Eiffage SA (FGR) Earnings Call Transcript & Summary

[Interpreted] Good evening. Thanks for being present today for the presentation of our half year results. Thanks especially to those who are present with us in this audience and those who follow remotely. We could not be very numerous in this audience. With us today, the ExCom members. Please allow me to introduce Cécile Cambier, who became Head of Concessions last spring. She started her career at Eiffage in 2003 and then joined Vinci in 2008. She was leading previously the Société Marseillaise du Tunnel Prado Carénage and Prado Sud companies -- Eiffage as a shareholder of this company. Thank you, Cécile, for having accepted to leave Marseille, this marvelous area, to lead the portfolio of the Concessions of the group. First half of 2021 is back to growth after 2020, impacted by the health crisis, supported by historic order book, the Contracting record revenue which is higher than 2019. Concessions go on being impacted by the limitations of the movements but less than in 2020 given the upstart of economy. Globally speaking, in Construction as well as Concessions, our results are increasing over the half year. I suggest to go over the highlights of the half year before giving you the perspectives for fiscal 2021. Christian Cassayre will introduce the financial elements in detail. In Contracting, the half year was highlighted by a dynamic order book even if it doesn't reach the first half of 2020, where we have recorded, as you remember, 3 very important construction sites. This is a proof of the upstart of construction in France. Eiffage Construction together with Eiffage Energy System won the last leg of the rebuilding project of the penal institution of Baumettes in Marseille for over EUR 90 million. Our teams won the tender for the implementation of a new building of 27,600 square meters of Dassault Systèmes in Vélizy. Since 2008, we have built already the 4 previous buildings. To be noted, development by Goyer of an alternate concept of Window's, whose analysis of life cycle enables a reduction of the carbon footprint of the building. End of 2019, the government decided to streamline its park of 39 administration areas. Most of them wouldn't -- are not offering any more working conditions -- satisfactory working conditions. In 2021, Eiffage won 2 contracts in the framework of this program. First program that you see on screen for the renewal of the administrative area of Colmar, including the renovation of a building, construction of a new building and the operation and maintenance for 8 years of all those. Those works will enable to save 70% of energy. We have been earmarked to lead the first leg of the rebuilding work of the administration city of Lyon in the core of [indiscernible] neighborhood, including a building of offices and a building of apartments for EUR 88 million, high environmental quality and will use bio-sourced material. We already launched the works of the e-sector of the Village of Athletes in Saint-Ouen suburb of Paris. Projects will mobilize over 4,000 people, will enable to welcome slightly more than 2,500 athletes in the summer of '24 and as of '25, inhabitants of Saint-Ouen. It has been designed to meet the environmental and social challenges through a saving construction system, mixing wood and low-carbon concrete, a smart energy steering and a solar energy with a storage of energy with cells. We'll leave a large room for vegetals to bring some freshness. We have a unique model of contractor promoters. It's the teams of Eiffage Construction that will build for Eiffage Immobilier and all the promoters constructors. The beginning of the year has been highlighted by the delivery of the Hypérion Tower in Bordeaux. The tower has been acknowledged by the government as industrial demonstrator for the sustainable city and was awarded the price low carbon -- residential low carbon. As an example for many operations, this operation of the E3C2 level is really illustrating this low-carbon strategy of the group. Hypérion over its life cycle will store 1,400 tonnes of CO2, meaning volume a comparable to 9 years of energy consumed by a building of this size. Other operations are underway like a school -- high school in Clermont-Ferrand, implementing timber wood frame with walls isolated with straw. Eiffage Aménagement was appointed for the tender of the urban design concession of Lallier, Gare des Trois Communes in L'Haÿ-les-Roses. In Belgium, our teams won the contract for the transformation of the transition of Gand-Saint-Pierre and the renewal of the trucks and the banks and the peers for EUR 86 million for Eiffage. In Switzerland, our teams launched the works of the apartment tower Artisa in Zurich. This 80-meter high tower and 26 stores will welcome 140 units as well as restaurant and stores. In property, reservations for units are reaching 2,194 apartments, above the number of 2020 but below to the tune of 13% as compared to 2019. The decrease of property market in France is offset by the starting of several projects in such this activity that we created in Poland. I discussed that from the previous years. On screen, you see a building of 450 apartments that we also sold as a whole to a Northern investor. Our facade builder Goyer signed a memorandum of understanding for the implementation of the 98,000 square meters of the, The Link tower that will welcome the future headquarters of Total at La Défense. As you know, the group is committed on the program Grand Paris Express. We employ over 2,700 people on the various operations which were awarded to the group. Since the beginning of the year, we won several new contracts. We have been appointed laureates for the works of the station La Courneuve Six-Routes and Blanc-Mesnil (sic) [ Le Blanc-Mesnil ] for an amount of EUR 97 million. And we have been notified for the train station [indiscernible] Together with