EGM 2020

Oct 29, 2020

Slides

Ladies and gentlemen, welcome to the combined shareholders meeting milestone. I'll hand over to the combined ordinary and extraordinary general meeting of shareholders open. The current health contacts and the restrictions related to COVID-nineteen lead us exceptionally to hold this meeting behind closed doors at our registered office without the presence of shareholders and other persons entitled to attend. I therefore warmly thank all shareholders who have kindly agreed to log on to attend this meeting remotely. Sitting next to me, Mrs. Emmanuel Petrovic, General Counsel and Laurent Martinez, CFO. In accordance with the law, it's now up to me to set up the presiding offices. In view of the closed door conditions, I call for the functions of scrutineers, Mrs. Emmanuel Petrovic and Mr. Laurent Martinez, present at this assembly and who have accepted this function. I propose to appoint Mrs. Emmanuel Perrovic as the secretary to the presiding offices. And you have the floor. [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Thank you, Chairman. First of all, I would like to remind you that a special meeting of holders of shares with double voting rights was held this very morning. Over 99% of the shareholders voted to eliminate the double voting rights attached to the shares of your company with effect from date of the completion of the acquisition of Bombardier Transportation and provided that it is approved by this meeting. The agenda of this combined meeting is set out on Page 3 of the notice of meeting brochure on our website and sent to our shareholders. This agenda also appears in the various notices published in accordance with the law. The meeting will proceed as follows. Your Chairman will remind you of the main considerations of the operation of acquisitions of Bombardier Transportation and we will conduct a governance review in order to introduce you to the directors whose appointment has been submitted to your vote and the composition of the Board of Directors as from the completion of this operation. Mr. Laurent Martinez, CFO, will present the funding conditions of the operation and the financial resolutions, which will be used to carry out this funding. Mr. Ian de la Bruyen, Lead Independence Director and Chairman of the Nomination and Remuneration Committee, will present to you the changes submitted to your vote on the compensation policy of your Chairman and CEO. In view of the closed session, there will be no debate. And I would like to point out that your company has received no written questions, no questions via the free exploration platform that has been made available to you between 15th and 26th October. We will conclude with the results of the vote on the resolution set out in notice of meeting brochure on Pages 37 and following pages. The report of the Board of Directors on the resolutions in the same document Page 8 and following the statutory auditors' reports have been made available to you on the company's website. The documents required by law and which will be listed in the minutes of this meeting are included in the folder on the desk. All of those documents have been made available to shareholders at your company's registered office in accordance with the law. Having stated this, I would like to inform you that on the registration date of the shares to which at least one voting right is attached, the share capital of your company is composed of 226,894,499 shares of €7 of nominal value each. The vote took place exclusively at a distance due to the closed door procedures imposed by the health crisis. Shareholders were able to vote up until yesterday, 28th October, 3 p. M. On that day, the shareholders voting remotely had 156,942 shares with voting rights, as I say, 68.77 percent of shares having voting rights. The quorum required for this general meeting held on first notice is 20% for the ordinary part and 25% for the extraordinary part. A quorum of 25% being reached in meeting can validly deliberate. And I'll give the floor to your Chairman. Thank you very much indeed. I'm now going to share with you the context of the acquisition. First of all, a brief reminder on Alstom. And Alstom during the past years, as you know, Alstom has grown at a very rapid pace, and it has significantly And during And during this period, we've increased our sales growth 4.5 percent per year on average, which is double the market average, going from €7,000,000,000 to €8,200,000,000 Profitability went up as well, going from 5.7 percent to 7.7 percent, thanks to cost savings and also thanks to better execution of our projects. With following Alstom 2020, we rolled out a new plan called Alstom in Motion. 