Gross capital expenditure totaled 1,384 million euros. Gross industrial capital expenditure amounted to 1,320 million, an increase of +9.9% compared with the 1(st) half of 2019. This represented 12.8% of sales, reflecting strong project development despite the public health crisis. Financial investments totaled 64 million euros compared with an exceptionally high 1(st) half of 2019 at 446 million euros due to the acquisition of Tech Air in the United States. Proceeds from the sale of fixed assets stood at 82 million euros and included in particular the disposal of activities in Slovakia and the Czech Republic, highlighting the Group's commitment to maintain its active business portfolio management. Net capital expenditure(6) totaled 1,309 million euros. 



  Net debt at June 30, 2020 reached 13,176 million euros, a decrease of 523 million euros compared with June 30, 2019 and an increase of just 803 million euros compared with December 31, 2019 following the payment of more than 1.3 billion euros in dividends in May. The net debt-to-equity ratio, adjusted for the seasonal effect of the dividend payment, stood at 64.5%, down sharply compared with end-June 2019 (70.7%). 


  In the 1(st) half of 2020, the Group maintained its dividend payment and increased industrial capital expenditure while refinancing in advance the debt maturing in 2020. These initiatives underline the robustness of the balance sheet and net cash flow from the Group's operating activities in a crisis context and its ability to ensure its future growth. 


  The return on capital employed after tax (ROCE) was 8.3% for the 1(st) half of 2020. Recurring ROCE(7) stood at 8.4%, an increase of +10 basis points compared with the 1(st) half of 2019. 

 
Financing   -- Late-March, Air Liquide successfully launches a EUR1 billion 
long term bond issuance. Proceeds from this issuance allowed the Group to 
refinance its June 2020 bond maturities in advance and secure financing to 
support long term profitable growth. This issue has been rated << A- >> by 
Standard & Poor's and << A3 >> by Moody's. 
 


  (________________________________) 


  (5) Compared with restated 1(st) half 2019 following changes in 2019 annual financial statements: financial costs before taxes linked to IFRS 16 are reclassified in other financial expenses whereas they were included in net finance costs on 30 june 2019. A distinction is now made between other non-cash items under which the adjustment of this cost is recognized as well as income and expenses under IAS 19 and IFRS 2 and other cash items. 


  (6) Including transactions with minority shareholders. 


  (7) See definition and reconciliation in the Appendix. 


  INVESTMENT CYCLE 


  INVESTMENT DECISIONS AND INVESTMENT BACKLOG 


  Industrial and financial investment decisions totaled 1,331 million euros in the 1(st) half of 2020. This was lower than the 1.8 billion euros in the 1(st) half of 2019, which included the acquisition of Tech Air in the United States for more than 300 million euros. 


  Industrial investment decisions totaled 1.3 billion euros, stable compared with the 1(st) half of 2019, despite the challenging global health situation. Electronics reached a record level of investment during the 1(st) half, notably thanks to the signing of new units for Carrier Gases in Taiwan and for Advanced Materials in Singapore. Large Industries development was also dynamic, with the signing of a major project in China and a new air separation unit in addition to a site takeover in Russia. More than 30% of industrial decisions contribute to the Climate objectives and close to 13% support margin improvement (efficiencies). 


  Financial investment decisions totaled 49 million euros during the 1(st) half of 2020 with several bolt-on acquisitions in Home Healthcare in Europe and in Industrial Merchant in North America and China. These investments were very high during the 1(st) half of 2019, at 0.5 billion euros, including the acquisition of Tech Air in the United States. 


  The investment backlog increased by almost 100 million euros compared with both the end of 2019 and the 1(st) quarter of 2020, and reached 2.9 billion euros. The Oil & Gas market represented less than 15% of the investment backlog and the share from Electronics grew over the 1(st) half. These investments should lead to a future contribution to annual sales of approximately 1 billion euros per year after the full ramp-up of the units, an increase compared to 0.9 billion euros at the end of 2019. 

