H1 14/15

Nov 5, 2014

Good morning, ladies and gentlemen, and welcome to our conference presenting Galveston's First Half Results for the Fiscal Year 20 fourteen-twenty fifteen, talking about the accounts from April 1, 2014 to September 30 as well as the strategy and Alstom and the perspectives. As you can see, we are here in London and welcome to the participants in this meeting. I also want you to note that some participants are joining us by phone and this conference is webcast live and will be also available in replay mode on your website. So thank you, Evan, and I would like to remind you that all published elements, presentation, financial reports including MD and A and accounts as well as the press release are available on our website www.alstom dotcom. Going on the let me first give you the main takeaways of this publication on H1 numbers and where we stand on our project with GE. As you will see, Transport showed a solid performance with order more than doubling compared to last year first half and sales are showing an organic growth of 13%. The Ifo margin after corporate costs improved by 30 basis points. In compliance with accounting international accounting rules and IFRS 5, Alstom Energy activities are classified as discontinued operations and therefore they will not be included in the numbers I'm going to present orders, sales, IFRS and these activities are reported under the line net income, discontinued operation. We also see that the free cash flow for the group has been affected mostly by working capital swings and in particular in the Energy business. I'm also going to report on the key steps that were achieved in the project between Alstom and General Electric, key steps which were completed, notably the works consultation is finished, the sales contract and all the corresponding agreements have been signed. And as announced by the minister overnight, the French foreign investment authorization has been granted. We therefore will call for shareholders meeting to be held on the 19th December, 2014, where this transaction is going to be submitted to the vote of the shareholders. And I intend during this presentation to give you a flavor on where we on the outlook, where we stand for the current year and some midterm guidance for Alstom. I will now leave the floor to Nicolas Tissot, our CFO, who will present you with the detailed results before I come back for the progress on where we stand with GE and details about Alstom's post transaction. And I will finish by the outlook before going to the question and answer session. Thanks, Patrick. Good morning, ladies and gentlemen. I will start with a short note on the application of IFRS 5 and IFRS 11. In application of IFRS 5, the thermal power, renewable power and grid activities as well as some corporate costs have been classified as discontinued operations. Transport share of corporate cost was allocated to Alstom and it is now included in the IFO and it has around 50 bps negative impact on the operating margin that you see in the accounts of H1. Up to the closing of the transaction, Alstom net result is also supporting high transitory financial expenses for obvious reasons, but we'll come back to it. And concerning the application of IFRS 11, the results of 2 joint ventures, 1 in China and 1 in the UK in signaling are now accounted for under equity method instead of previously being consolidated proportionally. The H1 impact was of close to €100,000,000 on the sales and close to €13,000,000 on the Ifo line. Slide 5 is summarizing our main KPIs for the first half of the fiscal year twenty fourteen-twenty fifteen. Orders at $6,400,000,000 were at a record high, up more than twice as compared to the same period last year with a book to bill ratio of 2, thanks notably obviously to the jumbo rail contract Africa. We booked in South Africa for around €4,000,000,000 for 600 suburban trains and this is associated with a maintenance contract over the long run because it's an 18 years contract. Sales were up 13% organically amounting to €3,100,000,000 Income from operations, which once again now includes a share of corporate costs linked to Alstom transport activity increased by 21%. The operating margin at 5% after corporate cost improved by 30 bps. Net income from continued operations of €29,000,000 is not significant as it was impacted by high transitory financial expenses as well as heavy non recurrent restructuring charges and we'll come back to it. Net income from discontinued operations reached $226,000,000 Free cash flow from continued operations and this is here before tax and financial cash out was slightly negative at $85,000,000 minus $85,000,000 due to unfavorable cash profile during the period of a few contracts being executed. And finally, free cash flow from discontinued operations before tax and financial cash out once again amounted to a negative €1,000,000,000 due to first lower sales in energy impacting progress payments and also adverse cash profile of some projects over this period. Now on slide 6, a few more words on orders. Orders this semester were boosted by the strong demand for urban transportation as well as signaling, they include, as I have just mentioned, the booking of the jumbo South African contract. Our record high backlog gives us visibility on future revenues. It's really at a very high level right now. And for example, approximately 50% of the sales expected in 2016, 2017 are already in the bag covered by the current backlog. Patrick will detail this point later when we'll talk about Transport specifically. Services backlog remains at a sound level both in bookings and in the total backlog where they represent a third of the backlog. Moving now to slide 7, which gives some more examples of our commercial successes for the first half of twenty fourteen-twenty fifteen. Beyond the South African contract, we booked in particular a turnkey contract system in Qatar, a project for rapid transit trains in Australia and a signaling system in Spain. Now on slide 8, the evolution of sales, which increased by a strong 13% organically. They were mainly fueled by deliveries of suburban intercity and very high speed trains in France, in Italy, in Germany as well as high speed trains in Poland and in Morocco and tramways in Dubai. Emerging countries represented around 1 third of sales during this last period. Income from operations stood at €152,000,000 increasing by 21%. It now includes a share of corporate cost allocated to transport activity. So the new Alstom, which represented roughly €15,000,000 in the first half of twenty fourteen-twenty fifteen and this is based on the review of actual costs. This is not a simple allocation key. The operating margin at 5% after corporate cost improved by 30 bps, thanks to sound project execution, tight cost control and cost cutting effort, partly mitigated by ramp up costs associated with new platforms such as the Rigiolis platform. Now turning to the rest of the P and L on page 9. You see that restructuring expenses this semester amounted to €55,000,000 This mainly relates to some restructuring at Alstom Transport Headquarter in Saint Trois and in some European facilities and should not be considered as normative. It has already been mentioned that we expect a recurring level of restructuring for current Alstom scope of around €30,000,000 a year. Other non operating expenses at minus €34,000,000 included write offs on assets as well as legal costs. Therefore, EBIT decreased to €63,000,000 The net financial charges reached €56,000,000 and are reflecting a high level of charges in this transitory period before we actually close the deal and get the proceeds, which is not representative of Alstom's expected financial structure. Tax result was a negative of €11,000,000 and it included additional tax expenses such as the CVAE, which is a contribution for enterprise on enterprise added value. If you restate from those fixed tax charges, the tax the effective tax rate of the company was 25%. Share in net income of equity invested amounted to $39,000,000 It is obviously driven by the contribution of TMH and this company showed a decrease in operational performance over the period due to a lower level of activity, obviously, amplified by the impact in our accounts in Europe by the severe drop of the ruble. Net income from discontinued operations finally decreased to $226,000,000 It is mainly the result of lower order intake over the last 18 months, which is now impacting sales and operating margin. And this is despite a significant capital gain on the sale of the auxiliary steam components we closed in September. As a result, net income group share amounted to €255,000,000 Let's now move to free cash flow on slide 10. Free cash flow from continued operations. So as we said before tax and financial cash out at minus 85 during the first half, the free cash flow generation was affected by temporary negative cash profile of a few contracts. We mentioned several times the volatility to be expected from a semester to another in the working cap requirement. And in that sense, H1 was unfortunately no exception. We believe this should not be repeated in H2 and we expect free cash flow from continued operations before tax tax and financial cash out to be positive over the full year. Free cash flow from discontinued operations before tax and financial cash out was negative at minus €1,000,000,000 It is hit by lower sales in energy impacting progress payments and also as we said by adverse cash