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Earnings call: Bouygues reports steady growth and strategic acquisitions

Published 28/02/2024, 16:30
Earnings call: Bouygues reports steady growth and strategic acquisitions
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In a recent earnings call, Bouygues (EPA:BOUY) (EN:EN) CEO Olivier Roussat presented a comprehensive overview of the company's performance and future strategies. Bouygues achieved a 3% increase in current operating profit after leases (COPA) and an 11% rise in sales, reaching €55 billion in 2023. The company also reported a net profit of €1.04 billion and a reduction in net debt to €6.25 billion.

A proposed dividend increase to €1.90 per share reflects the company's strong financial position. Bouygues announced an exclusivity agreement for the acquisition of La Poste Telecom, expected to enhance their mobile and fixed business.

The company's commitment to corporate social responsibility was evident in their efforts towards employee well-being, gender balance in management, and reducing their carbon footprint.

Key Takeaways

  • Bouygues's sales increased by 11% to €55 billion, with a 3% increase in COPA.
  • Net profit reached €1.04 billion, and net debt decreased to €6.25 billion.
  • The board proposed a dividend increase to €1.90 per share.
  • The exclusivity agreement to acquire La Poste Telecom is expected to boost EBITDA by €140 million annually from 2028.
  • Commitment to corporate social responsibility includes employee share ownership, gender balance in management, and carbon footprint reduction.

Company Outlook

  • Bouygues Telecom's strong performance is anticipated to continue in 2024, with sales billed to customers expected to rise.
  • EBITDA after leases is projected to surpass €2 billion, with gross capital expenditures around €1.5 billion.
  • The company's priorities for 2024 include integrating Equans, enhancing operational and financial performance, and adhering to environmental regulations.
  • The market outlook for 2024 is cautiously optimistic, despite macroeconomic and political uncertainties.

Bearish Highlights

  • Bouygues Immobilier experienced a backlog decrease of €500 million due to market challenges.
  • TF1's revenue dropped by 8%, and no guidance was provided for Colas amid inflation and foreign exchange uncertainties.
  • The mobile market is growing more slowly due to the high cost of handsets.

Bullish Highlights

  • Bouygues Construction boasts a strong backlog, ensuring visibility for future activities.
  • Bouygues Telecom was ranked #1 in customer satisfaction and Wi-Fi performance for the second consecutive year.
  • The acquisition of La Poste Telecom is expected to significantly contribute to EBITDA from 2028 onwards.

Misses

  • The media business faced a downturn in Newen's COPA margin, resulting in an overall margin of 12.5%.
  • The company reported a 3% decrease in programming costs compared to the previous year.

Q&A Highlights

  • The company expects stable average billing per user (ABPU) over the year, with a significant increase in ABPU for fixed lines.
  • Margins are projected to improve through cost reductions and procurement gains.
  • The company is open to acquisitions in telecom, construction, and energy services sectors.
  • The EBITDA goal for La Poste Mobile is €140 million by 2028, boosted by gains from the wholesale contract with SFR.
  • Bouygues is considering exercising the call option for SDAIF in 2025 or 2026.
  • The 2026 EBITDA guidance is €2.6 billion, which may be revised based on the acquisition of La Poste Mobile.

Bouygues' strategic moves, including the potential acquisition of La Poste Telecom and the commitment to digital and environmental initiatives, position the company for continued growth. The company's financial stability and focus on customer satisfaction, combined with its cautious yet positive outlook for the coming years, suggest a steady trajectory in the face of a challenging economic climate.

Full transcript - Bouygues SA (BOUY) Q4 2023:

