H2 20/21

May 11, 2021

Ladies and gentlemen, welcome to the Alstom Conference Call. I will now hand over to Henri Poupar Lafarge. Sir, please go ahead. Good morning. Good morning, everybody. Welcome to our full year results Conference call for the fiscal year ending March 21. We are going to go through the classical agenda, Starting by the 2021 highlights, which I will detail now. If you see the slides, here they come. So in terms of Global takeaway from this year, which has been, by any means, a very exceptional year for Alstom. It's To all the perimeter before the integration of Bombardier, we are fully in line with the guidance that we gave to you at the time Of the capital increase a few months ago, I just remind you what were these guidance. First, we have a book to bill ratio, which is above 1%. Clearly, we told you, I think, back in September that, yes, the first half It was relatively soft in terms of order intake, but the second half would be much better. And that's what has happened, particularly during the Q4 with A large number of projects which have been awarded at the time. And by the way, some of them which have been awarded would only be booked During 2021, 2022, so the year 2021, 2022 is also starting on a very good pace. Sales At €7,700,000,000 also in line with our guidance, a short decline on an organic basis as compared Last year, worth noting that this decrease has been recorded during the Q1 Of the year on, but the second half of the year was showing an increase as compared to last year despite, as you can imagine, some continuous Slow down because of the COVID. Even during H2, we had in service notably a little bit of downside pressure. But overall, we are continuing to execute our projects and our backlog, and this is one of the good satisfaction of the year, To be very clear, our execution in the Axsome scope, in the Axsome perimeter has been extremely Sound, I would say, for our backlog, which has enabled us to record an adjusted EBIT of 8%. Actually, if look at the margin and increase as compared to last year, despite the situation, despite the tension which has been Here on our supply chain during the first part of the year. Finally, last but not least, positive free cash flow. Yes, still impacted by the ramp up of some of our rolling stock contract, still impacted by the suboptimal Supply chain due to its disruption because of the COVID, but still, as announced previously, a positive free cash flow From the Amsterdam perimeter. Now talking about Bombardier and the acquisition, Which has occurred on the 1st of Feb, as you know. The first Android Day, we are very positive integration. A lot of work I've been done. I will come back to that. But clearly, the first step of our integration is now being secured With the new organization in place, people new processes in place, people working, already some Concrete results of this integration in terms of technology, in terms of standards, in terms of offers and solutions. Stepping back on the market, good market outlook. We have seen since we talked last time, Again, a new announcement and in particular, the Biden plan, which has been announced recently, which is supporting rail transportation. Last but not least again. EAG is still at the heart of our strategy, and we made a lot of progress on EAG. So overall, I would say a very exceptional year, a very good year, which opens up also a lot of potential for the future. I will not go back on the figures that I said. So €9,100,000,000 of orders. So we are actually at a book to bill above 1, Including the 2 months of Bombardier, both in orders and in sales, it's at €8,800,000,000 So again, an increase a special increase, a slight decrease on an organic basis. EBIT at €645,000,000 adjusted EBIT, Above last year in absolute numbers, above as well last year in margin for the Alstom scope, With BT contribution at 2.7%, in line with our expectations. As you know, we are expecting the backlog of BT to generate this kind of order of magnitude. Very negative cash flow for the year, positive for Alstom, negative for Bombardier, not surprisingly. We knew that Bombardier, an extremely stressed balance sheet and in particular, in terms of payable, which we have unwinded during the 2nd part of the quarter. So we come up with a more normative way, but we'll discuss that later on. Net profit, adjusted net profit impacted By not only by the increase of the EBIT, but also which is more than compensated by some exceptional items and in particular, the cost Of the merger with Bombardier, which is there, and a few write offs. Laurent will detail the P and L later on. Backlog, euros 74,500,000,000 record high backlog record high 4 Axtom perimeter, Which is now supplemented by Bombardier backlog. But overall, I would say, an extremely sound backlog. In terms of ESG, we are continuing to work. This is at the heart of our strategy. As you know, not only our solutions Contribute to the climate change challenge, but also, I would say, the way we need to Operator, the way we are producing our trains and equipment have to improve year after year. So you see here a few items. The first one, which is the energy reduction within our solutions. So The trends which are using less and less energy, 21.7% reduction. We have also committed to power all our sites from renewable power, so 60% of electricity is from renewable power now. And we are designing our trends using eco design, which include not only energy saving but recyclability and a number of features. EHS is continuing to improve. I mean, we have improved our EHS records for years on years. So now we are Still improving this situation year after year, increasing gender diversity, even though we are far from our objective and far from what We can do, but still increasing gender diversity year after year. And finally, this year, we have been, I would say, included as a top employer in most of our main We