EQUANS, we won 2 markets for the implementation of the ventilation, smoke and the compression of the Line 15 and the extension of Line 14 for a global amount of EUR 56 million. As a reminder, this expertise, state-of-the-art enabled the same group to win in July 2020, a contract of the same kind for the Lines 16 and 17. Outside of Paris, we were awarded as a group the works to increase the capacity of Joannès Couvert embankment in the Port of Le Havre, which is due to welcome a manufacturer of wind turbines and blades. We have also won, beginning of July, 1 of the 2 major contracts with implementation of the base tunnel, French side, in the framework of the project railway tunnel Lyon-Turin for a total amount of EUR 1.470 billion. That is EUR 660 million for the group, namely more than 700 employees. Our civil engineering teams are working since 2014 and the implementation of recognition works in Savoy on over 12 kilometers. In Germany, we will build a new bridge in Leverkusen for a total amount of EUR 180 million, namely EUR 116 million for Eiffage. Eiffage Metal, with its implementation in Germany and Belgium and France, will build the future bridge twice 3 lanes that should double the capacity of the existing bridge, which is not sufficient enough. Through this project, Eiffage participates to the program of improvement of the quality of the bridges in Germany. In Senegal and Mauritania, Eiffage goes on working on the Greater Tortue Ahmeyim projects for BP. Since July, 6 of the 21 concrete boxes -- there's only 5 on the picture because the sixth has been launched yesterday. 33 meter high that will be the breakwaters of the GNL terminal were installed 10 kilometers from the coast between Mauritania and Senegal. The building of the boxes mobilizes over 1,500 people. In Djibouti, we launched the desalination factory of Doraleh. It will feed 250,000 inhabitants in drinking water and sweet water, thanks to renewable energy. In the U.K. works go on, on HS2. As you may see, the groundwork started on the project. 15,000 freight trains will be used to transport 10 million tonnes of granulates, enabling to reduce to the tune of 30,000 tonnes the release of carbon. On roads, the activity hasn't reached the level of 2019 but one has to remind that this was then a pre-election year, which is always favorable to strong volumes. However, the first month of 2021 showed a better traction of the shops -- proximity shops. Always innovative, our teams developed Bioklair, a coating which is ecological and esthetic, devoted to the improvement of the standard of life. 100% recyclable, this coating uses a vegetable ligand instead of bitumen. It reduces the release of carbon by decreasing the temperature of fabrication. Bioklair was used in the area of [indiscernible] on foot path and cycling path to create freshness islands in schools -- school grounds. We restarted our works on the ring road of Paris, the large site on which our teams are working at night for over 20 years now with an average yearly of 8,000 tonnes of coated, including 20% of sound coating since 2013. Steel activities, very intense on the offshore. In Germany, we work together with Fabricom for this electric substation of the wind farm offshore of Baltic Eagle, a structure of 7,150 tonnes similar to the one you see on the screen. This will be the largest station on the Baltic Sea and will provide renewable energy to 475,000 households. In France, we take part to the development of the wind farms offshore through several projects. Smulders and Fabricom are building a substation of electrical transformation for the wind farm of Saint-Brieuc. The substation, total head of over 100 meters, includes a jacket of 1,630 tonnes and the topside structure of 3,400 tonnes. We implement the design and creating of monopiles and transition pieces of the 80 farms -- wind farms of Saint-Nazaire, the linking by cables to the electric terminal. We built also the maintenance base of the park of [indiscernible] and we are stakeholders in the pilot projects of floating offshore wind farms in the Gulf of Lions in Mediterranean Sea. For Energy System, the activity remains very dynamic in France as well as internationally. The organization by markets implemented in the framework of the strategic plan is bearing fruit [indiscernible] its branch to go on its path of increase of activity and improvement of profitability. To support the preparation of the decommissioning of Fessenheim nuclear power plant, EDF asked us to work together with Endel and Omexom. Started last March, the contract could go on until the end of the decommissioning of the power plant. 35,000 sun panels have been installed for the sun farm of Eosol Energies Nouvelles, the land area southwest of France. Those solar cells can also use the solar reflection from the ground. In Belgium, at the heart, the core of Brussels, Eiffage Energy System will light the church, Notre-Dame de Laeken. 4,000 hours of work were needed to install more than 400 spots, 100% LED. In Senegal, we implemented the project of Boucle du Ferlo, a 225-kilovolt line of 275 kilometers. The aim of the project is to develop the transportation network to secure the energy for the zones of Touba and [indiscernible] in Senegal, increase the transit capacity to the car and improve the quality of service. We implement also 4 contracts of electrification in Benin and Ghana in the framework of a program of development of Africa. Some talk on Contracting. We could have feared a decrease of our activity but the good traction of the proximity shops, as we can see in the book of orders, is very reassuring. We are very, very watchful about the property. As you have seen, the request for public equipment, new or renewed, is very strong. We can hope an awareness raising by the government to facilitate the property because the request for housing is very important. Even if it's not being felt as