second a slight increase the financial charges many due to the average goals, debt for the early debts refinancing and third the differentiation of several emerging country currencies increasing the products impacts from minus €5 million to minus €10 million. Looking at the tax rate, the adjusted effective tax rate of the group was down 20 basis points at 33.1 the decrees is many explained by the new rules for the tax deduction of interest application in France from 2019 onwards.

For the full year 2020 we expect, our adjusted EBITDA to remain at 33%. Moving now to the 29% increase in free cash.

On Slide 22, the underlying improvements beyond the IFRS 16 impact has been driven by any increasing profit before income tax, mainly led by higher operating profits and nowhere restructuring. A disciplined approach to CapEx which stood at 2.4% of the review compared to 2.6 in 2018 and we expect these to be slightly below 3% for the full year 2020.

Obviously the growth acceleration in Q4, and back working capital improvements focusing on these in more detail and looking at it on Slide 23. In 2019 we continue to deployed our most cash program.

We further reduced or working capital ratio by 20 basis points versus December last year to 8.8% of group revenue. Since December, 2016 our working capital ratio has been reduced by 120 basis points.

Working capital reduction remain a priority for the group. We continue and reinforce our action moving forward.

Regarding now our financial structure, the adjusted net that stand at €1.8 billion, down 14% from December, 2018. As the financial profile at the end of the year, reflects a strong free cash flow generation of €618 million, a disciplined M&A strategy with €99 million spent net of divestment, and original dividend outflow of €97 million given the strong taker from dividend in the first semester of 2019.

So, we closed the year with a leverage ratio of 1.87 times, down from 2.34 times in December last year and far below 3.25 times Bank covenants. With regards to our debt profile, it is been lengthened to an average maturity of 5.8 years, and we have no maturities before 2023.

So, we proposed the dividends of $0.56 per share for 2019 payable in cash, this corresponds to payout ratio of 55% of attributed net profits. To conclude, after the strong set of 2019 results, margins focus and cash flow remain our top priority in 2020.

And I now, hand it back to Didier for the business review.

Thank you François. Thank you very much.

Let me now share with you the key 2019 highlights and 2020 trends for each of our six businesses. Notwithstanding the 2019 impact.

Starting with Marine & Offshore. This business delivered a solid 4.9% organic revenue goals in 2019 as we benefited notably from high single-digit growth in new construction.

New orders grew 7% to $6.5 million gross tons at the end of December of 2019. The Group significantly outperformed the market, which was down double-digit, which highlights our single-digit in the more dynamic segments, such as the E&G, fuel, ships.

In 2020, we expect organic revenue growth in this business to be positive. For Agri-Food & Commodities the business achieved a strong organic growth of 6.7% in 2019.

This reflected double-digit growth for Agri-food lead by new services or new lab opening and high single-digits growth in metals and minerals. In 2020, we expect the Agri-Food & Commodities business to deliver a solid organic revenue growth, although at a slower rate compared to 2019.

Let's move to Industry. It accelerated to 6.4% organically in the full year of 2019 from plus 3.5% in 2018.

In the last quarter, the business delivered a solid 9% organic growth. This was driven by the diversification into power and utilities, the repositioning towards OpEx, the improving our oil & gas market throughout the year.

In 2020, we expect the business with solid organic revenue growth, our OpEx services diversification will continue to pay-off and our CapEx market will continue to improve. For Buildings & Infrastructure, the business achieved an organic growth of 3.2% in 2019 spread across Asia and America.

Growth was particularly strong in China led by energy and infrastructure project management assistance. The U.S.

benefited from strong dynamics in data center commissioning services. France saw some improvement into fall.

In 2020, the outlook for the business is expected to improve overall thanks to the recovery of France, backed by the delivery of healthy backlog of OpEx related services. It would be mitigated by the negative impact from the 19 on operations.

For Certification, as expected, the business recorded a slight negative organic growth of 1.5% for the full year 2019, following the end of the three year sellers revision period. In Q4, the growth resumed with a strong organic performance of 6.7%.

Gross is driven by new services meeting the growth demand from customers for brand protection and ability all around the supply chain. In 2019, social and customized audit sustainability and organic food certification grew double-digits.

In 2020, the certification business is expected to deliver a solid organic revenue growth sustainability and ESG topics, food schemes, and specialized product related to risk management. Consumer Products.

