H2 15/16

May 11, 2016

Europe is more how you see our portfolio, I would say, progressively evolving, both in terms of geography and in terms of activity. I will not be the fact that we have beaten our own, I would say, so to say, you can derive that we're going to beat it again next year or you can derive the fact that the base is now higher than what we anticipated. And therefore, the 5% objective, for example, for the current year is more difficult to achieve in a way. So I think I will not be too precise and too detailed on that. It's a long term growth, which is fueled. 90% of the sales is today in our backlog. 90% of the sales of this year is in our backlog. But depending on 1 or 2 milestones, it can be 1% more, 1% less year on year and again this year. And this is in line with the good execution of our contracts. The contracts have been well executed, and therefore, the milestones have been achieved in a timely fashion, and therefore, we have done In terms of operating profit, I would say it's a direct consequence of that. We have in our plan a gradual profit. This year, we have done, I would say, a greater improvement than what we anticipated, also because the sales were slightly higher than what we anticipated. So depending the answer to your point is that we don't intend to have a dip and then a rebound. We intend to progressively improve the mix, and this is on the back of the margin that we see in our backlog and our ability also to drive cost down. The reason of this improvement will vary depending on the reason of the growth in sales. The 2 are moving together because in the growth of sales, then you have the mix improvement, which drives this margin improvement. On your last point of CapEx, I would say a little bit the reverse. If everything goes well and if we are in line with our anticipations in terms of election of our new factories in South Africa and in India, actually, the €300,000,000 of exceptional CapEx should be a little bit front loaded. And as you said, it's €100,000,000 per year, and it will be a little bit more than €100,000,000 the 1st year, a little bit more than €100,000,000 the 2nd year and less the 3rd year. And this would be good news. This will mean that we are in line with spending, which is today forecasted for these 2 programs, which of course, as you can imagine, in terms of CapEx, both in Johannesburg or in Madepois, are quite challenging programs. The last I don't resist to the temptation of giving the floor to my Jose for your last point, which is very fair. I think you have been very precise in the numbers, but there is a very rational explanation to that. So I'll let Maize Jose to answer. Okay. So in fact, the value of the JV's investment is €2,400,000,000 So this is confirmed. You will notice in the annexed to the accounts that in the comments to the accounts that there was, as part of the price of GE, dividend distribution paid through the GRID JV for close to €200,000,000 So mechanically, you see actually this impact of dividend distribution in the value of the assets in the balance sheet. Yet this doesn't impact, in fact, the exit value of the put options, which is based on the €2,400,000,000 plus remuneration and an interest of 2% to 3% depending on the JV. So the exit value that is locked in is confirmed at €2,600,000,000 And this is basically what will occur when we exercise the options as early as September 'eighteen. If I may give this non accounting comment, There is, of course, an economic value to the joint venture, which is, as Mauricio said, is will be the exit value would be 2.6, which is a 2.4 plus the interest of the early interest. There are results each year to this joint venture. Our objective is definitely, from a non accounting standpoint, to try to minimize the accounting impact of the results of the joint venture, which are meaningless from an economical standpoint. But we are supposed normally to take this economic impact. So the results, because these are equity accounting, so the results of the joint ventures. And then to progressively increase the value to progressively reach this 2.6% amount. So hopefully, these results, all that will be offset. And we'll try to make sure that we keep an economical approach to our balance sheet and our accounts rather than a pure accounting approach of the equity accounting. And but we will year after year, of course, this will remain this year has been full of exceptional accounts. Next year, the only exceptional would be the joint venture accounts, which we try to minimize. Okay? Thank you very much. Thank you. Next question is from James Moore from Redburn. Please go ahead. Yes. Good morning, everyone. Henri, Marie Jose, Selma. Thank you for taking my questions. Really, given the low 19% free cash flow conversion ex DOJ, all my three questions relate to cash flow, and I'm afraid they're a little technical. So apologies. Could you please provide a €1,000,000 number for what the legacy cash cost impact was in the full year? If you are able to split what that is in tax interest and operating, it will be very helpful. That's my first question. Secondly, could you please help us on the legacy cash cost going forward? Henri, I think at the Investor Day, you guided us to a further €150,000,000 in 2017,000,000,000 fading, €140,000,000 to 20.20, something like that. Could you confirm that, that guidance is still valid? And could you clarify if those numbers you gave then were before cash