of today, the recovery plans of the various European countries will be an element and support as well as the activity generated by the major sites. They enable the order book to remain at a high level while not integrating yet the EUR 660 million of our share in the Lyon-Turin railroad. You have noted our very important positioning on all of the renewable energy: Wind farms, terrestrial with [ mass ], offshore with the foundations, transition pieces and substations. Sun farms, where the French and Spanish teams are recognized for the construction of the wind farms, we ensure also their maintenance for 5 to 20 years. Hydraulic, with the works and operations of micro power points for Eiffage Concession. In renewable energies, our subsidiaries works implement EUR 800 million of activity, EUR 800 million. All this will enable us to get back faster than foreseen to the level of activities we had in 2019. In the Concessions, we go on diversifying our portfolio on territories where we are implemented -- implanted, located. We acquired 2 new hydroelectric power points on [indiscernible] enabling us to increase our portfolio of assets in the micro power points -- power stations that we started in 2019 with the acquisition of 8 micro power points. We installed also sun farms on the unused parts of adjusted lands to the motorways. The widening in the 2 standards of the motorways of our national road 79 are in the full peak of production with the presentation on site of all of our businesses -- business lines, mobilizing over 1,300 people. The site was sped up during the summer, all along the 88 kilometers of the projects to be implemented by the second half of 2022. The bridge of Allier, the most iconic part of the site, is moving quickly. On the road, half of the coated have been implemented and 25 kilometers were open to traffic at the beginning of the year. After 3 years of works, we implemented the new turnpike of [indiscernible] at the core of Allier, totally financed by APRR. This infrastructure enables to fluidify the circulation, the traffic and to increase the security of the clients on the A71, totally connected now to the A79. Beyond those elements, we have already noticed an upturn of the circulation during June. I am pleased to confirm that the summer traffic has even went above the one of 2019 and 2020. But Philippe will give you more details answering your questions. After the summary of the highlights, Contracting and Concessions, allow me to get back to the low carbon strategy of the group I presented in details during the annual results of 2020. According to our commitments, we have published this year our second climate report. We stated our commitment to go on with the 1.5 strategy adopted by the Paris Agreement, committing ourselves to reducing by 2030 at least 40% of our gas release compared to year 2019. Eiffage committed to reach the carbon neutrality by 2050. As you have seen previously in my presentation, with our partners, we put forward action plans of offering of low-carbon offers in all the business lines of the group, so our clients can hold their commitments, too. Among the various actions, let's remind our participation announced in June in the third [indiscernible] and eco-material of Bpifrance and the framework of the support of the French line of business in this kind of development. The success of the group is linked to the consistency of all the employees through strong values. For over 30 years, we are all collectively committed in the success of the group through the salaried shareholding. This year, all the indexes are in progression with 73% of the employees who subscribe, which is the token of a major trust of our employees and their company. I cannot conclude this overview without our pride in supporting since 2015 high-level athletes, French athletes. 5 of them were in the summer in Tokyo. On these pictures, you recognize Clarisse Agbegnenou, gold medal in judo individual and by teams; Amandine Buchard, silver medal in judo; Valentin Belaud, pentathlon; Gabriel Bordier, athletic walk; and Manon Valentino, BMX. I'm not forgetting the Belgian male team of hockey, supported by our activities in Belgium who won the golden medal. After this summary of our highlights of the year, let's get back to the major figures of the half year. Return to growth of the revenue, very strong increase to the tune of 25.8% the first half year 2020, being impacted by the containment in France, like in the major countries where we are located. Even more important, we are growing by 1.9% compared to 2019. An operational result that is of EUR 679 million with the contribution of the Contracting, slightly above 2019. It's very good news. The Concessions remains impacted by the limitations of the moves. This leads to an increase of the net share of the group result to EUR 260 million, close to its level of 2019 than to the one abnormally low in 2020. The debt net is at EUR 10.2 billion. So a very important decrease of EUR 700 million, thanks to a good cash flow of the group. And the book of order maintains itself at a very high level. The order intake is more solid than expected. As you will notice by turning on your phones, we have decided to exert our right of preemption on the 35% of the capital of the motorway A65 between Pau and Langon, which were held by Sanef, co-shareholder of Eiffage. We are in discussion for the acquisition of Sanef Aquitaine, retained 100% by Sanef. Once finalized, this transaction will make Eiffage the only shareholder of the motorway A65. Due to those elements, we anticipate an activity of Contracting in a significant rise compared to 2020 and slightly above 2019 and activity of Concessions still impacted by the limitation of the moves but less than in 2020 and group results insensitive of increase. Thank you for your attention. And I leave the floor to Christian for any detailed financial elements.

