H2 18/19

May 7, 2019

And gentlemen, welcome to the Alstom Conference Call. I now hand over to Haripo Par Lafarge. Sir, please go ahead. Hello. Good morning. Welcome to our annual results conference call. I am together with Laurent and the Investor Relations team here to answer to your questions and to present to you the annual results. So just as an introduction, a few highlights of these results as you probably have already seen them. First of all, the order intake, which is at a record high of €12,100,000,000 I will come back on the major orders. This leads to a record backlog of more than €40,000,000,000 book to bill of €1,500,000,000 during the year. The operational performance of the year has been strong with sales at €8,100,000,000 in line with our guidance, which was at €8,000,000,000 so it is a bit above our guidance. The growth as compared to last year was 10% or 11% organically, not a lot of parameter changes. Margin was at 7.1%, up from 5.4%, as well in line with our guidance, which I will recall you was around 7%. So we are a little bit above this 7%. In terms of balance sheet and cash flows, we have generated €153,000,000 of free cash flow. This includes some cash out related to the Siemens Selda merger. We have a net cash position €2,300,000,000 This is of course related not only of the free cash flow of the year, but also of the proceeds of our disposal of our stake in GE joint venture. And this altogether has enabled us to propose or the Board will propose to the next general assembly a dividend of €5.5 per share. This is this will be legally an ordinary dividend, although you would understand that the amount of this dividend is exceptional and is of course related to this proceeds that we have received from General Electric and not directly from our net income as you can imagine. In terms of business, so for I think for the last time, you will see this slide, which summarize our 2020 strategy, which again has been a great success over the last years and which has enabled us not only to grow, but also to grow profitably and to develop our company worldwide. So we go through all the main pillars of this strategy. The first one was what we call the customer focused organization, which was to basically globalize the company to be present on all continents. And this is being translated into orders intake on all fronts, all continents. So you can see on the slide, of course, when you look year after year, it's mainly influenced by large orders. So the share of Europe at €7,300,000,000 out of the €12,000,000,000 which is quite high is notably due to the order in France for very high speed trend. Similarly, €2,200,000,000 in the Americas is mainly driven by our large TMT order in Montreal. In MEA, it's mostly in Middle East, Africa, it's mostly the maintenance contract in Riyadh. And we have a number of orders in Asia Pacific, particularly in India. In terms of activity, what is quite remarkable this year is the high level of service order of more than €3,000,000,000 So a very nice book to bill of very large long term service contract. I was talking about Riyadh, but also Montreal includes a maintenance contract. We have on signaling, we have book to bill greater than 1. I think actually it's a record level for signaling order intake of 1.5 €1,000,000,000 Of course, again, system is mostly the Montreal order and rolling stock, it's mostly the largest order is the PG1. Here, you see our main orders of the year. I've already detailed in Canada, in France for the very high speed, but also for some regional trend and also for the new metro, the Grand Paris around Paris. Quite noticeable in signaling, we have the onboard equipment for Norway Norway has launched a complete revamping of its signaling systems and we have been awarded the onboard part. In Germany, we wanted to outline some regional trend, but also some time it's the first time we penetrate the German market for Tram and we do that in the city of Frankfurt. Luxembourg, some regional trends, more classical. Italy, we are continuing our success story with NTV, with Spandolino trends and maintenance. Saudi Arabia, I already said it. And in India, Mumbai Metro, some signaling activities as well. In Australia, we have also some maintenance activity for the Sapne Metro, which had been awarded a few years ago. And in Taipei, we have also a Metro system. So again, quite a geographically spread order intake this year, which is in line with our strategy. And this is illustrated as well by the market share and by our leadership position on all continents. As you can see, this year again, we are number 1, number 2 in all the main continents, which is our goal, our objective. And we have continued to rebalance our employee base, if you were to compare with last year, we have now increased quite significantly our employees in the Middle East Africa, particularly in South Africa due to the ramp up of contract with PASA, Asia Pacific with the ramp up of India and of course Americas with the ramp up of the activities to deliver the very speed trend in the U. S, while employees in Europe have been more or less stable. We are in line with our objectives in terms of allocation of these activities. You remember that at the beginning of 2020, we set as an objective to a 40% in rolling stock and 60% in the other activities, which is more or less