interest and cash tax effects? And if not, could you size those too? That's my second question. And finally, on your working capital cash flow, it was about €1,000,000 ex DoJ. Given your backlog and milestone visibility, could you please help us with some sort of rough estimate for how you see working capital cash flow for this full year? And if you can say anything about the seasonality first half, second half there, that will be very helpful because that's one of the important things. It's hard to forecast from the outside. That was the last question. Thank you, James, for this question. Indeed, as we said, the cash generation is our, I would say, number one challenge, and we are working a lot to improve the situation on the back of both terms of payment, so the customer relationship as well as internal improvement of our working capital terms. To your points, it's difficult to answer precisely to all your questions. We would probably have disclosed them directly because these are valid. But the easily fall into the what we know is that the transport operations free cash flow, as we said, is positive and has supported some cash flow coming from the separation within GE. So what I said at the Analyst Day, I. E, there will be some continuous cash outflow coming from the separation within GE, is still valid first. I don't change a word of what I've said to give a note forgive me for that, operational cash flow of transport, which then is slightly positive. Coming from the interest costs, which is mostly gross debt, which was artificially higher. I remind you that the gross debt at the end of September when we released our numbers was close to €5,000,000,000 This was a gross debt. Whereas today, we have a gross debt of €2,000,000,000 So we have decreased significantly our gross debt, and therefore, our interest cash going forward. In addition, the bond buyback, which has cost us in terms of cash around €70,000,000 So all impact. So in a nutshell, I confirm what I said for next year, which is basically to compensate both the exceptional CapEx and coming from legacy, which separation cost cash out. As you could have derived from the slides in the Analyst Day. Having said that, and this is your third question, and this is a difficult question because we can, of course, derive from our backlog the cash milestones. That's clear. But that gives that would because, of course, the order intake of the year has a little impact on the sales of the year. So as I said, 90% of the sales of 1 year is totally derived from the backlog. But this is not the case for the cash because for the cash, you have the down payment. We still spend 5%, 6%, 7% of our backlog. So of course, the level of order intake, which is always very unpredictable, has a significant impact on our cash flow. So I would say that we have and we have a cyclical effect of our cash. It really depends on the level of down payments on so we have a good visibility of our milestone on the project, which are good this year. There is no particular exceptional impact. But again, to reach our objective, we need to record, as we expect to, a number of orders, which will include a number of down payments. Maisel, you want to add something? I think there is no seasonality really, as Henri mentioned. We are not really a flow business type of profile in terms of cash generation. Each project has its own specificity. When we've signed the revolving credit facility, clearly, we've taken account, let's say, a kind of volatility in our working capital of around €400,000,000 as I already said during the presentation. And this is basically the magnitude of the volatility that we are facing in our portfolio today. Very helpful. If I could just come back very quickly. The interest in tax for cash, was that included or not in your future phasing of legacy cash cash costs? And could you size the down payment for India? We have some exceptional tax cash out in the EMI, do you say? Yes. So as mentioned in the analyst day end of March, we flagged to you actually a number of costs relating to separation, mainly regarding the IT domain where we need to separate the networks from GE and the disbursements of the investments will probably occur more last year than what we faced this year in terms of timing. So we talked about roughly €150,000,000 And we also have obviously till the bonds that we still have a mature which the last maturity date is March 2020. Obviously, the costs the legacy cost of this progressive reduction of the gross debt. That's why I flag to you that I believe the normative level should be more below €100,000,000 versus the level that we see today in the books. Okay. Thank you, Ramay Jose. On your last point, just on India, we don't want to be to go in the details of the terms and conditions of any contract. We have mentioned the fact that we need to invest for this contract. It's a contract which is both including rolling stock part and maintenance for which usually we don't have any down payment. So globally, this had no significant impact today or this year on our cash flow. But it's a complex contract. As I said, there is a joint venture, so partly financed by locally and so forth. So no but no particular one off impact coming from this Indian contract. It's more a progressive impact. Thank you very much. Okay. Thank you. I will try to be more concise in my answer because there are a number of questions. And so third question from Akash, I think. Yes. Next