Europe France Capital Goods Electrical Equipment

8 July 2008 Results Preview

Company Company Reuters: ALSO.PA Bloomberg: ALO FP Exchange: PAR Ticker: ALSO Hold Price at 8 Jul 2008 (EUR) 70.86 Price Target (EUR) 73.00 52-week range (EUR) 83.55 - 58.69 Q109 sales/orders preview; Key changes Target Price 145.00 to 73.00 È -49.7% adjusting for stock split Martin Wilkie Peter Reilly Price/price relative Research Analyst Research Analyst (+44) 20 754-51956 (+44) 20 754-59835 85 [email protected] [email protected] 75 65 55 Q109 preview; adjusting Target Price to €73 due to stock split 45 Alstom will report Q109 orders and sales on July 16, when we expect group 35 25 orders of €6,221m and group sales of €4,499m. With this note we are also 15 adjusting our Target price to €73 and adjusting our EPS estimates by 50% to 7/05 1/06 7/06 1/07 7/07 1/08 reflect the 2:1 stock split effective from July 7; we have made no underlying Alstom changes to our model. Despite Alstom's attractive growth profile we find the DJ (.STOXXE) (Rebased)

Global Markets Research valuation full relative to sector peers and retain our Hold rating. Performance (%) 1m 3m 12m Expect orders to fall YoY due to contract timing; end markets remain strong Absolute -11.3 1.6 10.9 Although announced order trends remained healthy in the quarter (see pages 4 DJ (.STOXXE) -9.5 -12.6 -27.9 and 5), we expect booked orders to fall YoY in Q1, largely driven by the large Stock & option liquidity data €2.1bn SNCF rail contract booked in Q1 last year, as well as the timing of the Market cap (EUR)(m) 20,399.6 booking of the announced €1.3bn Eskom, €1bn Essent, and €1.9bn Saudi power Shares outstanding (m) 288 contracts, all of which we expect to be booked later in the fiscal year. Comments Year End No. Shares (m) 287,886,356 at the Siemens’ Energy Capital Markets Day held last week suggest that the Free float (%) – Power Generation outlook remains robust. Option volume (und. shrs., 1M avg.) 120,450

An update on strategic direction? Implied & Realized Volatility (3M) Although Alstom will not give P&L data at the Q1 stage, the company may update 60% the market on strategic direction. The head of the Alstom Transport division 50% recently commented on acquisition opportunities in Rail following the expiration 40% this month of the EU ban on Alstom Transport acquisitions, and CEO Patrick Kron 30% also recently expressed “regret” on the sale of the T&D business to Areva in 20% 2004. As of March 31, Alstom held net cash of €904m. 10 % 0% Valuation and risks Aug 07 Feb 08 We value Alstom on 10.5x FY10e EV/EBIT, a 10% premium to the long term sector Realized Vol Implied Vol (ATM) average of 9.6x to reflect the strength of Alstom’s backlog. Key risks include corporate activity, the emergence of national champions in China and India, any Implied Volatility (3M, ATM) vs. Peers slowing of the power generation cycle. (see page 6 for more on risks). SGEF.PA 39.3% SCHN.PA 37.9% ALSO.PA 37.3%

*STOXX 600 33.6% Forecasts and ratios PHG.AS 30.8%

Year End Mar 31 2007A 2008A 2009E 2010E 2011E BAES.L 29.8%

Revenue (EURm) 14,208 16,908 19,011 20,871 22,592 *Weighted-avg. of index components EBITA (EURm) 889 1,260 1,516 1,905 2,163 Data as of 07-Jul-08 DB EPS (EUR) 2.23 3.10 3.72 4.68 5.37 OLD DB EPS (EUR) 4.47 6.18 7.43 9.33 10.70 Upcoming events Details % Change -50.0% -49.8% -49.9% -49.8% -49.8% Q109 orders/sales 16 Jul 2008 Press release 08:00 CET P/E (DB EPS) (x) 17.7 21.5 19.0 15.1 13.2 Conf call 09:00 CET EV/EBITA (x) 13.4 15.5 13.5 10.8 9.2 Dial-in +44 (0) 207 162 0025 Source: Deutsche Bank estimates, company data