[Interpreted] Good afternoon, good evening, everyone. Let us go through the numbers again. The revenue, as was just pointed out, was significantly up compared to H1 2020, up 25.8%, almost 28 in contraction -- in Contracting. You can see that in France, the bounce-back is twice as high as the rest of the world, plus 3% compared with 16%. That's because, of course, in 2020, everything ground to a halt. Let's look at the next chart using 2019 as a reference just to see just how back to normal we are. The good news is that we -- revenue is up 1.9% compared to 2019, up 3.8% in Contracting. You have to remember that there were 2 years of strong growth, both in 2019 and 2018. And so the basis of comparison was high. And yet, we're up 3.8% compared to that. Concession are still suffering because, of course, people are not allowed to move about so much. And so here, we're still looking at a decline, a 7.3% decline in revenue. In Contracting, infrastructure and energy have had a very dynamic half year. Construction is slightly down. On the right-hand side, you can see that business in France has been buoyant, up 4.3%, even though there were no significant acquisition, any external growth. In the 3 countries that generate in pro forma upwards of EUR 1 billion in revenue, Germany has enjoyed a 26% growth compared to 2019; Spain is up 16% and Belgium, 7% up. So again, a good momentum in 3 flagship countries. Operating profit is, well, understandably high up compared to 2020. The good news is that Contracting have displayed a profit margin slightly better than 2019 and an additional EUR 30 million in profit. Concession is still below 2019 even though -- well, because we didn't have, of course, the negative contribution of airports. All in all, operating profit is -- the margin is 7.8% versus 9.8% in 2019 and 3.8% in 2020. So here, we have the breakdown branch by branch, still using 2019 as a comparison. In Construction, most of the business is done internationally, mostly in Poland. At the beginning of the year, we've seen a resumption of growth that should continue in 2020. There is a slight growth in France, where we had some significant businesses in commercial property and public buildings, and that is doing rather well, whereas residential property is down. Reservation for property development is slightly down, down 13% compared to 2019 but it's minus 30% in France, and that is in line with the contraction of the market. But you have to compare this with Poland, where you had 500 reservations or 100% of all the properties were actually presold. Operating profit from current operation in property development is EUR 29 million compared with EUR 39 million in 2019. In 2019, there was capital gain because of the sale of an office building. Operating profit -- operating margin is back at 3.4%, so in line with 2019. But there's a less contribution of property development and an improvement -- a EUR 10 million improvement in profits from building operations. There's a rehabilitation and extension of the public baths in Strasbourg, and that is modernizing this listed monument. You can see nice pictures. The rotunda, the Roman baths work is well underway and it will be completed in November. In Infrastructure, revenue has been pulled, thanks to civil engineering in France in particular, particularly Grand Paris Express. That was EUR 370 million in the half year compared with EUR 313 million in 2019 and EUR 300 million in 2020. And the growth in metals because of the project in Saint-Nazaire, there is a wind farm being built there. And in roads, there's a slight decline, but that's because there was a high comparison basis in '19. In 2019, of course, there are municipal elections in 2019. We see that there are new businesses where we are bidding, which was not the case a year ago. You have in particular some businesses in -- for local authorities around the country. Internationally, we've got a positive momentum in Germany with work on the motorway A3. In the U.K., again, the building of the high-speed railway track HS2 is, of course, gaining grounds. Profit margin at the beginning of the year is not representative of the figure for the whole year. Here, you can see that Eiffage will be building the pedestrian bridge linking the L’Île-Saint-Denis to the Village of the Athletes for the Olympics. This is a bridge made of concrete and steel. And so that is 140 meters long, 16-meter wide and that will bring together Eiffage Génie Civil, civil engineering, and Eiffage Metal for the structure. It's worth EUR 26 million, should be completed in March 2023. Energy Systems has enjoyed significant growth, up 7%, without external growth. There's good momentum both in France, up 5.4% and internationally, 10.6%. In France, Eiffage Energy Systems has been involved in most of the projects for building the railway stations of Grand Paris Express for Concessions PPP being completed. We're also in good position for renewable energies. There are quite a few projects in France and in Spain. In Spain, our business is up 30% compared to 2019. In Germany, it's up 16%. And both in -- that's in both countries on the organic growth. In Germany, we have been developing a new business, electricity distribution. And we were -- we had no presence in Germany before that, but we are building on Eiffage Energy's expertise. Operating margin for the half year is up compared to 2019 homogeneously in France, I mean -- and in the rest of the world. I did not mention the activities outside Europe. This is in Benin in Africa. We're building a solar plant, a solar farm. This -- we also have high-tension connection linking it to the grid. And that is financed -- funded by the EU, the French Development Agency and SBEE. Regarding APRR, so the motor works Concession. Because traffic was down 7%, especially with the third lockdown, we had, of course, less business -- also less business from ski stations. But traffic has improved in -- since the beginning of