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

Good morning, ladies and gentlemen. Welcome to the conference, Alten 2020 annual results. Working with you this morning, coordinating the call. Please observe, this call is being recorded. [Operator Instructions] I'll give the floor now to Mr. Azoulay, Chairman and Chief Executive Officer, who'll begin our session this morning. You have the floor, sir.

Thank you. Good morning to you, one and all. Thank you for taking part in this call, an unusual circumstances for the presentation of the 2020 annual results. I hope you're all doing well and that our next meeting will take place in person. We can, at least, be hopeful that will be the case. During our presentation, I'm going to try to summarize for you all the results for 2020 as reported. Also, the impact of the COVID crisis on 2021. I'll also talk about a vision, which is becoming fairly clear today, i.e., ALTEN Group's overcoming this and recovery for the ALTEN Group in 2021, resumption in our business. These figures were reported revenue at EUR 2.3 billion, bringing us back to 2017's revenue figure. Unequal drops, France versus international areas, as you can see. Internationally, there was much less of an impact on France, which jumps around minus 4.4% in France, minus 20%. And of course, France will come back to the point later, highly impacted by the strong presence of ALTEN Group in Aerospace and Automotive sectors. Now to talk to you about operating profit, 6.1%. Engineering headcount, currently 29,400 engineers. 32,800 employees overall. We lost since -- or pre-COVID, post-COVID for the year, lost approximately 3,150 engineers. Usually, this figure would be a pretty good reflection of -- change in number of engineers, it's usually showing -- changing ALTEN Group's potential. Usually, all of our engineers are working on projects, whether you're talking about work packages or technical assistance. Whereas here, we have to sort of tally this up differently. They're engineers. Many of them were at extra bench, additional contracts due to the COVID crisis, with or without subsidy. Another important point to observe is to take a look at how many engineers are currently working on projects today. Overall, as you see, we lost 3,150 engineers 3-1-5-0. Currently, we've lost approximately -- well, the impact of the crisis will have been around 4,500 projects. So about 1,000 engineers are an extra bench. And the 4,500 projects that were lost, so to speak, are mainly in Aerospace and Automotive sectors. I'll come back to the point later. And we can say henceforth that we've managed to make up for this through acquisitions underway or achieved. The objective before the summertime to go beyond the situation where we stood end of 2019, and we've almost achieved this. So those are the -- those are summary overview of our figures. Let's move on to Slide #5, a map of the world to take a look at the impact by geography that the COVID crisis has had. As I mentioned earlier, the impact is mainly to be seen in France, where we lost more than 2,000 engineers, 2,290 engineers. And also, I think, a similar point regarding Germany, it doesn't come as any surprise that we find most of Airbus activities and aerospace activities more broadly in Toulouse, Nantes and Hamburg in Germany. Then, Automotive sector, a drop, but not due to COVID. We reduced -- well before, starting in September 2019, before COVID, and the down continued during COVID. This is the main explanation for the changes that you see, but beyond other areas of change. All these events so let's move on to Slide -- on Page 6. We've considered shifting the ALTEN Group's positioning and speeding it up. There are a couple of types of activity. This is how we categorize these at ALTEN. Blue, engineering -- industry -- industrial areas, design, engineering and then outsourced R&D engineering, manufacturing engineering and technical support engineering. These are the things in blue. These are specific engineering areas where out and is present around 70% of us is design engineering, 5% or 6% would be a manufacturing engineering, making up all in all approximately 75%. We say overall, 70% now due to COVID crisis and a refocusing to the right-hand side, screening yellow. Here, we're not talking about R&D departments or production as such, but rather we're talking about working with IT departments at our various client premises, regardless of activity, IT departments. They need software, they need asset software, they run customer management software, so on and so forth. Infra network cloud data, data management and so on and so forth. So this is a different target of clients. Here, we've got, of course, the ASM that are trying to capture big BPO software packages and full CRM packages and so forth. We, at ALTEN, as an engineering and design company, we try to capture what I'm showing is the central rectangle here, which is IS software and applications development. Infra cloud, these are very technical areas that fit perfectly with our engineers that we have on board. Strategically, this has been our decision. The yellow area, we're carefully targeting design, infra and cloud network as well as security. This should make up around 30% of the group, which is far from the case in many countries. Currently, in France, the percentage is well below, around 15%. In Germany, it's almost 0%. Sweden, around 0%. In other countries, we already reached 30%, even more. So we're making efforts in this yellow area here, which may mean we'll start competing with some other ASM companies. Everything we do, specifically developments, data and so forth, isn't necessarily something where there's competition. Capgemini, Atos and others aren't necessarily in this area. BPOs of 6 years, turnkey with turnkey support admin and so forth. So I hope that sounds right. Regardless, we're moving more into the yellow area here, including acquisitions and including in France. Takeaway point, this ratio ALTEN is, first and foremost, a company of engineering, over 70% engineering, 30% in IS and IT design. And even in the blue area and, of course, in the yellow area, mainly, we're focusing on digital. So mechanical and electronics aspect, even under engineering, as such, are very much in a minority. Under blue engineering, here, our focus is really mainly systems engineering, real-time embedded systems for control and piloting. So digital. Now on to Page 7, gives you a breakdown of how our activity has evolved. Of course, there are 2 industries that were hard hit. As you can see here, Aerospace, Civil Aeronautics and Automotive. Broadly, these 2 sectors alone used to make up for this group around 35% pre-COVID. Now they only make up 29% of our group. These are 2 sectors. I'm not talking of the entire Aerospace and Defense & Security, Civilian Aeronautics, as a subset, 12.1%. Ditto regarding land and navy transport. Only Automotive has gone down as much, which is also to say, we're gradually slowly but surely very much hope, as I said, before the summertime or even well before. We intend to reach, again, the situation in December 2019. Territorial breakdown of ALTEN will change, however. We'll have a lot more business activity in other sectors, such as Life Sciences, Energy, Rail and Naval, which are doing well. Also, bank and finance services, telecommunications. Diversification will be much fuller and much better distributed. That's a real strength of the ALTEN Group. We've seen this ever since the Internet bubble crisis in 2002, 2003, that impacted many sectors, telecommunications and so forth. The 2008, '09 crisis mainly impacted IT services and finance as well as automotive. 2012, automotive as well, that was a crisis to a lesser degree. But broadly, we can say that thanks to this multi-sectorial footprint that we are very sound -- on a very sound sustainable footing. That's not the only aspect though. Our engineering positioning, our basic systematic refusal to work on other areas, such as high-level consulting, it's another business line, or providing level 1 or 2 technical support, which aren't in line with the population of employees, we manage with engineers between 0 and 10 years experience. So all of this helps ALTEN continue to be highly sustainable, long-lasting company. Let's move on to Slides 8 and following. Just a quick comment on the various sectors as such, going through them one by one. Page 8. To repeat, Automotive was very hard hit and started well before the COVID health crisis. There was restructuring cost cutting as this often happens before resumption in business. So the rollout of this strategy is by the carmakers, decarbonization, electrification of vehicles and so forth. So we're expecting a resumption recovery at best in June and after latest toward the end of the year, Automotive recovery. We're already excited to see the preliminary signs of that. We've reached a trough, and we're very hopeful -- we believe a good resumption recovery should take place before the end of the year. Now I move on to Rail and Naval. There are lots of new projects that were begun. Submarines to be exported by the Navy, modernization of various other vessels. This was something not very developed in here, a pace. And we're also seeing developments in new countries, such as Australia. Let's move on to slide -- Page #9, Aerospace and space, civil aerospace. Firstly, unfortunately, I hoped, of course, that we did have somehow -- there might be a recovery before the end of the year, but you're all familiar with the announcements by Airbus and Boeing's difficulties. Our basic assumption here is we don't expect any recovery in this area before 2022 and even 2023. Nevertheless, we've reached a low point now. We're seeing a very, very slight uptick, nonsignificant. So we're not concerned. We've reached the trough. It can only go up from here. There's a great deal of pent-up -- potential for growth in a couple of years time, not 2021 and maybe not September 2022 either. On to Defense & Security and space. These 3 sectors, which suffered a few years back, then grew in market share, and we're going to see that our clients are growing in this area. This is a good thing that offsets difficulties in Aerospace, more specifically. Move on to Page 10, which is Energy. First of all, Energy, we're very present. Firstly, regarding oil and gas, without engineering offices locally platforms supervision, platform architecture to operate to the engineers, local. There was a slight dip here. We can do the drops in oil prices. Regarding nuclear, our portion is buoyant. Renovation, security and plant dismantling, these are opportunities for new projects. A lot remains undone. We're far from having tapped into all the potential we can get in the Energy sector. Under renewable energy, we're not very present. Distribution and energy transportation, we're not very present either. So here as well, there's a great deal of potential growth that we can tap into, mainly outside of France, for the time that we're mainly present in France. Life Sciences, our strategy of presence, which we began 6 years ago now. We got over -- well, 8.7% of our revenue in Life Sciences. We had none previously, almost. If you're thinking of pharmaceutical laboratory support, regulatory projects, data processing, this is all work for engineers. Think of manufacturing as well that requires engineers. We're talking about cutting-edge processes as we're familiar with from a space work. Now there will be further new projects in this area. There are many emergency projects due to COVID, which means this bodes well. We think it's a great deal of potential for growth as well here. Now let's move on to Slide -- Page 11, Telecoms. We know that this is an important sector during COVID and there are also more 5G projects. We're active here as well. And infra and network projects, we're active on -- think of all the remote work and so forth, people are doing. This lead to further projects in this area. BFA/Services/Public Sector, we mentioned this earlier. We could have put this in the yellow rectangle I showed earlier. We're going out and seeking data processing and developing specific software for IT processing in finance, banking and so forth. We're talking about customer management, customer marketing, the big data focus here, the network focus, real web focus. Here, ALTEN has a position to take, which is about 20% of our revenue, and I talked about our strategy, and we very much intend to move toward 30%. We're going to be seeking further growth here. I hope that gives you a good overview of these various sectors, these various growth drivers for us. The only pink or reddish area would be Civil Aeronautics, but that won't be forever. Now to talk about our policy for external development, you can see this on this page. But beyond the tally of number of engineers, I would say that we lost around 3,000 and then there's about 1,000 engineers that are -- an additional contract to extra bench more than we usually have. Usually, the occupation rate is 92%, 93% for engineers including people off on training or off on sick leave. We've lost 3,100 engineers, and we also lost approximately -- well, 4,200 projects to date. There's been a slight improvement since December 2020, around 4,000 projects. We have to find them again, catch up on this, make up for them. We decided to step up our acquisitions policy, external development policy. You know that conventionally, we move toward companies that have around 300 employees. We've used this crisis as an opportunity, looking the field internationally. It's mainly internationally that we've sought external growth. As you can see, we're talking about around 3,000 engineers under project. All in all, this means we've got to catch up for H1 2021 of around 3,000 projects -- 1,000 projects, sorry, 1. We've almost already achieved that based on ongoing discussions. The 3,000 we bought in 2020, and then the last February '21, as you can see, are mainly located outside of France. Europe, the U.S. and Asia. The next will be mainly in the U.S. and Asia and in 2021, a French company to bolster IT services. We divested 2 companies. One of them included only technicians, infra network business for telco operators. Also, another company, which was in levels Tier 1 and 2 support. We had a relationship with a partner that's more positioned in Tier 1 and 2 technical support. So we divested the company to them, the company of technicians that provided infra network tech support. We also shut down our company in China that was very focused on manufacturing and prototyping. If you think back, you might remember, a company we've had in France way back when if I still -- it looked like them resembled them. We decided to divest this one as well because it's not in line with ALTEN's positioning, this prototyping. So of course, this didn't help out in the figures, but it was a problem. It needed to be done. So take away a couple of figures -- over a couple. We lost 3,000 engineers. We lost to date, 4,000 projects. We've made up for almost all of them by a small organic assumption plus external development, 3,000 people. We've got about 1,000 more engineers extra bench than usual. And as I said, it's highly likely it will have resolved all of this before the summertime. Now Page #13, shareholder base hasn't changed much. The free share system is available to employees, so they can have ALTEN shares. These shares are mainly for the 200 top managers of the ALTEN Group. There you have it. I've finished with the first portion of our presentation. I'd like to hand over now to Bruno, Bruno Benoliel, who will be giving you a better -- a more of a rundown of the specific figures, 2021.

