Patrick Kron – Chairman and Chief Executive Officer Jean Jacques Morin – Group Chief Financial Officer

Andreas Willi – JPMorgan Olivier Esnou – Exane Gael De Bray – Societe Generale William Mackie – Kepler Cheuvreux James Moore – Redburn Fredric Stahl – UBS Andrew Carter – RBC Alfred Glaser – Oddo

Good morning, ladies and gentlemen. Welcome to this conference call on our full year results for the fiscal year 2014/2015. I mean accounts from April 1, 2014 till March 31, 2015. I’d like to remind you that all the published elements, presentations, the financial report including MD&A and accounts, as well as the press release are available on our website at www.alstom.com. Let me first, on slide number two give you the main takeaways of this publication on the full year numbers and where we stand on with GE. To start with, I remind you that, in compliance with IFRS5, Alstom energy has been classified as discontinued operations as we did for H1 and therefore is included in the others sales IFO and is reported under the net income discontinued operations line. Now when I go to these numbers my first message will be to say that we actually are fully meeting the full-meeting the full year 2014/2015 guidance that we gave you. More specifically, Alstom showed in transport a solid operational performance with orders up over 60% compared to the previous year and an organic sales growth of 7%. You will see also that the IFO margin, after corporate costs, has improved by 50 basis points. The free cash flow from continued operations, which I remind you is before tax and financial cash out reached €77 million; showing, as expected, a significant rebound in H2, thanks to better cash profiles of a few contracts, as well as a stricter cash flow management. Another critical step in the project between Alstom and GE has been completed, with Alstom shareholders approving the transaction last December, with over 99% of the vote in favor. We also commenced the process to obtain competition authorities and regulatory authorizations, which is ongoing, with the closing of the transaction that we expect in the coming months. And finally, we confirm our mid-term guidance for Alstom. I start with the key events of the year. And then Jean Jacques Morin, our CFO, will present the detailed financial results before I come back with some additional remarks. We’ll then share the floor with you on the Q&A session. Let’s go together, please, to slide 4, which summarizes our main KPIs for the fiscal year 2014/2015. You see that the orders at more than €10 billion were at a record high; up 66% compared to the same period last year, which showed also a good performance book-to-bill ratio over 1.6, thanks notably to the jumbo contract in South Africa of around €4 billion but also a number of interesting contracts elsewhere. This will be detailed in a second. The sales are up 7% organically with €6.2 billion. And, as previously announced, the fourth quarter was slightly down compared to a very high fourth quarter of last year, which, as I remind you, that Q4 2013/2014 was something like 27% up versus the previous year so we had somehow an unfavorable base of comparison. But globally the sales over the year went up 8%, 7%, on a like-for-like basis. Income from operations, which now includes the corporate costs linked to Alstom transport activity, increased by 17% from €68 million to €118 million. The corresponding operating margin went up by 50 basis points reaching 5.2%, again after corporate costs. Net income from continued operations was a negative €823 million, notably impacted by the provision related to the agreement we passed with the U.S. authorities, the U.S. Department of Justice, last December, as well as some impairment of assets in Russia. Net income from discontinued operations reached €104 million, leading to a Group net income of minus €717 million, obviously hit by the exceptional elements that I just reminded you. Free cash flow now from continued operations before tax and financial cash out reached €77 million over the full year, with H2 more than offsetting the negative free cash flow of H2. And this is in line with the guidance we gave you also. Finally, the free cash flow from discontinued operations before tax and financial cash out, was positive over the full year, slightly positive over the full year, with nearly €1 billion of free cash flow generated over the second half. And this performance was notably driven by more favorable cash profile of some projects as well as stricter working capital management. So, again, fully emitting the guidance we gave you on all the lines that we guided you. If I go back to the orders with a little more words, as you can see on slide five, I said that these orders were boosted by strong demand in the urban transportation as well as in signaling and services. It also includes the booking of the large contract for suburban trains and associated maintenance in South Africa. It’s worth noting that Europe remains sound, representing more or less one-half of our orders. If we exclude this PRASA contract, it’s more or less €3 billion out of the €6 billion outside of PRASA. Again, this book-to-bill of 1.6. This strong order intake gives us visibility for future revenues as it represents more than 4.5 years of sales. I just want also to pinpoint that this is an exceptionally high level of orders, a record high level of orders. But 2014/2015 is also the fifth year in a row where we have had a book-to-bill above 1. Fifth year in a row. If I go to slide 6, slide 6 gives you more examples of our commercial successes during this fiscal year. And you see that, besides the South African one, we booked several major orders, such as large metro contract in Paris, a tramway system in Qatar, Sydney metro and tramways, among others. You have here a full set of examples. We saw commercial successes in the five continents and this confirms that we are able to capture opportunities and that they are such opportunities, both in emerging markets and developed economies. Moving on to slide 7, sales increased 7% organically, fueled by the delivery of suburban, intercity and very high-speed in France, Italy and Germany as well as very high-speed trains in Morocco and tramways in Dubai. Emerging markets represented around one-third of the sales, 30% plus, during the fiscal year. Income from operations increased by 17% €318 million, as I said, and includes a share of corporate costs allocated to Alstom transport activity which represented €27 million in 2014/2015. The operating margin went up from 4.7% to 5.2%, improving by 50 basis points, thanks to sound project execution, tight cost control, partly mitigated by ramp-up costs associated with new platforms, such as the Regiolis one, as mentioned in our previous communication. As well that you can see on the following slide in the cost improvement program, or performance program, called dedicated to excellence, which we are moving in line with various elements and guidance we gave you in the past. So the numbers that you see here are run-rate numbers but this is what we are gradually implementing starting end of 2014 where we first presented to you our plan. You see in slide nine some example of the initiatives which are ongoing and have been fruitful so far and continue to do so. And they basically cover all the areas of our cost base, starting with sourcing, very important, but covering also manufacturing footprint, industrial footprint, as well as overheads. On the next slide, on slide 10, you also see a couple of numbers, a few numbers, on our investment for future growth, both on R&D. Innovation is clearly in our DNA and we are investing for the future growth. R&D represented €160 million during the fiscal year and we also invested €100 million in modernization and expansion of our industrial footprint. The slide gives you also a few examples of our main research and development as well as CapEx programs. Now I leave the stage to Jean Jacques for the detailed presentation of our financial results, which we published today. You have the floor.

