AOMFF Earnings Call Transcriptbeta

Patrick Kron : Good morning, ladies and gentlemen, and welcome to our conference presenting Alstom's First Half Results for the fiscal year 2014-2015 talking about the accounts from April the 1st, 2014, to the September the 30th, as well as the strategy in Alstom and the perspectives. As you can see, we are here in London, and welcome to the participants in this meeting. I also want you to note that some participants are joining us by phone, and this conference is webcast live and will be also available in replay mode on your website. So, thank you then and I would like to remind you that all published elements, presentations, financial report including MD&A and accounts, as well as the press release are available on our website at www.alstom.com. Going on, let me first give you the main takeaways of this publication on H1 numbers and where we stand on our project with GE. As you will see, transport showed a solid performance with orders more than doubling compared to last year first half, and sales are showing an organic growth of 13%. The IFO margin after corporate costs improved by 30 basis points. In compliance with accounting, international accounting rules and IFRS 5, Alstom energy activities are classified as discontinued operations and therefore they will not be included in the numbers I'm going to present others sales IFO and these activities are reported under the line net income Discontinued Operations.. We will also see that the free cash flow for the Group has been affected mostly by working capital swings, and in particular in the energy business. I am also going to report on the key steps that were achieved in the project between Alstom and General Electric key steps, which were completed, notably the works councils' consultation is finished, the sales contract and all the corresponding agreements have been signed. And as announced by the minister overnight, the French foreign Investment authorization has been granted We therefore will call for our Shareholders Meeting to be held on the 19th of December 2014 where this transaction is going to be submitted to the vote of the shareholders and I intend during this presentation to give you a flavor on where we stand and the outlook where we stand for the current year, and some mid-term guidance for Alstom. I will now leave the floor to Nicolas Tissot, our CFO, who will present you with the detailed results, before I come back for the progress on where we stand with GE and details about Alstom’s post-transaction. And I will finish by the outlook before going to the question and answer session. Nicolas?

Nicolas Tissot : Thanks, Patrick. Good morning, ladies and gentlemen. I will start with a short note on the application of IFRS 5 and IFRS 11. In application of IFRS 5, the thermal power, renewable power and grid activities as well as some corporate costs have been classified as discontinued operations. Transport share of corporate costs was allocated to Alstom and it is now included in the IFO, and it has around 50 BPS negative impact on the operating margin that you see in the accounts of H1. Up to the closing of the transaction, Alstom net results are also supporting high transitory financial expenses for obvious reasons but we will come back to it and concerning the application. And concerning the application of IFRS 11, the result of two joint ventures one in China and one in the UK in signaling, are now accounted for under equity method instead of previously being consolidated proportionally. The H1 impact was of close to €100 million on the sales, and close to €13 million on the IFO line. Slide 5 is summarizing our main KPIs for the first half of the fiscal year 2014-2015 Orders at €6.4 billion were at a record high, up more than twice as compared to the same period last year, with a book-to-bill ratio of 2, thanks notably obviously to the jumbo rail contract we signed in South Africa. We booked in South Africa for around €4 billion for 600 suburban trains and this is associated with a maintenance contract over the long run because it's an 18 years contract. Sales were up 13% organically amounting to €3.1 billion. Income from operations which once again now includes a share of corporate costs linked to Alstom transport activity, increased by 21%. The operating margin at 5% after corporate costs improved by 30 BPS. Net income from continued operations of €29 million is not significant as it was impacted by high transitory financial expenses as well as heavy non-recurrence restructuring charges and we’ll come back to it. Net income from discontinued operations reached €226 million, free cash flow from continued operations and this is here before tax and financial cash out was slightly negative at €85 million, minus €85 million due to unfavorable cash profile during the period of a few contracts being executed. And finally, free cash flow from discontinued operations before tax and financial cash out once again amounted to a negative €1 billion due to lower sales in energy impacting progress payments and also adverse cash profile of some projects over this period. Now on Slide 6. A few more words on orders. Orders this semester were boosted by the strong demand for urban transportation as well as signaling. They include as I have just mentioned, the booking of the jumbo South African contract. Our record high backlog gives us visibility on future revenues. It’s really at a very high level right now and for example, approximately 50% of the sales expected in 2016-2017 are already in the bag covered by the current backlog. Patrick will detail this point later when we’ll talk about transport specifically. Services backlog remains at a sound level both in bookings and in the total backlog, where they represent a third of the backlog. Moving now to Slide 7, which gives some more examples of our commercial successes for the first half of 2014-2015 beyond the South African contracts, we booked in particular a turnkey contract system in Qatar, a project for rapid transit trains in Australia and its signaling system in Spain. Now on Slide 8, the evolution of sales which increased by a strong 13% organically. They were mainly fueled by deliveries of suburban, intercity and very high speed trains in France, in Italy, in Germany as well as high speed trains in Poland and in Morocco and tramways in Dubai. Emerging countries represented around one-third of sales during this last period. Income from operations stood at the €152 million, increasing by 21%, it now includes a share appropriate cost allocated to transport activities. So the new Alstom which represented roughly €15 million in the first half of 2014-2015 and this is based on the review of actual cost. This is not a simple allocation key. The operating margin at 5% after corporate cost improved by 30 BPS. Thanks to sound project review execution, tight cost control and cost-cutting efforts, partly mitigated by ramp up costs associated with new platforms such as the Regiolis platform. Now turning to the rest of the P&L on page 9, you see that restructuring expenses this semester amounted to €55 million. This mainly relates to some restructuring at Alstom Transport headquarter in Saint-Antoine, and in some European facilities, and should not be considered as normative. It has already been mentioned that we expect recurring level of restructuring for current Alstom scope of around €30 million a year. Other non-operating expenses at minus 34 included write-offs from assets as well as legal costs. Therefore EBIT decreased to €63 million and net financial charges reached €56 million and are reflecting a high level of charges in this transitory period before we actually closed the deal and get the proceeds, which is not representative of Alstom’s expected financial structure. Tax results was a negative of €11 million and it included additional tax expenses such as the CVAE, which is a contribution for enterprise – on enterprise added value. If you restate from those fixed tax charges, the effective tax rate of the company was 25%. Share in net income of equity invested amounted to €39 million. It is obviously driven by the contribution of TMH. And this company showed a decrease in operational performance over the period due to a lower of activity obviously amplified by the impact in our accounts in euro by the severe drop of the ruble. Net income from discontinued operations finally decreased to €226 million. It is mainly the result of lower order intake over the last 18 months which is now impacting sales and operating margin and this is despite a significant capital gain on the sale of the auxiliary steam components we closed in September. As a result, net income Group share amounted to €255 million. Let’s now move to free cash flow on Slide 10. Free cash flow from continued operations, so as we said before tax and financial cash out at minus €85 million during the first half. The free cash flow generation was affected by temporary negative cash profile of a few contracts. We mentioned several times the volatility to be expected from a semester to another in the working cap requirement and in that sense, H1 was fortunately no exception. We believe that should not be repeated in H2 and we expect free cash flow from continued operations before tax and financial cash out to be positive over the full year. Free cash flow from discontinued operations before tax and financial cash out was negative at minus 1 million. It is hit by lower sales in energy impacting progress payments and also as we said by adverse cash profile of some projects we executed over the period. Moving to slide 11, I would like to spend a few moments on our financial structure and give you an update on our balance sheet. Our liquidity position remains sound with €1 billion of gross cash in hand at the end of September, and a €1.35 billion totally undrawn and fully confirmed syndicated credit line. We closed the sale of our steam auxiliary component business for an EV in the region of €730 million, and we also reimbursed more than €700 million of a bond which was maturing in September at its normal date. Now talking about net debt and equity. We are on Slide 12. At the end of September 2014, our net debt stood at €3.9 billion compared to €3 billion at the end of March 2014 and this evolution pretty mechanically resulted from the negative free cash flow of the period. A negative ForEx effect and this was only partly mitigated by the effect of the proceeds of the sale of our steam auxiliary components. On the right side, you see that the equity remained sound over the period increasing to close to € 5.5 billion at the end of September 2014, compared to €5.1 billion at the end of March. Once again, the net debt level you see is reflecting the transitory period Alstom is going through and it’s clearly not significant of the future financial structure of Alstom following the deals with GE. Let’s now make a short note on energy key figures on Slide 13. Orders were globally down 2% remaining affected by the lack of big tickets especially in equipment. Main bookings related to steam turbines in India and upgraded GT 24 turbine in Mexico, a number of important HVDC contracts, and wind turbines in Brazil. As expected, sales decreased reflecting a slower order intake in recent quarters in some businesses. The operating margin was affected by lower volumes and some one-offs in projects involving notably in new products in the renewable power universe. This decrease was partly mitigated through continuing implementation of the D2E performance plan. Note that under IFRS 5, Alstom ceased the depreciation and amortization of energy’s tangible and intangible assets as of the 20th of June, which is the date of the approval of the offer from GE by the board. Thanks very much for your attention on those numbers, and I will now leave the floor again to Patrick for an update on our projects with GE. Thank you.

