Executives: Martin Bouygues - Chairman and CEO Philippe Marien - CFO Hervé Le Bouc - Chairman and CEO of

Colas
Analysts: Frederic Boulan - Delco America Vincent Maulay - Oddo Josep Pujal - Kepler Nicola Beausire - HSBC Gregoire Thibault - Natixis

Martin Bouygues: Ladies and gentlemen, as always, it's a great pleasure for me to host you here, alongside the Group's senior Executives. So, if you would all please take your seats. Okay, let's begin. Let's begin with the highlights and the key figures. First of all, as you know, the first half year of 2016, for our Group, has been characterized by the good commercial performance at Bouygues Telecom and the confirmed growth of Bouygues Telecom's sales and EBITDA.

The order book in the construction businesses has remained at a high level, reflecting strong and diversified positions in France and abroad; diversified in terms of the range of products and offerings, but also diversified in terms of our international foothold. And, of course, the outlook for the Group had been confirmed for 2016. Now, Group sales were down 3% on the first half year. This downturn can be largely attributed to the adverse effects of scope of consolidation at exchange rates, which have affected international sales. On a like-for-like basis, group sales were only down 1%.

Furthermore, it should be pointed out that sales in France were only down 1% in the first half of the year. Despite this downturn, the Group’s performance is up; current operating was up sharply by £87 million due to the approved profitability at Bouygues Telecom. Operating profit for the first half rose 12% and this includes a 149 million in non-current charges, mainly at TF-1, Bouygues Telecom and Colas. This was about half that figure, 74 made in the first half of 2015. Now, if we factor out these non-current items to get a better understanding.

Net profit attributable to the Group was up excluding intentional items of course were up 50 million. The financial store close as you can see while net debt between the end of December 2015 and the end of June 2016. So over that half year this change in net debt has causes and they get of course the negatives into the usual season effect of the Colas business, those of you who’ve been analyzing it for long time will not be surprised. And of course the dividend payments and the first installments in the 700 Megahertz frequency payment and in the case of TF-1 the acquisition of new studios. Now, the positive side we have the proceeds from the Alstom public share buyback offer.

So, the financial structure has been considerably strengthened, net debt at the end of June 2016 was down 855 and in euro by comparison with the end of June, 2015. Finally, the outlook completes the long-term credit ratings were revised up from stable to positive by Standard and Poors. Let’s now conduct a review of our various businesses. Thank you. What you see on the left hand side is a photograph of a residential complex with to condominiums in Singapore.

This is an order we took in first half of this year for a total of some €100 million. Here again, it should be pointed out that we've been particularly creative because in the building methods and principles in the construction of these two condominiums we would be applying technologies whereby we prefabricate very large units which considerably enabled us, sorry, enable us to considerably reduce the completion date. Now in construction we have posted solid commercial performance. The order book is at a high level €29.5 billion at the end of 2016 which was up 1% at constant exchange rates. At the end of June 2016 the order book did not yet include the first tranche of the Monaco offshore extension project, which was booked in July.

The first tranche is for €842 million this was a major contract. I propose to show you a short video on this project. There is not translation live, but this video is available on the website in English. [Audio/Video Presentation] Well, a wonderful, highly technical project with the environmental commitments that we are very, very happy to abide by. Now, as I said, we have a strong and diversified positioning because we now have 50% of the order book at Bouygues Construction and Colas in international markets as at the end June 2016.

By the way, we exceeded the 50% mark a year or two ago. So it’s quite a substantial figure now. Now, we can confirm the gradual stabilizing of the construction sector in France, I’d be tempted to say, at long last. We had continued growth in residential property reservations at Bouygues Immobilier, continued growth of 22% in the first half of 2016 by comparison with the first half 2015, increased order intake at Bouygues Construction of 27% in the first half of 2016, again, by comparison with the first half of 2015 A very good performance. Finally, in the case of Colas, sales in mainland France are gradually stabilizing.

You will remember that we had two very difficult periods with the two very

sharp recessions: 14% drop in 2015, and 11% decline in 2015. I’m now very glad to say only 2% decline in the first half of 2016 by comparison with the corresponding period in 2015. On the right-hand side you have the order book in France, with the breakdown by entity. In this brighter context, in terms of order intake, there is one very large project, that’s the Grand Paris, or Greater Paris project which is a great opportunity for the construction business. So I decided to just focus on this very major project for just a few minutes.

First and foremost, this is an infrastructure project, if you were to build a city, you need very good infrastructure. First of all this project consisted modernizing and extending the Paris region rail network. First of all with the Grand Paris Express which entails creating four new automated metro lines, lines 15, 16, 17, and 18 but also entails extending two existing lines, lines 11 and 14. Secondly, this concerns the RER Eole, that’s the East-West Express rail link for 55 kilometer Westward extension and a creation of three new stations. All of this entails a total budget of £24.7 billion, in the case of Grand Paris Express and 3.7 billion in the case of RER Eole.

