Good morning, ladies and gentlemen, and thank you for standing by. Welcome to today's Thales H1 2023 Results Conference Call. There will be a presentation followed by a question- and- answer session, at which time, if you wish to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. I must advise you that this conference is being recorded today. I would now like to hand the conference over to Mr. Bertrand Delacourt, VP, Head of Investor Relations. Please go ahead, sir. Yes, hello, good morning. Welcome, and thank you for joining us for the presentation of Thales' H1 2023 results. I'm Bertrand Delacourt, the Head of Investor Relations at Thales. With me today are Patrice Caine, Chairman and CEO, and Pascal Bouchiat, CFO of Thales. As usual, the presentation is in English and will be followed by a Q&A session. It is webcast live on our website at thalesgroup.com, where the slides, press release, and consolidated financial statements are also available for download. A replay of the call will be available in a few hours. Before handing over the call to Patrice, let me share a brief personal note. This is my thirtieth and final quarterly results as Head of Investor Relations at Thales. It has really been an honor documenting the transformation of the group over the past seven years and engaging with investors and analysts globally. I will really miss the quality of our interactions over the years. I also wanted to take the opportunity to thank my team, Olivier, Florian, Sylvain, who played a major role in the design, production, and delivery of all these interactions. In a few days, I will be joining SIX, our Secure Communications and Information Systems Global Business Unit, which has remarkable teams and many growth opportunities. I leave you in good hands with Olivier, Florian, and Alexandra, who will join the group in September. With that, I would like to turn over the call to Patrice Caine. Good morning, everyone. Let's start with Slide 2, as usual, the highlights of our robust H1 2023 results. Starting with the commercial dynamics, it was again strong across the portfolio. When you exclude the jumbo UAE Rafale booked in Q2 last year, the performance was actually in line with last year's record high. Over 12 months, from June 2022 to June 2023, our backlog is up by 7%, further increasing our long-term visibility. Secondly, our organic sales growth remains strong, driven by the ongoing recovery of the avionics business and the remarkable performance of DIS during the 1st quarter. Third, our EBIT margin, driven notably by the strong DIS performance, is in line with the full-year guidance. Considering our year-to-date performance and the perspectives for H2, we have decided to upgrade our full- year sales guidance, I will come back on this at the end of the presentation. Finally, of course, from a strategic perspective, we were very active in the H1, and I wanted, in particular, to mention the acquisition of Cobham Aerospace Communications that we announced last week. This acquisition will reinforce our position in cockpit connectivity. This represents a perfect example of the larger bolt-on acquisitions that we mentioned in the past. Let's move now to Slide 3, looking at our financial performance in a few charts. At EUR 8.6 billion, order intake was down 23% organically, versus a very strong H1 2022. As mentioned, organic sales growth remained strong at 7.7%, ahead of our full- year guidance. EBIT and EBIT margin continued to improve strongly, respectively, up 13% and 60 basis points. At EUR 819 million, adjusted net income grew by 13%. It's a new record high for our H1. Free operating cash flow remained positive at EUR 99 million, Pascal will come back in detail on the explanation of the drop compared to last year. Last chart on the slide, the net debt position, which ended the half year at EUR 781 million, down a little more than EUR 100 million over 12 months. Okay. Thank you, Patrice, and good morning to everyone. I'm now on Slide 4. Starting with our order intake dynamics, as Patrice mentioned, we achieved again, a strong order intake in H1 2023. The total amount was lower than last year because we booked this jumbo UAE Rafale order in Q2 2022. Please let me also remind you here that H1 2022 order intake, even without this UAE Rafale, was our record high H1. We booked nine large orders over EUR 100 million, of which six during Q2. ... four contracts in Defence & Security, including the jumbo contract for the production and delivery of the warfare, fire- control, and sensor suites for the four new Dutch and Belgian frigates. Also two large contract in space, confirming the commercial momentum in institutional space. As usual, you have more details on all the large contracts in the press release. Orders between 10 and EUR 100 million were up by 28%, notably driven by Defence & Security. Finally, orders below EUR 10 million progressing by 8%, reflecting the ongoing rebound of our civil aero