where we are today with 43% of rolling stock, 19% of sales with a very nice growth of service, 16% of signaling and system which is also very high. As I said the last time for H1 results and it's true as well for H2, the main contributors of sales in terms of projects are today Dubai and Riyadh, Dubai being a very fast track project and Riyadh being a very, very large project. So this explains why system is so high. We don't expect it to remain at that level in the future. This is exceptionally driven by these two contracts. So in terms of solutions, so some systems, Montreux, Riyadh, I've already mentioned them. In terms of sales, so if you look as well in terms of activities, so we have grown basically on all our activities in rolling stock, in systems, again with Dubai, Riyadh and Lusail as well in Qatar. Panama has been also quite a nice contributor. Service has moved positively. It's good news. I mean, you remember that it takes a lot of time to grow our service sales because between the order intake and the service, it takes a long time to be translated into sales. And now we see that coming. Signalling has still been relatively weak this year on the back of low activity in the U. K, which was on the back of low order intake the year before. But as we have seen, we have this year a rebound of orders. So we are more optimistic for the future of the signaling growth. R and D, sustained R and D. I mean, you remember that this was one of the goal also of 2020, which was to sustain in percentage term all our R and D efforts and to take advantage of the growth of the company. So we have now completed the renewal of our platforms. You also recall that we launched a new tramway platform 5 years ago and a new metro platform and a new regional train platform. And now this year, we have launched a new very high speed platform. And we are now in full development of TGV 2020, the new TGV for our sensors as well as the new TGV for Amtrak in the U. S. We are continuing to develop our signaling activities and the urban not to be our urban platform, but we have reinforced recently our effort on the main line as well. And of course, we continue to invest in digital solutions for smart mobilities. What is quite noticeable this year, I think, is that our 2 main, I mean, disruptive innovations as far as vehicles are concerned have been, I would say, awarded some contracts this year. I think the one which has attracted a lot of attention, which is the ILINT, which is our hydrogen train. And since it is in operation in Germany, a number of countries in the world, including France and the U. K. For example are extremely tested by this solution and have launched some hydrogen plan. So this is now from I would say an innovation to a commercial success. And similarly, we have launched this new vehicle which is halfway between the bus and the tram. And we have been awarded the 1st contract in Strasbourg in France. But you know as well that we have been nominated preferred bidder and will be officially awarded contract soon from ERATPE in Paris. So this is 2 successful launches of our new platforms or new disruptive platforms. Operationally, we continue to improve and we expect of course to continue to improve in the future. This is on the back of the volume increase, but also on the efficiency and also of the project execution, the mix as you know all the different levers that were at the origin of our 2020 strategy. And we have achieved as expected 7% and if not a little bit more than 7% adjusted EBIT. Livers were classical levers. We see our sourcing levers with the global sourcing. So if you were to look year after year, you would see the volume purchased in low cost countries moving up regularly from what was 30% probably 4 years ago to now more than 50%. Of course, this is also on the back of the globalization of the company. We are more and more and this is a new lever. We are more and more using robots and having automated lines. You know that this is more complex to do it for transport than for other industries because we are talking about extremely big and not standard equipment. So it's not easy to automatize, but still we are doing that. And we are increasing our global footprints with the Indian ramp up and as well in Europe, which is needs to also rebalance between Western Europe and Eastern Europe. We are ramping up very rapidly our factory in Poland which is becoming our largest factory actually in Amsterdam. 2 contracts, which are quite iconic and we knew quite well. The first one is in South Africa. So the first trains have been delivered out of our factory in South Africa, which is a very, very impressive success. And here you can see on the picture for the U. S. That the trends are not totally out of the factory. However, we are on time for this very important contract for the Avelia Liberty, which is the name of this train, to start the testing by the end of the year. In terms of environmental excellence, we are continuing to improve our situation and to be in line with our objective also which we have set a few years ago. We are reducing our energy intensity. We are improving the energy consumption for our solutions. As you know, this is increasingly one important driver for our customers. And we are working on safety at work where we have plateaued a little bit at 1, 1.1 this year, but we continue