To these amounts, I should add the amounts required to create road infrastructure, local roadways, all the various utilities, water, gas, waste management and so on. And the goal is of course to build 70,000 residential units per year over a 25 year period. As you can that’s a very ambitious goal and will certainly be a major economic driver for the entire Paris region, but not just Paris, for the whole of France for that matter. Now, as you see on this slide, slide number 12, we’ve already been awarded the first couple of contracts. First of all the extension of line 15 which is the metro line and the top left, the north-bound metro line and the Eole RER line on the top right of the chart.

These two projects consist in boring tunnels but also in creating new stations. In addition of the extension of lines in the building of new stations, we’ve also been awarded a contract to build an eco-neighbourhood with north of Bagneux around the new train station. This concerns 33,000 square meters of residential and commercial property. Overall these projects already represents over £400,000 million in the orders taken in. Moving onto the international markets, I am tempted to say that obviously we are present in a very, very large number of countries throughout the world as you know.

However, we’ve decided to focus mainly on countries that are growth countries but also countries in which the risk incurred is considered to be low. This chart has been updated in terms of lot of information to the economic growth rates, what we’ve also ranked the countries in terms of risk category. In Green you have the countries ranked A by Coface, that’s the French export credit agency and then Orange, you have the countries classified B or C. In other words, countries were the level of risk is medium to high-end. I think it’s interesting to point out that 22% of our international sales generated in Asia/Oceania where economic growth in 2016 is 5.3% and mainly in countries that are ranked A by Coface.

So this is development in a low-risk part of the world. We have the key figures for the construction businesses, as you can see sales were down a normal 5%, but on a like-for-like basis, sales from consolidation exchange rates that time would have been 2%. France has stabilized and gradually picked up. International sales were down 6% but on a like for like basis that would have been only 1% decline. Current operating profit improved by €37 million with the discontinuation of the refinery, this situation has approved as you know we were adversely impacted by the Dunkirk refinery, but that's now in the past.

So, what about the group's strength in the construction businesses? While this is a business in which we have worldwide expertise recognized worldwide, we have a very high level of technical knowhow in complex projects be it a reduce tunnels in urban and even difficult aggressive environments, tunnels of an areas, towers a whole set of very diversified skills. We also have extensive experience in project and more importantly risk management. We have a high value added innovative offering and extensive experience in management cycles with great adaptability. This agility within structures and this flexibility in resource management, by the way this is a business where variable costs account for at least 60% of total construction costs. This obviously makes for greater agility and adaptability.

We can boast solid commercial performance and financial results, those of you who have been following for a long time notice how resilient we are order book is diversified both in France and in the international markets and the order book continues to be at a high level. Our financial structure is healthy with a high level of cash and we have a steady generation of free cash flow. I now propose to look at TF1. I am not going to do that at any length on, this because the presentation and comments have already been made by Gilles Pelisson. Sales are up 4% when you include the acquisition of the Newen since January 1, lower operating profit, current operating profit is because of the costs of broadcasting of the soccer cup, Euro 2016 and in the previous year we had a positive impact because of the deconsolidation of Euro sport.

France, the operating profits for the H1 does include 55 million long term charges including transformation costs, the fact that LCI has migrated to freeview, of course Newen but there is also a French decree on French drama. Under Gilles Pelisson, TF1 has rolled out a strategic plan as follows in a highly competitive environment. For freeview TV you have of course as I said, LCI now has been migrated to freeview and it's been like this for the past few days. It's indeed we have a new studios, new programs and the new identity for LCI. We also have a strengthened, beefing up of prime-time programs of TF1.

And for DTT TF1, we have new premium channels and of course, Yann Barthes, our star presenter. Now, France and international we have of course, 70% of Newen Studios. New Studios is a major player in content production and broadcasting in France and abroad. A lot of products and you have this series called Versailles, which is very successful around the world. And, of course, Newen is very proud of having developed that new product.

Digital media, 555 million videos viewed in H1 2016, up 21% compared with the same period last year. So, of course, that is one of the main avenues of development for TF1. But, of course, we are pursuing that path. Now then, a few words about the outstanding commercial, and indeed, financial, performance of Bouygues Telecom, a reflection of the strategy we have again rolled out to address the major upheavals and the regulatory issues that we were faced with in this industry. Good commercial performance in H1 2016.

We also were able to confirm growth in both sales and EBITDA. So these are the two key items, key points here. Number one then, continued growth in mobile telephony. As you can see now, Bouygues Telecom is well positioned to meet its stated target. You may remember that we said that we wanted to increase our portfolio of subscribers by 1 million additional subscribers by end 2017.