Thank you, Patrick. Good morning, ladies and gentlemen. So turning to the P&L on page 12 and moving to exceptional items below the IFO line that impacted the EBIT of the company, you have restructuring charges this year which amounted to €106 million. This relates mainly to restructuring at Alstom headquarters 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 Alstom in its present scope of around €30 million a year. Other non-op expenses include our agreement with the U.S. Department of Justice as well as some asset write-offs. As already mentioned, the cash out linked to this agreement with the DOJ will occur after the close of the transaction with General Electric. Financial result stood at minus €137 million, which reflects a high level of charge in this transitory period and is not, again, representative of Alstom’s expected financial structure. The decrease versus last year reflected a reimbursement of a €722 million bond back in September 2014. Tax result was a positive €8 million. Share in net income of equity investees amounted to €80 million, with a lower operational performance of TMH of other periods, largely amplified by the impact of the further drop of the ruble. Consequently, we made an impairment on TMH value on March 31, 2014. Net income from discontinued operations decreased to €104 million, mainly as a result of lower sales, which impacted profitability. This net income also includes a number of specific items, positive and negative, and, amongst others, capital gain on disposal of the auxiliary business, a deal cost as well as restructuring and some exceptional charges. As a result of all the above, the net income Group share amounted to a negative €719 million. So let’s move now to the next slide, slide 13, which deals with the free cash flow. So the free cash flow from continued operations, which I remind you is before tax and financial cash out, was a positive €77 million for the fiscal year and with an H2 that more than offset the negative figure of H1, as we expected. While over H1 the free cash flow was affected by temporary negative cash profile of a few contracts, this phenomenon partly reversed in H2. We have mentioned that several times. The volatility is to be expected from one quarter to the other one in working capital and, in that sense, this year has been no exception. Moving to free cash flow from discontinued operations, again before tax and financial cash outlay, it was slightly positive at €19 million. The second half showed a strong cash generation of about €1 billion, thanks to a more favorable, again, cash profile from projects executed over this period, as well as a very strict cash management from the operations. We now move to slide 14. On slide 14 we’d like to spend a few moments on our financial structure and give you an update on the balance sheet items. So the liquidity position remains sound, with €1.6 billion of gross cash at the end of March and €1.35 billion of undrawn credit line. As mentioned before, we did reimburse €22 million bonds, which matured back in September 2014. This liquidity position is also backed by a new bridge facility of €1.6 billion until the GE deal completes. This was put in place to address working capital volatility, which, as you’ve seen, has been pretty strong over the year. We did obtain a waiver on our financial covenants for all facilities until the completion of the GE transaction. The covenants were no longer reflecting the reality of the current situation, considering the expected closing of the deal in the coming months. So finally on this section, we are currently negotiating new bonding and revolving credit facilities to replace the existing one after the GE deal completion. And we expect from those negotiations better conditions. Moving now to slide 15. As at March 2015, the net debt was stable year on year, at about €3.1 billion compared to €3 billion last year. And it is substantially down compared to the €3.9 billion that we had experienced at the end of H1. This overall stability resulted mainly from the negative free cash flow of over the period on one hand and the proceeds from the sale of the steam auxiliary business on the other hand. On the right side of the slide, you see the equity development, which decreased over the period at €4.2 billion. And it is mainly the combined effect of net income, as well as pension liability valuation. Once again, the net debt level you see is obviously reflecting a transitory period for Alstom and is not significant of the future financial structure that Alstom will have after the deal with General Electric. So we now move to the next slide, slide 16, which deals with pensions. You see on the chart that the pension underfunding position increased to €2.2 billion; impacted by the lower discount trade assumption, as well as some foreign exchange effect coming from Swiss franc and British pound. Out of the €2.2 billion of underfunding, the portion that relates to continuing operations was €450 million. We now move to a summary slide on discontinued operations and some key figures, for information. So you see on that table, on the upper-left corner, that orders went down 12%; remaining affected by the lack of big tickets. Main bookings related to a coal plant in Thailand; steam turbines in India. And, over the year, three gas turbines were sold, as well as a number of important HVDC contracts and wind turbine in Brazil. As expected, the sales decreased, consequently, reflecting this slower intake in recent quarters. Profitability has been behaving in line with the trend shown in H1. As for net income, as Patrick already indicated, it was impacted by the decrease of sales, which has an impact on profitability, as well as specific items, both positive and negative, such as the deal on the disposal of the auxiliary business, some deal costs related to the GE transaction and financial charges. The free cash flow from discontinued operations before tax and financial, again, was slightly positive at €19 million. And it showed, hence, a strong generation of €1 billion in the second half, thanks, again, to a more favorable cash profile on some projects, as well as a very strict cash management from our business.

