Alten S.A. (0O1S.IL) Earnings Call Transcript & Summary

Right. Let's get started once again. Welcome, and thank you for being here with us to listen to our annual report. We'll be presenting also our strategy and some outlook for the next 3 years. I know that there's another presentation by another company this morning, name starting with a, so thank you for having kindly accepted to attend our presentation. Now regarding our figures. Bruno will give you more details about that. Revenue was already known with a growth of 15.6%. A very good blend for 2019. I tried to be conservative because people tend to say, "Well, it's going to be the same the next year." But no, we've experienced very interesting years but -- because all the greens were -- all the lights were greens in terms of investment in R&D, and I'll come back to that later. But I think it's only dependent on the various industries and sectors. There was a sharp growth on the international with 1.2% of foreign exchange impact, which was positive for us this time, leading us to a 57% of our revenue from international operations. Hopefully, 60% in the future, with more than 10% of organic growth both in France and international markets. It's always surprising to observe such high organic growth in France, in a market where we are the leaders. And one might wonder whether we haven't gone for the maximum positioning in France. But for the last 5 years, we've come up with the same comments about our position on the French market. But beyond any type of analysis who could be done by consultant companies, I would say that there are 200,000 engineers in France and technicians in outsourcing, but Alten is mainly in the digital and R&D world. We only cover 50% of this technological and industrial outsourcing, so we're talking about 100,000 people. And if you do the math of the top 7 engineering companies in France, Alten, Altran, Segula, S2i, Astek and others, we reached 50,000 engineers. That is difficult to reach in terms of work packages, working for the main French industries. And then I do not include the IT and IS companies. That is those that focus on the internal needs of the companies. I'm just talking about services sold by the industry. So the market is consolidated for only less than 50% in -- of the total market in France today, so there is still positive outlooks for the French market as far as we're concerned. For the international markets, you will easily understand that there is a huge and wide avenue in front of us, there is no consolidation, no single-identified player regardless of the market and everything will depend on our management capacity. The operating profit on activity is close to 10%. It's 9.9% of revenue. Without the effect of the number of business days, we would have had 10% or slightly more. We will see what the future holds. And as for the headcount, you have more -- we have more than 32,000 engineers as opposed to only fewer -- far fewer last year. And the revenue of an engineer in international market, considering our activities in India, Spain and other countries, where sometimes they can be more difficult, the growth of engineers will be higher than that of the revenue. And we have a presence in 25 countries. And the support and administrative function percentage is still the same since the number of engineers accounts for 88% of the total headcount of our group. So on this world map, you can see the headcount. The end of 2018 compared with the same -- with the headcount at the end of 2019. For the number of engineers has grown in all regions: in France, from 11,250 to 11,720; Africa and the Middle East, it's mainly because of 2 offshoring businesses in Morocco and oil and gas for other African countries; in Asia also with -- we've added more than 1,000 engineers in this region. It's not homogenous in all geographies, in all continents, but it's buoyant everywhere, including in Germany, as you will see. So I'd like to come back to this slide, which is helping us to understand our positioning. It's the third time that I'm presenting it. So there are 4 levels. It's not really a risk level, but a level of offering, when it comes to our presence with our clients. And I'd like to comment these levels as a function of the geographies. The levels where we are striving not to be present, this is what we call staffing and freelance agencies. There are also umbrella companies or work-based contracts, and this is an increasing trend on the market. Some clients in some countries would rather go from level 1 to level 3 and try to get rid of level 2 and consider that you can have people in a staffing mode. And too bad if their -- the time between 2 contracts is not managed by the company hiring the engineer, if there is no HR management. But that's okay, because it's going to be cheaper because we consider the added value is just a luxury matching in -- with engineers. For levels 2 and 3, they're rather dynamic in Europe. And they tend to disappear in Germany and they've never existed in English-speaking countries for different reasons. In these countries, level 2 never existed because the labor market is very free. And there is a kind of confusion between level 1 and level 2, where it is considered that having pools of competence of engineers and training them, that's level 2, with an HR added value and high level consultancy services, this is what I call 2 plus, is not more expensive because the labor market is free. It's not more expensive than level 1, which is purely staffing. It's a big mistake, which is not observed in all European countries. Other European countries do make the difference between 2. And engineers in Europe would accept to work in the level 1-type of position in English-speaking countries because there is no labor contract as opposed to France, Germany and other countries. And in English-speaking countries or Anglo-Saxon countries, technical assistance is staffing in the U.S., in U.K., while in Continental Europe, it is considered as high added value, and clients are ready to pay an estimated gross margin of up to 30%. Now there was a new labor regulation introduced in Germany a few years ago. It's called [ ROge ] in German. These are bargaining processes which have led to the fact that technical assistance pays a high price when it's more than 6 months of contract. And the penalties that have been introduced will not be to the benefit of the client but rather to the benefit of the employee. So it has completely disrupted the labor market in Germany, which is now with a polarization, you cannot have in the same company high quality and consultancy, technical assistance and work package. You have to take sides: it's either one or the other. So your other work package or AUG. And Alten historically was present on both levels, like all German companies. And we have all 50-50 between the two. But we have to take sides in [ Bertrandt ], for instance, which is 100% AUG type of contracts. FERCHAU, which is not a listed company, is 100% AUG contract. So we're wondering whether we're going to have 2 separate recurring -- 2 separate company because the SG&As are different or we will give up on AUG because if we do not maintain our SG&A at 12% in AUG, that is technical assistance in Germany, we will be losing money. And that's why all the engineering providers in Germany have great difficulties in generating a significant EBIT. So that's a side comment to help you understand that these 4 levels are not there by coincidence. It's really showing where Alten is positioned. And sometimes, we're obliged to split the 2 between time and material and work packages. In the U.S., we'll start level 1, like Alka has done, buying a freelance company working for Boeing. And since level 2 does not exist, we'll have to switch to work packages level, which requires a powerful technical direction, specific methodologies and tools, training center for project managers because these technical directors and project managers need to be trained. So level 3 means projects that are managed by Alten. 50% of these contracts in our facilities, 50% of the facilities of the customers' for confidentiality reason, and it accounts for 60% of our contracts, with the same margins as level 2 roughly. I don't know why, but it's a 12-year track record which has led us to see that we have the same margins. We are good at managing work packages, technical assistance and consultancy services with 10 points of profit from operations. Level 4 is not a natural service that is measurable by a 6-month or annual period. It requires long-term CapEx. It means IP, mastering some technologies that we would sell. I think that this is what Altran is doing with Cambridge and what they've tried to do with Foliage. There are a few French companies that have tried to customize studies to sell them or they're in risk sharing, i.e., they perform a study for a client on an Airbus aircraft, for instance, and say, "We are going to design, on our own funds, the design of door, et cetera, and that will be paid as a function of the number of aircraft sold," as if I was an OEM, but -- so we have to wait until the units are sold because we're -- before being paid by the final client. And all those who have done that have failed. I have -- I can't find any single example showing that risk-sharing can be to the benefits and the profits of the company, but many of our competitors are tempted because it's a way to tease and attract a client and say, "Well, I'm going to perform the study, and I will bill it." Same thing for software publishing. You publish a software regardless of the cost and you hope that your network of salespeople is going to work out and sell this. And finally, CapEx. It's a trend that has been observed in Germany and that we've observed with some of our competitors in France, and they're -- and they are starting to get some means for prototyping or even preproduction, so it's a huge CapEx that is required. And Bertrandt has invested up to EUR 300 million out of its revenue on behalf of its client, and it's going to last 7 to 8 years before it is actually amortized. And you never know whether it's been properly amortized, whether there was a return on this investment. So it's a huge administration trying to raise and assess the return investment, which is far more tedious and difficult than levels 1, 2 and 3, where you know exactly what you've cashed in every quarter or every half year. In France, there has been -- there have been some attempts by some carmakers, Renault and PSA, have encouraged their providers to have test benches that were extremely expensive, but it does no longer exist. It's very important to remember this slide because every time you hear about companies who are presenting themselves as an engineering company, it helps you to see where they're positioned. And once again, we will be present on 1, 2, 3. And we will be mixing and blending these 3 levels depending on the countries and the companies we work with. This is another slide showing us a different way, our positioning. In blue, you have research, engineering and investments for clients for the services that are sold. It could be software publishing, it could be the car industry or the aeronautics, or our mega services. Amadeus, for instance, is a big client which has developed a huge software for airliners. Everything that is designed to be sold and deployed to be on the second branch of this V-shaped cycle are those clients whom we called engineering clients. Some are industrial clients and others are not, like telcos, that would deploy their 4G and their 5G equipment in France are in this blue arrow because they sell a service. It's a telecommunication service. 70% of our business is in this sector. 70% of our business is in this blue V-shaped system. We help our clients to design and deploy the services that they have designed. That's our definition of engineering. So we are dealing with technical directors, production managers, technical support directors, deployment directors, et cetera, et cetera. And every time, we are under huge pressure because this is something that is sold already, so they have to integrate our costs in their product or their service costs in order to design and to do their pricing and their selling price regardless of the product and service. We are working with young engineers, that is this -- R&D process that is services or softwares. And in the lighter blue, we're not so present. That is that out of the 70%, there will be 65% in dark blue and 5% in lighter blue, and that's factories manufacturing deployment. That's the 4.0. It was something that did not really exist at Alten. Four years ago, we were -- they had Accenture consultants who are providing them with production and organization consultancy services where you had blue-collar workers and factory supervisors, even though the factory is -- in manufacturing sites, they had robots. It was not a design study. But today, with the 4.0 factory and the work we're doing in industrial processes and manufacturing, that is the lighter blue, the arrow on the right-hand side of this V-shaped diagram is real time control, IoT, all these things that we do master in engineering because we've done that for onboard equipment or for complex pieces of equipment. So these are young engineers with -- between 0 to 10 years of experience, who are under the supervision of our technical directors. So we have a homogenous headcount. And that's why we're very comfortable to shift from darker blue to lighter blue, and that's why some of our key clients who are ahead when it comes to IoTs and factories 4.0 have won with us many contracts, and we have won with many contracts well ahead of our competitors. Then you have the consulting functions, addressing a more experienced senior levels. That's where we sent that EUR 400 per day. In the blue side, consulting and expresses is EUR 600 and EUR 3,000 per day. But these people have a completely different set of organization -- pattern of organization, where we're not really present. We have other brand names that are not called as Alten. We are PMO world leaders, program management organizers, et cetera. We have expertise structures but they account for a small percentage of the revenue and they cannot operate with the Alten brand name because the negotiating process with our client is different. Prototyping and design is something that we do not do. It's mainly blue collars and technician. For those who have been keeping record of our business for many years, we added a [ sell ] with 500 people for prototyping. We paid to buy it, we paid for closing it and we will not go into prototyping anymore. And it cost us EUR 10,000. On the right-hand side, you have manufacturing processes. And we've started to be present on this market because the digital manufacturing side, the digital factory is what we control. It is our knowledge. We support the clients deploying and installing offshore sites, such as metro lines, railway tracks, an oil and gas platform. It's 2/3 oil and gas and 1/3 other types of operations. And that's deployment. It's not R&D engineering or process engineering, it's operational engineering. And then you have the customer support that is producing technical documents that are drafted in English. In India -- we have English-native engineers in India. Of course, it's 30% of the European costs, so everything goes through India today that are present there with more than 1,000 people. So that's the Alten core business. But -- well, this accounts for 30%. 