Good morning. So following up on what Simon just to explained on Slide 15. As per usual, we've depicted the change in revenue and this time on the same slide, engineer headcount within the group. So it's more a number of projects. So we must look at the numbers today than in numbers of engineers. ALTEN has lost 3,100 engineers between 2019 and 2020, owing to the crisis, excluding acquisitions. In fact, we've lost about 3,500 engineers, the bulk in France, just over 2,000 and about 1,478 precisely outside France. ALTEN is back at the end of 2020 to its end of the level 2018 level and we're kicking off the year 2021 with 2.5 years of loss of activity. If I can put it that way, owing to the COVID crisis, lots of activity that's being caught up, both because we're counting on a recovery in organic growth. We're hoping for that as of H2 and the acquisition policy remains very dynamic. International, as you can see, today, above 60% of revenue owing -- unfortunately, the crisis led France to lose more activities than internationally and the strengthening of acquisitions on the international footprint. Slide 16. Now what you see is overall for the group, loss of business in H1 that continued in H2. Organic decrease of 12.9%, in line with the 13% that we anticipated back in the summer. And FX impact, relatively low, essentially due to the rise in the euro at the end of 2020 versus the U.S. and Canadian dollars, pound sterling, also in the Indian rupee activity level that these numbers reflect the drop to 77%. Let me remind you in Q2 2020, that began to pick up in H2 because it was of 80% in Q3 and 86.5% in Q4. So effecting '20, 92% of ALTEN across areas of activity. Essentially to lose 2020 very -- average activity rate of [ 84.6% ], where it was at 92.1% in 2019. Just a point because the question is sometimes asked. The activity rate includes the furloughed engineers because they are, in fact, engineers without activities. Slide 17. In France, business, bigger organic drop than the group average because the organic drop is minus 19.5% as we said, by Automotive and Aerospace. Both sectors in France represent what they represented at group level, 35% of revenue in 2019. Today, the contribution to revenue is close to 25%. Conversely, In France, Energy, that represents 15% of France energies. Rail enable activity, just over 7% overall in France. Life Sciences, just over 10% and Telecom, so 10% of business areas that are still growing. Slide 18, international, I'll detail by country at a later slide. International is, of course, impacted by the crisis, as you see in the figures less than in France because organic decreased minus 7.9%. Very mixed bag. Decrease, offset 50% by acquisitions achieved essentially international in 2020. Slide 19, which shows you, as with every sequential trend in ALTEN's growth quarter-by-quarter this year, slide depicts really the severity of the crisis in H2. France, minus 28%. Business that continued against expectations to decline in Q3, slightly before beginning to pick up again across geographies, as we can see in Q4. This year, an additional business day in 2020 versus 2019, but the marginal impact in terms of the crisis, that accounted for 0.6% of revenue. Slide 20, a more detailed view by geography. You'll find in the annexes an analysis of business growth sequentially, quarter-by-quarter, to give you -- gives a more dynamic approach of how the year unfolded, excluding France because we've already discussed France. International, you see, average is minus 7.9%. You see by geography, so that's a big deviation. North America, U.S. in particular, representing over 80% of North America. The main sectors, Automotive, oil and gas and finance rebounded slightly in Q4 after a strong decline in Q2 and 3. So lesser drop in the final quarter. Average drop of 9%, full year. Canada held up better, even grew 13% in '20, thanks to the service sector, grew over 15%, accounting for over 50% of the business in Canada. Telecom's up sharply also as well as Life Sciences. Germany, where aero, auto activities represented in 2020, 70% of German revenue. That's where activity dropped the most significantly, minus 25% in Germany, having reached minus 28% during the year. Both sectors are struggling, of course. Some diversification initiated in Germany a couple of years back, beginning to bear fruit. All the other sectors, even if they represent minority shows revenue, all the other sectors are growing. Scandinavia, business is down 20% on average like-for-like. Finland, representing 1/4 of Scandinavian revenue, down only 7% essentially in industrial equipment. Back to Sweden, the decrease is in the order of 28%. Constant ForEx, because the sharp drop in the auto and truck sector, representing 1/3 in local revenue, down over 40%. Benelux, business down slightly, 3% decrease. Belgium, business down 10%, but stabilized in Q4, with service activities that dropped surprisingly, offset by a strong growth in the pharma sector. Netherlands activity, up 3%, thanks to semiconductors and electronic. Spain. Spain held up well during the first lockdown, decreased in Q4. Probably the only country that was slightly bucking the trend of the others at the end of the year because of the succession of lockdowns. Asia Pacific, that encountered difficulties. That's where the crisis started back in early '20. The scope grew organically by 6.5% with growth that leveled off in Q4. Growth driven by India, where local activity grew 10%, representing over EUR 40 million. China, slightly down, owing to auto accounts, but activity stabilized. Italy, that's truly an exception in the sector, Panorama, it's a country, up 12%, performance that need to be underscored in this crisis with a country where all sectors are up, including the auto LTA. U.K. lastly, activity, down 5%. In fact, activity that grew in H1 dropped sharply in Qs 2 and 3 and up again in Q4. Activity heavily impacted by an aero and auto account that represent 40% of the total U.K. revenue. International countries that posted very disparate performance levels. And in fact, quite faithfully, reflect the exposure of each country to the auto and aerospace sector. Slide 21 now, the income statement for this year. So no surprise, operating profit on activity down, primarily impacted by the drop in activity in the group, had recourse to partial unemployment furloughs, has furloughed engineers, that extra bench over and above the normative extra bench of the group, that is we consider that must be furloughed engineers, that extra bench owing to the crisis. So ALTEN always finances is extra bench normative rate and, in fact, slightly beyond that to answer questions that was raised to be able to use the furlough scheme to cushion, to dampen the margin. That's the case, but it's the case only for what we call the extra bench, people who are non-normatively extra bench. ALTEN, of course, resorted to furlough schemes in all countries where it was possible, France, Germany, essentially, but also Belgium, Italy, Spain. The remaining cost is never zeroed. It's at a minimum, 15%, 20% for furlough . France and Germany can rise to 70% like in Sweden. So obviously, it had a dampening effect on the accounts but it substantially decreased the total amount of gross margin. We have costs linked to local business software that owing to that were impacted. The fundamentals of gross margin, ALTEN was preserved, but it's the cost to salary ratio remain unchanged. ALTEN took measures in the face of the crisis. We almost doubled the recruitment during Qs 2 and 3. Heavily reduced SG&A level at end of '19. We planned EUR 2.9 billion revenue in '20. We had to return to a more reduced cost base and put in place a headcount reduction plan, layoff plans that were quite not that significant, but in the U.S., Sweden, Germany, U.K. and in Spain. Lastly, we had to support additional costs linked to the health crisis. The protective equipment, that was EUR 4 million, the price tag on that. And our research tax ready in 2020 is lower than that in '19 because of the lower level of activity and a smaller number of projects eligible to this tax credit. So overall, if we have to model the change in the margin between '19 and '20, gross margin dipped by 2.7 