Solutions 30 SE (S30) Earnings Call Transcript & Summary

Good afternoon, everybody. Thank you very much for being with us today. It's very special times with this crisis going across Europe, and I guess that most of you are at home confined. I do hope that all of you and your families are well and in good health. We are going to present the full year 2019 financials and the first quarter 2020 revenues. And with that, I give the floor to Amaury to begin with the numbers that are on Slide 3, for the ones that are following the webcast, using the phone and have the presentation under their eyes. Please, Amaury, go ahead.

Thank you, Gianbeppi. Good afternoon, everybody. I'm very happy to share with you the financial results of Solutions 30 group for the year 2019, which are presented for the first time according to IFRS standards. As you will see, this change in GAAP has no impact on performance of the company. We just tried in this presentation to highlight the impact of IFRS 16, the new standard related to leasing contracts, in order to facilitate your reading. Please note that regarding IFRS 16, the group, Solutions 30, applied this new standard since the 1st of January 2018, which would facilitate the comparison. Now let's go through the figures. Well, 2019 is another very good year for the group. Revenue went up by 51% and reached EUR 682.2 million. Profitability increased by 63% with an EBITDA amounting to 13.4% of sales and if we exclude the impact of IFRS 16, to 9.9% of sales. The net bank debt also decreased in 2019 and stands at EUR 3 million. If you add the impact from IFRS, the total net financial debt stands at EUR 91.8 million, also decreasing in comparison with 2018 IFRS financial debt. Finally, the group generated a strong cash flow in 2019, amounting to 7.2% of revenue and if you exclude the impact of IFRS 16, to 4% of revenues. If we go now into more details on the revenue side, Slide 5. Well, just a preliminary comment before going through the figures. In 2018, the group published revenue of EUR 441.8 million under Lux GAAP, and this revenue stands at EUR 451.8 million in IFRS. This change is mainly related to changes in the consolidation methods of 2 companies. First one is Janssens Group. Under Lux GAAP, we consolidated Janssens using the proportional integration between 1st of January 2018 and 1st of June 2018 at the moment we acquired the majority of the company. So that means that under Lux GAAP, the company was -- we integrated 50% of the revenue. Whereas, in IFRS, we consolidated using the equity method. So this represents a decrease of revenue of EUR 7.2 million on the first half of 2018. Regarding CPCP, it's another matter. We used the equity method and before -- between 1st of January 2018 until 31st of July, when we took the majority of the equity of the company and when we took the operational control. In IFRS, as Solutions 30 had a call option on this company and the opportunity to buy majority, this company needs to be integrated as from the 1st of January 2018, so representing an impact -- or an additional revenue of EUR 15.8 million over the first month of 2018. Obviously, these changes have no impact on 2019 revenues. Moving to 2019. And once we have said that, we go to the next slide. The group posted a revenue in 2019 of EUR 682.2 million, growing by 51%, of which 29% is organic. This growth was very strong in France, which -- where the revenue grew by 59%, as well as in the other countries where revenues went up by 47%. On the next slide, you have breakdown of this increase of revenue between organic and external growth. So as you can see on the left-hand side of the slide, revenue grew organically by EUR 72 million in France, by EUR 46 million in Benelux area and by EUR 12.7 million in the other countries. Regarding external growth, revenue went up by EUR 66 million, and Sotranasa was the main contributor to this increase in revenue in France. In the Benelux, while the full consolidation of Janssens as from 1st of June 2018 obviously represents an increase in the revenue of EUR 20 million -- of EUR 13 million, sorry, the revenue of i-Projects, the company we acquired in The Netherlands, the company specializes in the energy sector, also contributed to this additional revenue. And then the remaining EUR 13.4 million represent the contribution of all the acquisitions that we made at the end of 2018 and in 2019, notably the acquisitions -- the acquisition of Telekom Uslugi, a former subsidiary of Sprint corp in Poland. We go to the next slide. Then you can see a breakdown of our revenue per country. So France remains the main contributor to the group revenue with 64% of the revenue. Benelux grew significantly since we started the partnership with Telenet. And this area now represents 18% of the group revenue, and we can consider that now we have reached a pretty good size in this area. We clearly have 2 significant geographies. And we have then Germany accounting for 9% of the revenues, Italy for 5% of the group revenues, Iberia for 4%. Poland contributed only in a very limited way in 2019 since we started the operations at the end of the year but should be -- its contribution should increase significantly in 2020. Now if we look at the breakdown of this revenue on the different activities that the group operates in France and Benelux, you can see that the main segment is clearly the telecom business, including fiber installation, which represents a large part of this revenue. The second largest factor is clearly the energy with the installation of smart meters, installation of EV chargers and all the operations that we do for the key utilities in all these geographies. The IT assistance sector represents 10% of the group revenues. The retail sector is 3% of the group revenues and security segment, 2% of the revenues. We also range the IoT -- we are also presenting the IoT segment, which is basically the place where we start small projects related to IoT or lots of new projects related to new technologies which are more in the beginning and that goes into another segment afterwards. Gianbeppi, I will now leave you the floor in order to comment the activity with more details.