to improve the situation. Finally, on people. We have increased our number of people. We are now more than 36,000 employee, again with the main increase coming from continents outside Europe. We are progressing as well in terms of gender diversity, although to be fair slower than what we would like to be. But now if I had to mention it at the exclam of Astom for the I think for the first time, 3 women, which is already, I would say, a progression. Ethics and Compliance, no compromise with ATX and compliance, of course. So now I will hand over to Laurent for some comments on the results. So thank you, Henri. Good morning, everyone. So starting with P and L on Page 22. I'm going straight below the adjusted EBIT of 7.1%. So as you see, we have €65,000,000 of restructuring charges, driven by your footprint rationalization and competitiveness initiatives mainly in Germany, Brazil and the U. K. Moving to the other charges of minus 97, this includes some amortization of intangible assets and integration costs related to SSL, g signaling and nomad, which has been reduced to minus €15,000,000 Transaction cost related to the Siemens Alstom deal, which amounted to minus €7,000,000 to €74,000,000 and other costs related mainly to the net of legal proceedings provision and capital gain on disposal of assets linked to the dilution of TMH and the takeover of Icalz in Kazakhstan. Moving to the financial result at minus 88% compared to minus 99% last year, consistent very much with the decrease of our gross financial debt with, as you know, the repayment of our bond in October 2018 of €371,000,000 Moving forward, we see the financial results, which should continue to improve as outstanding bonds would be paid out in 2019 2020. In terms of tax results, we have recorded a tax charge of €70,000,000 which is consistent with an effective tax rate of 22%, including some positive one off impacts compared to 36% last year. Moving forward, we expect to come back to a normalized level, which is close to our 25%, 30% that we have been indicating in the past. In terms of share in net income from equity investments amounted to €195,000,000 This includes for the last time the energy GV accounting consideration of 106 €1,000,000 and as well some TMH very positive performance of €66,000,000 including some positive one off in the H1. And as well good performance of our subsidiaries in China, Casco. Finally, I'll remind you that in H1, we have recorded an exceptional net income of €248,000,000 associated to the GE transaction. So as a result, net income jumped from €365,000,000 to 6 €81,000,000 this year. Moving to the cash side. So our free cash flow was positive at €153,000,000 driven very much by the EBIT evolution. Without Siemens Alstom cash, as Henri was mentioning, this free cash flow would have been around €205,000,000 approximately. Change of working capital was limited at minus €12,000,000,000 driven by the ramp up of our major projects, which has been signed in the past years. And free cash flow has been as well impacted as you see on by the financial cash out and the transformation CapEx, which I will detail now. So on the CapEx side, we have been spending €207,000,000 of CapEx intangible assets. This supporting our global footprint and our strategic transformation. In terms of transformation CapEx, we have been spending €110,000,000 moving from main construction of manufacturing sites in India, South Africa where you see pictures of the Ghibela factories, which with the start of the first Prusa trains, which has been delivered end of this fiscal years and as well as the extension of Ornell in the U. S. For Avelia Liberty. At the end of March 2019, we have cumulated €269,000,000 of transformation CapEx out of the €300,000,000 we have been communicating, the remaining will be spent this year. Moving to the liquidity and gross debt. We have a gross cash in hand of 3.8 €1,000,000,000 at the end of March 2019. In addition to this €3,400,000,000 of cash and cash equivalents, we have access to a €400,000,000 revolving credit facilities, which is maturing in June 2022, which is as we speak fully undrawn. On the 2nd October 2018, I remind you that we have indeed completed the transfer of all our interest in our 3 gs Energy GVs to General Electrics and we received a total cash payment of 2,594 €1,000,000 In terms of debts and bonds, as I was mentioning before, we have 878 €1,000,000 outstanding bonds as of end of March 2019 and all of these bonds will be repaid until March 2020 with the next maturities in July. Turning to the net cash. So the key drivers are obviously the positive free cash flow evolution and the acquisition and disposal, which is chiefly the proceeds coming from the sales of the JVs to GE. But as well, I'll remind the acquisition of the TMH LocoTech transaction, which we have been recording as well in H1. We have as well limited capital increase, dividends and ForEx and others turning to a total net cash end of March at 2,000,000,000 €300,000,000 Moving to the equity. Equity moves from €3,400,000,000 to €4,200,000,000 most impacted by the positive evolution on the net income €81,000,000 some variation on pension of minus €49,000,000 driven by interest rate changes, dividends paid to shareholders for minus €78,000,000 share based payments for €39,000,000 and ForEx and Others for 136 €1,000,000 So as Henri