aftermarket and also passport production. Overall, another solid performance in H1, 2021-2023, in regards to order intake. Turning now to Slide 5, looking at sales growth. First, a word on currency and scope. The currency impact became material in Q2 at minus EUR 73 million, for a total of minus EUR 79 million over H1, 2023. Let me take the opportunity to flag that the ongoing weakness of the U.S. dollar will represent a negative impact on our sales over the full-year. Based on our estimates, with the U.S. dollar at 1.12, the total impact could be somewhere between EUR 250 million and EUR 300 million over the full- year 2023. Now, in terms of scope, there's also a significant impact to model over the full- year 2023, resulting from the acquisition and transfer activity carried out in 2022. The biggest factor was a transfer of our IoT connectivity module business to Telit, which drove a negative EUR 184 million impact in H1. This impact is expected to be at around EUR 360 million over the full- year. On top of this, there were two smaller disposal impacting H1 by EUR 14 million. On the positive sides, we had the Bolton acquisition we closed last year, RUAG in Aero, AAC, S21sec and Excellium in the defense and security segments, and OneWelcome in DIS. Overall, for a total of approximately EUR 120 million over H1, and an estimated EUR 150 million over the full- year. As you can see on the right, a net negative scope impact of EUR 76 million in H1, and you should expect a clearly more negative impact in Q3 and Q4, as acquisitions were closed in Q2 and Q3 last year. Over the full- year, the overall negative impact should be around EUR 250 million, This doesn't include the expected disposal of our aero electrical system business. The important point is the fact that our organic growth reached 7.7%, ahead of the full- year guidance, with all three segments performing well. Turning to the geographies, a robust half year across the board, with most geographies strongly up. Overall, quite a solid H1 in terms of sales. Moving on to the EBIT bridge, looking at the drivers of the change in our EBIT between H1 2022 and H1 2023. I'm now on Slide 6. The mechanical impact, scope, currency, and pension, net each other with pensions up by EUR 15 million, thanks to a lower level of liabilities over the periods. More importantly, you can see the solid progressions of our gross margin, up by EUR 248 million, or 130 basis points, moving organically from 26.9% to 28.2% of sales. You have more details on the P&L in appendix Slide 19. Let me also point out the solid control of indirect costs, stable at as a percentage of sales. In particular, as you can see on the chart, G&A expenses were only up EUR 11 million, i.e., 3.8% in the periods. Marketing and sales costs were slightly up by 20 basis points, mostly resulting from the strong performance of the IS over H1. Finally, equity affiliates contributed less to our EBIT than in H1, 2022, but this was fully expected since last year. We had a EUR 50 million positive one-off coming from Naval Group. All in all, the EBIT margin at H1 was in line with our full- year plan. Looking briefly at each segment one by one. I'm now on Slide 7 for aerospace. Orders were slightly down by 4% organically, despite four institutional contracts above EUR 100 million in space over H1. The ongoing rebound of small orders in civil IoT. The large space contract signed during H1 2022 were for a value above the total value of the one signed during H1 2023. Sales were strongly up 10.1% organically, driven by the robust growth in aeronautics, up at a double-digit organic growth in both OE and aftermarket activities. The space business remain impacted by supply chain challenges over H1, especially on hardware devices, but the situation is expected to improve progressively during H2 2023. Overall, we are confident that the segments will achieve a high single-digit type of organic growth over the full- year of 2023, as indicated already in the past. If we look at profitability, EBIT margin continued to increase from 4.4% in H1 2022 to 7% in H1 2023, driven by the performance of the avionics business. The improvement is mostly driven by the recovery of avionics, which delivered a low double-digit EBIT margin. Space, however, remain impacted by higher cost due to inflation and the supply chain challenges, as mentioned before. Turning to slide 8, looking at the Defence & Security segments. Order intake amounted to EUR 4.6 billion, down by 36% organically, versus a very strong H1 2022, as mentioned before. Five large orders above EUR 100 million were booked in H1, including four in Q2, bringing our overall backlog to EUR 31 billion at the end of June. Sales amounted also to EUR 4.6 billion, up by 5.3% organically versus H1 2022. Many business units contributed to this steady organic growth, like Integrated Airspace Protection Systems, electronic combat solutions, network and infrastructure systems, and also cyber