Eiffage S.A.

Earnings Release • Feb 26, 2020

Vélizy-Villacoublay, 26 February 2020 17:40

Sales(1): €18.1bn (+9.4%) Operating profit on ordinary activities: €2bn (+8.0%) Net profit Group share: €725m (+15.3%) Net debt(2) : €10.2bn (stable(3) after €0.6bn of external growth) Contracting order book: €14.2bn (+2%) Dividend(4) : €2.80 per share (+16.7%)

Press release

2019 annual results

• Confirmation of growth momentum, with a 9.4% increase in sales for the Group:
  • Contracting: +10.8%, with like-for-like growth of 8.8%
  • Motorway traffic on APRR network: +1.1%
• Further improvement in profitability:
  • Increases in operating profit in Contracting (+12.5%) and Concessions (+4.9%)
  • Increase in net profit Group share (+15.3%)
• Major developments in motorway Concessions and airport concessions in France and PPPs
• Proposed dividend per share of €2.80 (+16.7%)
• Increase in order book (+2%) in all Contracting divisions
• 2020 outlook: growth in activity, more moderate in Contracting, and progress of results

The Board of Directors of Eiffage met this day to approve the 2019 annual accounts(5), which will be submitted at the next shareholders general meeting on 22 April 2020.

Activity

Following another upbeat performance in the fourth quarter (+6.3%, of which +6.1% for Contracting and +7.6% for Concessions), consolidated sales in the year reached more than €18.1bn, up by 9.4% on a reported basis and by 7.7% like-for-like (lfl).

Sales contributed by Contracting activity reached nearly €15.2 bn, increased by 10.8% (+8.8% lfl), fuelled by a still buoyant market in France (up by 11.1% on a reported basis and by 9.7% lfl) and the dynamism of the Group's European operations (up 13.5%). Sales generated outside France climbed to more than €4.6bn (up by 10.2% on a reported basis and by 6.8% lfl).

⁽¹⁾ Excluding Ifric 12.

⁽²⁾ Excluding IFRS 16 debt and the fair value of CNA debt and of swaps.

⁽³⁾ Restated for part of the financial lease liabilities recognised under IAS 17 (debt reported as at 31 December 2018 of €10.54bn less financial lease liability of €0.36bn).

⁽⁴⁾ To be proposed to the shareholders general meeting convened on 22 April 2020 due for 2019.

⁽⁵⁾ The audit procedures have been completed and the auditors' report will be issued once the procedures needed for the filling of the universal registration document will be finished.

In Construction, sales increased by 6.5% to €4.26bn. Growth reached 7.8% in France and 2.6% in Europe outside France. In property development, reservations for new housing units passed the 5,000 mark for the first time, increasing to 5,095 (up from 4,694 a year before).

In Infrastructures, sales increased by 16.3% to €6.44bn. There was an overall increase of 20.6% in France, growth reaching 10.8% for Road Construction, 37.1% for Civil Engineering (buoyed by the ramping up of work on the Grand Paris Express) and 11.4% for Metal. The division also pressed ahead with the development of its international activities, growth reaching 8.3% lfl.

In Energy Systems, sales increased by 7.7% to €4.48bn, growth reaching 3.0% in France, while for international activities it reached 19.3% on a reported basis and 14.2% lfl.

At Concessions, motorway traffic increased overall (+1.1% for the APRR network, +4.2% for the A65 motorway, -0.3% for the Millau viaduct and +28.0% for the Autoroute de l'Avenir in Senegal), favourably impacted in the fourth quarter by the disruption of rail services in France, bearing in mind that social unrest had had a negative impact on motorway traffic in the fourth quarter of 2018.

The total revenue contributed by Concessions increased by 2.9% to almost €3bn.

Finally, 2019 was marked by a series of successes that have strengthened and extended the duration of the concessions portfolio in France. In the airport sector, the Group acquired 49.99% and the control interest of Toulouse airport and was awarded, in consortium, the Lille airport concession. In the motorway sector, the consortium formed by Eiffage and APRR was awarded the concession for the Route Centre-Europe Atlantique (RCEA) project. The Group also signed an agreement that enables it to increase, indirectly, its stakes in APRR and ADELAC by 2%.