Yes. Thank you, Amaury. I take it back. Okay. Good. So I'm on Slide 9, where we give the breakdown per vertical for France, but I'm not going to spend too much time on that. Because it's information that we have already disclosed in January, so it's things that you know. Maybe just a couple of highlights on this slide. One, as you can see, the telecom activity in France were very strong in 2019 with a 72% growth, of which 48% organic. Main reason for that is the dynamism of the market of fast Internet with fiber and the fact that fiber is coming into rural areas in France. And we have a very strong position with all of the -- well, 3 of the 4 telecommunication operators in France, and we are gaining market share. The other highlight concerns energy, 49% growth, of which 6% organic. It is mostly related to one of the acquisitions that we did in France in 2019. And the important activity for us, which is the smart meters deployment, has been plateauing in 2019 and will begin to decrease a little bit in 2020. But the good news in the energy sector for us in France is that the deployment of charging stations for electrical vehicles has begun. And we have signed, beginning in 2019, some important contracts with EDF, the French national utility; with Alfen that is a manufacturer of charging stations based in Holland and that has selected us to deploy their equipment to -- across Europe; and another one with Total for charging stations across Europe. So these are the 2 main highlights of the slide. Telecom and energy activities are quite strong and promising for the following years. I move to the following slide, Slide 10, where you see the breakdown of the revenues in Benelux by vertical. And as you can see, Benelux has now in place the same offer -- oh sorry, somebody is asking me to come back to the previous slide. So I go back to Slide 9. Okay. Apparently something doesn't work in the slide show. Okay. I move now to Slide 10. Can the operator tell me it's fine? Yes, okay. Apparently it works. So Slide 10 contains the breakdown of revenues 2019 for the Benelux by vertical. The telecom part is the largest. That accounts for 80% of the revenues of the geography mainly because of the large outsourcing deal we have signed with Telenet that has been very significant for us and is now one of the important clients of our group. But then we have 8% of our revenues in region related to IT services. We do that with HP, with Dell. We also do work for printers manufacturers like OKI and Toshiba. Energy represents, at the moment, only 5% of revenues in the region. In Belgium, the smart meters deployment has not really begun yet, but it's about to begin. And the activity we have in this vertical in Benelux is mostly related to charging stations for electrical cars. It's actually the geography where we have begun this kind of business. And then we have in the other verticals about 7% of the revenues of the region, in security and also in smart city-related projects. And as you can see, all of these 4 verticals in Benelux have been growing nicely over the year 2019. I move now to Slide 11, where you can see the breakdown per geography. This is also information that you have already had in January. I will go through it quickly. Germany grew by 9% in 2019. We had first part of the year not particularly dynamic, but in the second half of the year, we have grown nicely. And in particular, the last quarter was up about 20% organically compared to the previous year with volumes increasing especially in the south of Germany, following the acquisition of Unitymedia by Vodafone. That implied an increase of volumes for us, who are one of the few companies that work for both operators. Then in Iberia, we grew 138% with significant activities gained in the telecom market and also the beginning of 5G deployments that we have begun doing in Spain. Spain has been the place where we started 5G inside the group. Italy has been growing by 11%, of which only 5% organic. We have done 2 acquisitions in 2019 in Italy, both of them in the IT sector: one with a company called CFC and another one was a deal done with DXC that is a spin-off from Hewlett-Packard. And that changed in the last quarter of 19 when we eventually decided to let go of this activity because the prospectives and the forecast that DXC was giving us were not as good as what we initially thought. And then we decided it was not useful to spend too much time on this activity with this client, and therefore, we sold this activity at the end of the year 2019. The last geography is Poland. We had a good beginning in Poland with 2 acquisitions: one at the end of 2019 and then the second one on 1st of January 2020, both active in the telecom sector with Orange being the final client. The integration was being successful, and the client is very happy. So Poland is going to be contributive to group revenue and also profits for the year 2020. I'm now moving to Slide 13. So Amaury, maybe you can pick it up now because we go back to figures and IFRS impacts.