defense solutions, just to give you a few example. This steady organic growth over H1 is obviously a positive sign in regard to our ability to deliver the mid-single digit organic growth we committed to for this segment over the full- year of 2023. Last point, the EBIT margin, as you can see, in line with the H1 2022 performance. As you know, there is some seasonality. I can confirm that this 12.3% in H1 is fully aligned with our big, with our objective of reaching an EBIT margin at or just below 13% for the full-year 2023. Finally, Digital Identity & Security, and now on slide 9. At EUR 1.6 billion, sales were up by 11.7% organically. The strong performance combines two different dynamics between Q1 and Q2 in term of organic growth. A very strong Q1 at 20%, a softer Q2 at 4.7%. This slowdown of growth was very much in line with expectations. After a Q1 that was very strong, the biometric business normalized in Q2. We anticipate that over H2, smart cards will probably turn slightly negative in terms of organic growth versus high comps in H2 2022. It means that for the DIS, you should expect H2 sales that would be comparable to the very strong level achieved last year, and hence, a full-year around mid-single digit type of organic growth. EBIT at EUR 253 million was up again by almost 36% organically, with an EBIT margin progressing significantly from 12.3% to 15.9%. Of course, including the relative impacts of the deconsolidations of the IoT module business. Outside this impact, the segments also benefited from a net gross margin improvement compared to H1 2022, thanks to favorable price and mix effects, and also the leverage on higher cybersecurity and smart count sales. Let me also stress here that the very high level of EBIT margin at almost 16% will not be sustained in H2, as we start seeing some price erosions combined with lower demand, notably in the telco segments. Turning now to Slide 10, looking at items below EBIT. there are two key points to be mentioned on this slide. First, the cost of net financial debt is turning positive at H1 2023, benefiting from higher return on the group's cash position compared to the H1 of 2022. Second, on the other side, finance cost pension increased in line with the rise in interest rates. All in all, bottom line, this drove an adjusted net income group share at EUR 890 million, and an adjusted EPS of EUR 3.91, up by 15% versus adjusted EPS at H1 2022. Finishing up with a few words on free cash flow, I'm now on Slide 11. As you know, our working capital is usually negative in the H1 of the year, mostly due to strong seasonality. This year was the case again, with also a EUR 600 million negative impact coming from a higher level of stocks at the end of H1 2023, versus the end of 2022. The main reasons behind this stock increase are the mechanical impact of higher revenue, the impact of inflation, but also a proactive decision at group level to authorize teams to build up additional level of stocks for some strategic items in order to deal with supply chain tensions. You can also notice that CapEx went up significantly versus H1 2022, notably to ensure the ramp-up of our production capabilities in order to support our future goals. We remain very focused on cash management, so that over the full-year of 2023, we expect to return to a more normalized level of cash conversions, over 90%, reaching a free cash flow around EUR 1.5 billion for the full-year of 2023. Finally, moving on to Slide 12, with a quick look at the evolutions of our net debt position. You can see that, EUR 468 million were paid as dividends in H1 2023, up by 12% versus H1 2022. The cash out related to the share buyback amounted to EUR 210 million. At June 2023, we purchased 4.4 million shares over 15 months, which is fully in line with the target to purchase 7.5 million shares over 24 months. At the end of June 2023, the group had a net debt of EUR 781 million, hence EUR 130 million less than at the end of June 2022. That's it for this financial review. I'm now turning over the call back to Patrice. Thank you, Pascal. Turning now to our strategy and outlook. This morning, I will limit myself to an update on the four strategic priorities that I presented back in March, so you can see them on Slide 14. Where do we stand on each of these initiatives? Let's move to Slide 15 now. Number one, first priority, capacity ramp-up. Back in March, I stressed that considering the dynamics in our markets and the strength of our backlog, this was our first priority, and it meant increasing staff, enlarging engineering and production facilities, and securing the ramp-up of our supply chain. During H1, we made good progress regarding staffing, with 5,300 recruitments. We are well on track to achieve our full-year target of 12,000 recruitments. In parallel, our turnover rate, which peaked in September 2022, has started to decline. All in all, we are very confident on this topic. Pascal mentioned it, our