May. We're close now to the levels of 2019. EBITDA margin actually was able to stand its ground compared to 2019, even though there was a 17% decline in traffic, but of course, we kept expenditure well under control. And so the performance is still rather good. Let me look at a new line of business. This is the low carbon business for APRR. We are providing charging stations for electric cars. This is -- these are being rolled out at a sustained rate. We have now a number of high-power charging points. We have -- we propose to have all of the service stations equipped with these by 2022. We have also what is known as the KiWhiPass for electric cars, which is -- which will enable cars to have access to as many as 35,000 charging points in France and 90,000 in Europe. We look at the revenue for other businesses. We have the Millau viaduct down 14.9%, the A65 down 18.1%. But for the Senegal motorway, we're looking at an increase in traffic, up 8%. Airports, of course, have been suffering considerably because there hasn't -- well, there has been some resumption of traffic, but we are a far cry from the levels of 2019. Let's look at PPP revenue, EUR 83 million. That, of course, does not suffer from ups and downs in traffic. And on the bottom right corner, you can see the operating profit of Concessions. The losses in airports does include goodwill amortization to the tune of EUR 16 million for the half year. So a few words about BPL. Here, we're trying to avoid animals being hit by trains. And so we have these protections for railway crossings. So we cannot have fences there. And what we've done there is a sort of a rubber crossing with rubber spikes that should stop animals from crossing the tracks. So much for the numbers. Let's look now at other income and expenditure, EUR 14 million. So that's a net charge, a EUR 14 million charge. The cost of net financial debt is down, down only EUR 5 million compared to previous years but still down. That includes the additional financial charge for the bond that was issued in June 2020, but financial cost for Concessions is as much -- as high as EUR 9 million. So there's EUR 9 million savings right there. For other financial income and expenditure, we have EUR 5 million coming from nonconsolidated stakes, that is where we -- companies where we have a stake. And then the tax is down because we had a positive outcome in a dispute to the tune of EUR 16 million but not including this. We are close to the usual level of taxation. And so the net profit group share stands at EUR 260 million. If we look at the debt position now, you can see the transition from 1 year to the next. You can see that EBITDA, well, we wanted to look at the numbers of both 2019 and 2020. EBITDA is close to the level of 2019, EUR 1.287 billion compared to EUR 1.338 billion. Change in working capital requirements, of course, it's higher than in 2020, but it's still below the level of 2019, EUR 518 million, even though the Construction business is higher than in 2019. So that's good news. Taxes and interest is down compared to both 2019 and 2020. And so if you add them all at the 3 boxes, we have EUR 525 million compared to EUR 287 million in H1 2019. So operating cash flow is positive. Operating CapEx at EUR 216 million, close to 2020, slightly higher than 2019. For the Concessions, this includes EUR 200 million for APRR. That's the second item of capital expenditure, EUR 130 million for the building of the new motorway A79 compared to EUR 51 million for the same period. And then the next item is reimbursement of PPP debt. And so that includes lease, the rentals and the fact that we -- where we sold an office building as part of the partnership for the Pierre Mauroy Stadium. So all in all, we have a net CapEx at EUR 536 million. So this is higher than both 2019 and 2020. Well, that's mostly because of the building of the A79 motorway and that is, of course, a growth. This is a factor of growth for the company. So you can see that free cash flow on the one hand is just about breakeven. And normally, we're in the red at this time of the year. Last year, in 2019, we were -- we stood at EUR 135 million -- minus EUR 135 million. So that means cash flow is looking very good. Finally, capital operations. And so we have the dividend that was paid out by APRR to its minority shareholder. The dividend paid by Eiffage in 2021, that's because to make up for the previous year. There's capital increase for employees and share buybacks. And then that is the shares being canceled when they will be bought back. And so the net debt at 30 June is up only EUR 345 million to EUR 10.2 billion, which is rather low considering the significant increase in business. Now you can see that debt was down EUR 700 million over 12 months. In the red part of the box, you can see that you have a high cash position for the holding company. The gross cash position is EUR 2.9 billion. and you have the details on Page 40. So cash is up EUR 350 million over 12 months, even though we paid out a higher dividend. And of course, there was, as I said, a significant amount of capital expenditure for A79. And so we've been keeping our debt well under control. So our order book stands at EUR 16.6 billion, which is still high, as Benoit pointed out, even though no major contracts enter the order book. If you look at the various businesses, we have an increase in Construction and Energy Systems for core businesses. In Infrastructure, we've been consuming the order book on the big operations of Grand Paris Express, the A79, the HS2 and A3 in Germany without equivalent orders. But in our core business, the business is still stable. So the order book is only down 3% over 1 year, which is perfectly acceptable. We will now take questions. We'll have questions from the audience right here. And then online, starting with the questions in French, and then we'll move on to the questions in English. And Benoit and I will take all your questions now.

