Bureau Veritas S.A.

Thank you, Dan. Good morning, good afternoon and good evening to everyone.

Thank you for joining Bureau Veritas half year 2020 results on the webcast and on the call. François Chabas, our Group CFO is here with me to present our results.

At the time of the full-year results call back in February, China was already in lock down. With China representing 20% of the Group's revenue and 22% of our employees we were closely monitoring the impact on our local operations.

The potential gravity of the virus hurting [ph] I would say China became quickly apparent so we took immediate measures to ensure the safety of our employees, contain costs and maximize cash across the Group. We placed all of Bureau Veritas on a crisis management routine and we launched three clear actions.

First the health and safety of all Bureau Veritas employees, a specific crisis unit was set up dedicated to monitoring actions, tracking staff and ensuring all possible measures were put in place to protect our people. Second, to protect the financial solidity of the Group, we formalized cost control actions across the Group, including anticipating lock downs likely to come and proactive cash maximization initiatives.

Third, to ensure business continuity with, and for our clients, both in the field and remotely using digital solutions and tools; all these actions were rolled out across the group with compliance staff having responsibility for their particular areas of management. In a decentralized and diversified group such as Bureau Veritas, we know we can rely on the discipline and efficiency of all our teams.

Indeed I would like to take this opportunity to thank all our employees for their dedication, loyalty and huge effort made during these challenging times. Today, we can see that the crisis appears to be far from over, with the number of virus cases continuing to increase in places where we have large operations.

We must remain vigilant and highly prudent about how the next few months will unfold. When we look at our first half performance, the impact of the pandemic is obviously significant.

The resilience and diversity of our portfolio has been of considerable benefit. Revenue totaled EUR2.2 billion, down 9% organically.

Adjusted operating profit came in at EUR216 million. This significant decline was partially offset by the cost-containment measures we put in place.

Thanks to our early actions we delivered total cash generation with free cash flow of EUR270 million, up 91% versus last year. Our discipline and anticipation in cash management, together with our Move For Cash program have delivered a major reduction of our working capital.

With regard to our clients, our teams have been proactive in seeking ways to assist and support our clients through the crisis. Based on our range of digital solutions, tools and development capacity we moved rapidly to launch innovative solutions with Restart Your Business with BV and supplies [ph].

We launched Restart Your Business with BV, the suite of solutions to our company [ph] clients in restarting their operations as quickly as possible with appropriate health, safety and hygiene conditions. To develop this solution our proactive and innovative teams have leveraged of our expertise in certification processes on the management of health, safety and hygiene risk.

This enabled us to build and launch the service with a full digital platform across the group in a very short period of time. The take up by many of our clients has generated considerable level of interest on the long-term.

Clients from all sectors and all geographies, We have supported for example Accor, Sodexo, L'Oreal, PONANT, Melia Hotels, Wells Fargo, Unibail-Rodamco-Westfield and Tata Steel [ph]. Government departments have also called us to assist.

The French Ministry of Education, the Turkish Ministry of Tourism, the Australian Justice Department to mention just a few. Another innovative service launched this month is Supply-R.

What is Supply R? Supply R is a unique solution that brings together a customized risk assessment of supply chain, based on field data collected from independent on-site verification of critical suppliers.

We have developed this solution thanks to our digital expertise. Our five key takeaways from the first half are as follows: First, the work to diversify the Group over the past five years has proved beneficial.

Second we moved fast to identify as proactively as possible all means to reduce our cost. Third, we took initiatives to optimize cash generation by ensuring that we collect and protect cash to mitigate the impact of the revenue and margin shortfall.

This way, we preserved our strong balance sheet, forced the ability of Bureau Veritas to adapt, and to innovate in a crisis to support both our employees and our clients. Lastly, we are ready for the new normal, overall putting more emphasis on hygiene and safety issues, transparency and sustainability, with more recourse of digital tools, virtual meetings, new ways of working.

We were already well advanced in this field and we will accelerate even more. François will now walk us through the financial performance.

François?

Thank you. Didier.

Good afternoon, good evening everybody. Well during the crisis, as a CFO my obsession has been to protect the Group's margin and cash obviously.

Margin wise, we put in place an austerity plan for our worldwide operations, involving amongst others, freezing recruitment, or freezing salaries, pay cuts, when and where possible, furlough of employees when appropriate and limiting SG&A spend and in the broader sense, most non-rechargeable expenses to the strict minimum. Cash wise, we took a number of proactive actions.

First of all, the drawdown of our EUR600 million syndicated credit facility, the signing of an additional liquidity credit line of EUR500 million, with one-year maturity and six months extension. And we finally obtained a waiver from our banks and USPP note holders to relax our financial covenants for the next three semesters.

It gives us sufficient liquidity headroom to face a very volatile macro-environment. As you've seen, we also took free cash flow optimization measures, including strict CapEx control, focusing mainly on maintenance.

