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

Hello and thank you for being with us for this presentation of the results of the first semester '23. I'm Simon Azoulay from the ALTEN Group. We are going to be presenting these results with Bruno, who's with us also. With Bruno, we are going to go and -- through the different evolutions over the course of this half year. And looking ahead, of course, as published -- we have published the results. The revenue, you had that, a good interesting growth, mainly organic. Unfortunately, difficulties were encountered accelerating the M&S in the first semester, given the extraordinary level of prices, which encouraged us to be more cautious with regard to certain operations. But let me reassure you that will stay -- that will start up again. So plus 12.2% of growth, 11.4% thereof, organic. You've had that figure since the end of July, of course. This growth of 12% is broken down into, as you can see on the screen here, growth of some 13.5% internationally and 9.4% in France. So, just organic in France, so very satisfactory, of course. With regard to our general rate outside an exceptional year or any big merger and acquisition or outstanding years like '21, we're around 12% organic growth and 4% of organic growth. So that gives you an idea that we've had outside one-off years. Good organic growth, notably internationally, as you can see, internationally, that represents 32% -- 68%, sorry, 68% of revenues, 32% in France. So that trend is going to continue to go like that. France will continue to grow organically, 12,000 to 13,000 engineers in France. And internationally, we're going to be accelerating faster still, and we believe that, that will be much higher than 70%, maybe looking to attain 75% internationally with regard to the French revenue, which should attain 25% with regard to the overall revenues. So operating profits on activity, 9.2% of revenue. If we compare that with '22 year-on-year, which once again was a one-off year linked to a number of parameters. Bruno will be commenting them in much more detail later on over the course of this morning. For the same period, we had 11.4% in '22. But let me remind you that, and this is important, the normal rate of performance over the past 15 years, our business model puts us generally in the first semester between around 10% -- 9.7% and 10%, and the second half of the year, generally speaking, between 10% and 10.5%, to give an average annual ROA of operating profit activity over 10%, 10.5%, good years and 10.2%. Here, we're at 9.2%, and as we were expecting, there was a correction linked to a number of components phenomena. First, it's -- and this is good news. The mix, salaries and sales price, we thought it was going to be very difficult, and we have managed to play with this gap between the big increase in salaries in '21, '22, 5% and how that has impacted our fees, this impact will only cost us 0.3% of this difference, 0.3%. That is to say we have managed to pass on, if you will, in our sales prices, in our quotes, in our work packages, in our fees, the increase that we have put in place, the increase in salaries, which is over 5% last year. That's very good news because, to be honest with you, it was a parameter that I was the most fearful of, the impact, as I was saying, will be 0.3%. No more than that, that is also linked to our capacity to improve productivity levels in our work packages, in our major projects, where we have succeeded in delivering on projects with fixed fees, thanks to our technical direction. So good results. So where does the gap come from? The rest of the gap comes from an increase of the intercontract. We had anticipated a lot of recruitment for the end of the year, the beginning of the year. This year, in spite of some warnings that we had seen at the end of '22, as ever, we prefer as we have done when we have lived through the different crisis, the Internet bubble of 2003, the subprime crisis in 2009 or to a lesser extent, the COVID crisis in 2021. We thought to ourselves, this is the time -- the time has come to recruit massively. We did it at the end of '22, but the market did not follow, there was a sort of a calming of the situation. So we found ourselves with a rate -- an occupancy rate, which was the satisfactory than we would have hoped for. We lost approximately 1% of occupation rate, which corresponds to 0.7% on the OPA. That's the second parameter. The third parameter, is the impact of acquisitions and M&M, which was down 3% over the acquisitions of last year for an impact on 2023. That's there at 3%. And finally, and this is something new, the final parameter. It's the cost sales -- cost of recruitment, which has increased substantially and which is going to be reduced for the second semester '23 and looking ahead to '24, because we invested substantially in the recruitment forces and in the training of new business unit managers, and also the G&A because the group were becoming very heavy. As you can see, 54,500 employees -- 57,400 employees, all our major customers are global, international, over EUR 50 million. They have at least -- if they're over EUR 50 million revenue, they'll have 3, 4 countries involved, Airbus, other such companies, a lot of international recruitment, the deployment of models in countries, growing models like in Poland, for instance, in Asia also, where we're going to attain 8,000 engineers. In Japan, we're developing very strongly, and in North America, where we have major ambitions. So it's -- there's over costs and it's HR, G&A and sales investments to cost us some 0.9%. And we're going to look to reduce that in 2024. We're going to reduce that by [ 0.5% ]. To say that the normalized OPA, we believe we'll get back in 2024 to the figures that I indicated, which is to say, over 10% with a small possible variation between the first and second semester but to be above 10% in '24 as in previous years. Naturally, we have a lot of acquisitions, and those will be the good news over the forthcoming months, notably in Asia and in Eastern Europe. So the impact can be variable according to EBIT of said companies. So those are the comments that -- Bruno will come back in detail, but those are the comments I can make with regard to the operating profit on activity of '23, and we