30%, that's the yellow section. The internal requirements of IT companies, CMR -- CRM, sorry. Retail, marketing and sales, so that's all the specific type of development paid by the work or technical assistance, the making of complex software packages that are specific and that cannot be bought from the shelves on an SAP or Oracle app. So the IT director, they like to have their own retail web capabilities and CRM. We're pretty successful in the BFI world, in the retail and service world, so at the end of the day, the accounts are nearly 27% of our revenue. And then if it's in dealing with the networks, infra, cloud and cybersecurity, that takes more and more importance, so we begin to work in that. It accounts for 3% of our revenue so far. I hope that was clear and useful to help you understand better what Alten is about today. So for 70% of our work, we work in engineering and sold services. 30% is our focus on company's internal requirements. And for all of that, 100% of our positioning, 80% of our positioning has to do with digital technology. That's why for the last 3 years, I hear, "Well, that's about digital technology. All the website service companies, they all shoot for the big digital revolution." But Alten has been in the digital revolution forever. The digital transformation onboard planes, cars, industrial equipment. We started doing that before it was trendy and fashionable. Of course, digitization has been speeding up. But luckily enough, we bypass the mechanical world. We do a bit of a mechanical design, like parts of the plane or designing automobiles, but it's mainly embedded testing systems in real time. So that's for industrial equipment, but it's all digital. So Alten is 80% in digital technology. If you look at what carmakers are doing -- well, actually, they make us suffer these days. We don't suffer as much as our competitors though. And oddly enough, it's not the car industry. It's not where we suffer the most. But generally speaking, the car industry is suffering. But given our very digital positioning in the engineering and industrial world, our engineers are really multipurpose and we didn't have more engineers on the bench than in other sectors. So that's the pie chart representing our revenue split. Well, it's clear-cut. It hasn't changed. It's identical to last year minus -- plus 0.5%. Each sector weighs about the same in Alten's revenue. So it's pretty much stabilized. That may be due to external growth. If you make 12 acquisitions, you acquire, in average 1,000 engineers a year, well, it depends what we stumble into. If we stumble into an aerospace or automobile industry, it may have a light --slight impact. But most of the sectors recorded the same organic and external growth rate, so nothing has changed really. And Alten's major strengths is that we've always been multisectoral. We've always worked in many different sectors. We didn't want to be too highly dependent on one single sector. And experience has shown, it was a great idea. We suffered less in periods of crisis. And in periods of growth, we were able to juggle from one sector to the next. Like prior to the Internet bubble, the years 1997 and 2000, 40% of our work was in telco. We didn't do much car or aerospace industry, and look where we are today. So our engineers were able to shift from one sector to the next because they are multipurpose. Now I'll go quickly. I'll go over each sector to give you just the information we'd like to share with you, but then there will be a Q&A session to Bruno and myself. Okay, the car industry, there was a warning on quarters 3 and 4 of the year 2019. That led us to be more cautious in terms of recruiting because of that warning signal. And for once, I'd like to thank our customers for warning us in advance. They were not that diplomatic previously. It was on New Year's eve that they announced to us, oh, we have an excess of 30% of people of our headcount. They have to go. But there, they warned us in advance. We're able to reduce our recruitment between September and December, so we were able to prepare the ground for starting out the year 2020 with a good figure in terms of our contract portfolio. Our hope is that this high caution given to the car sector, the automobile sector, because the sales have been dropping, no more subsidies that used to boost sales, but there are huge technological needs in the core industry. Imagine the car of tomorrow, connected, autonomous, the battery charging terminals, autonomous cars. We said that means huge needs. So hopefully, this drop will last only during the first semester. The time for our British, Swedish, German customers to financially reorganize themselves. Let's put it that way. Actually, we know they will be dismissing lots of workers. And then in September, the demand will be on the rise sharply. That's our forecast. Huge needs. Now rail and naval industry. That's a good surprise. Those 2 sectors were wrestling with difficulties 5 years ago, but they work up big contracts, huge investment. Naval, as you know, there are big projects in the ship industry. They stopped outsourcing to small regional companies and they went for consolidation, which was excellent for Alten. Same with aerospace. Industry 4.0, that helped us get most of the nice contracts around plant 4.0 for Airbus mainly. And in the field of Defense & Security, you can just imagine the huge needs for investment in those sectors. And our customers told us we should be ready to work much more for them worldwide. But we have to find that precious resource, real-time embedded engineers, working on really state-of-the-art equipment. That's long -- I mean, a short-term period of development, like 2 years, so there will be great pressure on us. They will need to order much more safety, security and defense equipment, and we have to decide what risk level we are willing to accept. Do we accept to be paid with -- on a lump sum system or not? You have big ones: Telus, Safran through Defense & Security, the former Sagem. But the market is there. Anyway, we have to be cautious and be aware of not taking too many risks. Now the energy sector. It's been pretty tough. We've reached the bottom in oil and gas. Now investment is picking up, resuming. Nuclear, we continue to develop to grow. Things are getting consolidated. That's good for Alten. And there are new projects on the horizon. Life Science (sic) [ Life Sciences ]. Now that's a brand-new sector at Alten. We decided to have a closer look at this sector. Less than 6 years ago, we were at 0 in that sector. We thought it was not for us, but we realized the life and science sector need lots of engineers, not biologists, not physicians. We don't have anything to offer on that front. But in the final part of a biological study of vaccine, a new drug, new medicine, you have a big chunk of BI, business intelligence. We have IT engineers thus working on studying data, data collection over 10 years. You have all the regulatory aspects and the manufacturing aspect, that's close to the aerospace. You need to get 0 default -- 0 defect because it impacts the human body. And you know the repercussions of the slightest defect. And in a while, I believe we'll be also working in the world of beauty and cosmetics and the agri food industry as well where we're not present at all. So we have good prospects for growth, in that swiftly consolidating growth. Now telcos. All the licenses have been allocated for 5G. We are present. We're even leaders in France. Unfortunately, we're not very much present in Spain, Italy and Sweden. And apart from those countries, we haven't set foot on any other one. So 5G will benefit us certainly in 3, 4 countries, not in the others. But it's already pretty good. We'll try to get our own share. It's been pretty flat. You've seen with the pie chart, 14%, 15%. I hope it will help us make a move in that front knowing that the infrastructure of the 4G, 5G deployment. We have high-level support engineers that can be delocated, like the French telco operators would like that to be done in Morocco, and other foreign customers ask us to do that in Morocco. That's why it's reflected on the high end, higher number of our Moroccan engineers. Very good level engineers. And you can add to the 4G, future 5G tower and platform administration. And then you have the BFI service and public sector. Of course, it's not our favorite ground, but still, what's called enterprise services, that's IT services for internal needs and customer-oriented, we keep the same headcount by and large. There was a stop though, in the BFI investment, but it should pick up. Actually, the web marketing, digital world, customer management, sales management in the retail industry. So one should make up for the other, compensate, so we should stick to our percentage and not lose ground too much. But we might record a negative growth in that one sector in 2020, but we'll need to wait for the half year to confirm that. So that's for our main markets, and then Bruno and I will be happy to entertain any question in the Q&A session. Now acquisitions. If there is one slightly weak point for the year 2019, it's with acquisitions. I will show you the 3-, 4-year targets. Organic growth. We did a bit better. We exceeded our forecast, and we'll see whether 2020 may compensate that further. But by and large, we stick to our 3-, 4-year target. It's certainly with external acquisitions that we're wrestling a little bit. We've been blamed for that in the past. It's not that we're overcautious. It's that we stick to our positioning. What's the point of buying a company that's not in the positioning line of Alten, which is pretty broad actually, as you saw. So buying out a company that works in prototyping, high-level counseling or self-staffing, we're not too good at that at Alten, right? And it was not too successful when we tried in the past, so might as well focus on what we're good at, that is engineering studies with the best engineers from the best schools and a good, well-trained technical management. So in total, here, we get 830 consultants, far from the 1,200 additional ones a year that was in our previous forecast with our 3-, 4-year plan. So it's the slight, little nuance we can bring. Now one thing I should share with you is that I'm totally reluctant to buy a company that's worth 2.5x its revenue even though you have so many EBIT points because as soon as they sell that company, the EBIT will go down. So we're cautious. We buy between 60% to 100% of the revenue, depending on quality of the company at hand to be bought. A few of our targets we couldn't acquire. One that we targeted was bought by ACA. It's good to give them good positioning in Sweden in Scandinavia. But look at the multiple of the figure of the revenue. It's scary. So we decided not to buy it when the shareholders expressed their ambitions, their pretentions. You also see fake buildups or fake consolidation moves in the world. We've seen one such buildup around small U.S. and British companies. 70% was staffing, and you had no homogeneity whatsoever. You had the pell-mell of 10 companies, all doing different things. How nice would it look like if I told you, "I'm going to buy 10 people in the U.S. at the value of the revenue on an artificially constructed EBIT meant to reach 10%"? And 1 year later, it's down to 6% with goodwill depreciation. That's never very pleasant. So it's not easy to find the right targets in line with Alten's positioning. We canvass, we look everywhere. Sometimes we find an Alten-like company, small company with a headcount of 100 to 300. In 1 or 2 months, we should make some announcements and hopefully, we'll reach our ratio of an additional 1,200 engineers joining Alten every year and in 2020, in that case. And for others, we are competing because you have an M&A in the middle, but it looks promising. I hope we'll be able to catch up on our slight delay because we do have the means and resources to achieve our goal and -- but we are the one company that buys the leads, that makes the fewest acquisitions. It's like that. Now our capital equity structure, nothing has changed there again. We are organized in the same fashion. Now I'll hand over to Bruno for the financial results, and then I'll come back to tell you about our strategy for the 3 coming years.