see, of course, a great satisfaction. Foundation, supplier, so as you can see, all indicators are going in the right BT, Bombardier, as I was saying, very, very good momentum. Frankly, I'm positively surprised and positively impressed By the speed of our integration with Bombardier, I guess the cultural fit was there. The willingness of Our new colleague from Bombardier to embrace have some values was totally there, and therefore, it has helped us to really put in place Very happily. We are helped by the good support from our stakeholders and in The customers which have welcomed this acquisition, and some of them have already expressed positively the impact The early impact, I would say, of Faststorm integration. So that's a very good news. Projects, we have Finalized the project Deep Dive. We have completed it. In demand, there are no big Surprised, we knew what were the difficulties. On the positive side, there is no new technological difficulties that we have That we could have difficulties to overcome. So I think that, as I explained in the past, There's nothing like skyrocketing, but there were a number of managerial difficulties, problems of Management of projects, delays and so forth that we need to solve, quality as well is not at the level where it should be. So we have Continuously worked on the deep dive, but more importantly, we have started to work on solving these issues. And again, I'm happy to report that some of the projects are already starting to move in the right direction, and this has been recognized by customers. IT, I mean, this is just a symbol of the fact that now we are one company. We are working on the same processes, and we are starting to work On the same tools, even though it will take a few years for everybody to be fully, fully on the same page. We are This early discovery phase, I would say, enables us to confirm all our guidance in terms of synergies and in terms of outlook. So we confirm what we said at the time of the acquisition, both in terms of synergies as well as in terms of At EPS Accretion for the next 2 years. I will go relatively fast On the market, you all know the situation. There is strong boost towards sustainable mobility and therefore, towards rail. On all continents, we have quoted a few examples. Of course, in Europe, with a goal of doubling High speed, rail traffic, doubling freight. Of course, a strong push towards hydrogen. I mean, There were a number of key elements during this year. One of them is definitively the fact that Hydrogen has gained a lot of momentum, And our hydrocarbon trends are now recognized as being one of the solution for the Decarbonization of Mobility. The Biden plan, the jobs and rescue plan in the U. S, Very, very impressive numbers, which will sustain the market in the coming years. It will take 12 or 18 months to really translate into orders, but this is a very, very nice pipeline of investment going forward. Another example, India, where we are extremely present. You know that India is one of our strong footprint, even more so now with Bombardier. And he has well very, very strong announcement. So overall, a very sound market for the years to come. Coming back to a few of our indicators. Orders intake, €9,100,000,000 including €700,000,000 from ex Bombardier. Very sound Therefore, commercial activity, very good activities in Signaling and Services, good About 40%, which is a good ratio. Apart from that, relatively Well spread order intake in our different regions with, of course, a predominance of Europe, Particularly on Q4, the last orders which have been announced, a number of orders have been announced on Europe on the back of the continuation of investment plans, Which again confirm what I told you several times that despite the decrease in ridership of some of our operators, They have maintained their investment plan, and we've seen that in very diverse countries such as Germany, Spain, Italy, Denmark, Countries where we have recorded a very large order. So Europe has been a stronger this year. You can see that on this slide. So some nice picture, which shows Europe, Spain, again, Germany, Boost in double deckers as well as in Tram, France as well with Toulouse. Interestingly, Turnkey business is coming back or coming to Europe. Europe was not a turnkey market particularly. It was more the Middle East or Latin America. But we have recorded 2 dues. And as you know, we have also been awarded the Metro of A10, which will be recorded in the coming months. And last but not least, of course, the METR in the U. S, which is a very nice order, which also give us a possibility to design a new train, which It will be very useful for the coming investment plan, which is being launched in the U. S. Asia is still quite buoyant With Taipei and of course, India, extremely also buoyant. In terms of sales performance and project execution, no surprise. We have a nice Growth during H2 as compared to last year as expected. So we are back on our growth pattern. System is going down quite sharply. I mean, no surprise at all. It is putting some pressure on our working capital, as we I explained to you in the past, and this is definitively the same analysis of the very large contract in the Middle East, Whether we talk about Dubai, which is now totally completed or Riyadh, these are projects which are behind us now. And there was they were not replaced by similar projects in the Middle East. Middle East will come back, but there was a long period of Low market level in the Middle East, and now systems are more in Asia, in Europe and, of course, in Canada, in Montreal, where have a very large metro system. We have, of Of course, done a very large acquisition with Bombardier. But in addition, we want to continue to do some very targeted focused acquisition, Mostly targeting technology, whether it's some particular components such as brakes for HIBRE and Flaretec, Cybersecurity with a