question is from Akash Gupta from JPMorgan. Please go ahead. Yes. Hi, good morning, everybody. I have 3 questions, please. My first question is on top line because you guided 3% organic for the full year and you posted 7%. So was that because of some milestone? And do we expect any sort of payback in FY 2016, 2017? So that's my question number 1. And the question number 2 is on capital allocation. What is going to be dividend policy? That is something that we have never talked about. And because the free cash flow generation will be poor and you might be doing some ad hoc M and A, do you have any target for leverage like what sort of leverage you are willing to take on the books before we see these because these GE related payments will not be coming before 2018? So question on what sort of leverage you can take before you before those payments come into picture? And then the final question is on these legacy costs. I mean, I get about cash flow that how they will be coming in cash flow, but I still have some issues in modeling them in P and L that in the coming years, other than interest and tax, this IT cost, is there something that's going to impact P and L? And if it is, then where the cost will go? That's my third question, yes. Thank you, Akash. So on your first point, your first point is very valid. If we have overachieved our own anticipation, it's because, again, the projects have been well executed and the milestones have been reached in time or earlier than what we anticipated. And of course, these milestones have been achieved before the year end, and therefore, will not be achieved again. They are not going to be achieved twice. So it puts a little bit additional challenge on this year growth, clearly. But as I said, I'm not going to qualify this year growth at 1% or 2%. So this is a it depends if we reiterate this very good performance in terms of milestone achievement or not this year and so forth. So your mechanical, I would say, remark is correct. But let's see how things are going to develop in the year. In terms of capital allocation, I have no answer to your question. Frankly, and I will not link that to the dividend policy. We are going to resume with a normal dividend policy. And we are going not this year, again, but next year, we are going to distribute the dividend in line with market practice. We are not, I would say, bound by our capital allocation because today, as you have Rico mentioned, we are in a specific time where we have this joint venture option, put options, which will occur in 2018, which is tomorrow. Actually, it's in 2 years. So today, we have a strategy to continue to grow the company organically and by acquisitions. And to be fair, I will answer to your question in 2018 when we will discuss the exercise of the put and what to do with the eventual proceeds from this put options exercise. And then there will be the question, as we have answered to the question for the Opera, which when we did the Opera, we said that basically we want to have an unleveraged company because we felt that this was a proper balance sheet for the time in which we were and with investments that we were pursuing. Whether the answer will be the same in 2018, that we will I think we have time to discuss at this point. But clearly, there will be a point of discussion when the gain eventual exercise of the put option. In terms of legacy cash, we said it at the Analyst Day, most of the separation costs are provided for in the P and L. So today, with all the operation and the exceptional operations that we have done, you should and that's why we are outlining it, expect from some cash out in the next year, but the P and L impact would be minimal. Okay? Thank you. Next question is from Guillermo Plaghers from UBS. Please go ahead. Hi, good morning, Andre. Good morning, Maria Jose. It's Guillermo Pener from UBS. I was wondering actually about 2 questions, but I'll ask the first one and then I follow-up with the second one. Regarding the mix impact that you mentioned on the margins, can you quantify it? And then can you give us a hint as to how much that mix will impact 2017, if possible? On the mix, we made I mean, it's always complex to make some simulations. But this year, it has been, I would say, a greater impact than what we have guided for the midterm because of the mix because of the acquisition, so Tabby has been quicker. The mix impact has been quicker. And we consider that it's half half between the mix impact and the, I would say, operational leverage this year, which doesn't say that it will be the same next year because the acquisition impact will be not repeated each year. And we have done a significant, I would say, step towards our objective in terms of mix. So it's more or less mix, half half between the operational leverage and the mix impact, which is a kind of operational leverage but a different one. And then the second one, a clarification. Even the finance line, I think Maria Jose mentioned around EUR 100,000,000 negative by 2020. But I was wondering whether that is the net finance line or just the finance expenses? Or how can you in a way guide us through 2020 in that particular line? So regarding financial expenses, we have, obviously, the regular fees from the banks on the various facilities. You know, we need for our contracts quite a large amount of commercial bonds to guarantee, in fact, the execution of our long term projects. So basically, we