Thank you, Gianbeppi. Yes, before going into the detailed figures, just a quick summary on the main differences between Luxembourg GAAP and IFRS in the context of Solutions 30. Well, the first impact, I already had the opportunity to comment on it at the beginning of the presentation. So we changed the consolidation method for Janssens and CPCP during the first month of 2018, mainly impacting the revenue. The second impact is related to IFRS 16 standard, which refers to operational leasing. In accordance with the standards, all leasing contracts -- all leases are recorded in the balance sheet. This results in the recognition of new assets called right of use for a total amount of EUR 62 million in the balance sheet of Solutions 30 and the financial base as a counterpart on the liability side. In the P&L, obviously, this right of use is amortized, generating an additional depreciation for EUR 23 million and also some financial expenses, but the impact on the net profit is not -- is absolutely unsignificant. Regarding revenue recognition, well, the impact is very limited. The integration of revenue related to future potential bonuses from clients modified revenue by EUR 0.2 million in 2019. And the immediate recognition of the revenue coming from the leasing of payment equipment lead to another adjustment of EUR 0.2 million in 2019. On the top of that, you have a reclassification of the changes in work in progress from other income in Lux GAAP to revenue in IFRS. Regarding goodwill and badwill accounting, the main difference comes from the fact that goodwill are not amortized anymore in IFRS, generating an improvement in the net profit in IFRS. Finally, stock options in IFRS need to be booked as an expense in the P&L. Even if no impact -- there was no impact related to this standard in the P&L 2019. Well, I hope that this accounting focus was not -- was short enough to keep your attention, and I now move to the figures on Slide 14. Well, as you can see, the EBITDA increased significantly by 63% between 2018 and 2019. That is mainly because the group managed higher volumes in 2019, with revenues going up by 51%. That is because we managed to increase the profitability of the acquired companies and improve their profitability. That is also because the group limited the increase of the central structure. As you can see in the P&L, operational costs went down from 76.9% of the revenue to 76.4% of the revenue in 2019. And the cost of the central structure decreased from 10.8% in '18 down to 10.3% in 2019. The EBITDA now amounts to EUR 91.1 million and represents 13.4% of the sales to be compared to 12.3% in 2018. Now excluding the impact of IFRS 16, the EBITDA would amount to 9.9% in 2019 versus 8.6% in 2018. In 2019, operational depreciation and provisions stand at EUR 37.5 million. These depreciations are obviously inflated by IFRS 16 since the amortization of leasing contracts represent 2/3 of this amount both in 2018 and 2019. Taking that into account, the EBIT stands at 7.9%, an increase by 66% in comparison with 2019. We go on to next slide. And below the EBIT, you can see the amounts related to the amortization of client relationships that the group acquires through its acquisitions. Given the number of operations that the group realized in 2018 and in 2019, obviously, this amount increases from EUR 6 million last year up to EUR 10.8 million this year. Regarding our financial results, financial results stands at minus EUR 2.9 million, including a financial expense of EUR 0.6 million related to IFRS 16, and continues to reflect the good financing conditions of the group. The nonrecurring items below are mainly related to our external growth. In 2019, a profit of EUR 5.6 million was recognized as nonrecurring. It is actually mainly related to the badwill we recognized on the acquisition of Byon because Byon was a small company with very large contracts, and we -- and the group made a pretty good deal when acquiring this business. In 2018, the nonrecurring items generated a profit of EUR 13.3 million, mainly coming from the change in the consolidation method of Janssens since when you change consolidation method, you need to reassess the value of the company at this moment of time. Now if I move on to corporate taxes. Well, the corporate taxes remain in line with the group standards. The increase is very low. It only increases by 14% between 2018 and 2019. And that is mainly explained by the level of taxes that we had to pay in 2018 because of the restructuring operations that we did in the preparation phase of the Telenet deal. Now given all these elements, the consolidated net income stands at EUR 38.9 million and represents 5.7% of the sales and the net income stand at EUR 38.7 million, representing 5.7% of the revenue. On the next slide, you have a view on our workforce. Obviously, in order to manage this growth, we need more people. As you can see, the workforce increased by 24% between 2018 -- between end of 2018 and end of 2019. We hired more than 1,188 people on the field. So we had a clear focus on the operations. And we hired more than 1,000 technicians. On the other hand, we only recruited 35 additional persons in the management and administration team. This is explaining why our cost structure are decreasing in percentage of our revenue. At the end of 2019, the group has 6,284 employees. On the next slide, you have a view of our balance sheet. As you can see, there are additional elements in this balance sheet coming from IFRS standards. You have on the asset side rights of use related to the IFRS 16 standard for a total amount of EUR 61.9 million in 2019 to be compared to the EUR 56.3 million booked in 2018. And on the liability side, you have a debt related to these leasing contracts, which amounts to EUR 61.6 million in 2019 to be compared with the debt of EUR 55.9 million in 2018. What you can see there also is that the working capital remained at a very low level, okay? At the end of 2019, the working capital stands at EUR 7.7 million or 1% of our revenue while it was slightly negative last year. The equity increased from EUR 99.3 million in 2018 up to EUR 139.8 million in 2019. Regarding our -- now regarding our debt position. As you can see, we highlighted in light orange our bank debt, composed of medium- and long-term debt as well as short-term debt. At the end of 2019, the net bank debt, comparing the bank debt to our cash position, stands at EUR 3 million to be compared to EUR 12 million at the end of 2018. So this bank debt decreased by EUR 9 million over the year. In IFRS, additional financial debt needs also to be recognized in the balance sheet. You have on the one side -- on the one hand debt related to leasing contracts, which I already mentioned. And you have additional debt related to future earn-outs of purchase options that the group can activate in the future in order to increase its share in the equity of some of the subsidiary. So taking that into account, the total debt -- the total IFRS debt of the group would stand at EUR 91 million in 2019, which is less than the level of the equity. So the gearing is very good, but I will have the opportunity to comment on that afterwards. If we go on the next slide...