Olivier Roussat: Well, good morning to one and all. That is our new corporate firm, highlighting our employees, their knowhow, which is our only real asset, and this is why we have put them front and center of stage. Now before beginning today's presentation, I'd just like to say a few words on this cover slide. This is swimming pool that will be completed for the diving competitions and artistic swimming competitions in this summer's Olympic Games. You can see the good integration into the environment with the use of solar panels and timber, which will considerably reduce our carbon footprint. Okay. Let's now move on directly into our presentation. And I'm on Page 4. Our results for 2023 are good, very good. We've achieved the goals we set ourselves. Our sales reached €55 billion, COPA up 3%, sales up 11% by comparison with the 2022 pro forma statements. Equans is rolling out its strategic plan, on target, it's COPA margin was 2.9%, which is the upper end of the range announced at the Capital Markets Day when we announced between 2.5% and 3%. Our net debt has also improved considerably. This is a great source of satisfaction to us. Finally, Bouygues Construction, Bouygues Immobilier and TF1 have all been certified for the reduction of carbon by the SBTi. So 5 out of 6 of our business segments have been certified. Equans should achieve its certification in the course of 2024. It will be filing for certification in the next few weeks. Now the construction business has a very good backlog, providing us with good visibility for our future activity. It's in this broad context that the Board at its meeting of yesterday morning decided to propose to the AGM on the 25th of April, a dividend increase of €0.10, bringing the proposed dividend to €1.90 per share. That's €0.10 more than in 2022.Next we move on to the key figures on Page 5. The Group sales in 2023 reached €56 million. That is a 26% increase, which is essentially due to the full integration of Equans and our accounts for the full year. That's if Equans had been integrated as of 1st of January on a pro forma basis, that would have been a 3% increase. COPA rose by €393 million to €2.411 billion. That's a €247 million increase or 11% increase, if you prefer, by comparison with the pro forma statements, which include includes Equans over the full year.Net attributable -- net profit attributable was up €72 million to €1.04 billion for the period. Finally, the group's net debt was down to €6.25 billion at the end of '23, down from €7.45 billion at the end of 2022. That's a good performance, particularly if we take into account the exceptional events that occurred in the course of 2023 and particularly the €310 million that we had to pay to Free Mobile, which we will be appealing, as we have already announced, and we will be also contesting the provisional execution. Before getting into the figures for our different businesses, I'd like to come back to Bouygues Telecom's announcement of last week regarding an exclusivity agreement with La Poste, because last week Bouygues Telecom signed on Thursday evening an exclusivity agreement with La Poste concerning the acquisition of the entire share capital of La Poste Telecom. And this also involves a distribution partnership with La Poste. Our La Poste Mobile is the foremost mobile virtual network operator in the French market, 51% on La Poste, 49% by SFR. Also the last large MVNO available on the market. La Poste has 2.3 million mobile customers, a very strong brand with a very high level of customer satisfaction, largely thanks to its quality of service and the fact that it's very close to its clients. The catchment area is very vast, particularly in rural areas, which is a further argument in favor of pursuing this agreement. Now the reasons that Bouygues Telecom is interested in this acquisition from La Post Mobile, well, over and beyond the fact that it's the large last remaining MVNO available in the market. This is an opportunity for us to strengthen our position in mobile and fixed business based on a nationwide distribution while increasing EBITDA after leasing in a fixed cost sector. First of all, this enables us to increase Bouygues Telecom's mobile customer base by some 2.3 million clients. This will also provide a new fixed offering for La Poste Telecom's customers. And it will also strengthen Bouygues Telecom's presence in the professionals and SME segments. This is a transaction that would enable Bouygues Telecom to improve its profitability in the fixed cost sector, given the Bouygues Telecom's radio network, which does not require any additional CapEx in acquiring La Poste Mobile's customers. Our acquisition costs from 2025, 2026 with a view to preparing for the migration of clients. This is a migration that could begin at the end of the wholesale agreement currently in force with SFR, which expires at the end of December 2026. After that migration, which would take place in the course of 2027, the contribution to the group's EBITDA will be approximately €140 million per annum from 2028 onwards. Concerning the acquisition price, I have 2 information or 2 pieces of information. The acquisition price for the shares is €950 million, which corresponds to an enterprise value of €964 -- sorry, €963.4 million. These amounts will be treated based on the time table for completion of the transaction. This is obviously subject to consultation with employee representative bodies, which we expect to have completed by the end of 2024, again, subject to authorization from the antitrust authorities and subject to SFR not exercising its preemption rights on this entity. If the significant transaction closes, Bouygues Telecom will communicate at the very latest within the months following its completion, will communicate a new guidance, which will replace the Ambition 2026 guidance announced during our Capital Markets Day on the 15th of January. We'll obviously keep you posted throughout this year, 2024.Let's now begin the strategic review. With this slide, we wanted to talk to you about corporate social responsibility. Important topic for us, which we articulated around 3 main thrusts. First of all, we have our people at the very heart of our group, which means that we are very keen to ensure their health, safety, and well-being. We want to not just welcome and onboard employees, but we want to advance their careers within the group. Thirdly, we share value with our employees. And finally, we promote diversity and gender balance, taking action in favor of inclusion. Secondly, we are keen to contribute to ecological, environmental, and energy transitions. We are keen to preserve resources to fight climate change and to protect biodiversity. Thirdly, we are keen to be our stakeholders' most trusted partners. For us it's essential to respect strict ethical standards to forge relations based on trust with our suppliers and subcontractors to ensure compliance with human rights, to demonstrate social responsibility and commitment to society, and to conduct dialogue with our stakeholders. Page 12, as you can see, people are at the heart of our group, as I said. In 2023, that led to an increase of 17,000 employees becoming shareholders in the group. So there are now 68,000 as of the end of 2023, 68,000 big employees who own shares in the group. This is evidence of the fact that our employee share ownership program as well as integrated Equans very well within the group. The gender balance is also well in evidence in the fact that 21.4% of the group's managers were women at the end of 2023. This is something we must continue. We must indeed up our efforts, particularly in Construction and Energy & Services. I'd also like to point out that on the 1st of January of this year, we broadened ByCare, which is our common core of harmonized and universal benefits. This is for new parents and offers employees a period of leave to take care of their children with salaries maintained 100%. Finally, we have launched 2 programs for high-flying women in France and abroad, a mentoring program for talents beginning their careers and another training course by the Bouygues Management Institute for women with strong promotional potential. On Page 13, a slide, just to say a few words about our commitments to the ecological and energy transitions. We have a whole portfolio of solutions for these purposes that enable us to roll out the plans of action in our SBTi road map. Illustrations would include, I'm just going to give you 2 examples, recycle which is a process invented by Colas in the institutional or the corporate program. We saw that we have renovated roads institute to avoid the large convoys of trucks, bringing aggregates and pebbles to this. We just grind up the existing road and remix it with a binder. So no additional aggregates required. So that's very good in terms of recycling biodiversity. And the second example I'd give is the use of low-carbon materials. Low-carbon materials, also low carbon metals that we use elsewhere in the group. And these are materials used by Bouygues Construction and Bouygues Immobilier. For instance, in Bouygues Batiment in France, in the course of 2023, we were able to reduce the carbon intensity in our concrete by 4%. It's also consistent using timber bio-source materials or even recycled materials. Page 14, I wanted to say a few words or 2 important words. First of all, our priority, which is the group's cultural foothold. You can't do anything without a very strong group. This is why we grant particularly important place to the training of our employees, of our managers, and great importance to the importance of ethics ambassadors in all our business. These are people whom employees can turn to if they have any questions or doubts. These are processes that each and every member of our group must abide by. Finally, I'd like to say that we have revised our vigilance plan. We have a number of prevention plans and we have also set up a whole series of new measures. Other activities included the continued supplier assessment on the base of CSO. And finally, we launched the 19th cohort in our Francis Bouygues Foundation. These are young [indiscernible] graduates that we take on as new recruits. Next come up is the greenhouse gas emissions footprint. A total of 21.2 million tonnes of CO2 equivalent in 2023. We've analyzed -- we extended the analysis to Scope 3b. We've included Equans in our calculations, when I say Scope 3b because that's not including Colas. The b is the carbon footprint and the way our production is used. When you build a road, we have no way of knowing what the 3b footprint will be in future, depending on whether the engines are internal combustion engines or electric motors. So we've covered 3b except in the case of Colas, for the reasons I just mentioned. We've also pointed out how our emissions have -- of greenhouse gases have progressed between 2022 and 2023. Broadly, they have been reduced by 1.6 million tonnes of CO2 equivalent between '22 and '23. That's on a like-for-like basis. This is the first time we have reduced greenhouse gas emissions. We must continue, and the carbon trajectory that has been identified with our SBTi road map, we'll continue to see this carbon footprint reduce over time. Let me now move on to the operational review of our various activities, beginning with construction. You have here a view of the tunnel, which uses and rather catches rainwater. We have this in the U.S. Looking at the carbon pathway of Bouygues Construction, that of Colas was confirmed in 2021. Once the carbon foot path has been presented, it has to be validated to get the SBTi ranking. There's a change in governance. We decided to have at the head of Bouygues Immobilier, a Chairman of the Board and a CEO. And so we have the 2 new faces. Emmanuel Desmaizieres spent 25 years with us and 4 years in a competitor, but we're happy to have him back, welcome Emmanuel. If you look at the order book, the backlog, it is up 4% compared to 2022 at €28.4 billion, give us good visibility on future business. Let's take a closer look, starting with Bouygues Construction in the year 2023, the order take -- intake was €10.6 billion. This order intake was driven by a number of large projects, which accounted for 50% of the overall orders. There was the Abidjan metro in Q1, €770 million. The Potomac River Tunnel in the U.S. in Q4 for €480 million or the extension of the metro line in Hong Kong in Q2 for €470 million. The legacy businesses of Bouygues Construction have remained stable in 2023. And so the backlog stands at €15 billion. It's up €900 million, up 6%. This is mostly civil works, up 12% over 1 year. And [indiscernible] international building business, that backlog is up 5% over 1 year. On this side, Bouygues Immobilier is facing a challenging market. The residential property business is unpredictable. Commercial property has gone to a hold. And so the order book, the backlog is down €500 million year-on-year, down 32% at €985 million. But Colas had large new orders, €13.7 billion in 2023. There were a number of major contracts, the extension of the NSCR metro line in Manila, €660 million and Abidjan metro €330 million or the Old Oak common station in the U.K. for €215 million. The backlog -- Colas' backlog is up 6% at €12.4 billion and this is in particular, the rail business internationally, large contracts for 1 year. The rail backlog is up 39%, whereas for road works, that is down 5% over 1 year. Moving on to the Page 23, the key businesses of the Construction business. Revenue was €27.3 billion, up 2% and 4% on a like-for-like basis. It is mostly driven by Colas in Bouygues Construction. Bouygues Construction is up 5%, mostly international building business. Bouygues Immobilier's revenue is down 14%. Colas' revenue is up 3%, mostly driven by rail, up 6%, whereas the roadwork business is up 3%, mostly due to the EMEA project. COPA, that is the current operating profit from activities, stands at €851 million and COPA margin is up 0.2 percentage points at 3.1%.Bouygues Constructions' COPA was up 1 year at €281 million. The margin stood at 2.9%, close to that of 2022, as expected. In a context of a declining business, Bouygues Immobilier in '23 recorded a COPA down €9 million at €28 million over the year. Colas, for its part, had generated COPA of €542 million, up €74 million. This was also due partly due to the disposal of property -- land property in the U.K. [indiscernible] in Q3. The corporate margin stood at 3.4%, up 0.4 percentage points. Moving on to Equans. Sorry, there was a slip of the tongue. I named maybe something to do with nuclear plants. I named a competitor. Looking at Page 25, Equans. Here, you have a picture of something in India. This is -- well, from BYES, high-voltage facilities, the performance is significantly improved. And this is in line with the road map presented by Jerome. Revenue was up 6%. That's more than expected, but that includes the disposal of asset-based businesses. And so they were -- if they were sold in 2023, they won't contribute to the 2024 sales figure. COPA ended up in the high end of the bracket announced in the guidance at 2.9%. You may remember at Capital Markets Day we said it would be anywhere between 2.5% and 3%. And the conversion rate, COPA to cash flow, stood at, before WCR, stood at 86%. And again, at Capital Markets Day, we announced a guidance of between 80% and 100%.On the next slide, you can see that in 2023 in a Bouygues context, Equans had orders worth €17.4 billion, 2/3 of which internationally, abroad. Over the year, there was a significant volume of orders on data centers, EV parks, gig factories, these are plants where they build batteries for electric cars in Europe and the U.S. And then short-cycle businesses and recurrent maintenance contracts for industrial sites and public buildings. Equans has a backlog worth €24.8 billion at end December '23, down 4% compared to end December 2022, but this is in line with our strategy where we will give preference to profitability rather than volume. Sales were -- stood at €18.8 billion on 2023, a good momentum there. The first positive effects of the perform plan and asset disposal plan have materialized. COPA margin was up 0.6 percentage points compared to the pro forma 2022. And we have a net financial surplus, up €800 million over the year, mostly because we generated operational cash flow, but also there was a positive movement on WCR plus, of course, the disposal of assets. On Page 27 now. Equans in 2027 is expected to continue rolling out its strategic plan. It will be focused on improving performance. And, as I said, a favorable context, giving preference to profitability rather than volume. Sales in 2024 should be close to that of 2023. There will be, of course, market effects because that market is growing. But there's also scope effects. You'll have to remember that we disposed of asset-based businesses, plus there's -- we've been selective on the projects we choose. The guidance given at the beginning of '23, in terms of sales, Equans is aiming starting in 2025 for a -- an acceleration of its organic growth in revenue to be in line with the peers in the market. In terms of margin, the expectation is a COPA margin close to 4% in '25 and 5% in 2027. In terms of cash, the conversion ratio is expected to be anywhere between 80% to 100% from COPA to cash flow before WCR, -- WCR.TF1, I will skip over quickly because you had the results a couple of weeks ago. [Rudolph] gave you the presentation. But the outlook for TF1 for -- in 2023 proposed to be close to the revenue of 2022 and generating sufficient cash to allow for growing dividends over the next years. These 2 objectives were reached. The COPA margin was 12.5%, close to that of 2022 as announced, and net cash was high at €505 million. On extra nonfinancial numbers, TF1 had SBTi validate its carbon foot path to 2023. But of course, if you look at the buildings of TF1, they don't generate much by way of CO2, but it's still -- we should still look at it, we do it for all our businesses. Looking at key figures for TF1, revenue is down 8% compared to 2022. The media business is down 5%, but only 2% if you consider the scope effects with the disposal of Unify assets over the year. Advertising revenue was down 4%, but it bounced back in H2, reflecting the return of a number of advertisers that decided to advertise their brands, the retail brands. And of course there's the broadcasting of the Rugby World Cup in September and October, that drew in more advertising revenue. Sales for the Newen Studios was down 23% over the year. As you know that this was because the comparable base -- the comparison base was not favorable because we had last year iconic shows, then Salto stopped and Plus Belle La Vie went to -- was produced for television, that was last year. We are also keeping close rein on programming costs. They were down 3% compared to 2022, a stable COPA margin of the media business at 13% made it possible to compensate for the downturn of Newen's COPA margin, the overall margin being 12.2% -- 12.5%, sorry. The outlook, we, the Board of Directors will propose a dividend of €0.55 per share, up €0.05 per share, up 10% compared to 2022. And for 2024, TF1 proposes to pursue its digital road map with the promising launch of TF1+. Operating margin -- COPA margin should be close to that of 2023. And of course, we still propose to generate significant cash so as to maintain a strong dividend policy for the next few years. Looking now at Bouygues Telecom, and you have a fine picture here of Bouygues Telecom up in the clouds as it were. Bouygues Telecom in 2023 reached its targets. The sale billed to customers was targeted, we're aiming for an increase in sales billed to customers. EBITDA after leases was around €1.9 billion. It's exactly €1.969 billion. And capital expenditures were supposed to stand at about €1.5 billion, and they were exactly €1.475 billion. Moving on to Page 34, you have the customer base, which is broadening. We had 15.5 million mobile plan customers, including MtoM at end 2023. So it's up 287,000 new customers, including 71,000 in Q4. Growth is continuing in FTTH with an additional 574,000 customers, of which 150,000 in Q4, FTTH customers numbered 3.6 million, accounting for 73% of the overall customer base. They were only 64% 1 year ago. Overall, the fixed customer base stands at 4.9 million, up 232,000 customers in 2023, of which 65,000 in Q4. Zooming in now on the fixed line, fixed line business, this is sort of the star of the show. There are ways of measuring operator performance. But there's one which is pretty good. It's reality as seen and perceived by customers looking at boxes of all customers throughout the country, and that gives big trends, which customers themselves can demonstrate because we're looking at the actual set-top box. And from this survey, it turns out that Bouygues comes as #1, equal across technologies for the second year running. And we are #1 on Wi-Fi for the fifth year running according to the nPerf 2023 survey. Now this is important because internet used at home involves the Wi-Fi, of course, and that's thanks to the fine quality work of the technical teams at Bouygues Telecom. As you can see, the middle chart, which shows ABPU, of course, with a good network, ABPU has been growing steadily to reach €31.4 per bill in Q4 2023 and the FTTH rollout is 3 years ahead of schedule because we have actually reached our objective of 2026, 35 million FTTH premises. Now these premises or most of them Bouygues Telecom will rent out access to FTTH infrastructure, in particular to a joint venture called SDAIF. It sounds like a demonic name. We had BTBG and now SDAIF. We have 49%. Well, we -- these are code names that nobody will copy. Anyway, SDAIF invest in FTTH networks rolled out by Orange in medium coverage areas. Bouygues Telecom has an option to purchase the entire company, but they will have 2 new opportunities in 2025 and 2026. And on these occasions, we will decide whether or not to exercise the option. Looking now at the key figures for Bouygues Telecom, I'm, therefore, on Page 36. The commercial momentum remains buoyant with positive effects both in volume and value, especially for the fixed line business. In '23, sales billed to customers were up 5%. That's because of a sound customer base and a growing fixed ABPU up €1.9. In the mobile business, ABPU was stable at €19.7 for a number of quarters running now because there are purchasing power issues. People are opting for cheaper deals. And so we don't have the same price increase as we have for the fixed line business. The EBITDA after lease obligation was up 11% because of higher revenue, lower cost. EBITDA margin after lease obligations was up to 32.9%, up 2.1 percentage points. COPA was up €104 million at €798 million and COP, C-O-P, was up in the same proportion. Free cash flow was €249 million, up €69 million over 1 year. What's the outlook for Bouygues Telecom in the context of a growing customer base with a view to broadening its network, especially for the mobile business. We're looking at sales base to customers on the rise, EBITDA after these obligations upwards of €2 billion and CapEx -- gross CapEx, about €1.5 billion, not including frequencies. I'll now give the floor to Pascal, who will give you details about the accounts.