 
Investment   -- Air Liquide announced mid-April a major investment in Taiwan 
to enter two of the world's most advanced semiconductor basins. Air Liquide 
will invest close to 200 million euros to build production capacities in the 
Science Parks of Tainan and Hsinchu, respectively located in the South and the 
North of Taiwan. Under a long-term commitment with a semiconductor market 
leader, this investment in new production capacity will allow the Group to 
supply three high volume semiconductor fabrication plants under construction 
in Tainan Science Park, as well as some of the world's most advanced R&D fabs 
for logic IC chips in Hsinchu Science Park. -- Air Liquide and NLMK, a leading 
steel producer in Russia, have entered into a new long-term partnership. Under 
the agreement, Air Liquide will invest around 100 million euros in the 
flagship site of NLMK in Lipetsk, a combination of three projects which 
include the construction of a state-of-the-art Air Separation Unit (ASU), the 
acquisition of existing hydrogen unit for the steel plant and of the unit for 
Rare Gases production. This project also provides the base for growth of Air 
Liquide's Industrial Merchant activity in one of the largest industrial 
Merchant markets in the Moscow region. 
 


  START-UPS 


  Ten new units started up during the 1(st) half of 2020. These notably included two new hydrogen production units for Large Industries; one to supply the pipeline network of a major industrial basin in South Korea and the other to meet growing refining needs in Argentina. Ultra-pure nitrogen production units were also started-up in Asia in Electronics, as well as biomethane production units in the United States and the United Kingdom in Global Markets & Technologies. Moreover, a krypton and xenon production unit was started up in South Africa to meet the strong demand for rare gases, in particular for Electronics and Aerospace. This unit is part of the world's largest oxygen production plant, which is managed and operated by Air Liquide. 


  The additional contribution to sales of unit start-ups and ramp-ups totaled 80 million euros over the 1(st) half of 2020. 


  The Group confirmed the start-up dates of the main projects for 2020 and maintained its forecast for the additional contribution to 2020 sales of unit start-ups and ramp-ups of between 150 million and 180 million euros. Based on the health situation as of the beginning of the 3(rd) quarter, the Group's best estimate regarding the additional contribution to sales for 2021 is in the range of 300 million euros, reflecting notably the postponement of certain start-ups and ramp-ups to 2021 due to the COVID-19 crisis. 


  INVESTMENT OPPORTUNITIES 


  The 12-month portfolio of investment opportunities stood at 2.9 billion euros, stable compared to the end of 2019 and up compared to the 1(st) quarter of 2020. Driven by a highly active 2(nd) quarter 2020 despite the public health situation, new opportunities offset investment decisions and the removal from the portfolio of several projects that were either postponed beyond 12 months or awarded to the competition. 


  Europe remained the leading region within the portfolio with around one third of opportunities, closely followed by Asia, then the Americas and the Middle East & Africa with similar levels of opportunities. 


  Opportunities mainly came from Large Industries and included a growing number of site takeover projects that may have a faster contribution to growth. 


  The shares of Electronics and hydrogen and biomethane for clean mobility projects were up markedly. Six projects have an investment amount of more than 100 million euros and more than 25% of the portfolio's amount corresponds to projects supporting the Climate objectives. 


  RISK FACTORS 


  The current public health crisis relating to the global spread of the COVID-19 virus, which is not specific to the Group, increases certain risks or categories of risk specific to the Group described on pages 86 to 97 of the 2019 Universal Registration Document, for which the Group has applied management measures adapted to each country and each business line, including in particular: 

   -- Human Resources management related risks: an immediate effect of lockdown 
      measures introduced in various countries in which the Group operates was 
      the large-scale introduction of homeworking, the reorganization of 
      production facilities and the increased use of digital tools to ensure 
      business continuity. This adjustment and the associated risk management 
      were facilitated by the existence of a digital and collaborative 
      environment that had already been rolled out within the Group prior to 
      the pandemic, as well as the stepping up of virtual training courses 
      covering distance working and management. In the workplace, employees and 
      external service providers regularly receive specific protocols aimed at 
      the application of health measures required by the governments in order 
      to prevent the risk of contagion. External telephone support helplines 
      have also been introduced to help protect the mental health of employees. 
 
   -- Industrial risks: due to an organizational structure which was modified 
      by public health measures and at times a reduced number of employees 
      physically present at production facilities, the Group adapted its 
      processes to ensure the safety of employees and facilities, in addition 
      to specific awareness-raising actions. 
 
   -- Digital risks: the COVID-19 pandemic is a prime time for cyber-attacks 


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