Patrick Kron: Thank you very much Nicolas. So, I come back on where we stand in the process with the deal with GE. I would say that as indicated in our press release a number of major steps have been achieved. As of today, we have completed the information consultation with works council in something like 91 entities at European level, national level and local ones. We have signed with General Electric yesterday the Moscow agreement, as well as all related documentation, notably the JVs and the acquisition of GE Signaling as well as the rail global alliance with GE. And as indicated by a press release on the French Ministry of Economy, we – the authorization on French foreign investment and French foreign investment – foreign investment in France – sorry – has been granted, and we are obviously in the process of requiring all the necessary competition and regulatory authorizations in a number of jurisdictions, again, both from regulatory and competition standpoints. Consequently, as originally forecasted, we planned the board has decided to call for a Shareholders Meeting on December the 19, where the transaction approval will be submitted to the vote of the shareholders as we indicated. Now concerning the closing, the – clearly it depends on the completion of all the previously mentioned regulatory and antitrust approvals. We expect that this may happen in the second half of 2015 and in mid-2015 was our indicated date. As we have communicated previously. There is a question on the use of the proceeds which we will communicate shortly. As I said, we will provide the shareholders when they will be requested to decide that means before December 19th with the full set of the information which I view needed to decide whether they like or don't like the transaction. And among this set of data is obviously the use of the proceeds. So we want them to have the full view when they decide. As you know, there is – we expect proceeds of € 12.35 billion, and will use a large part it obviously to provide the Group with a solid balance sheet plus headroom for future growth as well as having a strong liquidity; and we may use part of this proceeds to reimburse part of the outstanding debt before maturity, purely subject to economic conditions for this to happen. So, we will give you in due time the necessary information that we will provide to our shareholders. I would like to spend sometime with you now to give you some more flavor on the transport strategy and its perspectives. I think that when you look at Alstom in its transport business there are three main blocks. The first one is we are serving large resilient and growing markets. Two, we believe that we are well placed in order to address the customers’ requirements in these good markets. And three, this should translate into the combination of growth and profit improvements as I am going to detail in a minute. If I start with the markets, and what is our view on the markets. We expect this market to grow by around 3% per year over the coming medium term period and it’s a five years from now. And the interesting point is that growth should be expected more or less everywhere. You have Europe representing a third of the global market which should remain solid. There are a number of major infrastructure projects which are to be launched or are in the pipeline such ass such as Grand Paris in France, London Underground, et cetera. And there are also numerous services opportunities. Growth in the North America is expected to be driven by the urban transportation, LRV Metros, as well as by signaling. Latin America and Middle East should also experience healthy growth benefit from expansion. And we will benefit for expansion in the urban integrated solutions and bundled offering, I mean the numbers for the first half illustrate this trend and Asia-Pacific should also obviously remain a dynamic market and the example of the Indian market which we have had original successes which I expect are going to expand is a good example of a potentially very active market. Passing on the analysis of the market by activities that you can see on Slide 20. This slide illustrates the solid growth that we should expect, in particular in signaling and the urban trains as well as in services. The urban market is going to be supported by emerging countries where the growing phenomena of the urbanization is clear and where we should benefit from the 67% growth per year on this segment. We also expect the service segment as you can see in the charts to grow strongly 4% per year. This growth is supported by management. Sometimes or often associated with orders of trains and turnkey systems, also when we see growing opportunities to – in relation with operators outsourcing a number of their management activities. Last but not least, we also expect in mature countries that the aging of the fleet and the need for more provided in – for more to be provided in the transportation system to give us opportunities mid-life for modernization, lifetime expansion as well as new systems and equipments. We believe that we are in a good position to address these opportunities and basically, we expect our business to outgrow its market, grow faster than the underlying market, because we are among the very few players who are combining global reach and strong local presence. Global reach allows us to benefit from the opportunities existing in the market which are growing faster than other ones, and allows that to mitigate the local cycles, market could be softer at one point, but may be more and more active more active elsewhere, et cetera. So we – and obviously, we are able to serve our global customers wherever they are. But at the same time, I think that when you look at our footprint, we probably have the more diversified and the most international footprints compared with our competitors and this creates the opportunity that is necessary with the customers and it allows us to better answer to requests from customers or in the countries in which they operate for more local presence. We are present in 60 countries and we are perceived as a true local player in a number, in many parts of the world. So you have here three examples among us plus the way this strategy has turned into contract, South Africa, the small €4 billion contract has been booked in the first half is an interesting combination. We are currently starting the process of delivering trains from Brazil, using obviously our global including the urban engineering support and we are going to manufacture onsite, I mean, in the country, in a factory that we are going to be on the supply chain that we are going to create and to further for what we will deliver over the lifetime of the contract is local. By the way, we have been combining these 600 trains contract by an 18 years maintenance contract that gives us obviously a nice visibility of what's going to happen there. The other example, India, Azerbaijan, we're not going to detail. In India, we started by a contract in Chennai. We built a factory in Sri City near Chennai. And this factory allows us to take a second contract in Kochi and will allow us also to serve as a low cost base in a number of export opportunities. So, all these I think is fitting very nicely to the strategy that we are implementing. The idea here is also to show that we are not just an equipment provider, but we can address the need of the customer from the product, the equipment towards the full system and depending on what is necessary. We are able to strictly answer the need, It's true, for instance, that in a number of countries the demand is not just on equipment but for full solution and we expect by the way this solution requires notably in the urban transportation to grow and represent a higher share of the global demand compared to what it is today. If, I obviously just remind that in this business you need technology, you need innovation and you have to combine innovation on one hand and obviously a competitive offer in another hand and you have in this Slide 20 something, 23, you have a few examples which are provided. Also interesting to say that, as you see on Slide 24 the demand today is no more to reduce the CapEx and provide a cheap equipment, but the ability to be competitive not only through the investment they want but to the lifecycle of the customer and we have also providing here a few examples of how we can answer this request by systems which not only provide a competitive equipment, but also the ability to reduce operating costs by the customers. You have examples of energy recovery systems where the braking system is re-injected in the system to allow the overall supply of electricity. You have also some very interesting development that we have made in maintenance but the predictability is also a number of examples we show that the cost of ownership