Two, very limited acquisition spent on H1. And finally, an accelerated invoicing and cash collection leading to a very strong performance at the end of June of our working capital of our revenue ratio, which went down almost 500 basis points to 7.1%.

Looking now at the portfolio over the first semester, we posted a resilient revenue performance in the phase of the COVID-19 shock, thanks to our diversified portfolio. In a nutshell, around 80% of the Group's revenue has shown a good level of resistance with Marine up 3.4% organically, suffering from little disruption so far.

B&I, Industry, Agri-Food and Commodities down only 6.6% organically on average, within the minus 5.4% to minus 7.7% range. The remaining 20% made of certification and consumer product was severely hit by the lock down measures.

Certification provides many non-critical services. So we experienced postponement of audits and this despite the deployment of remote solutions during the lock down period.

And consumer product was further affected by the difficult situation of US retailers and several bankruptcies. Moving to the revenue bridge on Page 13, we delivered EUR2.2 billion in half year 2020 with an overall decline of 11.1%.

Organically decline reached 9%, including the negative impact of 15.6% in the second quarter. The resilience and the diversity of our portfolio cushioned the business disruption resulting from the lock down measures across the world.

External growth contributed minus 0.5% on a net scope, reflecting the impact from prior year disposal, mainly the HSE consulting business in the US. And it reflects as well the absence of material transaction over H1 obviously.

Forex had a negative impact of minus 1.6% mainly due to the depreciation of some emerging countries' currencies against the euro, partially offset by the appreciation of the US dollar and pegged currency by the end of June. Now a few key points regarding the half year 2020 results.

Despite the revenue shortfall we succeeded in keeping margin close to the 10% threshold at 9.8%. Adjusted EPS is down a little over half to EUR0.19.

Free cash flow is up 91% as mentioned by Didier, I will come back to the details of cash flow in a minute. And finally, improvement in our net debt level continued despite the crisis, down a further a EUR200 million from the position at the end of [indiscernible] and down EUR500 million from June last year.

Turning to the adjusted operating margin, as you can see on the slide, the decline to just below 10% is largely explained by the drop in organic margin. Overall this margin shows a revenue drop through the profitability of 59% in H1.

The level of drop-through between Q1 and Q2 has been influenced by the situation in China. In Q1, with the sudden lockdown and we have limited time for cost adjustments and very little possibility to take restructuring measures in our Chinese operations.

Then in Q2 [ph] starting to each [ph] of the geographies we saw the positive impact from the proactive cost actions across most countries. As to be expected all business activities apart from Marine & Offshore posted lower margins due to the impact of the COVID-19 shutdowns on the activity.

Marine & Offshore delivered 185 basis point of improvement to 23.1% compared to H1 last year. It benefited from the operating leverage, positive business and geographical mix as well as an operational excellence.

Adversely the most impacted margin were those of certification and consumer product due to the sharp revenue decline and a negative mix effect. Together they represent around half of the Group margin decline in the first semester.

For Certification the margin declined to 7.7% due to the decline in revenue, basically in Q2, although it was cushioned by a more flexible cost base due to the greater use of subcontractor. The drop-through was 50% in H1 on Certification.

For Consumer Products the significant margin drop to 8.9% is a straight drop through from the revenue decline. Restructuring measure were put in place in Q2 and to give you a bit more color from a negative margin in Q1 we achieved above 20% on Q2 as a semester.

Looking now at the operating profit on Slide 17 in H1, the amortization of intangible assets resulting from acquisitions increased due to the depreciation of certain legacy businesses. Those assets relate mainly to a niche business servicing offshore platforms and to commoditize all transaction activities in the US.

In addition, we booked write-off for total of EUR22 million in the first half. This concerned laboratory reorganization in our Consumer Product and Agri-Food commodities.

And lastly, we further implemented structural margin improvement actions and continued to adjust our cost base. As a consequence, we recorded a restructuring charge of EUR21.7 million in H1, action here as well mainly taken in Consumer Product and community-related activities.

For the full year 2020, we expect the total restructuring charge to remain in the range of EUR25 million to EUR30 million, so having done the bulk of it in the first semester obviously. Coming to the net financial expense, increase somewhat in H1, mainly due to a slight increase of financial charges due to higher average gross debt following early debt refinancing.

And it's also due to the fees arising on the early repayments of two programs, we had USPP and Schuldschein repayment has been done in H1. Looking now at the tax rate, the adjusted effective tax rate of the Group increased to 37.9%.

The increase is mainly explained by the weight of taxes that are not directly calculated by reference to taxable income such as withholding tax and value-added contribution. For the full year 2020, we expect adjusted ETR to be in the range of 35% to 36%.