So I take over to say a few words on General Electric. Thank you, J-J. As you can see on slide 19, the process regarding the with GE on the energy activity is on track. We had, over the last six months, a number of key steps achieved. We are currently, as indicated there, but you all know that, so I’m not going – it’s just a reminder. We have filed a number of filings in a number of jurisdictions, 27. We’ve already got something like got something like 10 approvals, it was cleared in 10 areas, and we are actively working with GE on all the remaining ones. So the timing of the closing will obviously depend of the closing will obviously depend on the positive completion of these regulatory and antitrust approvals. We expect it approvals. We expect it to happen in the coming months. As you also know, we intend, after the closing, to call for a shareholders meeting, for a vote on the public share buyback offer, OPRA, which is the option favored at this stage, to move part of the proceeds towards the shareholders. And turning to this use of the proceeds on slide 20, what we already said and confirm is that we obviously expect these proceeds to provide the Group with a solid balance sheet; headroom for future growth. We plan to maintain strong liquidity, to reimburse progressively part of the outstanding debt, depending on the opportunities to do so. Accelerate if it makes economic sense, don’t if it doesn’t. Should the company decide, in due time, to exercise its put options in the energy JVs, this will provide additional financial flexibility, notably for the reimbursement of the remaining outstanding debt. And we anticipate, as I already said, the cash return to shareholders to be in the range around €3.5 billion to €4 billion, taking the form of a public share buyback and thus, if confirmed in this line, which I expect will be the case, lead to a shareholders meeting after closing, to ask our shareholders to vote on this cash return. I will just conclude this presentation with an update on our outlook. We provided, last November, a new guidance for both this year, which is fully met, and for the medium-term guidance. When I said fully met, you have here the comparison of the guidance given for 2014/2015 and what are the actual. So we have achieved all our forecasts there. And the medium guidance, we confirm it. We expect the size to grow over 5% per year organically; the operating margin to gradually improve within the 5% to 7% range; and the free cash flow of the Group to be in line with the net income before any GE JVs results. That means stability of the working capital, which is the underlying assumption. And we also know that there is relativity of this working capital impacting, as you have seen, in this recent period and is always possible some volatility on short periods. Okay. This is the conclusion of our presentation. I thank you for your attention and, with Jean Jacques and Delphine, we are now ready to answer your questions. Thank you very much, again.