approach is definitely moving ahead in this business as well and we are well placed to answer this type of requests. So, if I try to check whether the strategy that we have been – that I am talking about is working or not working, I mean, it has been implemented for a number of years. I think that the backlog of 4 – 4.5 years of sales, the increase that you can see in both sales and IFO seem to illustrate that's probably not a failing strategy in my view, it’s a strong strategy. We are committed to increase the profitability. We have put in place a tight cost control system. We put in place performance plans that I already mentioned that were implemented across, and are implemented across Alstom and specifically implemented as well within the transport activities so-called the D2E performance plan and we know that there are challenges. We know that the market is a competitive one; that are known. So many non-competitive markets. We know that budgetary constraints and economic ups and downs can put pressure on a number of projects. We know that there are political risks here and there as well. That's the price to pay for being international and there are many merits of being so, as I mentioned earlier. And we also know that in order to meet the requirements, for new equipment, new platform et cetera at the start of the day you have to put a little money in the system before you get to the profitability. You expect that this is what we are doing. Again, we have a record backlog as you can see in the slide 26, this backlog gives us pretty visibility, feasibility. You have here the way we believe the backlog is going to turn into future sales and obviously, this is nice to have this 50% of the 2016, 2017 sales in the backlog and the rest is going to come. If you look also on our orders and sales on Slide 27, you've seen that over the last three years our book-to-bill has remained above one, now substantially high obviously with the support of the jumbo contract signed in South Africa. It’s interesting also to see that the service orders represent a material share in the total. We have around 20% of our total orders which are coming from service and things like €1.3 billion per year on average of service contracts and the sales are also showing history of healthy growth. So they should increase at a steady pace over the years to come. At the same time, we continue to invest for future growth. We invest in R&D, we invest in CapEx. You have here the few data, I mean, this is the investment have been around €130 million over the last years. CapEx represents part of this. The investment in new manufacturing capacities, the other one is to upgrade and improve the efficiency of the existing industrial footprint. And you see here, the evolution on the next slide, the evolution of the operating margin from 11, 12 onwards. They are basically in my view, under positive implementation of the strategy I described and on the rigorous implementation of actions to work on costs through the performance program and to improve execution performance. The additional contribution has been the growing share of service and the signaling activities which obviously helped the global economic numbers. I am not going to details the slides which relates on the dedicated to excellent plan. This is something I described that for the global Alstom Group. I also remind you that out of the €1.5 billion that we targeted as a run rate in March 16 versus the 2012, 2013 cost base, 30% was that part of transport in the global picture. So don’t be surprised to have this €450 million. That’s where we are and on the following slide, you can see a few examples of what it means practically in the daily life, examples in sourcing manufacturing, industrial foot prints as well as reduction of our overheads through a simplified and optimized organizational measures. You also can see that we own our business, but we also are part in a number of joint ventures and have investments with associates which remains a substantial contributor to our profitability. This has been for us and will remain a successful strategy to penetrate a specific local market which also produces sound financial results. This is the example of Transmashholding, for instance, in which we had a 25% stake, this company is performing very well. But obviously, when the ruble is soft and is impacted this impacts the translation in euro of the earnings we get in ruble et cetera. Free cash flow, I am not expecting to are going to question on that point, this is on Slide 33, I think that over the recent years, we have made significant efforts in cash management and I would say that, we have never made secret the fact that the working capital may have swings from a semester to another one, but globally, we are targeting normatively a stabilized working capital going forward. Moving to Slide 34, we have summarized the history of expansion of Alstom. Again, the main M&A milestones in the recent years have been the acquisition – recent years, 15 years ago of Fiat Ferroviaria in 2000 and 25% stake in TMH that means that, it has been a way to boost our strategy by basically our strategy has been focused on organic growth. I am happy to put another bridge in this M&A expansion with the GE Signaling acquisition which as announced is expected to be finalized at the closing of the deal with General Electric because it’s a side deal within the global deal with them. I will – if you don’t mind, spend a couple of seconds to highlight a few characteristics of GE Signaling in the next slide. It’s an interesting acquisition for us. It’s a company of around €400 million of sales with a 1200 employees in different sites in the world. It’s interesting, because it’s combined, it’s a good fit for us both geographically and in terms of products as it has strong North American position and it also has a larger presence in signaling for freights which is one area in which we were not at present as the passengers related signaling activities. Concerning the other side of what we have signed among the various agreements, we have signed with GE yesterday is a global rail alliance that I already mentioned, which is a frame agreement which stipulates a number of areas in which we’ll try to work together. No commitment for anybody, but at the end of the day, the way it's structured is that it can only bring positives if you are negative or not, sales will be zero, if you are more optimistic as I am. Consider that the commercial support we can get from GE on a number of geographies as the USA I think they have but don’t repeat it publicly stronger lobbying capabilities than we do in the US, for instance, I think that what we are doing in some countries as maintenance of their locomotives business could be expanded in others, should the two parties consider, this makes sense. I am sure, there will be some opportunities. Sourcing they’ve got significant quantities for their local business, we do as well. Engineering, manufacturing, so we have identified a number of boxes in which working together can make sense. Last but not least, GE Capital is supporting a number of infrastructure in the world why not transport projects in which we are involved and EPC or equipment provider. A few words on the guidance , on Slide 36, first message, in the current year, we expect to – ourselves grow organically. I mean, the 13% that we had on H1 is not going to be repeated on H2. That's why we guide you for high single-digit number for the full year. We expect the operating margin nevertheless to be starting from 5% in the first half over 5% in the full year and as you have seen the €85 million negative of the free cash flow before tax and financial expenses, we expected not only to be positive in H2 but to compensate the negative 85 on H1. Concerning the Group, where we have had a substantially negative free cash flow over the first half close to €1.4 billion negative. We expect this number to be significantly positive in H2. Medium0-erm, concerning, now we are talking about the new Alstom. We think, as I said earlier, that the sales should beat the market and we expect to grow this business at over 5% per year, we see where we stand. We start from 5% plus and we expect to gradually improve this number within this market of 5% to 7% and concerning the Group’s free cash flow, again, as I said, there is relativity. We expect nevertheless that normatively in a given period. It should be in line with – the free cash flow should be in line with the net income talking net income higher to the contribution of the energy. I am talking here as well as making net income in transport and free cash flow corresponding to this transport business. That's where we stand, and before giving the floor to question and answers, I would like to hand over one minute to Nicolas who wants to share with you a personal matter.