Moving now to the cash flow statements, and 91% increase in free cash that you can see on Slide 20. The underlying improvement has been driven mainly by a strong working capital requirement inflow.

You see a positive impact of EUR113 million, representing a swing compared to previous period of almost EUR275 million. Two-third of this has been generated by our action to reduced accounts receivable, and the balance is coming from the deferral of cash payments related essentially to employment contribution and tax charges followed by governments.

Obviously, a strict approach to CapEx, which stood at 1.9% of revenue compared to 2.1% in the first semester 2019. We expect this to be around 2% for the full year 2020.

So by and large a solid cash flow statement. Interestingly, looking at the working capital, you see that in the first half our Move For Cash program continued to demonstrate positive effect.

We further reduced working capital ratio by close to 500 basis points versus June last year. We've reached 7.1% against 11.7% same period of time last year.

And looking backwards in June, 2016, our working capital has been reduced by nearly half. Obviously it reflects, I would say three main points.

First an optimized invoice to cash process on which we have been focusing our efforts as early as possible this year. Second, accelerating of billing and cash collection in the first half across the group with our cost -- with our collection team across the network, being energized by a reinforced sales force.

And finally, we've also benefited from the accelerated cash collection at a time of revenue decline in Q2. So be aware that the working capital in H2 in the second semester, will be obviously impacted by the deferral from H1 to H2 of those cash payment as mentioned before related to tax and payroll charges.

So to summarize, on working capital, its reduction remains a top priority for the Group. We will continue and reinforce our actions moving forward.

As a consequence of this good performance we can now have a look at our financial structure. The adjusted net debt stands at EUR1.6 billion, which is down EUR200 million compared to December last year.

Our healthy financial profile at the end of the half year reflects a strong free cash flow, as mentioned before, EUR270 million in H1, very limited M&A, EUR17 million of spend, net of divestments and no dividend outflow following cancellation earlier this year. So we closed the semester with a leverage ratio of two times, only slightly up from the 1.9 times in December last year.

As regards our debt profile has been lengthened to an average maturity of 5.6 years, extended in terms of bank covenants and with all maturity already refinanced until 2023. At the end of June 2020 Bureau Veritas had EUR2.1 billion in available cash and cash equivalent and EUR500 million in undrawn committed credit line.

In the second half of the year, in the face of, as Didier mentioned, continued uncertainty, margin protection, cash preservation will continue to be our main priority. So to sum up on this financial part, I would like to share with you that I think, first, we took action to protect our margin as much as possible with cost-containment measures.

We maintain a strong financial position have taken proactive action to ensure liquidity. And lastly, at the same time are taking major cost adjustment measure.

We have taken care not to lose any expertise of skills vital to serving our clients when the market pick up again. 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 H1 2020 factors for each of our six businesses. Let's start with Certification, which is the business most affected within the portfolio, down 21.9% in the first half.

Obviously, we slowed down meaning on a central audit, initially planned during the first half, we have postponed, notably, training and customized audits. On the positive side, certification of organic food products grew and sustainable development and CSR showed strong resilience.

We were able to perform some audit remotely which amounted to 13% of the program. Restructure business with BV offer is expected to contribute to the gradual improvement of the business from Q3 onwards.

Consumer Products now, for Consumer Products organic revenue declined by 20.8% in the first half of 2020. The pandemic has shown that the diversification strategy towards new geographies, products and clients, whilst well underway way is still work in progress.

I cannot pretend to be satisfied by our work on similar consumer product division performance. Our performance varied widely between the different segments.

Softlines, this business segment has suffered from its over exposure to the US-China trade channel, particularly in retail where we have seen a collapse in activity and an increase in the number of client businesses going under. The uncertainty around trade tariffs, has also brought additional pressure [ph].

Hardlines, toys and audit, the business has been weak across more geographies, and notably in China and in the US. The toy sector is under significant pressure, even though we have already reduced our exposure.

Inspection and audit services showed a good level of resilience in H1, led by high single-digit organic growth in China. The momentum continues to gather for social and CSR audits.

Electrical and Electronics now; the activity suffered from difficult trading conditions with large US retailers and the effects of the COVID-19 shutdowns. The Electrical Automotive segment was particularly challenging, notably in China.

Mobile testing held up quite well. And the Group 5G-related products infrastructure continue to ramp up.

Our Asian test platforms in South Korea and Taiwan are now fully operational. As François mentioned, margins were better much closer to normal levels of above 20% in Q2.

In the Consumer Product division, we continued to hold out our strategy to diversify the geographical footprint and client sector mix of this business. Moving now to Marine and Offshore; the business delivered a solid 3.4% organic revenue growth in the first half, benefiting notably from double-digit growth in new construction, and the good level of in-service activity as we continued to deliver essential services to clients around the world.