Deutsche Bank AG/London All prices are those current at the end of the previous trading session unless otherwise indicated. Prices are sourced from local exchanges via Reuters, Bloomberg and other vendors. Data is sourced from Deutsche Bank and subject companies. Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Independent, third-party research (IR) on certain companies covered by DBSI's research is available to customers of DBSI in the United States at no cost. Customers can access this IR at http://gm.db.com, or call 1-877-208-6300 to request that a copy of the IR be sent to them.

DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1 8 July 2008 Electrical Equipment Alstom

Model updated:08 July 2008 Fiscal year end 31-Mar 2006 2007 2008 2009E 2010E 2011E

Running the numbers Financial Summary Europe DB EPS (EUR) 1.14 2.23 3.10 3.72 4.68 5.37 Reported EPS (EUR) 0.64 1.67 2.96 3.72 4.68 5.37 France DPS (EUR) 0.00 0.40 0.80 0.93 1.17 1.34 Electrical Equipment BVPS (EUR) 6.5 7.8 7.7 10.5 14.0 18.0 Weighted average shares (m) 276 287 287 288 288 288 Average market cap (EURm) 5,877 11,357 19,145 20,400 20,435 20,435 Alstom Enterprise value (EURm) 6,297 11,932 19,592 20,510 20,545 19,795 Valuation Metrics Reuters: ALSO.PA Bloomberg: ALO FP P/E (DB) (x) 18.7 17.7 21.5 19.0 15.1 13.2 P/E (Reported) (x) 33.0 23.7 22.5 19.0 15.1 13.2 Hold P/BV (x) 5.36 6.26 8.93 6.77 5.08 3.94 Price (8 Jul 08) EUR 70.86 FCF Yield (%) 6.5 9.7 8.6 5.5 6.1 7.3 Target price EUR 73.00 Dividend Yield (%) 0.0 1.0 1.2 1.3 1.7 1.9 52-week Range EUR 58.69 - 83.55 EV/Sales (x) 0.5 0.8 1.2 1.1 1.0 0.9 EV/EBITDA (x) 5.8 10.8 13.2 11.6 9.5 8.1 Market Cap (m) EURm 20,400 EV/EBIT (x) 9.5 13.4 15.5 13.5 10.8 9.2 USDm 31,953