The business delivered moderate organic growth of 2.3% in the full year. Our business grew low single-digit with very strong momentum in South Asia and Southeast Asia, continuing to benefit from the shift out of China.

Our new laboratory was open in Vietnam. In was cosmetics experienced double-digit growth and momentum for social and continued across all regions.

The new international e-commerce platform for mass markets gained traction along the group customers during the year. ForEx added organic growth was flat.

The activities from difficult trading conditions with large U.S. retainers and the effects of several markets.

In 2020, we expect positive organic growth with strong momentum in South Asia and Southeast Asia, moderate growth in Europe and more challenging conditions in both the U.S. and China.

As we close 2019, we expect the growth of our Consumer Products business to be negatively impacted in Q1 due to containment measures. At Bureau Veritas, I have been following the news of the corona outbreak with deep concern.

Safety is an absolute at Bureau Veritas. It means doing everything we can to keep our people safe and our clients people safe.

We are monitoring the situation every day in real time and have set up a dedicated crises committee. We expect much material negative impact on the Groups from 19 due to the inactivity primarily in China, 17% of Group revenue earned potentially elsewhere.

Both group system driven consumer goods activity and audit and inspections activity are affected. In the current circumstances the impact on revenue is expected to be in the range of €60 million to €100 million.

We are focusing on protecting our profitability. Our outlook now, the group's fundamentals remain unchanged and clearly demonstrate the strongness of the ongoing strategy.

We have know the first measure was 2019 outbreak, which we will monitor. In the current circumstances, the first quarter of 2020 will be primarily impacted.

Overall for 2020, we expect to achieve organic revenue growth focused on projecting the adjusted operating margin at constant currency generate sustainable cash flow. This strong 2019 results is predicts the transformation Bureau Veritas since 2016.

We now have put in place much of the growth profile and cyclical reasons we are looking to achieve in our 2020 plans. Together with cash flow generation and deliberative balance.

So, to conclude, we are extremely pleased with this momentum into year 2019. With these two fundamentals, and strong financial profile we can now look to the good future of development, which we will share with you in September, precisely on September the 29th in Paris.

Thank you for listening. Francois and I are now pleased to answer any question you may have.

Yeah. Good afternoon, everybody.

Congratulations on the results. But clearly, you are facing some headwinds now.

So just to dive in a little bit into the forward guidance. Would you can say just how much of the suspected lost revenue is lapsed based versus non-lapsed based, and how much of it is sort of lost increasingly testing if you like, and how much of it would be mandatory which you may expect to come back in the second half.

And then obviously on cost mitigation. Presumably drops for long this is going to be relatively high, especially at the early stages in your high margin there.

But what cost mitigations can you actually do is there are differences in I don't know holiday provisions or something or what the clear cost flexibility do you have? And then have a follow-up on the U.S.

retailers.

So of course your question is excellent. In fact, all businesses are affected in China.

If you think about the labs, because you asked the questions about the lab. I had a call this morning with the boss of the consumer product unit who is as you know, Chinese Catherine Chen, based in Shanghai.

And today 70% of the employees are back in our laboratories. I do see today but again, in one month we may have a different perspective on the business, but today I do not see any weird catch up regarding the testing in our laboratories in China because first it is too early to talk about.

And second I would say the reaction of our clients is still not clear for instance, the next collection, the summer collation. So we are waiting for them as now our laboratories in China.

I'll open again to see what are expecting from us. Now regarding the cost containment plan maybe François you could give more, probably more, more details.

Yes. Thank you, Didier.

So there are practically two types of cost containment. The first one is what we are doing in China as we speak, which is by far the region which has a stronger hit.

And here we have implemented a cost control program. We are getting travel ban regarding hiring freeze.

Anything that is not necessary is simply stopped. Obviously as you understand, we are respecting the Chinese regulations here and the Chinese state has made it very clear that there should be no restructuring, no technical, show much technique.

We don't have any flexibility on the cost base when it comes to salaries and we respect this obviously. So there is a limited element of custody we can do here in China.

What we are looking more into the detail now is discussion with the Chinese authorities on to where it has potential tax reductions and some reduction in the release of our labs, which are owned by state own companies. So that is what China I would say.

And then we are implementing a group-wide a number of actions on which we are currently working to protect as much as we scan the margin and this is in this case beyond the Chinese geography and in practical term is actually affecting all non necessary expenses while preserving the key investment for the group. Obviously this is a very fine balance we keep on having with DG and the executive committee.

