Europe is more how you see our portfolio, I would say progressively evolving, both in terms of geography and in terms of activity. The fact that we have beaten our own, I would say, so to say, expectations in terms of sales, 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. 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.
Depending on one or two milestones, it can be 1% more, 1% less year on year, and again this year. 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 are 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. 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 costs down. The rhythm of this improvement will vary depending on the rhythm of the growth in sales. The two are moving together because in the growth of sales, then you have the mixed 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 erection of our new factories in South Africa and in India, actually the EUR 300 million of exceptional CapEx should be a little bit front-loaded.
As you said, it's 100 per year, and it will be a little bit more than 100 the first year, a little bit more than 100 the second year, and less the third year. This would be good news because this will mean that we are in line with the spending, which is today forecasted for these two programs, which of course, as you can imagine, in terms of CapEx, both in Johannesburg or in Madhepura, are quite challenging programs. The last, I don't resist to the temptation of giving the floor to Marie-José 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. I let Marie-José to answer.
In fact, the value of the JV's investment is EUR 2.4 billion. This is confirmed. You will notice annexed to the accounts that, in the comments to the accounts, that there was, as part of the price of GE, a dividend distribution paid through the agreed JV for close to EUR 200 million. 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 EUR 2.4 billion, plus a remuneration and an interest of 2%-3%, depending on the JV. The exit value that is locked in is confirmed at EUR 2.6 billion. This is basically what will occur when we exercise the options as early as September 2018.
If I may give this non-accounting comment. There is, of course, an economic value to the joint venture, which is, as Marie-Jose said, the exit value would be EUR 2.6, which is a EUR 2.4 plus
Increase
the yearly 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. The results, because these are equity accounting, the results of the joint ventures, and then to progressively increase the value to progressively reach this EUR 2.6 amount. 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. 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 these joint venture accounts, which we try to minimize.
Thank you very much.
Thank you. Next question is from James Moore, from Redburn. Please go ahead.
Yes. Good morning, everyone. Henri, Marie-José, 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. I'm afraid they're a little technical, so apologies. Could you please provide a EUR million number for what the legacy cash cost impact was in the full If you are able to split what that is in tax interest and operating, it would be very helpful. That's my first question. Secondly, could you please help us on the legacy cash costs going forward? Henri, I think at the investor day, you guided us to a further EUR 150 in 2017, fading EUR 100 million, EUR 40 million, EUR 10 million to 2020. Something like that. Could you confirm that that guidance is still valid? Could you clarify if those numbers you gave then were before cash interest and cash tax effects?
If not, could you size those too? That's my second question. Finally, on your working capital cash flow, it was about- EUR million ex DOJ. Given your backlog of 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? If you can say anything about the seasonality first half, second half there, that would be very helpful because that's one of the important things that'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 is difficult to answer precisely to all your questions. We would probably have disclosed them directly because these are valid. 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 do not change a word of what I said. Forgive me for that. The effective cost of operational cash flow of transport, which then is slightly positive, coming from the interest costs, which is mostly a gross debt, which was artificially high. I remind you that the gross debt at the end of September, when we released our numbers, was close to EUR 5 billion. This was a gross debt, whereas today we have a gross debt of EUR 2 billion. 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 EUR 70 million. All similar impact.
In a nutshell, I confirm what I said for next years, which is basically to cash out to compensate both the exceptional CapEx and cash out coming from legacy, which is separation cost cash out. As you could have derived from the slides in the analyst day. Having said that, this is your third question, and this is a difficult question because we can, of course, derive from our backlog the cash milestones. That is clear. That will because of course, the order intake of the year has a little impact on the sales of the year. As I said, 90% of the sales of one 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, which still stands 5%, 6%, 7% of our backlog.
Of course, the level of order intake, which is always very unpredictable, has a significant impact on our cash flow. I would say that we have a cyclical effect of our cash. It really depends on the level of down payments. We have a good visibility of our milestone on the project, which are good this year. There is no particular exceptional impact. 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. Marie-José, 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 EUR 400 million, as I already said during the presentation. 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 costs? Could you size the down payment for India?
We have some exceptional tax cash out, maybe Marise, you say?