[Interpreted] Jean-Christophe Lefèvre-Moulenq. I have 2 questions. One, a strategic question and a question about Concessions. A strategic question, we've talked about EQUANS and Fabricom. Benoit mentioned them 3 times. So are you going to -- is the merger with EQUANS coming any closer? Is Eiffage doing it alone or with partners? That was question number one. Second question about Concession that's a standard question, but could we have the capital expenditure budget for 2021, 2022 for the A79 and APRR and also the budget for PPPs?

[Interpreted] Regarding EQUANS, you should note that this is part of the group strategy. In February 2017, we gave you the outline of the strategic plan. In 2019, we gave you a progress report. You may remember that I refer to the group's development, but we're looking on the right balance between Contracting and Concessions. We wanted to pursue Eiffage development on both fronts, both Contracting and Concessions. It should be pointed out that we are fundamentally European, our Concessions. Well, there's a political risk for Concessions. So we are very much committed to those territories where we do have an active presence and that does include Contracting. And on Contracting proper, there are a number of items where we decided that we should focus on our, well, core region. And so -- because, of course, that is what makes the business viable, that is, having the right people. And that business can be attractive. If we can promote -- if you can propose long-term perspective for the business, that will attract the best people. So that's one thing. And then -- so we don't propose to branch out into many different businesses. But of course, the energy transition and the digital transition does mean that both -- all our businesses will necessarily change over time. Now when we were asked about possible acquisitions of contracting companies, that is, you have to know that mergers in this business never really work out internationally because what you do need to have is a common base of values, a common cultural base. Now EQUANS, well, 86% of its business in Europe. It's mostly in the energy business. Most of the business is in France. EQUANS' activities are mostly in France, Belgium, the Netherlands, Switzerland. And of course, Eiffage is already very much present in these countries. So -- and these are businesses at the core of the energy and the digital transition. So of course, it stands to reason that we should look into EQUANS as a possible target. So that's part of our strategic development plan. Indeed, a number of developments have occurred in Concessions. We have increased APRR's capital. We had a stake in Getlink. There is APV. We have been investing in the A79. So that is, of course, a significant investment in the future. And we are now acquiring 100% of A'liénor, the A65 operating company. So we do believe that we will forge ahead. And indeed, EQUANS is still very much in the picture. Having said all that, we believe that there, you have a significant operation. There are -- the stakes are high, but I think we can take this using our own resources. But of course, we have to work with our teams -- This is not an easy matter. Taking on board another company is not easy, but we have to make a move. ENGIE is expecting us to make an offer by September. That was question number one. Christian?