indicated, given the net cash position at 31st March 2019, the Board of Directors has decided to propose a dividend of €5.5 per share, which is equivalent of an amount of €1230,000,000 to the shareholder meetings, which will be held on the 10th July 2019. Looking at the net cash post dividend, we will be at €1995,000,000 without considering IFRS 16 impact, which has been estimated between €400,000,000 to €500,000,000 On IFRS 16, it will be communicated for the first time in our H1 results in November. So thank you very much for your attention. I'll go now back to Henri for the conclusion. Thank you, Elora. In one word, the conclusion that as you have seen, we continue to record an excellent commercial momentum, a strong operational performance, which has sustained the good net results, which in part, of course, explains the dividend as said by Laurence also related to the GE proceeds of 5.5 euros And as you probably would recall, we will launch the new outlooks, including for those of you who had the question, new guidances during your Capital Market Day in at the end of June. I think this will complete again the 2020 strategy, which has brought a lot of positive results for the company and for its customers. But now we need to open a new perspective and this will be done at the end of June and we'll do a little bit similarly to what we did 3 years ago. We will give some perspective mid to long term perspective to all of you. So thanks again for being here. And now I'm taking the questions that you may have. Thank you, sir. We'll now take our first question from Ben Sekeris from Goldman Sachs. Please go ahead. Your line is open. Hi, good morning. Thank you very much for taking my question. My first one would be about the dividend. Obviously, after the kind of exceptional dividend of €5.50 this year, I'm wondering how we should think about the recurring levels of dividends in coming years. If you could provide any color around that, that would be much appreciated. And just a second one on if you could talk about the large order environment that you expect in the following year, especially after the strong commercial momentum that we've seen this year? Thank you. Thank you, Ben, for your question. Of course, I said the dividend of this year is exceptional. It will be legally an ordinary dividend, but of an exceptional amount. Going forward, we will resume, I would say, classical dividend distribution. We have no guidance precisely on what should be a classical. Up to now, I have to say that in the last 3 years, our net results has always been impacted by exceptional items. This normally should end next year or this year, this year ending March 2020 should be, I would say, a normalized year with, I would say, a normal level of distribution. In terms of commercial outlook, this year has been particularly strong, mainly due to a good level of midsized orders, but also due to 2 very large orders, 1 in Montreal and 1 in France, as you know. I don't see in the coming period such a level of exceptional orders. So we continue as you know to fuel our growth through a book to bill, which is above 1 regularly year after year. But the volatility is there. And I would say I would qualify this year as being not only excellent, but also exceptional. So I don't expect to repeat this kind of order intake year after year. We still have a lot of the pipeline and the markets are still extremely good. I mean, you know that mobility is at the heart of all political agenda. So there's no problem of a number of opportunities. But the fact to have these 2 large orders in the same year is something which is rather exceptional. Next question? Thank you. Our next question from Gael DeBry from Deutsche Bank. Please go ahead. Your line is open. Yes. Good morning, everybody. Can I have two questions, please? The first one is about the systems business, where the book to bill has been well below 1 times now for the past 2 years. And you've just said that you do not expect the systems revenues to remain at the current high level. So could you elaborate on what it means for the coming years group revenue growth and margin mix? That's question number 1. And then question number 2 is about your capital allocation strategy. Can you discuss what you consider would be an appropriate leverage for the group going forward? And I think you've alluded to that, but how come you don't have a normalized payout ratio? That would be official. Thank you. In terms of system, we this year, as you have seen, we have still recorded relatively high level of system order intake and notably against Montreal. We have also recorded some system order intake in Asia like in Taiwan and in Vietnam last year. But it's fair to recognize that one of the main driver of system was Middle East, main region, which was really system region was Middle East. And this region is relatively slow as we speak. And if you talk about Saudi Arabia, for example, yes, we are executing Riyadh. But the other projects, whether we talk about Maca, whether we talk about Cheddar have been delayed. So the level of we don't expect the level of system order intake to be as high as it was in the past. We can also add by the way that Latin America is also relatively weak and this was also a system region. So we could expect in the mix a slight decrease in system. In terms of margin, System