Yes. 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. We talked about roughly EUR 150 million, and we also have, obviously, till the bonds that we still have mature, which the last maturity date is March 2020, obviously the legacy cost of this progressive reduction of the gross debt. That's why I flagged to you that I believe the normative level should be more below EUR 100 million, versus the level that we see today in the books.
Okay. Thank you, Marise. On your last point, James, on India, we don't want to go in the details of the terms or 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 a rolling stock part and a maintenance for which usually we don't have any down payment. Globally, these are no significant impact today or this year on our cash flow. It's a complex contract, as I said, there's a joint venture, so partly financed by locally and so forth. No particular one-off impact coming from this Indian contract. It's more a progressive impact.
Very much.
Okay. Thank you. I will try to be more concise in my answer because there are a number of questions. Third question from Akash, I think.
Yes. Next question is from Akash Gupta from JP Morgan. Please go ahead.
Hi, good morning, everybody. I have three questions, please. My first question is on top line because you guided 3% organic for the full year, and you posted 7%. Was that because of some milestone, and do we expect any sort of payback in FY 16/17? That's my question number one. The question number two is on capital allocation. What is going to be dividend policy? That is something that we have never talked about. Because the free cash flow generation will be poor and, you might be doing some ad hoc M&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. Question on what sort of leverage you can take before those payments come into picture.
The final question is on these legacy costs. 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&L that in the coming years, other than interest in tax, this IT cost, is that something that's going to impact P&L? If it is, where the cost will go? That's my third question.
Thank you, Akash. On your first point, it 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. 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. It puts a little bit additional challenge on this year growth, clearly. As I said, I'm not going to qualify this year growth at 1% or 2%. This depends if we reiterate this very good performance in terms of milestone achievement or not this year and so forth. Your mechanical, I would say, remark is correct. 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, I will not link that to the dividend policy. We are going to resume with a normal dividend policy, we are going, not this year again, but next year, we are going to distribute a dividend in line with market practice. We are not, I would say, bound by our capital allocation, because today, as you have, [recall I've] 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 two years. Today we have a strategy to continue to grow the company organically and by acquisitions.
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. Then there will be the question, as we have answered to the question for the OPRA, which when we did the OPRA, we said that basically we want to have an unleveraged company because we felt that it was a proper balance sheet for the time in which we were and with investment that we were pursuing. Whether the answer will be the same in 2018, that I think we have time to discuss this point, clearly that will be a point of discussion, when, again, 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&L. 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, the P&L impact will be minimal. Okay?
Thank you. Next question is from Guillermo Peigneux from UBS. Please go ahead.
Hi. Good morning, Henri. Good morning, Marie-Jose. It's Guillermo Peigneux from UBS. I was wondering actually about two questions, 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 can you give us a hint as to how much that mix will impact 2017, if possible?
On the mix, 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 acquisitions, notably, the mix impact has been quicker. 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'll be the same next year, because the acquisition impact will be not repeated each year. We have done a significant, I would say, step towards our objective in terms of mix. 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.
Thank you. The second one, a clarification. Regarding the finance line, I think Marie-Jose mentioned around EUR 100 million 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?
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. Basically, we have, let's say, a regular level of fees with banks. The second aspect in the financial expenses that will remain in the company is the cost of hedging. We have a stringent policy of systematic hedging in terms of forex exposure on our projects. This conveys a cost, which is part, obviously, of the cost that we put in our tenders, in our bids to the different projects. This is also part of the recurring, let's say, financial cost that we will have in the P&L.
That's why, let's say, once we come to the end of the maturity of the gross debt, I consider that we will still have, let's say, a normative level of financial expenses below EUR 100 million.
Okay. Gael, is it?
Gael de-Bray 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 EUR 500 million 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 Signalling integration. It seems that GE Signalling had a margin of just 5% in the first few months of its integration, which seems a bit lower than what I was expecting myself. Can you perhaps comment on this and say what you see as a normalized margin level for the business? 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.
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.
Okay. Thank you, Gael. On your first question, the number which I quoted, the EUR 100 million, was the number not compensated by GE. These are the separation costs which remain, paid by Alstom. That's why I said that we need to These are impacting the so-called transport operations, if we want to talk about recurring transport operations, we need to exclude this number. What is compensated by GE is included in the power free cash flow. On GE Signalling, we said that actually the margin of GE Signalling is not very different from Alstom. That's why it's Okay, two months is not extremely significant, a few months, but that's why it's this type of level. Why? Because actually, GE Signalling is a mix of 2 type of activities.