The solid momentum of new orders continued totaling 3.2 million gross tons at the end of June 2020, close to the order book of 3.5 million gross tons last year. Once again, the group significantly outperformed the market which is sharply down.

This highlights our strong position in the most dynamic segments such as the E&G [ph] fuel, ships. During this semester, new digital tools were launched, such as e-learning modules and the rising number of adult surveys were led remotely.

Agri-Food and Commodities; so for Agri-Food and Commodities, the business held up with the decline of organic revenues of 7.7%, the decline of 7.7% in the first half. The main supply chains in Agri-Food and in metals and minerals continued operating.

In Q2, the oil and petrochemicals business suffered from the lower demand for oil. Government Services were impacted by the lock down measures taken in some African countries.

Industry now; revenue declined by 6.8% organically in the first half of 2020. This performance reflects the positive consequences of having diversified into the OpEx [ph] and non-oil and gas markets over the past four years.

Power and Utilities OpEx-related activities were broadly stable, primarily led by Latin America, thanks to the ramp-up of large contract wins with various power distribution clients. As regards oil and gas; CapEx activities representing today only 3.6% of Group revenue, well under pressure with muted opportunities.

Commercially OpEx continued to grow on the first [ph] good pipeline. For Building and Infrastructure has between our moves to diversify the geographical footprint of the business, and develop the activity over the past four years, has played a key part in limiting the decline in organic revenues to 5.4% in H1, and this, in spite of the shutdowns across many of the Group operations.

After strong negative organic revenue in Q1 our Chinese operations delivered positive 8.6% organic growth in Q2. Regarding the 2020 outlook; the crisis is still with us.

And given the uncertainly, it's very difficult to predict how the next few months will unfold. We are currently working with three different scenarios for the full year 2020.

First the situation improves enough to see a slow recovery. Second the current situation continues with localized lock downs which may enable some muted recovery.

Third, the pandemic worsens again. This is why for the remainder of the year we must remain prudent.

So to conclude; the absolute priority for all of us at this time remains health and safety. We will continue to contain costs and maintain our cash, and strong financial structure.

At the same time we are accelerating our strategy towards meeting the trends of the new normal. We are talking about digital and fiber tools, supply chain location and increased spotlight on ESG.

Execution by the way is already underway. This would have been the support theme of our Investor Day that we have had to cancel in September for those reasons.

We expect to risk a due date for the second half of next year and we'll announce the date shortly. Thank you for your attention.

Thank you for listening. François and I are now pleased to answer any questions you may have.

Hi, thank you for taking my question. Just two questions.

So firstly, could you comment on what proportion of revenue that you lost in H1 is likely to be lost permanently. And how much you expect -- how much you expect to catch up in H2 or in 2021?

And the second question is, could you share what the organic growth rate was month for month in the second quarter? Thank you.

Maybe I'm going to start by your second question. In fact, I'm going to give you June, because it's interesting to see after a lock down in Europe, what June is and June was at minus 8.8%, showing clearly improvement from of course, May and April, which was more -- which we are more on the something like minus 15%.

So in June, I would say in a more normal condition, even if the conditions are still not normal, at least in Europe, the negative organic growth was minus 8.8%. Your first question, honestly, not easy to answer.

And I'm going to be very cautious, on the catch-up in H2. First, of course, we should look at it, business by business.

But maybe we could discuss the business, which were the most affected by the various lock downs. I'm talking about certification of course.

I'm talking about consumer product division. If you think about certification, there will be some catch-up.

But of course, we are talking here mostly of voluntary type of schemes. So meaning that, some clients will come back and will ask us to do some certification before the end of the year, sometime because their own clients are needing it.

As I'm thinking about the client who called us, because he had to be ISO 9000 certified to sell his own product. How we're going to catch up profit [ph] in H2 this year, honestly I'm not sure.

It's going to be probably spread over H2 this year and next year. Now, if you think about the consumer product division, clearly with the execution of the tariff war between the US and China and the fact that the election are still in front of us in US and also the fact that we are clearly very exposed to the US retailer market because of the business model, of our CPS division with Bureau Veritas, I'm not sure we will catch up in the second part of the year.

It will come progressively for the second part of the year, so -- for next year, sorry. So for CPS, of course, I'm still very prudent.

In the short-term, even if we are working hard, and we started to work already last year, because of the trade war between China and the US on diversifying the portfolio, diversifying the products, testing opportunities and looking at new opportunities in term of geography. So I cannot say more Julien, than that today.

As of today, as you know, the situation is still very uncertain. So the catch-up will occur probably between H2 and next year.

Okay. Thank you.

Thank you, Julien for your questions.

Great, thank you. Good evening, everybody.

Just a couple from me. Just firstly, can you give us sort of indication of how certification is faring as lock downs ease and sort of indication of growth going into the summer months?