Company Profile Income Statement (EURm) Alstom generates 60% of revenues in Power Generation, and Sales revenue 13,413 14,208 16,908 19,011 20,871 22,592 40% in . In Power Generation, Alstom has the Gross profit 1,170 1,173 1,518 1,811 2,222 2,494 largest installed base of coal-fired power equipment globally, EBITDA 1,090 1,105 1,483 1,761 2,162 2,434 and also derives significant revenue from gas-fired and hydro Depreciation 424 216 223 245258 270 power equipment. In Transport, Alstom supplies both rail Amortisation 000 000 rolling stock and signalling, and competes globally with Siemens and Bombardier. French industrial conglomerate EBIT 666 889 1,260 1,516 1,905 2,163 Bouygues owns 25% of the share capital, which was primarily Net interest income(expense) -222 -111 -69 -52 -34 -17 bought when the French state sold down its 21% stake in Associates/affiliates -1 0 1 00 0 2006. Exceptionals/extraordinaries -137 -162 -39 0 0 0 Other pre-tax income/(expense) 0 0 0 0 0 0 Profit before tax 505 616 1,152 1,464 1,871 2,147 Price Performance Income tax expense 125 145 291 381 505 580 Minorities 3 -9 10 1316 19 90 Other post-tax income/(expense) 0 0 0 0 0 0 70 Net profit 178 480 852 1,071 1,349 1,548 50 DB adjustments (including dilution) 137 162 39 0 0 0 30 DB Net profit 315 642 891 1,071 1,349 1,548 10 Jul 05 Apr 06 Dec 06 Sep 07 Jun 08 Cash Flow (EURm) Cash flow from operations 618 1,496 2,061 1,572 1,701 1,940 Alstom DJ (.STOXXE) (Rebased) Net Capex -234 -389 -419 -450 -450 -450 Free cash flow 384 1,107 1,642 1,122 1,251 1,490 Margin Trends Equity raised/(bought back) 6 0 0 0 0 0 12 Dividends paid -4 0 -117 -230 -337 -387 10 Net inc/(dec) in borrowings 0 0 0 0 0 0 8 Other investing/financing cash flows 17 139 -531 -175 0 0 6 Net cash flow 403 1,246 994 717 913 1,103 4 Change in working capital 314 524 897 200 50 0 2 0 06 07 08 09E 10E 11E Balance Sheet (EURm) Cash and other liquid assets 1,301 1,907 2,115 2,832 3,745 4,848 EB ITDA Mar gi n EB IT Mar gi n Tangible fixed assets 1,361 1,369 1,501 1,688 1,853 2,006 Goodwill/intangible assets 4,520 4,701 5,089 5,089 5,089 5,089 Growth & Profitability Associates/investments 3,719 2,559 1,221 1,221 1,221 1,221 Other assets 7,484 9,008 10,703 12,034 13,211 14,301 25 50 Total assets 18,385 19,544 20,629 22,864 25,119 27,464 20 40 15 Interest bearing debt 2,549 1,997 1,211 1,211 1,211 1,211 30 10 Other liabilities 13,996 15,276 17,173 18,592 19,820 20,985 20 5 Total liabilities 16,545 17,273 18,384 19,803 21,031 22,196 0 10 Shareholders' equity 1,782 2,229 2,210 3,013 4,025 5,186 -5 0 Minorities 58 42 35 4864 83 06 07 08 09E 10E 11E Total shareholders' equity 1,840 2,271 2,245 3,060 4,089 5,269 Sales growth (LHS) ROE (RHS) Net debt 1,248 90 -904 -1,621 -2,534 -3,637

Solvency Key Company Metrics Sales growth (%) -1.8 5.9 19.0 12.4 9.8 8.2 10 0 150 DB EPS growth (%) na 95.7 38.8 20.0 25.8 14.8 50 10 0 EBITDA Margin (%) 8.1 7.8 8.8 9.3 10.4 10.8 0 EBIT Margin (%) 5.0 6.3 7.5 8.0 9.1 9.6 50 Payout ratio (%) 0.0 23.9 27.0 25.0 25.0 25.0 -50 ROE (%) 10.8 23.9 38.4 41.0 38.3 33.6 -100 0 Capex/sales (%) 2.2 2.8 2.9 2.4 2.2 2.0 06 07 08 09E 10E 11E Capex/depreciation (x) 0.7 1.8 2.2 1.8 1.7 1.7 Net debt /equit y (LHS) Net interest cover (RHS) Net debt/equity (%) 67.8 4.0 -40.3 -53.0 -62.0 -69.0 Net interest cover (x) 3.0 8.0 18.3 29.4 56.0 131.1

Martin Wilkie Source: Company data, Deutsche Bank estimates +44 20 754-51956 [email protected]

Page 2 Deutsche Bank AG/London 8 July 2008 Electrical Equipment Alstom

Q208 Sales/orders preview

Key points

„ Order development: We model group orders of €6,221m in the quarter, although by definition order intake is lumpy and somewhat unpredictable on a quarterly basis. Although announced order trends remained healthy in the quarter (see Figure 4 and Figure 5), we expect booked orders to fall YoY in Q1, largely driven by the large €2.1bn SNCF rail contract booked in Q1 last year, as well as the timing of the booking of the announced €1.3bn Eskom, €1bn Essent, and €1.9bn Saudi power contracts.