points, SG&A rose 100 bps, 20 points in relative value, owing to the drop in revenue, EUR 0.2 million coming from the protective measure and the research tax credit, down 10 bps, so 0.1% of revenue. So our operating margin goes from 9.9% of revenue in '19 to 6.1% in 2020. Share-based payments, EUR 7.9 million. Nonrecurring profit, EUR 15.3 million, essentially restructuring costs in the country cited for EUR 7 million. Acquisition fee is about EUR 6 million fees. So those are the fees paid to the M&A companies or due diligence. And tax adjustment costs abroad are just over EUR 2 million. As a consequence, net income, EUR 119 million. That's 5% of [indiscernible]. Financial income, EUR 14 million. Corporate tax, EUR 26.9 million. And company's consolidated equity, EUR 1.6 million. Net income group share, EUR 98 million. That's 4.2% of revenue. Just a word on the tax rate. Effective tax rate, 25.2% this year, owing to the capital gains on divestments, tax at a lower rate. The effective normative tax rate of the order of 28%. Slide 22, the detail and analysis of the financial income. As you can see on the slide, cost of net financial debt, EUR 0.5 million. Negligible interest on leasing contracts, IFRS 16, about EUR 2 million. Cost of financial net debt, that essentially, to the capital gains on divestments. We divested the 2 small companies that Simon -- a minority stake that we also had in another company. And the exchange result, negative EUR 4.6 million, essentially ForEx positions on receivables in dollars. On geography, Slide 23, you can see that France was heavily impacted by the crisis, 35% revenue in auto and aero. Activity rate, 78%, full year, far lower than the average activity rate. It was up -- it was 92% last year. Type of furlough, the gross margin was actually significantly impacted, down 5 points versus '19. We, of course, implement SG&A reduction measures to reduce the cost in absolute terms versus '19 terms. So an SG&A rate up 210 bps in '20. And COVID spend accounted for 40 bps in France, where they're very low internationally. So all in all, operating margin down from 11% to 3.6%. International, like the activity results are very mixed. Of course, furlough schemes were implemented in the country like Germany, which is the most impacted by the crisis is posting a loss in 2020. Scandinavia, in spite the problems encountered by Sweden, it maintains its EBIT about 6%. U.K., Luxembourg, Netherlands and Belgium, we managed to maintain an ROA above 10%. Southern Europe, Spain delivered a performance in the order of 5%. Whereas Italy, in spite of all the good results, maintained operating income, operating profit, about 10%. Lastly, North America operating profit is down. No surprise, but it nevertheless above 5%. Whereas in AsPac, where the situation improved, at the end of the day, the operating profit on activity is close to 9%. So international, you see that the number has mixed it's also on the growth front. And overall, excluding Germany, our operating profit remains satisfactory, very close to its '19. With Germany, it drops to 7.7% in 2020. In fact, you see that international, that's where the recurring costs are the most significant. That's where we had the acquisitions, and we implemented the restructuring plans mentioned previously. Balance sheet structure. I won't dwell too much on that. Paradoxically, the balance sheet is strengthened. In fact, after the crisis, assets -- the noncurrent assets, just over half of the balance sheet essentially goodwill. The right-of-use under IFRS 16, part of the noncurrent assets but, of course, change with the leases, current assets, 40% of the total, 80% made up of customer receivables. Liabilities, equity about half the total balance sheet. Important, cash this year, over EUR 200 million. Gearings comes in at minus 16%. Cash flow -- net cash, ALTEN generated EUR 186.7 million, about EUR 320 million last year. Restated by IFRS 16 provisions for buildings associated with the leases that we hold the real cash flow that represents the -- stands at EUR 136.2 million. That's 5.8% of revenue. It was EUR 272 million last year. That 10.4% of the revenue is down half, which is normal because it trends in parallel with the reduction in operating profit. Conversely, our working capital change is EUR 168 million, a reduction due to the receivables. Diminution result of organic growth, EUR 159 million. DSO. DSO, down 6 days versus December '19 because it was 86 days versus 92 days last year, thanks to France primarily. So the improved in DSO generated EUR 43 million, additional cap drop in tax debt is at EUR 25 million. And we have social receivable, EUR 6.2 million for furloughed cross group. A word on decrease in DSO end of June. We noted slight increase in DSO, that's normal because of the seasonal impact. And we also anticipated increase of DSO. 6 days at the end of 2020, owing to the initiatives, certain customers. Announced that they would defer payments so an actual fact in December -- November, December, big clients in France paid their invoices on time or even for some slightly ahead of time. So change in behavior that was totally unexpected. We don't know whether that is set to continue or not, and may reflect a desire to have a WCR [ in effect ] that is more attractive in '21. Be that as it may, we were paid. So we cash in on our DSOs the last 6 days. I don't know if in '21, we'll be able to replicate that 86-day DSO number, even if, of course, the cash in teams are really focused on that. I'll get after -- including the tax paid, EUR 50 million. CapEx, EUR 12 million, 0.5% of -- lower this year than last year. IFRS, that's EUR 49 million of free cash flow, EUR 246.8 million, that's 10.6% of revenue, above the 7% -- the normative 6%, for an EBITDA 10% that I've always explained to you, and it's higher this time owing to the decrease. Change in scope represented cash out of EUR 122.2 million in 2020 includes, of course, the amounts paid for acquisitions achieved in 2020, the integration of the treasury of companies acquired and the earn-outs for earlier years as well as the cash-in on the divestment at company. Other financial flow, EUR 3.9 million, essentially, ForEx impact. And as ALTEN hasn't -- didn't pay a dividend in '20, net treasury comes in EUR 196 million, a gearing of minus 16.1%. Just a clarification here since we don't book in treasury the earn-outs, but they represent at the close of 2020, an amount of EUR 72 million. No surprise. More than doubled versus last year, owing to the acquisition dynamic. Out of EUR 72 million, EUR 5 million to EUR 7 million will be disbursed in '21. The balance, the bulk, beyond '21. Slide 26 shows the free cash flow by half versus '19. I won't dwell on that. Slide 27, just the analysis of the balance sheet income statement, cash flow statement, that really is very time-consuming in terms of tracking. Doesn't really enlighten much on the ALTEN accounts. I mean make some -- even more opaque, I find. But the impact is almost 0 on the accounts in the income statement and also in terms of the financing. IFRS lease debt are not included in the net cash position, excluded. They don't represent an economic reality. They account EUR 170.2 million at the end of the year. Essentially, real estate, 87%. So takeaway on the activities in 2020 result. All countries exposed to auto and aerospace sectors, representing from 34% in '19. That's dropped to 25% revenue share in '21, were heavily impacted both in their activity and their earnings. The resumption in activity is very gradual, started in Q4 and is continuing because we're seeing in Q1 '21. But ALTEN has preserved its gross margin fundamentals, that measures implement to limit the consequences of the health crisis on gross margin effective as of H2. H2 margin comes in February, they expected identical to H1 since there are more business days that contributed to improving the margin structurally between H2, H1, but we anticipated a margin down, which didn't materialize. Free cash flow, sharply up despite a decrease in profitability as a result of lower activity, combined with improved DSO. There you have it. I'll take your questions after the presentation. Back to Simon, who'll discuss the growth strategy for ALTEN.