We were extremely reactive on just for you to know, we started thinking on this mitigation, cost mitigation action, already three weeks ago. Immediately in fact we saw that the situation could be serious.

So we made some good decision to protect the margin. The second point I could make about China is more than 50% of the people in the commodities industry and facilities are backed.

I had a phone call also with commodities industry and facility leader this morning. So they are back to work and the good news we have two guys affected in the province of one, one is out of the hospital and the other ones seems to be okay and should be out of the hospital in the next day.

So, as you can imagine as a CEO of a company, your first concern is about the safety of employees of course.

Thank you for the answers. And then just to follow up on your comment on, U.S retailers and the issues that they may be happening, obviously there is a couple of high profile bankruptcy's, but is this something that you are seeing some stress as you go down to suppliers and do you think you are well positioned sort of e-commerce versus our space traditional retail space.

In fact, there is nothing really new and so towards the case so in 2018 it continue in 2019 Bureau online business is now becoming a competitor to the to these retailers. And the good news, of course, is that now the consumers are looking for even more quality even run for the online business.

Meaning that clearly we are going to do more inspection, more heat and they are more even for the products which are for the [Indiscernible].

Why do you pick it out now, if it is obviously it is been an effective ecommerce versus traditional retail for a period of time, but why pick it out? Now what is particularly happened over the last few months?

We looked at it into detail. We feel that already something like 15% of the products which are coming from ecommerce are inspected, but we can clearly see now because of this constraint of the regulations in most countries in exploration and this acceleration we continue because there is more business, who ecommerce, of course consumers are more demanding in term of quality.

So, we can see clearly now and for the future and acceleration in the industry and inspection is going on.

Firstly, just to be actually clear, and I appreciate how difficult it is to forecast at this moment in time, but in terms of the proportion and how we should think about the proportion of the 60 to 100 million and where that falls, because and by division because I'm not sure how I'm trying to reconcile your comment about consumer growth with the 60 to 100 million. I'm struggling to see how that fits together, because I would have imagined that the vast majority will have proportions and the impact to consumer business.

And then just in terms of the parameters of how you have calculated it. Should we do that as a Q1 specific impact at this stage and largely related, just to china are you seeing any other impact in the Southeast Asia region, for example.

Thank you.

And today, of course, I'm talking about today as of today. This similar institution as we see it, we are talking of course, mostly about China because it is quite even if it is difficult quite difficult what is happening in China because after the Chinese New Year vacation they proceed by one week.

So, that our people who are not working, so there was no activity. Now people again, coming back progressively, of course the traffic disappears building an infrastructure and commodities activity in China.

And again now where 70% of our people in our labs all labs are open for consumer products and even for the food business and regarding the building an infrastructure and commodities again. I had the boss of China this morning and he told me that to be more than 50% are back working again, for [Indiscernible] some people on top are agree to come back positively as long as the projects are restarting.

So, the reason why we, in fact, when you look at the range 60 to 100, it is quite a large one. But wt still, we took some assumption and we are still evaluating of course today what could be the assumption.

Today, of course Q1 is impacted, but we still believes that, we should come back to a normal situation in Q2, Q3, Q4. But in February several weeks we lost and folding them again.

Maybe I'm too but I do not see any catch up. It is too early to talk about it.

And again, I'm probably too cautious. You want to add something?

No. I think we have decided together with Didier to be very transparent to you guys in to the market because we are looking at this situation in very, very precise manner with, let's say more than weekly as you may imagine with team over there.

China is a material part of our business, and we thought it was the adequate manner to tell you what risk assumption is. When it comes to the assumptions, we factored in business description throughout all of February and a good chunk of March, and with those step-by-step ramp up somewhere in the middle of March to get then to more of the normal by April.

And what we put here, is what we know as of today. We can only say what we know and this is what we estimate being the best assumption.

With some signs of activity starting back again in China as mentioned by Didier. It is too early, but we thought at that moment that was important to share that with you and the market.

I appreciate the transparency. Just as a follow up.

With back to work by between 50% and 70%, would you say that is indicative of your client behavior as of today? Or is that lagging?

It depends on the clients. Some already started at full speed.

I could take a good example around the food business. Of course, you can imagine that, if this business that could be a disaster for China.