„ Sales forecast: We model sales of €4,499m in the quarter, an organic growth rate of 15%. Alstom do not provide P&L or balance sheet data at the Q1 stage.

Figure 1: Alstom Q109 orders/sales preview Euro millions, March year end Q108 Actual DBe Q109 Comments

Orders Power Systems 2,747 3,181 Q1 order intake will not include €1.3bn Eskom order, €1bn Essent order, or €1.9bn Saudi order Power Service 1,284 1,330 Total Power 4,031 4,511 Transport 3,581 1,700 Q108 included €2.1bn SNCF order Corporate & Other (Eliminations) 12 9 Group orders 7,624 6,221 Organic order growth 65.0% -14.4% We model 17% order growth in Q109 ex the SNCF order last year Book/Bill 1.9x 1.4x Sales Power Systems 1,771 2,147 Power Service 878 913 Total Power 2,649 3,061 Transport 1,386 1,431 Corporate & Other (Eliminations) 12 8 Group sales 4,047 4,499 Organic sales growth 28.0% 15.3% Source: Deutsche Bank, company data

Figure 2: Power revenue/order progression Figure 3: Rail revenue/order progression

6,000 2.5x 4,000 3.0x 5,000 2.5x 2.0x 3,000 4,000 2.0x 1.5x 3,000 2,000 1.5x 1.0x 2,000 1.0x 1,000 1,000 0.5x 0.5x 0 0.0x 0 0.0x Q199 Q399 Q100 Q300 Q101 Q301 Q102 Q302 Q103 Q303 Q104 Q304 Q105 Q305 Q106 Q306 Q107 Q307 Q108 Q308 Q199 Q399 Q100 Q300 Q101 Q301 Q102 Q302 Q103 Q303 Q104 Q304 Q105 Q305 Q106 Q306 Q107 Q307 Q108 Q308

Orders Sales Book/Bill Orders Sales Book/Bill

Source: Deutsche Bank, company data Source: Deutsche Bank, company data

Deutsche Bank AG/London Page 3 8 July 2008 Electrical Equipment Alstom

Figure 4: Alstom selected Power orders FY08/FY09 Date Value Country Type Customer Contract In-service (€mm )