Secondly, all your scenarios have double-digit margins. Can you give us any sort of color on the range of outcomes based on the revenues there or just give us any sort of guidance or help in terms of how we think about operational gearing over those revenue ranges?

And then thirdly, on the consumer margin, back to over 20% margin in the second quarter, is there any reason why we would see that deteriorate in the second half or should we view that as a good number for the remainder of this year? Thank you.

Well, thank you, Paul, for your questions. I'm going to start by the last one.

So in fact, when you think about what happened with the Consumer Product Division regarding the margin, we were taken by surprise of course when China locked down, clearly. So because of the revenue impact, we made the decisions -- by the way, you need to know that I was already working on sort of restructuring of the Consumer Product division last year.

And we already decided with François that we would probably be put some restructuring cash in this operation. So we -- we were already working on it.

We accelerated the restructuring and thanks to this good job done on cost, not cost containment. I'm talking of restructuring, we achieved a margin over 20% in Q2.

Clearly, because now we adapted our cost base to -- let's say what I could consider the worst-case scenario, which is probably what is happening today with the minus 20%, we can imagine a margin, and that's our goal [ph] for the second part of the year. Regarding your first question about July it is too early.

I cannot give you any answer, any trend I will know more next week. The second question François, could you answer.

Hi, Paul. On your second question regarding the differentiation of margin in the three scenarios.

I mean obviously you understand, we are very cautious, as there are plenty of moving pieces obviously. But not to leave you completely in the dark, I think what we are thinking around this yearly drop to a level ranging between 50% to 60% across the three scenarios.

So you can put them and look at them the way you wish. But that's basically the idea we have advanced.

Didier mentioned, and as you see we haven't reiterated guidance for reasons, which are obvious. But I think with this in mind you can fill up your model and I'm sure that Laurent would be happy to take some further detailed questions on this particular matter now that you have this range in mind.

Right, thanks for your time. Thank you.

Our pleasure, Paul.

Thank you. I think I had three but maybe it's only two.

You mentioned in the consumer outlook that China has recovered in Q2. Can you give us an idea of what the China growth rate is for Q2 to give us some kind of indication of where the rest of the group maybe in Q3, given it is following what -- generally what the trends in China have been doing one quarter later?

And to follow-up on same thing [ph]; François, said, just so I understand it right, the tax deferrals that help the working capital, you mentioned a third of that was related to tax and other benefits, you've had. Is that a third of the $113 million benefit or a third of the year-on-year swing in working capital, on the cash flow, just so I understood that, right.

And I think that is everything for now. Thank you.

François, I propose answer the second question and I will answer the first one.

So to start on the second one, had -- to be very clear, we're talking -- we're talking roughly $90 million to $100 million, so it's a third of the total swing. And it relates mainly to measures, which have been offered by the French government, Canadian and the US government, so it's a third of the total swing.

So on your first question regarding the -- you asked the question -- in fact, when I think about your question I think about China because you asked a question regarding the Consumer division, clearly, we could see an improvement in particular in CSR audits, inspection and audit services in China in the second quarter. But more important for me is the fact that we grew our business in industry and facilities, and in particular in building and infrastructure by 8.6% in Q2, showing that the Chinese were not as decided, clearly to put more cash in the economy, and in particular on the energy infrastructure.

And we are extremely well positioned, as you know, thanks to the business that we developed in the past. And in particular the joint ventures that we have in China, in construction and in building and infrastructure.

Regarding the Certification, it's nearly flat in Q2 in China, which is of course, quite a good news, nearly flat to last year. So if you think about commodities industry and facilities business, China is going to do a better Q3 and Q4, with positive organic growth.

Regarding CPS, if the pure Chinese domestic market is the going probably to be flattish but it is not material at the company level.

Okay, good. Can I ask one quick follow, because you mentioned that you've been impressed by [indiscernible] with them.

I'm just wondering whether that is a one-off isolated event or whether you're beginning to see more retailers take on this kind of supply chain certification and assurance and whether it may be something that could move it off you [ph] beyond just restart with BV.

Yes. I will turn to François.

Yes. Hello, Ed.

So Boohoo [ph], it's quite a recent relationship, and just at the early stage, but we've been selected amongst two audit bodies to make a full review of their supply chain, following their well-known issues. So it is showing you that clearly there is a clear focus on the CSR and audit, social audit topics.

And what we can show is that we've been working for them as well and to manage some products under licenses and on the very well-known US customer. And so, it's a new relationship, but it will be clearly moving in the right direction.

More broadly, the restructure of business initiative was a great initiative developed by Bureau Veritas. And as you know, we were the first one to launch this program.

And I'm very proud to say that thanks to it we opened the doors of some clients which knew Bureau Veritas in the past, but were not really a client. So it was a way for us to promote the Bureau Veritas brand.

And these clients will be loyal after. I take the example with [indiscernible] for instance, there we developed some protocols, hygiene protocols with them.