[Operator Instructions] We have a question from Andreas Willi from JPMorgan. Please go head.

Good morning, gentlemen. My first question is on the outlook for the continued operations for the year 2015/2016. You have maintained the longer term guidance, but not said anything specifically on the year. Is there anything you can say about the pace of organic growth and the margin improvement? Should we expect a relatively linear improvement over time? Or is there anything specific about the current financial year in terms of margin progression? The second question on your cash distribution to shareholders, the €3.5 billion to €4 billion. Is that number set in stone or could that change, given that there’s quite a lot of potential consolidation going on in the industry in which you may want to participate? And the last question. What’s your outlook expectations for some of the large high-speed orders that are currently in the market as potential tenders, such as Turkey and Spain? Thank you.

On the outlook, we don’t see anything specific in 2015/2016 which justifies a specific outlook and specific guidance. We told you that we expect the top line to grow by 5% per year, over 5% per year. This is in line with what we expect to happen. We said that we’ll have a gradual improvement. That’s also – we just don’t see the medium-term guidance, which will be the size going up 20% a year and minus 10% the next year and then up 20% again. So this is why we think that we are in this mode of having the sales growing 9% plus, having the income from operations gradually improving and the free cash flow moving towards this cash flow equal net income target. So no real details which need to be specifically plugged in the 2015/2016 year. On the €3.5 billion to €4 billion, nothing is engraved in stone but, at the same time, we confirm this indicative number. There is nothing which has changed compared to the previous indications. We’ll see within this bracket where it makes sense to stand. Again, my view is that the company in the future will be a pure player in transport with some JVs in energy and will have a strong balance sheet. And I said that one of the priorities is to make sure that this company has the means to move. So I don’t think that this level of distribution, of share buyback, is going to impact the future ability of the company to move. So we are not going to – and, again, I don’t want to speculate on the speed of any industry consolidation. As I said, we are not in a must-do mode. Our priority is to continue to grow organically and I think that the year we are just closing gives some credibility to this strategy. If there are opportunities, we will look and the company will have the means to take actions in order to be able to move. So, therefore, there is no specific reason to change this outlook of the distribution of the OPRA level. Concerning the tenders, as you can expect, Andreas, I am not going to comment specifically a tender here and there. We are interested by high-speed by nature, but no specific comments.

Thank you. Operator Thank you. We have a next question from Olivier Esnou from Exane. Please go head.

Hello, good morning, Patrick.

Good morning.

I’d like to start with the update on the payment for GE signaling. With the FX change, can you maybe update us on if there’s any change on the amount you have to pay for it? And if you happen to have an update on the performance of that business in 2014, that would be great. I noted you would have preferred to keep the financial statement confidential, but I have some questions on the account as well. It mentions that, and that’s on the cash, actually, and the interest charge, GE is supposed to carry the risk of the free cash flow valuation since March 2014. Alstom carries rail. What about the share between you and GE of the interest and tax charge, which is actually the most significant amount in the cash flow statement? That’s number two. I’ll give you number three as well. The accounts, they mention that the business plan has been revised for TMH, so I guess it’s not just the ruble which is driving the revision of the asset value but also the new business trend. I wonder if you could share a little bit with us what you see – how the business trend has been revised for TMH. Thank you.