On this type of testing talking about food, of course, it had to start very quickly. So, it will take a little bit longer but we can see, and again have a, I would say daily call with our team in China.

There is a key around encouragement from the local authorities to staff and to start 100%. So, and again our assumption is that February or we would not work at all and a part of March.

So this is the way we decided to work on it to be as transparent as strong as we could. But today, there is no, and it can achieve, I would say decision from the that I'm not going to start, it is opposite now.

They are really accelerating the restart. Of course, when you close the factory for two or three weeks, it depends of the production, because it can be more complex or less complex, but positively clearly it is restarting now.

Thank you very much.

Thank you for your question.

Thank you for taking my questions. I have got three please.

On the Marine Division. Can you give us an idea of how much the margin of 65 basis points of organic margin outside related to restructuring that you have done in the past and whether there is more this restructuring benefits that come through in spirits?

On the industry division clearly that was a certainly took me slightly by surprise in terms of how good the growth was there. And just to get a feeling for the sustainability of growth.

Could you give us more of a feeling on price and volume both for the sort of OpEx markets as you have got and the CapEx markets just to see what the trends are slightly meet the surface. And finally you talked about several initiatives that allow you to grow well ahead of the market.

Could you just quickly tell us what your view on how fast the market is growing what your growth rate through it is. And what is initiatives are that allowed you to grow in excess to the market.

Thanks.

Thank you. So I'm going to start with the number two and number three question.

And Francois will give an answer for you using the restructuring. On the industry, clearly, the consequence of this strategy that we implemented in 2015.

And as you know, we decided to work a lot on OpEx solution in oil and gas, but also in power and utilities. So we won very, very good contracts in power and utilities in particular in Latin America.

When we talk about the contract in Latin America, just to give you a size we are talking about contract which are between €20 million to €60 million over a period of three or four years. And in fact, we did so well, that now we are replicating the successful receipt what we did in the country because Started with to me in other countries by agreeing on meeting the client.

The second we done very good result, of course is the fact that for three years, the oil company decided to freeze any investment on oil and gas - I mean in terms of CapEx. And in fact, it has restarted and clearly we can see an increase and it we are continue to go to approximately 10% and 9.8% in 2019, to be precise.

So, the good news for me that this CapEx is not the one we observed in the past meaning that there were very big CapEx in the past when you stopping to [Indiscernible] problems. In this case, it is not the case at all.

In fact, it is more I would say some big CapEx amounts. Because they do not do anything for fear.

So according to work on the quality and safety potential challenges. And the second of course, in the new CapEx just because if we need to think about the new CapEx to working on gas, in particular on energy projects.

There are strong gas fields and we are as you know, we have a very, very good leadership position on gas. So it is a reason why we are doing so well in industry.

On the food business, we did a superbly win last year, we performed in the market 10% growth. In fact, the strategy that we adopted some years ago was to be essentially in Asia.

And we opened some lab in Asia and in the U.S. by the way.

We also made some acquisitions. We have very large hub here in Singapore.

On the impact that you 60 to 100 million due to [Indiscernible] writers. I wanted to ask are you seeing any slowdown in Europe, because of China and among your client base in Europe?

And secondly, in single berth the CapEx Paris to sales numbers it has been coming down quite steadily for the last four or five years. I'm just going to have positive sales in 2019.

I think you are guiding for the under 3% for sales for 2020. Depending on more OpEx based is that the reason why it should not be around 2.5% of sales medium term that investments you are 2020 please?

Thank you.

About your first question. Maybe before answering it.

I would like to reiterate the fact that thanks to the good job we did in the past four years the fundamentals are clearly a very robust today and we are confident after the situation of course, we will be back to good normal and I should say a better normal, and then in the past. It is too early about any slowdown today.

We have not seen any - again, we are very carefully monitoring the situation, cost containment measures are in place and ticking all across the globe, but today and I see today, we have not seen any other consequence elsewhere. The second question which was raised for on CapEx -.

CapEx wise, so percentage wise you are right. We went down from 2.6 to 2.4 and to from 2.8 a year before, from a pure amount in euro point of view.

You see you like me, we kept the CapEx spend actually flat 124 million Euro in 2018 and 123 in 2019. So, what is true is truly that we are very cautious when it comes to capital allocation and we made the decision that we actually was coming to the already for the last 18 months that we are expecting and pay back in a very selective and disciplined manner.