profile of some projects we executed over the period. Moving to slide 11. I would like to spend a few moments on our financial structure and give you an update on our balance sheet. Our liquidity position remains sound with €1,000,000,000 of gross cash in hand at the end of September and a €1,350,000,000 totally undrawned and fully confirmed syndicated credit line. We closed the sale of our steam auxiliary component business for an EV in the region of €730,000,000 And we also reimbursed more than €700,000,000 of a bond, which was maturing in September at its normal date. Now talking about net debt and equity, we on slide 12. At the end of September 2014, our net debt stood at €3,900,000,000 compared to €3,000,000,000 at the end of March 14. And this evolution pretty mechanically resulted from the negative free cash flow of the period, a negative ForEx effect. And this was only partly mitigated by the effect of the proceeds of the sale of our steam auxiliary components. On the right side, you see that the equity remained sound over the period increasing to close to €5,500,000,000 at the end of September 14 compared to €5,100,000,000 at the end of March. Once again, the net debt level you see is reflecting the transitory period Alstom is going through and is clearly not significant of the future financial structure of Alstom following the deal with GE. Let's now make a short note on energy key figures on slide 13. Others were globally down 2% remaining affected by the lack of big tickets especially in equipment. Main bookings related to steam turbines in India, an upgraded GT24 turbine in Mexico, a number of important HVDC contracts and wind turbines in Brazil. As expected, sales decreased reflecting a slower order intake in recent quarters in some businesses. The operating margin was affected by lower volumes and some one offs in projects involving notably new products in the renewable power universe. This decrease was partly mitigated through continuing implementation of the D2E performance plan. Note that under IFRS 5 Alstom depreciation and amortization of Energy's tangible and intangible assets as of the 20th June 2014, which is the date of the approval of the offer from GE by the Board. Thanks very much for your attention on those numbers. And I will now leave the floor again to Patrick for an update on our project with GE. Thank you. Thank you. Thank you very much Nicolas. So I come back on where we stand in the process with the deal with GE, I would say that as indicated in our press release a number of major steps have been achieved. As of today, we have completed the information consultations with the work councils in something like 91 entities at European level, national level and local ones. We have signed with General Electric yesterday the master agreement as well as all related documentation, notably the JVs and the acquisition of GE Signaling as well as the RAIL Global Alliance with GE. As indicated by press release from the French Ministry of Economy, we the authorization on French foreign investment foreign investment in France, sorry, has been granted. And we are obviously in the process of requiring all the necessary competition and regulatory authorizations in a number of jurisdictions, again both from regulatory and competition standpoints. Consequently, as originally forecasted, we planned the Board has decided to call for shareholders' meeting on December 19th where the transaction approval will be submitted to the vote of the shareholders as we indicated. Now concerning the closing, clearly it depends on the completion of all the previously mentioned regulatory and antitrust approvals. We expect that this may happen in the second half of twenty fifteen. I mean mid-twenty 15 was our indicative date as we have communicated previously. There is a question on the use of the proceeds, which we will communicate shortly. As I said, we will provide the shareholders when they will be requested to decide. That means before December 19 with the full set of information which in my view are needed to decide whether they like or don't like the transaction. And among this set of data is obviously the use of the proceeds. So we want them to have the full view when they decide. As you know, there is we expect proceeds of €12,350,000,000 and we'll use a large part of it obviously to provide the group with a solid balance sheet structure headroom for future growth as well as having strong liquidity. And we may use part of these proceeds to reimburse part of the outstanding debt before maturity purely subject to economic conditions for this to happen. So we will give you in due time the necessary information that we will provide to our shareholders. I would like to spend some time with you now to give you some more flavor on the transport strategy and its perspective. I think that when you look at Alstom in its transport business, there are 3 main blocks. The first one is we are serving a large resilient and growing market. 2, we believe that we are well placed in order to address the customers' requirements in this good market. And 3, this should translate into a combination of growth and profit improvement as I'm going to detail in a minute. If I start with the market and what is our view on the market, we expect this market to grow by around 3% per year over the coming medium term period, I'd say, 5 years from now. And the interesting point is that growth should be expected more or less everywhere. You have Europe representing a third of the global market, which should remain solid. There are a number of major infrastructure projects, which have been launched over in the pipeline, such as Grand Paris in France, London Underground, etcetera. And there are also numerous services opportunities. Growth in the North America is expected to be driven by urban transportation, LRV, metros as well as by signaling. Latin America and Middle East should also experience healthy growth, benefit from expansion in Europe and we would benefit from expansion in Eurobond integrated solutions and bundled offering. I mean the numbers for the first half illustrate this trend. And Asia Pacific should also obviously remain a dynamic market. And the example of the Indian market in which we have had original successes, which I expect are going to expand is a good example of a potentially very active market. Passing on the analysis of the market by activities that you can see on Slide 20. This slide illustrates the solid growth that we should expect, in particular in signaling and urban trains as well as in services. The urban market is going to be supported by emerging countries where the growing phenomena of urbanization is clear and where we should benefit from a 6% to 7% growth per year on this segment. We also expect the Service segment as you can see in the charts to grow strongly 4% per year. This growth is supported by maintenance sometimes or often associated with orders for trains and turnkey systems. So and also we see growing opportunities to in relation with operators outsourcing a number of their maintenance activities. Last but not least, we also expect in mature countries that the aging of the fleet and the need for more to provided in for more to be provided in the transportation system to give us opportunities midlife modernization, lifetime extension as well as new systems and equipments. We believe that we are in a good position to address these opportunities. And basically, we expect our business to outgrow its market, grow faster than the underlying market because we are among the very few players who are combining a global reach and a strong local presence. Global reach allows us to benefit from the opportunities existing in the markets which are growing faster than the other ones and allows us to mitigate the local cycles. The market can be softer in one point, but maybe more active as well, etcetera. So we and obviously, we are able to serve our global customers wherever they are. But at the same time, I think that when you look at our footprint, we probably have the most diversified and the most international footprint compared to our competitors. And this creates the proximity that is necessary with the customers and it allows us to better answer to requests from customers or in the countries in which they operate for more local presence. We are present in 60 countries and we are perceived as a true local player in a number in many parts of the world. So you have here three examples among others of the way this strategy has turned into contract. South Africa, the small €4,000,000,000 contract that has been booked in the first half is an interesting combination. We are currently starting the process delivering trains from Brazil using obviously our global including European engineering support and we are going to manufacture on-site, I mean in the country in a factory that we are going to build on the supply chain that we are going to create and 2 third of what we'll deliver over the lifetime of the contract is local. By the way, we have been combining this 600 trains contract by an 18 years maintenance contract, which gives us obviously a nice pre visibility of what's going to happen there. The other example India, Azerbaijan, I'm not going to detail. In India, we started by a contract in Chennai. We built a factory in Schesity near Chennai. And this factory allows us to take a second contract in Kochi and will allow us also to serve as a low cost base in a number of export opportunities. So