[Interpreted] On question #2 on APRR, we said that we would be investing EUR 400 million both in 2021 and 2020 -- I beg your pardon. EUR 450 million and EUR 350 million, that's what we announced. We announced EUR 450 million and EUR 350 million. So in fact, it will be EUR 400 million and EUR 400 million. So we'll be investing somewhat less than announced for this year but somewhat more next year. Regarding the A79, we still propose to have about EUR 340 million in Contracting the balance being about EUR 100 million. If you look at the existing facilities, we have EUR 100 million in CapEx for projects being built and the PPPs now in operation. So that is about EUR 100 million in CapEx.

[Interpreted] Thank you. Further questions from the audience? Yes.

[Interpreted] Eric Lemarié. I have 3 questions, if I may. About the growth in revenue for Contracting in H1. Are we basically looking at a volume effect? Or is there a price effect as well? That's on revenue. On road work in France, well, business is looking better. Have you found price pressure? Or do you believe that competition is as it were -- is healthy? Or is it getting out of control with too much pressure on pricing? And what about the road traffic? Do you have any numbers for the past few months on that?

[Interpreted] Regarding question number one, the growth in revenue, it's not just volume. Well, of course, you do have a volume effect, but there are price effects. A part of our revenue is index linked. And so necessarily, there will -- well, there will be a mechanical increase because of that. And of course, since 2019, there have been significant increases. And it's just as well because, of course, we have to be able to take on board price inflation in raw materials and such like and be in a position to pass on that cost to our customers. But another point is that demand is high. Indeed, one of our concerns has been to make sure that before we can bid for a project, we have to be able to be able to pull it through. Should we be selected, that is a concern. That was question number one. Question number two, regarding price pressure, competitive pressures. Well, we could go around our businesses. But by and large, there hasn't been any fundamental change. Business is pretty much the same. At least the competition scene is pretty much the same. There are areas where we have to be -- to watch developments very carefully. I've mentioned raw materials, but there are no particular concerns. And we believe that the market is still pretty buoyant even though we have to be careful and pay a close look at issues of profitability, but Philippe can give you details about question number three, on road traffic figures.

[Interpreted] Well, this summer road traffic was pretty high on the APRR motorway network compared to 2019. That is the pre-COVID baseline. In July, we've seen growth to the tune of about 6% compared to July 2019, indeed slightly upwards of 6%. August, well, we're still in August, but we're looking at about a 5% growth compared to 2019, again, slightly upwards of 5%. I will give you the final figures at the end of the month. Question is -- regarding trucks. And we're looking at numbers for July and August in line with the numbers of 2019 for the heavy goods vehicles, the HGVs, of course.

[Interpreted] LV and HGV.

[Interpreted] Eric Lemarié, if I may, follow-up question. Could we have your view on property development, the outlook for this year and next year? Should there be a deal on EQUANS? I mean are there red lines, I mean, regarding things such as debt over EBITDA? Just how much you could -- how much money can you put on the table should you decide to make a move and acquire EQUANS?

[Interpreted] Maybe Olivier can give you an answer to that.

[Interpreted] Regarding residential property, one thing is for sure. As soon as we put something in the market, it is grabbed. And so the real concern is getting building permits. The French government is aware of this. And indeed, [indiscernible] is now chairing a special committee, looking into these issues of delivery of building permits and the report should be completed by September. Having said that, residential property development is not going to turn around overnight. But there are a number of commercial property developments which will sort of make up for the decline in residential property development. We also have a business in rehabilitating buildings. And of course, we have this good business going on in Poland. So even though there may be a slight decline right now in France, overall, I'm very confident.

[Interpreted] Regarding EQUANS, well, one thing is for sure, we will not increase capital in order to acquire EQUANS. The financial package is part of our own competitiveness. And so, well, I cannot give you details about the bidding. But one thing is important is to keep both good gross cash position and our overall position, not just for the holding company. All these items, of course, are significant. But I cannot give you more details, of course. All the bidding process is highly confidential.

[Interpreted] Well, it didn't escape you that there are some sites in the U.K. and the Benelux that are really raising issues. I suggest that more than the commitments that were made with the unions, I think those little hurdles will be taken into account for the prices of Eiffage. It's the base principle when you have something, we'll look into it and given that, we decide. I try to reframe why it was natural for us to look into it, its interest and then we'll be aware about this intrinsic quality to see how we progress. Maybe we can move to the questions over the phone, French first.

[Interpreted] Q&A session in French of the phone. Elodie Rall, JPMorgan.

[Interpreted] Benoit, Christian, three questions. First about -- I think you're much more confident than you were in the past month on the possible impact on the margins -- on the Contracting margins. What has changed in your vision of those risks? Second question about the Grand Paris and the news information we had about the delays. Can you confirm the impact it might have on Eiffage? Especially, can you confirm that the extra cost will be attached to the company of the Grand Paris? And third question, if ever EQUANS would not come out, what would be the other opportunity of external growth that you could consider? And which would be of interest to you?

[Interpreted] On your first question regarding the impact, obviously, on the provisions, we were worried half a year ago because we see that after the crisis, the procurement chains were not working and it was worrying and behaviors that were not very rational on sudden increases in the prices on wood, for instance, in a very significant way without first notice. Half a year later, we remain very vigilant, very aware but no construction sites were stopped for a procurement system or procurement issue. Teams are mobilized, think ahead of time. We have a dialogue with our providers to avoid negative impacts. And 6 months have elapsed, and things didn't go too bad. It's very [ unrational ]. The issue was on the equipment someday, on something different another day. We have to notice that the flows are not back to normal, but it's been half year that we operate without a major impact on our activities. So we're less worried, less concerned, but we remain very aware, very vigilant. The profitability of the works, some total the demand on next-door shop was more important than expected in our property. When there's more volume, it's easier. Greater Paris, Guillaume? Please be kind to him. It's his birthday today.