And now, at mid-2016 we already have an additional 835,000 new subscribers, so it will be for us, in the weeks or months to come, to re-adjust this 1 million figure, upwards. Now then, regarding the new uses of mobile telephony, especially with 4G Internet, we have as many as 6 million customers using 4G technology at end June 2016, 58% of the mobile base, not including machine-to-machine. We have also a significant increase in mobile data use, 2 gigabytes per month, so multiplied 2.5, by 2.5 in a matter of two years, and as much as 3.2 gigabytes for 4G customers. And this is also in line with a significant growth in the content available on cellphones by TF1, and so the two go to reinforce one another. And you have the slides showing the increased use of data usage for mobile subscribers.

Regarding now fixed broadband, we have an additional 122,000 new fixed line customers, including 31,000 in Q2 alone, and an additional 412,000 very high speed customers, including 70,000 fiber-to-the-home. So we are very close to reaching this additional 1 million customers by end 2017. We have acquired a large number of fixed line customers in August. August has still got a few hours to run, but a number of things. In August, we had the best single growth day for fixed line users ever.

And also, we had our best historical week in terms of new recruits for fixed line subscribers. And in August, we will have had the best month in terms of customer base growth. We are above the 4 million customer line. And so, of course, we are delighted, and we will continue full steam ahead. We have also confirmed in revenue, by the way look at the picture on the right hand side which is of course that was the main source of concern because ever since 2011 as you may well remember revenue was down in the mobile business, while now we’ve turned that page and we’ve reversed the trend because you may remember that in Q1, we were already looking at plus 2% in revenue and that increase has indeed spared up since now we have reached a 4.1% growth.

So that means that we have a wider customer base and of course better ARPU. All-in-all the revenue from the network, both mobile and fixed line subscriptions reflect the significant growth in our number of fixed line and mobile customer and is stepping up of that growth and so this all bodes rather well. Now, then confirmed growth also in EBITDA, 26% growth of EBITDA £408 million, 3.6 points. We have now taken on IFRIC 21 accounting standards, so that makes for rather more difficult reading because we have to recognize some of the charges at the beginning of the year rather than as they go along. But in any case, Bouygues Telecom is in a rather good position to reach its target for EBITDA for 2016.

Our strategy has been extremely effective, we have a three-pronged strategy. Number one, of course boost our leadership in the 4G technology, making it easier for people to use data using mobile technology. The second pillar as it were is to have a better reach to household for us to make it accessible to all and of course new opportunities in B2B. Now 4G, in denser areas we’re looking at our program to have a tighter network, we have of course more than site out of two already have 4G plus and that is what makes it possible to have better flows, better speed for most customers. But then we want to have an additional, where we have to increase by 50% a number of new sites with 4G over the next five years while we have of course a large, tight network of sites in denser areas but we also have many frequencies.

So not only are we present, we also have the right frequency. Now in the less dense areas, we are in with the industrial phase of rolling out, sharing the network with FFR. So we have an 82% target for 4G coverage by the end of 2016 but as much as 99% by end 2018. And we also have significant potential in terms of market shares that we can gain through the sharing of infrastructure with FFR because of course in mobile telephony we have now tapped into new potential areas. Those areas that were not well covered by Bouygues Telecom now are come within our fold.

And so this is good news because it means we can grow our customer base as well. And of course the high quality of the service has been recognized throughout to service very often, we come out number one or indeed number two. Regardless of the technology, regardless of the surveying organization we all come out ahead. Now, in terms of providing high quality services we want to prove so that we have an additional 10.6% market shares, two point over two years. In DSL, ADSL, of course, we're rolling out in strategic areas as many as 16.5 million households will have access to bundled ADSL.

You may remember that we are doing this through the Orange network. And that started in July 2016. But from SFR to Orange the migration will be completed and we have also a connection with SFR for fiber-to-the-home. We have 8 million connections using SFR's cable network. And then, with Axione we have, well Axione is an initiative started with Bouygues Construction.

The ideas is to have public initiative network that is rolling out fiber networks in less dense areas, where you choose not to be profitable. That means an additional 8.5 million additional connection points by the end of the program. So regarding B2B now, there are a number of opportunities. Bouygues Telecom because of the high quality of its 4G network that any services as a whole, we find there is a significant growth in B2B business. We have better offer for our customers, we have an additional 11% increase in the mobile base, the 24% in the fixed base compared with the same period last year.

And so, we have any number of examples of a large companies that have gone over to us. And then, we have new opportunities because of the deregulation of the B2B that was of course a request of the government. And now the internet of things, this is something rather new, but we have taken on a technological standard, known as LoRa. It's been adopted by 20 countries around the year, 100% the country will be covered with this technology using as many as 4,000 antennas. Of course we are working with, well Bouygues Telecom has built, it created its own subsidiary called Objenious to make it all happen.

We have already 20 large accounts find up, but as you know this is a business full of potential and it is for us to try and see what new ideas will come up and that is to create very small object into the connected objects that are of low costs, but that means that operators can locate these objects and see whether any kind of services required for them. That's the huge potential and we have to force use our imagination to see just what might be on the map. Our investing policy has always been pragmatic ever since the inception of Bouygues Telecom. And you've known us from the start and you know that indeed, ever since, Bouygues S.A. 65 years ago today was created.