CapEx were strongly up in H1, up 40%, and as you may imagine, the bulk of this increase is coming from investments in engineering and production. Last, supply chain is a key challenge at this point, and it drives some of our cautiousness for the H2 of 2023. Second priority, technology leadership. Once again, in H1, our long-term investments in R&D delivered remarkable successes. Just two illustrations: number one, on the different side, in H1, we have an impressive list of wins in ground radars. On top of the 13 GM400 radars ordered by Indonesia, we sold the SMART-L radar to Sweden, and of course, the new generation of SAMP/T incorporates one of our flagship radars, the GF300. All these radars belong to a single dream product line, bidding on many years of sustained technology investments. Another example on the civil side, let me mention the announcement we made with Qualcomm regarding integrated SIM. You do remember that integrated SIMs represent the next stage in the evolution of SIM cards, when a separate chip is no longer required to deliver this, their functions. The GSMA certified the cybersecurity of the iSIM we integrated on Qualcomm's latest high-end smartphone chip, making it the first commercially available iSIM solution for smartphones. Third, well, third strategic priority, taking our sustainability performance to the next level. Well, number one, on the first business opportunity side, on the business opportunity side, let me stress that Thales Alenia Space will lead a consortium to deliver an in-orbit servicing mission to the Italian Space Agency. The long-term goal is to be able to refuel, repair, and move satellites to other orbits, which will represent breakthroughs for sustainability in space. Second, Pascal had highlighted it back in May, we received our SBTI certification earlier this year, and we are one of the very first large aerospace and defense companies to have obtained it. Finally, as planned, we have stepped up our capital deployment actions. Year to date, we have announced two Bolton acquisitions projects for more than EUR 1 billion: Tesserent, an Australian cybersecurity company, and Cobham Aerospace Communications, focused on the delivery of secured connectivity to aircraft cockpits. Both of these acquisitions are fully in line with our M&A strategy. In parallel, we made good progress on our share buyback plan, which is almost 60% completed. In H1, as mentioned by Pascal, we repurchased a little more than EUR 200 million in shares. Moving now to slide 16, and finishing with our 2023 outlook. As you saw in the order intake figures Pascal presented, market demand remains robust across the portfolio. Recruitments and CapEx are in line with the plan, while global supply chains remain under tensions. On the macroeconomic side, the dollar, which peaked against the euro in Q3 2022, is now materially weakening. As you understood, considering the strengths of our sales year to date and the perspectives for H2, we have decided to upgrade our full-year guidance. Now, we expect an organic growth between 5% and 7%. Taking into account the negative currency impact to expect over H2, this corresponds to EUR 17.9 billion to EUR 18.2 billion in absolute terms. We keep unchanged the other objectives, we expect the book-to-bill above one, and a full-year EBIT margin between 11.5% and 11.8%, which will represent a significant improvement over last year. This concludes our presentation. Many thanks for your attention, and together with Pascal, we are now pleased to take your questions. Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. As a reminder, if you wish to ask a question, please press star one one on your telephone and wait for your name to be announced. Please limit yourselves to two questions per person. Please stand by while we compile a Q&A queue. We will now take the first question. From the line of Victor Allard from Goldman Sachs, please go ahead. Thank you for taking my questions. Good morning, Patrice, Pascal, and congrats, Bertrand, on the new role. First question is on margins and DIS, for which the performance was obviously very strong in H1. I was wondering if you could please help us assess the EBIT performance in H1, in particular, if there was any one-off or mismatch that we should be aware of. I think you mentioned pricing and mix with the pricing contribution likely fading out in H2. I'm wondering if you could share a bit more color on this in the context of your guidance of around 14%. The second question will be on others, and it seems that you have slightly changed the language of your guidance from significantly above one to just above one. Should we read something here? If so, what has changed in your assumptions, in terms of others? Thank you. Hello, good morning, Victor. Maybe I will start with your second question because there's a bit of misunderstanding. I mean, we keep seeing, we keep saying that book-to-bill should be above one. That was our