partnership with Silus, digital technology with BNC in the U. S. On the West Coast. We are continuing to, I would say, hence, our position in Hydrogen with the acquisition of Helion in France on fuel sales. So as you know, we A strong believer of hydrogen trends, and we need to continue to build our capabilities. It's Something to fuel sales, but in a trend, it cannot be fuel sales which are totally on the shelf. So we need to have our own technology, own capabilities to integrate Fuel cell technology in our trends. Last but not least, of course, Service is an important business for us, and we are continuing To increase geographically our geographical presence in service. Innovation, 2 smarter and greener, as we said, 2 main pillars of our innovation Capabilities are in the strategy. Hydrogen, I talked a lot about it, but we have been awarded some trends in France and in Italy, Which then supplement the order that we have already in Germany. So again, the important point is that now all countries are going in that direction. We have a discussion in the U. K. We have discussions in Spain as well. So we really believe that hydrogen trend will be one of the solution going forward To replace all the diesel fleet. Something that we have talked less about, which is the autonomous train, which is one of our main, I would say objective in terms of digitalization. Of course, we have some automated metros, but we need to go to main lines. And we have some milestones which have been achieved there. For example, the first locomotive in autonomy in France, So I'm Automotive Shunting in the Netherlands. So we are moving HTO for regional trends in Germany where we have been selected To launch this prototype in Germany, so we are moving in that direction. One thing which is extremely interesting for us is, as you know, The signaling market in Germany is probably the most important market going forward. We were not so present in Germany, Particularly on the track side, we are present on the onboard equipment but not on the track side. And we have been awarded the first Line for digital interlocking for Coburg for Deutsche Bank. And this is extremely key for our penetration on this Very, very promising market. So I think it was worth noting, in addition, we have been selected as well by SNCF in France, but this is more in continuation, I would say, Of our previous contracts. ESG, I was mentioning a few examples. So you have here on the slides the fact that we definitively want to comply with all our commitments Regarding decarbonization of the economy, we have been included in the climate A list From CDP, we have in the Dow Jones Sustainable Index as well. We are supporting the community. We are putting solar panels in our factories in India Because we want also to produce our own electricity, not only to buy renewable electricity, but also to produce our own electricity. So we are definitely investing more and more On ESG topics. I will now hand over to Laurent, who will detail for you the financial results of the year. Thank you. Up to you, Laurent. Thank you, Henri. Good morning, everyone. So let's start to review our profitability trajectories for 2021, first highlighting the very positive uplift Of our adjusted EBIT margin on our Alstom legacy perimeter, up to 8% compared to 7.7%. The key drivers, the first one has been our positive gross margin evolution, which has been backed by strong project execution, But as well, our continuous effort on operational excellence initiatives, such as leveraging our best cost countries for sourcing And Engineering. Overall, I'm pleased to confirm that our average backlog margin continue to improve in 2021. 2nd drivers has been our cost structures with and our R and D, which is overall stable despite COVID-nineteen impact On volume. And finally, as you see, Cascaux, our single engine in China, continues to deliver nicely. All in, we are on adjusted EBIT for the group at 7.3%, including 2 months contribution of BT of 2.7 percent, and this consistent with 2020 recurring performance. So moving to our detailed P and L and going straight below adjusted EBIT. We have limited restructuring charge At €14,000,000 we booked as well in a number of one off items, including 117 €1,000,000 of charges related to the Bombardier Transportation acquisition and as well €84,000,000 PPA impact, Which are mainly driven by BT acquisition. COVID cost recorded below adjusted EBIT amounted to 68 €1,000,000 and as you know, all expense in our H1 2021. Finally, we had our Usual profit mechanical reversal to our EBIT of our Chinese JV at minus €50,000,000 including CASCO And as well, our ex BT Rolling Stock JVs in China, leading to an EBIT of EUR 300,000,000. Below EBIT, our ETR stand at 27%, financial cost at €68,000,000 and contribution from Our Equity Investees at €83,000,000 slightly down compared to last year due to lower TMH Contribution. So all in, adjusted profit at €301,000,000 putting aside the PPA impact after tax €61,000,000 Moving to the cash. First of We are very pleased by the positive performance on Alstom Legacy, in line with our guidance, and this despite the very specific COVID impact. And all together, €48,000,000 for this year and after a very positive free cash flow of €301,000,000 in the second half of twenty twenty one. So a €1,000,000 in the second half of twenty twenty one, so a very strong H2 in terms of cash performance for ex For Alstom Legacy Perimeters. In terms of drivers, we had, as expected, Increased by around €240,000,000 which is linked to our rolling stock ramp up and overall contain our CapEx to around €150,000,000 Moving to the €150,000,000 Moving to the free cash flow usage for former Bombardier Transportation in February March €750,000,000 This has mainly been driven by one off items of around €550,000,000 Specifically, suppliers repayment and reduction of working capital instruments, the rest being related to working