look going back to being on a normal figures soon. With regard to the number of engineers, with regard to the growth in revenues, as you can see, we've had a growth of some 3,000 engineers. Essentially, mostly outside the borders of France. It's interesting now to look at the world as a whole to see the different geographic areas, and how growth there has occurred and is occurring. As you can see, there's growth everywhere throughout the whole world, whether that be North America, massive project there. We have our 2,600 engineers. And North America, let me remind you, 2,600 engineers between Mexico, the States and Canada. But there's some 2,000 engineers, who in offshore countries such as India. So it's over 4,000 engineers provided with workers. So with regard to revenues, it's higher than what you may imagine, looking at just the number of employees. If you look at France now, growth for them of 500 engineers, approximately 500 engineers. But in reality, the revenues increased more, because a lot of revenue was gained in France, notably in the Automotive sector, which has gone offshore to low-cost countries, countries such as Morocco, India or Romania, notably. And you can imagine with the -- for the automotive manufacturers notably, but not just for them. So when you look at the growth of number of engineers, does not always represent to the growth in revenue. And you can look at the growth of the current number of engineers' corresponding numbers in Africa, notably in Morocco. When you look at the rest of Europe, with a growth of 1,500, notably on local markets, South Europe and Benelux and Scandinavia, things went well and good growth in Asia also. And all of that, let me reiterate with the first semester, which was practically just organic growth, very little external growth, all the external growth projects that we're looking at currently or have looked at, we have been following them for some months, even several semesters and they will be rendered public in the forthcoming month and will impact the year 2024. Let me come back now to the positioning of ALTEN. Very important, it's evolving a bit. But what needs to be retained in the ALTEN jargon as a blue activity, which is product engineering, engineering services. With the design of industrial equipment, whether that be in the space, defense activity, automotive, transport, shed transport, public transport, trains or in industrial equipment, whether we're talking telco or research for life sciences. And that's what we call engineering services, which characterizes ALTEN, where we've won or one of the several -- one of the work leaders, which represents 70% of our activities, engineering services. And we'll see in the following slide, that's our brand image. It's our know-how, our original know-how. Essentially, crucially, we're in project or work package mode, that's to say that our customers, they give us part or all of the design of their industrial equipment to design it. Everything around the planification, organization or whether that be with the design of their plants on the right, manufacturing and engineering with the rollout of their infrastructure and customer support, technical documentation, that's in blue. And yellow now on the right, ALTEN is not just about engineering, and we're not just IT services, but we have this activity, which pertains essentially to banking, financing, insurance industries, which has suffered a lot, these sector. It's the activity, which has impacted us the most and retail and services and public administration, so it's 70-30. It's separated in every country and managed in a different manner within the ALTEN Group. It's important to really understand that, that ALTEN is organized in this manner. Looking at the different industries now, breakdown of turnover per sector. You'll find practically the same figures because the world of ALTEN -- we're looking on the right. As I say, you've got service retail bank and public sectors and represents approximately 30%. You can see in yellow there, we have to a certain extent in the industrial world at 2% -- no, more. In the industrial world, you can see that all sectors have functioned well, because you can see the growth in the Automotive industry with a lot of offshoring there. So what we are -- make in France, Germany. A lot goes into delivery, into realizations in India, Morocco, Romania and Mexico now, for the United States. Growth in the Aerospace, Defense, Security and naval, where there's practically no offshoring for results, which are easy -- for reasons which are easy to understand. And stability of the percentage, that is to say, growth of 10% in absolute terms for all the other sectors, Energy, Life Sciences, Telco. Energy, a lot of projects around the nuclear with the accompaniment of EDF, with everything pertaining to the EPRs. Life Science activities linked to processing of stats of the clinical tests, notably. And the 5G, of course, in Telecoms. So the blue sectors, engineering, have had good results, good growth, notably pertaining to Automotive, to Aerospace, to space, Defense. A bit harsh -- a bit harder in the yellow, Bank Finance and Retail & Services. I'll let you look at and discover rapidly, the split of our activities. This breakdown of our activities is strategic. We do not want to be pigeonholed as ALTEN, as just linked to one industry like a lot of our competitors, whether that be in France, Germany or elsewhere specialized in Aerospace, specialized in the Automotive sector, et cetera. The industry's [ width ] and breakdown is fundamental to ALTEN's strategy, in the sense that it enables us to withstand crisis without suffering too much. The 2000 -- telecoms crisis. Telecom suffered in 2003, 2009. It was the Automotive industry and the Banking one, which suffered a lot. The 2021 crisis -- the COVID crisis, it was the Aeronautical sector, which suffered a lot. So this breakdown, being present in so many sectors is a guarantee of ALTEN's durability and it's [indiscernible], which is one of the big groups at high level to have the specificity of being a multi-sector. I won't go into the details on the stakes sector by sector. You all have seen in the sector as -- what has occurred in the previous slides. So Automotive, things looking good, a lot of moving of engineers