guidance at the end of 2023. We confirm this guidance as we released our Q1 figures, and we just, we confirm this guidance. No change at all on our overall order intake book-to-bill guidance for the full-year. Now, on your first question about the DIS margin. First point, I think it's quite useful for all of you to have in mind that the level of EBIT margin that we delivered in H1, almost 16%, shouldn't be what you should factor for the full-year. No, specific one-off, I mean, answering your questions, Victor. However, I would mention, I mean, alignment of planets with overall quite a good mix across our various businesses. Also, I mean, taking advantage of today, a very strong overall gap between level of prices and level of cost of materials in our P&L. We have got this expansion of margin that we took advantage of throughout H1. As we see, as I mentioned, as we start seeing some price erosions, we believe that overall, this positive gap between the trajectory of our prices and the trajectory of our costs, of materials, cost of goods sold, in our P&L, this gap will narrow as we'll progress in H2. I mean, probably a bit difficult to give you magic numbers in terms of overall level of EBIT for the full-year. My condition today is based on our overall mid-term target for our DIS, a level of EBIT margin that will be between 13.5% to 14.5%. This is basically what we shared with you a few months ago, being our target for 2023, 2024. My view today is that we should be at least at the upper part of this of this range for the full-year of 2023. Confirming, I mean, the quality of our DIS business. Okay, very clear, thank you. Thank you. We will now take the next question. From the line of Ben Heelan from Bank of America, please ask your question. Yeah, morning. Hope everybody is well, thank you for taking the question. The first question I had was on the book-to-bill in Defence was around 1.0x in the H1 of the year. Should we expect to be above 1.0x this year? I'm just a little bit surprised that orders have plateaued a little bit versus obviously there was a very difficult comparison in last year. I was expecting a little bit better from an orders perspective. Second, question for me was on aerospace and in particular, the space performance, and what you're seeing there from a margin perspective through the period. Finally, could you give us a bit of an update on where you are in the supply chain for avionics? Are you seeing any challenges there? Are you keeping up with the requests from the OEMs? How are you feeling about that? Thank you. Good, good morning, Ben. Thank you very much for your three questions. First about, book-to-bill, in particular on defense and security. What we all need to have in mind is that, overall, we, at Thales, we book more on the second half than on the H1, as compared to a revenue profile that is more linear across the year. Which means that first, I mean, we are quite happy with the level of order intake and defense for H1 2023, which if you put aside this exceptional UAE Rafale orders in H1 2022, if you put them in this contract aside, H1 2022 was really a record level, and H1 2023 is comparable to this record level in H1 2022. The fact that it is slightly below one on defense, it does not mean that we are expecting a book-to-bill below one for Defence in 2023. I do expect a book-to-bill, which overall for the full-year of 2023, that will be above one. All of that reflecting our view on the fact that we see quite a continued commercial momentum on defense across across the board. Second question about aerospace, in particular, your question was more on space. Yes, I mean, with this, those, I mean, the combination of both supply chain tensions, difficulties on space, together with inflation. You probably remember that last year, we commented quite a lot about the overall impact of inflation on Thales. Making a long story short, positive for the DIS, neutral on defense, and potentially a negative on aerospace. Today, we see inflation being also well mastered, and I would say, no specific constraint on our avionics business. However, we see on space, some impact. It's true that we see today, at our space business, combination of some supply chain difficulties. This combine with overall impact of inflation, all of that driving a level of EBIT margin in H1 that is quite modest. We expect for space overall for the full-year of 2023, a level of EBIT margin that should be probably low single digits on EBIT margin. Now, from a commercial standpoint, we see quite a strong momentum, in particular, as I mentioned, on the institutional segments. Overall, I mean, it's true that at this point, we see, I mean, some pressure on margin, but for those two temporary effects, the inflation and difficulties on supply chain, I mentioned, as I made the presentation, that we should see some improvements in H2 on the supply chain, I mean, tensions. Once again, those two effects are quite