have, let's say, a regular level of fees with banks. Then the second aspect in the financial expenses that will remain in the company is the cost of hedging. So we have a stringent policy of systematic hedging in terms of ForEx exposure on our projects, And this conveys a cost, which is part, obviously, of the cost that we put in our tenders in our bids to the different projects. But this is also part of the recurring, let's say, financial cost that we will have in the P and L. That's why, let's say, once we come to the end of the maturity of the gross debt, I consider that we still have, let's say, a normative level of financial expenses below €100,000,000 Okay. And Gael, is it? Gael DeBouret from Deutsche Bank. Please go ahead. Yes. Hello. Good morning, everyone. The first question is again related to the free cash flow performance. How much of the €500,000,000 financial cash and tax cash out was offset elsewhere in the cash flow statement as part of the locked box mechanism with GE, if any? The second question is on the GE Signaling integration. It seems that GE Signaling had a margin of just 5 percent in the first few months of its integration, which seems a bit lower than what I was expecting myself. Could you perhaps comment on this and say what you see as a normalized margin level for the business? And the third question I have is on the French market. You booked pretty high restructuring charges and impairments this year. A lot of that was probably related to France. So in this respect, could you give us a bit more substance to the comments you had this morning at the press conference when you said that the group was preparing for possible decline in activity in France? Thank you. Thank you, Gael. On your first question, the number which I quoted was the €100,000,000 was the number not compensated by GE. These are the separation costs, which remain paid by Aston. And that's why I said that we need to I would say these are impacting the so called transport operations. And if we want to talk about the recurring transport operations, then we need to exclude this number. But these are which is compensated by GE is included in the power or free cash flow. On GE Signaling, we said that actually the margin of GE Signaling is not very different from ASTOM. And that's why it's okay, 2 months is not extremely significant, a few months, but that's why it's this type of label. Why? Because actually, G signaling is a mix of 2 type of activities. 1 is more a product activity in the U. S, which is quite profitable. And the other one is a project activity, which we had launched quite recently in the world based upon European products, new CBTCE and so forth. And they have struggled more in this activity. So it's a kind of very, I would say, differentiated, very contrasted mix of activity from the U. S. And from the rest of the world. It's also fair to recognize that, and you may know that, that the freight market in the U. S. Is not as booming as it was in the past due to the decrease of activity in the oil and gas sector, which was the driving part of the freight activity in the U. S. In France, what I said to the press conference in France, I said that the French activity, and I said it to the press conference, if you look now, we are detailing our activity in France in our books. So if you look at it, you will see that the sales are more or less flat. So there is nothing which is earth shattering today. What we see and what we anticipate is that the backlog or the commercial activities is smaller than what it was in the past. And therefore, we can have a gradual decrease of activity in France. And what I said to the press conference that the backlog gives us visibility to adapt ourselves progressively in France. And that we will, of course, discuss with all interested parties to see how to do that in a very smooth manner. Okay? Next question from Exane. Next question is from Sebastian Gater from Exane. Please go ahead. Hi, good morning. First question, I'm a bit confused about the IT separation cost. You say you have been provided that this cost in the P and L and would see the cash out in the next few years. I mean, have we seen I mean, have this cost been booked and is part of the adjusted EBIT number you've shown or is it below? Second question is on the net capitalization of R and D of €20,000,000 this year. Is it a new normal level or has it been exceptional this year? And the final question will be on the provision in the balance sheet. There has been a very sharp increase if we adjust for the DOJ payment, notably in tax free and other non current provision. Can you tell us what drove this increase? Thank you. Okay. A number of questions. We're not going to go into the details of all the accounting lines. Basically, the separation IS and T costs have been recorded below the adjusted EBIT. These are nonoperational costs. So depending on where they are exactly, but they are below adjusted EBIT, that's clear. On the R and D capitalization, I would say I don't know if €20,000,000 is kind of recurring level. It's not abnormal as we are growing, as we are launching a number of innovations that the capitalization is slightly higher than the depreciation. Okay, €20,000,000 is not a huge number, whether it would be €20, €10,000,000 or €0,000,000 depending on the year. But I would say it's not abnormal that it's slightly above this level. Finally, on the provisions, I would say, and Jose will maybe answer