Pascal Grangé: Thank you, Olivier. I'm going to comment the group's consolidated financial statements, beginning with the income statement. I'm not going to dwell on the sales or COPA figures that have already been presented by Olivier Roussat. I'll begin by comparing 2023 to the figures for 2022 as reported. But to simplify your analysis, we've also added to our chart, the 2022 pro forma figures. This is drawn up on the basis of Equans having joined the group on the 1st of January 2022. Now I should point out that the pro forma figures have not been audited. The first point I'd like to point out on our -- is that the amount of PPA that was amortized, PPA is the power purchase agreement, €103 million, which breaks down to €62 million that we booked at Bouygues SA on behalf of Equans. The remainder is amortization of lesser amounts for Colas, TF1, and Bouygues Telecom. Secondly, non-recurring elements, non-current items that are not really representative of activity totaled €195 million in 2023.Now these non-recurring items concern the following main issue: First of all, Equans recorded €81 million in non-recurring expenses. About €50 million of these were due to the management incentivization plan that we talked to you about at our Capital Markets Day. But also consulting fees involved in our various disposal projects and integration costs, in particular, IT costs. As for reconstruction, it recorded a nonrecurring expense totaling €81 million. In particular, the dispute in Singapore for a building that was completed in 1997, that we talked to you about in previous presentations, and a regulatory change in one of the countries in which we construction operates. TF1 recorded €30 million in nonrecurring expenses, essentially due to the optimization of its real estate and the various measures concerning its digital transformation plan. Third thing I'd like to point out is the net cost of our debt rose by €88 million. This increase was mainly due to the increase in financial expense due to the cost of acquiring Equans. As for the lower half of the income statement, we recorded a tax expense of €547 million after €424 million the previous year. This gives us an effective tax rate of 32%, up from 27% in 2022. The effective tax rate in 2023 is mainly due to international taxation constraints, particularly due to our presence in very large number of country and the very broad range of tax rates in a number of countries. Finally, the share of net profit of joint ventures and associates totaled €59 million last year. This is an improvement on the end of 2022, and this improvement was mainly due to the fact that [Dassault] ceased its losses that we provisioned last year. As a result, the net profit attributable to the group amounted to €1.04 billion, up €67 million on the previous period, as Olivier Roussat pointed out earlier on. A few words on the balance sheet. I think the main change was net debt that I now propose to explain in detail. As you can see on Page 40, at the end of December '23, our net debt was €6.3 billion, down from €7.5 billion at the end of 2022. I'm not going to comment all of these items, but the main points are the following: First of all, acquisitions, net of disposals totaled a positive €205 million. This amount was notably the disposal of asset-based activities at Equans. Olivier mentioned this earlier on, but also other acquisitions, disposals, and smaller financial investments carried out during the year at Equans, Colas, or Bouygues Telecom, for instance. This amount also includes the buyback of TF1 shares. The buyout of minorities and delisting of Colas totaled €180 million. The capital increase reserved for employees generated €150 million. The dividend paid out by the group cost a total of €744 million. And of course, we had to pay €310 million, as Olivier said earlier on, to Free Mobile as part of a lawsuit that we will be appealing with vigor, not just to the decision, but also the obligation to execute straight away. Operations generated €2.2 billion, a very high level that I propose to look at in greater detail on the next page. Let's look at -- let's begin by looking at net cash flow. And this includes the lease expenses. That gave us a total of €3.3 billion, up €303 million on 2022. Net operating CapEx excluding frequencies, amounted to €2.1 billion. Broadly speaking, that's stable by comparison with the previous year. The variation in working capital requirement for activities was, as always, affected by the usual seasonal effects. I hardly remind you that every quarter it's very difficult to forecast the variation in work capital requirements, particularly in construction. Some years, the variation is positive. It was the case in 2022. In this instance, 2023, the variation was almost €1 billion. This is a very good result, and I think it can be attributed to the very good work of our employees in all our business segments. Naturally, in 2024, we will continue these good efforts. But as I've said before, in contracting, we can't modelize working capital requirements. Let's move on to the group's financial structure on Page 42. The group's liquidity totals €14.6 billion -- totaled €14.6 between at the end of December. This is a very high level. The amount is comprised of €4.9 billion in cash and €9.7 billion in undrawn medium and long-term facilities. This is -- these are covenant-free facilities. As you can see on the bar chart on the right, the breakdown of our debt maturity is very balanced over time. On the next page, you'll see that our gearing has improved by 10 points over the period to 44%. The rating agencies have confirmed their rating, A minus with a negative outlook in the case of Standard & Poor's and A3 with a stable outlook in the case of Moody's (NYSE:MCO). I conclude this part by underlining the fact that our next bond redemption will be in October 2026. And at the end of December 2023, the average maturity of our bonds was 8.5 years. That corresponds to an average effective interest rate of 2.25%.On the chart on the bottom right bar chart, you see that while the average maturity of our bond debt has increased since 2019. At the same time, the average effective rate has dropped considerably from 4.09% to 2.25 percentage points. This is an illustration of our good financial discipline that enables us to remain financially independent and enables us to continue our independence in all circumstances -- in all circumstances.So thank you for your attention. And Olivier, I give you back the floor.