One is more a product activity in the U.S., which is quite profitable, the other one is a project activity, which they had launched quite recently in the world, based upon European products, new CBTC and so forth. They have struggled more in this activity. 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, you may know 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 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, I said it to the press conference, if you look now, we are detailing our activity in France in our books. If you look at it, you will see that the sales are more or less flat. There is nothing which is earth-shattering today. What we see and what we anticipate is that the backlog or their commercial activities is smaller than what it was in the past, therefore, we can have a gradual decrease of activity in France. What I said to the press conference, that the backlog gives us visibility to adapt ourselves progressively in France. That we will, of course, discuss with all interested parties to see how to do that in a very smooth manner. Okay, next.
Next question.
Next question from.
Next question. Thank you. Next question is from Sebastian Growe 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&L, and we'll see the cash out in the next few years. Has this cost been booked and is part of the adjusted EBIT number you've shown, or is it below? Second question I have is on the net capitalization of R&D of EUR 20 million this year. Is it a new normal level, or has it been exceptional this year? 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 risk 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 highest IT costs have been recorded below the adjusted EBIT. These are non-operational costs. Depending on where they are exactly, but they are below adjusted EBIT, that's clear. On the R&D capitalization, I would say, I don't know if EUR 20 million is a 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, EUR 20 million is not a huge number, whether it will be EUR 20, EUR 10 or EUR zero depends on the year. I would say it's not abnormal that it's slightly above this level. Finally, on the provision, I would say, Marie-Jose will maybe answer into more details.
There have been a complete review of the balance sheet, there have been a number of non-operating provisions and tax, which had been proved from the different lines to clean all the balance sheet. That's why you may see some movement in provisions from the different lines of provision, also from current provisions to non-current provisions. We were expecting some questions around that. It's quite complex. 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, Marie-Jose, 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 DOJ movement mainly relates to tax as you flagged it. I think we are well-covered in terms of risks in the balance sheet. 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. Next one.
Next question is from Christophe Quaroni , from Société Générale . Please go ahead.
Yes. Good morning, everybody. Just three questions, if I may. 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? That's my first question. Second 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 there any more? That's my second question. Third question, coming back to the free cash flow structure. You have given a lot of explanations on legacy and provisions so far. Could you give us your view on the evolution of 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 and where we are currently? May evolve in terms of improvement for next year in terms also of the 2020 objectives? Sorry.
Okay. Thank you, Alfred. Christophe, sorry. 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. We know that there is a pressure on price and there is a pressure coming from some competitors. You are mentioning precisely the Chinese. As I always say, I think for the Chinese, we should not take a 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 being closer to 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 are not present everywhere, of course, by far. 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 exporters to come to Brazil, Chinese or other exporters. 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. 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. 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.
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. Hopefully, this will come to an end sooner than later. I would say this is a day-to-day struggle. Whether it's more complex today than yesterday, all our projects take some time to come from a few project development to coming to force, to project execution. Whether it takes more time or less time, it is difficult to say. Typically, on the financing side, we are working on it, and I would 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. Structurally, we are working on improving our inventory. Our terms 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. As compared to our level of activity, we intend to improve these indicators. Having said that, I would say 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. If we look year after year, these indicators are improving. Okay.
The next question is from Alfred Glaser from Oddo. Please go ahead.
Yes, Alfred. Sorry, I was here.
Yes. Hi, good morning. Alfred Glaser from Oddo. First on acquisitions, you said that you wanted to do several add-on acquisitions this year, preferably in Signalling and service maintenance. What kind of targets could you actually envisage, and how much would you consider spending on these acquisitions this year? The second question relates to TMH in Russia. You increased your stake in TMH not so long ago. How do you view the business outlook for this company and also your stake evolve in the future in TMH?
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. 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 a stupid acquisition for the sake of doing acquisition. I will not give any guidance, but what we have done this year in terms of bolt-ons or the SSL, Motala, this kind of small acquisition, which amount, we are talking about tens of millions. Globally, about EUR 100 million of proceeds, EUR 100 to EUR 200, maybe. That's the order of magnitude.