And clearly in the future, we'll continue to work with them keeping these hygiene type of inspection, because it will be more and more requested by the clients. There is still good news for us regarding restart your business with BV, is that we could touch any type of clients from good unknown [ph] to whatever industry, stores, or any center to even in tourism, in the hotel that I mentioned.

So for us, it was -- and still is and because we are seeing in the middle of selling this product with great opportunity, again of course, to make some revenue, but more important for me to develop our brand image.

Hi, good evening. Thanks for taking the questions.

Could you give us some color on the type of write-downs and restructuring expenses you chose to take in the first half, as in the provision cost to the P&L seems to be a bigger number than the restructuring provision. So what are the various parts in that one.

The second, if we look at your revenue decline, thanks to Marine, which was quite resilient, it's compared better than a few other companies that have reported recently, but if we look at the drop-through margins, then you've had higher drop-through margin negative. In part that is down to consumer, in part because if you look at the headcount that seems to be quite resilient.

It's only that personnel expenses are down only 8% to 9%. So just on that piece can you give us a color on, if you have kept more capacity waiting for a recovery.

And second, why do you think your consumer business is trending the way it is compared to some of your peers, as-in -- or is it just a matter of geographic exposure. And last, and I promise you this is the last one, when you look at your revenues and profits loss in first half, what are the revenues and profits that you think won't come back.

Okay. So François will touch on the restructuring, on the drop through.

When you look at the number of people, the number of employees working for the company, you can see clearly that the organic growth was negative 9% and the number of employees negative something like 3.5%. There is a good reason.

It's just because we decided, as you suggested to keep the expertise, when the recovery is going to be here, and we hope, of course, that it will start already in H2. So in fact, what we did, we worked on the salaries, on the packages, and so on.

And when we did that we could save something like probably closer to the 9% impact of the revenue and François will give you more details about the drop through. But today, I can say that we -- when you look at the number of employees, again where, -- we are ready if there is a rebound in the second part of the year and for next year.

In term of expenses, we did not want to lose a colleague that we might need in the near future. I'm going to ask [ph] François giving more details about the drop through and the question about the restructuring.

Yes. So, just some color on the austerity plan.

I mean at the end of the day, the number of action, we've put in place around pay cash, reduced spend et cetera it represent EUR170 million of costs that have been out of the P&L in H1 compared to H1 last year to be very down to the fact. 9% less personnel charges, 9% contractors and the like.

So this has been the answer to unprecedented situation we face. When it comes to the drop-through, clearly we had this first semester has obviously shown two phases Q1 and Q2 with, as I mentioned in Q1 a drop-through which was higher than 70% and Q2, lower than 40%.

Having said that the bulk of the issue we have and we faced in the first semester is related to consumer product. If you do your math, and even without mentioning competitors, you would find out that this is where we've lost part of the margin in H1.

How we address this, as we said with Didier, I was visiting the Consumer Product division, end of last year. September-October and from down, we have decided to launch a restructuring plan to -- I would say we get our network of laboratories adapted to the flows of business coming close [ph].

So at least, we had the ready from [indiscernible] pocket those plans, which have been implemented very rapidly in the first semester. That's why you have the restructuring charge of 20-ish million in H1.

Most of it being customer product and that all of it having been executed already. So we do not expect for the full year.

As I mentioned to be well above $25 million, $30 million max. So this has been addressed and this enables us in the second quarter to have consumer product closer to 20% margin already in Q2.

So that's one element. Coming to your -- you had another question -- yes, the write-offs -- coming to the write-offs there relates two aspect, one being intangible assets so two specifically the business, one that belongs to all Marine & Offshore division that is specializing on offshore platforms.

And the second one being inspection in a commoditized oil and petroleum business in the US. So we took the decision to impair them.

So that's roughly the $60 million difference you have compared to the historical amortization level on this line. And when it comes to physical assets, we've applied to a sense a very strict discipline when reviewing or laboratories on networks, mainly on consumer products and commodities, and we to actually reduce some of the footprint, aggregate laboratories.

The margin is coming from mobile on the same place, we're not teach [ph] that to you. So we took very, very rapid actions to get this happening.

And again, the bulk of the write-off is made in H1. So, that's why we are, where we are today.

Thank you very much. That's very helpful.

Thank you for your question.

Thank you, it's Rory here. I know you've already given a lot of detail on the costs on the drop through.

I want to turn obviously a slight differently. So through H1 your cost base was down about 5%, I think.

And can you quantify how much benefit you got from government support schemes that might not be there to help through H2. And also given you some about this restructuring, should we expect, a -- I guess a further decline in the H2 cost base, year-over-year.

Thank you.

Yes, good afternoon, Rory. Well, on the first question very straightforward and direct.