Thank you, Bruno. Bruno laid to us the points. Let me just recall the following. On Page 30, we can see the impact of the crisis -- well, our strategy is into marketing strategy. It's a strategy of doing away with the 2020 losses due to COVID before the summertime. We may well be in a better position afterwards. Extra bench should be around 1,100 people, a little bit higher in December. We hope to achieve this before the summertime to bring the G&A back to normative levels. It could be good if -- it would be good if 2020 for aside from operating profit, which necessarily be lower. But in terms of business activity, it were pretty much a reflection of the volumes that we had in the situation where we stood over '19 or even better than that, thanks to our being able to offset through external growth. Fortunately, it's gone well. We ended up where we wanted to be in the countries where we wanted to be. Global aerospace, as I said, a substantial potential for growth in 2022. We're not worried about it today. This couldn't go lower. And I draw -- automotive losses see a recovery. Other sectors are very promising. It's up to us to tap into all of this. Currently, the group is heading toward more international activity. ALTEN very clearly is an international group. We've got sectorial and geography diversification, and this is quite uniform. We have issues to settle in various countries. We're not in a critical size of regulate number of engineered projects. And we have to be active in 3 sectors in each countries, so we never jeopardize during the time of crisis, a given country. That's been our strategy. And it's always been a win-win strategy. The sector is doing well. I mentioned them to defense space, telecom, life sciences, energy and services, banking, et cetera. Currently, we're in a good position to continue moving in these areas. We're in very good position. The competition in many of these sectors isn't yet consolidated and isn't yet organized. Now move on to Page 31. First, what's enabled us to achieve these results is first and foremost, ALTEN Group's excellent financial health, our balance sheet, our ability to have organic growth plus giving us financial reserves so that we could supply what we wanted. Always had excess cash and RWC have always been very good. If you tally up everything, net profits in 2021, we will see the acquisitions we do will be in line with the -- that result that's generated. This will not in any way reduce our cash or our equity or in any way worsen our situation in our balance sheet, which is to say more than ever before, we're remaining faithful to our strategy, compliant with our strategy. Sometimes we will be criticized about acquisitions and so forth. We are who we are. This crisis makes us want to continue to be who we are. So we're stepping as external growth. We continue organizing ourselves the way we do. 2020, therefore, will be a year much better than the pre-crisis time. We look at number of engineers, number of projects, number of contracts that we bring on board end of '21 for 2022, but very much hope it will be higher than it was the case of 2019. Three important subjects. I'll use the opportunity to mention these before wrapping up. Often asked is the business of engineering going to go offshore in a big way to India or elsewhere. Currently, our offshore proportion is approximately 5%. That's around 2,500 engineers working offshore for countries. India, Morocco and Romania, flexible to them. There may be other countries offshore in the future in Asia and elsewhere in Europe. So yes, we will offshore somewhat more, but it won't be a major shift. Maybe we'll double offshoring in 3 years going to 5,000 or 6,000 people, which will still continue to be reasonable in a group that will have gotten bigger in the interim. We're ready to rise to all these challenges, customer demand. Our competitors are often looking for this but may not be as well-structured as we are offshore and often not in the area of engineering. That was a parenthetical point just to say that more than ever before, this group is confident, bolstering its position as a leader in engineering and technology consulting. We're there to hit the ground running. Everything is ready to recover quite significantly after COVID. For us, COVID is pretty much sold to everybody. So thank you very much for your attention. We'll be happy now to field any questions you might have. Bruno and I will answer your questions.