margin, we were saying that usually in terms of order of ranking of margin, system is yes above average, but not I would say usually above the average. So it will not have a huge impact on the margin. On the growth of the company, it's clear that the growth will have to be fueled more by service, by signaling. As I said, we have a rebound of signaling activity with a nice order intake this year. And of course, the slight the slighter growth of system or the decrease of system will have a slight impact on the growth of the company. But that has not, I would say, a major impact. We will review all that during our Capital Market Day end of June, including I'm not going to give any guidance today on this on the dividend policy. I think we want to have, as I said, a normalized dividend policy, which is in line with market practice. I mean, I will give that I will talk about that again at the end of June. Thank you. Our next Our next question comes from Simeon Tonneson from Berenberg. My first question is just on the margin development in H2. It was obviously slightly down versus last year in the Q2. Maybe you can just provide a bit more color on the various drivers. You obviously don't provide a bridge there, but just if you could talk a bit about the various sort of margin drivers in the second half and the impact there. And also if you could talk a bit more about what you would expect for 2020. And I appreciate you're probably not going to give any guidance right now as you wait until 24th. But maybe just in terms of sort of just color around sort of improvements versus deterioration when we talk about maybe mix and savings, etcetera? That would be very helpful. And then last question on the free cash flow. You obviously had some of the one offs. Could you quantify some of the one offs a bit more? I mean, you talked about the Siemens Alstom deal costs, for example, that had an impact. Do you still expect some of that to come through in the first half of twenty 20? Or is that completely over with? Thank you very much. Thanks. In terms of driver for the profitability of H2, it's true that the volumes have been stable between H2 of last year and H2 of this year. Now it depends on if you compare with the IFRS 15 adjustment or not. The margins are driven by the cost improvement and our operational plans. It's also driven by the mix of projects. So it's difficult to draw conclusions on a short term basis. But we see that this H2 of this year has a quite good margin. Last year, particularly if you look on the previous accounting standard, we had a number of milestones during the last quarter, which explained a very high level of sales in the last quarter. But now with IFRS 15, the sales will be more regular. We will not have this kind of phenomenon of high level of milestones. So I think it's a combination of the cost drivers as well as the mix, which has generated this relatively similar level of margin from last year to this year. 2 in terms of free cash flow, maybe Laurent will say a word, but we have Cement, we have also the CapEx and then I will come back on the color for next year. So on the free cash flow, indeed, there is around, as I said, more than €50,000,000 of impact from Siemens Alstrom. So without that, we will be at more than €200,000,000 There will be a bit to your question, Simon, of cash out still in the first half of this year, but more limited than the impact of last year, for sure. And there is, moving forward, indeed, this cash out for financials, which will be improving as well in 2019 2020. With regard to the CapEx, as I said, there is indeed the drivers related to the transformation CapEx, which will be running out in 2019 2020. However, we continue to see a need for investing in capacity in our plant for 2019 2020. Thank you, Laurent. In terms of perspective for this year, I said we are not going to give any guidance for the year. Broadly, I would say that there is no reason why we should go backward. So we need to continue to improve our situation operationally, of course, in terms of sales and in terms of profitability. As I said at the beginning and I think answering to a question, I don't expect the level of order intake to be repeated. That's clear despite again this is not a negative message on the market, but this is a more realistic message on the fact that we are not going to be awarded such a large contract. I mean it's quite exceptional to achieve that. In terms of mix, as I said the system so the mix impact will be probably of less importance, I would say, because again system will go a little bit down. So service will continue to grow. Signaling will continue to grow as well, but system would be a little bit down. So we in terms of costs, we will continue to benefit. If you look at our past 3 years, we had the mix impact, which has played a quite strong role. And quite recently, we had a margin impact, a stronger margin impact at the level of the, I would say, the gross margin and the cost of sales. And this is related to the impact of the consequences of the renewal of our rolling stock platforms. It took a few years for this new rolling stock platform to bear fruit and they are bearing fruit. So we should expect that this year again. So we need we'll continue to benefit from this cost reduction initiatives. So all in all, we continue to grow and improve our