The Lille airport and RCEA concessions require significant investments on the part of the Group's Contracting activities, the intention being for local firms to be involved in these projects. The related works contracts have not yet been added to the order book.

In February 2020, the Group was awarded the PPP consortium for the Biebelried-Fürth/Erlangen section of the A3 motorway in Germany.

Results

Operating profit on ordinary activities came to €2,005m, up 8.0%.

In Construction, the operating margin declined by 20 bp to 3.7%. In Infrastructures, the operating margin rose sharply to 2.9%, up from 2.7% in 2018, buoyed by the strong growth recorded by Civil Engineering and Road Construction in France. The Energy Systems division recorded another good operating performance in France as well as abroad, the operating margin improving to 4.6% in 2019, up from 4.4% in 2018.

There follows that the operating margin for Contracting reached 3.6%, level with 2018. The contribution to consolidated operating profit on ordinary activities increased to €549m, from €488m in 2018 (representing an increase of 12.5% on a 10.8% increase in sales).

In Concessions, the operating margin increased to 49.7% (48.8% in 2018), with APRR recording another improvement in its Ebitda margin to 74.4% (73.8% in 2018).

Net finance costs declined for the fifth consecutive year, down to €265m, which represents a decrease of 28% in 2019 alone, reflecting both the expiration in June 2018 of the Eiffarie interest rate swaps and the bond refinancing by APRR in 2018 and 2019.

This reduction in finance costs, along with the further improvement in operating performances, paved the way for a 15.3% increase in net profit Group share to €725m (up from €629m in 2018).

Income tax expense reached €560m (€461m in 2018) and the effective tax rate was of 33.7% (32.5% in 2018).

Financial situation

Free cash flow increased to €1.3bn (€1bn in 2018). It is stated after still significant development investments of €537m in Concessions due to the ramping up of major infrastructure investments by APRR and AREA under their management contracts and further to the motorway investment plans.

In Concessions, Eiffage acquired a 49.99% shareholding in the Toulouse-Blagnac airport company for €502m, which represents the bulk of the spending on external growth for the year.

After taking into account capital transactions and dividend payments, net debt - excluding IFRS 16 debt and the fair value of CNA debt and of swaps - amounted to €10.2bn at 31 December 2019, stable(3) compared with the year before, the free cash flow generated having funded growth investments in 2019.

The Group's liquidity amounted to €4.6bn at 31 December 2019 (€3.4bn at 31 December 2018). It consists of available net cash of €2.6bn and an undrawn credit line that has been renewed in 2019 and increased to €2bn (from €1bn previously).

Financing

APRR has successfully placed two new bonds of €0.5bn each, the first on 10 January 2019 at 9 years (maturing in January 2028) and offering a 1.25% coupon, the second on 10 January 2020 at 3 years (maturing in January 2023) and offering a 0% coupon.

The Group finalised the refinancing of Eiffage's credit line, which was increased to €2bn, in May 2019, and of the APRR and Eiffarie credit lines for an amount of €3.1bn, in February 2020. Signed for a period of five years with two possible one-year extensions, the credit margin on these lines is more favourable than it was for the previous credit lines. Their cost features a variable component that will depend on the Group's performances with regards to health and safety and carbon footprint. With this innovative mechanism, which is consistent with the Group's undertakings in these two areas, Eiffage is one of the very first companies in the sector to integrate extra financial criteria into its financial documentation on such an important scale (€5.1bn).

Carbon footprint

The Group continued to deploy its low-carbon strategy by running an awareness and training campaign for employees on the front line. Eiffage included a certain number of industrial partners in this approach through its Sekoya platform created especially for low-carbon materials and processes. The first call for solutions attracted 57 low-carbon proposals in France, from which five winners were chosen.