Jul-08 1,900 S. Arabia Oil Saudi Electricity Company 1200 MW steam power plant 2010 (SEC) Jul-08 335 Tunisia Gas Société Tunisienne de Construction of a 400 MW combined-cycle power plant which also includes 12- NA l’Electricité et du Gaz (STEG) year operation support and maintenance agreement Jun-08 NA US Gas Reliant Energy, Inc Providing mercury removal system 2009 Jun-08 85 Brazil Gas ThyssenKrupp CSA Siderúrgica maintenance of 495 MW TKCSA Rio power plant NA do Atlântico Ltda Jun-08 271 US Nuclear Exelon Corporation Supply and install steam turbine retrofit equipment at three of Exelon’s nuclear NA power generation facilities Jun-08 1,000 Holland Gas Dutch utility Essent 3x GT26 gas turbines along with TOPAIR turbo generators, heat recovery steam NA generators, ALSPA distributed control system Jun-08 22 South Hydro Eskom Generation Replacement of the stator frames, stator cores, stator windings and rotor 2009-2011 Africa windings Jun-08 80 Various Hydro Various hydro Generating equipment for three hydropower plants in Turkey, Greece and France NA May-08 300 Wind Iberdrola Renewables Turbine models Eco 74, Eco 80 and Eco 80 2.0* which would provide a total of Over four 300 MW years May-08 63 UK Biomass Drax Group plc Biomass co-firing NA May-08 NA Bahrain Hidd Power Company (HPC) 15 year contract which includes supply of spare parts, resident engineer and supervision services for the planned and unplanned maintenance Apr-08 500 Germany Coal RWE EPC and boiler islands for two 800 MW units and auxiliary equipment 2011 Apr-08 NA Turkey Gas HEAS 2x GT13DM gas turbine upgrades, conversion of 4 turbines from gas to dual fuel 2010 FY08 Apr-08 NA UK Gas Scottish Power Nine-year operation and maintenance contract NA Mar-08 270 France Gas Electrabel France GT26-based, 420 MW combined cycle power plant NA Mar-08 160 Uganda Hydro Government of Uganda 5 turbine/generator units, control and protection systems 2011 Feb-08 1,300 South Coal Eskom 4,740 MW coal power station, 6 x 790 MW steam turbines and related 2008-2009 Africa equipment Jan-08 400 Netherla Gas Electrabel 870 MW power plant which includes 2 GT26 gas turbines and associated NA nds equipment Dec-07 800 Algeria Gas Sonelgaz 1,200 MW gas-fired power plant NA Nov-07 1,400 South Coal South African state-owned 4,800 MW power plant, 6 x 800 MW units NA Africa utility company Eskom Oct-07 200 Morocco Gas/Solar Abengoa Group on behalf of Two GT13E2 gas turbines, a steam turbine & 3 air-cooled turbogenerators & long- NA Morocco’s Office National term maintenance d’Electricité Oct-07 200 China Hydro Jinping,Nuozhadu,Shatuo and 8 x 600 MW generators ,3 x 650 MW generators, 4 x 280 MW generators, 3 x 84 NA longijang power plants MW turbine/generator units Oct-07 150 Brazil Hydro Foz do Chapecó hydropower 4 x 217 MW turbine-generators units 2010 plant Oct-07 190 Vietnam Hydro Electricity of Vietnam (EVN 6x 400 MW Francis turbines and generators. 2012 Aug-07 1,000 UAE Gas Abu Dhabi Water and 5 GT26 gas turbines, 5 HRSG, 3 steam turbines, 8 turbogenerators and NA Electricity Authority associated control systems. Aug-07 850 UK Gas RWE npower plc 9 GT26 gas turbines 2010 Aug-07 135 China Nuclear Dong Fang 4 x 1000 MW-Class steam turbine-generator packages NA Aug-07 125 Dubai Coal Dubai Aluminium Company EPC and GT13E2 gas turbine NA Limited (DUBAL) Jul-07 250 Australia Gas Delta Electricity EPC and 4 x GT13E2 gas turbines NA Jul-07 150 Kuwait Gas Az Zour 5x GT13E2 gas turbines 2008 Jul-07 275 Ireland Gas ESB Power Generation EPC and 430MW GT26 CCGT, steam turbine and generator NA Jun-07 310 Algeria Gas SONELGAZ GT13 simple cycle NA Jun-07 175 India Gas Gujarat State Electricity 370MW GT26 NA Corporation Jun-07 330 Brazil Waste ThyssenKrupp 490MW GT11 combined cycle NA Jun-07 580 UK CHP E.ON 1,275 MW turnkey combined heat and power plant, 3xGT26 NA

Page 4 Deutsche Bank AG/London 8 July 2008 Electrical Equipment Alstom

Source: Deutsche Bank, company data

Deutsche Bank AG/London Page 5 8 July 2008 Electrical Equipment Alstom

Figure 5: Alstom – selected Transport orders FY08/FY09 Date Value Country Customer Contract In-service