Project with a payback and 15 months have a very hard time in our CapEx committee. So selective is one of the reasons why we have managed to keep the level of CapEx around the 120-ish million.

Then coming to next year 2020 we still do expect to have a number of investment to make which are around I would say three main areas. First area is 5G we had already a good chunk of the investment done in Q4 2019.

There is another half to do in 2020. The second element, is CapEx that we believe are bringing growth and margin in-line with billing strategy.

We are talking here mainly about food laboratory and third CapEx to the digital transformation of the group when will accelerate. So that is why we guide and you are right for something I would say in the area of 3% or slightly ahead of what we are doing today, but we didn't do it.

We find very disciplined and focused approach when it comes to CapEx spend.

Thank you just one quick follow up. And you mentioned just you want to start the food lab.

Any particular regions in the world where you want to start it?

We have decided to start some food labs in the U.S. for symposium I can be very transparent with your financial community.

You should think about the U.S. operations today.

If you won't but you will have the multiple reasons because [Indiscernible]. I can tell you that the payback is lot better when you go for Greenfield though this is what we have decided to do in terms of situation and we will probably have the opportunity to discuss it again before the end of the year.

We are looking at starting a Greenfield labs, buying some of the labs in particular of course in China. We have two labs today and we want to have more, but not just in China.

We know that the population on the Asia will be probably or 70% of the worldwide population in 2050. So of course, we are keenly working in extending our footprint there.

Today, in China we have three labs in fact and to be very clear and we all looking at making some of the acquisition and again why not starting from Greenfield.

Thank you very much.

Pleasure.

Thank you. Good afternoon.

Two questions please. Firstly, on the consumer business, it is dropped off the headlines, but I wonder what your clients are saying to you now about the U.S.

China trade access. Are they continuing to look to shift their supply chain out of China and to Southeast Asia?

And I wonder if that has implications seeing on CapEx and M&A strategy if so. And then secondly, I just wonder if you can give a sense for how material a part of your certification business, your environmental sustainability activities are.

I can imagine you expect to see accelerating customer demand for these services in 2020 but I would love to hear your opinions on that. Thank you.

So thank you for your question Alexander. I will start with the second question because there is no, I'm used to meet a lot of clients.

I think it is part of the job of CEO. And each time I meet the CEO of a company is asking me, did you, could you help me on the CSR and could you, in terms of points share.

Today, a lot of companies decided the KPIs and committed on some let's say numbers or achievements with their Board and with their consumers. And now the Board's are asking for EBITDA.

So, we are very well placed to do the audit and proposed certification LIBOR or you see showing that what the our position. And the market is really booming and we have the opportunity to talk about on our Investor Day in September.

But you will see in the next months we will launch very important certification around this business. Your first question about both consumer business, even without the trade war, and even before the supply chain was moving from China to Southeast Asia and in fact, when you think about the evolution of the [salaries] in China it was obviously that would once.

I'm talking mostly about the clients in this case, and the good news is that, we decided to build some labs in Vietnam, in Cambodia, in India and now we opened a lab last year for instance in Vietnam. I could give you another example.

I met a client in New York city. It was no one year and half ago, this very last said, could component in -- because we are going to turn a open factory there.

We are opening a lab in Ethiopia. So clearly you can see that even if this trade war not happen the move would have accelerated.

And it is still the case, and we offering our clients. The good news case is in some cases we are even before our clients which is which is good.

So we are totally reviewing to work of course, with our clients with their new situation. After there an acceleration honestly today No, of course because first as you know, this war was a little bit -- I would say stopped or different.

And there was some discussions. I didn't see any acceleration.

What I can see clearly on the top-line is change because of the costs in China. And looking for countries where the cost is just lower.

Still, if you think about your second question about environment and sustainability. You have also a new market trend, which is accelerating a lot which is a brand particular now.

Each standard color with a problem is a brand. The brand could be default.

With social media you have a problem anywhere in the world. Everyone knows the day after.

So, our clients want to protect their brands and their reputation. So it is about sustainability but not just sustainability it is about -- I mean the age of the people who are working for them the diversity.

So we do social studies, we reduce management we do according to assessment, quality inspection and this time it is clearly accelerating faster.

That is very clear. Thank you.

Thank you for the questions.

Good afternoon. Three please.

Firstly, going back to the Corona Virus guidance. This question was asked previously but just trying to reconcile the guidance of €60 million to €100 million with guidance of growth and consumer.