Good morning. So the revenue of Alten over the last 20 years, I'm hoping that next year when we'll be reporting our 2020 annual result, I hope that we will show that we've tripled our revenue in 3 years. Now international is 57% of our revenue, and of course, the headcount will go along that of revenue. Rather, it's the opposite, 37,200 engineers, 32,550 engineers. That's 88% of our headcount. Approximately 65% of our engineers worldwide since we're present in ex-shore Asia -- in Asian countries that are growing faster than the U.S. or Continental Europe markets. We have grown by 3,500 people, as you can see on this slide, between the end of 2018 and the end of 2019. And out of the 3,500 people who've joined the group, either through organic growth or acquisition, 2,950 people are engineers and consultants, 1,800 were recruited by the ALTEN Group, 470 in France and 1,300 outside France and 1,200 have joined the group through acquisitions. So the headcount has grown in a very dynamic way after a slight plateau at the end of H1. We have enjoyed the third and fourth quarters growth. And as you've understood from the presentation of our revenue 2 weeks ago, Q4 was a bit slower in terms of headcount increase because as Simon has just explained, we have anticipated a slowdown in the car making sector, so much so that managers gave reference to the time slot between contracts rather than recruiting for ex-shore centers. We have 2,300 people: 1,100 in India, 760 in Morocco; and the others are in Eastern Europe, in Romania, even though we have a small presence in the Czech Republic. These are the figures that Simon has already presented. An excellent year in terms of organic growth, that's more than 10% growth for the last 2 years, 11.2% international growth, which accounted for more than 2/3 of the total growth of the group. 28% of our business is now in foreign currencies. And ForEx impact is mainly due to the dollar -- the U.S. dollar, the Canadian dollar and the Swiss francs, when the Swedish krona went down in 2019. In France, there is no impact of the scope. All the business sectors where we are present, that are all represented in France, that is the pie chart represented by Simon earlier, is a good demonstration of our positioning in France. And they've all grown in a significant fashion. The most dynamics market are Airbus -- aeronautics with Airbus operations; the energy sector, be it for oil and gas or the nuclear sector; and rail and naval, with a significant growth, above 20%. And Defense & Security as well. The car making sector had slowed down during the year, picked up at the end of the year, with an 8% growth for us in France on this market, which is far higher than the actual growth rate of this sector because we are mainly positioned on real-time software and embedded systems. For the other industries, the other sectors, they've all grown. Life Sciences, telcos. And Life Sciences has grown slower. It's between 5% to 10%. Our international positioning, our organic growth is accounting for 60% of the growth of the area, 40% due to acquisitions. These acquisitions over the last 3 years have made -- have been made exclusively outside France. But it's very heterogeneous when you consider the various countries, and I'll come back to that on the following slide. So our organic growth in 2019, restated with number of business days because there was an impact on the first half and the second half. There was little impact on the organic growth due to business days because the number of business days was 0.4 days in total. The pace of growth has normalized at the end of the year, with 4% organic growth in France and slightly less than 10% of the international market, which means that the organic growth in 2020 will be below 10%. So this is the breakdown per geographic areas. On international markets, there are some areas that are still very dynamic, like North America with an 18% organic growth. Quite a steady growth, mainly thanks to the energy sector, the car industry. There was a picking up of the oil and gas sector and Life Sciences. In Italy, there was a steady growth throughout the year, above 20%, mainly driven by the finance and tertiary sectors, Defense & Security as well as the Industrial sector. Then Germany a positive organic growth, above 4%, which might seem very low compared with the overall growth of the group. But for the German market, it's quite an outstanding performance level. This growth rate is mainly due to the growth and the 5% growth of the car industry mainly for OEMs. Aerospace has also increased by 10% in Germany, that's -- as Airbus and the Airbus ecosystem. Diversification is underway in some sectors, I'm thinking of the intermediary industrial sectors, and this is now bearing fruit since the growth rate is 20% even though it's only 5% of the total turnover in Germany. And the finance centers -- sorry, sector were -- has been declining by almost 30%. Scandinavia, you will see in the appendix, which has been added to this presentation in the final pages, shows that the slowdown was significant in the second half. It was a 6% growth throughout the year, but last month, we're showing some decline, particularly for trucks and cars. The other business sectors have been growing, even though the telcos, which account for 10% of our turnover in this area, have shown a slight decrease at the end of the year. Spain, approximately 6%. All business sectors are on the rise and it's homogenous. That is a growth rate between 5% to 8%. Asia Pacific, it's always a very high growth, particularly in China, in India. U.K. restated with oil and gas would be 20%. Oil and gas in the U.K. only accounts for 5% to 6% of our revenue and is still declining because the comparison base of last year was higher. But all business sectors where we are present in the U.K. have been on the rise. That is nuclear, aerospace and car industry. They've all been growing in a significant fashion. Benelux, so Netherlands and Belgium, they've grown, but it's more moderate. In the Netherlands, it's mainly due to our positioning in the electronics sector with [ ASML ]. And in Belgium, some business sectors have been growing in a significant way, while others, like the rail, have been growing. Like the rail and the car industry and the tertiary sectors have been declining in Belgium. So there is no such thing as a general final conclusion for Continental Europe, where you see there are many variations from one country to the next. Now the income statement. The operating profit has increased faster than the revenue, plus 16%, with 2 digit after the figures as opposed to 9 87 last year. A negative impact of the number of business days because there were 0.4 fewer business days and the 25 bps slower for the gross margin. But the gross margin has increased by 45 basis points because there was a positive increase of the price engineer cost mix and projects, so plus 45 basis points. So at the group level, it has increased by 20 basis points. This has helped us to offset managerial costs, which were higher on the international market by 10 points. And also, we've taken on new premises in Boulogne to absorb our growth, so the operating profit is stable at 9.9%. Now the share-based payments, we have one plan of 3 shares per year. That's a cost of EUR 5.2 million this year. The forecast for the stocks, which were given in 2019, was also for EUR 5.2 million for 2020, to which we have added -- we have to add the 3 shares for 2020. It's an IFRS charge which doesn't have any impact because these 3 shares are issued when they aren't granted. They are performance-based. So it's based on a series of criteria defined by the Board of Directors. Nonrecurring profit is higher than what we anticipated at the end of the first half year, minus 17.3% this year, which is quite unusually high for Alten. It's one of the highest we've ever had in our records because usually, it's very low. We tried to have as much in our EBIT as possible. What does that include? Well, it includes fees and restructuring costs due to acquisitions, EUR 2 million this year. Costs that are due to audits -- social audits made by the tax authorities in France and in Italy; some adjustments of impairments or earn-outs, which were done after the allocation deadlines. Now it's not considered as nonrecurrent now. And the extraordinary goodwill depreciation on one impairment, which is for one company based in China, for which there was -- we've reported a significant decrease in the business level at the end of 2019. Outlook for 2020 are not good for this company. It's almost exclusively operating in the car industry with middle-sized operators. There was a slowdown in January, which was mainly due to the coronavirus and the outlooks for 2020 are not clear at all. It's very vague because we don't know when people are going to resume work, even though it's a company with only 150 employees. So we've been very cautious and said that we needed to consider the situation as it were. And therefore, we have a depreciation of goodwill for this company, which is only EUR 4.8 million. We provisioned an earnout, which has not been paid -- which could not be cancelled. But the economic and the business impact is that it's EUR 5 million, exactly EUR 4.8 million for this particular company. So that's for the nonrecurring profit. Now the operating profit after that is 9.1%, EUR 238 million. The