Nicolas Tissot : Yes, if I can give the mic connected, I would like in fact to share with you a more personal information. There is no slide for that one. After basically almost five years as CFO of that company, and that was a great job, great experience, great company, I would say time has come to think about the future. And for me, with the Alstom GE deal, it's a fact that the future is not going to be with the new Alstom we talked about. So we decided with Patrick that I would leave my CFO role in a few weeks after having the pleasure of continuing the dialogue with you and I will take a new position to assist Patrick in the implementation of our alliance with GE. The deal itself as you’ve heard, is well advanced, but we have tons of work to prepare the integration of our energy activities within GE. And also the integration of GE Signaling within Alstom Transport and last but not least, we have also to build a new Alstom which is going to be able to fly on its own. We see in the process GE is dedicating a lot of resources to the project and we want to be able to keep up the pace in the interest of our teams. I would like to thank Patrick for this year’s working together in this position and thank you more so for offering me this new position. I would like obviously to thank you all for the rich years of dialogue on Alstom. It’s a strategy, it’s a number of its markets. Thanks very much and I will now leave to Patrick to complement on his side. Thank you.

Patrick Kron : Thank you, Nicolas. I conquer on the analysis of what we have been through over the recent years. I mean, we have had a number of successes, a few more difficult moments, but we found solutions and they didn’t come by chance, they came because of the hard work and initiatives and actions taken that you and your team deserve credit for. So, sincere thanks for that. As you said, and I don’t think it’s a break-up news, there is a lot of work ahead, notably with this implementation and execution of the deal with General Electric on which you will focus. So, for the CFO job, you will hand over one of your top guys in your team, Jean-Jacques Morin, that some of you know and Jean-Jacques has been the Finance Director CFO of our power activities, transport activity and he is currently Senior VP, Group Controller. So he has been working under our joint guidance on the account we are commencing today and I wish good luck and success to Jean-Jacques as Nicolas said, by the way and I would like to insist the move will only happen in December the 1st and therefore Nicolas and us will be together around to continue to update you on all the questions you may have and all the comments you’d like us to give on both the H1 accounts and the GE related issues. Thank you very much ladies and gentlemen. Thank you Nicolas for wishing to make this point public in front of you guys. We have been working very closely over the recent years. I think it was the proper timing to do it. So now, ladies and gentlemen, I give the floor to the questions you may have.

Patrick Kron : Yes. No, wait, what we are going to do now, what we are going to do, we have a number of questions coming from the room here and a number of questions from the – we have close to 200 attendees through the webcast and the teleconference. So, I try to keep the right balance between questions from the room and questions from the associated participants through the webcast. Gale, [Ph] you start.

Gael De Bray – Societe Generale: (Inaudible) my question is obviously related to the cash flow development, and so you are talking about the unfavorable cash profile of the contracting executive, but do you mean the cash flow is related to the milestones that we have achieved in H1 have already been received or are yet to be received in the coming quarters and maybe in relation to that, I mean, you set the targeted cash conversion rate of about 100% over the medium term. But what makes you really confident about that target, given over the past couple years, since you haven’t been able to do this. I guess, that might be related to the CapEx trends. I am not sure so what you see here maybe, if you could give us a sort of timing, when do you expect the CapEx to be more in line with the depreciation level? The second question really is about the competitive landscape which is kind of changing right now with the planned merger between CSR, CNR; with the rapid development of the cash in Europe and so on and so forth. And a few months ago, Siemens offered to create a joint venture with transport activities including Signaling. So I’d like to understand what in principle maybe makes you reluctant to combine the forces with Siemens and possibly create a real European leader in the market? Thank you.

Patrick Kron : Okay, thank you. Well, the cash flow for the first half has been disappointing. We have had expected issues and some less ones. I would say that, yes the cash flow for the first half included at top globally for the Group, the €1.4 billion negative. It’s a combination of as I said some negative cash profiles over a period, this happens, it has happened in the past. Second one, obviously the slow sales have impacted the milestones, the payments related to the milestones. We had a number of one-offs et cetera. So, it has been disappointing. On your question is, well, one, we are expecting it to reverse in H2. Both obviously for transport, because we told you that we expect the free cash flow before financial expenses to be positive in full year, negative in the first half, I mean, it’s being compensated. And the second one, globally at the Group level, we expect the free cash flow to be significantly positive on H2. It’s fair to say that some payments that were expected on the 30th of September or before came in October, et cetera. So, it’s – in this we have not been good in forecasting the cash flow. I would like you wrote it and I am not just quoting what some of you wrote. I mean, sometimes it works in the good direction. As you may remember, not that long ago, where we guided to a negative number which happens to be positive other times, it’s worked the other way around. Why? It’s because we have substantially big moving parts. As we moved our transport the size of the moving parts obviously, shrinks a little bit, but still there are a number of substantial moving parts up and down. The cash conversion of a 100% is an objective. It’s not given, we believe that this should be achieved CapEx, CapEx is not massive, CapEx is what around €100 million like that, that’s not something the reality of the swings that you have in the working capital is related to the free cash flow, is related to the working capital, that’s where the issue is. So, we expect that will go to this €100 million as soon as possible. Again, I want to – I am confident on this number, at the same time, I will not disturb the possibility on a given period to have some ups and downs. So, the future is more difficult to predict than the past, I used to say that, but I am strongly supported this point. On the competitive landscape, when you look at our M&A, basically, most of the development we have achieved over the years have been through organic growth and the numbers and the backlog supported to continue, when there are opportunities, so we look at it opportunistically. This is the signaling opportunity which comes as part of the collateral benefits of the deal on energy. That’s interesting, I’ve been trying to grow on signaling over a number of years, it didn’t happened. If there are opportunities to grow in Europe, we’ll consider. There is nothing cooking, I am not looking at Italian projects, et cetera. We will see. Now you come back to recent history, on a deal – on why did we, while weren’t we excited by a competitor’s proposal to get our gas business and give us their train one. Basically, forget about the gas issue, it’s no more on the table. Your question on Transport, why we weren’t we interested in this transport combination? Just because one plus one makes less than two, because it’s same footprint, same market, and same technology and you don’t build the future of a business on bloodshed. Then, Andreas, then I’ll take a question from the – Andreas? Microphone please faster.

Unidentified Analyst: Thank you very much. First question on – just on helping with our models going forward.

Patrick Kron : I apologize on that, but, I mean, because of – there is a significant discontinuity into numbers. So the models are a bit shaken. So I guess it is what.

Unidentified Analyst: You mentioned corporate cost for transport about 50 basis points in the first half. Should we use that as a pro forma going forward as well? Or will that change when it actually becomes the surviving entity in that sense in terms of overheads…

Patrick Kron : I like so – that I mean, the continuing one.

Unidentified Analyst: Continuing entity in terms of lifting costs and all the other things that are still there. The second question on tax rate as well, you said 25% this half year period. Should we use that as a normal rate going forward? And one more strategic one, in the past because of the constraints of the overall Alstom balance sheet, the margin of error within transport but also maybe the use of the balance sheet to help customers by financing payment terms and all of that was maybe more constrained that some of your other competitors. Does the approach of Alstom, going forward change, in terms of using the balance sheet in a more aggressive way or taking more risks than the very disciplined approach you have in the past?