capital and cost phasing. All in, free cash flow for this year at minus €700,000,000 driven by this Bombardier Transportation Cash usage in Feb March. Moving to the net debt situation. End of March, standing at around minus €900,000,000 So starting from the end of September at €8.40,000,000 what are the key drivers of this evolution? Number 1, Our capital increase of EUR 5,100,000,000 the net proceeds of BT acquisition at EUR 4.4 2nd, the BT net debt at acquisition date on the Jan 29 at around 1.4 3rd, obviously, the free cash movement I was commenting for the second half of Alstom legacy and 2 months of ex BT. And finally, as you see, some evolution in terms of M and A that Henri has been commenting. And as the last point, we have also reclassified a number of working capital instruments related to factoring And 3rd party advanced payment arrangement in net debt for a total amount of €453,000,000 All of that leading to our net debt end of March at around minus €900,000,000 So turning to the Bombardier Transportation Project Reviews, as mentioned by Henri, we have implemented, as of Jan 29, a full task force reviewing in-depth 120 projects of BT legacy perimeter representing 70% of the total backlog, and we are now deploying Comprehensive action plan on 3 dimension. Number 1, technical and engineering, which are focusing, obviously, on the development side Of the project. 2nd, industrial and supply chain, ensuring industrialization and ramp up, which She's definitively aware of us. And of course, reinforcing the commercial and customer relationships on this project. Financially speaking, this review led us to build additional provision for risk of contract Of around €630,000,000 incremental to the €450,000,000 which has been A good fall by Bombardier Inc. In December closing, leading to a total, as you see, of provision for risk on contract Of around €1,100,000,000 considered in our opening balance sheet. So project stabilization Remains obviously a key priority moving forward. We understand now the challenges in-depth, and we are deploying mitigation across the board. So moving to liquidity status. We have as March 21, strong liquidity position, Exceeding €4,500,000,000 including €1,500,000,000 of RCF and 1.75 €1,000,000,000 of short term RCF facilities, replacing the Alstom and BT existing RCF As well in the context of COVID-nineteen, which are both fully undrawn, we have bonds amounting to EUR 1.45 €1,000,000,000 including a 750 bond issued in Jan at a record coupon rate of 0%. And our target, Obviously, it remains to stay in a strong Baa2 rating. Finally, in terms For dividends, the Board of Directors will propose to the General Assembly a €0.25 dividend per share, Resulting in a 31% payout ratio. Henri, back to you for the conclusion. Thank you, Laurent. So as a general conclusion, so if you look backwards, again, To meet all our own targets from an Athens scope standpoint, on the back Good market rebound at the end of the year. So a very, very good year indeed. We are now we are on our way to integrate Bombardier. We have now, I would say again, put in place all the necessary processes and routines to manage satisfactorily The project of Bombardier, and we don't ignore the challenges, but I think we are up to them. We expect going forward a very good market momentum for the coming years, starting this year, but Even more importantly, on the years after. We imagine that You will have a lot of questions, and we'll open the floor for Q and A. We will post a Capital Market Day Beginning of July, to give you more perspective on the mid- to long term, we need to as we did, I think, a 2 years ago with Astom in Motion, so we need to have a complete plan to present to you at the time. So we'll give you further update beginning of July on what should be our trajectory going forward. But having said that, I'm more than happy to answer with Laurent to any questions you may have now. So thank you very much, and we'll open the floor for Q and A session. Thanks a lot. I will now give the floor to Ms. Daniela Costa from the company Goldman Sachs. Madam, go ahead. Your line is open. Hi, good morning. Thanks for taking my question. I have 3, if I may. But first one, I wanted to ask you regarding What you talked about in terms of unwind of working capital at Bombardier. And I guess before you had sized it So from the Bombardier accounts, roughly EUR 1,300,000,000 between factoring, extended payment terms and customer advances. And I wanted to understand, clarify what is the right number to compare that with. Is that the EUR 450,000,000 of reclassification of working capital instruments? I think you've also mentioned now during the speech EUR 550,000,000 of one offs. So based on that, is there More unwind that you might have to do and how will you go about it? That's my first question, and I'll ask the others after maybe. Thank you for the question, Daniel. I may leave the floor to Laurent to answer to these questions. Yes. Thank you, Daniela, for this question. So in a nutshell, we have classified EUR 4.50 €1,000,000 as debt out of the €1,330,000,000 you are referring to, which are referring to a specific arrangement with the customers And with the factoring, and factoring, by the way, has been repaid. So that's €450,000,000 which is part of debt. On the rest, we have reduced the reverse factoring to some extent as well, and a part of it is in advance payment and will continue its life along the projects. So bottom line, out of the €1,300,000,000 €450,000,000 As been classified in-depth, around 110, 1000000 has been reduced, and the rest will be unwided Following the life of the project, including the reverse factoring, which will be continuing because we feel that this is something which is positive in terms of our supply chain management. In terms of our Supply Chain Management. Okay. I will now give the floor to Mr. Pilar Maupinier from the company UBS. Sir, go