in 2 more details. There have been a complete review of the balance sheet. So there have been a number of non operating provisions and in tax and which have been proved from the different lines to clean all the balance sheet. So that's why you may see some movement in provisions from the different lines of provision, also from current provisions to noncurrent provisions. So we were expecting some questions around that. It's quite complex. There is no to be clear, there is no particular cash out to be expected from these movements. These are regular, and this does not change, I would say, the cash out perspective as compared to the previous year. But it's more a question of where and which lines to put them. Maybe Maisel, you want to add a word. I confirm actually the classification of the different provisions has been adjusted. The amount that you see on top of the DRG movement mainly relates to tax as you flagged it. I think we are well covered in terms of risks in the balance sheet. And let's say, the profiles of cash flow that we have presented to you during the Analyst Day are consistent with the closing that we are showing today. Okay. Thank you. And next one? Next question is from Chris O'Carron from Societe Generale. Please go ahead. Yes. Good morning, everybody. Just three questions, if I may. Just could you come back on the competitive environment? Could you give us what's going on in the current tenders? Any specific pressure from Chinese players, for instance, or for any other players that you may see? And that's my first question. 2nd question about the financing. Is there any issue on dedicated or in specific countries where you have seen some difficulties currently? Or is the move more positive, if I may, say, in terms of financing? How do you see any risk with regard to that? Or is that anymore? That's my second question. 3rd question, just coming back to the free cash flow structure. You have given a lot of explanations on legacy and provisions on so far. Could you give us your view on the evolution on the operational cash flow or working capital? More particularly, what's going on in terms of inventories? And could you give us your view on the evolution of your supply chain, maybe related also to what you want to do in terms of outsourcing on where we are currently, giving us a view on how it may evolve in terms of improvement for next year's in terms also of the 2020 objectives, sorry? Okay. Thank you, Christophe, sorry. It's a few general comments on the activity. Nothing, of course, has really changed as compared to what we said end of March. The competitive situation is still the same. We have quite intense competition worldwide, which is not a surprise. And our 2020 strategy is precisely to address this competitive pressure. And we know that there is a pressure on price, and there is a pressure on some competitive coming from some competitors. You are mentioning precisely the Chinese. As I always say, I think we should for the Chinese, it's not we should not take the kind of extreme position. They will be there. They are there. They are competing with their own, I would say, pluses and minuses. Our strategy, by being more local, by closer to, I would say, the customers, also by benefiting in some countries, like in India, from even lower cost than the Chinese cost. We have this strategy to be competitive even against Chinese when they are present. They're not present everywhere, of course, by far. But when they are present, we want to be in a position to be competitive, and we have won a contract against the Chinese. For example, the level of the reais today makes it also difficult for some exporter to come in Brazil, Chinese or other exporters. So that's no particular change, and there is a good commercial activity. Your point on financing, I would not be as optimistic as you are. I mean, the financing situation has not improved in the recent period. Financing is always a key topic for our projects, not that we are bringing the financing ourselves. But as you know, our customers need to get some financing from external parties, whether they are multilateral agencies, whether they are banks, commercial banks or budgetary funds. And we are discussing with a number of customers the coming to force of some projects, which are waiting for the financing to be put in place. This has been a little bit, in some countries, of course, deteriorated or more difficult situation because of the oil price drop. And hopefully, this will come to an end sooner than later. But I would say this is a day to day struggle. Whether it's more complex today than yesterday, I mean, all our projects take some time to come from a few project development, to come into force, to project execution. So whether it takes more time or less time, it's difficult to say. But typically, on the financing side, we are working on it. And I'd say the situation has not changed neither positively nor negatively. In terms of cash flow and working cap, again, we can come back to the variation of working cap, which is linked to some of the milestone. But structurally, we are working on improving our inventories, our turns of inventory as compared to sales. Of course, we are growing. So it's not totally abnormal that our inventories are growing at the same time, like payables are growing, like receivables are growing. But as compared to our level of activity, we intend to, I would say, to improve these indicators. Having