Eiffage will publish its first carbon climate report in April 2020 (TCFD recommendations).

Shareholders general meeting – Dividend

Eiffage SA recorded a net profit of €590m.

At the shareholders general meeting convened on 22 April 2020, the Board of Directors will propose distributing a dividend of €2.80 per share, which represents an increase of 16.7%. The coupon would be detached on 18 May 2020, with payment of the dividend taking place on 20 May 2020 on the 98,000,000 shares making up the share capital on 26 February 2020 as well as on the shares to be issued in connection with the capital increase reserved for employees decided by the Board of Directors on 26 February 2020.

Executive remuneration

In accordance with Afep-Medef recommendations, information about the ex post and ex ante remuneration of the Eiffage Chairman and CEO for the 2019-2021 period has been disclosed on the www.eiffage.com website.

The Ordinary and Extraordinary General Meeting will be held at 10.00 a.m. on 22 April 2020 in Salle Wagram, 39-41 Avenue de Wagram, 75017 Paris, France.

2020 prospects

Given the major developments in Concessions and the solid €14.2bn order book in Contracting, Eiffage expects further growth in its activity and its results in 2020. Nonetheless, growth will be more moderate than in 2019 given that the increase in the Contracting order book was not as strong in 2019 (+2%) as the year before (+15%).

A more detailed presentation of the financial statements for the year ended 31 December 2019, in French and English, is available on the company's website: www.eiffage.com

Investor contact Xavier Ombrédanne Tel: + 33 (0)1 71 59 10 56 E-mail: xavier.ombredanne@eiffage.com Press contact Sophie Mairé Tel: + 33 (0)1 71 59 10 62 E-mail: sophie.maire@eiffage.com

APPENDICES

Appendix 1: Sales by division

			% change
in millions of euro	2018	2019	Actual consolidation scope	Like-for-like
Construction	4,001	4,260	+6.5%	+5.0%
of which Property	845	985	-	-
Infrastructures	5,537	6,441	+16.3%	+14.0%
Energy Systems	4,160	4,480	+7.7%	+5.7%
Sub-total Contracting	13,698	15,181	+10.8%	+8.8%
Concessions (excluding Ifric 12)	2,879	2,962	+2.9%	+2.9%
Total Group (excluding Ifric 12)	16,577	18,143	+9.4%	+7.7%
Of which:
France	12,327	13,456	+9.2%	+8.0%
International	4,250	4,687	+10.3%	+6.9%
Europe (excluding France)	3,431	3,893	+13.5%	+9.3%
Rest of the world	819	794	-3.1%	-3.4%
"Construction" revenue of Concessions (Ifric 12)	311	331	nm

Sales by division, 4 th quarter

in millions of euro	Q4 2018	Q4 2019	% change
Construction	1,222	1,240	+1.5%
of which Property	271	317
Infrastructures	1,567	1,709	+9.1%
Energy Systems	1,181	1,265	+7.1%
Sub-total Contracting	3,970	4,214	+6.1%
Concessions (excluding Ifric 12)	661	711	+7.6%
Total Group (excluding Ifric 12)	4,631	4,925	+6.3%
"Construction" revenue of Concessions (Ifric 12)	88	75	nm

Appendix 2: Operating profit on ordinary activities by division

	2018		2019		% change
	€m	% of sales	€m	% of sales	12 months
Construction	155	3.9%	157	3.7%	+1.3%
Infrastructures	151	2.7%	187	2.9%	+23.8%
Energy Systems	182	4.4%	205	4.6%	+12.6%
Sub-total Contracting	488	3.6%	549	3.6%	+12.5%
Concessions	1,404	48.8%	1,473	49.7%	+4.9%
Holding	(35)		(17)
Total Group	1,857	11.2%	2,005	11.1%	+8.0%