ahead. Your line is open. Thank you. Good morning. Thanks for taking my questions. I wanted to ask about the Extra provisions that you booked, the BRL 632,000,000 on the Barco Bumpati Transportation List. And you have a little bit of an indication of the timing of the different projects that you're basically referring to on these provisions. Is there any particular year that we can see a bigger allocation of provisions as we understand? Thank you. Thank you for your question. First of all, this amount of provision is Consistent with our previous guidance in terms of the backlog of Bombardier, so we knew that there were We had a different view, let's say, than Bombardier on its own backlog. So this is the transition into numbers of this different view. These they will be unwinded not to 0. We always have. And if you look at Alstom in the past, We always have a certain level of provisions, of course, so it will decrease to a more normative level over 1 to 2 years. But it will not go to 0, of course. We still have a number of provisions. I call you that these provisions are not only Loss making for loss making, but also general provisions on contracts. So it's you see the amount for Alstom was €500,000 roughly €500,000,000 which we can The recurring level. Laurent, you want to add something here? No, everything is clear. Thank you. And I will now give the floor to Mr. Alexander Virgo from the company Bank of America. Sir, go ahead. Your line is open. Thanks very much, and good morning to everyone. I wondered maybe you could talk a little bit about the pipeline of order intake And how things look over the near term, like 12 months or so. And particularly, maybe you could answer the question As to why you've chosen providing full year guidance until the Capital Markets Day? Thank you. Well, in terms thank you for the question. We see a good order pipeline. There are a number of projects which are being discussed. It's clear that order intake is always a little bit volatile. I mean, we there are very large orders to come, like the various speed Trends in the U. K, for example, we have also some large orders to come in Mexico. We have large orders to come in Canada. We have So of course, it depends on our commercial successes. That may be why we are not necessarily giving today guidance On this perspective, but I can tell you that we are very positive on the Commerford momentum. And we know more in a few of course, in a few months from now, but that's the long term trend is extremely positive. It's a very, very large sustained pipeline. I mean, our can quote we are also waiting orders in Israel, for example. So we have A number of good commercial to come. And I will now give the floor to Mr. Gael Dubre from the company Deutsche Bank. Sir, go ahead. Your line is open. Yes. Thanks very much. Good morning, everybody. So I have a few questions, please. The first one is, I mean, we've been now 4 months into the consolidation of Bombardier. So how do you see the integration process Progressing, I know it is early days, but what surprised you the most in a negative and in a positive way? So that's Question number 1. Question number 2 is about the net debt position of Bombardier. What drove the sort of €400,000,000 increase in Bombardier's net debt to €1,400,000,000 Between December January. And the third question is about your Future free cash flow generation, given the need to continue to disengage from Some of Bombardier's working capital financing initiatives and all the project charges already booked. Could you Help me understand how potentially significant disconnect between cash flows and profit Might be in the coming year or in the coming years and how long it might take for cash flows to So you will connect with the P and L. Thank you for the questions. So I will take the first one, And I will leave next one for Laurent. On the first one, yes, we have been now with our new colleagues for A few months. And it's true that we have some positive and negative surprises. The very first positive surprise is the very good integration. And I would say, I know it's a very It's like a buzzword nowadays, but I feel that the Bombardier teams are extremely resilient. They have been Under a very deep crisis at in Bombardier Group for years years, and they still have a lot of energies. They want to rebound. They are extremely enthusiastic to embrace the new challenges, to embrace the new company. So there was no Negative feeling about leaving Bombardier and moving to Alstom. On the contrary, and we have made some surveys. And you know we have more than 90% of the employees of ex Bombardier being positive on the merger, not only from a strategic standpoint, Also for their own individual perspective, so I think it's extremely good. And that I think was And that has helped us to work extremely fast, not only in terms of putting in place the organization, but indeed and this is the second very good Indeed, in terms of solutions, and we have already offered I was mentioning a tender in Mexico, for example, that we have offered where We are combining both Alstom and Bombardier solutions. We have already worked in India to improve some of the Bombardier projects With some of the Aston Technologies, the ability to combine the different subsystems with 1 each other has been much quicker Then I thought, and I think this is because people are really collaborating with each other. And really now on each of the tender, We are acting as if we had a combined portfolio. Of course, we need to rationalize it. We need to improve the interfaces. We need to Maybe discontinue some of the redundant technologies. But in the main now, when we are doing a tender, we are already benefiting from the Very, very large portfolio. On the more negative side, and this It's indeed a feeling of disorganization, which was very profound. And I said that for the project, and I will repeat it again and again. I