Well, on the first point, the signaling business, there is nothing new under the sky. The price of the deal is fixed and there is nothing new. I will comment on the signaling in the next steps when we’ll get that closing level, but there is nothing that I should report here. I would say that this business has not – we have not changed our position, as far as how interesting this business is for us. It’s a good complement, both geographically and in terms of technologies. So there is nothing to add on that position, on that point. And this is a very strong business in North America. And, again, no specific comments in terms of nothing fundamentally new under the sky. If we look at the free cash flow, you know that the deal includes some cash, which is transferred to GE, and there is, as you know, also a locked-box mechanism, which makes the consequences of the free cash flow of the energy business, global free cash flow of the energy business, taken over by GE. There is good news for GE, which is that, after a very negative H1, H2 has largely reversed the cash outflow that we have in H1, which has been positive in H2. Now we have obviously some – the tax and the financial costs are associated to some businesses. We pay taxes because of what happens in a specific business. We have the financial cost inclinations to what happens. I would say that the split is done by entities. I would say that the financial and tax cash out is probably something like 80% in the energy side and 20% in the transport one. Last question on TMH. Yes, indeed, what we face in Russia, and this is something I mentioned clearly, I think, in our H2 report, is the fact that TMH is exposed one, to a slowdown of the Russian economy, implying a slowdown of its activity, and two, the devaluation of the ruble, which, even if it recovered from a very low point that was reached by the end of the fiscal year, still there is depreciation of the ruble against the euro of something like 30% from the start to the end of the year. And this combination of a slowdown and the ruble led us to take a write-off. To be fair, I think that will remain with a low tide for a limited period of time, which is obviously difficult to quantify, but we have not changed our view on the potential of the Russian market, the ability to seize opportunities in this market through our partnership with CMH. And I personally am extremely positive on the medium prospects of both the market and our position in this market. I may add that, in spite of this write-off, it confirmed that our strategy, which has been a partnership strategy in this market, is the right one, not only for political reasons, I would say, but also for economic ones. So okay, yes, we’ll have, for a couple of half years, a contribution which will be substantially lower than what it has been last year or the year before. But it doesn’t change our expectation of a rebound in this market and new opportunities taken by TMH and ourselves.

Thank you.

Thank you. We have a next question from Gael De Bray, Societe Generale. Please go head.

Hi, good morning, everyone.

Good morning.

Maybe two questions on the financials and one on the outlook. So firstly, how do you explain the 100 bps decline in the gross margin this year, despite a pretty good sales growth? Secondly, maybe could you give us an indication in terms of what proportion of the backlog should be executed in the coming two years, in theory? And the third question is on the maintenance business. Generally, how do you see the demand for maintenance and services, particularly in Europe? It seems there is an increasing trend towards more outsourcing of the maintenance and services activities amongst some of the rail companies in Europe. So maybe could you elaborate on the potential for you to benefit from services market growth here? Thank you.

On your question on the gross margin, the evolution of the margin, I start by telling you that, as you can see, basically on the bottom line, that means the IFO line, our margin increased by 50 basis points. And if you look at our margin, I think that there are several factors which can explain the gross margin evolution that you mentioned. The first one is that we have a mix which includes during the year some – we had the growth, which was more in rolling stock than the rest of the activities this year. Our rolling stock has been up at a higher level than the average growth, so the mix is relatively diluting, so offsetting some of the positives of the mechanic impact of the volume growth. And that has been one. The second one is we also have some ramp-up costs on some new platforms, and notably Regiolis, which is a platform in which we have a very ambitious program of development of seven new trains within the global platform. And this is basically what explains the point. Your question around services in Europe, well, again, Gael, yes, it’s true that we have a number of customers looking for outsourcing and we have been working on that, but this is a slow train and basically we – it’s a priority. I think we are well positioned and I think that we will seize opportunities again. My view is that when we look medium to long term, we should grow, and will grow, the signaling and the service at a higher speed than the rolling stock one. On the backlog question and how fast will the backlog flow through the P&L, just to summarize your question. I’m sorry, Gael, I don’t have the number on my head right now. I would say that I think that we are typically – we are in a classical situation where we expect the sales of this year, the current year, to be something like 80%-plus or 90% within our backlog. So that is what happens this year. And I would say that the number for next year is probably around 60%, 70%, that type of – 60% is probably the level, I would say. So you say we have 85%, 90% of the backlog for this year and probably 60% for next year. If I am grossly wrong, I will correct it towards you.

Okay. Thank you, Patrick.

Thank you.

Thank you. We have a next question from William Mackie from Kepler Cheuvreux. Please go head.