Appendix 3: Consolidated financial statements

in millions of euro	2018	2019
Operating income (1)	16,890	18,690
Other operating income	5	5
Raw materials and consumables used	(3,022)	(3,180)
Employee benefits expense	(3,571)	(3,800)
Other operating expenses	(7,099)	(8,103)
Taxes (other than income tax)	(479)	(495)
Depreciation and amortisation	(864)	(1,041)
Net decrease (increase) in provisions	(73)	(72)
Change in inventories of finished goods and work in progress	(22)	(77)
Other operating income on ordinary activities	92	78
Operating profit on ordinary activities	1,857	2,005
Other income (expenses) from operations	(51)	(68)
Operating profit	1,806	1,937
Income from cash and cash equivalents	13	18
Finance costs	(379)	(283)
Net finance costs	(366)	(265)
Other financial income (expenses)	(23)	(12)
Share of profit (loss) of equity-method investments	9	13
Income tax	(461)	(560)
Net profit	965	1,113
Attributable to equity holders of the parent	629	725
Attributable to non-controlling interests	336	388

1) Of which Ifric 12 of €311m in 2018 and €331m in 2019.

Consolidated statement of financial position – Assets

in millions of euro	31/12/2018	31/12/2019
Property, plant and equipment	1,853	1,817
Right-of-use assets	-	889
Investment property	3	62
Concession intangible assets	10,981	10,837
Goodwill	3,219	3,703
Other intangible assets	205	249
Equity-method investments	171	162
Non-current financial assets in respect of concession service arrangements	1,621	1,585
Other non-current financial assets	518	612
Deferred tax assets	247	254
Total non-current assets	18,818	20,170
Inventories	740	745
Trade and other receivables	5,311	5,467
Current tax assets	170	140
Current financial assets in respect of concession service arrangements	56	60
Other current assets	1,577	1,718
Other current financial assets	-	157
Cash and cash equivalents	3,696	4,420
Total current assets	11,550	12,707
Total assets	30,368	32,877

Consolidated statement of financial position – Equity and liabilities

in millions of euro	31/12/2018	31/12/2019
Share capital	392	392
Consolidated reserves	3,867	4,288
All other comprehensive items of income	(132)	(157)
Profit for the year	629	725
Equity attributable to equity holders of the parent	4,756	5,248
Non-controlling interests	879	983
Total equity	5,635	6,231
Borrowings	11,422	10,698
Lease liabilities	-	642
Deferred tax liabilities	854	811
Non-current provisions	656	787
Other non-current liabilities	153	151
Total non-current liabilities	13,085	13,089
Trade and other payables	3,720	4,174
Loans and other borrowings	1,649	3,047
Non-current borrowings due within one year	1,327	1,304
Lease liabilities due within one year	-	230
Current income tax liabilities	154	190
Current provisions	567	597
Other liabilities	4,231	4,015
Total current liabilities	11,648	13,557
Total equity and liabilities	30,368	32,877

Consolidated statement of cash flows

in millions of euro	2018	2019
Cash and cash equivalents at 1 January	4,391	3,573
Currency effect	1	2
Restated cash and cash equivalents at 1 January	4,392	3,575
Net profit	965	1,113
Profit (loss) of equity-method investments	(9)	(13)
Dividends from equity-method investments	6	6
Depreciation and amortisation	775	1,041
Net increase in provisions	35	51
Other non-cash items	34	43
Gain (loss) on disposals	(6)	(14)
Cash flows from operations before interest and taxes	1,800	2,227
Net interest expense	341	240
Interest paid	(407)	(263)
Income tax expense	461	559
Income tax paid	(471)	(542)
Changes in working capital requirement	(125)	3
Net cash from operating activities	1,599	2,224
Purchases of fixed assets	(318)	(392)
Purchases of intangible concession assets	(377)	(420)
Purchases of non-current financial assets	(30)	(26)
Disposals and reductions of fixed assets	118	114
Net operating investments	(607)	(724)
Purchases of controlling interests	(610)	(553)
Disposals of controlling interests and assets held for sale	2	10
Cash and cash equivalents of entities bought or sold	57	49
Net financial investments	(551)	(494)
Net cash used in investing activities	(1,158)	(1,218)
Dividends paid to shareholders	(519)	(550)
Capital increase	144	162
Purchases/disposals of non-controlling interests	(9)	-
Repurchase and resale of treasury shares	(153)	(146)
Repayments of lease liabilities	-	(233)
Repayments of borrowings	(2,487)	(1,406)
New borrowings	1,764	2,042
Net cash used in financing activities	(1,260)	(131)
Change in other financial assets	-	(157)
Net increase in cash and cash equivalents	(819)	718
Cash and cash equivalents at 31 December	3,573	4,293