think that from a technological standpoint, our colleagues from Bombardier were absolutely competent, And there is no big technological problem. So there is no trends that will not be, I mean, handed over to the customers and 4th, I think that's we are far, far from this kind of situation where we have big technological problem. And already, we are helping, as I said, as some experts are helping I'd love to hear their technological issues, and there is nothing which is impossible to cure. But it's true that the project management, the management in general, was profoundly perturbed by the And we need to reinstall some basics in terms of stability, in terms of Long term perspective and not only a very short term perspective in our debt in day to day management. So I think this is something that the Bombardier colleagues themselves are welcoming, but this is something that takes some time. So I'm very confident that we'll achieve it, but it's true that the depth of the preservation in terms of management of the company From the Bombardier Group was probably higher than what I thought. Maybe Laurent on the more financial Thank you again for your questions. So on the net debt of ex BT as of Jan 29 of €1,400,000,000 We have 2 elements into it to get to your point. The debt as of end of December, which was in the range of EUR 9 €150,000,000 as we communicated, and we had cash flow usage of €450,000,000 In the month of January, which is chiefly related to working capital phasing. On your second point, which is more looking ahead, I can provide you some of the key moving parts We will have in the next years, definitively on the positive side, we see a very strong market traction, Which will, of course, generate down payment and progress payment, which will be, of course, Positive evolution. We definitively confirm as well our positive trend On the free cash flow generation on the Alstom legacy perimeter, on the kind of the other side of the equation, We will need indeed to unfold in terms of cash the risks on contract provision, and we may have as well Some impact in terms of working capital phasing on the ex Montmartier perimeter. So these are So 4 moving parts, and we'll provide you more colors on the netting of this moving part for 2021, 2022 and as well more important for The mid to long term in our Capital Market Day. And I will now give the floor to Mr. Thomas Tennyson from the company, Jefferies. Sir, go ahead. Your line is open. Yes, good morning, everybody. I've got a question on the sort of the Due diligence part at Bombardier and what you've discovered so far in the review. I thought the 70% The 70% of acquired backlog that you've reviewed was an older target that you set in the past and I believe you're going through 100% review at the moment. This is that you're going to comment at the Capital Markets Day about Having reviewed the entire backlog and you will then be able to say whether there are further issues relative to what you've found so far? And the second question is on the U. S. Infrastructure programs. If you could elaborate a bit more of the announcement that you've heard so far on rolling But also maybe on signaling, you said you're positively surprised, but maybe you can go into a bit more detail here. And in relation to that, do you think your footprint In the U. S, it's sufficient given also obviously, Bombardier has a decent footprint there or do you think given the discussions that are currently happening and I know it's early days that you might have to Invest more into the footprint in the U. S. Thank you. Thank you for your question. To your first question, no, we have reviewed the entire backlog now. So what we give you as So the global picture with the amounts of provisions being booked and so forth, corresponds to 100% of the backlog, not 70%. So where we want to give you more color is on the outlook because we need to look at the comfortable momentum and how it translates Into our sales and profitability going forward. But in terms of now, I would say, the Due diligence on the past and the review of the past backlog, this is now behind us. I mean, what we are showing today to you with the entire backlog. In the U. S, yes, I mean, it's these are extremely large numbers. It's true that most of the investment will come to the infrastructure. As you know, there is The need to rejuvenate a lot, rehabilitate a lot the infrastructure in the U. S. We'll talk about bridges and Whether it's for road or for tracks, and that will consume the vast majority of the sums which have been announced. But still, the remaining portion is huge as compared to the current market situation, and this will go For Rynxok as well. And we expect not this year, not during the next 12 months because, of course, We need to translate that and Amtrak need to translate that into concrete orders, both on the main lines and on the urban side. On the Mainlines Direct List, Wamsak, on the urban side, through some co financing of projects, including PPP's project and so forth, A significant increase in the market. So this will be in 2 years, and of course, it will translate into sales the year after. So when it's significant, it should be a double digit increase of the market in the U. S. Related to these elements. And the question of the footprint is a good question. We have a very good footprint in the U. S, Already asked Tom, but even more importantly, with our new footprint, Bombardier footprint. Nevertheless, And you will probably see it. It's not big amounts, but we are investing in the U. S. On the back of the Buy American Act Because we have also a large footprint in Mexico. As you know, we have a large footprint in Canada coming from Bombardier. But the Buy American Act Pouches us to produce everything that we sell in the U. S. In the U. S, and we are fully compliant and embracing this Buy American Act. And therefore, for example, for the Metra project, which