to low-cost countries, but the Automotive sector is still running after the sectors. But a lot of new projects, got a lot of reorganizations with the manufacturers, and they're putting ever more of their trust in us. Rail, we have big contracts there, which are allowing us to believe that there will be a big projects, worldwide ones, a replacement of rolling stocks. Notably, Aeronautics/space, very well positioned with all manufacturers in Europe. Unfortunately, we're not present or practically not with the Boeing in the United States, so that lets you imagine the field of investigation that can lie ahead of us, and the possibilities where we're going to get possibly very aggressive to move further into that market in the United States, but a lot happening, notably around the improvement of production and supply chain efficiency and manufacturing. And in space, a lot of new projects. Defense & Security, Naval, a lot of projects are there, and we know that in spite of what has occurred in -- with canceled projects, in the Naval sector, but a lot of new projects in spite of that are being -- are in the offing. And we've told to prepare for good growth. Energy, around the EPRs, renewable energy. We're going to look at organizing ourselves in a transborder manner, transnational to not just be responding in France, but also in the U.K., other countries. Life Sciences. Life Sciences, quite flat over the course of the first semester, but now there's a good bounce back, good recovery, launching the transnational activity at ALTEN level. And we're looking to boost and I hope so, to accelerate development. Telecoms, quite flat. A lot of looking for cost savings and limiting spend, but not in a dramatic manner. We are maintaining -- we have maintained our activity from a percentage point of view, slight growth, therefore. Industrial equipment, electronics, a lot of interesting points going on there, with some equipment to some OEMs who have decided to become partners. Bank, finance, insurance. Difficulties, we're looking to maintain our existing activities and indeed, our existing margins, but it's a challenge, and we're looking to have the same rate of occupancy and not have the intercontract periods too much, and that is what weighed on the rate of intercontract which increased over the course of the first semester. CSR policy, a few words now. And our approach, very important. As you can see, the pathway has -- we've traveled a long way between 2010, 2023, a lot of resources allocated to it. Substantial ones in order to respond to all the regulations, certifications. So you can see the certifications that we have on the right there. We have all the major certifications, and I'm just talking here at CSR, because I could talk about the other certifications pertaining notably to safety of IT systems, with ISO 27001, the different isolation, the different quality indexes. But now just talking about RSC and CSR, you can see how proud we can be and the different teams to be able to present all these results that you see on this slide. Next slide. And now we're looking -- I touched upon it earlier on. Growth strategy, we're not very proud or indeed happy with the result over the first semester. We have succeeded in having some acquisitions to sign some acquisitions, which had been in the pipeline, practically since the beginning of '22. Structure in U.S., Canada, not a major one, 185 consultants. That's how we're seeing. Now we're looking for companies, which will have between 300 and 1,200 consultants. So this is about under the target. In Poland, a very good company, specializing more in IT and telecoms, others in the offing. A company also, which works in India, a lot for the United States and for Germany, offshoring, which has joined our activities, our Indian activity in effect, because that's where the consultants are. A small activity in Aeronautics in Spain, Germany. And this is maybe the most interesting one in the first semester in Japan of some 720 consultants, which brings us to above the 1,400 consultants, engineers on the Japanese market and others will follow because Japan, just like Germany and the United States, the U.K. and India are strategic countries. We hope to have at one stage, over 10,000 consultants. So Japan is going to take off. But once again, I believe that other publications are to be expected, other statements will be expected in the forthcoming years to replace the -- to talk about the nonorganic growth of ALTEN with -- if we had, we could have attained 16%, 17% of growth, had we had more external growth other than just organic, and I hope that's what's going to occur in -- external growth over the forthcoming semesters. We're investing a lot. And the price levels seem to have calmed down a bit. For information, 90% of companies of over 500 people that we contact for M&A are already held by private equities or business banks, which are looking to multiples of 15, which is too expensive, we believe, especially with EBITA, which is with the corrected EBITA, which corresponds really to the EBITA or prepared 1 or 2 years before looking for resell. So we can't just look to work with such companies. They really need to be at EBIT, which are normalized, and that's really the case. And that's a major issue, to find the right targets in Europe, also in Asia, we need to identify companies who are will -- still with their founders, who would look to be accompanied by the ALTEN Group. So that makes the waters a bit murkier. But things are looking better, I must say, and I hope that, that is indeed the case, that things will improve at that level. Before I give the floor back to Bruno, maybe a quick word with regard to the shareholder base, which has not moved at all. So a very simple, I still hold around 15% of the capital, some year 1 -- 12 months back, I announced that I would transfer a lot of those shares, some 5%, possibly at the right moment to a charity foundation. So if there's movement, you'll know where that is going. The organization or the investment with regard to the development of the ALTEN Group, and nothing will change at that level. Thank you. I'll be back at the end of this presentation to talk about what we can expect and perspectives for next year. And I'll now give the floor to Bruno to go into more detail.