We have always had that same strategy. For Bouygues Telecom we are looking at frequencies, mobility in less dense areas. In dense areas but LoRa network for the others. And then, using the set top box, but renting out from our competitors items where there’s little difference. So in less dense areas the FTTH investment seems to make sense.

But we also have an agreement with Cellnex. As many as 230 towers were loaned out or rented out to Cellnex for EUR80 million, and we can have as many 500 towers with them. Now, Philippe Marien, our CFO, will give you the numbers.

Philippe Marien: Ladies and gentlemen, just a few comments on our first half accounts. Concerning the income statement, I’m not going to dwell on sales and the current operating profit because Martin Bouygues has described them, given you the breakdown business-by-business.

But I will mention that while sales were down 3% nominally there has been the negative impact of scope of the consolidation effect at Colas, and, of course, currency rates at Bouygues, and elsewhere. On a like-for-like basis, that they case, would only be at 1%. Current operating profit was up EUR87 million. This is entirely attributable to the improvement at Bouygues Telecom, because the current operating profit of Bouygues Telecom improved by exactly EUR92 million. Now, other operating income and expenses, well, actually, an expense of EUR149 million.

That said, the nature of these charges and expenses in the first half is exactly the same as the nature of the charges expenses we had in the first quarter of this year, so nothing new here. You’ve heard the breakdown business-by-business. Over the full year, we expect these non-current operating expenses to be in line with our previous announcement of EUR270 million. A significant figure, but one that is, nonetheless, no different than the figure we’ve been announcing since the very start of the year. So, overall, an operating profit of EUR57 million, up EUR12 million on the same period last year.

Cost of net debt is down, quite sharply. Financial expenses were decreased by EUR35 million, due to the lesser cost of our borrowing thanks to two bond redemptions one in July 2015, and the second in May of this year. Continuing on with the income statement, income tax is actually a tax credit given the fact that we posted a loss in the first quarter, this gives an effective tax rate that is very, very low. Now, this is not representative, and will not be representative, of the full year, when we expect the tax rate, we’re very close to a normalized rate of 30% to 35%. That’s corporate income tax.

Share of net profit of joint ventures and associates, EUR32 million, up from EUR29 million in the first half of last year. Alstom’s contribution was zero for this half year. But this contribution of zero is actually the contribution that we recorded in the first quarter of the year. Because, as you know, Alstom publishes its accounts at the end of March, and the end of September, twice a year, so Alstom’s contribution is booked to our accounts in March and September. So there was no further contribution from Alstom in the second quarter of this year leaving us with the same figure that we had at the end of the first quarter.

The other joint ventures and associates had a figure that was quite stable by comparison with the first half of 2015. So the net loss for the Group of 28, this was an improvement of £14 million improvement on the 42 million losses of last year but as Martin Bouygues pointed out the interesting thing is that excluding exceptional items, the net profit and we have a bridge chart by the way, we tend to publish figure and the underlying fee were the only restatement really concerns non-current operating expenses. But if you factor out these exceptional items which I think is a good reflection of the businesses in the first half, this figure is up sharply and a good indication what we anticipate for the year, that’s improved profitability for the Group as a whole. Moving on to the balance sheet, the main items concerns. First of all, the usual seasonal effect at Colas which increases net debt and deteriorates working capital requirements in the first half.

This is a now customary phenomenon that I will elaborate on a few minutes. The balance sheet is mainly impacted by two items that were already opened in the first quarter. First of all, the our strong share buyback offering and secondly the acquisition of Newen Studio by TF-1. Now, these two factors also contribute to non-current assets and the decrease was £796 million. This is the combination of fixed assets or so the 997 million impact of Alstom share buyback.

An increase in non-current assets due to the integration of Newen since the 1st of January. It’s the audio-visual rights on the one hand that increased our assets and of course goodwill which also increased assets total of £230 million and the balance between the two is mainly shall we say, the bulk of this variation. Shareholders’ equity which is down 878 million where we have the usual factors explaining these are variations in the first half year. The results explained a negative 26 million, the dividend part to bridge shareholders and also to TF-1 and Colas minorities totaling €656 million. Scope effects for 179 million negative and of these 179 million negative effect, a 118 which is the about two thirds which corresponds to the value of the minority put option on Newen and of course further losses or exchange rate losses for 17 million negative.

All of this give us net debt of €4.254 billion which is up on December 2015, I’ll elaborate on that but it’s a big improvement on the same period last year, the end of June 2015. So how do we fund ourselves in the first half year. At the end of December we had net debt of €2.56 billion. Acquisitions and disposals netted plus €858 million, the two main phenomena here or the Alstom share buyback and the acquisition of Newen which was a negative, the former will be positive. While there is 133 million included 118 million for the year, Newen put which increases outage, dividends 656 million I apologize.