Maybe, Amaury, for sake of completeness, even though it is deconsolidating, maybe you can mention the level of factoring from '18 to '19.

Right, right. Absolutely right, absolutely right. Yes. In addition of that, we have an outstanding position of receivables that we sold to the factor of EUR 54 million in 2019 to be compared to the EUR 51 million that we sold at the end of 2018. So again, we continued our factoring program at group level, which is deconsolidating without recourse. On this slide, you have a view on our debt position. So the first bar represents the net bank debt, so the bank debt compared to our cash position. And in light yellow, you have the full debt, taking into account the additional debt coming from IFRS, including IFRS 16. In both cases, you can see that the gearing is very low. It was 96% in 2018 and stands at 66% in 2019, with a ratio net debt over EBITDA of 1 and net bank debt over EBITDA of only 3% at the end of 2019. We improved our gearing over the year 2019. Now on the next slide, you have a view of our cash generation over the year. If you compute the free cash flow generated by Solutions 30 over 2019, we'll come up with a free cash flow of 7.2% of the revenue, taking into account the IFRS 16 impact, and of 4% excluding this IFRS 16 impact. Actually, the group had a cash position of EUR 69.9 million at the end of 2018 and a cash position of EUR 84.4 million at the end of 2019. Operations generated a cash flow of EUR 86.7 million. Out of that, EUR 18.9 million were used in order to finance our working capital; an additional EUR 18.6 million were used in order to finance our organic CapEx, meaning investments in our IT platform, meaning also equipment for our technicians and electronic devices, computers, laptops for the equipment strategy to work. Regarding external growth, we financed EUR 17.6 million of M&As in 2019. And we managed to -- so obviously, we used bank debt to finance these acquisitions, but we managed also to pay back EUR 14 million out of this debt, that is why you can see our gross bank debt decreasing in 2019. Then you have a new item representing leasing debt as leasing costs are now considered as financial item. So we take back, according to IFRS 16, EUR 23.2 million in terms of leasing debt. And ultimately, you have a capital increase for nearly EUR 2 million that is the reflection of the size of stock options by management during the year 2019. Now you go on the next slide. I suggest to move to 2020 and give you a view on the development of our revenue over the first quarter of 2020, which was obviously a very particular quarter with this COVID situation coming out in all the countries where Solutions 30 operate with different degrees. Well, as you can see, revenues continued to grow over this first quarter with a good balance between organic growth and external growth. Revenue grew organically by 10.5%, and the external growth represented an increase of 7% of the revenue. As you can see on the left-hand side of this slide, the organic growth in France remained particularly strong, with an additional EUR 13.5 million mainly due to fiber deployment during this first quarter. Regarding external growth, so you have the contribution of all the companies that we acquired at the end 2019, namely Byon in France, which specialize in the cyber activity related to public initiatives. You have the additional contribution of i-Projects, the company we acquired in The Netherlands. And you have a large contribution then afterwards of Poland, taking into account the acquisition that we made in 2019 and the one that we finalized in 2020, Elmo. At the end of the day -- at the end of the quarter, the group has revenue of EUR 188.5 million, up by 17.5% in comparison with last year. Gianbeppi can maybe...