[Interpreted] I hope I'll be able to answer the question on the Grand Paris, Greater Paris. They redefine their schedule, especially in Lines 15 and 16, delay of 2 years on the civil engineering with -- on which we're committed, 15 South since 2017, Line 16 since 2018 and 14, where we are now. The tunnel borer are out and [ 15 2 ] tunnel borers are out and [ 16 2/3 ] are being bored. We had some delays on the schedule due to the COVID. The Society of Grand Paris mentioned those problems of boring due to COVID when you had to remobilize the various German teams in spring 2020, couldn't come to France, to Paris. As you know, the 2 other elements that were put forward by Grand Paris is the necessity to stop total lines and beyond the system and the capacity to mobilize also the operator so that the implementation, the commissioning has been done nominally and the Greater Paris has recalculated and worked a lot on this issue. So it goes beyond civil engineering. And second element, it's the need that was made even more crucial to make sure that the works would be done in densely populated areas and should be accepted by most of the population. This has been integrated in the schedules. So as to answer your question. And to get back about civil engineering, are there financial impacts? As of today, discussions for the impact of the COVID, we had it with the Society of Grand Paris. Negotiations are on. We're still negotiating, still discussing in the correct manner. And I think we should really have a proper outcome as it has been done until now.

[Interpreted] Thank you, Guillaume. You can make comments on the procurement and inflation when you take the floor. Last question was regarding EQUANS and the possible other opportunities. My answer is a year ago, before the strategic review of ENGIE, we wouldn't imagine that EQUANS was on sale. And the strategy of Eiffage was already implemented. I think that we will remain focused on our will to develop works like Concessions rather in a European framework because it's exactly what is the right scale for us and we have a lot to do. And a certain amount of business lines, especially on the energy line, we have an activity in Germany that remains very low compared to what we do in the other business lines. If you take Belgium, where we are one of the major actors of Contracting Belgium, the energy part of Belgium is relatively low compared to all what we do in the other business lines. So we have a lot on our hands to go on densifying our presence and progress, it wouldn't be with operations of the size, but many things have to be done in the concentration of the market to develop our works, not forgetting our Concessions, obviously, on those territories.

[Interpreted] Nabil Ahmed, Barclays. Three questions, A65 motorway. It's been a long time you have a majority of shares beyond this participation of 35%. Why did you make this decision now? Are there things that made it mandatory to be done now? Second question, can you update us on the second part of your activity? One of your competitors talked about a mini investment plan on the motorways and was in discussion with the government. Do you have any information about that?

[Interpreted] Thank you, Nabil. On your first question regarding motorway A65, it's simply that the co-shareholder became selling. There was a decision notice to sell their minority participation. They understood that we would not sell our majority share. So they were interested in selling their minority share. What was important to us was to take hold of the operational society. And it's simply the fact that there was -- suddenly it's a want to sell because they were talking about that for quite a long time, but it was the first time that they really decided to make an arbitration on this asset. On the Energy System line, we are at half year. We do not despair to have margins in the full year that would be above the center. I always consider that there was no reason when a line of business is working well, why shouldn't we reach the 5% of profitability. It's not 4% or 4.5% but it's 5%, and this is the target. About the government, Philippe?

[Interpreted] Yes. I alluded to this issue last February. We are indeed discussing with the services of the Transport Ministry for the building of a new investment plan smaller than what we thought at the origin. This investment plan would have a large part of the decarbonated part and to the environmental investments. The scope and the volume of the plan are being discussed for the time being before the ART would be questioned and before the state council and a decision by the end of the first quarter -- end of first quarter 2022.

[Interpreted] No more question in French. However, we have one question that has been recorded from Nicolas Mora, Morgan Stanley.

[Interpreted] Yes. I'll do it in French rather, First, Contracting margin. Beginning of May, you surprised the market with an announcement. And suddenly, you announced a margin which is better in this line of business than in the past month. With your volumes, can we dream about a resumption of the margins following several difficult years? Second point, the results are good. One negative point from my point of view is the lack of progression in the infrastructures. Your neighbors came out with very strong margins. And the roads, what prevents you on the infrastructure margin less than 1%, even negative? So last point, Concessions, the Lille Stadium, the property around Lille, you pocketed EUR 80 million in terms of gain or boost. I wanted to know if this is the size of the envelope of the budgets.

[Interpreted] Now on the last point, Nicolas, we usually have a repayment of BP of EUR 30 million. We have EUR 90 million this year. So 16 session, we communicated on the session of the sale of the building inhabited by Orange. There's a capital gain but much smaller than what you say.

[Interpreted] Is the total flow of session normative?