The first payment of the 700 megahertz frequency, €170 million. These frequencies are paid in four installments, two in 2016, one paid on January 2, two at the end of the year, one at the end of 2017 and the final at the end of 2018. And of course which operations which involves an outflow of €1.745 billion compared with €1.3 billion a year ago. All of this increases our net debt or leave us with net debt of €4.35 billion at the end of June 2016. As we look at details breakdown of operation you see, net cash flow was up a €139 million, quite substantial increase, a good increase of Bouygues Telecom and TF1 and stability in the case of cash flow generation in the construction businesses.

CapEx increased by €236 million. Again, I'll elaborate on that in a few minutes. And working capital requirements rose to €1.675 billion up from €1.328 such a negative variation, and a bigger variation than last year. This €347 million variation in working capital requirements can be attributed to exchange rates have changed in scope of consolidation, which worked against us in terms of WCR for a total of €162 million and a €185 million of this variation was due to TF1 and Bouygues Immobilier. These are exactly as anticipated and announced earlier this year.

So total consumption of capital of €347 million. Going back to investments and the reasons behind this €336 million increase CapEx we have the break down by business line. The constriction business increased by €71 million. Bouygues Construction not pretty substantial, most of the investments Bouygues Constructions operating costs concern the purchase of specific equipments, specific to large contracts. But the infrastructure and, of course, the pace of CapEx will depend on the pace at which these projects start up just to happens that during the first half of this year, we started up a number of projects which require that we increase our CapEx outlay.

By the way these CapEx are always covered by advances or initial installments so no negative impact on the Group's debt situation and no impact on the generation of cash flow. Colas, €44 million increase there was much more structure, due to the investment policy in 2016. You may recall that in 2015 due to the fact that the French economic situation was now conducive to roadworks, we substantially reduced CapEx at Colas. There was no question of continuing to keep CapEx lower over the longer term, so we decided to increase CapEx at Colas which is what you now see translated into these accounts. The €80 million increase in CapEx at TF1 mainly concern €63 million of those €81 million concern the integration of new one in the TF1 landscape which many ways changes TF1's business model not just in terms of the amount of CapEx but also the amount of cash flow generation as we heard few minutes ago.

In fact, when Newen produces a series or film or content of any type it then sells this content. At the time of the sale, the investments increase. But the corollary is that the cash flow also increases at the same time. We’ve seen that cash flow has increased. This is the corollary, the increase in CapEx, increase investments, which is free cash-flow neutral from the group’s point of view.

And finally, Bouygues Telecom, EUR84 million increase in CapEx. This is because of the network-sharing agreement with SFR. And, in fact, the faster we invest in this network-sharing agreement the sooner we will areas with better quality coverage, and, of course, the more we benefit and the more business we take in. So this is not just satisfactory to us, this is exactly as we announced. This network-sharing agreement with SFR does entail, over 2016 and 2017, an increase in CapEx as a result of the rollout.

So CapEx is up, but well under control, and perfectly in line with what we announced, and anticipated. Here, you have the breakdown of net debt by business, in the various businesses. Bouygues Construction, a very good performance of the cash situation. Bouygues Immobilier, net cash was down, debt increased, due to the negative impact of working capital requirements. We, again, announced and anticipated this.

At TF1, of course, between June and June, this was of course, the impact of integrating Newen Studios. At Bouygues Telecom, the difference can be ascribed to the fact that cash flow is still low. And, of course, there is a CapEx, despite the improvement in EBITDA. And at the holding company, this is the impact of the EUR996 million impact of the Alstom share buyback. Just to finish on our liquidity situation, our liquidity is very strong.

We’ve available cash of EUR7.4 billion, EUR2 billion in available cash, and investor, of course, EUR5 million in undrawn medium and long-term facilities. These are lines that can be drawn down at any one time. No covenants, and no trigger events, either. And, of course, the schedule itself, nothing new here. The maturities are well spread.

There are no hurdles at any particular point in time, meaning that we can manage this debt maturity schedule very comfortably. By the way Standards and Poor’s have improved outlook up a notch, from stable to positive, in June, based on our first quarter results, and the prospects that we explained to them, that’s what we can say about the financial information for the first half of 2016. Thank you for your attention.

Martin Bouygues: Thank you, Philippe. And now, a few words of conclusion.

Looking at the outlook, we intend to focus our business, both in France and abroad, by providing innovative products and services. We expect a better profitability as of 2016. That’s for construction. For TF1, of course, we have more digital technology involved to improve production of content and adapting the channel to the new business model. We are looking for Bouygues Telecom at 25% EBITDA target for 2017.