Yes. I pick it up again. Okay. So as you can see, we are quite used to see a nice growth quarter after quarter. And this year, 2020, we began the first quarter very well, and then in the middle of March, the crisis came with the first country impacted that was Italy and quite severe lockdown of the region of Milan, where we have our headquarters and a lot of activities. So since then, the activity has slowed down, and we assess that the impact of COVID on the first quarter revenues is about 7% beginning in the middle of March. So Italy first and then all of the other countries entering into slowdown, more or less severe, depending on the local regulation. If you go to the next slide, you will see -- Slide 23, you will see that even with the arrival of COVID, all of the geographies, as Amaury has shown before, had been growing in the first quarter. And basically, we are seeing that our model, the model that has been developed in France, is applying well to Benelux first and then all of the other geographies. Then with the arrival of COVID, I move to Slide 24, what we did was to react immediately, first of all, to protect our employees. Basically, we had to adapt our processes to make sure that our guys were safe. And then we put all the people working from remote wherever possible to avoid contagion and to allow people not to be in touch with each other. The good news for us was that our services were considered "essential" in all the countries. So basically, we have been able to work. We have never been to stop activity in any geography. Even in the region of Milan with the most severe lockdown, we have been able to continue to work. But then volumes were not the same, of course. I will give you more detail in the following slides. But by and large, all the deployment activities that were not something urgent were either slowed down or stopped while the maintenance activities continued. In certain cases, the maintenance activities even grew. We then adapted also our services to the new situation with some new offers that we have been able to put in place quite quickly to assist people who were working from remote. In terms of our P&L and our cost structure, the reaction was fast on the operational side. Basically, we have carried out daily calls with all of the entities. And the idea was that there was not much that we could do for the volumes, the volumes were what they were. The only thing we could do was to adapt our cost structure as fast as possible, and we managed to do it. So basically, we had reduced volumes given to subcontractors, which allows us for quite a lot of flexibility, and then also used all the measures that were available in all of the countries to put people in partial unemployment if the volumes were not there. So doing that, we have been able to adapt our cost structure quite quickly to the reduced volumes and be in a situation where we did not lose money. It was the same on the cash side, again important measures in all the countries where we operate and the tight control on cash consumption. So basically, we had been able not -- to preserve our cash basically. So that has been our rationale during the crisis: reduce costs as fast as possible, preserve the cash and then follow the developments. I move to Slide 25, where basically, we are saying the same thing in a slightly different way, but I go through it. At the moment, we have not 8 but 9 cases of COVID-infected people. None of them are at the hospital. It's people who are at home but they have been recognized as having COVID. And then we have a little bit less than 50 people that are quarantined. They do not have COVID but they are suspected. The -- as I said before, we estimate that the impact on revenues in the first quarter has been of 7%. And that means, on a monthly basis, because I'm sure that's what you want to know, that March has had basically 2 parts: one, normal up until mid-March; and then the second one lower by, I would say, 30% compared to a normal month. So in the end, March has been 15% lower than a normal month, with the first half normal and the second minus 30%. And then again, we began April with lower volumes, overall minus 30% compared to March. But then the good news were that beginning in the third week of April, we saw volumes coming up again. And then we began having several conversations with our clients to prepare an exit for -- of the crisis. I'm going to go into more detail concerning that. I begin with France to give you a view of the situation of the different verticals. Telecom activities had been growing in France by 35%, of which 32% organic, so quite strong growth. In the first quarter '20 revenues in telecom sector, about 3/4 of them -- or 2/3, 3/4 of them are related to fiber and the rest to the other technology. But clearly, fiber is the strongest technology in telecom in France today. I don't know exactly what you've seen in the press, but the deployment of fiber has continued even during the lockdown. So the fiber has been developing in France even during the lockdown. What has happened is that the shops of the operators have been closed down, and therefore, there has been a slowdown in new contracts. But that has not impacted us immediately because there is a certain lead time between the moment the person signs a contract and the moment we receive the contract to implement it. So we have been able to continue to work on that even after the shops were closed. And then eventually, volumes have been really reduced