Don't come back to me if we do only EUR 50 or if we do EUR 200, because we want to be selective, and we want only to acquire companies which are worth being acquired. These are the size of acquisition that we do, whether in maintenance or in Signalling. We don't have currently on the pipe something of the size of GE Signalling, for example. In terms of TMH, no, there is no today. The RZD, the Russian operator, has sold its shareholding in TMH. 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 ruble. 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 Carter from Royal Bank of Canada. Please go ahead.
Yes, I've got three questions, please. The first, I apologize, I just wanted to come back to cash flow briefly just to help 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 EUR 652 outflow in the full year, I'm guessing that the EUR 720 DOJ fine is included in there. If I add that back, then the free cash flow pre-define would be, I think, around EUR 70 million. When I look into the notes to the accounts, I do notice that in terms of the movement in construction contract in progress, there was a very strong cash in relating to construction contracts in progress. I think it was EUR 400 million in the year, maybe EUR 500 million in the second half.
I was wondering, perhaps as my first question, if you could help me just understand what the payments the other way were that meant that overall the cash flow was only that EUR 70 million. 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. 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 that 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 sterling accounts in terms of sales and also profits.
The final one was, I apologize if it came up before, just in terms of the decision not to propose a dividend this year. 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 U.K. We are present in the U.K. We are mostly a long-term contract, by the way, service contract, whether it's West Coast Main Line or whether it's for the metro of London. It's not significant in terms of large numbers. It is one activity, we can say several hundred million, couple hundred million EUR of sales. Everything is based in the U.K. It's a service contract. It's a local contract. The only risk that we have is a translation impact if the British pound was to dramatically change its value.
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&L nor on cash flow of this Brexit impact. Whether you consider that this Brexit would turn the U.K. into a very difficult period with the European Union and so forth, that I don't know. Whether it will have some impact on the future tenders, that frankly, it's very difficult to predict at that stage. 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. It was very recent.
After a 3.2 billion EUR 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 elements in our P&L. The board has decided that it was probably unnecessary and that it would be preferable to consider that we will resume with a normal dividend policy next year when we have, if I may say, normal accounts, not polluted by all these exceptional items. Again, considering you know , the level of dividend which would have been distributed if we take a normal policy as compared to the large number of share buyback of 3.2 billion EUR.
On the working cap, I will give the floor to Marie-José. It's true that there have been lack for the provisions, but a number of reclassification between the different lines or movements, not reclassification, but movement in the different lines. If you take only the assets or only part of the working cap, you have a very biased view of the working cap evolution, which you could see in the cash flow statement. You see the change in working capital of close to EUR 900 million. If you deduct the DOJ fine, you can also deduct some kind of working capital change. Marie-José will explain that.
Okay. In fact, when
In a
In a short answer, I'll try to.
Yeah.
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. Obviously, the positions in the balance sheet reflect these acquisitions entering into our balance sheet without, in fact, impacting the cash flow of the year. In fact, the cash flow movements are very much flagged in the cash flow statement. You're right, we have a little bit utilized some of the working capital. Even when we exclude the DOJ 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.
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 Vos from Barclays. Please go ahead.
Hi there. Good morning. 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, or quite a lot lower I should say, than I was used to. For renewables, for example, it seems that you only booked kind of EUR 50 million 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&L of those JVs. I also noticed, in addition to the three GE JVs, there's a thing called put options, which would've generated EUR 91 million in P&L. Could you just explain what that pertains to, please?
Okay. Thank you. I think I will hand over to Marie-José for these questions.
Okay. 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 method, so we recognize 50% of the net income as a contribution to our books. The put options are actually there to offset these contributions since clearly we said that we intend to exercise the put options in September 2018. 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 EUR 2.6 billion in two years. In fact, what we are trying to do with the put options is to limit and control the impact of the energy JVs on Alstom accounts, and therefore, we offset any negative contribution from those JVs in our accounts.
Thank you. We have no further questions.
Okay. 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 first quarter orders and sales. Thank you everybody for your time. Thank you for your understanding and talk to you later. Bye-bye
Ladies and gentlemen, this concludes our conference call. Thank you for attending. You may now disconnect.