Yes, good morning. Three questions, please, Patrick. First of all, a detail on financials. With regard to the corporate costs for the transport business, should we take the bookings that you’ve taken in the last year as a fair value of the centralized costs for transport? Or were there any particular transition charges in there that might affect that going forward. Secondly, on restructuring, I hear that you’ve reiterated the level of ongoing expense at around €30 million, but the charges last year were high. I’m sure some link to the d2e program. How should we think about the level of expenses into the 2015/2016 year, given that you have about another €150 million of cost objective linked to d2e? Lastly on the financials, perhaps coming back to the level of the deferred tax asset, which is sitting at about €720 million in the accounts. How should we think about the effective tax rate of the transport business, given the opportunity to realize the benefits from those tax assets on the balance sheet in future years? Thanks. That’s the three detailed ones.

On the first question, which are the corporate costs, we told you we have this year something like €27 million, if I’m not wrong, of not wrong, of corporate costs impacting the transport activity. This is both the fair share of our current cost allocated to transport, but also a good assessment of what can be the future one of the Alstom standalone, which we guided in the past as being around 30%. So it’s not something which is impacted by transition. We may have a few million, which, instead of being here, are already embedded in the number of Alstom transport itself. But basically the corporate cost, it’s cost, it’s called it transitory, but will remain. At the end of the day, the functions, which are currently provided by Alstom, will have to be done by someone and the one will have to be paid. So basically this will remain. I think that this is not creating any distortion to consider the current situation as the future one. So €30 million is around that. So we are in the 30, 30, 30 in all your questions, I’m sorry. The second one is €30million again. Again, I told you that this is a kind of recurring level that I have in mind when you talk about restructuring of transport. It’s not impossible that this 2015/2016 number will be above this €30 million because we have still some adjustment to do here and there. And we have this d2e program, which will continue; it’s obviously not over. I don’t necessarily say that it’s going to be at the present year level. At the same time, it will be above the €32 million, so somewhere in between probably. The third question is also a 2015, 13%. We guided you in the past that, because of the geography of the profit, et cetera, it would be wise to consider a tax rate somewhere in the range of 30%. So 30% in all your points.

Perfect. So 30, 30, 30 vision. Thank you. A follow up, then, briefly, if I may. Just relating to the mix of the business, you’ve alluded to the strength of revenue growth in the rolling stock segment during 2014/2015 as being above your Group average. Could you provide a bit more color as to how the revenues developed in service and signaling and maintenance, please?

We have signaling and services which are – both rolling stock signaling and services increased. But, again, I don’t want to overstress one point or another. There is volatility. You reach milestone at one point in time, which implies that the signaling going up, services going up. It’s not very relevant that the rolling stock represents something like 50% of our total sales. You have turnkey, you have signaling and you have services. So that’s more or less the split.

Thank you very much.

Thank you. We have a next question from James Moore from Redburn. Please go head.

Yes, good morning, everyone. I’ve got two on margin issues and I’ll try a hopeful one on antitrust. In terms of the savings progression, I see that the annualized run rate has done well; gone up from €150 million to €300 million. But I wonder if you could help us a bit with how much was actually realized in the P&L in the last year out of the €300 million. I’m really trying to understand whether the year-on-year effect in the P&L last year was higher than it’s going to be in the coming years or a bit lower and how that’s going to progress. The second question is on mix. You mentioned rolling stock growing faster than service and signaling. You also mentioned ramp-up costs. I know that no one issue is that important and there is volatility. But, as we move forward into the 2015/2016 year, could you give us some idea as to whether you see continued ramp-up costs and continued faster growth in rolling stock or whether you see any change to that effect? And I’ll try a third one, if I can. Can you say anything at all about whether the questions from the European Commission have centered around investment and R&D concerns? Or whether there have been greater questioning on issues of market shares and the impacts they may have on turbine prices and, ultimately, consumer electricity prices? My sense from press commentary is that innovation and investment seem to get mentioned but nobody is talking about electricity pricing, which makes me feel hopeful. Is there anything you can say on that debate?