Hello, so moving on. Simon, of course, has provided you with a lot of indications around the activity of the first semester and the overall results on the slide that you have on your screen now. You can see that ALTEN has pursued its growth in practically in an uninterrupted way since the very beginning and has doubled over the 5 years. International is -- revenues are practically 70% of the group, which is a target that we had for '24, '25, and that we have attained earlier than scheduled. ALTEN started 2023 with 53,600 staff on the first of January, and 47,200 engineers. At the end of June, the group had 57,400 staff, 50,550 engineers thereof, which represents, over the course of this first semester, a growth of 3,310 engineers, 2,625 through organic growth. So the first semester, ALTEN has continued to grow beyond the growth of revenues, the sequential growth of the staff of ALTEN, which translates this dynamic of growth for the forthcoming semester and beyond. The sequential growth of staff has been 7%, 5% of organic growth, adjusted with the first semester figures looked at. On this current semester, the organic growth continues, represented 90% of total growth. So less contribution through acquisitions. Generally, we're at a ratio of 2/3, 1/3. Organic growth, which represents 90% of total growth. 12.5% in France and the foreign exchange impact, because of the recovery of euro with regard to some other currencies accounts almost 1% in the total growth. Internationally now. The figures -- the detailed figures with regard to the explanation of growth, because of the sale of an activity last year with [indiscernible]. The [indiscernible] the reference -- the reported revenue was processed. So 12.5% like-for-like basis, organic, which represent 80%. Foreign exchange, which is weighing more, because internationally, minus 1.5%, but international growth, which is not homogeneous according to the different geographical areas. So first semester, global growth, which remains satisfactory, even as several of you would have noted, it decelerated in the second quarter that was -- had been anticipated, and we had communicated around that back in '22 already, and which should continue over the second semester. In France, in spite of a base effect, which -- under one working day less than last year, the activity progressed by 9.5%. So it would have been 10.5% with -- if it had been like-for-like working days, remains dynamic. Automotive, Defense, Security and Civil Aeronautics and plus 20% in those sectors, in each of them. In Europe, outside France, a growth, which is satisfactory, almost 16%, even if you'll see Scandinavia and Germany have slowed down in the second quarter. So without too many going into details, activity in progress of 17%, all -- everywhere in Germany, a slowdown, which is due to the stabilization -- progressive stabilization of the activity in the Automotive industry, which is still in growth of 10% year-on-year, and a deceleration of growth in Aeronautics. The 2 sectors in Germany representing 70% of the turnover. In the U.K., growth is around 16%. This is due to Automotive and Aeronautics, And Italy, growth by roughly 26%, in all sectors. In Benelux, growth by 15%, rather even between Netherlands and Belgium. In the Netherlands we have more IT, and then in Belgium, we have a big increase in Automotive and Rail. Scandinavia, more is the same as Germany, due to Automotive and to trucks. In the Eastern Europe, 27%. So that's quite satisfying, even though, well, in the second quarter, it was slightly down. Poland, representing a big chunk of this part, grew quite substantially. So quite interesting. Then we look outside of Europe. In North America, growth by 7%, like-for-like. In the U.S., well, what we had already noticed and have funded into, was confirmed in the second -- in the first half of this year, especially in the Automotive, where the situation is rather flat. In Canada, the growth is also down due to the to the Aeronautics and Finance sectors. And then Asia, we already had seen a slowdown last year and the explanation here is mainly Singapore, Singapore representing 12% of our revenue. So the growth in Singapore is explained by a certain number of big projects in oil and gas and in the Finance sector also. So Singapore, so -- shared this information because, I mean, in order to