all this I think is fitting very nicely the strategy that we are implementing. The idea here is also to show that we are not just an equipment provider, but we can address the needs of the customer from the product, the equipment towards the full system. And depending on what is necessary, we are able to strictly answer the need. It's true for instance that in a number of countries, the demand is not just for an equipment, but for a full solution. And we expect by the way this solution request notably in urban transportation to grow and represent a higher share of the global demand compared to what it is today. If I obviously just remind that in this business, you need technology, you need innovation and you have to combine innovation on one hand and obviously a competitive offer in another hand. And you have in this slide 20 something, 23, you have the a few examples which are provided. Also interesting to say that as you see on Slide 24, the demand today is no more to reduce the CapEx and provide the cheap equipment, but the ability to be competitive not only through the investment day 1, but through the lifecycle of the customer and we have also providing here a few examples of how we can answer this request by systems which not only provide a competitive equipment, but also the ability to reduce operating costs by the customers. You have examples of energy recovery systems where the braking system is reinjected in the system to allow the overall supply of electricity. You have also some very interesting development that we have made in maintenance, predictability, etcetera. So a number of examples, we show that the cost of ownership approach is definitely moving ahead in this business as well and we are well, well placed to answer this type of request. So if I try to check whether the strategy that we have been that I'm talking about is working and not working, I mean, it has been implemented for a number of years. I think that the backlog of 4.5 years of sales, The increase that you can see in both sales and IFO seem to illustrate that's probably not a failing strategy. In my view, it's a strong strategy. We are committed to increase the profitability. We put in place tight cost control systems. We put in place performance plans that I already mentioned that were implemented across and are implemented across Alstom and specifically implemented as well within the transport activity, so called the D2E performance plan. And we know that there are challenges. We know that the market is a competitive one that I've known so many non competitive markets. We know that budgetary constraints and economic ups and downs can put pressure on the number of projects. We know that there are political risks here and there as well. That's the price to pay for being international. And there are many merits of being so, as I mentioned earlier. And we also know that in order to meet the requirements for new equipment, new platform etcetera at the start of the day you have to put a little money in the system before you get the profitability. You expect that this is what we are doing. Again, we have a record backlog as you can see in the slide 26. This backlog gives us visibility. You have here the way we believe the backlog is going to turn into future sales. And obviously, this is nice to have this 50% of the 2016, 2017 sales already in the backlog and the rest is going to come. If you look also on our orders and sales on slide 27, you've seen that over the last 3 years our book to bill has remained above 1, now substantially higher obviously with the support of the jumbo contract signed in South Africa. It's interesting also to see that the service orders represent a material share in the total. We have around 20% of our total orders which are coming from service, something like €1,300,000,000 per year on average of service contracts. And the sales are also showing a story of healthy growth. So they should increase in a steady at a steady pace over the years to come. At the same time, we continue to invest for future growth. We invest in R and D. We invest in CapEx. You have here a few data. I mean this is the investment has been around €130,000,000 over the last years. CapEx represents part of it. The investment in new manufacturing capacities, the other one is to upgrade and improve the efficiency of the existing industrial footprint. And you see here the evolution on the next slide, the evolution of the operating margin from 2011, 2012 onwards. They are based in my view on the positive implementation of the strategy I described and on the rigorous implementation of actions to work on costs through the in Performance program and to improve execution performance. The additional contribution has been the growing share of service and signaling activities, which obviously help the global economic numbers. I am not going to detail these slides which relates on the dedicated to excellence plan. This is something I described that for the Global Alstom Group, I also remind you that out of the €1,500,000,000 that we targeted as a run rate March 16 versus the 1213 cost base, 30% was the part of transport in the global picture. So don't be surprised to have this €450,000,000 that's where we are. And on the following slide, you can see a few examples of what it means practically in the daily life examples in sourcing, manufacturing, industrial footprint as well as reduction of our overheads through simplified and optimized in organizational measures. You also can see that we own our business, but we also are part in a number of joint ventures and have investment with associates, which remains a substantial contributor to our profitability. This has been for us and will remain a successful strategy to penetrate specific local markets, which also produces sound financial results. This is the example of Transmash Holdings for instance in which we have a 25% stake. This company is performing very well. But obviously, when the ruble is soft and is impacted, it impacts the translation in euro of the earnings we get in ruble, etcetera. Free cash flow, I'm not expecting to avoid question on that point. This is on slide 33. I think that over the recent years, we have made significant efforts in cash management. And I would say that we have never made secret the fact that the working capital may have swings from a semester to another one. But globally, we are targeting normatively stabilized working capital going forward. Moving to slide 34, we have summarized the history of expansion of Alstom. Again, the main M and A milestones in the recent years have been the acquisitions recent years 15 years ago of Fiat Perro Allia in 2000 and the 25% stake in T and H. That means that it has been a way to boost our strategy. But basically our strategy has been focused on organic growth. I'm happy to put another brick in this M and A extension with the GE Signaling acquisition, which as announced is expected to be finalized at the closing of the deal with General Electric because it's a side deal within the global deal with them. I will, if you don't mind, spend a couple of seconds to highlight a few characteristics of G signaling in the next slide. It's an interesting acquisition for us. It's a company of around €400,000,000 of sales with 1200 employees in different sites in the world. It's interesting because it combines it's a good fit for us both geographically and in terms of products as it has a strong North American position and it also has a larger presence in signaling for freight, which is one area in which we were not as present as the passengers related signaling activities. Concerning the other side of what we have signed among the various agreements we signed with GE yesterday is a global rail alliance that I already mentioned, which is a frame agreement which stipulates a number of areas in which we'll try to work together. It's no commitment for anybody. But at the end of the day, the way it's structured is that it can only bring positives. If you are negative on us, say it will be 0. If you are more optimistic as I am, consider that the commercial support we can get from GE on the number of geographies as of the U. S. A. I think they have, but don't repeat it publicly, stronger loading capabilities than we do in the U. S. For instance. I think that what we are doing in some countries as maintenance of their locomotives business could be expanded in others should the 2 parties consider it make sense. I'm sure there will be some opportunities. Sourcing they buy significant quantities for their local business we do as well. Engineering, manufacturing, so we have identified a number of boxes in which working together can make sense. Last but not least, gcapital is supporting a number of infrastructure in the world. Why not transport projects in which we are involved as an EPC or equipment provider. A few words on the guidance on slide 36. First message on the current year, we expect to our sales to grow organically. I mean the 13% that we had on H1 is not going to be repeated on H2. That's why we guide you for high single digit number for the full year. We expect the operating margin nevertheless to be starting from 5% on the first half over 5% on the full year. And as you have seen the €85,000,000 negative of the free cash flow before tax and financial expenses, we expect it not only to be positive in H2, but to compensate the negative €85,000,000 on H1 and over. Concerning the group where we have had a substantially negative