2020 was about benefiting from growing markets, especially in emerging markets. Alstom in Motion is driven more by the environment and by our capability to offer greater value and innovate by more environmentally conscious products, by being more digital and by delivering and our backlog, sharing the same values with an inclusive, agile and responsible Alstom team. The market context we are in as we are speaking has been impacted by the COVID-nineteen crisis. What the market shows is that we're getting very strong support by all governments who are acting in favor of local rail operators to keep them in business and to allow them to invest. We have a number of investment plans in railway. There are several examples here. We have different European initiatives, German initiatives, French initiatives, India as well or the U. S. All governments have stimulus packages that are either supporting the environment and of course, approaching with a different approach of mobility. And we're seeing a shift from different means of transportation to rail, for example, air to rail, but also road freight to rail freight. So what the Unifay anticipates is a 2.3% annual growth rate, which is fairly similar to what we had before the crisis, with somewhat of a slowdown, somewhat of a dip in 2020, which is something we've seen in our orders, but we expect a rebound in 2021. So let's take a look now at the Bombardier Transportation acquisition. BT is one of the leading players in rail. They've been a leader and have been recognized as such for decades worldwide. They have a very strong portfolio of products going from tramways to high speed trains. And BT has products that we don't have, people movers, for example, or monorail. BT has a very comprehensive set of skills. They control everything in the rail industry going from signaling to digital to traction and systems. It is a company which really fully understands and controls the manufacturing and design and manufacturing of railway equipment. They have a very balanced industrial footprint, very similar to Alstom, a good balance between emerging countries and more mature countries. But their footprint is different from Alstom's footprint, which we will see in a moment. Last but not least, they have the largest installed base worldwide with a fleet of 100,000 vehicles. That is a key element for our maintenance business, which is a growing business and a good money generating business. So Bombardier Transportation will help us further increase our footprint with a strong presence in the future in countries where we were not very present so far, rolling stock in the U. K, Germany, for example, Scandinavian countries as well, countries that are very actively investing, as a matter of fact. So that puts BT in a very good position. In emerging countries, Bombardier, there again has a very strong position in China more than we are. We have a stronger presence at Alstom in India, they're in Thailand, Australia, New Zealand. And of course, Bombardier has a very strong footprint historically in North America, Canada, the U. S. Where massive investments are expected as well. So in all in all, I think we can say that the acquisition will give us the critical size we need in all in the most important countries across all continents on the globe. And this will help us deploy our technologies and have this stronger footprint to further innovate. Now this is not about changing our strategy. Instead, it's more about accelerating our strategic roadmap. BT is going to help us enable accelerate the launch of new rolling stock. Once again, we're very complementary companies. And it's not a surprise to see that in the U. K, for example, they've developed Adventra, the Adventra platform, which will put them in a very good position, the San Francisco Metro, for example. And we have some niche markets, although they're very attractive markets, the monorail, people mover or and the European locomotive. We're in a very good position in Alstom with very heavy locomotives in India or Central Asia. Bombardier is also a very competitive player. So much for rolling stock. Moving on to services. Services, dollars 12,600,000,000 backlog, dollars 1,900,000,000 in sales for services, dollars 100,000 installed train fleet, which will become an unequaled company, which will help us in terms of predictive maintenance, for example. This will give us the status of a reference player. Last but not least, signaling. As you know, signaling is what makes systems more efficient. It's probably the most important one in terms of efficiency. As far as the efficiency cost ratio is concerned, we're going to become number 2 in signaling once Alstom and BT combine their efforts. BT is a little smaller, but they have key technologies in a number of geographies like German, for example. So this puts us in a much stronger position in Germany, thanks to the acquisition. As I said earlier, we I'd like to take a look at Bombardier's industrial capacity, which is very complementary in terms of footprint. Here again, this does not come as a surprise. They have their industrial product and commercial presence. As you can see, they have a strong footprint in China with 7 sites in Germany as well. In Central Europe, they have a strong footprint in the U. S, Canada, Mexico, when we are where Alstom is more present, in Brazil, for example. A quick word on the shareholders. There is going to be strong value creation for shareholders. This is going to be a true global company, a leader in its industry, which means more innovation, sales or revenue of $15,700,000,000 a backlog of over $70,000,000,000 and a significant increase in the number of clients and