financial income is rather low, and I'll come back to that later on. Income and tax expenses, EUR 77.3 million. That's 31.6% income tax rate. It was 28.1% last year. This is of the fact that the tax credit on research is now subject to taxes. So automatically, it has increased our tax rate by 3%, and therefore, the corporate tax has increased proportionally, as a function of our business in France that is slightly less than 2%. It should go down again, and we're still waiting for this to be at 31% in 2020. So it should be actually 30.5% corporate tax for 2020. It all depends on what the government is going to announce now. After the equity needed for minority interest, EUR 6.7 million, the net income for the group share is EUR 164.2 million, that is 6.3% of the revenue. Carrying on with the financial income. It's extremely low. The IFRS 16 impact accounts for 50%. It's a noncash impact on the financial income. So in reality, our financial income is very stable. The cost of the financial debt is negative by EUR 1.3 million, even though our cash flow was positive at the end of the year. We have a debt because of the working capital requirement, which is the lowest in June, but it's still limited. And the cost of the debt is rather low. It's nonsignificant for the group as a whole, EUR 1 million the ForEx impact and other financial income, which will mean charges because of the earnouts and retirements, premiums, provisions on shares that are very small companies, minority interests, companies that have just started. So a stable financial income. Now per geographic area by region. Between 2018 and 2019, our operating profit has remained stable. In France, in spite of 1 fewer business day, but was a 70 basis points for the group. But it's in France that the price/mix of the engineer and other gross margin element is not favorable because our gross margin has increased by 90 basis points, so that's plus 20 basis points, which was offset by an SG&A change by 20 bps as well or basis points, that's the new premises, the new facilities I've just mentioned earlier. Managerial costs in France are stable. I don't know whether you remember, but we had started an important initiative to restructure some business compensation and recruitment. And since then, the sales and recruitment costs, that is the managerial and SG&A costs, have remained stable in France. On the international market, the operating profit on activity has increased from 8.9% to 9.1% with variations according to the regions. In North America, even though this margin has been impacted by the car industry, where there was a pricing impact, the margin is still above 7%. In Germany, situation is still difficult with the margin, which was impacted by the car industry and still impacted by the AUG process with the pressure on prices, profit on activity, which is below 5%. In Sweden, this margin is still approximately 8% in spite of the price, pressure on prices in the car and the truck industry. In Spain, the competition is very difficult. So the gross margin is lower than in other countries, but our operating margin today is still standing above 8%. And in Italy, Belgium, and the Netherlands are those countries where the gross margin is higher than in other continental Europe countries where the EBIT or the operating profit on activity is, in some sectors, higher than 12%. So all in all, the operating profit is 9.1% with a standard deviation, which is rather wide. So the finance -- the balance sheet now. There's little to be said about it, except that we have included IFRS 16. That is the leasing equipment, which is to be included and factored in. On the assets, on noncurrent assets, it's mainly goodwill, except for the rights to use EUR 174 million, which did not exist in the past. The goodwill goes up as we acquire companies. Current assets are mainly the customer receivables and the cash and the cash equivalent of the shareholders' equity of the liabilities is EUR 1.1 million. EUR 176 million, there were EUR 135 million last year, plus EUR 40 million, which is due to the leasing of a new facility in Boulogne, liabilities due to our customers as well because there are liabilities to be factored in as well as the financial liabilities in some region. Our net cash which is EUR 73 million. Gearing is at minus 6.7%. So the cash was EUR 12 million -- EUR 12.5 million at the beginning of the year. So a positive cash flow, as announced in September, when we presented our half year results. So here, you have the cash position, bridging the passage from 2018 to 2019. The free cash flow stands at EUR 160 million, that's 6.1% of the revenue, the free cash flow, practically doubled versus last year. We've neutralized the IFRS 16 impact in the free cash flow so as to make it more legible, economically speaking, because the accounting interpreting of that is nearly impossible. And visually, it's clear with that pretty yellow color, highlighting the figures you shouldn't take into account. So free cash flow, EUR 160 million. Financial investment, that's mainly plus EUR 1 million, new deposits and guarantee to related companies. The rest, of course, being -- well, concerning the paid earnout, EUR 16.2 million, and the balance, the price of the securities of the acquisitions after we've paid for them totaled more than EUR 55 million, devoted to funding external growth in 2019. And surprisingly, the dividends, EUR 1 per action, EUR 33.4 million. The other financing flows are negligible. So we finished the year with roughly EUR 75 million in cash. Now let's see them on the free cash flow briefly. So the operational cash flow is above 10%. It's directly proportional to our revenue minus the impact of IFRS 16 and the EUR 77 million of taxes paid, EUR 18.8 million in working capital requirement variation. Intuitively, you might have thought that this variation should have been higher. But as you know, as I explained to you, we actually measure a variation on the flow. It's the -- we have to look at the customer accounts between the end of 2019 versus the end of 2018 because the growth slowed down slightly at the end of the year. The customer count is not as high as it should have been, and we have to clean it up in order to measure the flows that are only connected to the companies that were within the scope at the end of last year. So this, of course, we've been growing, but the customer accounts didn't grow proportionally. We have to look at the organic growth Q4 over Q4 to measure that more finally. Organic growth cost us EUR 66 million in working capital requirements. The DSO went down from 93, down to 92. Well, this is not a sufficient effort because, Alten's DSO is always a pretty high number, above 90 days always. Nevertheless, you have mix effect. Due to the mix in some regions, the DSO is very high. When I come thinking of Italy with the DSO above 60 days -- above, sorry, 160 days. And then, we mainly work with big industrial customers. That's -- our positioning in the industry world is 80% of Alten's customers. And the industrial world doesn't pay well, let me tell you, including in countries where we should pay quickly. If I look at Germany or the U.S., you may have a DSO above 90 days because we're a service company and the customer pays only after due acceptance and due process of orders and the rest. If we work more in the tertiary sector, the DSO in our mix would be lower. But thanks to the DSO, we were able to improve our working capital requirement by more than EUR 7 million. We've been leveraging the corporate tax credit. We've asked the government for some reimbursement. So that's the CICE, Corporate Tax Credit. It was reduced by EUR 30 million, down to 0, and labor debts, social debts increased by EUR 11 million. That's directly connected to our business, and that accounts for the change in the working capital requirement, didn't change much, so we can get a high free cash flow. CapEx is 6 -- 0.7% of the group. Our standard is between 0.8% and 0.9%. And also, we had to add 3 million additional CapEx for our new offices. So now, let us focus on the IFRS 16 financial impact on our consolidated income statement. I'll try to make it as digestible as possible, showing you the balance sheet income statement and financing statement. Assets, EUR 74 million for rights of use and EUR 74 million debts in our liabilities. Income statement, a negligible impact, EUR 0.4 million [ at least ] the impact on our results and the financing statement, as I told you, we've managed to neutralize the incidents, no impact on the free cash flow, no incidents on our free cash flow. Now our debts account for EUR 77 million at the end of the year, mainly real estate close to 90%. 10% being the rental of cars, mainly in the countries of Northern Europe. In short, summary. This was another year, a very strong growth, a 2-digit growth. The operating margin of activity is close to 10%, despite ongoing structuring efforts. Our SG&A level has been pretty stable over time. We try to structure up the group as we grow to ensure future growth. The free cash flow nearly doubled compared with 2018, despite a high organic growth. Very good control of our WCR, working capital requirement, and low CapEx. So our organic and external growth was self-financed and we began the year 2020 with EUR 75 million. And now I hand over back to Simon, who will now tell you about our group strategy for the years to come.