free cash flow over the first half close to €1,400,000,000 negative. We expect this number to be significantly positive in H2. Medium term concerning now we are talking about the new Alstom. We think as I said earlier that the sales should beat the market and we expect to grow this business at over 5% per year. We see where we stand. We start from 5% plus and we expect to gradually improve this number within this bracket of 5% to 7%. And concerning the group free cash flow, again, as I said, there is volatility. We expect nevertheless that normatively on a given period, it should be in line with the free cash flow should be in line with the net income, talking net income prior to the contribution of the NRG DVs. I'm talking here about net income in transport and free cash flow corresponding to this transport business. That's where we stand. And before giving the floor to question and answers, I would like to hand over one minute to Nicolas Nicolas who wants to share with you a personal matter. Yes. If I can get the mic connected, I would like in fact to share with you a more personal information. There's no slide for that one. After basically almost 5 years as CFO of that company and that was a great job, great experience, great company. I would say time has come to think about the future. And for me with the Alstom G deal, it's a fact that the future is not going to be with the new Alstom we talked about. So we decided with Patrick that I would leave my CFO role in a few weeks after having the pleasure of continuing the dialogue with you. And I will take a new position to assist Patrick in the implementation of our alliance with GE. The deal itself as you heard is well advanced, but we have tons of work to prepare the integration of our energy activities within GE and also the integration of GE signaling within Alstom Transport. And last but not least, we have also to build a new Alstom, which is going to be able to fly on its own. We see in the process that GE is dedicating a lot of resources to the project and we want to be able to keep up the pace in the interest of our teams. I would like to thank Patrick for this year's working together in this position and thank him also for offering me this new position. I would like obviously to thank you all for the rich years of dialogue on Alstom. It's strategy, it's numbers, it's markets. Thanks very much. And I will now leave to Patrick to complement on his side. Thank you. Thank you. Thank you, Nicolas. I concur on the analysis of what we have been through over the recent years. I mean, we had had a number of successes, a few more difficult moments, but we found solutions and they didn't come by chance. They came because of the hard work and initiatives and action taken that you and your team deserve credit for. So sincere thanks for that. As you said, and I don't think it's a breakup news, there is a lot of work ahead, notably with this implementation and the preparation execution and implementation of the deal with General Electric on which you will focus. So for the CFO job, you will hand over to one of your top guys in your team, Jean Jacques Morin, that some of you know. And Jean Jacques has been Finance Director, CFO of Power Activity, Transport Activity and is currently Senior VP Group Controller. So he has been working under our joint guidance on the accounts that we are commenting today. And I wish good luck and success to Jean Jacques. As Nicolas said, by the way, and I would like to insist, the move will only happen December 1. And therefore, Nicolas and us will be together around to continue to update you on all the questions you may have and all the comments you would like us to give on both the H1 accounts and the GE related issues. Thank you very much, ladies and gentlemen. Thank you, Nicolas, for wishing to make this point public in front of you guys with whom we have been working very closely over the recent years. I think it was the proper timing to do it. So now ladies and gentlemen, I give the floor to the questions you may have. Yes. No. So as a way no, what we are going to do what we are going to do, we have a number of questions coming from I may sit so it's easier. Number of questions coming from the room here and the number of questions from the we have close to 200 attendees through the webcast and the teleconference. So I'll try to keep the right balance between questions from the room and questions from the associated participants through the web. Gael, you start. Thank you very much. Thank you very much. Yes. Obviously, relates to the cash flow development. And so you're talking about the unfavorable cash profile of the contract being executed. But do you mean the cash flows related to the milestones that were achieved in H1 have already been received or are yet to be received in the coming quarters? And maybe in relation to that, I mean, you've set up a targeted cash conversion rate of about 100% over the medium term. But what makes you really confident about that target, given over the past couple of years? I mean, it seems you haven't been able to do it. I guess that might be related to CapEx trends. I'm not so sure what you see here. Maybe if you could give us a sort of timing when you do expect the CapEx to be more aligned with the depreciation level? The second question really is about the competitive landscape, which is kind of changing right now with the planned merger between CSR, CNR, with the rapid development of Itash in Europe and so on and so forth. And a few months ago, Siemens offered to create a joint venture with transport activities, including signaling. So I'd like to understand what in principle maybe makes you reluctant to combine your forces with Siemens and possibly create a real European leader in the market? Thank you. Okay. Thank you. Well, the cash flow for the first half has been disappointing, disappointing. We have had expected issues and some less ones. I would say that, yes, the cash flow for the first half included globally for the Groupon, the EUR 1 point €4,000,000,000 negative. It's a combination of as I said some negative cash profiles over period. This happens. It has happened in the past Will. 2nd one, obviously, the slow sales have impacted the milestones the payments related to the milestones. We had the number of one offs etcetera. So it has been disappointed. On your question is well, 1, we are expecting it to reverse in H2, both obviously for Transport because we told you that we expect the free cash flow before financial expenses to be positive on full year. It's negative on the first half. I mean, it will be compensated. And the second one, globally at the group level, we expect the free cash flow to be significantly positive on H2. It's fair to say that some payments that we were expected on the 30th September or before or I came in October, etcetera. So it's you know that in this we have not been good in forecasting the cash flow. I would like you wrote it and I'm not just quoting what some of you wrote. I mean sometimes it works in the good direction as you may remember not that long ago where we guided to a negative number which happens to be positive. Some other times it was the other way around. Why? It's because we have substantially big moving parts. As we move towards transport, the size of the moving parts obviously shrinks a little bit, but still there are a number of substantial moving parts up and down. The cash conversion of 100% is an objective. It's not a given. We believe that this should be achieved. CapEx CapEx is not massive. CapEx is what around €100,000,000 like that. That's not something the reality of the swings that you have in the working capital is related to the free cash flow is related to the working capital. That's where the issue is. So we expect that we'll go to this 100 when as soon as possible. Again, I want to in fairness, I'm quite confident on this number. At the same time, I will not discard the possibility on a given period to have some ups and downs. So sorry not to the future is more difficult to predict than the past. I used to say that, but I'm strongly supported at this point. On the competitive landscape, when you look at our M and A, basically most of the development we have achieved over the years have been through organic growth and the numbers and the backlog support it to continue. When there are opportunities, we look at it opportunistically. This is the signaling opportunity which comes as part of the collateral benefit of a deal on energy. That's interesting. I've been trying to grow on signaling over a number of years, it didn't happen. If there are opportunities to grow in Europe, we'll consider. There is nothing cooking. We're not looking at Italian projects etcetera. We'll see. Now you come back to recent history on the deal on why did we why aren't we excited by a competitor's proposal to get our gas business and give us their train one. Basically forget about the gas issue. It's no more on the table. Your question on transport, why we aren't why aren't we interested in this transport combination? Just because 1 plus 1 makes less than 2, because it's same footprint, same market and same technology. And you don't beat the future of a business on the bloodshed. Then the Andreas, then I'll take a question from the conference. Andreas? Microphone please faster. Thank you very much. First question on just on helping with our models going forward. I apologize on that, but I mean because of there is a significant discontinuity