We all have a cost savings time which we expect to complete by 2016 compared to sorry to save €400 million in expenses over three years since 2013, capital expenditure about 800 million. Current charges would stand at about 217 million and we expect profitability to remain good and due to improve throughout. And now there is one thing about the governance of the company, as you know our company is 65 years of age and 65 years it has only had two CEOs and the number two and I myself I am about to turn 65 myself. And so we felt it was opportune well to prepare for the future for a number of reasons. Well, as I just pointed out time is flying both for me and others and the events last year that put us under some pressure, you may remember that a journalist announced my death sometime in March and it makes you to think that sort of thing.

Any case we felt it might make sense to have another look at the organization of this company. My older brother Olivier is already a deputy CEO, has been working for 42 years. 35 years of being the company manager, 47 years of being the CEO of Bouygues, and so I’m probably one of the most senior CEOs amongst the – club probably the oldest as well. Any case, the time has come to prepare for the future and so I felt that I should bring along two of my closest aides, Philippe Marien, whom you’re well familiar with as a Chief Financial Officer already. He has done his entire career at Bouygues, he is a graduate of HEC but he has worked for all the branches of the Group including Serve and with Telecom and everything.

He is being involved in the businesses and deals in France. He is well familiar with the companies, he is well familiar with all the businesses of the company. And so of course he keeps his brief as CFO, it will be for him to provide his skill and know how in running the company. Olivier Roussat is a tad – he is 52 years of age. He has been in the company for 25 years and he has had most of his career at Bouygues Telecom.

He is an engineer who graduated from INSA in Lyon. And he's been to all the ranks at Bouygues Telecom and he was able to display a great managerial quality in the dreadful years we’ve been through. He was able to hold the hand as a manager but he was able to not only analyze situations and offer solutions and we can see that the choices he made are testament to his skills. So two great men who will certainly help navigate this both and will very much be involved in the modernizing of the company because like any other company we are facing a huge modernization plan that is we have to take on digital technologies throughout the group, information technology is it's spread of course Bouygues Telecom is flagship for this because we have, we are at very edge of modern technology that of course are the other businesses are following through. Any case I will remain as Chief Executive Officer of Bouygues.

But I am delighted to see that this truly brutal period that we've just emerged from is at long last coming to an end. This was stressful and this stressful period we had the double-whammy of the great global crisis of 2008-2009 and then the crisis in telecom industry which was apparently orchestrated by the powers that be, for some reason, and, of course, we suffered the backlash of that. Any case, that is what I had to say and now we are more than happy to take your questions. Please fire away. Q -

Frederic Boulan: My name is Frederic Boulan from Delco America.

I have two questions on telecoms. Can you say a few more words about new opportunities in the B2B market? Is this your, what are your ambitions in terms of market shares? But also, what are your expectations regarding new regulations? Regarding CapEx, you've said that you're looking at almost €900 million this year alone, having done this deal with Cellnex. What, is CapEx going to level off? Or are we still looking at large investments, say, in 4G or 5G technology in the years to come?

Martin Bouygues: Well, Olivier Roussat is the man.

Olivier Roussat: Yes, well regarding the first question, well let's start with the second part of the question on CapEx we have announced about €800 million not including things that can be disposed off that is the possible disposals and of course fiber technology or 5G technology, we are actually getting ready to do just that. As question number nine, the first question regarding the B2B market, I am sorry, we were trying to address the second question.

Regarding the B2B market there are two things to illustrate this situation, number one, we are delighted with the head that we were able to make, because 4% in fixed and 11% increase in the mobile phone for B2B. ARCEP, the authority, feels that this business should be made even more dynamic and that new opportunity should be made with the fixed line business. And of course, if there is more flexibility in the regulation of course we will be able to take advantage of that. Regarding on CapEx you expect this €800 million to be maintained over the years to come? Well, yes that's exactly the point I was trying to make.

Vincent Maulay: Good morning my name is Vincent Maulay I am from Oddo.

I have two questions. Number one, precisely on governance, could you tell us, I mean, this is a bit premature, but can you say, next three years, what the flow chart of the Bouygues organization should look like? One of the two lieutenants might become the CEO, until such time as a family member could become CEO himself.

Martin Bouygues: Look, I’m sorry, I’m not in a position to answer. I hope this reassures you. I’m not in a position to answer.

Vincent Maulay: And then, the follow-up question on telecoms, why did you increase the catalog price in the spring on fixed line, and then, in the summer now you are starting promotion on entry level and top-end products?

Martin Bouygues: Hang on, Mr. Vic, you are confusing different things here. We very much like, say, the automotive manufacture. We have a product range with a pricing that goes with this, and we do have promotions that may occur at different times of the year. There’s nothing unusual about that.

Likewise, with mobile phones, not just with fixed line. I remember what SFR, they had an increase in their prices. I mean, the market, or the price maker in mobile technology is free, and the price maker in fixed line technology is us.

Josep Pujal: Josep Pujal from Kepler. I have two questions regarding, first, on telecoms, how has ARPU evolved compared with your initial expectations? I mean, you look at a 25% profit margin as a target, do you find that ARPU is in line with your explanation?