Patrick Kron : Look, first question, I think that the corporate share which is in this H1 number is both in line with what – is a fair share of what has been used by transport in the global corporate cost that we have experienced so far. And in my view, in line of the future corporate rates that is going to be associated with Alstom transport. So in other terms, the fact that the company reduces by two-third, is not going to create an overweight at this level.

Nicolas Tissot: It is based on an analysis of the actual cost and those which were to serve transport activity it’s actual analysis of cost and I mean it may be refined, fine tune in the end, but it’s basically the right level.

Patrick Kron : It is the reality of what is used today and I add that I don’t expect a step change neither up and down in the future level of the functions. This would be needed for Alstom in its new format to continue to do business, including being listed and addressing analyst questions.

Nicolas Tissot: It’s basically 25% of the total corporate cost of the former group.

Patrick Kron : Second one is the tax system, it’s going to be refined. So we don’t give you a fair number. But I would consider 30 to be more in the ballpark – the ballpark will be more around 30s and around 25 because of the geography where the money comes from.

Nicolas Tissot: Because of the geographical mix and the weight of Switzerland which is going to reduce in the new format of the Group.

Patrick Kron : DTA everything, that we’ll refine in new type. So that’s just a preliminary input to your model. The third question relates to, are we going to use the balance sheet to get business that would not be very consistent with my statement on what will happen to the working capital as we move forward the answer is, even though Alstom’s future balance sheet liquidity, et cetera is going to be strong. We don’t consider ourselves as becoming an infrastructure bank for the customer. So, no, we are going to keep the strict hygiene on the way we take others looking at the margins, the risks and the cash profiles of the projects.

Nicolas Tissot: I would say the evolution is that we see some pressure on the clients’ pre-financing of the contracts which doesn’t mean that we will return completely the roles and be in the position to finance our customers.

Patrick Kron : I mean, the markets are competitive, we know it, no surprise. I think we change by the disposal of Alstom Energy and the new set up in the energy area. It remains a competitive market. We address this market. We have a good backlog. We are acting on the cost, acting on the execution and we have no intention to change our commercial policies to by all means accept, if the cash profile is not fine with us, we don’t go. We are not the bankers of our customers, we are their suppliers.

Unidentified Analyst: (Inaudible)

Patrick Kron : Yes, understood, no, no, I took it.

Unidentified Analyst: With margin profile, but it is cash profile and that wasn’t attractive.

Nicolas Tissot: In the future it could be more attractive

Patrick Kron : I took your – I didn’t took your question negatively, I just say that our intention is to continue to exercise hygiene, looking at the global picture which is price and margins, risks associated to the contract and cash profiles and terms and conditions in general. So I mean it. So, it’s a day-to-day decision. We go, don’t we go, but we will oblige price hygiene as we move forward regardless of the fact that there will be more liquidity and much stronger balance sheet.

Nicolas Tissot: And when you look at our order, I mean, the level of order intake we will see – I mean the numbers that it would imply in terms of financing of our customers are so massive that no balance sheet, even the stronger balance sheet we will get off those transaction would resist to such a policy to supply that systematically.

Patrick Kron : Thank you, Nicolas. There is a question, I go to the conference, if you excuse me one second, so I think there is a question from Martin Wilkie should I give you the floor Martin?

Operator: Martin Wilkie from Deutsche Bank you have the floor.

Martin Wilkie – Deutsche Bank: Yes, thank you, good morning. It’s Martin from Deutsche. A couple of questions just on cash. So now that you have reported energy as discontinued, we can see a little bit more detail of transport and I see that the down payments – or the customer advances inside transport are still quite large; I think nearly €2 billion, just to trying to understand, how we should think of that number in terms of the volatility of downpayments in transport over time? And also when you think about capital return and I understand you make an announcement on that towards the end of the year, but just how would you think about the headroom comment that you made? And how would you think of the downpayments as part of that when we think about the kind of balance sheet that you might be thinking of post the capital return? Thanks.

Patrick Kron : Martin, thanks. I mean, I am not going to restart the debate on whether the downpayments are debt or not debt, I mean, as you give you in this room and the phone experiencing of participants, no again, we have €27 billion backlog. Are you surprised that there are some downpayments associated to the orders we have in hand. At the same time, I commented on the working capital globally. I told you that I am expecting limited volatility – some inter-period volatility, although I can’t tell, but some global stability that includes the downpayments as part of the global picture. So, okay, we have downpayments, when we don’t have you are upset. when we do have, you are also, so be so. Yes, question in the room. Olivier? Okay, growth momentum.

Unidentified Analyst: Olivier, we have three questions and I like to – so please, so I’ll come with four then, I guess. Just in terms of looking at your cost base, when you compare to your peers, how do you think you are? And obviously, you have a lot of work to do there? Question one, question two, when you look at the margin of 5% to 7%. What do you think you have in terms of long-term pricing pressure in terms of mix, because obviously service and signaling will grow which will be positive and the final question when you look at the sort of global position you have, where do you think the biggest gaps are that you need to full through M&A?

Patrick Kron : Look, first question, where do we stand in terms of costs, I mean, very difficult, I mean, I don’t have detailed data from all our competitors available to share with you. What I see is we have €227 billion of orders in the backlog and we have a backlog which supports what I am telling you in terms of gradual improvement of our profitability. So, it means that our cost position is in line with what is necessary to trigger this type of profitability in the given market. At the same time, there are projects in which we see some very aggressive quotes by competitors and therefore either don’t participate or don’t win, so that happens as well. So I can’t tell you. So, I think we have to continue to work on the cost. I think that Henri Poupart-Lafarge has taken a number of positive initiatives such as, which I think will be fruitful over time, such as giving more empowerment to the local businesses making sure that the decisions are taken as close as possible to the customers while keeping a global coherent hygiene and consistency through some strong engineering, manufacturing skills at the center. But making sure that all decisions to get another are not necessary taken in Saint-Antoine. So that has been quite action in the initiatives and this give reactivity, cost improvement et cetera. So, I don’t think we are at the end of the process, we are at the start of the process, but we have opportunities. At the same time, we have also – I am talking about manufacturing costs, but there is also one area in which we think there is a lot to as well is what we all re-engineering to cost. What we try to do is we try to do products which have better functionality for our customers. We work on the future generation of high speed trains which will have a lower cost per seats in addition to running fast, in addition to providing new characteristics, new services to customers being able to have cost per seat which is lower. So this is through an optimized footprint. It’s also when optimized product, so the re-engineering to cost is also one of the key areas in which we can differentiate ourselves in terms of product offering. Pricing pressure, I more or less answer that general as well in – there is – this is a market which is a competitive market and we expect it to remain so. Again, in this competitive and price pressure in markets which has some price pressure. You have seen that we are able to take a substantially – to take substantial orders. The last point in terms of gap. Well, I would say, you have seen in signaling where growth may make sense that we have had this opportunity. I looked in the past as others, which didn’t materialized. I hope this one will materialize with the global deal with GE. This obviously is a substantial with finalization of the deal will be. The – I would say that, I don’t think that in M&A, I don’t – the judgment, I don’t think that in M&A, we are in a must do mode. We will grow organically and we will look opportunistically, if there are opportunities to grow. We just bought a very small business from Areva, from Tecnicatome, in the signaling one which is not big in million, but nice in terms of Brick including in our technical offering. This deal write in terms of ramping up the signaling business, both in geography and in extend up the product range. We are also, so that’s the type of thing we will do, if there is – we want to grow the services, same time, we bought some small service business; not big noise. But still, that’s nice, this increases and moderns our franchise. I think we can do more in this area and the market is supporting the growth strategy in services. As for our rolling stock is concerned, I answered to Gael a question on the deal with Siemens, which I don’t think makes sense. I'll not change my mind on that. At the same time, if there is a specific opportunity which allows us to better cover a geography, allows us to expand the offering by some access of new technologies, which we can do better. Why not, we look at it that way. But again, we are not in a must do mode. We have no big deals cooking under the curtain currently. Olivier? And then I’ll ask I'll ask Arnaud Schmit on the teleconference please.