understand the figures, this is important, but -- so Singapore only represents 4% of the Asia Pacific sector, where last year, it was at 12%. And the -- without Singapore, the Asia Pacific growth would be up 8% -- 18% and not 6%. So the situation is quite good in Asia Pacific, given the situation. So in China, which represents 35% of this area, growth is slowed down, 7%. India is up by 15%. Japan, up by 30%. In Korea, up by 35%. So results for the first half, as Simon mentioned this. Well, a certain number of reasons explain why the operating margin moved from 11.5% to 9% -- 9.2%, sorry. So it's kind of comparable to the margins that ALTEN would generate before COVID. Just to explain to M&A, it cost us 30 bps, but then we explained this in July, the activity rate is 92%. So well, that's slightly down, which represented 70 bps, then the other impacts, price ratio and so on, cost us 30 bps. And then SG&A costed us 90 bps. And I want to insist here that we have to [ envision ] a number of nonrecurring expenses, namely the furbishing of a certain number of offices, information systems also that we had to work on. And as you know, I mean, most of the solutions that we give for [ FIS ], where they used to be assets. So the result is, all in all, quite satisfying and the margin of 9.2%. Then if we look down to the share-based payments. So this is noncash, right? So this is we take it into account, representing EUR 16.6 million, which is in line with what we did in 2022. And given the plan that is projected for October for the year, this will represent roughly EUR 31 million. Operating profit is of EUR 15 million -- sorry, the long-term profit is of EUR 15 million, but this is due to M&A. We have EUR 1.7 million that's due to a number of fees and acquisition costs, and we have EUR 7 million of bonus pools, which are kind of earnouts. But cannot be, let's say, counted as goodwills, due to a number of management rules. And then we have certain number of earnouts, complementary expenses that have to be counted here. So the real nonrecurring profit is roughly EUR 3 million -- the financial income, right, is roughly EUR 3 million. And then the financial result will be explained on the next slide. And then on tax, EUR 42.5 million, and for 2023, you can roughly count to 25%. So our income result is 5.4% of our revenue, 5.4% of the revenue due to the M&A, operating expenses. So what can we say about this financial income? Not much. If we look at a certain number of aspects, namely the interest on the leasing contracts under IFRS 16. So that we pay out -- down by EUR 1.7 million. And the cost of the net financial debt is EUR 1.6 million. The exchange result is minus EUR 1.8 million, and then the other net financial income is down by EUR 0.8 million. Then if we look at this by geographical area. So you can see here that France, as actually for the international, have lesser performances compared to last year. Let me draw your attention on the fact that in France, we have to bear a certain number of corporate expenses, which are not invoiced to the international because they cannot be, due to the nature of these expenses. Having said this, the revenue of France, given to the way France is structured, this -- yes, the impact of this cost is quite important. And this is important to understand right. Then the operating profit, down by 2% for France -- 2.3%. So, one working day less in this year compared to last year. So this costed us 60 bps. And then other impacts on the gross margin, well you have the certain number of income and payroll impacts that need to be taken into account so, yes. If we take SG&A, they increase by 70 bps, this is quite temporary for, well, the reasons I explained. If we look at the international now, well, margin is quite high, close to 11%. The impact here is from M&A, by 45 bps, as we said. And we are down due to activity rate, which is below 2022 and also the increase of structuring expenses. So just to summarize per geographic areas, we can say that we have 3 big packages that we have North America, the U.K., Nordics and Germany, where we are down by 10%. Then we have APAC and Eastern Europe, where we have a 10% margin, and Benelux and Southern Europe with, let's say, very high -- higher margin, over 10%. So the impact of M&A is a lot in international and the [indiscernible] rate is over 27%, and