Thank you so much, Bruno. So for the few coming years, I'll try to share with you what we believe will happen in the 3, 4 years to come. And surprisingly, we shall not attempt to broaden our positioning around high added-value engineering. Our young engineers provide technical assistance in high added-value countries. We should avoid temptations that never paid off and go through other types of offers. Of course, we will strengthen our leadership in engineering, design and process engineering with beautiful prospects still in France, and that we should consolidate that in terms of critical mass in some countries. And we want to open up to new positionings that are emerging, matching our offer, particularly in process engineering and IT services and enterprise services, that's getting closer and closer to the engineering world, the making of -- the designing of complex software packages. And I would add to that, we'll try and consolidate this sector of enterprise service as well as the life science and connected sectors that I mentioned earlier. Thirdly, in terms of offshoring and near offshoring, we have 2,300 people in 3 countries today, mainly. Possibly by December 2020, we might have 4,000 such offshoring engineers, but we're not sure of reaching that. Customers are really demanding. They put pressure on us. But given that we're close to the design world, design phases, customers turn to us for globalization, work packages and facilities located near the customers' site. That's why our development centers in France are in the Paris area for the car industry and telco, even if we have an offshore center in Morocco, but we need to be close to our customers. Same thing in [ X ], we're close to customers like Eurocopter or Amadeus. Same thing in Toulouse, Southwestern France, we are right next to Airbus facilities with 2 buildings. So we'll do offshoring. And if we have 5,000 engineers, we'll be ready to go. We are working with our Indian entities for this target -- towards this target. And actually, we're moving on swiftly, more so on the local demand than on the offshore market, which is a good surprise. Now external growth is still focused on international development. We might make though 1 or 2 acquisitions in France, if we find companies in sectors where we want to move more swiftly or in sectors where we're not very present, like life science. And then, we want to reach the critical size of 2,000 consultants to deploy our HR and technical organization model in all the target countries. And we don't want to go, to set foot in countries where we cannot hope to have 2,000 consultants because that's what it takes to deploy our model for the training of engineers, project leaders, organizing the project managers, technical managers, turning them into business managers and the rest. So that's our model, the Alten model, and we cannot do that if we only have 500 consultants in a country. We need to reach that critical mass of 2,000 consultants in each country where we operate. So that's our positioning strategy. Here are the figures. So 2019 is behind us. We have a new 3-year plan 2022, knowing that we've been pretty cautious when it comes to our possible acquisitions. We wrote 3,500 and 6,000 in organic growth. Of course, we'd love to buy 5,000 people that would bring us to 43,000 or so. It will depend on our acquisitions. I think 2020 will allow us to reach our 1,200 per year. It's in the pipeline. I hope we can get ahead, though, but we'll adjust on the basis of the external growth rate, on which we're cautious. So that's for our future prospects. And in the light of everything we told you and everything we can observe in the business world, we are pretty confident. Q4 2019 was -- it's been pretty cautious in terms of recruitment, but we should reach and even exceed our target and keep an EBIT of around 10%. Thank you so much for your attention. And now Bruno and I will be happy to entertain any question you might have.