because that part of the sales was closed. On the maintenance side, we have continued -- and actually, certain activities have increased because people really need it. Even today, we see that without networks and computers, we cannot operate. So people needed our services to continue to work from home and be in touch with their colleagues and their family. And the situation has not been normal as before because some of the people were afraid to open the door of their house, so some interventions are being postponed. But I would say that even during the crisis, that part of the activity has been quite good. And the intervention that is being postponed are going to -- well, that means that we are going to have a catch-up effect with a certain backlog that we need to swallow when we come out of the crisis. And we believe that it's going to be the same with installations because we have seen our clients having quite a lot of pressure, political pressure to continue to deploy good quality connections, and clients will need to buy because they really understand now that they need good quality network to be safe at home. So I would say quite positive on the telecom side in France. Energy has been decreasing. As I said before, in 2020, the Linky deployment was decreasing a little bit. That is not what explained the decrease of 22% that we have seen in the first quarter 2020 in energy. Most of the decrease has been related to the complete stop of the deployment of smart meters in France, both electricity and gas. So basically, in the -- like in mid-March, the activity had been completely stopped. It has been a discussion -- political discussion basically, where France has decided to give the priority to health and not to put our technicians and workers in dangerous situation. So we have completely stopped the activity. The good news on that is that we have begun in the third week of April to talk again to the utilities to prepare a plan coming out of crisis, and it is now confirmed. So we will begin operating countrywide to continue the deployment of meters by the 11th of May. It's going to be a ramp-up because it's not easy to start up again the machine when it's been completely stopped, but we believe that the month of June is maybe not going to be completely normal, but quite close to a normal situation. And July, for sure, is going to be normal again. On the IT side, revenues decreased by 16%. What we have seen in this vertical was basically that all the B2B2B activities have either -- well, not really stopped but has slowed down significantly because offices were closed and people were working from remote. Yes, we put in place a new service of remote assistance for teleworkers, but that could not replace all the activities that we were doing directly when they were in the office. And then the other activities grew by 54%, but this is a small number. So basically, we grew from EUR 3.9 million in the first quarter '19 to EUR 6 million in the first quarter 2020. That was mainly because we had a good start of the year with some contracts that should have begun at the end of 2019 that were pushed at beginning of 2020. So this is the situation of France. I think the worst is behind us. And I would say that beginning in May and then June, the situation is going to be much better. And we are going to have some backlog to swallow during the summer. Going a little bit further, we also see quite aggressive forecast of our clients, especially the telco clients. They are telling us that we need to prepare for a ramp-up. We usually have the month of September that is quite strong all across Europe. And this year, that could begin even before September because people are at home, so our clients are expecting a ramp-up of activities in June, August and then, of course, a strong month of September. If I move to the other geographies, beginning with Benelux. They grew by 7% in the telecom vertical, by 176% in the energy vertical but most of it was related to external growth. We made a deal in Holland, i-Projects, and most of that growth comes from this acquisition. The IT vertical went down by 10%, same reason as in France. B2B activity, that was reduced a lot because of the confinement and the closing of the offices. And concerning other verticals, they grew by 120%. But again, most of that was related to external growth. The profile of volumes in Benelux was very similar to the one of France, with an impact in terms of volumes at the beginning of April of minus 40%, minus 50% compared to the -- to a normal month before crisis. The -- well, some good things also in Benelux. We began doing our first pilot project with 5G. The sales machine has been active. Actually, that has been the case in all of the geographies. And all the sales had continued to fly in France, Benelux and in all other countries, so we managed to sign new contracts during the crisis. I don't know if you have seen it, but Proximus, the Belgian national operator, has increased its forecast in terms of fiber connections. So we are very active in discussions with Proximus to prepare ramp-up for after the crisis. And the EV charging stations activity is also quite dynamic, with some deployments that have been either stopped or slowing down but now, again, we are preparing to resume just after the crisis. Belgium is opening up activities again beginning the first week of May. And Holland has not really been completely locked down, but there has been a slowdown in activities. And now both