Olivier Esnou – Exane BNP Paribas: Second one, thinking about the long-term guidance for rail, so, I mean, the closest peer we can think about is bombardier there which is targeting 8% medium-term. Is there anything structural which we should be aware of that means, 8% wouldn’t make sense for you? And that’s the second one. And maybe to finish on Transmashholding. I may have wrong with this and, but I think, Nicolas, you said operatingly, it was going a little bit down and it was amplified by effects and on the slide, it says operating performance is stronger. I just like to see to get a feedback of how you see this developing as part of the overall rail medium-term outlook? Thank you.

Patrick Kron : First question, JVs, we don’t provide a specific guidance on the margins, it’s come in due time if necessary. Concerning the dividends, we see and the third question, this is only I would answer is the fact that yes, the JVs are structured on a no debt no cash basis. So basically, the close to 2.6 which is the sum of the three investments in the – the investments in the JVs covering agreed renewable and nuclear and steam represents on a non-cash no debt basis, this is few millions below this 2.6. Again, as you know, we have a liquidity rights and flow and obviously any dividend which is going to be distributed would impact the flow as you can imagine. The second question, rail and comparing to Bombardier, well, I am not really prepared to make in front of you the comparison of our performance with our peers, I think that you should be – I think that Bombardier includes in its profitability margins, the contribution of its investments in non-fully consolidated units which is, again, it’s a convention. It’s a definition. I think that when you look at the business such as the rail business, you should include one way or another it can be in the ratio, it can be in development ports, the contribution of these entities because again, we – you can decide at one point in time, whether you fully invest in a plant as we did in near Chennai and this is fully integrated in our numbers or whether you go through a JV which we have been doing in China on some signaling activity in the UK and then signaling activity in Russia for 25% in TMH. So, frankly, that’s – the way you put it in the picture is to be defined but, so, when you look at the numbers, I mean they put some restructuring. We don’t, they include the numbers on the non-fully integrated companies. We don’t do exactly the same conclusions.

Olivier Esnou – Exane BNP Paribas: We have to compare apple-to-apple?

Patrick Kron : Yes, you have to look at the global ones, so that was my comment. But, I don’t see any fundamental reason for our profitability to lag some of our subject that the mix is the same. So we – so I don’t think is that difference in the company – for the company you mentioned. On TMH, on the new cost control, the message is the following. One, this company has a strong performance as highlighted by the numbers. But, two, it’s fair to say that this company maybe exposed by shortfall of the overall activity, slowdown in the overall activity in Russia which has ups and downs as everywhere. So I mean, there may be some effects on the economy of events in Russia and this could impact the level of deliveries of – level of purchases of state-owned companies such as these and those they are committed and all the discussion had with them showed a strong wish to continue to push the renewable and the expansion of their fleets. So, they remain bullish, but, I mean, there may be a volume impact and two, – but not because it slows down, but it’s not a strong performance. I mean, the two may happen together. It remains a strong performance in the lower – with the lower level of activity. And three, the translation of this overall KPIs from rubles to euro, obviously is impacted by the current decline of the value.

Nicolas Tissot: And just Olivier, on the JVs, clearly to be very clear, I mean we signed not only the master agreement, but all the side deal agreements yesterday and also don’t only look at the JVs as a – through the P&L and looking at the margin and looking at the dividend. Look also at it with a balance sheet view, because this is also a financial investment and one of the important things for the company is, do we have a granted value on this investment. And so, look at also at the liquidity rates.

Patrick Kron : Yes, from the teleconference, questions?

Operator: Arnaud Schmit from Natixis. You have the floor.

Arnaud Schmit – Natixis: Yes, thank you and good morning, Patrick and Nicolas. First question on transport, what would be in your view the drivers to enhance the margins up to 7%? Would that be rather volumes or the mix maybe? Second question on transport, normalized free cash flow. Do the last two years give a fair idea on the gross cash flow transformation, before interest and tax that was around 70%? I have a third question on debt. Which debt lines will it would be gullible before their maturity? And the last, a small question on Areva, Sri City, could you give us an idea of sales and margin levels? Thank you.

Patrick Kron : First question the improvement of the margins in transport, we expect a gradual improvement. This is something which is supported by our backlog, obviously, because I gave you the visibility given on the sales from the backlog. It will come b y a positive impact on the cost execution and also the mix would improve and I add to that we have currently a number of contracts typically, Regiolis, which are in the first stage of their alliance and as we move forward, this is classically a better contributor to the overall performance. The mix of cost and the execution will play. On the future cash flow, I told you that I was expecting free cash flow of the new Alstom focused on transports to be in line with its net income. You say that, it was 70% over the last year, I am not totally sure about the numbers. I tell you that I am expecting the cash conversion to be around 100 and you will – the fact that will show whether I am right or not right. On Areva and on the signaling deal that we buy, it’s a very small business around the €10 million, something like that, Nicolas, but it has a few – it has a number of engineers where that fits, what we believe we need in order to serve a number of projects and notably, highly helpful in all our efforts to position ourselves for the company – domestic. They bring skills in automatic metros which is an area of interest for us.

Nicolas Tissot: Important technological gap that we fill and on the debt management part, obviously, once the transaction is completed, Arnaud, we will obviously take some actions to actively manage debt and specifically, probably reimburse early part of the debt, but obviously we will strike a compromise between the cost of earlier reimbursement and the premium you have to pay in this case and the end game. And we don’t necessarily need to reimburse so much of our net debt, because we can also manage our balance sheet taken into account the potential exercise of the puts on the JV starting in 2018. So, we will have some actions to reduce cost there, but, in a way where we will take into account the economics of such actions.

Patrick Kron : We look at the gross debt, we look at the net debt, we look at the liquidity, we look at the price at which we can use the liquidity in order to reimburse earlier the debt and for the benefits are captured by the lenders, they weight the maturity and we’ll do as well. Yes.