[Operator Instructions] The first from Emmanuel Parot from Gilbert Dupont.

A couple of questions. Activity rates. You mentioned. We've got the figures. Page 1 of this year. What are you thinking in terms of numbers and actual departures and so forth in the various sectors? And then another question about '21. You gave us some figures for '21. Normative margin expectations this year. You have to think about what the landing might be. Another question, 2022. About operating profitability. You said gross margin hadn't been worsened due to the crisis. Can we hope to reach the normative operating margin by that year?

Yes. To answer regarding activity rates. First of all, thank you for those questions. Let me say that's a very good question. Now, extra venture activity levels going beyond 92%, 93% current activity, as I mentioned earlier, covering around 1,200 people, around 3%. This is very local, 94 cities. Broadly in Germany, a little bit in Munich, automotive. This will be absorbed, though, when there's recovery in automotive. We're not worried about that. What we're slightly concerned about was remaining our concentrations with people in aerospace that we have in Toulouse, in the Nantes and also Hamburg and, to a lesser degree, in Sophia Antipolis. We were highly present. Regarding post-Airbus, these are the ones that are furloughed. This is due to the crisis. The others have not been furloughed. So as long as they're covered by paid furloughs and there's some wait and see both sides by the company and the engineers, they're not budging favor to 100% compensation. They've got a mobility clause requiring them to work within France or Germany; this is in their contract. But we're not making use of that contractual possibility for the time being. This is an indirect answer to your question. Point being if furloughing is at all going to happen, actually, in the near future. Then last for mobility. When there's resumption in other cities and sectors, we'll ask these engineers to please transfer or leave. Vehicle discussions we have with the labor representatives, and I understand full well that an engineer is expected to do that now outside of France and Germany. And I'd remind you, there are no layoff plans. Further, it's very marginal, not at all in France and in Germany, very, very tiny one. Outside of France, labor law is sometimes liberal, allowing us to lay people off. Sounds cynical, but this is the case in the U.S. and the U.K., it's okay. All right. So things went fairly well. Extra venture was resolved in that fashion in those countries. So we will have solved this through natural departures, the resumption business, shifts to other sectors, bringing engineers to accept to move and shift so they wouldn't have to stay at home, even with 100% pay to accept -- to go outside of the aerospace sector or possibly to another city. That will solve things. We've already seen this in the past. We've already divided this number by 2. So that's on activity. On to profitability 2022. Yes, of course, if there's no hiccup, no hitch, we'd like to get near our customary profitability in 2022 of course, with extra venture, reduced overheads. That won't be the case in 2021, even though I would be pleased, for the end of the year, will the equivalent activity, even greater activity than in 2019 idea of revenue. Activity rates will come back to the normative level before the end of the year, even before the end of the summertime. But the impact of 2021 we won't see right away. I'm hoping in 2022. Everything will depend, of course, on easily western companies -- countries solve the COVID crisis and if possible. Now we getting fresh, and it's behind us. We hope it's not just in question. As to free cash, Bruno will comment on this point. Bruno?