Holland and Belgium are preparing to open up things slowly beginning of May. So we expect a month of May that is going to be better -- much better than April. I move to the other geographies. And I begin with Germany that grew in the first quarter by 12%. The impact of COVID in Germany has been extremely limited, so we had a little bit of an impact but not much. We have continued our work with all of the telco clients and in particular with Vodafone and Unitymedia. We have begun deploying smart meters with EON, and that deployment has continued even during the crisis. And we have begun doing some fiber work in Germany. That's actually the good news in Germany. Especially now after the crisis, we have the feeling that the country realizes that the fast Internet and good connections and good network is really needed for the country. So we are expecting good news in Germany in the coming months and the rest of the year. Iberia had a very severe impact with COVID, but we managed to grow by 44%, mainly thanks to the acquisitions done in 2019 and therefore, the effect on the 3 months -- 3-plus months of 2020. The good news in Spain is that even during the crisis, we have continued to deploy 5G. So that activity has not stopped. And the forecast of our clients in that respect are quite aggressive and interesting for us. Italy has been the worst geography with a very severe impact of COVID. So revenues have decreased by 16%, but not so much in organic terms. The main impact in Italy has been the deconsolidation of the DXC activity that was sold, as I said before, around the end of -- in December 2019. Poland had no impact of COVID, so we managed to continue our activity with no impact. The integration of the 2 acquisitions has continued. We managed to win some additional work from Orange. The 5G deployments have been slowed down, but we are in talks with operator and we begin -- that will resume in the third quarter. We also had begun discussions with some clients for the deployment of charging stations for electric vehicles. In the next slide, you see some information concerning ESG, where you have seen already and you can see it on our website that we have taken some initiatives to be more transparent and disclose more information concerning our governance. You will find much more of that in the annual report, and then also the information is going to be shared with the shareholders at the next shareholder meeting. But we have made an effort to be as compliant as possible with the AFEP-MEDEF recommendations and to give full disclosure of our remuneration policy and governance methods on our website and in the documents that we will publish in the coming weeks. On the social side, we have done a few things that you can see on our website, especially concerning the code of conduct and the human right policy that is now published and applied across the group. But there is more that we can do, and we'll continue working on that. It's the same with the environmental measures. We do that because fuel consumption is a very important matter for us, and we pay a lot of attention. But we are going to develop some specific KPIs that then we are going to disclose in the rest of this year and most likely 2021. We also maintain that we have prepared our transfer to the regulated market in the first half of this year. We are in talks with the regulator, Euronext, and we plan on being on Euronext regulated market before June 30. So I'm on Slide 30 now. All in all, we are very confident for our midterm targets that we reiterate. We believe this company can reach EUR 1 billion, we will reach EUR 1 billion of revenues. The main drivers for us remain, well, the telecom activities -- well, telecom and IT because now, even more than before, people realize that they need a computer at home, they need computers that are connected to a good Internet connection. And we believe that countries will allocate significant investments to these technologies, and we are in a good position to take advantage of that. It's going to be the same for energy. We are talking about smart meters. We are talking about EV chargers. It's another sector where we believe that countries will invest money to get the economy going after the crisis. And again, it's a sector where we have a very good position in our geographies. And the last important thing for us is a tendency towards outsourcing and consolidation. We have put on hold all the M&A activities during the crisis because we didn't want to do investments in a scenario that was not clear. We didn't have a clear view of how the crisis would stop and when things could resume a normal level. So we prefer not to take any risk and not to invest, but our M&A pipe is quite full. So we are in talks with several companies, and we will resume the M&A activity as soon as we are out of the crisis and also as soon as these companies understand that maybe prices cannot be the same after the crisis than before the crisis. We have managed to preserve our cash. So we will be able to grow just after the crisis through M&A and also organically. Again, when you do organic growth, you need money because you need to invest in working capital. Our competition is quite weak and after the crisis is going to be even weaker. So we are very optimistic that we can actually have results that are better after the crisis than what they were before the crisis. And I think with that, I will leave the floor to Q&A. So please go ahead with questions and answers.