So we have applied for governmental schemes where our activities were eligible, so that's mainly US, Canada, France. Altogether it represent in terms of subsidies being received and booked in our accounts in H1.

I would say between $30 million and $40 million, that's the magnitude. On the -- then can we expect a similar thing to happen in H2, obviously it's very early to say, it's -- you know case-by-case situation for example, in France, we had a significant part of our team on the specific program which is partial work type of things where you get funding from the state, we currently have only now only 1% of the staff as they are back to work.

So in my view, I don't look at those amounts as an improvement of margin is just a way to go through a crisis at a time where your revenue is down, I mean, I really do hope we not getting in H2, because it will mean that things would have started again. So that's one.

The second question you had was on yes, restructuring, we've -- correct me, if I'm wrong, but basically the mindset when I think your question is we've gone through $21 point something [ph] million in H1. We aim for the full year at $25 million, $30 million maximum.

So the bulk of it is done already and it's been on the consumer products. All these plans have a payback time of I would say 10 to 14 months; that's the average of our plans.

Yes. All those plans might have the payback.

It's very helpful. Thank you very much.

And in fact, when you look at the payback, we had even better and quicker payback, because you could see if you take the example of CPS, the margin over -- at more than 20% in Q2. So clearly, we did very well in term of restructuring some businesses as quickly as possible.

And by this week, preparing, this is one part of the year and of course, the years to come in '21 and the years to come.

Hi, good afternoon. Just a couple from me, please.

You mentioned that within the Softlines division, you had issues with the US retailers and the bankruptcy situation there. Did it impact your working capital in the first half?

Do you expect further impact of working capital in the second half as a result of this? And the second one is on your restructured business with BV, quite a lot of -- it's very interesting to see the number of customers who've already signed up to it.

Can it materially move the needle you think on organic revenue growth in second half of the year and maybe mitigate some of the declines that you're seeing?

Okay. So on the restructure business, we are still in the middle of [indiscernible].

So at the company level, it's not really material even if, of course, it's going to impact positively our certification revenue starting in Q3, because most of these schemes will be in place starting now, July, August and so on and so. Again, I'm happy because we won some contracts.

And it's going to give us a clear opportunity in term of revenue for certification, but more important than that it opened doors for the future, clearly. So and again, we know that North America is seeing the crisis.

Latin America is also seeing the crisis. So we will record more wins in the future, even if I'm happy already with the revenue that we could generate from this initiative.

François, the first question about Softlines and impact on the…

So, as you can see on our numbers our working capital has gone south quite significantly in H1, which is driven mainly by the reduction in outstanding receivables. So as a matter of fact, we don't see today any major impact.

What we see now from -- but the point of view is, we are still today well below 1% of the group sales. So if, even if the situation were to become very worse and kind of double that would not materially affect our own liquidity.

Lastly, on the specific point you mention of the US retailers, we have cases where today we work actually for some of those companies being financial difficulty [ph], they are still operating, but obviously we have payment terms with them that enables to -- the consumer test business is based on the big number of small operation. So it enables for them to pay in advance each and every test.

So we do not build up a strong exposure to clients having financial difficulties.

That's very clear. Thank you.

Thank you.

Thank you. Good evening, gentlemen.

Three questions please. Just firstly within B&I, the organic growth was very good in Europe.

I just wonder how you managed to achieve that particularly in France given presumably a number of your sites, or the sites that you visit were inaccessible during the period. It seems like a very strong outcome.

Secondly, sorry to go back to consumer, but I just wondered what has happened in that division in terms of the setup of the cost base that made it necessary to take the restructuring actions that you have. And thirdly, François apologies if you mentioned this earlier, but I wondered if you had any guidance, the financing expenses in the second half, please.

Thank you.

Okay. So I'm going to start by the first question, the question on B&I.

So it's clear and you're right, Alexander, let's say that we achieved quite a good performance. And when you think about the lockdown period in particular in France and also in Europe, so it came, of course from two factors.

I would say the first one, the decision we made in 2015 to diversify our portfolio geographically, meaning that it's a lot more balanced and again we grew 8% -- more close to 9% in China in Q2. The second one is, we strongly benefited from new services launched related to energy efficiency programs in France in particular.

And also, we had a very, very healthy backlog for OpEx-related activities when we restarted the year. And in fact, when you think about the OpEx, if you combine the energy efficiency programs and the execution of our healthy backlog, we are at around three quarter of the French construction business; so it had a good impact.

The CapEx related work is under pressure as you can imagine, but it's clear that the fact that we decided again to be present in several countries gave a good balance to achieve this minus 5.4%, which is quite remarkable knowing that there was a general lock down in Q1 in China, and in Europe for two months -- two and a half months The second question is about the consumer set up and the cost base, so François is going to answer this question. But François said did and I would like to make it clear, last year when we saw the trade war between the US and China and knowing that we were highly dependent on the American retailer, we started to work on the restructuring, the Consumer Products division.