in the numbers. So the models are a bit shaken. Sorry guys. You mentioned corporate cost for transport about 50 basis points in the first half. Should we use that as a pro form a going forward as well? Or will that change when it actually becomes the surviving entity in that sense in terms of overhead for I like surviving, but I mean the continuing one. Continuing entity in terms of listing costs and all the other things that are still there. Second question on tax rate as well. You said 25 percent this half year period. Should we use that as a normal rate going forward? One more strategic one, in the past because of the constraints of the overall Alstom balance sheet, the margin of error within Transport, but also maybe to use the balance sheet to help customers with financing payment terms and all of that was maybe more constrained than some of your other competitors. Does the approach of Alstom going forward change in terms of using the balance sheet in a more aggressive way or taking more risks than the very disciplined approach you had in the past? Look, first question, I think that the corporate share, which is in this H1 number is both in line with what which is a fair share of what has been used by transport in the global corporate rate corporate costs that we have experienced so far. And in my view, in line of the future corporate weight that is going to be associated with Alstom Transport. So in other terms, the fact that the company reduces by 2 third is not going to create an overweight at this level. It is based on an analysis of the actual costs and those which were to serve transport activities. So it's actual analysis of costs and it's I mean it might be refined fine tuned in the end, but it's basically the right level. It is the reality of what is used today. And I add that I don't expect a step change, neither up and down in the future level of the functions which will be needed for Alstom in its new format to continue to do business, including being listed and addressing analyst questions. It's basically 20 5% of the total combined cost of the former group. The second one is the tax system. It's going to be refined. So we don't give you a firm number, but I would consider 30 to go more in the ballpark will be more around 30 than around 25 because of the geography where the money comes from. Because of the geographical mix and the weight of Switzerland, which is going to reduce in the new format of the group. TTA, everything. That's the view. We'll refine it in due time. So that's just preliminary input to your model. The third question relates to, are we going to use the balance sheet to get business? That would not be very consistent with my statement on what will happen to the working capital as we move forward. The answer is even though as terms of future structure, balance sheet, liquidity, etcetera is going strong is going to be strong. We don't consider ourselves as becoming an infrastructure banks for the customers. So no, we are going to keep a strict hygiene on the way we take orders, looking at the margins, the risks and the cash profiles of the projects. I would say the evolution is that we see some pressure the client's pre financing of the contracts, which doesn't mean that we will return completely the roles and be in the position to finance our customers. I mean, over the the markets are competitive. We know it. No surprise. Nothing will change by the disposal of Alstom Energy and the new setup in the energy area. We it remains a competitive market. We address this market. We have a good backlog. We are acting on the cost, acting on the execution. And we have no intention to change our commercial policies to by all means accept if the cash profile is not fine with us, we don't go. We are not the bankers of our customers. We are their suppliers. Yes, understood. No, no, I took it. Yes. In the future, it could be more attractive. I didn't took your question negatively. I just said that our intention is to continue to exercise TRIC's hygiene looking at the global picture, which is price and margins, risks associated to the contract and cash profiles and terms and conditions in general. So I mean it's a day to day decision, we go don't we go, but we'll apply Street's hygiene as we move forward, regardless of the fact that there will be more liquidity and a much stronger balance sheet. And when you look at our order I mean, the level of order intake, we really see I mean, the numbers that it would imply in terms of financing of our customers are so massive that no balance sheet, even the stronger balance sheet we will get after the transaction would resist to such a policy to supply this systematically. Thank you, Nicolas. There is a question. I go to the conference, if you excuse me one second. So I think there is a question from Martin Wilkie. Should I give you the floor, Martin? Thank you. From Deutsche Bank, you have the floor. Yes, thank you. Good morning. It's Martin from Deutsche. So a couple of questions just on cash. So now that you reported Energia discontinued, we can see a little bit more detail of Transport. And I see that the down payments or the customer advances inside transport are still quite large. I think nearly €2,000,000,000 Just to sort of try to understand how we should think of that number in terms of the volatility of down payments in transport over time? And also when you think about capital return and I understand you're making an announcement on that towards the end of the year, but just how we should think about the headroom comment that you made and how we should think of the without payments as part of that when we think about the kind of balance sheet that you might be thinking of post the capital return? Thanks. Yes. Martin, thanks. I mean, mean, I'm not going to restart the debate on whether down payments are debt or not debt. I mean, if you as in this room and at the phone experience enough participants. No, again, we have a €27,000,000,000 backlog. Are you surprised that there are some down payments associated to the orders we have in hand? At the same time, I commented on the working capital globally. I told you that I'm expecting limited volatility some inter period volatility of the working capital, but some global stability that includes the down payments as part of the global picture. So okay, we have down payments. When we don't have you are upset. When we do have you are also. So be so. Yes, question in the room? Olivier? Okay. Olivier. Okay. No, Olivier will have 3 questions later. So please, James? I thought I'm with 4 then, I guess. So just in terms of looking at your cost base, when you compare it to your peers, how do you think you are? And obviously, you have a lot of work to do there, question 1. Question 2, when you look at the margin of 5% to 7%, what are you thinking about in terms of long term pricing pressure in terms of mix, because obviously service and signaling will grow, which should be positive. And the final question, when you look at the sort of global position you have, where do you think the biggest gaps are that you need to fill through M and A? Look, first question, where do we stand in term of costs? I mean, very difficult. I mean, we don't have detailed data from all our competitors available to share with you. What I see is we have €27,000,000,000 of orders in the backlog and we have a backlog which supports what I'm telling you in terms of gradual improvement of our profitability. So, it means that our cost position is in line with what is necessary to trigger this type of profitability in a given market. At the same time, there are projects in which we see some very aggressive quotes by competitors and therefore either don't participate or don't win. So that happens as well. So I can tell you. So I think we have to continue to work on the course. I think that Henri Boulpar Lafarge has taken a number of positive initiatives such as which I think will be fruitful over time, such as giving more empowerment to the local businesses, making sure that the decisions are taken as close as possible to the customers while keeping a global coherence hygiene and consistency through some strong engineering, manufacturing skills at the center, but making sure that all decisions to get an order are not necessarily taken in Saint Trois. So that has been quite an action and initiatives. And this gives the activity, cost improvement, etcetera. I don't think we are at the end of the process. We are at the start of the process, but we have opportunities. At the same time, we have also I'm talking about manufacturing costs, but there is also one area in which we think there is a lot to do as well is what we call reengineering to cost. What we try to do is we try to do products which have better functionality for our customers. We work on the future generation of high speed trains which will have a lower cost per seat in addition to running fast, in addition to providing new characteristics, new services to customers being able to have a cost per seat which is lower. So this is through an optimized footprint. It's also through an optimized product. So the reengineering to cost is also one of the key areas in which we can differentiate ourselves in terms of product offering. Pricing pressure, I more or less answered that James as well. This is a market which is a competitive market and we expect it to remain so. Again, in this competitive and price pressure in markets which have some price pressure, You have seen