Yes. I've explained to you free cash flow at ALTEN with an operating margin around 10% normatively and with no organic growth should be around 6%. Why? Because fairly mechanically, it's equal to net profit when you subtract investments, capital expenditure. I know you're right. Next year's free cash and issue-free cash will depend on our activity business margin. We are not able to wait and the group's ability to resume organic growth, organic growth which will necessarily consume some cash. Yes. We could be in a situation. And we'd like it in 2021, where we've got a change in working capital on WCR, which would be negative or positive, depending how you view it, which would be due to the fact that the group is going to consume cash because it resumes financing new clients. I can't go further than that. It all depends on the working assumption in terms of growth and operating profitability. But yes, you can craft a model pretty easily looking at P&L. And operating income with an assumption of CapEx would be 0.7% of the revenues.

Next question comes from Laurent Daure, Kepler Cheuvreux.

Simon, Bruno, several quick ones. First point, I'd like to return to change of the margin H1, H2 and the improved international. There's a business day impact. There are certain geographies that have already structurally improved their margin and contribute to '21 to group improvement. That's the first point. Second point, could we have the amount of government support or a change between H1 and H2 concerns essentially France in terms of margin impact? And lastly, return to the previous question about the furlough scheme, 1,100 engineers today without layoffs. With people leaving, but you'll still have 700 by the summer, won't you have to go implement a layoff plan? Is that way a risk on the change in group margin between H1 and H2 this year?

I'll respond to your last point on furlough. Well, from what we see in the markets and from what we see in terms of engineer movement, essentially, France, to a large extent, to a lesser extent, Germany, elsewhere, everything is fine. The job geography standpoint, no problems, I'll swear, with a few marginal exception back to the normative rate pretty much across the board. Excluding France, Germany, to a lesser extent, Sweden, but even in Sweden, things are fine overall. So geographically, the margin will be impacted because it's the main driver for the impact on the margin. The resorption of the 1,100 extra venture engineers that worsens the normative rate of 92%, 93% occupancy rate. Well, frankly, we believe that, that will be resolved before June, it was before the end of the year, but I think that will be resolved. That's what we see coming today. I can't give you more details than that. But I gave the reasons why that will happen. In the previous question, that's to say, at some point, engineers will accept to move. And if they don't accept them, that'll be -- we'll let them go. That -- I mean our problem to date may surprise you is to compel our business managers to return to an aggressive position on recruitment aside from the areas "where we were hit by COVID," aside from those areas, we must revert to recruitment full throttle and our success criteria is one, to always be ahead of the game in recruitment as we were back in 2004 and in 2020 -- 2010 and we were proved right. There's no reason young engineers always tough people to attract today. We're really trying to boost recruitment and to leverage the crisis to attract engineers at a high level for the geography. I think I've answered both questions. Maybe Bruno, you could speak to the gross margin and government support for the furlough scheme.

Well, maybe on the furlough scheme today is essentially located, France and Germany. That's where all the engineers concerned are located. Government support in France continuing month by month, the government is extending those today through end of March. And compensation means we're kind of 20% out-of-pocket expense as of April, the out-of-pocket expenses probably grow to 40%, 45%, depending on the categories of personnel concern. But once again, we can't rule out. The government decides to extend that over time. Once the decision is taken in France by the government to revert to an ordinary law compensation system, the out-of-pocket of 40%, 45% for last 6 months because furloughs in last 6 months -- after 6 months, then companies will have to shoulder the full cost. Today, we'll continue to benefit, France, from a furlough scheme through the end of the summer at the very least. We'll see for Q4. We'll also see at that point how things will develop to the extra venture. Germany, German government's announced that it would maintain government support further so to keep skill levels in companies as long as necessary at the minimum through the end of '21, the out-of-pocket in Germany, that's about 20% have to live with that. But on the face of it, there's no risk of seeing that out-of-pocket expense increasing between now and the end there. That's to answer your point, that government support scheme and then a little bit in Belgium. It's really scattered here and there. But as to the margin, H1, H2, well, in July, I announced we gave a margin guidance slightly above 4% in H2. Because obviously, we have a half that heard by the crisis compared to H1 only 1 quarter. We took the pendulum effect into account; thus we make sure on H2, you'll find that the accounts differential number of business days between H1 and H2 last year, we had about the same differential. There was an impact on the March of 1.86. So we were full capacity with an activity rate of 92%. We can't transpose that pendulum effect, H1, H2 identically, but 1%, but that was factored into the guidance we gave. That improved the margin with the disclosure that we would exceed [ 5 5 5 ] as we move to the end of the year. The fact that cost reductions implemented went swiftly, were rolled out faster than anticipated. SG&A rate down, as I indicated, with SG&A rate in absolute terms identical to that of '19, in some places lower, whereas projected high also a reduction in the extra venture swifter than expected. After the summer, Q3 was a good quarter when activity continued to decrease, and there were more people leaving than expected so that had an impact. Research tax credit, slightly better-than-expected also because it was lower in H1 than in H2. All that put together, and there's some mix effects that account for the fact that the reasons why we have an H2 margin on a par with H1. That wasn't our initial scenario back in last July. Thanks for the geographies. I've given you the orders of magnitude for 2020. There'll be no -- what's the challenge today, increase the margin in Spain because has a low gross margin in Spain, so the margin is very sensitive. The breakeven is higher. As a consequence, margin sensitivity rate very high compared to the activity rate. We had a layoff plan. Activity rates are now normative. Germany, where the question mark today and France for the rest, all the other geographies have returned, give or take, to their precrisis level with the exception of Sweden, that impacted even if we adjusted the activity resources activity right back above 90%, maybe U.S., where we have a profit level that's slightly lower. To try, Laurent, to give you a number, you can imagine that the annual price, all costs included payroll for an engineer in France or Germany, employee employer costs, EUR 50,000 on an annual basis to give you a round number. We have an average subsidy rate of around 70%. So remains when we had 2,000 people for 4 months, they gave an amount covered 70%. Now we have 1,000 covered -- we have 1,000 on extra venture. That's going to decrease to 60%, possibly 40%; gives you an idea of the support we'll be getting in '21. We're not really counting. It's not a problem for us for ALTEN. That's not an issue. The issue is the extra venture should no longer exist. We'll resolve it, not financially, but commercially.

The next question, Gregory Ramirez.

I'd like to come back to the various parameters to take into account operating margin 2021 toward gross margin. Would you please give us further details going up where we can evaluate the full impact of changes in activity, impact of the drop in furloughs. What about expenditures that will necessarily increase once again after recovery in activity [indiscernible].

Questioner's voice is cutting in and out, and the speakers are saying they cannot hear you. [Technical Difficulty]

Should I repeat my question?

You're asking about changes in the various growth impact on operating margin in 2021. Is that correct?