If we assume - let's say part of that impact at the midpoint is it consumed by you with need to offset over 5% dilution to revenue. Just some help in reconciling that guidance would be helpful.

And secondly, on the margin figure in the past. You have given us some qualitative color of how you would expect margins to evolve over the coming year.

If you are able to do that, that would be helpful. And finally, one for one for Francois.

I mean, obviously working capital progression this year was offset by the strong organic growth. Just wondered if you had any, any additional thoughts on the on the targeted production and expected expectations for2020, please.

Thanks

On the margin, I'm going to give you an answer that could surprise you, but in fact if we not had this issue with COVID-19, our guidance would they be improving margin compared to last year and in fact our guidance would have been probably to achieve the margin which was a plan when we launched it in 2015. So it is not the case anymore of course, because China is as you know, the largest country for us.

And the second reason also is that the margin coming from China mostly because of CPAs is high one. It is too early to give a precise guidance.

We put a lot of containment plan in place. We need to wait till the end of Q1 to really understand what is going to be the impact but what you can be sure about is that we are really I would say implementing all action you could imagine to mitigate this Chinese COVID 19 issue.

On the working capital, I let François.

Thanks George for your question. I would say in a nutshell first what I have indicated for now year and a half, that is that our ambition is to achieve 8% by the end of 2021.

One thing we could be happy about is at least gone into the 8% area for the first time now after several years of the nine and 10 level. Now you are right, frankly speaking, the organic growth hasn't really helped, especially when it is done at Q4 which is a both 5%.

And let me disclose you something that is Laurent, that you know, where we not be happy about, but the December was even above seven due to I would say a number of days working days, et cetera. So when, and I, again, I'm very consistent to what I have said because a year and a half ago, I say, this group grow both 5% on a quarterly basis that would be very tough to achieve the eight.

So imagine when we grew 7% in December. I’m actually very proud of what has been done and the fact that we went down to 8.8%, that is for the first part, for the second part it doesn't mean we are happy with it.

It is a journey and as I mentioned several times, there was no factoring. It is pure healthy work with cash collection team, with your suppliers as well.

So its blended in our working capital reduction. And as usual when things aren't done in a normal manner, it takes a bit of time.

So that is why we haven't promised in 12 months to bring it back to 2%. It is a journey we are on it, we are well on track and I'm very active with what has been done this year.

Thank you, François. I come back on your first question and 6100 million is for the group of overall, not just only CPS.

So again it is as it is today and is we know today. But it is not just for CPS.

Okay. But if we take off of that or a proportion of that, it would seem to suggest quite a big chunk out of the consumer revenues.

I think we will a bit a bit prize suppose that the consumer can still grow despite that sort of quantum headwind in the first quarter.

We will see what the second quarter and third quarter and first quarter will be. I can understand your point, but today, I mean after certain point our clearance are going to come back in the laboratories for sure.

And there are today already and clearly you should take the example of H2 for instance, we knew that those could be used by the 5G positive impacts. So, there will be some positive impact that will be, so clearly for the amount this year the guidance that we can give to you today.

Okay, at the end of Q when we committed again when you [Indiscernible].

I guess two one follow-up questions first on the margin, so you mentioned that you have just recorded 19 impacts you would have been able to reach your target for 2020 which was 17% but the 17% was with the ForEx of 2015 and with previous accounting standard also could you give us current ForEx and current accounting standards. And second question regarding the number of laboratories and obviously that you have divested.

Could you give some kudos about the impact on revenue and margin you think? Thank you.

Okay , so 15.4% so it is very clear and by the way we have communicated to the cluster 16.4%. And you are totally right, by the way, it is because of the impact of the FX are from 2015.

So, we made the calculation at the end of last year, if we had and we would have achieved 16.4% account rate if it was we would have achieved one number. So, I think this is a very clear a very transparent.

But if it was 16 the guidance would have been 16.6%. Regarding your second question François?

Yes, regarding the divestment I would say the impact overall of those divestment operations are to make it pretty simple not matter your intent of revenue, as we are talking about €35 million of divestment on a yearly basis yearly review and annualized review. This is [Indiscernible], but at the bottom line, this improved the margin my 10 basis point.

There is no big piece of it, no big division whatsoever we have perform the fulfillment that it needs now several years ago. And we are actually we have identified already what is underperforming what is not in the vehicle business, our spare our 2020 plan and with the diverse initiatives that and then we are opportunistic about the divestment.