for the international, 25%. So this takes into account the rate in the U.K., where we moved from 19% to 25%. So well, the balance sheet, you know it, only the figures have changed, right, from 1 half to the other. [ Current ] assets, still the same. Net cash, EUR 396.5 million, and the gearing is down by 17.9%. Then the impact of the IFRS 16, kind of flat. Here, you have the detail here. So 85% for real estate, 12% on vehicles and 3% on others. Cash generation for the first half, well, and you can see then the treasury bridge. So ALTEN generated a cash flow, outside IFRS 16, EUR 35.4 million, so that's 9% of our revenue. This was used to pay 81.9% of tax. We name it -- taken into account for the cPrime sale, we paid an increase of working capital requirements of EUR 111 million and CapEx, which are not that high, EUR 12.8 million. So the free cash flow is negative by EUR 35.4 million for this half. Then for the financial investments, we have EUR 53.5 million, so EUR 14.5 million payback of cash in, right? And then we paid EUR 21 million of cash outs and EUR 47 million of acquisition price for the acquisition of a certain number of companies. Dividends, EUR 54 million and ForEx -- but this is rather technical, let's say, not that high, representing EUR 1.8 million. So free cash flow, well, you have the main elements which allow you to understand what is -- so the presentation, right. We have it for the half year and over 12 months, right? Because obviously, there's a lot happening in the first half. So anyway, so the cash flow business, which is in line with [indiscernible]. We paid taxes of EUR 37 million. So the tax that's been paid is only EUR 44.8 million. The working capital change, right, is higher in the first half. So we see an increase of our customers so from the 112 -- EUR 111 million due to the customers. And then we have an increase also with the work in progress, right? Namely for the Eurozone. As for each first half, this increase there so -- is due to a lag in the orders and also the complex situation, right, with our clients, which obviously create lags in the -- lag in the invoice. We have [ some accounts ] that allow -- that ask us to help them manage and their working capital requirements and so, well, this has an impact. Then not that many payment delays. So obviously, we always invoice right. But this all in all, costed us a few days of DSO. So of the EUR 116 million, we have EUR 55 million due to the organic growth, because organic growth, obviously -- well, this uses up cash. And then the rest, so we have DSO lags so, 92 days. So that's 2.5 days more compared to last year. For the rest, well, it's not much that needs to be said. CapEx represents EUR 12.8 million, and then the free cash flow at EUR 22.4 million, 1.1% of our revenue. It would have been EUR 14.7 million, so 0.7% of our revenue, so higher than 2022. So we have reset the one-off tax impact, right? So what you see here, the main information that I just mentioned and then just a summary concerning the results of this first half. So what you need to bear in mind is that the organic growth in our activity remains solid, right? Even though it is slower, as expected, right? And as a result of the normalization of the economy, it's expected to be somewhere around 10% at the end of 2023, perhaps even more, perhaps even less depending on how the Q4 pans out, especially October, November. The operating margin, which includes the dilutive impact from M&A. And so this was for the first half -- this half 2 and for ahead of the year, actually, the impact of the -- actually, we could say satisfactory activity rates, lower than 2022, indeed, but which was -- that's an exceptional level. Then we have a certain number of operational and organizational initiatives and spending. So technical department, sales, hiring, information systems, et cetera, and that the price-wage ratio, which remains stable overall, right? The free cash flow, which we stated, not for the one-off tax impact, benefited true, right? Of EUR 14.7 million, so 0.7% of revenue. And the net available cash of EUR 299 million, which allows ALTEN to continue its development, namely M&A and international. So I'm now happy at the end of the presentation to ask any questions you may have. And with this, I give the call back to Simon, who will take us through our growth strategy.