said that, I would say, and this is the complexity of our cash flow, that this gradual improvement is sometimes masked by the volatility, the short term volatility related to some milestones of payment or related to some down payments. But if you look year after year, these indicators are improving. Okay? The next question is from Alfred Kleyter from ODDO. Alfred Kletter from ODDO. First on acquisitions, you said that you wanted to do several add on acquisitions this year, preferably in signaling and service maintenance. What kind of targets could you actually envisage? And how much would you consider spending on these acquisitions this year? And the second question relates to TMH in Russia. You also your stake evolve in the future in TMH? So in terms of very difficult to answer. In terms of bolt on acquisitions, we have a pipe of acquisition, which I would say is similar to the one of last year. So we are I will be disappointed that we are not making any acquisition because this is part of our strategy to boost our organic growth through bolt on acquisitions. At the same time, I'm not ready to do stupid acquisitions for the sake of doing acquisitions. So I will not give any guidance, but what we have done this year in terms of bolt ons or the SSL, Motorola, this kind of small acquisition, which the amount we are talking about of tens of 1,000,000. So globally, about €100,000,000 of proceeds, €100,000,000 to €200,000,000 maybe. That's the order of magnitude. But don't come back to me if we do only €50,000,000 or if we do €200,000,000 because it's we want to be selective and we want only to acquire companies which are worth being acquired. So this is but these are the size of acquisition that we do, whether in maintenance or in signaling. We don't have currently on the pipe something of the size of G signaling, for example. In terms of TMH, no, there is no today, the RZD, the operator, the Russian operator, has sold its shareholding in TMH. And so we are at 33%. Our partners are at 66%. And there is no intention, neither from them or from us, to change this ownership. Of course, as I said also during the press conference, we have changed a little bit the priority of the partnership from something which was more commercially oriented and introducing to the market new product and so forth. We are more in the operational improvement, the global footprint, trying also to take advantage of the footprint of TMH, which is quite competitive today, thanks to the level of the rubber. So it's more operationally oriented, restructuring, competitiveness rather than new product, I would say, new product penetration to the market. Thank you. Moving on to Andrew, if I'm not mistaken. Yes. Next question is from Andrew Kapler from Royal Bank of Canada. Please go ahead. Yes. I've got 3 questions, please. The first, I apologize, I just wanted to come back to cash flow briefly just to help if tell me understand. On the slide that we were talking through, I think it's Page 32. I was just wondering, if I look at the 652 outflow in the full year, I'm guessing that the $720,000,000 DOJ fine is included in there. So if I add that back, then the free cash flow sort of predefined would be around, I think, around €70,000,000 But when I look into the sort of the notes to the accounts, I do notice that in terms of the sort of movements in construction contract in progress, there was a very, very strong cash in relating to construction contracts in progress. I think it was €400,000,000 in the year, maybe €500,000,000 in the second half. And so I was wondering, perhaps as my first question, if you could help me just understand what the payments the other way were that meant overall the cash flow was only that €70,000,000 It just seems that there's an awful lot of movements there and maybe I'm missing something. The second question was hopefully a slightly less complex one. And I guess in a month or so's time here in the U. K, we've got quite a big vote that at the moment does seem to suggest there's a possibility that we might see Britain exit the European Union. Some speculation, if that happens, we'll see quite a significant weakening of sterling. I wonder if you could just talk a little bit about Alstom's exposure to that and give us an idea as to what's doing your accounts in terms of sales and also profits. And then the final one was and I apologize if it came up before, but just in terms of the decision not to propose a dividend this year, I mean, I would have thought a company such as Alstom with a sound outlook and a pretty strong balance sheet would be expected to pay a dividend. Could you talk a little bit about why you haven't decided to do so in the next couple of months? On your Brexit point, we have not disclosed any detailed amount coming from the UK. UK we are present in the U. K. We are mostly long term contracts, by the way, service contract, whether it's West Coast Mainline or whether it's for the Metro of London. So it is it does I mean, it's not significant in terms of large numbers. It is one activity, several we can say several €100,000,000 a couple €100,000,000 of sales. Everything is based in the U. K. So there is no we say it's a service contract, a local contract. So you the only risk that we have is a translation impact if the British pound was to dramatically change its value. But frankly, considering the size of the income that we do that, I don't know what are your expectations in terms of