Martin Bouygues: No, the ARPU numbers have not deteriorated, at least, that’s not what the slide showed.

Or maybe a mistake was made in the…

Josep Pujal: But then, is this to say that if you are ahead of schedule in terms of the mobile customer base and you might revise this number upwards? This 25% EBITDA, you could do better than 25%?

Martin Bouygues: Look, I let you be the judge of that. You can read things as you please. At this stage, we do want to make a statement, we do want to say that the EUR1 million additional customers is a target we probably will revise upwards in the weeks to come. Of course, we’ll see. In terms of EBITDA, we’ll be able to give you numbers or expectations at that point.

Josep Pujal: Thank you, sir. I had another question. What about this, you’re talking of handing over the running of the company to deputies. How do you see, I mean where should, the company be in five years time, from two viewpoints. Number one, in terms of business, I mean would it be more or less diversified, not just by in terms of business areas, but also geographically? And then, round about the capital structure, namely, you have a significant presence of, well, you have great shareholdership in the family itself, but also in your employees.

Is this going to change?

Martin Bouygues: Look, what I have found is just like everybody else, we’ve been through that 2008, 2009 crisis, not just, I mean meaning Europe, the U.S., the whole world. Now then, we had, as I said, a double whammy because of course in France we had a tragic situation for telecom, 50,000 jobs were lost and that was a disaster. We were able to demonstrate our resilience in these very trying circumstances, that mean maybe the CEO and we are familiar with my own Group. I must say, I had the greatest admiration for our people’s ability to hold the course and weather the storm in what could I said very, very challenging circumstances. So if you look at the different business areas, that mean how different can you get from public works to telecom business because of their specificities these are diametrically opposed and that, that may well be one of the reasons why we were to prove so resilient.

And so if you look at the diversity of our portfolio, then also as you pointed out our geographical diversity we were able to generate a great capacity not just to weather the storm when they do show up, but also to generate growth whenever that is possible. But this is all based on a strong corporate culture, I think the great characteristic the potential is that we have a typical very strong, very powerful widely shared corporate culture, something that everybody very much address to. And this brings me to the next point about employee shareholder, so this is one of the key components of that very specific feature. We have a significant employee shareholdership and that is one of the defining dimensions of our own corporate culture and that gives us a huge competitive advantage because A, all employees have a joint stake in the future of the group. It is all employees are happy to defend the company’s interest and we can see the fruit of this everyday.

Now, part of the company is indeed held by the family but the fact that it is a family held business, or partly held business, we’ll make a big difference. We only had, had two CEOs in 65 years, some people might say its two CEOs is one too many, but still we haven’t had much agenda. The whole point is saying that hey, I am the CEO of the group. No, they hope my position as CEO is to service the company and it is for me to ensure that the values the philosophy of the group indeed the way we’ve been conducting business is a sustainable one because they were saying we do to have a new boss coming in with a single forging desire to kill the father, i.e. to kill his predecessor and this of course entails many difficulties indeed when somebody has there own personal agenda.

That’s a worse thing and the fact that we have had the stability, this great sort of traditional practice in the company will ensure the sustainability of the group. And I do expect my successes my heritage as it were to be up to the cost but of course it will be for the governing bodies of the group to make sure that my successes will abide by the same philosophy and there again the structure of this share holdership is indeed one of the day guarantee of the Group's stable outlook.

Nicola Beausire: Hello my name is Nicola Beausire from HSBC. I would like to know how much the UK is part of your business and have you found that local authorities and the private customers have been shirking at your offers ever since the Brexit that's the construction? For Telecoms and you can see there is the convergence between the telecoms and the media, do you believe that there is should be more content provided by Bouygues Telecom?

Martin Bouygues: Right, regarding the UK, €2 billion in revenue all included not just not just Bouygues Construction, but Colas as well. And so you have of course the different businesses, Colas building roads, and Bouygues Construction doing buildings, and such like.

And the new government has stated their intention to develop infrastructure, so there should be rather good news for us. Brexit hasn't had much effect on us because after all we all our business is conducted locally, we have local costs or locally denominated costs and so and income as well. For public works, there may be situations where on the private market there could be a slowdown. That, in itself is not necessarily but I think because it was an overreach of that business in the UK. Regarding the convergence between the telecoms and the media.

Well, we are well positioned because we do have both businesses don't we, with TF1 and Bouygues Telecom. Should there be more convergence? Well, I am constantly thinking about this, you can well imagine. We put telecoms business is to carry signal, it is for Bouygues Telecom to make sure that it provides the best possible signal with the best possible service at the best possible costs, that's the business of Bouygues Telecom. So, we are a carrier, a telecoms carrier and that is first and foremost our business. Now, the fact that we're in a position to pass on broadcast content that might support our sales.