temporary, and this shouldn't hide the fact that overall, we keep seeing quite a strong overall commercial momentum on space. Your third question about supply chain, I will leave the floor to Patrice. Yeah. Supply chain in avionics in particular, but also globally speaking, I would say a twofold answer. On one hand, we have seen that the situation on components and chips have, I would say, improved. Clearly, it was much more difficult in 2022, even 2021. And in particular, you can see that we see that in AIS. The situation is, I would say, under control on component and chips aspect. At the same time, we have seen other, I would say, entrance under pressure or becoming under pressure, like PCB, electronic boards or mechanical parts. As you know, first, we have managed the situation always to meet OEMs expectations. Airbus, Boeing, Dassault, the big OEMs. We have always been in a position to deliver them what they needed to produce, typically their aircraft, as far as avionics is concerned. We have also, let me say that again, a very strong and professional supply chain and procurement team. To mitigate these tensions, we have, I would say, increased the resilience of our supply chain by looking for systematic double sourcing in tense area, redesign from time to time, some electronic boards. We've made, when necessary, some strategic stocks, hence our inventories that have increased, but that's for a good reason, of course. Anticipation as well is another lever that we have activated. Typically, we have decided, in some cases, to order with, let's say 18 months visibility instead of six months visibility. That's, in turn, it gives a good visibility to our own suppliers. You see many, many levels with the professional team to mitigate the situation, which is, I would say, challenging, but under control. Very clear. Thank you, Beth. Thank you. As a reminder, please limit yourselves to two questions per person. We will now take the next question from the line of Milene Kerner from Barclays. Please go ahead. Yes, good morning, Patrice, Pascal, and Bertrand. Thank you for taking my question. Bertrand, thank you for your support over the last seven years, and I wish you all the best for your new function. I had just one question on space as a follow-up. You have been targeting in the past EUR 2.5 billion of sales for 2024. Are you still confident in this target? Okay, good morning, Milene. I think this guidance was relative to 2024. Yes, 2024. Overall, as I see it today, I mean, level of revenue, I mean, tension and supply chain, the impact of inflation, let's consider that probably 2.4 to 2.5, is probably the best views that I could share with you on this business relative to 2024. That's probably the best I can give you at this point. Also, I guess that you have just understood that we are facing today, I mean, in particular, this supply chain challenges. Once again, I mentioned that it should improve gradually. Let's see at the end of 2023, where we'll be standing on this matter, I mean, to give you probably a better view on how we see 2024. Thank you. I think in mind, Milene, that, of course, I mean, we are discussing here about space. Now, I mean, probably my tone was probably more positive or quite positive on avionics, in particular, civil avionics business. Which is today, clearly ahead of our plan, both from a revenue standpoint and from a bottom line standpoint. Overall, what we shared with you in term of growth for this segment, for 2023 -2024, which in my recollection, was a high single-digit organic growth, is fully valid. I mean, and this is, this is how it works. I mean, we will have probably a level of performance on avionics above our expectations, and for the reason I mentioned, probably on space, a bit slightly below what we had in mind. Overall, I mean. Very- This level. Very clear. Thank you, Pascal. Thank you. We will now take the next question. From the line of Ross Law from Morgan Stanley, please ask your question. Yes, good morning, everyone. Thanks for taking my questions. All the best, Bertrand, in your new role. First question is on avionics, and just interested to hear whether you're still comfortable in achieving the ramp-up plans targeted by the airframers, and also whether you're actually receiving purchase orders in line with those production rate targets. Secondly, on the full-year margin outlook, which is unchanged despite the strong H1, you've obviously called out the IS margin as unsustainable and some uncertainty around space performance in the second half. Just wanted to check whether there was any other factors driving your caution around the margin for H2. Thanks very much. Well, for avionics, I thought I was clear, but I can reconfirm that, yes, we do follow the ramp-up of it's mainly Airbus for us, but let's say, the OEMs in general. It's also the case for the Rafale or the Dassault production line. We do meet all the POs we receive from them, no doubt. Pascal, on