that we are able to take substantially orders. The last point in terms of GAAP, well, I would say you have seen in signaling where growth made sense that we have had this opportunity. I looked in the past at others which didn't materialize. I hope this one will materialize through the global deal with Z, because this obviously is a substantial with finalization of the deal we see. I would say that I don't think that in M and A, right or wrong, that's your judgment, but I don't think that in M and A we are in a must do mode. We will grow organically and we will look opportunistically if there are opportunities to grow. We just bought a very small business in from Arava in Technikatome in the signaling one which is not big in 1,000,000, but nice in terms of brick including in our technical offering This GED is great in terms of ramping up the signaling business both in geography and in extent of the product range. We are also so that's the type of thing we'll do. If there is we want to grow the services same time, we bought some small service business, no big noise. But still that's nice. It increases and broadens our franchise. I think we can do more in this area and the market is supporting the broad strategy in services. As far as rolling stock is concerned, I answered to Gael a question on the deal with Siemens, which I don't think makes sense. I've not changed my mind on that. At the same time, if there is a specific opportunity, which allows us to better cover a geography, allows us to expand the offering by some access of new technologies, Orion, which we can do better. Why not? We look at it that way. But again, we are not in a must do mode. We have no big deals cooking under the curtain currently. Olivier? And then I'll ask Arnaud Schmidt on the teleconference please. Thank you, Olivier. It's new. It's new. It's new. So I'm not disappointing you. So I'd like to start with the JVs, please. There's a master agreement you said that's been signed. Yes. We don't have much more detail yet about the JVs. Can you comment maybe on the margins of the JV? How much dividend the JVs will distribute and the debt structure of the JV. Am I inferring well from the presentation that you're paying €2,600,000 cash at the end which means they're not carrying debt? Or is that supposed could that change? That's the first one. Second one, thinking about the long term guidance for RAIL. So, I mean, the closest PR we can think about is Bombardier out there which is targeting 8% medium term. Is there anything structural here which we should be aware of that means 8% wouldn't make sense for you? That's the second one. And maybe to finish on Transnational DME. I may have wrongly listened, but I think Nicolas you said, operatingly it was going a little bit down. It was amplified by FX. And on the slide, it says operating performance is strong. So I just would like to see to get a feedback of how you see this developing as part of the overall Rail medium term outlook? Thank you. Good. First question on JVs. We don't provide a specific guidance on the margins. It come in due time if necessary. Concerning the dividend, we see. And the third question, this is only one I would answer is the fact that yes, the JVs are structured on a no debt no cash basis. So basically the 2 point close to 2.6 which is the sum of the 3 investments in the investments in the JVs covering grid, renewable and nuclear and frac steam represent on a non cash no debt basis this few 1,000,000 below this 2.6. Again, as you know, we have a liquidity right and the floor. And obviously, any dividend which is going to be distributed would be would impact the floor as you can imagine. The second question in rail and comparing to Bombardier, well, I'm not really prepared to make in front of you comparison of our performance with our peers. I think that you should be I think that Bombardier includes in its profitability margins the contribution of its investments in the non fully consolidated units, which is again it's a convention, it's a definition. I think that when you look at a business such as the rail business, you should include Huawei on another. It can be in a ratio, it can be in different approach, the contribution these entities because again we you can decide at one point in time whether you fully invest in a plant as we did in near Chennai and this is fully integrated in our numbers or whether you go through a JV which we have been doing in China on some signaling activity in the U. K. On some signaling activity in Russia grew 25% in TMH. So frankly, that's the way you put it in the picture is to be defined. But so when you look at the numbers, I mean, they put some restructuring, we don't. They include the numbers on the non fully integrated companies. We don't do exactly the same conclusion. So you have You have to compare Apple to Apple. Yes. You have to look at the global ones. That was my comment, but Lindon. I don't see any fundamental reasons for our profitability to lag some of our peers subject that the mix is the same. So which I don't think is that different in the company for the company you mentioned. On TMH, on the Nucleus Control, the message is the following. 1, this company has a strong performance as highlighted by the numbers. 2, it's fair to say that this company may be exposed by a shortfall of the overall activity slowdown in the overall activity in Russia, which has ups and downs as everywhere. So I mean there may be some effect on the economy of events in Russia there and this could impact the level of deliveries of the level of purchases of state owned companies such as RZD even though they are committed and all the discussion had with them showed a strong wish to continue to push the renewable and the expansion of their fleet. So they remain bullish, but I mean there may be a volume impact. And 2, but not because it slows down that it's not a strong performance. I mean the 2 may happen together. It remains a strong performance in a lower with a lower level of activity. And 3, the translation of this overall KPIs from rubles to euro obviously is impacted by the current decline of the value. And just on the JVs, clearly, to be very clear, I mean, we signed not only the master agreement, but all the side deal agreements yesterday. And also don't only look at the JVs as a through the P and L and looking at the margin and looking at the dividend, look also at it with a balance sheet view because this is also a financial investment. And one of the important things for the company is do we have a guaranteed value on this investment. Yes. And so look at also on the liquidity rights. Yes. From the teleconference question? Arnaud Schmidt from Natixis, you have the floor. Thank you. Good morning, Patrick and Nicolas. First question on Transport. What would be in your view the drivers to enhance the margins up to 7%? Would that be rather volumes or the mix maybe? 2nd question on Transport normalized free cash flow. Do the last 2 years give a fair idea on the gross cash flow transformation before interest and tax that was around 70%. I have a question on debt, which debt lines would be covered before their maturity? And the last small question on Arriba CCT, could you give us an idea of sales and margin levels? Thank you. First question, the improvement of the margins in Transport, we expect a gradual improvement. This is something which is supported by our backlog obviously because I gave you the visibility given the sales from the backlog. It will come by positive impact on the cost execution and also the mix would improve. And I add that we have currently a number of contracts typically in Regioni's which are in the first stage of their life. And as we move forward, this is classically better contributor to the overall performance at the mix, the cost and the execution will play. On the future cash flow, I told you that I was expecting free cash flow of the new Alstom focused on transports to be in line with its net income. You say that it was 70% over the last years. I'm not totally sure about the numbers. I tell you that I'm expected cash conversion to be around 100%. And you will and the facts will show whether I'm right or not right. On Arava and on the signaling deal that we buy, it's a very small business around €10,000,000 or something like that, Nicolas, but it has a few it has a number of engineers that fits what we believe we need in order to serve a number of projects and notably are highly helpful in all our efforts to position ourselves for the Grand Paris automatic. We have they bring skills in automated metros, which is an area of interest for us. Important technological gap that we feel. And on the debt management part, obviously, once the transaction is completed, Arnaud, we will obviously take some actions to actively manage debt and specifically probably reimburse early part of the debt. But obviously, we will strike a compromise between the cost of early reimbursement and the premium you have to pay in this case and the end game. And we don't necessarily need to reimburse so much of our net debt because we can also manage our balance sheet taking into account the potential exercise of the puts on the JV starting in 2018. So we will have some actions to reduce gross debt, but in a way where we will take into account the economics of such actions. We look at the gross debt. We look at the net debt. We look at the liquidity. We look at the price at which we can use the liquidity in order to reimburse earlier the