Olivier Roussat: Thank you, Pascal. We're going to wrap up with the outlook. We will begin with the group's priorities for 2024. First of all, for 2024, we have 3 priorities; to continue to integrate Equans into the group and successfully implement its strategy. Equans has become our biggest business segment. Almost half of our employees work for Equans. Secondly, we want to continue to improve our operational and financial performance in all our business segments. Thirdly, we intend to implement this CSRD regulation and rollout, actually quite a program, and roll out action -- plans of action in order to achieve our SBTi targets. We will be doing what it takes to reduce our carbon footprint. We'll be doing for CSRD everything it takes for CSRD too, of course. The outlook for 2024 for the group. Well, first of all, Equans will continue to improve its results in line with its strategic plan called Perform. This is under Jerome's leadership. Bouygues Immobilier will continue to be faced with a challenging market with very little visibility and no idea as to the timeline for recovery. And in an uncertain economic and geopolitical environment and after a year of strong growth, Bouygues is targeting sales and current operating profit from activities, what we call our COPA for 2024, that should be slightly up on 2023.That brings us to the end of our presentation. On this slide, you will see that we have recalled our important dates. The AGM on the 25th of April, dividend payment on the 3rd of May, in particular. We will now take your questions along with [Edward], Pascal and the heads of the various different businesses who are all present in the front row.