Yes. Wondering about the impact in resumption in trade and resumption of various costs that has been halted due to the crisis and that we'll then resume again. Also wondering about a drop in inter-contract coverage, so on and so forth.

Okay. For the time being, we're not disclosing details on operating margin. We never do that at the beginning of the year. One, even in usual times, it would be early days in the year to do that. Usually, we have clear assumptions as to growth and projections of cost trend. This year, that's very complicated, as you can well imagine, due to the crisis -- due to the fact the crisis is still here. So we don't have a great deal of visibility. What I can say, though, the impact of use rates, generally 70 basis points gross margin in results gives us an order of magnitude. As to the impact that could have as a resumption activity, the drop in furlough subsidy can use this modeling EUR 150,000 per annum I mentioned earlier. Out-of-pocket amount is between 20% and 40% with seasonal effects. For the time being, 20%, that will shift up to 40% in Q4, depending on governmental decisions, similar in magnitude in Germany, we've got around 1,400 currently. That's today. This goes up and down depending on activity shifts and changes, but that enables us to project as residual costs and trends over time in the deal costs. For the time being, though, let me say that SG&A rate, structurally they're greater than what we usually have, an order of approximately 120 basis points. We're continuing to set up various organizations of the group to support the future, [ their Alia ] for future growth. We've decided to continue with various investments, for instance, as we start recovering more normative activity. These costs will be fully diluted. This is also going to be coordinated very dynamically. They're just sales and recruitment costs vary with activity levels. In SG&A, you saw in previous years, cost of SG&A was fairly stable. It's definitely monitored investment over time as agents develop security increases. Currently excess costs around 120 basis points group-wide, which may last through 2021, will then be reabsorbed as revenues begin growing against organic growth. So basically that's what I can give you at this juncture.

Mr. Derric Marcon from SocGen.

I hope you can hear me all right. Several questions. Firstly, a comeback to Germany briefly. Could you give us some comments on changes in direction, the arrival of changes in management, a new manager for Germany? I was wondering if this is a run of a transformation plan there maybe in German. It frozen this more or less with the arrival of COVID distribution between engineering and others, you have someone from [ Adecco ]? Second question on Germany, a follow-up to some degree. Due to the fact Germany is making losses in spite of government subsidy, it is somewhat surprising that it is only marginally that you've got a layoff plan, acknowledge one after all. Won't it be interesting to go more in this direction in 2021? Is that a bigger resumption of activity? Greater layoff. Should I continue with my questions now or later?

Go ahead with your questions now. Ask all of them now.

Okay, fine. Another question, more technical, on M&A, thinking of the company about 2021 announced, has payment already taking place? It is factored into the EUR 120 million? Another point. Let me get further detail on the profile of that company, EUR 38 million in revenue, we didn't get comments on this. And I have another question on reducing carmaker panels. I think there's an automotive carmaker that reduced panel from 13 to 3 companies. Are you in that panel? And is this an overall major trend you're seeing speeding up during COVID? Had already begun previously, but is this speeding up under COVID?

So thank you for this question. First of all regarding Germany. Yes. I would say Germany was organize or not important in the northern venue of Hamburg. We both say the person in charge of Airbus Toulouse, that made sense because the bulk of their activity in the North was Airbus Hamburg. Then you had the southern part of Germany with a manager, maybe the executive committee working almost exclusively for automotive. We just might, considering what happened in another crisis, we stopped splitting Germany in 2 in that respect. Sorry for saying it that way. But we decided to bring Germany back together under 1 single management, and we brought someone for that. Someone [Audio Gap] have been at [ Adecco ] briefly but they're really from another company. Spent 12 years at another company previously. They're a trained engineer. [Audio Gap] his possible first day. We announced him. Among other things, his mission statement will be to bolt together Germany under 1 management and also move into areas where we hadn't been present previously, mainly south under an aero segment probes in the north. So we first of all, consolidating and then supporting the recovery in automotive, Germany and in France, we're seeing this now. We'll also diversify into other sectors, such as telcos and life sciences, services and energy, where we're not present currently or almost absent in Germany. There's some reasons we're not pressing at all, which is related, for as you can see, we've still got the potential for work in that country. The -- not going to factor what I've just said in terms of 2020 results. As you can imagine, we lost over 60% of aeronautic activity in the north, 1 month on. But we made money. And then automotive wasn't doing well in the south either to make up for that. We didn't lose a lot, a little bit. We would have preferred at least breakeven. But aside of subsidized furloughs around 70% subsidy in Germany, that wasn't enough. So this year, I hope we'll break even again or do much better than that. We'll start seeing some very ambitious momentum, multisectoral momentum in Germany. No doubt about it, we waited a little bit too long to launch our multisectoral approach there. It should have been done a while back. That's why we needed a top-notch manager to really move on the ambitions we have for Germany. Next. Just to add another point on the answer I might interject. There was the split of activities in Germany. Off-site management and engineering packages and so forth. Well, the split from international in Germany, we'll be trying to set up 2 separate legal entities because rules governing labor laws, negotiated by industry and labor, are such that you have to pay penalties and/or bonuses to people in technical assistance in Germany, which means you can't do this in the same way as in France for the same token. Technical systems is covered by something different. We're not talking about temporary employees, but actual management of engineers' careers. 30% margin varying from client to client, added value. These can be under packaged or technical assistance. In Germany, they've changed the situation, changed the rules. Now there are penalties in some instances that can reduce 10 points of gross margin, which is to say, trying to do with SG&A and HR models. Time and material and technical systems under work package is impossible. And to hope to develop technical assistance in Germany using SG&A like you have in France on the work packages. It's not feasible there. This is why it is necessary to have that technical assistance. So in SG&A, 14%. We still have a fair few people there, probably all maintaining their financials under the work packages. So yes, we will keep that separation. HR management and SG&A management to the models for SG&A and HR are not going to be the same in 2 areas in Germany versus how it's done in France. Germany is now together under this [indiscernible] reporting to the same management. Our chief in Germany is the chief for the whole of Germany. Slide 10. I wasn't there end of '19. Cash impact not very significant. That won't substantially change our cash position. They work in IT services. General services, i.e. retailing, banking, finance, the yellow business area that I showed you earlier on the slide, try to increase the ratios there. The data and IT services ratio in France, which was fairly low-ish. We acquired one mentioned earlier, in September, October, they were in that area as well under infrastructure as a network. So we're completing all of this. We're reaching 30% in France as is the case in many other countries and in a very specific technical positioning. Engineers with added value, not EPO with software packages, configurating and so forth. That's not our business area. On to your second question. The panel of automotive suppliers.