British pound evolution, if there is a Brexit. But I don't expect any significant impact on our P and L nor on the cash flow of this Brexit impact. Whether you consider that this would Brexit would turn the U. K. Into a very difficult period with the European Union and so forth, that I don't know. And whether it will have some impact on the future tenders, that frankly, it's very difficult to predict at that stage. But on our ongoing tenders, as we are completely local, I don't expect any significant impact on our accounts. On the dividend, just to clear this point, it's true that we thought about it. Frankly, the share buyback was only done in February, so it was very recent. So after a €3,200,000,000 of share buyback, distributing a dividend, which would have been by any mean, if you take a normal type of ratio, would have been very small as compared to this share buyback, of course, and which will be difficult to size considering the number of exceptional element in our P and L. The Board has decided that it was probably unnecessary and that it will be preferable to consider that we will resume with a normal dividend policy next year when we'll have, if I may say, normal accounts not polluted, I guess, exceptional items. And again, considering in Yahoo, the level of dividend, which will have been distributed as if we take a normal policy as compared to the large, large number of share buyback of €3,200,000,000 On the working cap, I will give the floor to Marie Jose, but it's true that there have been lack for the provisions, but a number of reclassifications between the different lines or movements, not reclassifications, but movements in the different lines. So if you take only the assets or any part of the working cap, you have a very biased view of the working capital evolution, which you could see in the cash flow statement. You see the change in working capital of close to €900,000,000 And if you deduct the DoD fine, you can also deduct some kind of working capital change. But Marie Jose will explain that. Okay. So in fact Short in the short term. In the short answer, I'll try to. So basically, when you compare the balance sheet evolution and you try to reconcile with the cash flow, you should keep in mind that actually the balance sheet very much evolves also with the acquisitions that we have made in the year, which generate in fact an input in the scope. So obviously, the positions in the balance sheet reflect these acquisitions entering into our balance sheet without in fact impacting the flow the cash flow of the year. So in fact, the cash flow movements are very much flagged in the cash flow statement. So you're right, we have a little bit utilized some of the working capital. So even when we exclude the DoG payment, you see it's a slight consumption of working capital, which in fact reflects the progress in terms of execution of our projects. I would say prepayments remain relatively flat. And the evolution of the suppliers was very much in line with the increase in activity. The very good performance comes from the evolution of our inventories level, which in terms of turns has clearly improved over the year as already mentioned by Henri. Okay. Thank you. I think we turn to the last question as time is running. I think it's David. Yes. Next and last question from David Voss from Barclays. I'll try to keep it as short as possible. A couple of questions on the JVs. I noticed that the sales levels are a little bit lower, quite a lot lower, I should say, than I was used to. For renewables, for example, it seems that you only booked kind of €50,000,000 of revenue. I'm sure there's a perfectly logical explanation to it, but if you could help us with that. And also perhaps give us an outlook of what you think will be the kind of normalized level of contribution to your P and L of those JVs. And then I also noticed there is a in addition to the 3 GE JVs, there's a thing called Put Alliances, which would have generated €91,000,000 in the P and L. Could you just explain what that pertains to, please? Okay. Thank you. I think I will hand over to Marjorie for these questions. Okay. So in fact, regarding the energy JVs that we have with General Electric, we have actually no opinion on the evolution of the activity of those JVs that GE is managing. Basically, we account them under equity methods. So we recognize 50% of the net income in as a contribution to our books. And the put options are actually there to offset this contribution since clearly we said that we intend to exercise the put options in September 'eighteen. And therefore, let's say, the mark to market valuation that we expect of those puts should be the exit value of those put options at €2,600,000,000 in 2 years. So in fact, what we are trying to do with the put options is to limit and control the impact of the energy JVs on our storm accounts. And therefore, we offset any negative contribution from those JVs in our accounts. Thank you. We have no further questions. Okay. So thank you very much for your time. I think this concludes our first conference call on our yearly results. Happy to meet all of you again in the coming days maybe. And certainly, on July 13 for the conference call on our Q1 orders and sales. So thank you everybody for your time. Thank you for your understanding, and I'll talk to you later. Bye bye. Ladies and gentlemen, this concludes our conference call. Thank you all for attending. You may now disconnect.