Q - Mathieu Robilliard: Mathieu Robilliard, from Barclays. I have several questions, but I'd like to begin with the guidance you've just explained that the environment is politically and macroeconomically uncertain. But if I then look at the businesses individually, it seems that Telecoms are doing well, and you expect them to continue to perform well in 2024. You're also talking about Equans progressing. So what is it that has you envisaging only weak growth, low growth in -- at group level in terms of sales and COPA? Is it the weaknesses at Bouygues Immobilier or Colas historically, if you have further details on the guidance? That is my first question.

Unidentified Company Representative: The fact that we don't give guidance regarding Colas, we don't because we feel that with inflation and the ForEx, it's very difficult to forecast. But broadly speaking, we expect something all else being equal. As far as Colas is concerned, we expect the situation to be relatively stable. In reconstruction, you've seen that the backlog is very good, very strong with an order book starting with 84% of the U.S. business already in the order book. That's more than last year. So that's rather on the good side. That said, we said we were expecting a slight improvement over 2023, where Bouygues Immobilier there's no knowing because we don't know when the market will pick up. We don't believe that the tertiary market or office market will pick up this year. As for the residential market, all dependent on the various measures decided or taken. There's no way of knowing when that's going to happen. As for Equans, as we've said, there's a part of Equans that was disposal at the end of 2023, which will not be producing sales in 2024. So we're expecting something close to what we had in 2023. Bear in mind that for Equans, our objective is to give a profit pride of place over volume. For TF1, we haven't given any guidance on sales and with Bouygues Telecom, we told you that we expect to be up that we -- as last year, we didn't say any more than that when we commented the results. Having said all that, you can concatenate all this, you can aggregate it to -- put it into whatever you like, and you'll see that, that's very consistent with the guidance we've just given you. In a world of uncertainties, we expect stability. The one we're were uncertain about -- most uncertain about is real estate. Now in construction, you're rather confident. I said, yes, stable broadly stable. Our order book is strong, good, solid. I'm not going to change that.

Mathieu Robilliard: I have a question regarding the potential deal with La Poste Mobile. You did point out that SFR has a preemption right. Have you any visibility on whether or not?

Unidentified Company Representative: Visibility? No, we have no visibility because this is part of the process. We must talk to the employee representative bodies first of all. I think SFR has something like several weeks to decide whether once to preempt the remaining share or not, whether they will or will not exercise that right. I don't know. You have to ask Patrick that.