Thank you, Bruno. So our development strategy is rather clear, as it consists in going over the 50,000, sorry, engineers to 70,000 engineers, right? In a breakdown, France-international, 25% France, 75% international, and the blue-yellow split, so blue 70% and 30% for the yellow activities, so try to consolidate, which gives us a, let's say, today 35,000 people split for engineering and 15,000 in the IT services. So we need to sustain the international expansion of ALTEN. So this is our challenge for the 3 years to come. To do so -- and this is actually what we work on, on a daily basis. So we need to manage -- our management with this, do we have the right development of the company. This management will not come from elsewhere out of ALTEN. We could hire people outside, right, for support functions and finance, why not. But for the positions that are really, really ALTEN, let's say, so technical functions, sales, business management, we do not have any competition which could allow us to recruit people at the level we need, right? So we need to make these people. And so this is exactly what ALTEN's development is all about. We need to maintain our talents. We need to have a great employer brand, and we need to push the people, with regards to mobility. Our problem, right -- this could seem odd, but our problem is not so much the market. The problem is management. We need to have enough managers, and we cannot go find them outside, because we are leaders, right? So we just need to push for training and push for manager mobility, the system, main, main issue. Then we have to take into account the evolution of our customers, international. We need to work on the commercial and technical organization. This has an impact on the G&A, obviously. The G&A did not increase just because of that, right? It's -- let's say, half of the increase of G&A is. But the other is the investments in each transactions. But anyway, so to go abroad is a good thing, but then working on the impact of sales management on 5, 6 countries for certain projects, right? To push our top clients to over EUR 100 million from about EUR 30 million. Well, this is what it takes. So anyway, then we need to improve the profitability of our centers, right? We need to consolidate the technical departments to maintain our level of margin, taking into account the increase of salaries, wages. Our wage strategy has been obviously very important, considering our margin. And then the financial situation of the company allows us to go for acquisitions. So, well, given the situation, M&A is perhaps going to be, let's say, it's going to slow down. So we need to, let's see, go find us companies that will allow us to consolidate the countries, Japan, Germany, the U.K., namely. So we have a lot of work that we need to do to achieve what we want by 2026. So this is basically what our challenges are about. Now we are confident that this will happen smoothly. We've implemented what needed to be implemented to allow this, to generate the margins that are necessary. But now we have, as I said differently, all the necessary assets, right? To manage this development. The organization, the, let's say, deliver -- the financial situation, yes. Perhaps the first item -- perhaps the most complex, by the way, and given the fact that the geographical organization needs to be consolidated by a transnational organization. So this means that even though we have this P&L manager, we want to have transnational offer management and managers to better manage these, right? So this is regarding the strategy. And then this is really great, right? And we really believe and are confident that we have all the assets, let's say, to do so. So with this, thank you very much for your attention. Bruno and myself are very happy to answer any questions you may have for us. Okay. So I'll take them as they come.

Okay. So I'm not going to say who asked them, they all just know, right? So we talked about Boeing, right? Boeing, which could generate as much business as Airbus. Actually, well Airbus, we have these 4 clients, Civil Aeronautics, air space and -- the Airbus Helicopter, yes, sorry. So Boeing, why not? Now before we go for Boeing, and this is obviously a strategic decision, right? We need to be ready in the U.S. We need to be set, right? We just can't go -- I mean even though ALTEN knows what it's doing, and then we're good at what we do. But then when we have France, we have Germany, we need to have the right capacity in the U.S. and the neighboring countries, so Mexico namely and Canada, why not, to be well set. So we have an existing sales structure. What will actually give the go to the Boeing strategy is once we have consolidated the technical department in the U.S., we don't have this department per se. And since the real -- reorganization in end of 2022, North America has been reorganized, and the idea is to make the -- make North America benefit from the European system and structure, right? So I hope that we will be ready in, let's say, before the end of the first half of 2024. The person that is in charge of Aeronautics Space, Defense in France, which coordinates its -- in international has been appointed Manager of the U.S., for this reason specifically. So this is for Boeing. So we hope to go for Boeing next year. We know that we are capable to present the Boeing offer, then we have a certain number that's set to go to India, but they're not too happy for a certain number of issues. Even though in some cases, okay, well, they have their teams in India. But there is a know-how right and the know-how needs to be sustained locally. But in Boeing and the U.S., they could go for freelance, but we don't believe that's the case, no. Anyway, yes. Then another question here. We have a lot of questions concerning the margin. Okay. Well, I'll let Bruno answer regarding the margin.

So concerning the margin of this year and actually only for the first half. So the question is regarding the gap between 2022 and 2023. So the second half, right, let me remind you that we had 1.3 working days less than last year, which is important and is taken into account. We have the dilutive impact of acquisitions, which, due to the consolidation of the acquisitions, should increase slightly. And then everything will depend on the September activity. Then what we actually, can't -- I think we were at 10.5% last year. We wouldn't have a 2.2% differential as during the first half, if we were to give you, let's say, of an idea, it should be somewhere between 0.7% and 1.5% negative, right? So this could allow you to compare H2 2023 with H2 (sic) [ H1 ] 2023. So can we have a global operational margin for 2023 below 10%, that will depend on Q4. But if we take the assumption, the high would be below at 1.5%. So at 1.5%, we would be just slightly below 10% overall for 2023. Concerning the acquisition in Japan, as you know, we do not publish the price of the acquisition. It was sold by a private equity fund. There are no earnouts, right? So because of this, well, the -- let's say, obviously, we are higher than the usual situation, right? Roughly, it's somewhere between 6 and 8, right? But with an earnout, as there's no earnout, obviously, we'll be slightly higher. The operational margin, let's say, is roughly 10%, slightly above. But as Simon mentioned, we are very suspicious, right, on these types of EBIT, because usually, you will -- there's a lot of -- let's say, the margins that are not exactly the operating margins, especially when we acquire from a fund. So okay, it could be somewhat over 10%, but it could be just 10%, depending on what exactly we do. And then each time a company enters a company, we need to structure it and not only on the sales level. So maybe I'll let Simon answer with regard to the M&A pipeline, what are the geographical areas where we have ongoing discussions and the possible size that we're talking about.