debt. And before the benefits are captured by the lenders, they wait the maturity and we'll do as well. Everyone, it's James Moore from Redburn. I've got questions on 3 topics if I could. Just on the deal, could you just give us a sense of deal risk here? I know it's their intention to fully go through this. They're putting a lot of people to work. But say the EU say to you, you've got to sell a small little piece. Can GE then say, oh, we wanted that small little piece, we walk away? And on the fungibility of the joint ventures, would it be fair to say the grid and hydro offshore are more realistic to have as a cash like item, whereas the global nuclear and French is perhaps harder. I know it's a small piece to sell ultimately to match off against debt. And cash and equivalents in transport as a percentage of sales over time, you've been 5% to 10% as a group. Is there a number we can think about there? Secondly, on the topic of so the cash and equivalents in the Transport balance sheet compared to a group number which is ranged between 5% 10% of group sales? Just trying to get a sense for a sensible number there. With respect to signaling, GE have talked about high double digit margins, but they report very differently to IFRS. Could you give us a sense of the profitability and also the synergies now that the deal is signed and any synergies from the Global Alliance Agreement? And then finally, on your manufacturing footprint, you've still got the bulk of your headcount in Europe. You've been investing a lot in emerging market plants. And you've talked about margin pressure in the past from investing in India and Russia. I'm trying to get a sense for the loading of Europe versus emerging and really still how much we have to do before the balance is right. Yeah. Thank you. On the risk of the deal, first risk is the shareholders to vote against the deal on December 19, so that will allow everyone to go back home. I think we have to pay GE with €35,000,000 of breakup fees. So that's one of the risks, but it's in your hands and on the shareholders' hands. As far as the regulatory and competition authorities are concerned, as you can imagine, I have no intention to speculate. It has been studied carefully, but by our respective teams. We have strong answers to any questions that can be raised. So therefore, we'll work with the corresponding authorities and in all the jurisdictions that we are going to request approval for and this is between 2030. I don't have the number in the back of my head, but massive work to be done. This is why by the way the closing is not happening as shortly as everyone would have hoped because transitory period are not very helpful for daily life. But again, I'm not going to speculate on what answer we give to this and that question. So I think that we have either filed where we had to file or are actively preparing the filing and we'll update you on where we are there. On the JVs, again, the JVs are the JVs which combine what we bring, what in some instances GE bring and will be under GE's operational management through and benefit from the backup of GE's strength all over the world. So I think it's a strong set of assets in hand and we'll see where it goes as it goes. But again, nothing wrong. I would say you are right in distinguishing the new JV compared to the others. I mean, that's the one which embeds the most national interest stuff and also which has some specifics in terms of governance, targeted exit and so on. And that's okay. We'll share with you, by the way, at the shareholders meeting the details of how much is invested in each of these JVs. And so you have the full view. On the signaling, we have Gee, as indicated, that it's a double digit number. I have no reasons to make any additional comments. We have made due diligence and we have concluded this due diligence with the agreement with GE, which allowed us to sign. We have not given public guidance so far on the synergies. We have some ideas, but we share it with ourselves first and then we'll share it with you. Concerning the load of the transport activities, Yes, we can have some pockets of underactivity here and there. And for instance, we have in Benfoure some load issues and we are having some so much partial some specific measures in order to reduce the time of temporary reduction of working hours and this can happen here and there. So again, our job is to fill the factories and reasonable conditions. And if we cannot, typically what happens in Barcelona, in UK, in Canada, we adapt and this is why we have had in the first half higher than recurrent, I would say, restructuring measures. So we but again, I think that if you compare us with a number of our international peers, I don't think that we are the worst positioned in term of internationalism, if I may say so, and in term of global footprint. We have a strong European base, but at the same time, big activity in Europe as well. Yes. On the liquidity, the future liquidity of Transport, we will keep on applying a policy, a pretty conservative policy in keeping significant cash on the balance sheet. I think it's a little bit too early to commit on an amount of early reimbursement, but our policy will still be to maintain significant cash and cash equivalents enhanced to handle the fluctuation of liquidity and ensure continuity of business. What we want because we'll not play hide and seek on the cash return to shareholders. What we want is to have the company properly deleveraged. We want it to have a strong balance sheet. We want it to have ample liquidity in hand. And depending on the economic conditions, we expect to reimburse if it makes sense or don't do. If it doesn't, some bonds which will come in at maturity in the coming several years. You will see the picture assemble also with the file of the shareholders meeting because you will get more details and more numbers. And just to mention an example of load of factory, we were in India about a month ago and we start to see contracts also in other countries being executed in, for example, our factory of 3 City in metros. We also use our Bangalore Engineering Center to deal with contract in Australia and so on. So you really have to see the load on a global basis. And we now our job is really to allocate the load appropriately to deliver the contract in the most competitive way. Yes. Question? Thank you. It's Daniela Costa from Goldman Sachs. Two questions. One, just curious if you beat for the recent contracts that the Chinese won in the U. S. I think there's some subways in Boston and in New York. And if so, why do you think they got those contracts? And then the second question just more broadly, can you comment on tendering in transport on whether there are what are the mega contracts that are out there to be decided at the moment? Thank you. Thank you. Concerning the contract in the U. S. Won by C and L, was it C and L or C and L, one of the 2? If they become 1, it will be simpler in terms of terminology. Basically, we didn't participate in these standards, so I'm not in the best position to comment. So if I guess they won because they were the cheapest and the product they were proposing was the best, but we didn't participate in this standard. Concerning the mega contracts, I mean, we still have an active funnel, but I'm not having there are some big projects which are coming in the Middle East. We have a number of active regions, but there is no we are not targeting 4,000,000,000 plus contracts in the coming weeks. So this is not in our radar screen, but there are a lot. I mean, as I said, I mean, urban transportation, very active signaling, very active services, very active. So these are the areas and would not qualify more. I mean, you know that we have been selected, for instance, in Saudi Arabia for 3 out of the 6 lines in Riyadh. There are other cities which are going to be equipped in this area. We just won a tramway a comprehensive tramway system in Qatar for the new city of Lusail. So this is the type of project which in my view is going to be repeated. Thank you. Yes. Hi. Ajat Chamie from Moneypont Life. A quick question about trading. So do we need credit trading? Rating. Yes. Okay. We need to understand No, sorry. Do we need to understand by the fact that you want ample liquidity, strong balance sheet deleveraging that you will target an investment grade rating after the deal is completed and possibly probably improve your credit rating? Thank you. What we want is to have a strong balance sheet, ample liquidity and to and as a consequence to return an adequate level of cash to the shareholders. We have initiated discussions with the rating agencies. But as you know, I'm not going to comment. When we will make the official announcements, they will position themselves and I don't want to speculate on what is going to happen. But again, we want to have the balance sheet necessary to address any type of business events of the business life, want to have a possibility to move, etcetera. At the same time, we mentioned the competitor of us who is 2 notches below us and win contracts sometimes against us. So I mean, it's not that simple. But again, we want the new Alstom to be in a situation which will give no headaches to anybody. We have already enough opportunities to get the headaches on business matters. I don't want to add others. There is a question from the teleconference from Andrew Carter. So Andrew, if you want. Yes. Good morning Patrick. Thank you for the opportunity. I