Appendix 4: Order book by division

in billions of euro	31/12/2018	31/12/2019	% change 12 months	% change 3 months
Construction	4.4	4.5	+2%	+2%
Infrastructures	6.3	6.4	+1%	-5%
Energy Systems	3.2	3.3	+4%	+1%
Total Contracting	13.9	14.2	+2%	-2%
Property	0.6	0.6	+6%	+16%
Concessions	1.1	1.0	-3%	-1%

Appendix 5: Summary of IFRS 16 impacts

IFRS 16, leases, introduces a single lessee accounting model. The new standard requires that all leases be recognised on the statement of financial position in the form of a lease liability corresponding to the obligation to make payments and a lease asset reflecting the right to use the underlying asset.

Within the Group, lease arrangements concern mainly property, construction site equipment used by the Construction and Infrastructures divisions (notably in Civil Engineering) and motor vehicles.

For the first-time application of IFRS 16, the Group opted for the modified retrospective approach. Under this approach, the cumulative effect of initially applying IFRS 16 at 1 January 2019 has been presented as an adjustment to other components of equity. The effects on the statement of financial position at that date are presented in the financial report available on the www.eiffage.com website.

In the income statement, lease payments are replaced by the depreciation of the right-of-use assets and interest expense on lease liabilities.

Right-of-use assets and lease liabilities, including lease liabilities due within one year, are reported separately on specific lines of the balance sheet.

in millions of euro	2019
Impacts on income statement
Depreciation of right-of-use assets	226
Interest expense on lease liabilities	14
Impacts on statement of financial position
Right-of-use assets	889
Lease liabilities	872

Appendix 6: Glossary

Contracting activities order book	Portion of signed contracts not executed
Net financial debt excluding IFRS 16 debt and fair value of CNA debt and of swaps	Net financial debt excluding debt from IFRS 16 applied since January 1st 2019 and the fair value of the debt owed to Caisse Nationale des Autoroutes (CNA) and of the swaps
Current operating margin	Operating profit on ordinary activities expressed as a percentage of sales
Like-for-like (lfl) Constant consolidation scope and constant exchange rates	Constant consolidation scope: calculated by neutralising: - the 2019 contribution made by companies consolidated for the first time in 2019; - the 2019 contribution made by companies consolidated for the first time in 2018, for the period equivalent to that in 2018 before they were consolidated for the first time;
	- the 2018 contribution made by companies deconsolidated in 2019, for the period equivalent to that in 2019 after they were deconsolidated; - the 2018 contribution made by companies deconsolidated in 2018. Constant exchange rate: 2018 exchange rates applied to 2019 local currency sales.

Annexe 7: Financial calendar 2020

	Eiffage	APRR
Quarterly information and sales for the 4th quarter of 2019	26.02.2020	NA
2019 annual results and financial analysts' meeting	26.02.2020	26.02.2020
Quarterly information and sales for the 1st quarter of 2020	12.05.2020	21.04.2020
Shareholders general meeting	22.04.2020	NA
Quarterly information and sales for the 2nd quarter of 2020	26.08.2020	21.07.2020
2020 half-year results and financial analysts' meeting	26.08.2020	26.08.2020
Quarterly information and sales for the 3rd quarter of 2020	04.11.2020	20.10.2020

During the 15-day blackout period preceding the publication of the quarterly trading statements and the 30-day quiet period preceding the publication of the half-year and annual results, Eiffage will not comment on its financial performances.