James Moore – Redburn Partners: Hi everyone. It’s James Moore from Redburn. I’ve got questions on three topics if I could. Just on the deal, could you just give us a sense of deal risk here? I know, it’s their intention to fully guide through this. They are putting a lot of people to work, but to say that you use, say to you, you got to sell a small little piece. Can’t you then say, oh, we wanted that small piece we walk away and on the fungibility of the joint ventures, will it be fair to say that grid and hydro offshore are more realistic to have the cash like item whereas the global nuclear franchise is perhaps harder, I know it’s a small piece to sell out in the – to match off against that. And cash and equivalents in transport, as a percentage of sales over time, you been five to ten as a group, is there a number we can think about that? Secondly, on the topic of cash and equivalents in the transport balance sheet, compared to a group number which is range between 5% and 10% of group sales. Just trying to get a sense for a sensible number there. With respect to signaling, GE has talked about high double-digit margins, but they report very differently to IFRS. Could you give us a sense of the profitability and also the synergies now that the deal is signed and any synergies from the global alliance agreement? And then finally, on new manufacturing footprint, you’ve still got the bulk of your headcount in Europe. You’ve been investing a lot in emerging market plants and you’ve talked about margin pressure in the past from investing in India and Russia. I am trying to get a sense for the loading of Europe versus emerging and really still how much we have to do before the balance is right?

Patrick Kron : Yes, thank you. On the risk of the deal, first this is a shareholders to vote against the deal on December the 19th. So that will allow everyone to go back home. I think we have to pay GE with €35 million of breakup fees. So, that’s one of the risks, but it’s in your hands and on the shareholders’ hands. As far as the regulatory and competition authorities are concerned, as you can imagine, I have no intention to speculate. It has been studied carefully by our respective teams. We have strong answers to any questions that can be raised. So therefore, we will work with the corresponding authorities and in all the jurisdictions that we are going to request a call for and this is between 20 and 30. I don’t have the number in the back of my head, but it’s a massive work to be done. This is why, by the way the closing is not happening at shortly as everyone would have hoped, because mandatory period, I am not very helpful for daily life. But again, I am not going to speculate on what answer we’ll give to this on that questions. I think that we have either filed where we had to file or actively preparing the filing and we will update you on where we are on there. On the JVs, again, the JVs are – the JVs which combine what we bring, what in some instances GE bring and will be on the GE’s operational management through and benefits from the back up of GE’s strength all over the world. So I think, it’s a strong set of assets in hand and we’ll see where it goes as it goes. But again, nothing…

Nicolas Tissot: I would say, you are right in distinguishing the new JV compared to the others, I mean, that’s the one which I’m glad the most national interest staff and also which have some specifics in terms of governance targeted exit and so on.

Patrick Kron : And that’s okay, we’ll share with you by the way at the Shareholders Meeting the details of how much is invested in each of these JVs and so you have the full view. On the signaling, we have GE has indicated that it’s a double-digit number. I have no reasons to make any additional comment. We have made a due diligence and we have concluded this due diligence with the agreement with GE which allowed us to sign. We have not given a public guidance so far on the synergies. We have some ideas, but we share it with ourselves first and then we’ll share it with you. Concerning the load of the transport activities, yes, we can have some pockets of underactivity here and there and for instance, we have in Belfort some load issues and we are having some chomage partiel, some specific measures in order to reduce the time of a temporary reduction of working hours and this can happen here and there. So, again, our job is to feed the factories under reasonable conditions and if we cannot, typically, what happens in Barcelona, in UK, in Canada, we adapt and this is why we have had in the first half higher than recurrent, I would say, restructuring measures. So, – but again, I think that, if you compare us with the number of our international peers, I don’t think that we are at the worst position in terms of internationalism if I may say so and in terms of global footprint. We have a strong European base, but, at the same time, big activity in Europe as well.

Nicolas Tissot: Yes, on the liquidity, the future liquidity of transport, we will keep on applying a pretty conservative policy in keeping significant cash on the balance sheet. I think, it’s a little bit too early to commit on an amount of early reimbursement, but our policy will still be to maintain significant cash and cash equivalents in hands to handle the fluctuation of liquidity and I am sure continuity of business.

Patrick Kron : What we want, because we do not play hide and seek on the cash return to shareholders. What we want is to have the company properly deleveraged. We want it to have a strong balance sheet. We want this to have ample liquidity in hands and depending on the economic conditions, we expect to reimburse if it makes sense or don’t do if it doesn’t. Some bonds which we come at maturity in the coming volume.

Nicolas Tissot: You will see the picture assemble also with the file of the Shareholders Meeting, because you will get more details and more numbers and just to mention an example of load of factory, we were in India about a month ago and we start to see contracts also in other countries being executed in – for example, our factory at Sri City in Metros.. We also use our Bangalore engineering center to deal with the contracts in Australia and so on. So, you really have to see the load on a global basis and we now – our job is really to allocate the load appropriately to deliver the contracts in the most competitive way.

Patrick Kron : Yes, questions?

Daniela Costa – Goldman Sachs: Thank you. It’s Daniela Costa Goldman Sachs. Two questions. One, just curious if you beat for the recent contracts that the Chinese won and the US some subways in Boston and in New York and if so, why do you think they got those contracts? And then, second question just more broadly, can you comment on tendering in transport on whether there are – what are the mega contracts that are out there to be decided at the moment? Thank you.

Patrick Kron : Thank you. Concerning the contract in the US won by CCNR or CSL, one of the two, it just become one, it will be simpler in terms of terminology. Basically, we didn’t participate in this tender. So I am not in a best position to comment. So, if, I guess, they won, because they were the cheapest and the product they were proposing was the best. But we didn’t participate in this tender. Concerning the mega contracts, we still have a negative funnel, but I am not having big projects which are coming in the Middle East. We have a number of active regions, but there is no, we are not targeting €4 billion plus contracts in the coming weeks. So this is not in our radar screen, but there are a lot. I mean, as I said, the urban transportation, very active, signaling, very active. Services, very active. So these are the areas and would not qualify more and you know that we have been selected for instance in Saudi Arabia for three out of the six lines in Riyadh. There are other cities which are going to be equipped in this area. We just won a tramway, a comprehensive tramway system in Qatar for the new City of Lusail. So this is the type of project which in my view is going to be repeated. Thank you.

Gerard Chemit – Nippon Life: Gerard Chemit from Nippon Life. A quick question about rating, credit rating.

Nicolas Tissot: Rating.

Patrick Kron : Rating, okay. I understand it’s breaking.

Nicolas Tissot: No, sorry.

Gerard Chemit – Nippon Life: Do we need to understand by the fact that you want and the liquidity, strong balance sheet deleveraging that you will target an investment grade rating as that the deal is completed and possibly, probably improve your credit rating?

Patrick Kron : Well, what want is to have a strong balance sheet, ample liquidity and the consequence to return an adequate level of cash to the shareholders. We have initiated discussions with the rating agencies, but as you know, I am not going to comment. So when we will make the efficacies announcements, they will position themselves and I don’t want to speculate on what is going to happen. But again, we want to – we wanted have the balance sheet necessary to address any type of business events of the business life. We want to have a possibility to move et cetera. At the same time, we mentioned the competitor of us who is not just be below us and win contracts sometimes against us. So, I mean, it’s not that simple. But again, we want the new Alstom to be in a situation which will give no headaches to anybody. Already enough opportunities to get headaches on business matters. I don’t want to add others. There is a question from the teleconference from Andrew Carter. So, Andrew, if you want.