Well, it's been tried out, indeed, it's been tried out around the world. The history of that isn't very good. It may be more successful in the future, but I still think that it is still dubious. Bouygues Telecom's business is not the content that in the media business for, what 30 years, but I find that he who owns the rights will try to get the best value for these rights and get the largest possible exposure. It stands to reason.

And TF1's business where we have high quality audiovisual content, the idea is to get the most of this, of course, in best possible conditions. Now that's a pretty straightforward philosophy. Having said that, there are a number of synergies between TF1 and Bouygues Telecm, we are of course privilege partner but I have no intention of weakening TF1 to the benefit of Bouygues Telecom. So, synergies were right, common joint operations that of course we don't want business to be to suffer at the expense of the other.

Gregoire Thibault: Gregoire Thibault from Natixis.

I have three questions. My first question regards Colas. Frankly, we’ve seen profitability increase quite sharply in the first half. Can we extrapolate on that over the full year? And maybe we could have a few words about the outlook for the North American market for Colas in terms of business levels and margin. Can I continue with my questions?

Martin Bouygues: Yes, please go ahead.

Gregoire Thibault: My second question, I see that you regularly dispose of small assets, and it all adds up. But what about the book value of your portfolio of concessions, everything you have aggregated within…?

Martin Bouygues: Hang on, have you any idea what our portfolio looks like? It’s gigantic. We have buildings here, there, and everywhere.

Gregoire Thibault: I’m talking about stakes in concessions, all our 41 small airport companies, so on. And my third and final question concerns extension project in Monaco.

What about the compensation for Bouygues TP? Is it paid directly by the principality?

Martin Bouygues: No, no. There is a company that was set up and that company obtained, from the principality of Monaco, the right to build, if you like. The company was funded by the markets. It then entered in to a contract, construction contract, with Bouygues Construction. And it’s this company, this adult company that pays us.

So it’s a conventional works contract with the company, which itself is entrusted with the development of this extension project. Herve, I’ll let you answer about Colas. Hervé

Le Bouc: As for the operating margin at the end of 2016, as we said from the very start, this margin will improve. We’re not giving any figure, but it will certainly be an improvement on 2015.

Martin Bouygues: You then asked about the North American market.

Well, Canada was affected in the first half year because the weather was a bit longer than usual. So we really only started a month later than is customary. We were also affected by the wildcat fires in Alberta, which we, we have a very good foothold in Fort McMurray. And the North American situation will improve, and will continue to improve, because the stimulus over the next seven years is already rolling out and should, I think, benefit us in 2017, in particular. So the prospects are good.

Have we any other questions? Yes, from the front.

Unidentified Analyst: I’ve two requests. First of all, the Alstom business is pretty much behind us now in the accounts, could we take stock now of this investment you made alongside Alstom? These are methods you don’t really use in the Anglo-Saxon countries. The profitability of this investment over time, in particular, is what I’m referring to. For future reference, is there anything of interest to you in your dealings with Alstom? Anything that you can take away from this cooperation? That’s my first request.

And my second one concerns what you said about the situation in the telecommunications market. You said that this was an organized crisis, but you talked about it as being in the past. Do you now feel that, not just because of the strategy you’ve had agreed but because of the market conditions do you feel that this kind of nightmare is something that will not happen again? Do you now curtail that we are back to normal, business as usual so to speak?
Unidentified

Company Representative: Before coming back to Alstom, regarding Buoygues Telecom, I’d be trying to say that we have performed very well. My feeling is that in the second quarter of this year, sales growth is positive in fixed and mobile, it’s a positive, now as for the real situation or the other operators were, I don’t know I haven’t seen their accounts but what we do know is that as far as Buoygues Telecom is concerned, we are normalizing and improving our situation quite well. So we’re happy with that and between that and saying that we should reduce the number of operators from four to three.

While I think it was Chairman Lasserre from the Competition Authority who said there is no magic number in terms competition and he is perfectly right. There could well be 10 competitors in France and everything could work well if the market is properly regulated, if everybody, there is a level plain sheet between old 10 or even 20 pairs, no problem but of course one of the options of that would be the cost. obviously with four operators, it’s clear than done with three, we knew that from the onset that was something the government chose to do. This brings me to Alstom, I am afraid I can’t tell you what the profitability is. I don’t what the profitability is.

We just finished unbundling, you’ve seen the commercial results of some transport and the commercial results are particularly good. I think we should give Alstom time to with the share price to settle. Alstom has substantial potential cash because our puts of GE at the Alstom board will have to decide it in the next few months what it wants to do with these productions. So it’s actually difficult to calculate the overall profitability of this transaction. To my mind it’s far from being dramatic.

As for the relations between us, yes we work together on a number of different the Nimes-Montpellier bypass, just to take an example. While we’re involved in a grouping with the construction of Colas, Alstom and yes we will build railway infrastructure were projects try to weld or lot of these projects were very happy to work with Alstom with no particular difficulties with them at all.

Martin Bouygues: Okay, with no more questions, ladies and gentlemen thank you for being here.