situation. But I would say I will go for in more details end of June. Thank you. We'll now take our next question from James Moore from Redburn. Henri Laurent. I have two questions, if I could. Firstly, on your 2020 strategy, it's been a great success in a number of P and L categories, but maybe it's fair to say that the cumulative free cash flow conversion remains below 50% even if you adjust for exceptional items. Just broadly, how do you feel about that performance? And as you look forward, given you are signaling that CapEx won't come down after the transformative programs come to an end, do you think that the previous target of moving conversion towards 100% is realistic? Or should we think that it is not? And secondly, if I could, on the order intake margin, can you give us a flavor without any numbers as to whether the order intake gross margin that you track internally in the full year of 2019 was above the order intake margin of full year 2018? Thank you, James, your questions. Yes, you're right that we should continue to work on the free cash flow generation. 2020 has been impacted the 2020 strategy by the need to heavily invest in CapEx. This comes to an end. So this should ease, I would say, this burden on our cash flow. If you look at the working capital over the 2020 or the 3 or 4 last years, the working capital has been relatively stable. We have improved in some years or slightly deteriorated in other years. But overall quite stable, which was one of our main objectives, which was to make sure that we keep the same working capital situation. So on that perspective, I think we are in line with what we said. Then it's true that the net income, for example, and the EBIT has been impacted by a number of exceptional events. Some of them were non cash. So it's I would say it's I'm not negative on the performance of the cash flow, but it's fair to recognize that this needs to be continue to be worked on in the future. On the gross margin and order intake of this year, as you know, we are and that you say we don't give the exact number of that. The other the gross margin is actually very good this year, but this should not come as a surprise because as you have seen, we have €3,000,000,000 of service order in this order intake of this year and this service order as service type of margin, which is quite good. So this explains globally a good gross margin in the order intake. So we have I think a good or if not a very good level of gross margin in the order intake of this year. Thank you. Next question? Thank you. Our next question comes from Jonathan Monce from Exane BNP Paribas. Please go ahead. Hi, yes, good morning. Thanks for taking my questions. 2, please. Just first of all, on working capital development in 2020, thoughts there. So I think consensus for order intake is at around €9,000,000,000 for FY 2020, Thinking about particularly prepayments, what's likely to come in and the distortion there. Do we think, particularly with cash being weak in the second half of this year, is there a catch up? Can we see a working capital inflow in 2020 given what the situation in 2019 was? And then just a second question, perhaps a bit more explicit on CapEx guidance going forward. So obviously, Slide 24 seems to imply that the normalized level is more like 100, but you are talking about continuing to invest. What's the right way to think about it? Is it 200,000,000 going forward? Is it 300,000,000? Obviously, this is quite important for our models. Thank you for your question. So on the first question, as we classically say, there's a huge volatility in working capital. It happens that actually over the last 3 years, you have not seen this volatility because as I said, at the end of the year, a little bit by coincidence, the working capital has been relatively stable year after year when we know that there could be some large term payments or large advance payments, which could lead to some much greater volatility. So we don't there is no such phenomenon that you are describing of negativity on 1 year and then positivity on this year. Just one point on this year, you have not raised the question, but you could be surprised by the high level of order intake and the low level of down payment. But you need to know that service order intake has no down payment. So it's claimed why there is to start with €3,000,000,000 of order without any down payment. And then it happened that we are very ASP trends in France have no down payment as well. So out of the €12,000,000,000 you have €6,000,000,000 of contracts with no down payment. So this explains why if you look precisely, you will see a very low level of down payment this year. But again, this does not generate mechanically a reversal of this situation in the coming year in this year. In terms of CapEx, I will give the floor to Laurent, but you need to take into account some change a little bit of accounting on that aspect. Yes. So yes, Jonathan, so in terms of CapEx for 2019 2020 to give you some colors. So indeed, we'll be completing the transformation CapEx, which is the setup of Industrial Hub. So that will be completed in 2019 2020. From there, we are not opening any new industrial hub. So our industrial footprint hub strategy is completed. However, we'd be I would say increasing the capacity on the existing industrial hubs, which this will