Of course, the COVID-19 impact pushed us to accelerate this restructuring and to work on the strategy as well for diversification, as we did well for the rest of the portfolio. Regarding the cost base, so you want to add something, François.

I think you said it in practical terms, these restructuring is mainly for rationalizing our laboratory footprint in China. And this is all the plan that been set up end of last year and have been executed as soon as the lock down was over with a view to maximize the margin.

Alexander, again, I'm sorry, maybe I'm a little bit heavy but we, in fact at the beginning of the year in February when we told you that we will have some restructuring. If I remember well we gave a number which was closer to EUR15 million.

It was at that time mostly the CPS risk return. Of course, the COVID-19, again impacted the organic growth, but we were already working on it.

It's probably -- and I'm sure the reason why our margin moved up significantly in Q2 already. And we'll be -- probably at that level in H2 and I hope better next year.

I would take your last point on the financial cost. I would broaden it a little bit to answer precisely to your question, but we have a pretty prudent view on the way we manage our debt.

So we have taken a couple of reimbursement earlier this year in H1 that inflated a little bit the finance cost on H1 for the full year, we expect to remain within the EUR90 million range. So we have in H2, which will be softer on finance costs taking advantage of A, the action we've made last year in refinancing; B the last steps of this plan that has been executed in H1 this year, meaning some legacy program which were expensive, are now off the table and we are starting to gain the benefit in the financial cost.

That's perfect. Thank you.

Good afternoon, thank you. Just one really, I'm sorry to belabor the point on the restructuring and consumer.

But I just wanted to understand specifically and whether you can share details of what proportion of the labs in China, you have closed? And which of those -- perhaps another way to look at it is, which of the three scenarios in your outlook best reflects the revised footprint your lab footprint is now designed to serve.

And when do you anticipate the revenues generated by having a large footprint in China be achieving the high -- the previous high watermark, which I assume was in 2018.

It's more rationalization than anything else. I'm not going to disclose the number of labs that I decided to close.

What is important for you to understand is that, it's all about, -- because we had this pact between the US and China and it was really to anticipate what the footprint in China should be for the future. There is still one point I wanted to insist on is the fact that as you know, we decided to open labs in Vietnam, in Cambodia in India because the Softlines business was already moving in term of testing from China to these regions.

And for instance we even opened a lab because our client asked us to accompany in [indiscernible]. So the supply chain was already moving.

It's the reason why we decided to rationalize what a good production, the testing in China. Now I'm not going to give you the number of labs that we expected to close.

Okay. Thank you very much.

Thank you.

Good evening, Didier, François, Laurent. I will take the three, please.

Firstly, back to the drop-through. I just wanted to clarify whether François, the 50 to 60 that you mentioned is organic.

When I look at the first half, the organic drop through looks to has been around 70%. I'm just trying to reconcile the 50 to 60 with that and also your comments around the Q1, Q2 split?

And secondly, do you have a full year expectation for further currency headwind relative to the 1.6 in the first half? And finally, I appreciate there's lot of uncertainty going into the 2021, but if conditions continue as you expect into the second half, should we expect the tax rate to normalize into '21, please?

Thank you.

Okay. I'll take last three questions.

So on the drop-through, first, let's be careful with the concept. It's not exactly a normalized indicator.

So instead of being in -- our drop-through is all inclusive. It's not organic, it's altogether.

When it comes to précising exactly the H1 versus the three scenarios, what I would advise, it's late already, join and get in touch with Laurent to ensure that your numbers are aligned with ours, just to avoid misunderstanding. Coming to your second point which is foreign exchange, as I used to say, if I could predict foreign exchange, I would not be sitting here.

I would have made a fortune somewhere else. But frankly speaking, what we see at the moment is that our exposure on H1 even though by and large we're minus 1.6, we were minus 1.1 negative in fact in Q1, minus 2.3 in Q2.

Reading the news, you see the dollar moving crossing the line the 1.17 against the euro. So I would say it's reasonable to think that we continue to have a drag on H2, due to foreign exchange very little doubt about it.

And your last question was about?

Tax deferral.

Tax; I think we guide for the year at 35% to 36%, when it comes to next year 2021 then I promise, I will answer this question in our yearly call. But it's a bit early, it will obviously normalize-- 2020 is a year, is an exceptional year in that regard.

As I mentioned we have especially within Bureau Veritas, a lot of internal dividend distributions that are obviously having tax friction, withholding tax and this discussion has been happening in H1, as it is no more. We wanted to maximize our cash essentially considering what was going -- what is happening.

So I would not take 2020 as a reference here on tax. It's an exceptional year in many regards including tax.

Thank you.

Okay, it seems that we have no more questions. So good evening everyone and of course, stay safe.