geographies. We're going to create value by improving the performance of the new company. We're going to improve the performance of Bombardier Transportation. They had some operational difficulties. We're going to help them solve these problems. They're already solving them and we're going to continue our efforts to improve their operational levels and bring them back to more industry standard levels of profitability. Similar to Alstom's and there will be some synergies about €400,000,000 per year coming from procurement, purchasing, innovation as well. We're going to innovate and put more products out there on the markets. And there are a number of very clear clearly established or identified levers. There's a strong cultural and business fit. We've been working very closely with BT since the early days, and we have very good relations between the teams. And I think that we truly understand one another, and that is good. Once again, I think we have Alstom has a very successful track record in terms of profitability and profitable recovery. So all in all, we're looking at a double digit EPS accretion from the 2nd year after the closing. A quick look at the acquisition. While the acquisition is now well on track, we signed the purchase agreement. The price has been established at €5,300,000,000 which is slightly below the initially the initial bracket, which was between €5,800,000,000 and 6 point €2,000,000,000 The rationale has been fully confirmed, but we've taken the new consideration the new situation into consideration rather. We have we're maintaining the financing structure and preserving Alstom's strong rating. The clearance process is in has made good progress, And we've so far received all the necessary authorizations. We had a number of authorizations that we needed to file. And every week we keep receiving new authorizations. A quick look now at the next steps. We're going to have the capital increase, which will allow us to pay for this acquisition with the preferential right of subscription, which will be maintained and, of course, subject to market conditions and to the EGM approval. Expected closing is planned for Q1 'twenty one. As far as the governance is concerned, further to this operation, as you know, the Casa Depot Quebec will be part of the capital of Alstom and will benefit from 2 directors and one observer. With regard to the 2 new directors, they were submitted to your vote. From CDPQ, represented by Mrs. Kim Thomasin, who is presently Executive Vice President and Head of Investments in Quebec and Sustainable Investments within CDPQ. The second Director, Mr. Serge Godin, Creator and Executive Chairman of the Board of CGI, having 77,500 employees in 41 countries throughout the world. Detailed information on Mrs. Thomas Gouda are included in the meeting notice on page 34 and the following pages. I would like to invite Mrs. Kim Thomasin to introduce herself to you. Good afternoon to you all. My name is Kim Thomasin, and I have been Executive Vice President and Head of Quebec Investments and Sustainable Investments at the Caisseau Depot in Plasins du Quebec since April 2020. I lead the teams in charge of investments in Quebec, the Post Investment Management and the CDPQ. I am lucky as well because I manage the sustainable investment team in charge of implementing the CASK investment strategy on climate change and diversity. I sit on the Executive Committee and on Investment Risk Committee in addition to being a member of the Board of Directors of Ivenu Cambridge, our real estate subsidiary. Previously, I worked at the KES as Executive Vice President of Legal Affairs and Secretariat. I joined in January 2017 after working as a lower and senior associate at McCarthy Telstra, a Canadian law firm where I spent more than 70 years. It will be an honor and a great pleasure for me to represent my employer, the Caisse depot in Pasonente de Quebec on the Board of Alstom. The CDPQ is a long term institutional investor. On June 3rd, so 2020, the assets of the cash amounted to 333,000,000,000 dollars in the economy of Quebec and in 60 countries around the world. The Caisse depot and Placement du Quebec invest in stock markets, private equity, real estate infrastructure and fixed rate instruments. Our investment in Alstom is an extremely important one, and we are delighted with this relationship between our 2 companies. Thank you. Thank you very much, Mrs. Thomasin. And on behalf of the company and all shareholders, I would like to welcome you very warmly. I would like to invite Mr. Serge Godard to introduce himself as well. Dear shareholders, dear members of the Board of Directors, ladies and gentlemen, good afternoon. I'm pleased to take part today in this combined general meeting by audio conference from Montreal. I'm honored to have received invitation to join the Board of Directors of your company as of the completion of the acquisition of Bombardier world renowned company. As an independent director, I'm committed to ensuring the best interest of the company, its shareholders, customers, employees and the communities in which Alstom operates. I'm looking forward to the opportunity to join the wonderful Alstom's team and to