Mathieu Robilliard: And one last question on your free cash flow, particularly your working capital. You have a great answer that is a -- well, will be given to you by Pascal Grange. I know in advance, Pascal, if you would, please. But my question is -- this year, you said that very clearly, this has been a very positive year, thanks to the efforts made by all the managers and employees. I'm not -- I'm sure that the efforts will be the same every year. But from one year to the next, there is a very strong level of volatility. Is there a simple explanation? Or is it a combination of phenomena and explanations that can explain what's such a big swing from 1 year to the next?

Unidentified Company Representative: I think there are structural changes and our situational changes. I think the involvement of our employees wouldn't explain everything, and then they will continue, of course, their efforts in 2024, I can confirm that. But in construction, particularly in large projects, large contracts, the treasury is not aligned with progress of these projects. So this has a major impact on the group's cash situation.Also at group level, we have another business segment where we need working capital, and that depends on our success -- that is because of our success in fiber. That's a horizontal connection, this is -- has takes its toll on working capital requirement in the early stages, which I think deforms the income statement to extend. So we're not giving any guidance on cash or on working capital out. As is the case every year, we get that same question on guidance regarding working capital.

Eric Ravary: Eric Ravary from the CIC, the French Bank. Eric Ravary from CIC. Two questions. My first question concerns Colas. The order book is down 5% for roadways. That was at the end of 2023. Could you give us the figure for roadways in France separately? My second question on Bouygues Telecom. If I remember correctly, you think you had hedged your energy costs to protect Bouygues Telecom from electricity price hikes in recent years. Are there any price hikes as increases expected in 2024? Second question concerns the ABPU and mobile phones. And I understand that certain consumers are migrating towards less expensive plans. Is that gathering pace? And could you give us some idea of the churn at Bouygues Telecom and mobile phones?

Unidentified Company Representative: While Benoit is processing his answer, I will answer you on roadways in France. In France, we have municipal elections in 2026. So in what we call money time now in the pre-election years work is carried out. This is an evidence of the order intake, which rose by 15% in Q3 by comparison with the previous period. So no concerns about roadways in France. So we're always cautious about what can happen elsewhere in the world, but at least in the current period of time, for Colas in France, things are going well. Benoit.

Unidentified Company Representative: Cost of energy. Well, we had contracts up until the end of 2024, and we hedged our energy costs up to the end of '24. That's to say the costs increased. They are higher in '24 than '23 simply because we're consuming more energy. But in 2025, you can imagine that the cost afference would be about €80 million, again, more than in 2024, but that's already built into the plan. We expect these cost increases. So we've been working on other costs to be sure that we will be on target. As for the ABPU and mobile phones, well, the mobile market is different to the market in previous periods in terms of volume, the [ARCEP], the regulator has published figures for 2023. In terms of the number of clients with plans, let's say the increase is smaller than previous years. For the general public, there's an increase with 700,000 new plans. It was €1.3 million in the previous year. So the growth is slowing. The total number of postpaid clients in France is increasing, but our market share is still quite significant. In terms of average billing per user, yes, there is a certain tension among consumers and a number of consumers adjusting their expenses. We have a whole array of plans and solutions. So we are making our plans and prices progress in order to increase our ABPU, but our clients adjusting, tweaking their budgets and working in the other direction. So all things told, I think we can expect a stable ABPU over the year. In fixed lines, however, we expect an increase in volumes is substantial increase in the ABPU based on the quality of what we've been building in 6 lines. We've been attracting clients with better prices, better quality. So the dynamics in fixed ABPU is better and will continue to perform well.

Augustin Cendre: I'm Augustin Cendre from Stifel. I have 3 questions. Number one on Equans. Can you give us an update on the possible room for margin improvement during Capital Markets Day, you had procurement, pricing, productivity and a number of other lines? And then on Colas, following up on the guidance, there's no guidance because of inflation. But is this because your backlog is more exposed to rail? And then on your use of capital in M&A, could you expect more deals in Telecom, in Construction, in Energy Services? Or would we consider the key acquisitions in the property business because now the valuations are low?

Unidentified Company Representative: While the others are getting ready to take your questions, I'll take the very last point on possible acquisitions. Well, for Bouygues Telecom -- well, the last MVNO in the market is there up for grabs as it were. But it's a last one. And so it will [indiscernible] mobile, we have this opportunity, we decided to take advantage of that. That is the last opportunity. Regarding external growth, our strategy remains the same. We have Colas on the one hand and the Equans that proposed to gain strength in areas like especially in North America and Europe, but also Australia, they are trying to gain more footprint there and that might until acquisitions. And now you had a question for Jerome and he's got microphone.

Jerome Stubler: Yes, we do not give details on the profit numbers. But yes, there's bug killer, as you said, for Equans, taking out cost centers, working on procurement, pricing and then productivity. So there were 4 items and 4 or 5 items really, they all work. But differently, for instance, on procurement gains were made on procurement, but now we are introducing a procurement software, which we announced at Capital Markets Day, which is now being rolled out in in a number of branches, and that will be continued throughout 2024. It's a major program for 2024. And this should bear fruit not just in 2024, but '25 and '26 as well. So there all right 5 items, bug killer and all of that. We're doing this country by country on all 5 items, and we are very much on track. We cannot really give a guidance on the various gains in the various items because they tend to be intertwined anyway. But by and large, things are going according to plan. Now the last question on the no guidance about Colas. I said that this -- it's not because we have real exposures in a number of countries. But with exchange rate variations and inflation and the consequences on the price of bitumen, we are not in a position to give a guidance. But all things being equal, we would expect things to remain stable.

Operator: [Operator Instructions] The next question comes from Nicolas Cote-Colisson from HSBC.

Nicolas Cote-Colisson: A couple of questions on Telecom and Construction. Regarding Telecom, can you tell us why it is that the La Poste EBITDA margin after the migration would be 10 points higher than that of Bouygues Telecom? You said that this is a fixed cost business. Well, then you should expect an even higher margin closer to the gross margin. Is it because of licensing brands, distribution costs? On Telecom, you said you said you -- on the SDAIF, you will not exercise your option to take control, but you have other opportunities in the following years. But is this because of the capital you have? Or would there be consolidation reasons with SDAIF? And finally, on Construction and profit margins there, the COPA margins there. Is there any room for growth in the medium term? Or is a 3% the sort of standard that you cannot really do much better than? And then in the U.K., you know that the infrastructure plan is being constantly revised. Hinkley Point is also running behind schedule. Is that covered by your contracts?