we have been awarded, we are investing in terms of capacity in the U. S. So It will not be a huge amount. We are talking tens of 1,000,000 of dollar. And as compared to the size of the market, it's not huge amount. But it's true that the future market will require some investment, mainly trigger on the back of the Buy American Rather than on a global perspective. Thank you. Next question? Just as a reminder, only one question is allowed. I will now give the floor to Ms. Iris Brang, Tomtocompany Credit Suisse. Madam, go ahead. Your line is open. Thank you for taking my question. Can I have a follow-up on the provisions that have been taken? [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] And in the past, you've mentioned that some portion of the backlog of on body transportation is of low margin. And could you give an update on that? [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] And also on the provisions, are they mainly linked to the rolling stocks and any portion of that is linked to, for example, service and secondly, potentially? Olivier, to Laurent, on the split of provisions in the different product lines, the vast majority He is on holding stock. Could be 1 or 2 on signaling, but frankly, The signaling portfolio of Bombardier was same, and we had 1 or 2 elements. The vast, Vast majority is on rolling stock. And then on the unwinding, Laurent? Yes. So On the unwinding of this provision and overall on the backlog, so it will be an unwinding which will be over the next around 3 years, I would say related to the rolling stock deliveries, which is very much, as we indicated, rolling stock driven. In terms of your the update on the backlog overall, Henri said that there is no major evolution in terms of the way we look at the backlog From this deep dive phase, so we are in the same kind of ballpark overall. And I will now give the floor to Mr. Martin Wilkie from the company Citi. Sir, go ahead. Your line is open. Yes. Thank you. Good morning. It's Martin from Citi. Just one question coming back to the cash Hello. You talked about some of the unwinds and reclassifications and so forth. But another part was there was an impression that there was some Excess contract assets at Bombardier, so some pending cash, which doesn't look like it appears in your balance sheet. I know there are accounting differences. But just if you can talk about Has that cash been received? Or is it no longer expected to be received? Or is it now showing a different line somewhere in the balance sheet? Thank you. Yes. Laurent, you can take this one. Yes. So Martin, thanks for your question. So this has been Overall considered, of course, in the overall balance sheet we have, this is something that we will as well provide you as colors, Martin, terms of the key moving part of the cash moving forward, I have mentioned we will have some working capital phasing, which are Related to contract assets. So this is something where we'll be able to provide you more colors early July in our Capital Market Day. Yes. Indeed, as you know, there were some stocks and inventories that are kind of finished goods, and it's true that there are a lot of trains sitting on the Yes, of Bombardier to be expedited, and this will generate some cash. On the other hand, we have Some liabilities are in front of that. So overall, it's relatively balanced. By the way, I should have mentioned, it makes me think that One of the good news in terms of supply chain, it's true that in terms of inventories, the level of inventories of mortgages is relatively low. And we have discovered that they have a nice Management of their inventories, and I think that's beyond, I would say, a number of, I would say, artificial measures, so that supplier payment. But beyond that, a physical standpoint, they had some nice inventory management, which we could apply to Alstom as well. So some good practice as well. Next question? I will now give the floor to Mr. Jonathan Mardi from the company Exane. Sir, go ahead. Your line is open. Thank you. Good morning. Thanks for asking the question. Just back to the previous question briefly. I think the magnitude of those of that cash trapped on the balance sheet has been discussed before. As you remember, a number of 1,000,000,000 or even in excess of 1,000,000,000 without a huge amount of detail, but I mean, it seems to roughly offset the off balance sheet financing that you also inherited. Is it still the view that the magnitude is there? And maybe as well, you mentioned it will take 3 years for the provisions to normalize. What about this cash trapped on the balance sheet in finished goods? Is that a 3 year story? Or could we actually see that coming in Sooner given that a lot of these trends are finished or close to being finished. And also just a follow-up on the deal related remedies, Are we close to that all being done now? Or how much longer will that be on the long term? So thank you, John, for your question. On the Excess inventories, indeed, this is something which will be unfolding in the next 2 years or so, Related mainly as well to the UK situation, need to bear in mind that a part of this finished good or inventories Has been already paid by the customers. And so when you deliver a car, you don't have 100% of the car value, but a fraction of it. So this is something which will be as well, I would say, a positive in the next 2 years or so in terms of excess inventory Unfolding. And to the €1,300,000,000 of the unwind of the working capital, I'm back to the question of Daniela, the first question. So just to recap, €450,000,000 has been taken into debt, and we have €650,000,000 which are left in our balance sheet. €400,000,000 of reverse factoring, which we will continue because we feel that this is a competitive tool For our supply chain, so we'll continue and adapt. And EUR 250,000,000 which are specific arrangement, which are of advanced payment With