Gregory Ramirez. I'd like to go back to the various components for the operating margin in 2020. What will be the pluses, the minuses? And despite the situation with the car industry in Germany, for example, can you plan on an even slight increase of the operating margin?

Well, there will be some mechanical effects. Two such effects will compensate each other. Hopefully, it will be a simple, straightforward and mathematical as what I'm going to tell you. We hope to slightly improve the potential gross margin because of the number of days in the year, 0.4 points. But we lose through the slight increase in the number of engineers on the bench. So the mix of the 2 will not generate the potential increase of our margin. Now regarding the specific gross margin in each country. I believe that in Germany, except if we go for other activities with cost restructuring, integration and acquisitions, some are in the pipeline already. But normally, we expect a marked -- markedly improved result for the year 2020 in Germany. For the other countries, I would tend to say it will be pretty homogeneous. You may have some marginal pluses and minuses depending on the country, maybe a little minus in Sweden, a little plus in Spain, and that will be set up. It's impossible to predict. There will be also the incidence of China, what's happening in China. Our 800 Chinese engineers have been homebound for 1 month. They start resuming work very slowly, but their customers are afraid to welcome them. That will come with a cost, of course. Nothing major. I mean no major event to be expected. We just have to look at what's happening in the automotive world. That is -- that might be an unknown with our plan, either to go as expected, a little trough and then resuming in September or it keeps going down until September. Then it will not look very nice in terms of growth but not in terms of result and financial income because, for that, we are preempting what's going to happen and anticipating on things.

[ Eric Blad ] from [ Finance Konnekt ]. Two things about your presentation, which, by the way, I've found remarkable. When your engineers work for a flat rate, is it something growing like in what we've seen in the blue section on your slide? And what about the churning? Churn. Churning. It's been problematic. It's been a problem over the last year. Where do you stand? And the deconsolidating factoring. What about it?

Okay. Now about the flat rate activities where we're pretty obsessed with ranking. We divided the business in 4 levels. And in the work package box, we have no less than 3 different levels. So you have actually flat rates that carry no risk, others that carry some risks and others that carry high risk. We call that work packages because we decide how to structure up the management and the teams, even logistics and equipment based on the request of the customer. It accounts for nearly 60%. In that 60%, we consider that you have 10% of flat rate contracts with the risk. I hinted, it was more in the world of defense-related projects. You have shorter, highly technical projects and the customer wants to shed the risk on to us. We are careful with that. It's like systems to control a pilot drone. Once integrated in a complex system, it's going to be difficult to identify the culprit if it doesn't work. So it always leads to incredible complications. We don't like those. The other flat rate contracts that concerns the service platforms and competent teams that we manage ourselves, or flat rates with a given task and split divided into batches of work. Those are low risk and they bring the same levels of margins.