come as well with some CapEx for sure. Finally, indeed there is now in IFRS 15, the specific CapEx tools, which are related to specific projects, which are accounted for in our CapEx. So that will have as well a limited impact in our CapEx profile for 2019 2020 onwards. So we'll give you more colors in terms of the numbers, but these are these will be the drivers for 2019 2020. Thank you, Ro. Next question please. Thank you. Yes, the next question comes from Alfred Glaser from ODDO. Please go ahead. Your line is open. Yes, good morning. I wanted to ask you on firstly your acquisition policy. You will keep about EUR 1,100,000,000 of net cash once you have paid the dividend. What is your take now on the acquisitions you might want to do? And then second, I wanted to ask you on pricing. Offers you're working on? Thank you, Alfred. On capital allocation and on acquisitions, I mean, what we do today with dividend distribution and what was going to be proposed to the general assembly is in line with our general policy, which is 1st and foremost to have a strong balance sheet. So we'll keep a very strong balance sheet both in terms of net cash and in terms of equity. And this is as you know the one of the fundamental items of our business model. And 2, to keep some rooms of maneuver for external growth. As you know, following the Cement's merger failure, we want to redirect our strategy towards more probably partnerships, smaller acquisition, bolt on acquisitions. So we think that we kept in hand what was necessary to sustain the strategy going forward. But again, we'll be more explicit at the end of June. So that's in a mean we don't expect extremely large acquisition. We don't have that on the pipe today, but we expect more bolt ons activities and bolt ons bolt ons acquisition, which are totally enabled by the level of cash that we that is sitting on our balance sheet. In terms of pricing, we don't see there is no real evolution of any prices or the competitive behavior of the market of our competitors. So we see, as said in the past, a continuous pressure on the prices and we are in an industry where prices are under pressure continuously. We are not in a cyclical industry where you have prices moving up or down depending on cycles. We are in an industry where it's more I would say an average pressure on prices. But I cannot say that there is particular pressure coming from somewhere boost drastically or from a particular competitor. Okay. Thank you, Alfred. Next question? Thank you. Our next question comes from Magnus Kruber from UBS. Please go ahead. Hi, Aurelio. Magnus here with UBS on behalf of Guillermo Peigneux. A couple of questions from me. So first, would you say that your underlying order growth this year ex the large project is reflective of the current market activity? And do you see the market activity remaining on this level you saw last year through this year as well? So on order intake, yes, I mean, the underlying, I would say, midsize orders are in line with the market activities. We need to have, as I say, our growth is fueled as well by 1 large order per year or 1 or 2 large orders per year of significant amount this year. I don't know if you count mostly all 1, the TGV, Riyadh maintenance is also a very large one. So there are maybe 2 to 3. But in terms of midsize order, this is more as you said the classical reflection of the market dynamics. So that's there is nothing exceptional in the market itself, but it's just happened that Aspen has had an exceptional level of large order this year. You had another question maybe? It's okay. Okay. Thanks. Thank you. Next question. Next question from Andreas Willi from JPMorgan. Please go ahead. Good morning, everybody. I have Opera? So what drove that decision? And secondly, in terms of your bonds that you still have outstanding, do you plan to buy them back and then run the company basically without any long term debt in the future? [SPEAKER JOSE RAFAEL FERNANDEZ:] Yes. So we've been looking at all the option in terms of distribution mechanism indeed, Andrea. So we believe that this dividend distribution was the more appropriate mechanism. Looking back and we'll give more colors as well in terms of the upcoming capital allocation and shareholder returns in the Capital Market Day on the 24th June. Indeed, of course, dividend policies or share buybacks are considerations that we'll be explaining in our Capital Market Day end of June. Thank you, Laurent. Further questions? There are no further questions, sir. At this time, I'd like to turn the call back to yourself for any additional or closing remarks. Thank you. Thank you, operator. So thank you all of you for your time. Happy to meet you soon. As general conclusion, I would say that this has been an extremely good year, I have to say. Another one, we of course still need to continue to work to improve, but it has been a very good year. And although we tend to forget now, it seems to be a long past, but we should recall that this year has been marked by this project with Siemens. And I'm particularly proud of our teams and our colleagues, which have delivered this performance at a time where they could have been perturbed by external events. So thank you for that and happy to talk to you soon. Bye bye. Thank you. This concludes today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.