the second one? Yes. I mean, also, overall, I mean, on, on margin guidance, I was quite clear on the DIS space. What can I share with you? I mean, I mentioned that on defense and security, I mean, a level of margin, I mean, close to 13% is basically what we have in mind overall. All of that, very much consistent with the overall guidance, 11.5%-11.8%. Now it's true that I do think that H1 will give us even more confidence in our ability to deliver on this, on this overall overall guidance. Yes, I mean, showing, as you are seeing, 60 basis points above H1 last year. Basically, I mean, this is probably this type of margin improvement that we also expect for the full-year. I mean, reflecting this 11.5%-11.8% guidance. No specific items, no one-off, no, I mean, at this point, no specific elements to share with you on H2. Which is good. Which is good. Thank you very much. Appreciate it. Thank you. We will now take the next question. From the line of Hervé Drouet from CIC Market Solutions, please ask your question. Yes, good morning, all. Thank you for taking my question. two questions. The first one on DIS, and again, on the margins. Sorry to ask again on that. I mean, this improvement of margin we've seen quite significant in H1, where is it really coming on? Were there some significant price increase that was put in DIS during H1, that may explain that? While maybe the cost, aligned with inflation, did not increase as much. Do you think, you know, there is some of that? I'm aware that the IoT business, which was the consolidated, helped the margin, but it looks like the margin improvement is more than expected. Mm-hmm. If you can be a bit more specific, that would be great. The second question is on interest that you get on the cash. I was wondering, on the prepayment you received, and if you can highlight how much prepayment you received for some of your order, how can you account for the interest you have on the cash you received? Do you have to share the interest you receive on that cash with the client afterwards, or can you keep it? Thank you. Thank you very much, Hervé, for your two questions. On the IS, as I mentioned, it's true that H1 2023, quite a unique alignment of planets. Quite strong level of demands across the board overall in all our sub-segments. We discussed about recovery on biometrics, when I look overall, H1 2023 against H1 2022, quite a positive overall volume growth against last year. Second, as we manage to keep raising our prices along 2022, it's true that today, I mean, H1 2023, we're probably at the peak of our overall level of prices, as compared to a H1 2022 baseline base, which has not benefited from all the prices that we managed to get throughout 2022. Now, I mean, a bit more cautious on H2. As I mentioned, I mean, we have started to see some price erosions, in particular in our telco business, which is more on the SIM, on the SIM cards. Also, I mean, we think that the cost of goods sold, which reflects the cost of materials in our P&L, coming from our supply chain, will grow in H2 2023, as compared to H1 2022. Of course, will be significantly above what it was in H2 2022. If you combine first, I mean, some kind of price erosions, even though at this point, it's quite, it's quite limited, together with cost of goods sold in our P&L, that will grow. The combination of the two will result in probably some a bit of tension on margin. This is really what explain my tone about being a bit cautious on H2. As I mentioned, overall, our level of EBIT margin for the full-year, that will be at the upper part of our overall guidance, in terms of EBIT margin for the IS. Your second questions, I mean, of course, I cannot share with you the detail of our contract with all of our clients, but overall, I mean, in this industry, when you get down payments, you get those down payments, and it's really up to you to manage those down payments. If you can get some a bit of return on those down payments, it is, of course, it is, of course, positive. This is also basically what we benefit from, in particular, as we see interest rates moving up. Okay. Thank you. Thank you for your answers. Thanks, Hervé. Thank you. We will now take the next question. From the line of Olivier Brochet from Redburn. Please, ask your question. Yes, good morning, all. I will have two questions, please. The first one on the EUR 250 million to EUR 300 million FX headwind for the full-year. Could you just maybe clarify how much of that will be from U.S.