Unidentified Company Representative: Sorry, can you repeat that, please?

Nicolas Cote-Colisson: Do we have clauses in our contracts because if you're running behind schedule, I believe these are contracts that are price linked.

Unidentified Company Representative: Right. No, the yellow started -- yellow tie beginning to speak for Colas. No. So Pascal will answer with me. The contract look, okay, there they're vying for the microphone here. Regarding Civil Works in the U.K., we have 2 big projects, Hinkley Point and HS2. These contracts have an objective cost and that is its cost plus fee. And so the risk is -- well, these are rather derisked in view of the situation in the U.K. with uncertain prices. Pascal Grange.

Pascal Grangé: Regarding the profit margins on construction contracts, there is the specific issue of Bouygues Immobilier. And now this is a far cry from the standard medium-term margins we have had before. But it will take some time to get back to that because of the market. At Bouygues, the COPA margins or the standard margins were anywhere between 3 and 3.5 in -- and so we expect the coming years to remain around that barring any major event. And then at Colas, let me remind you that the copper margin this year was included a capital gain on the sale of land, and that itself was about €40 million. So it is stable if you leave that out. And in view of the mix between industry and works, we expect margins to grow and get close to 4% on average. On Telecom, was there a question on Telecom, I believe. But of course, you are right. There were 2 questions about Telecom. The EBITDA ratio for La Poste Mobile, the contribution of EBITDA of La Poste Mobile was €140 million. By 2028, this will have grown, but you cannot compare the revenue of 2023 and that of '22, but we were looking at a figure higher than €300 million. And then the EBITDA ratio will be close to that of Bouygues Telecom, especially because La Poste Mobile is only dedicated to mobile lines where the Bouygues Telecom, we have both fixed and mobile and the ratio is better for mobile than for fixed. In any case, we'll have more than €300 million in terms of contribution, and it will only be the mobile business. Regarding recapitalization on the financial instruments, €30 million this year and €50 million later, I mean, these are bonds to be issued, and this is already planned in our debt plan. This has been already scheduled as it were in our 2020 as early as 2021.

Operator: The next question comes from Nawar Cristini from Morgan Stanley.

Nawar Cristini: I have a couple of questions about the possible acquisition of La Poste Telecom. I have a couple of questions. So this responds to sort of industrial logic, but the price of acquisition is much higher than what you paid for EIT even though the EBITDA is lower. So why -- what's the rationale behind this high price? And then the cost of integration, you said that this is a well -- the network is well dimensioned to take in all customers from La Poste Telecom, but there would still be OpEx and CapEx integration costs. But just what are -- would these costs be? Well, you haven't disclosed any amount so far. But could you at least give us some color or at least some comparison between these amounts and what we -- what you did in the previous operation?

Unidentified Company Representative: Benoit?

Unidentified Company Representative: On the acquisition price, compared to EIT, you have to consider, well, the integration cost of Bouygues Telecom for EIT, when we took in these customers and in EIT, there was no IT. The integration costs were upwards of €300 million, both in terms of CapEx for the network to give the profit I mentioned to the network. These were customers that consume more. And then we had to rebuild the IT system at Bouygues Telecom because this was not part of the EIT scope. So €300 million, €350 million in integration costs, plus the acquisition cost, which was €850 million. For La Poste Telecom there are very little by way of integration costs anywhere between €50 million and €100 million. And that there will be some IT, some costs in SIM cards and some marketing costs that will occur in '25 and '26.So if you add, say, €75 million on top of, say, the €950 million, we get to €1.025 billion, whereas the other ones were close to €1.2 billion. So in terms of EBITDA amounts, we end up with similar numbers. And of course, La Poste Telecom over time should generate EBITDA, but there's very little CapEx required. The only CapEx in side will be for set-top boxes because there will be some fixed line business on top of the mobile business. So -- but it's mostly integration costs. We're looking at 300 to 350 million in EIT and only 50 million to 100 million for La Poste Telecom.

Operator: The next question comes from Mollie Witcombe from Citigroup.

Mollie Witcombe: I have a couple of questions. One on Equans. Can we try and get a bit of view of Q4. COPA margin is good. But if you look at EBITDA margin, it's about 3%. That's not as good as last year. Is there a reason for this? Are there one-offs that you have to take into account? And the second question is about La Poste Mobile again. You -- if I understand right, EBITDA last year was about €7 million. And in 2021, it was €55 million last year in '21. It must have been 57 million last year. How do you arrive at the EBITDA number you announced for 2028?

Unidentified Company Representative: Can you repeat the second question about La Poste Mobile because we didn't hear the numbers? Could you repeat this?

Mollie Witcombe: Yes. The EBITDA of La Poste Mobile. Looking at the reports, the present EBITDA stands at €7 million. And are there specific synergies with -- between Bouygues Telecom and La Poste Telecom that we cannot see there? How do you propose to achieve the EBITDA announced for 2028?

Unidentified Company Representative: You mean are the synergy is greater than what we said? Well, you have the EBITDA of La Poste Telecom. You add to that the gain from the wholesale contract, which is now SFR and to after lease, you get an EBITDA of €140 million. But I got -- okay, I got it right. So 140 is the whole -- SFR's wholesale contract plus the present contract. And so that will enable Jerome to -- on Equans, we have a simple question. We had one-off items in 2022. These were the one-off deals that did not reoccur. So the number was €100 million for EBITDA. Now Elisa for the questions in English.

Operator: We'll take the first question from Nick Lyall from Societe Generale (OTC:SCGLY).

Nick Lyall: Can I just ask 2 on Telcos, please. On the -- you had a very strong fourth quarter despite the accounting changes for Telco. The guidance of €2 billion EBITDA or above €2 billion, though doesn't seem particularly strong. I realize it's above €2 billion. So could you just -- it seems like a large number. Could you just tell us a bit more about the growth you expect in EBITDA because it seems top line is still very strong, particularly in fixed? So do you expect decant growth, at least on the Telcos and EBITDA? And just going back to SDAIF as well for the option on that. But I don't -- I'm not sure if you answered why you didn't decide to or why you decided not to exercise it just now. What would be the current debt and equity you would have to pay on the 15th of March, do you think on your assessment, if you did buyback in, please? Could you give us a bit of information?