On the d2e program, you know that I’ve been, over the years, reluctant to give this type of data because I wanted you not to be misled on the consequences of the data which would be released. And I was right to be shy in giving the numbers because we are currently talking about run rates. These are actually savings that we are doing. That means that when we look at our cost base today and compare it to what was our cost base two years ago when we started the program, this is the difference. But this difference of cost first gets into the backlog in elements which are not going to be externalized immediately. It also goes to the customers because we are under price pressure across the portfolio because of the environment, the competitive environment, that you know. So, at the end of the day, we have the volume impact. We have the mix impact. We have the cost impact. We have the execution impact. We have the ramp-up cost impact. And all this gives ups and downs. And that’s why we, at the end of the day, the €300 million, you don’t find them in the P&L day one and you will not find them in the P&L day two. So this goes into this crashing machine that I just described. And, at the end of the day, what we expect is the bottom line to move up. We said: Look, we are in the market where we don’t see discontinuity. We don’t see our operating income to go to hell. We don’t see it going through the sky next year, et cetera. And we are on this medium-term guidance that we gave you. I’m not going to go in the guidance per product line because I don’t think it’s realistic to do. I am very happy to see the rolling stock growing. I hope it’s going to continue to grow. I hope also that signaling and services are going to grow as fast, if not faster. So that’s where we are because, typically, you have a better margin in the signaling and service business that you have in rolling stock. But, again, my job and our efforts is to grow the rolling stock as we grow the rest, because all this is globally value creative. But I’m not going to give you a guidance per product line, et cetera. Is the pressure from ramp up of new platforms going to continue? Yes, because we are going to continue to ramp up new products. And when the ramp up of one platform will be over, we start the ramp up of a new one. So this is part of the game. At the end of the day, we say that we will expect to improve the bottom line. On the EC, look, you don’t expect me to comment on ongoing regulatory processes. I’m not going to take the decision. I’m going to provide GE with our help, are providing the necessary data to all the regulatory authorities. This is true as in Europe as elsewhere. And I can, very candidly, that we are working constructively through all the regulatory processes in all the geographies in which this is happening. I also tell you that our deal is structured on the basis of very complementary technologies and very complementary geographies. And nothing that we have looked at over the recent period changes our mind on that. So I am very positive on what will be the outcome of all these processes. At the same time, I recognize that it’s a large and complex deal and I recognize it’s not something that is great because transitions are painful by nature. People like stability and predictability. So, therefore, I hope this will be completed as soon as possible. But, basically, I fully understand, and this is a surprise neither for GE nor for us, that these reviews take time as they are very analytically addressed. Will the regulatory authorities, and notably the European Commission, look not only on the competitive environment but its consequences on the industry in Europe, innovation in Europe, etc? I expect them to do but I’m not the guy taking the decision. So what we do is we provide the that this deal is good for the customers, is good for innovation, is good for industry and is good for jobs in Europe.

Thanks, Patrick.

Thank you. We have a next question from Fredric Stahl from UBS. Please gp head.

Yes, good morning, everyone. It’s Fredric Stahl from UBS. I just want to go back to the product launches and the costs relating to that because it’s not clear to me that – the question is, are the product launches and the associated costs in the fiscal year that you just closed, have they been higher than normal? And, if so, how long does it take for them to normalize again? That’s the first two questions. And then the second question is I was wondering if you could give us some help with the FX impact on your P&L in the new fiscal year here. Thank you.

On the first one, look, no we are probably in a period where we have probably more launches than the normative level. You expect us to keep on developing new products and launching them. I would say I probably think that we are currently in a situation where the launch of products is above a normative level. Will this continue next year? My answer is yes. I don’t see a discontinuity there. We have both in signaling, in rolling stock, we have a number of very good and innovative products. And, again, I mentioned that this is not something new under the sky. When we start a program the profitability of the program is impacted by the fact that this is a ramp up in industrial efficiency and that we include in our margin recognition a number of precautions on the way the one contract is going to be executed. So, classically, we have a better performance at the end of a program than at the start of the program. But this is not something new. So to cut a long story short, yes, we have significant ramp-up costs. Are these going to disappear next year? No. Normatively should they be a bit lower? Possibly. On ForEx, I would say that on ForEx you have the impact of the ForEx, which was somehow quite limited between one year; 8% published growth and 7% organic growth. So the numbers are not massive and they are not massive because of our industrial performance. So no specific guidance that we will give you on that.

Okay. That’s clear. Thank you.