[Operator Instructions] We will now take our first question from Anthony Dick, Portzamparc.

Maybe a first question on international development. There have been a lot of initiatives in the last couple of months to increase FTTH deployments in the U.K., and you've previously mentioned the possibility of expanding in the country before. Is that something that could be done this year? And also, same sort of question on Italy, which has posted strong growth in FTTH deployments this year. I was wondering if the situation had evolved there compared to the political stalemate last year.

Yes, Anthony. Okay. I answer about U.K. first. Yes, you are right, the projects in the U.K. were extremely interesting. And at the beginning of the year, we said that we really wanted to have a close look and with a little bit of luck, begin entering the U.K. market. And then COVID came. So we put that on hold because it's not easy now to travel around. But for sure, we will resume the contacts with our clients and our prospects in the U.K. in the second part of the year, and then we will try to get it going. It's not 100% sure. I would say that without COVID, we would have done it. Now with COVID, we need to be a little bit careful and see how the situation evolves. Concerning Italy, you're right, there has been additional investment. But the new issue -- I checked the numbers in detail. Most of it has been in terms of homes passed. So the investment now is mostly on the core network. But then you are right, especially now after the crisis, there should be money spent to push the connection to the final client, and that is when we come into play. I would be cautious this year concerning Italy because the country has been really badly hit. I can say that because I'm originally from the region of Milan. It has affected the morale of people. In certain regions, when you talk to people, they tell you that they know several people that died of COVID and some people they know are still in quarantine or some of them are the hospital. So it's a difficult -- it's pretty tough situation. So yes, we will have a close look to that geography. But at the same time, we would be cautious because we need to see if the money that has been promised really arrives down and comes to the real economy. So we will see.

And maybe I had just another question on margins. Could you tell us how -- what is the potential, if any, for further margin improvement going forward? For example, any risk of price pressure in the current context? And also, I don't know if you're expecting to record any nonrecurring costs this year because of restructuring or other sort of such measures.

Okay. That's a good question. It -- well, 2 parts. One is exceptional and nonrecurring, and the other one is recurring -- so exceptional and nonrecurring and also payments, you said, and prices on -- personnel prices. Now on that side, good news. Actually, I should have said it before, but I would say that almost all of our clients or most of our clients have been very supportive. Some of them have even paid us in advance. All of them have accepted the principle that now if we need to have masks or if we need to follow special procedures to protect our guys, they are expected to pay some extra money. So we do not expect disruption of margins because of this special situation. And in terms of nonrecurring, it's the same. We are not expecting heavy restructuring. The activity has slowed down, but the markets remain dynamic. So all we are doing now is just to prepare to get out of the crisis, and we believe that the volumes that we are going to have after are higher than the ones we had before. So we do not see major risks already to restructure something early. So no, I would say that I'm positive on margins, both recurring and in terms of extraordinary expenses. The only thing I don't know is how the end of the year is going to be. I do not know exactly how the different countries are going to come out of confinement. And I do not know if there is going to be a second wave that arrives in fall or winter this year. So that's the part that we do not know. The good thing is that even if there is a second wave, and me personally, I believe there will be a second wave, it's going to be less hard than the first one because we all have learned something out of it after the first one. So if we managed to go through the first one, then we will manage to go through also the second one. I hope that answered the question.

We will now take our next question from Eric Blain from Finance Connect.

I just have a question about your business model concerning your workforce. You gave some numbers of your work units -- number of people you employed. Can you split between people who are paid by you directly and the people which are subcontractors?

Well, the numbers you have seen are full-time employees. So all of those people are on our payroll, and we pay them directly. On top of these numbers, there is an additional -- in 2019, I would say, 3,500, 4,000 people that are subcontractors, but we have not shown the number because it's not full-time employees. So it's basically people that we work with depending on the volumes we have. So it's...

When -- so all the people you show us are in wages in your account, okay?