Unidentified Company Representative: Maybe Benoit can take. We have 2 windows in '25 and '26 for SDAIF. So we are waiting until then to see whether we'll exercise that call option. But on EBITDA Benoit.

Unidentified Company Representative: Well, the guidance we have EBITDA compared to the past, there's one item you have to keep in mind between '20 and 2023. There were €500 million in EBITDA growth. And that's we have between '23 -- '26 between '21 and '23, we are ahead of schedule that we announced. So we are we are closer to the objective than what we announced. And between '21 and '23, the acquisition of EIT boosted EBITDA, there was synergies and that brought in €200 million in EBITDA growth over that period. So that is one reason. If you give a guidance on 2024, it might look more modest to you, but this is because they were the extra €200 million in '21, '23 because -- because of the EIT. And then the market is growing as well, adjusting rather. The mobile market is adjusting, whereas fixed is growing. So this is why, all in all, we are announcing EBITDA, which is about €2 billion in 2024.

Unidentified Company Representative: Can we also give a detail about SDAIF?

Unidentified Company Representative: SDAIF. Well, if we were to take it on board, it's only a few percentage. So the integration…

Unidentified Company Representative: No, no, that wasn't the question. We're talking about the effects on the overall indicators on debt and EBITDA.

Unidentified Company Representative: Now, SDAIF in 2023 is -- has a €90 million in EBITDA and €600 million in debt, €700 million in debt, but we expect that to come down because SDAIF has reached the peak of its CapEx for the year -- in the year 2023, '24. So should we decide to consolidate SDAIF, this will give you an order of magnitude of what we will be consolidating both in terms of debt and EBITDA.

Operator: We'll take our next question from Jakob Bluestone from BNP Paribas (OTC:BNPQY).

Jakob Bluestone: I've got 3 questions, please. Firstly, on Equans, could you maybe just give us a little bit more of a sense of what sort of organic growth you expect? I think you grew revenues pro forma at Equans by over €1 billion in '23. Do you think you could do something similar? Or should we expect the organic growth of ex-disposals to be somewhat similar? Secondly, and I appreciate you've commented on this, but I just wanted to clarify, when you talk about a stable situation at Colas, is that a reference to revenue or margin or both? So if you can maybe just help clarify the comments you've made on your expectations for Colas? And then finally, on the telecom side of the business, could you just give us your latest thoughts in terms of the state of competition? We've seen some perhaps slightly more aggressive moves on the low end from [indiscernible] but also some new offerings coming on the fixed line side. So just interested in hearing how do you see the market from here? Are things getting better or worse at a competitive level?

Unidentified Company Representative: Okay. Let's begin with Jerome, then we call on Pierre. You can do it in French if you'd like.

Jerome Stubler: We expect similar organic growth next year. As we have explained, we will dispose a certain number of asset-based activities. We expect our sales to be relatively stable. What we said was that it's the revenue that will be stable, not the operating profit. The guidance we gave you we are trying to eke out close to 4% COPA margin as we said. This year, it's between it will be between 2.9 and 4. Just to give you some idea of where we expect to end up. Pierre, I'm not sure I fully understood the question, but I think we asked about the guidance that we don't give a bad Colas is that what…

Pierre Vanstoflegatte: Well, we feel that in 2024, the sales will be up a few percentage points given the information we have in the very large number of countries where the some are up, some are down and it's always difficult to anticipate. But we expect relative stability but in absolute terms, we expect revenue growth.

Unidentified Company Representative: Thank you, Pierre. All that remains is Emmanuel's contribution -- Benoit, so your turn.

Unidentified Company Representative: Your question concerning the Telecoms market. Now I'll come back to this. In terms of volume, that's in terms of the number of clients in the French mobile market, the postpaid market is growing, but growth is slowing. It's €700 million new contract clients since 2023 after 1.3 million the previous year. The number of trade-offs people are holding on to their smartphones for longer, the handsets because handsets are expensive. Even though there is telephone operators are helping with these, but there's no real technological breakthrough. So people are holding on to their handsets for longer. This has an impact on market dynamics in terms of volume and value. In the fixed market, fixed market is still a dynamic. We're talking about fiber and boxes, growth will be slower than previous years, but will still be buoyant. Thanks to the switchover to fiber, which is something that customers really want to switch over to this new technology, which is a whole new experience, be it in the retail market or in B2B. So in both of these markets, competition is still strong between the 4 main players, the 4 players. But our greatest asset and what we've been developing in 2023 is that we have been investing in the quality of customer experience, quality in mobile ad and fix, this has helped us attract new clients. Even though the market -- the growth is -- market growth is slowing, we have seen an increase in the number of clients because we have good quality at very attractive prices. But the competition is still there, strong competition. There are promotional periods, promotional drives in certain periods of the year in certain market segments by certain players. But what we do is we provide quality that's good enough to attract new clients with a network that's very competitive, very good quality and…

Operator: We'll take the next question from Javier Borrachero from Kepler Cheuvreux.

Javier Borrachero: Second, on Telco. It's on the 2026 EBITDA guidance you provided in the past, the €2.6 billion. Just wondering how confident you are in achieving that figure in light of the 2024 preliminary or guidance you've given? And also, I mean, obviously, the 2026 guidance, obviously, I assume it was not included, obviously, the La Poste Mobile acquisition. But to what extent that guidance of the target is dependent on exercising the option on SDAIF?

Unidentified Company Representative: Thank you, Benoit. He's a bit of a star here today.

Unidentified Company Representative: Concerning the 2026 guidance, if La Poste Mobile is integrated, that will induce costs in 2026. So if we go ahead with this acquisition of La Poste, we'll come back to the market a few months afterwards to update our guidance to allow for the integration of La Poste Mobile. If we do not acquire La Poste Mobile, we will confirm our guidance for 2026. We're working on that road map, particularly on the €600 million in free cash flow before working capital requirements in 2026, even though the environment will be different. We told the market in 2021, what our guidance would be for 2026. The mobile market was different at the time. Now the mobile market has less volume and less value than it did 3 years ago. We didn't have the inflation that we have experienced since then. However, we have good news in the fixed segment. So the context -- economic context and competitive environment have had a bearing on our road map, but we can confirm our guidance for 2026.

Unidentified Company Representative: So confirmation of our guidance. There you are. Okay. Well, if there are no other questions, all that remains for me to do, so thank you, all, and wish you a very pleasant day. Thank you.

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