Thank you. We have a next question from James Stettler from Barclays. Please go head. Mr. Stettler just hangs up. So we will taking next question from Andrew Carter from RBC. Please go head.

Yes, good morning. Most of my questions have been answered, but if I could just ask two quick ones. Firstly, thank you very much for providing the continuing share of the net pension deficit, so the bit that goes with Alstom Transport. Are you able to provide us with the same numbers for net debt, so the net debt that will continue with Alstom Transport based on the yearend? And then the second one was just I did notice that the net working capital in the ongoing business continued to increase and I just wondered if you could talk about that a little bit. My impression was that Alstom Transport was a business that operates with negative net working capital, so I would have thought when the business was growing you’d actually get a cash flow in for net working capital. Now I recognize things can be a little bit volatile, but I was wondering if you are seeing any change in any of the terms of trade that the business is doing.

The first question is on the debt that you mentioned, the pensions and the funding, etc. Look, the debts of the business is basically the net debt at the start of the year, plus or minus the free cash flow of transport, and you can see that the free cash flow of transport over the period was not very significant. We had a positive free cash flow before [indiscernible] tax and this is more or less offset by the tax and the expenses, financial expenses, relating to the continued operation. So, basically, the net debt is more or less stable. On the second question, which is related to changes in trade, no, I am not aware of any substantial, of any material change of anything over the recent period.

Thank you. We have a next question from Alfred Glaser from Oddo. Please go head.

Yes, good morning. I was wondering on CapEx, first of all the numbers are, in fact, going down over the last two years despite the ramp up of new product ranges. Should we expect these numbers to slide further in the coming years? Or do we have some – reached some kind of floor here on CapEx numbers? And then I also wanted to ask you on TMH and Russia. You said previously that you’re targeting more export business from TMH, benefiting from the weak ruble. Is this progressing? Do you have any tangible elements here that you could share with us? And regarding also TMH, currently you’re holding 25% of this business. Do you think that, with the cash you’re going to get from the GE deal, you might increase your stake in TMH?

Thank you, Alfred. On the CapEx, frankly, as you know, we had a large number of very large projects which are ongoing; typically a brand new rail factory in India, et cetera. So really the fact that we went at €110 million and we go to €100 million doesn’t mean that we are going to be €90 million this year and €80 million the next year. I must admit piteously that I don’t monitor the CapEx plus or minus of €10 million. So it’s not a trend. CapEx at €100 million plus is a normal level that we expect as necessary to modernize and expand our manufacturing footprint. So, okay, it was €110 million. It could have been €110 million or €95 million without me changing the way I described the situation. Concerning TMH, you know I told you this is a good investment. We hold 25% in this business. I will not speculate on whether we are going to increase or decrease this level. We are happy with our investment in TMH. We suffer as an investor from the current slowdown of the Russian economy. We took a write-off. It doesn’t change in my view the possibility to develop this business both on Russia and on other geographies. As you know, one of the footprints, one of the developments, of our JV in Russia has been the possibility to develop a position in Kazakhstan by a joint venture between TMH, Kazakh Railways and ourselves. So this is one example. We will also, as we move forward, use more of what happens, what is done in Russia, to support some projects in nearby countries. So Kazakhstan is one example. I hope that I’ll be able to provide you with others. But I don’t change my mind. TMH is a good base to develop business in Russia when the business in Russia will resume and it’s a good base also to develop business in the broader geography. And that’s the comment I can do on TMH. It’s fair to say that the current contribution of TMH in our P&L has been in H2, and will be this year, lower than what it has been in the past. That’s a given.

Ladies and gentlemen I think it’s time to discontinue. Thank you very much for your interest. J-J, Delphine and, if necessary, myself remain, obviously, at your disposal to answer any additional concerns or questions you may have after looking at our results. But, again, to cut a long story short, I think that we have shown during this fiscal year a strong performance in our transport activity. We expect this to continue and we have a great business here, supported by a great backlog in the business, which is not an easy business because we are in a competitive environment but well placed within this competitive environment. And as far as GE deal is concerned we are in the transitory period. We have moved through a number of key steps. We are in the regulatory stage and I hope that this will come to an end in the coming months, allowing the deal to be closed and to move in the next steps. Thank you again and looking forward your potential additional questions. Thank you.