one of our key customers that we will continue as well. Thank you. I will now give the floor to Mr. Alastair Leslie from the company Societe Generale. Sir, go ahead. Your line is open. Yes. Hi, good morning. So you haven't given an initial guide for the fiscal year at this stage, but you do say the additional provisions you take at Bombardier are in line with And you've reconfirmed the double digit EPS accretion target as well by year 2. So just wondering, can you confirm the sort of trajectory of Bombardier margins well over the next couple of years is in line with your kind of original expectations as well. And should we maybe So a year 1 margin for Bombardier in line perhaps with the Q4 level, just to kind of help us anchor expectations over the next couple of months before The CMD in July. And then perhaps a follow-up question as well, just outside the review of the Bombardier backlog. Are there any situations where you've kind of identified some risks around pricing contract terms at Bombardier on pretendering activities Where there might be some form of legal commitment already to the customer? Thank you. Yes. So on the trajectories of the gross Margin of Bombardier, we are confirming very much the perspective that we have been Explaining, which is recoveries to a standard margin in the midterm, we do not see why we cannot achieve this. We need to unfold the kind of difficult project in the next 3 years, and the job will be essentially done in this time frame. And we are now benefiting as well from the technologies and the support of the full group to get a fix On these issues and get order intake with good quality and good margin. To your second point on the downside risks Moving ahead, we don't see any price pressure. I think there is a stability in terms of the overall competition background in the main. And in terms of TNCs as well, it's stable. There is no negative evolution. Of course, it depends standard by standard, region by region. But in the main, we do not see any downside pressure on these two aspects. Thank you. Next question. I will now give the floor to Mr. James Moore from the company Redburn. Sir, go ahead. Your line is open. Hi, everyone. I trust you're well. It's James from Redburn. Just going to the BT backlog, now you've reviewed 100%. Can you say what the margin is for the legacy BT Trains and Systems business in the backlog? Because that's clearly the area of risk that investors worry about. And what confidence can you give them that orders were not heavily discounted By parent trying to stay alive with advances. And the follow-up would be with all the many complex moving parts That you have laid out for the coming fiscal year and I know the outlook is coming, could you at least say if you expect positive free cash flow The whole group in this fiscal year. In terms of due diligence, we can confirm in the main what we Say that at the time of the acquisition that the overall margin in the backlog of Bouvardier is around 3% to 4%, And it's consistent with this number, which is, by the way, consistent with the 2 months profitability of 2.7 that we have recorded at the perimeter of Bombardier. So we are in this vicinity. In terms of backlog flow, as Laurent said, it's in the coming 2 to 3 years. I mean, The ballpark numbers are not different from what we have announced. Of course, project by project, pluses and minuses. We have booked some provisions on some projects and so forth, but this is no different from What we've seen what we announced in the past. In terms of cash flow generation, I think it's a we'll Tell you, at the CMD, there are pluses and minuses. We need to it will depend as well on down payments. So we need to review the Commer fully assumptions in terms of what could be the down payment of the year. I mean, as you can imagine, now with The size of the company, the amount of down payment, which is expected for 1 year, is very, very significant. So we need to Put that into one equation, and we'll let you know the consequences. And we will now take the last question. I will give the floor to Ms. Katie Self from The Moors Company, Morgan Stanley. Please go ahead. Your line is open. Hi, good morning. Thanks for taking my question. So yes, just a follow-up to James' question actually. I think as you said, a lot of different moving parts. But perhaps if we just take a step back and look at the bigger picture, In your view, has that €1,100,000,000 of provisions that you've now taken essentially covered everything, right? Does that really draw a line in the sand On the risk that people have been concerned about here. So that's kind of question A. And then if we just think conceptually, how long do you think about when you think That cash momentum at Bombardier coming through, how long could it be for that Bombardier cash to really become positive? Is this It allows To conclude a little bit on this subject and as you said, to step back a little bit. Yes, what we have done as a review of the project is Doing a line on the sand, and we don't expect at all to come back to you with any Further deterioration, this is what we have recorded, and that's what is needed absolutely and no more, I would say, To execute the contract. We and as well, if you step back a little bit, Considering the speed of the integration, considering what we do today, we believe that the turnaround of Bombardier will take 2 to 3 years. And during this time, we'll have some pressure on the margin. We'll have some pressure on cash, definitively. And we come back to a more sustainable profitability, sustainable level of cash generation In the next 2 to 3 years and from there, as you know, we are going to benefit from the High level of synergies that we are expecting. So thank you very much. I think it concludes our Q and A. So of course, we'll All and the IR team is all at your disposal for further questions during the day and later on. Thanks a lot.