[indiscernible]

The question could not be heard. No microphone. Well, that's how it always starts out. It depends on the degree of maturity of the client consolidation. First, the customer cannot call for tenders with flat rates, if they don't have people who are familiar with their environment. So first, they globalize all the suppliers and they divide them like 3 contractors for powertrains, 3 for logistics and organization and the rest and so on. And once all the outsourcing is split into 3 companies, they put them together by project typology and they ask them to work in work packages. In France, it seems we have reached a balance at about 70% split. We still have to conquer, transform and globalize and helping our other European customers to reach that, if they haven't reached that level of maturity. Germany has shifted overnight with all the penalties that come with that to force all industrialist to shift to a work package mode immediately. But all that should be stabilized eventually at probably 70% but will never reach 100%. So that was your question about our flight rate activity. Yes. Now the churning, the personnel turnover. The trend is pretty much under control. It's about 27%, 28%, the churning rate. There is a minimal and a maximal rate. The minimum rate, we evaluated at 20%. Below 20%, it becomes a big problem. I can tell you why, and above 30%, it gets problematic for other reasons. When you're below 20% of churning rate, you have the aging of our internal population while you do not increase the prices you charge your customers. So our company's margin is eroded. We like to train and keep managing engineers or engineers that will become managers of a business unit. And the average age or the number of years of experience of our engineers should be 3, 4 years. The average age is 30, 31 years. Above that, each time you increase the average age, you lose 1 EBIT, 1 point in EBIT. So we must make sure we have a minimal turnover. And we don't want to be subjected to very high turning rate above 30%, which we -- well, we suffered from that in 2017, it was pretty hot. People came -- coming and getting out immediately. They would stay less than 3 years. We had to invest in well-being, in our relationships with engineers, working on that community. And we've heeded what young engineers wanted. So we start at 27%, 28% is good. Not to worry. Now in the specific car industry world in Europe. In H2 and January 2020, as you can imagine, that churning rate has gone down, but it's still above 20% in the digital world because our engineers are multi-purpose and can work in other sectors. There is no deconsolidating factoring.

Emmanuel Parot, Societe De Bourse. I have 3 questions. First, the margin in Germany at 3 years, provided that things get back to normal in the car industry. What profitability level do you expect in Germany? And how do you mean to reach that goal? Second question, recruitment. Well, we are halfway down quarter 1. Are you speeding up with recruitment? Or are business managers still cautious with hiring new engineers? And then, the cost of tax controls with the CIR and the CICE, corporate tax credit. Have you paid all -- everything you do -- you owe there?

I'll hand over to Bruno about the tax payments, the corporate tax payments and controls because it hurts too much.

Okay. So your question about Germany. There are 2 ways of working. You have the AUG technical assistance model, which is considered as having no added value. The customers don't like it. They penalize it even though the engineers in HR modality are identical to what we have in France because those engineers were still -- were already with us 3, 4 years ago. So it's not a -- they're not higher than in freelance staffing model. They're still profitable for our company. But because of penalties, the margin is eroded, so that half of our German engineers that we converted into work packages. Today, we're losing money with those. So out of the 3,000 engineers in Germany, you have half of those, 1,500, making money and the others losing money. And it's not earning a bit and losing a lot. With work packages, we earn, well, 1 point on the EBIT, but we lose a lot as well. 4.5 bps -- basis points lost in Germany and 5% or 6% lost or basis points lost in technical assistance. So we need to quickly split those 2 businesses. Either we keep only one, the turnover would go down, but we would be back to an EBIT of 10%, or we still do both. And with the AUG staffing mode, but we would change their work contract to reduce the number of engineers on the bench or sick leaves. And the rest of it, and the engineers will still get their bonuses. And then we could go back to a 10% EBIT as well. I believe it will take 2 years if we go the right way about it. So I cannot really answer your question as of today because we're really thinking hard. And also in view of 2 potential acquisitions, we have, we shall have to decide whether to keep both businesses, both activities, hoping to get a 10% EBIT, but -- or do we keep only one of those activities? We can reach 10% EBIT quickly or our turnover will go down by 30%, 40%, as just as quickly, or we want to keep our turnover or revenue, hoping to control the AUG model associated costs. So that's for Germany, with nice prospects, though. Germany is not a market that's doomed to lose money. It's just that it drastically changed due to external conditions over the last 3, 4 years. Now for the hirings of 2020. As I told you earlier, we are cautious with 2 sectors. Other sectors, we have no problems with. Geographically, they're not located in the same areas. In the car sector, we don't have that much worry about Germany. In contrast with France, we don't have a warning on German carmakers. We just have to manage what I explained earlier. However, France, Sweden, England, probably the U.S.A. also because we've made a good penetration in the automotive world around Detroit but we'll be very cautious. We are cautious. So that's bound to have an impact in the overall hiring rate. The car industry accounting for more than 20% but there is also the service and tertiary world, BFI, retail world. We're cautious with banking and insurance, which accounts for half of that. So it's nearly 30% of our revenue, on which we'll be very cautious when it comes to hiring new recruits. So we'll be just as cautious with our forecasting of organic growth for the year 2020, and we'll wait and see how it turns out as of April or May to see whether we should start hiring again.

The question on tax inspections is not only for France. It's France and Italy. EUR 5 million for France and the remaining amount for Italy. You're mainly talking about social contribution inspections in Italy. That's something we had to deal with in France a few years ago, how we were covering the travel expenses. We have provisioned the amounts that are currently disputed with the authorities. And the Italian authorities are scrutinizing this and they are under the scrutiny of the whole sector because it might apply to the whole sector. So that's roughly EUR 3 million. For France, it's the crédit impot recherche, that is the tax credit on research. The French tax authorities were not in agreement with the rights granted to Alten being granted this tax credit, including tax credit on its equity. We disagreed with the French tax authorities because it had been approved in the past years. And nothing in the legal text says that we could not perform our own R&D operations. It ended up with the negotiation with the tax authorities. We had to pay, nevertheless. The legal basis for that is quite shaky, and they're aware of it. And so we eventually -- we reviewed some projects and see whether they were eligible or not. On inspection issues, the Ministry of Research was commissioned. Some [ 62% ] of the projects were eligible. So that's a statistical rate, which seem to be applicable to Alten and others. And we put an end to this. And you will know that the projects that were challenged would be difficult to be approved by the French authorities in 2015, 2016 and early 2017 because as from the second half -- the second quarter of 2017, Alten decided, was no longer approved for this tax credit. It was only one subsidiary, but not Alten as a limited company. At that time, we were not -- we did not have the final opinion of the tax authorities. So they couldn't impose any other taxes on those. So they had to use this as an argument. That's for the years '15 and '16. But so far, we haven't come to any conclusion with the French tax authorities.

Laurent Daure from Kepler Cheuvreux. I have 2 questions. First of all, about the 2020 organic growth. The latest call, you said maybe 8% of organic growth. What is the assumption? You've made an potential risk and then the gross margin for 2020, the negative impact of the utilization rate. Is it due to China or you're very cautious in your recruitment? So I do not understand why such statement.