-based subsidiaries, and how much will be from revenues that are naturally hedged? That's the first question. The second one, Dassault yesterday announced or indicated that some suppliers on the Rafale received some down payments from them in H1. Can you confirm whether this had an impact on your free cash flow for H1, please? Good morning, Olivier. I mean, the FX that we report for the full-year, it really, I mean, measures the pure accounting effect of the level of sales that is reported by our subsidiaries that report in U.S. dollars. It doesn't reflect, I mean, transactional effect, which is overall hedged for 2023. We don't expect any significant transactional effects on the U.S. dollars to EUR. Second point about down payment, I mean, we don't disclose, I mean, the level of down payments that we get in, I mean, from our contracts. No, I mean, we got some down payments in H1 of 2023. Yes, it's a matter of fact. However, at the level, which is below what it was a year ago. Yeah. Thank you. Thank you. We will now take the next question. From the line of Christophe Menard from Deutsche Bank, please go ahead. Yes, good morning. Thank you for taking the question. All the best to Bertrand also. Two questions on my side. The first one is in terms of order intake, where the Telesat order to be booked in 2023? I mean, we've seen that there's been some progress on this program recently. Would it be, for you, a greater risk, considering the supply chain issues that we're seeing at the moment? I mean, it's just to understand the framework of what you reported today. Second question is the mix in aerospace precisely. I mean, it's better in avionics, both OE and support. Does it change anything to the guidance you gave us for 2024 of 8.5% and 9% EBIT margin? Should we be more looking at the high end of this guidance, or even above? Bonjour, Christophe. Morning, Christophe. I take the first one on Telesat. First, as you know, Telesat is a listed company so I do not intend to comment too much Telesat. However, they have not changed their stance vis-a-vis the Lightspeed, I would say, initiative. They are still looking for closing the financial scheme for this project. If and when they announce the closing of this project, then we will be ready for that, of course. Be sure that we would not take any commitment that would not be backed by our supply chain, of course. There is no, I would say, additional risk in case of. Now, it's really, the ball is really in their camp and not in ours. Okay, Christophe, on your second question about the expected organic growth relative to our aerospace segment for 2023- 2024. I mean, our view today is really to confirm this high single digit overall organic growth for this reporting segment in 2023- 2024. On this matter, I mean, I don't see anything special in this matter. Your question was also on margin? margin. Yes. Yes. I mean, margin was, no, I mean, no, nothing to, nothing specific on this matter. Here again, I mean, high single digit overall EBIT margin for 2024. Yes, I mean, that's basically what I think we should be able to deliver at this point, yes. Okay. Thank you. Thank you very much, Christophe. Thank you. There are no further questions at this time. I would like to hand back over to the speakers for final remarks. Okay, thanks. As there is, or there are no further questions, just a few words of conclusion. As you understood, H1 2023 demonstrated once again the strong performance of our group, and we are fully focused on the execution of our profitable growth strategy, supported by rigorous capital allocation, of course. I'm really looking forward to speaking with you in the upcoming investor roadshows and conferences after the summer break. Of course, if you have any further questions, do not hesitate to contact the IR team, Olivier, Florian, and for a few more days, Bertrand, for a few more days. Now I hand over to Pascal for a very last word of conclusion. Yes. Thank you very much, Patrice Caine. As you have understood, it was the last results presentations that Bertrand Delacourt has prepared with Olivier Brochet and Florian. I would like to thank him for his invaluable contributions to the development of what I think is overall, quite a good practice of financial communication at Thales. Bertrand Delacourt has been an outstanding Head of Investor Relations since he joined Thales in 2015. He managed to develop, with all of you, a trustful level of relationship based on transparency, anticipations, also, I think, providing you for the right insights on our businesses, as well as on all our drivers that underpin our profitable growth strategy. We are very happy that Bertrand is taking over a new operational senior position within our Secure Communications and Information Systems GBU, and I wish him every success in this new challenge. I'm also delighted to welcome Alexandra Boucheron, who is succeeding Bertrand, and who will join us beginning of September. Once again, Bertrand, thank you very much for everything you have done since you joined Thales in 2016, and good luck for your new challenge. Thank you to all of you. Thank you, ladies and gentlemen. If you didn't have a chance to ask your question on today's call, please do not hesitate to send your question to Thales Group Investor Relations at ir@thalesgroup.com. We will get back to you as soon as possible. Thank you all for your participation. You may now disconnect.