If we find a good offer, we sell, if there is no good offer in the market we keep because those businesses usually remain profitable even though they are below obviously the, I would say the group average. But that is interesting assets.

So, we go about it in a very decent manner, but that the only way actually to make progress, and at the end of the year to get a positive activity, which is consistent with the ambition of [Indiscernible] with our initiative of growth. And it is, I would say it is a healthy discipline, there is nothing exceptional here.

Is the asset of a group that is 140 countries has been acquiring companies for the last 15 to 20 years and on a regular basis, decide to divest what is not keen longer or nothing more seamless portfolio management.

Hi. Three for me, if I may.

First on just on the CapEx, oil & gas CapEx which performed very well. Could you just talk a little about, which regions were performing and particularly one of your competitors in the oil & gas best market seems to have a much tougher time in 2019.

Secondly, and just following on CSR. Within that certification division, how much of it is of that division is already focused on CSR related things rather than some of the more traditional certification operations?

And then thirdly, and then apologies for that, in terms of 2019, you have given the guidance of 60 million to 100 million. Any of the other things you are doing across the Group in terms of travel bans and so forth?

Could you talk about how much of the cost within that 60 million to 100 million is fixed versus flexible i.e. what is the drug-through going to be on that 60 to 100 as you say it, right now.

Thank you very much.

Didier, you want to answer.

I don't want to disappoint you, but I will be quick and fast. It is too early to say.

I mean, frankly speaking, we are in the middle of implementing those measures. I mean contrary to some other companies we are giving you as we speak a very clear guidance about the impact on revenue.

You would understand that, the margin parts would be for later on. At the moment, as you mentioned the company is focused in mitigating the impact clearly.

And when you have the number of employees that we have in China, you understand that it is better, the management is mitigating the impact more than the making, I would say gut feeding, impression about what the margin could be.

Yeah, it is a good point. And coming back on your first question, which is about oil & gas CapEx.

So, last year we grew this business by 9.8%. So quite a good coming essentially from the U.S.

and for and also from Africa. When I say -- it is excluding Brazil.

When you look at it in the detail, it is a lot about the gas, on O&G. And again, it is because we have great expertise in this domain and our clients know it and it is the reason why they come to us for help on these big CapEx, and we knew already that we are and we are still working on CapEx projects and there is a very, very extensive pipeline, with this type of CapEx and good opportunities for the future.

So, this is good news. There is no stop.

I don't see stopping it, because again, the production in some cases will not start before two years. So, these projects have started and I think that they will be completed.

The second question was about CSR. It is not an easy question.

On the certification business, purely, I consider 8% of the subscription business, which has sustainability today. But sustainability is not enough as we discussed the CSR is corporate and social responsibilities and this is more than just sustainability and in fact across the Group, you could imagine that, some of the services are embedded.

We do a lot of social audit for our clients in the U.S. and Europe with the consumer product division.

Yeah, I think it is a good example. Now if I take purely certification on this paper business into sustainability last year we grew double digits or high double digit.

So we can clearly see that market is moving very fast. And again compliance is very important.

We will talk about it again as we launch a new product and we will have more details about it in into the months to come.

Right thank you very much.

Thanks so much. Good afternoon, everyone.

Only one question for me. The oil and natural gas prices have fallen a lot in the last few weeks and couple of months.

The oil share prices have fallen a lot as well. Presumably their P&L are going to start turning into quite a lot of pressure as just as a print first quarter numbers and their cash flow statement as well.

Why do you not think that will not have a knock on effect to your 2020 guidance in your in-store division please?

Two main reasons. The first one many projects remain profitable at the level.

And the second one is mainly we are taking renewable onshore projects. Maybe I would like to add a third one, which is the fact that some of these projects now are becoming mandatory.

And in this case for two reasons the first one to replenish the reserves. The second one is because again in terms of reliability safety of the platform.

Their CapEx maintenance project that cannot be postponed.

Okay. In previous times that we have had these sorts of commodity price declines, companies have pushed out some of these obligatory inspection workloads.

Do you think that that would happen this time.

You can do it for a while, but you cannot do it so longer. And they didn't and you are right.

The best for too long time. No, this is not becoming an optional.

Okay. Great.

Thank you so much.

We just would like to thank you for your attention. And I wish you good morning, good afternoon and good evening.