Follow-up question. Apparently, a French carmaker was talking about reducing their list of suppliers of 13 to 3. Bijan Renault had already been doing that I think, 3, 4 or 5 preferred suppliers. So I was wondering about you. First of all, are you in that panel of 3 that have been shortlisted?

I have no information. I haven't seen that particular information. And for the time being, that's not our reality information point. 2 makers in France, not dozens. We are well positioned with 1 of them, no problem. There's another one after some new listing done recently shown supplies. We're not in lift one, we're in only 2 of them. But broadly, we're making every endeavor to get back into at least one. Therefore, plus 2 or 3 and lose 2. If we do our job properly, I think we'll shift back up into list one fairly quickly. For the time being, that vehicle maker will not be changed overall policy. So we're not in any way concerned or worried about this. So my information is not exactly the same as yours.

Okay. Follow-up question. Might I ask about automotive now? In the presentation, you emphasize the fact that German automotive auto kicks back off in Q1. In the press release, you talked about automotive seeing a recovery in H2 '21. Could you give us more specifics on this recovery in automotive that you're spec to? What countries are you sure about it will be happening quickly beginning of the year? Where are the companies that you've got some doubts, you're not sure of their recovery yet in terms of the time line? And what about the countries where at this juncture, you're not seeing any improvement?

Broadly, overall. Yes? We've got indicators of a good recovery in H2 2021. Among all the vehicle makers broadly, they've got to step up various programs in the industry in hybrid and electric vehicle. Currently, we're seeing growth. We're seeing calls for tender. We're not worrying about negative [Audio Gap] There are some vehicle makers where the -- where things are speeding up, such as one in Northern Germany, where there are lots of calls for tender.

Next question, Stefan Slowinski from Exane BNP Paribas.

Simon and Bruno, 2 quick ones on '22. Hoping the year will normalize. When you look at the change in the market post COVID, if there is one, maybe an acceleration in digitization, for example, change in ALTEN position, more IT services, more international presence. What can be the growth in the addressable market for ALTEN as of '22? Is it change in the addressable market growth as compared to pre-COVID? Second question on 2022, the acceleration of M&A that we see in 2020, 2021. Can that become the new normal? In other words, as of '22, will we continue to see this level of M&A now that we've become more used to making bigger acquisitions?

Well, you need to put into perspective at its right level what I told you about the blue and the yellow hard and fast engineering and IT services. The aim is to return to interesting issues in IT services, normative level in each country, 30% remain essentially an engineering company. It's not a new strategy. It's just a lag to be caught up in certain countries such as France and Germany. And that delay, that lag corresponds to our central diversity. We also have it in all countries in particular sectors. I said it's Germany. It's not normal that we're not in energy or telecoms there's as much in France. There's no reason for it to be low. Ditto for U.K., several other countries where we need to have that sector of diversity and the IT services data segment. Is part of that like the other? It's not a strategy of moving towards IT company or too involved in software packages, where an engineering company will take our share of software packages where very often, I mean for the reasons outlined, engineering companies because they develop specific software packages, they don't do the contracting and installation with software packages for admin systems. We don't do that. So leaving that aside, the growth of ALTEN Group -- well, just given you the key, will reside, firstly, in growing in sectors where we're well positioned across geographies. And secondly, to open up all the sectors where we're not present. The goal is to have 3 or 4 sectors per country in engineering to a lesser extent, IT services now. The market in all that, well, is unlimited. Today, we have no market blockage. Everywhere we go, we can bring needs. We can conquer business, organic growth. Our only problem because we're a service company is a problem of training and supporting our business management and technical management team with good HR. The only reason why we haven't doubled what we'd like to be in the U.S. or we didn't do what it took in Germany, et cetera, is solely down to management organization issues, be they business, technical and HR enveloping that. The market for us is no limit. Look at France. You'll find pretty much the largest engineering companies. Why don't we have other similar multisectoral or multi-country companies in Germany or the U.K., if you have names to site in Germany. We have 2 or 3, [ Bertrand ], EDAG, but they're not positioned as engineering companies like ALTEN, Altran, Applied, et cetera. So market is not consolidated. It's all for the taking. But to take it, we have to have the trained management result. The pace of growth depends solely on that, not in the market, the product. So I really addressed the question in that way. We have no -- it's not a product that we want to sell. We don't know whether it's going to be successful or not. There's a competitive product that will be better when needed. And the clients, I mean companies see that ALTEN, by consolidating their HR and technical strategy, can better meet the needs for outsourcing that are indispensable, especially when there's a COVID crisis impacting all our clients. On M&A, second part of your question. Well, we really boosted things in 2021 with an eye to offsetting what we lost. But using the results generated between '20 and '21, do the balance, you'll see that net income 2021 equals price of acquisition. So we haven't impacted our balance sheet or our cash position. Now that continue in '22, '23, we took now a pace moving to 200, 500 people. But I'd already announced that well before COVID. For those of you who recall that, we're allowing ourselves to do bigger M&A deals, but these are not companies of 10,000 people at 1.9. These are add-ons, bigger add-ons. 300, 500 people will cost between EUR 20 million, EUR 50 million, EUR 70 million will self finance. If we can continue into '22, well, of course, that will correspond. I hope that will be about 1/3 -- account for about 1/3 of the ideal -- excluding COVID, 2/3 organic growth and 1/3 M&A as we did in the year '17, '18, '19, were about 10% or 11% organic growth and 2% to 4% M&A, that's what it would have by acquired 3,000 people in years '22, '23.

[Operator Instructions] We have an additional question coming from Mr. Derric Marcon from SocGen.

Sorry to return to 1 question that I omitted to raise earlier, but would you have the figure to hand but to give us a more -- a clearer idea of the recovery we're seeing in your clients? Have you -- could you discuss the number of calls for tenders that you're receiving for clients, excluding auto and aerospace early '21 versus last year? Have we returned square to early '20 or is the sequential metric would make more sense? Could you give us more granularity on the KPI's commercial activity that allow you to believe that the recovery is well underway in most clients, aside from auto and aero? Because I assume that, that's where part of the extra venture will be deployed if it's possible to redeploy them there.

Excluding auto and aero, we're not in the same traction level that we had in '19. I would put it about 70%, excluding auto and aero, what we had in '19. That gives you an idea of when auto returns, it will boost the ratio even further. So if there a need that given the fact that we've slowed that the recruitment, the equation is done in terms of the extra venture. Well, if there are no further questions, I'd like to thank you all for tuning into the call in these unusual circumstances. And Bruno and I available to answer any additional questions. Have a good day. Stay safe and see you soon.

Thanks for taking time. You can now disconnect. [Statements in English on this transcript were spoken by an interpreter present on the live call.]