As I was saying earlier on, we're on the areas where we have satisfactory feedback, so more towards Asia -- India and Asia Pacific and Eastern Europe, too. And it's not because that's what we are focusing on, it's -- that's where we have managed to identify interesting companies looking to join us. Our efforts are very focused on North America and Germany, but we are struggling, currently, for the reasons I explained earlier on, because the companies have equity -- private equity groups looking for multiples of 15 and some more aim of 2.5% on revenue, which is absolutely unacceptable to us. Of course, so this is saying why we are not having that much success currently on such areas. But strategically, internationally, we are looking to identify acquisitions in every country. We could even envisage an acquisition in France, why not, to complete some sectors, industries, offers, but that's not where we are really concentrating our efforts. So the U.K. very interesting, because sector -- because you want to go beyond 5,000, but very expensive, the policy of acquisition, nothing unveiled there, really. All countries which have substantial capacity, Japan, U.K., Germany, India and the United States of America are our preferred targets. That's where things are the most complicated, of course. To come back now to other questions pertaining to impact, because I saw a number of questions asking what are the specific impacts. I believe that with regard to the margin for the forthcoming semesters, I have touched upon, talked about the different parameters, rate of activity. Currently rate of activity is normative. That's not where we're going to garner more points. It's more the readaptation of our costs of our M&As on productivity of work packages, and the improvement and the reconquest of the margin mix, salary, price of sale, where we've lost approximately 0.3%, where we've limited the damage, of course, but otherwise, it would be 0.6% mitigated by 0.3% of improvement projector, if you want the details. So the 0.6% of mix salary prices. We're really looking to bridge that gap, reconquer it maybe over the second semester 2023 at the stage where we are. We've already reconquered part of it. But as soon as we have the negotiations of the beginning of the year with 2024. That's why we're confident that we'll get back to the normative framework with regard to our EBITDA and our [ habitual ] operational result, to be beyond 10% in other words. Let me insist upon one element. I said it early on, we were expecting worse in effect, looking at the mix price of sales, salary, that ratio, it's 5% of increased salaries. So it's difficult to pass that on in '22 throughout the year. It's partly passed on in 2023 to the customers. And I hope totally so in 2024 and the fact that we only lost 0.3% with regard to that ratio, thanks to the productivity of rate of work packages is good news. We will say the bad news is the 0.9% of SG&A. But Bruno explained that it was really down to the situation, such as it was, and we have mitigated that and we'll continue to do so rapidly. And we have a question, now with regard to the data of consolidation of '23 acquisitions with to the operating margin perspectives on the normative -- without changes.

Nothing with regard to ALTEN, its normative margin of approximately 10% over the years of the activity rates, the mix of activities country by country, the number of working days, because you'll have heard that continues to have an impact on the operating profitability. But the operating, the economic model of ALTEN, even if last year, the margin was under 10%. It's a margin of around 10%. With regard to the data consolidation of acquisitions. The question has come up a number of times. The companies -- the first company that Simon mentioned that we bought in the United States and Canada. We're going to consolidate that from the first of July 2023. The one purchase in Poland will be consolidated from the first of October '23. Like -- just like the company bought in India and that would be on the first of October 2023. The company that we work in Spain in the aeronautic field will be consolidated from the first of January 2024. Just like the Japanese company that we have just acquired. So that gives you the dates of consolidation of -- for the provisioned ones of the companies acquired of recent. In the companies that we buy, you can imagine that the internal organization needs to be looked at, before the companies can in line with the requirements that we have for consolidation from our side, to the efforts for integration are substantial, they need to be implemented. So generally, there's some 3 months between the date of acquisition and that of consolidation.

I hope that we have answered to the questions that come in, there are an array of questions, but we try to summarize in our answers, the questions that came in. But of course, we remain at your disposal after this meeting and from next week, we will have -- we can commit to one-on-one meetings or in a smaller committees. And don't hesitate to contact for any questions you may have. Thank you very much for your participation, your attention, and I say to you all, [Foreign Language]. Thank you. [Statements in English on this transcript were spoken by an interpreter present on the live call.]