Now in relation to the car industry, as such, the slowdown in the first quarter, which was announced by our client meant that earlier this year, there were some changes in our headcount, and mobility of engineers was such that some of them were allocated to different projects or the turnover was different. So there were some consequences. There was an aftermath with a slight increase of the number of engineers on the bench. This was where they're well-controlled as opposed to the finance and insurance sectors where our clients didn't inform us, and this sector is almost 10% of our headcount. And this is observed in many countries. So the churn rate might be 1, 1.5 points in the first quarter. Some of our competitors were not in the high [indiscernible], where they have mobile engineers, have a difference of 5% compared with 2018. So 1% difference is something that we could be happy with. So there is an impact due to the car industry. And I'm hoping that this will be offset because in 2020, the number of business days will be higher than in 2019. You know there is always a silver lining to a problem or the opposite. So that was for the questions. And then, there was a second question?

With your guidance in terms of revenue and the growth with the car sector.

Well, we consider our headcount variations when it comes to the growth outlook. You have the number of engineers between December '18 and December '19. The average value -- the average tells you about the actual revenue for 2019, where it linear, a straight line between January and December, but it's not exactly like that. Sometimes, you have a few bumps on the road but it's almost a straight line, where in the second half, it's lower. We know how to calculate the mean headcount for 2019. We know what is the onboard or the onboard headcount and growth for 2020. For the same headcount, it's Page 4. You have 32,000 engineers. We could compare this with 29,000 in last year, the worst-case scenario with the same headcount. So that's 4% to 5%. So in the worst-case scenario, if we have the same headcount as -- for 2020, as of January 2020, it will be 4% to 5%. And of course, we're hoping it will be better, then the headcount will increase by 1,000 people, not 3,000 or 4,000, like in the past. So it will be 6% to 7%. And then you have to add external growth to this. That's why we're hoping for 5% organic growth. If it's 4%, it means that the headcount of January will be lower. At the end of the year, it's 5. It's the same headcount. And then, it's a higher percentage, then it means the headcount is higher. As usual, we have little visibility in February. We'll know a bit more in May. We'll be better informed in May because there were good news last year, and I said that all the indicators were in the green, and this is unprecedented. While I'm seeing here that there are a few lines that are in the orange or amber color, so I would be cautious and say 5%.

I have a question about the U.S. market and then a second question about electric cars. The U.S. market is your leading market abroad. But in terms of revenue, it's very low compared with the huge potential of this market. I've observed that in the aerospace, Boeing is not in your pie chart. And in the car, the car-making industry, General Motors does not appear. You have Ford. Maybe it's Ford Europe, but not Ford U.S. Now the outsourcing model of R&D, which is quite successful in Europe, is it something that can be transposed to the United States? Or is it that the industrial tradition or culture in the U.S. is so different, that it doesn't work? Then with the recent problems at Boeing, there was a criticism on the R&D policy of Boeing, which was said to be arrogant, and there were some changes in some of the management team members to Boeing. And I'd like to know whether relying on outsourced providers, such as Alten, does improve the R&D capacity, the internal R&D capacity of companies in the U.S. market. Then my question about the electric cars. You've said that there was a slowdown of your business in the car industry, in the car sector because the traditional powertrains were changed to the benefit of electric powertrains. Now once that we've moved to the hybrid cars or electric cars, does that mean that there will be less work for your companies?

Well, for the U.S. market, you are right in your conclusion. It's true that the labor market is very free, just like in the U.K., and this has resulted in the fact that companies will staff in engineers. There are interim companies that are specialized in engineering services, and they do not rely on technical assistance. So it's difficult to capitalize in the United States, if you do not have up to 800 people in a given city to offer work package to a local industry. It's quite surprising to see that in the United States, you do not have any company with more than 1,000 employees providing more packaged services. The only cases where you observe work package-type of contracts is that there are some tasks that can be performed in India for financial reasons. The work package, which could work with 10,000 people in the U.S. market is very difficult to implement because we do not have any technical division in the U.S. We don't want to go on the staffing mode because they do not want to move to work package. So we do provide some technical assistance with an added value in the U.S. In North America, we have 800 -- 1,800 engineers. Alten is being felt as a company with an added value. We've started to come up with a few work package contracts and our U.S. clients have appreciated it, but we're not there yet. We could potentially have 5,000 people, just like that on the U.S. market. But there are many engines that are offering work package contracts for everything that can be delocated as an offshore service in India. In the U.S., they speak English, in India as well. So it's far more advanced than what we could have in Europe, if only because of language. So maybe we can shift to 3,000 to 4,000 people. But you have to jump. It's jumped from Level 1 to Level 3, without going through Level 2 or we directly shift to offshoring, and we will certainly go for it. We're hoping to have 5,000 engineers working for the U.S. market, and maybe some 1,200 of these engineers will be in India, and the remaining numbers will be in the U.S. Now when it comes to the U.K., we were faced with the same problems. There is no such thing as a British company or based in the U.K. that would have more than 2000 engineers, providing work package contracts on the U.K. market. Does not exist. It's only through interim agencies, and companies do not outsource work packages. It's a staffing-based contract that we observed. The difference with the U.S. is the fact that we're close to Paris. Two hours with the Eurostar, you can send out your technical directors. And we have work -- sold work package contracts to big clients in the U.K. because they knew us already, like the Thales and the Airbuses, and there was a ramping up, which was quite significant. We went from 0 to almost 600 people with the work package contracts, with a high added value on the British territory, without even considering any offshoring contracts. And they're very happy. So we think it's going to be the same thing in the U.S., but it's going to be more difficult to control and manage. And that was for the U.S. and the U.K. Now regarding car making industry. There is, indeed, a decrease in the demand for traditional powertrains. There is less investment in conventional engines and there is a change in the economic design. Those who are going to suffer from this shift are those who are in the mechanical sector. But there are new needs emerging for these cars. Security systems, security items and all the exogenous instruments that are needed for these autonomous cars, and there are new players coming up on the market. Those are partners of OEMs or carmakers today and we need to be positioned in this new landscape of the car making industry. And fortunately, we're not in the traditional powertrain sectors. It's for everything that comes onboard the vehicle and all the IT real-time embedded systems where we need to be positioned. And the investments could be similar, but there will be a shift in the profile of players.

What about the Boeing?

We don't work with Boeing at all. I'm hoping that it's going to never happen to Airbus. Had it happened in Toulouse, it would not have changed our workload. Quite the opposite, actually, because they would have needed more studies and assessment. The fact is that an such an event is not going to reduce the work volume nor the workload because then we will need to be positioned to perform additional studies for them when they're faced with the -- such event. I don't know whether a car is going to be able to shift its contract in work packages for Boeing with 2,000 engineers there. And I'm sure that Boeing is interested in work package-type of contract, but nobody is offering such contracts on the U.S. territory. And shifting from freelance to work package-type of contract does not bring in the technical direction that you need to back it up. Thank you for your questions, and you're kindly invited for a drink in the room next door, where we shall entertain more questions. Thank you. [Statements in English on this transcript were spoken by an interpreter present on the live call.]