had a couple of questions. The first one was just about when you're going to tell us about the cash return. It wasn't entirely clear from the comments and from the presentation whether that would be in December or whether it would be with the sort of the bigger shareholder meeting, which I assume with the general meeting, which I assume would be middle of next year. So that was question 1. I think the second one was in terms of the bonding facilities that New Alstom will require. The $7,000,000,000 was perhaps a little bit higher than what I was thinking. Do you envisage that a company of new Alstom size would be able to access bonding lines on pretty similar terms to what Alstom has been able to historically? I'm thinking, I guess, in particular about cash collateralization and also cost. And then I apologize if I missed it, but I didn't see in the presentation an update on sort of the percentage of transport sales into service and also into signaling. I wonder if you could just run through that and give us a bit of an idea as to how much I'm getting higher the margins are in service and also in signaling? Okay. Thank you, Andrew. Sorry for the lack of clarity on your first question. What I indicated is that we would like to provide the shareholders with the necessary elements to decide on whether they support or don't support the deal. This means that before the end of before the shareholders meeting of December 19, we provide you with some guidance on what is expected to happen in terms of cash returns. So therefore, the answer to your question is yes, this we are talking about the upcoming shareholders meeting and not any future one. The second comment is bonding lines. First of all, we received from all our banks the corresponding waivers in order to transfer what is currently applied to the new system post deal. So that's transitory condition. So life continues and there is no disruption in the system. We'll obviously rely on bonding lines and the fact that the split of activities doesn't change the need of external transport in terms of bonding lines. And I frankly have no expectation of any deterioration of the conditions in which we take and the collateral and the cash collateral, Andrew, if I may say, you remind me of very old stories that we all forgot, both you and me, of what happened in 2,003. So the issue is not how do we address the net, but that's the issue, how we deal with the proceeds. It's something which is a little bit new for all of us, at least for me. This is why it takes me some time to provide you with clear answers to fair questions you may have. But okay, please, the cash collateral is not in the picture. The third question is on the split. I told you that we have around 20% of the orders on average over the recent period, which were service related. I looked and this is ups and downs because you get a big contract in service multiyear, it increased the number. If we look at Alstom Transport over the last year 2013, 2014, the situation is quite simple. We had around 20% of service and around 20% of signaling, the rest being rolling stock or rolling stock within systems. And as I'm talking obviously before the €400,000,000 which is going to come from GE in the signaling business of course. Maybe a question in the room. Thank you, Andrew. Maybe a question in the room? Yes. Take the last one from last one, I mean, before the next one. Right. Alfred Gaeza from ODDO. I want to ask you about free cash flow in the first half. Could you give us the number for Transport including interest and tax payments as well? And your guidance for future free cash flow, is this net income conversion into free cash flow including interest and tax? Or is it excluding interest and tax? And then my second question relates to the joint ventures with GE. Now that you've signed the agreements, could you give us more details on the put option exactly and other clauses that exist in terms of put or maybe call options that could exist regarding these JVs? And what about the pricing involved for your stakes? And last one on transport and acquisitions. You didn't talk very much about acquisitions in this business in the future. What would be really your most interesting areas of business? You mentioned the attractiveness of signaling urban transport service. Is there anything else where you would really put your money and avoid bloodshedting? Okay. Thank you, Alfred. First question, look, when you look at the continued operation numbers, all the numbers coming from the orders to the operating income makes sense. If I may say, the net results make less sense because obviously when you look at the net results of continued operation, it includes for instance all the interests which happen to be borne by the transport entity at the time of during the period which has nothing to do with what will be the future period post proceeds. So that's why we view the good guidance on the half year as being the fair one, being the free cash flow before this interest and taxes because okay, you could have for instance all the debt borne by the transport activity day 1. Today that doesn't change anything to the fact that we are going to receive $12,350,000,000 of proceeds and that's okay. So that was my remark. That's why we gave you the guidance prior to financial expenses and tax on the transport part. When I look at the medium term, now I'm talking about the global numbers. I'm talking about the net results transforming into free cash flow. On the JVs, on the JVs, we'll give you the comprehensive details of all the JVs agreements and the numbers, how much is invested in JV 1, how much invested in JV 2, etcetera with the shareholders meeting. Frankly, there is no much more under the sky that what we have communicated from day 1, which is a detail, which is basically that we get liquidity rights and we get a floor. This floor is the entry price with an escalation and we have specific windows in this exercise of the puts. GE has no call on our shares in the JVs except in some specific conditions. 3, again, as I said, if there were some sales, some IPO, whatever, there are also other liquidity rights. But basically, if I may say, what we told you in June is obviously still there. We have reinvested in the JVs. We have an upside potential if the JVs overperform. We have a flow and a protection against capital losses. And again, all this will be detailed when we show the when we'll call for the shareholders' meeting. To your last point, Alfred, refers to where we'd be invest. I already mentioned that. I said, we are nowhere in a must do mode. What we look with more interest is signaling, service. And again, on the other areas, the idea is to check whether 1 plus 1 makes more than 2. I told you that the German example doesn't answer positively to this question. If there is a small business to buy in one place, which gives a low cost base, gives us a better position on a specific product in which there is a hole in our market, etcetera, we look. But again, this is not something that we have to rush and do tomorrow. If there are opportunities, we look. Gwen? Andreas, you have the last one. Thank you very much. Just quick follow-up on the put options. Would the exercise of those require again the French foreign investment authorization? No, it's decided by the Board and all the agreements which are the 3 partite agreement between State Alstom and GE signed by the 3 parties include this put option. So it will be the board to decide. So they wouldn't fall on because they are still French national assets in or If there were a problem with the puts, it would not have been agreed as part of the global agreement. And for me, it was very important to have this protection because I consider that okay we'll have the benefits of being part of 3 great core enterprises, joint ventures. But at the same time, we've got the protection against losses. We have a floor and we have a liquidity right. So I think that the interest of Alstom shareholders are fairly protected. And for gs standpoint from day 1, it was a Mr. Emeld stated that what he's looking for is a deal which will not compromise the original idea of the merits of the industrial and strategic merits of the combination, which is not the case. It is not compromised because basically the operation and management will be under GE's control. At Alstom, we share we have the corresponding rights in terms of governance, etcetera, and have no doubts that the managerial skills that exist in Alstom in businesses in which Zee is even not present or smaller than we are will massively contribute to the way this business is going to be run as we move ahead. And the second question on M and A to clarify. You said you don't have any big plans. But so there are 2 ways for companies to run a balance sheet. They can say, I keep some cash in case I have a big idea or I'm going to ask shareholders if I have a big idea to get give some more cash. So you would see on the distribution levels whether we are on option A and option B. Okay. Thank you. Thank you very much. Okay. I cannot answer all questions. Yes, I'll keep some for the future meetings we are together. Look, ladies and gentlemen, thank you for participating physically here in London. Thank you for being at our call. Again, all this is going to be all this has been registered and will be accessible. And Nicolas and Jean, we are absolutely at your disposal to satisfy any additional questions we may have and that we can answer. Thank you very