have the privilege to contribute to its success. I would like to thank you in advance for your confidence. Thank you very much, and a warm welcome as well to you here within Alstom. We are very much honored to have you among us. So the Board of Directors from the completion of the acquisition will be made up of 14 members, including 2 directors representing the employees, taking up their duties on the 1st January 20 21. Your board would comprise 8 independence members, 5 women and 5 foreign nationalities. I would like to invite our CFO, Mr. Laurent Martinez, to take the floor. Thank you, Mr. Chairman. We're now going to move on to the presentation of the financial authorization for which resolutions have been submitted to your vote. Please allow me to provide you with some background information. 1st, Page 20 shows the financial plan of the proposed acquisition of BT. We plan to finance this acquisition mainly through capital increases in order to preserve our strong credit profile. The equity financing of the transaction of approximately $5,000,000,000 will be as follows: 1st, the reserve capital increase for CDPQ, Bombardier Transportation's current shareholder. CDPQ has committed to reinvest the entire proceeds at the sale price plus an additional $700,000,000 in cash. This mechanism should lead CDBQ to subscribe for approximately €2,600,000,000 in new shares. Then we plan on a capital increase for Bombardier. Bombardier U. K. Will subscribe to new ordinary shares of the company for an amount of €500,000,000 Thirdly, a capital increase for Alstom with preferential subscription rights for an amount, including share premium of approximately €2,000,000,000 A balance of approximately €200,000,000 will be financed by Alstom's cash and or a bond issue. Thanks to this financial plan, we're maintaining a very strong balance sheet and strengthening Alstom's long term shareholder base. This is what is shown on the following page. On the left, we outline the mechanism of the transaction. For the record, CDPQ and Bombardier Inc. Are the shareholders of Alstom shares, while Bombardier will receive cash and new Alstom shares. Through this mechanism and following its investment of approximately $2,600,000,000 CDPQ will become Alstom's 1st shareholder. On the right side of the page, we have shown the indicative pro form a shareholder of Alstom after the 3 capital increases. CDPQ will hold approximately 18% of Alstom's share capital with a commitment to retain its shares for 21 months after the completion of its transaction. Dubuque shareholder is expected to be around 6%, Bombardier is at approximately 3% with a commitment to retain shares for 3 months after Here is a reminder of the principles of the capital increase with preferential subscription rights that is expected as part of the financing of the acquisition. The allocation of a preferential subscription right will offer existing shareholders the possibility to subscribe in priority in order to maintain their share in capital. For those who decide to sell their rights, the sale of the preferential subscription rights will contribute to compensate their dilution in capital. If this resolution is approved and once the Board of Directors deems that the conditions are met and decides to implement it, Prospectus will be approved by the French market authority. We expect subject to market conditions to launch this operation by the end of the first half of 2021 at the latest. On Page 23, you will find the resolutions relating to the capital increases planned in connection with the proposed acquisition. They're expressed as a maximum nominal amount with a par value of €7 per share. Resolution 4 will allow the capital increase be carried out, among other things, by €2,000,000,000 Resolutions 6 and 7 will proceed will allow to proceed with the capital increase reserved to CDP Investments Inc. On the basis of a subscription price set at €44.45 Resolution 6 provides for the possibility to proceed with the capital increase reserved to CDP Investments Inc. Through the issuance of a preferred share. These preferences shares are mainly intended to protect CDP Investments. Resolution 7 provides for the possibility to proceed with the capital increase reserved to CDP Investments Inc. By issuance of ordinary shares. These two resolutions are alternative and the Board's choice of 1 or the other of these structures will have no impact on the situation of the company's shareholders. Resolution 8 provides for the possibility to supersede with the capital increase reserved for Bombardier U. K. Through the issuance of a common share based on a subscription price set of €47,500,000 Lastly, resolutions 9 and 10 provide the possibility of the increasing company share capital. I would like to invite our Lead Independence Director and Chairman of the Committee of Nomination and Remuneration, Jan de Abriere, to take the floor. Thank you, Chairman. It is now up to me to introduce you to the draft resolution to you, shareholders, regarding the compensation policy of the Chairman and CEO of the company Before entering into the description, I would like to say that this project fits into a global framework and much broader