Andrew Carter – RBC Capital Markets : Yes, morning and thank you for the opportunity. I had a couple of questions. The first one was just about, when you are going to tell us about the cash return? It wasn’t entirely clearly from the comments and from the presentation whether that would be in December or whether it would be with the sort of the biggest Shareholder Meeting, which I assume with the General Meeting, which I assume would be middle of next year. So that was question one. I think the second one was, in terms of the bonding facilities that new Alstom will require and the €7 billion was perhaps a little bit higher than what I was thinking. Do you envisage to the company of new Alstom size would be able to access bonding lines on pretty similar terms to what Alstom has been able to historically? I am thinking, guessing particular about cash collateralization and also cost and then, I apologize if I missed it, but I didn’t see in the presentation an update on sort of the percentage of transport sales into service and also into signaling. I wondered if you could just run through that and give us a bit of an idea as, how much I am getting higher than margins are in service and also in signaling?

Patrick Kron : Okay. Thank you, Andrew. Sorry for the lack of clarity on your first question. The – what I indicated is that we would like to provide the shareholders with the necessary elements to decide on whether they support – or don’t support the deal. This means that before the end of before the Shareholders Meeting of December the 19th we will provide you with some guidance on what is expected to happen in terms of cash returns. So, therefore, the answer to your question, yes, this we are talking about the upcoming Shareholders Meeting and not any future ones. The second comment is bonding lines, first of all we received from all our banks the corresponding waivers in order transfer what is currently applied to the new system. So that’s transitory condition, so life continues and there is no disruption in the system. We’ll obviously rely on bonding lines and the fact that the split of activities are that unchanged the need effect on transport in terms of bonding lines. And I frankly have no expectation of any deterioration of the conditions on which we take. And the collateral and the cash collateral and/or if I may say, you remind me of very old stories that we all forgot, both you and me of what happened in 2003, so that the issue is not how do we authorize. The net, the debt, the issue now we deal with the proceeds. It’s something which is a little bit new for all of us, at least for me, this is why it takes me some time to provide you with clear answers to fair questions you may have, but, okay please the cash collateral is not in the picture. The third question is on the split. I told you that we have around 20% of the orders in average over the recent periods which were service-related. I looked – and this is ups and downs and because where you get to be contracted in service it increases the number. If we look at Alstom Transport over the last year 2013-2014, the situation is quite simple and we had around 20% of service and around 20% of signaling. The rest being rolling stock or holding stock within systems. And that I am talking obviously, before the €400 million which is going to come from GE in the signaling business of course. Maybe a question in the room, thank year-over-year, Andrew, maybe a question in the room, yes. Take the last one.

Alfred Glaser – Oddo Securities: Right, Alfred Glaser from Oddo. I want to ask you about free cash flow in the first half. Could you give us some number for transport including interest and tax payments as well? And, your guidance for future free cash flow, is this net income conversion into free cash flow including interest and tax or is it excluding interest and tax? And my second question relates to the joint ventures with GE. Now that you have signed the agreements, could you give us more details on the put option exactly and other clauses that exists in terms of put or maybe call options that could exist regarding these JVs and what about the pricing in involved for your stakes? And last one on transport and acquisitions, you didn’t talk very much about acquisitions in this business in the future. What would be really your most interesting areas of business? You mentioned the attractiveness of signaling than transport service. Is there anything else why you would really put your money and…

Patrick Kron : Your money.

Alfred Glaser – Oddo Securities: Or avoid blood shedding.

Patrick Kron : Okay, thank you, thank you Alfred. First question, look, when you look at the continued operation numbers, all the numbers coming from the orders to the operating income make sense. If I may say the net results make less sense, because obviously, when you look at the net results of continued operation, it includes for instance all the interest which happened to be borne by the transport entity at the time of –during the period which has nothing to do is what will be the future period, plus proceeds. So that’s why – so that’s why we view the good guidance on the on the half year as being the fair one, being the free cash flow before this interest and taxes, because you could have for instance, all the debt borne by the transport activity. They won, today that doesn’t change anything to the fact that we are going to receive €12.35 billion of proceeds and that’s okay, so you know, so that was my remark. That’s why we gave you the guidance prior to financial expenses and tax on the transport part. When I look at the medium term, now I am talking about the global numbers, I am talking about the net results transforming into free cash flow. On the JVs, on the JVs, we will give you the comprehensive details of all the JVs agreements and the numbers how much is invested in JV one, how much invested in JV two, et cetera with the Shareholder Meeting. Frankly, there is no much more under the sky that’s what we have communicated from day one which is the detail – which is basically that we get liquidity rights and we get the flow. This flow being pre-priced with an escalation and we have specific windows in this exercise of the puts. GE has no call on our share in the JVs except in some specific conditions. Three, again, as I said, if there were some sales, IPO, whatever there are also other liquidity rights. But basically, if I may say, what we told you in June is obviously still there. We have – we invest in the JVs. We have an upside potential if the JVs overperform. We have a flow and the protection against capital losses and again all these would be detailed when we show the – when we’ll call for the Shareholders Meeting. To your last point, I am sorry, the first to where would we invest? I already mentioned that, I said, we are nowhere in a must do mode. What we look with more interest is signaling service and again, on the other areas, the idea is to check, whether one plus one makes more than two. I told you that the German example doesn’t answer positively to this question. If there is a small business to buy, in what place which gives a low cost base, gives us a better position on the specific product in which there is a role our racket et cetera, we’ll look, but again, this is not something do we have to rush and do to more if there are opportunities we look. Quinn Andrea [Ph] you have the last one.

Unidentified Analyst : Thank you very much. Just a quick follow-up on the put options. Will the exercise stuff require again the French foreign investment authorization?

Patrick Kron : It’s decided by the board and all the agreements which are the tripartite agreements between state, Alstom and GE, signed by the three parties include this put option. So it could be the both to decide

Unidentified Analyst : So they wouldn’t fall on, because they are French national assets or…

Patrick Kron : If there were a problem with the put, it would not have been agreed as part of the global agreement and for me, it was very important to have this protection because I consider that, okay, we’ll have the benefit of being part of three great core enterprises, the French joint ventures, but at the same time, we’ve got the protection against losses. We have a flow and we have a liquidity right. So, I think that the interest of Alstom shareholders are fairly protected and from GE’s standpoint from day one, it was the agreement stated that what he is looking for is – a deal which will not compromise the original idea of the merits of the industrial and strategic merits of the combination, which is not the case, it is not compromised, because basically, the operational management will be under GE’s control. At Alstom, we share, we’ll have the corresponding rights in terms of governments et cetera and had no doubt that the managerial skills that exists in Alstom in businesses in which GE is even not present or smaller than we are will massively contribute to the way this business is going to be run as we move ahead.

Unidentified Analyst : The second question on M&A to clarify, you said you don’t have any big plans, but there are two ways for companies to run a balance sheet that can pay or keep some cash in case they have a big idea or I am going to ask shareholders if I have a big idea to give some cash.

Patrick Kron : So, you will see on the distribution levels, whether we are on option A and option B.

Unidentified Analyst : Okay, thank you.

Patrick Kron : Thank you very much. Okay, that kind of answered all questions. I think, I’ll keep some for the future meetings to have together. Look, ladies and gentlemen, thank you for participating physically here in London. Thank you for being at our call. Again, all this is going to be – or this has been registered and will be accessible and Nicolas and (inaudible) we are absolutely at your disposal to satisfy any additional questions we may have and that we can answer. Thank you very much.