decisions of the Committee of Nomination and the Board of Directors of Alstom, aiming at associating as much as possible the management and beyond the management, the whole staff of the company to associate that to the success of this very important operation of acquisition of Bombardier Transportation. So within this framework, we are proposing a change in the concession policy of the Chairman and CEO as voted in July 2020 during our yearly general meeting. This change leads us to propose an exceptional conversation to the benefit of the Chairman and CEO. But as I said it a minute ago, beyond the Chairman and CEO, also of other officers and key contributors within the group, contributors to the acquisition of Bombardier Transportation, an exceptional compensation that is, which will be, of course, implemented after the closing of the acquisition and which will be linked not to the completion of this acquisition, but to its complete success over a period of 4 years. That's the period set by the company in order to achieve the objectives of this transaction. This exceptional conversation would be made up of shares and performance only And here again, in order to associate the Chairman and CEO and other officers and to associate them to the success of the operation and its translation into the performance of our share. And this allocation would be linked to performance conditions, being internal and external, assessed in this in parity at the end of this acquisition period without any provisional allocation before the end of this period. So those conditions are based on the long term success criteria of the integration of Bombardier Transportation as announced in February already by the company during the announcement of this acquisition project, such as the turnaround, the operational and financial turnaround of the main Bombardier Transportation Projects, the main synergies and the performance of the Alstom share. I would like to point out as well that the triggering thresholds will be set at the level of the objectives as announced in February for each of those criteria. As far as the technical elements of the development of this compensation policy are concerned, Let me say that for the limits, they will the limits will not count against the limits currently applicable to the long term variable compensation as defined by the compensation policy voting during the shareholders' meeting of July 2020. So it is to be added. And we suggest to set an individual cap for this compensation corresponding to an IFRS value not exceeding 100% of its annual fixed short term compensation of the compensation of the Chairman and CEO and the obligations with regard to the, well, the holding requirements and the limits and conditions in case of leave are identical to those for the yearly performance allocation as defined by the compensation policy. And let me point out that this is an exceptional transaction linked to this exceptional external growth operation, which is the acquisition of Bombardier Transportation. And this operation is not intended to be reconducted in the compensation policy of the next fiscal years. In order to have as many people as possible within the company, taking part into the success of the operation of the transaction, the Board is thinking of a possibility of a free share allocation plan targeting the whole population of employees of the group. So if we look at the compensation policy of the Chairman and CEO, and we look at all its components, you see on this presentation that all items voted in July 2020 have been taken over. It's unchanged, except, of course, for the exceptional compensation, which we had not planned in July 2020 and which is to be added through the resolutions submitted to your vote. This is it. Contrary to the habits and because of the closed door procedures, we cannot exchange likely with you. As I indicated, we have not received any written questions, no questions via the free exploration platform. Put that your disposal between the 15th and 26th October, so I'm asking the to present the results of the vote on resolutions. Thank you. I remind you that the text of the resolutions is included in the notice of meeting brochure on Page 37 and following the report of the Board of Directors on the resolutions is included in the same document on Page 8 and following pages. In order not to extend the duration of the shareholders' meeting and in so far this report is publicly available, I will not read it out. I remind you that the vote was closed yesterday, Wednesday, 28th October, at 3 The quorum required by law is exceeded as it reached 68.77%. You see here on the screen the slides with the results of the votes for the ordinary and extraordinary resolutions. The 12 resolutions on the agenda presented to you were all adopted. So the result of the votes will be put online on our website during the day. I thank our secretary. And before joining this meeting, I would like to thank, again, all the shareholders of the company for their confidence. I hope see many of them again in a classic and more friendly configuration at our next meeting. The agenda being exhausted, the meeting is adjourned. This is the end of