Jul-08 280 Brazil São Paulo metro Renovation of existing train control system Start 2010 Jul-08 425 Germany Deutsche Bahn 180 Coradia LINT-model regional trains Up to 2011 Jun-08 300 Dubai Road Transport Authority Citadis 402 type tramways equipped with the catenary-free APS NA technology, as well as the signalling and ticketing system Jun-08 1 Switzerland SNCF Modification of four A TER - X73500 railcars 2009 Jun-08 Kazakhstan Samruk Modernisation of 145 VL-80 electric locomotives NA Jun-08 47 Chile Metro de Santiago Supply of 36 Metropolis cars 2009 May-08 29 Italy Ferrovienord 6 new regional Coradia trains 2010 May-08 1,800 UK UK Department for 4 new trains, cars required to lengthen the existing trains and 2011-2012 Transport maintenance contract Apr-08 1,100 Argentina Argentine Republic Management of the project, rolling stock and signalling NA Apr-08 280 UAE Dubai RTA Al Safooh transit system tramway project 2011 Apr-08 NA Trinidad and NIDCO Two express train lines and the supply of rolling stock over an estimated NA Tobago four-year period Apr-08 326 Algeria Entreprise du Métro d’Alger 57 Citadis tramways, track, power supply, signalling and NA telecommunications, and the depot equipment. Apr-08 70 Germany Veolia Verkehr 30 Coradia range of regional trains 2009 FY08 Feb-08 160 Australia State of Victoria 18 X’Trapolis six-car trainsets 2009 Feb-08 36 Tunisia Tunisian national rail Installing a substation (25 kV) that will power the rail line and its 105 km 2010 company (SNCFT) of overhead lines along 23 km of double track Jan-08 25.5 China Nanjing Metro Company 21 six-cars Alstom’s Metropolis trainsets 2011 (NMC) Jan-08 650 Italy Nuovo Trasporto Viaggiatori 25 of its brand new very high speed AGV trains 2011 (NTV) Jan-08 NA Argentine Argentine Republic 7 stations and 780 kilometers of tracks NA Nov-07 32 China Shanghai Shentong Transit control system 2010 Holdings Group Nov-07 60 Germany Deutsche Bahn Regio AG 25 Coradia LINT model regional trains 2009 Nov-07 116 France RATP 49 MF2000 metro trainsets 2010-2012 Nov-07 38 France Gruppo Torinese Trasporti 9 TTR regional trains and spare parts 2009-2010 Nov-07 300 Algeria EMA Manufacturing a 18 kilometre-long line, serving 32 stations & 8 kilometre- NA long line, serving 11 stations Nov-07 103 France RATP and SNCF Interior refitting of 119 suburban trains 2009-2010 Oct-07 220 Spain RENFE 30 commuter trains 2009-2010 Oct-07 74 Morocco Moroccan National Railways 20 new generation Prima electric locomotives with high traction power 2010 (ONCF) of 6 MW Oct-07 Morocco Moroccan railway master 18 very high speed Duplex double deck train sets. NA Oct-07 117 UK London Underground Maintaince of the Jubilee line fleet in the metro system 2008-2017 Sep-07 120 Finland Karelian Trains 4 high speed Pendolino trains 2010 Jul-07 150 Germany DB Regio AG 39 Coradia Lirex regional trains 2009-2010 Jul-07 500 US Metropolitan 360 heavy rail subway cars 2008-2009 Transportation Authority Jul-07 100 Netherlands RET 53 Citadis tramway train sets 2009 Jun-07 27 France Lyon 13 additional Citadis tramsets for its new T4 line 2008-2009 Jun-07 2,100 France SNCF 80 double-decker trainsets; option for 40 could take value to €3.1bn From 2009 Jun-07 268 Belgium BELGOSIGNAL Supply and installation of signalling 2007-2012 May-07 37 China City of Nanjing 24x6 Metropolis train sets 2008-2009 May-07 182 Brazil São Paulo Metro 96 metro trains From 2007 Apr-07 100 France SNCF 31 tram trainsets - plus option to bring total value to €650m NA Apr-07 51 Ireland Republic Procurement 18 Citadis trams 2008 agency Source: Deutsche Bank, company data

Page 6 Deutsche Bank AG/London 8 July 2008 Electrical Equipment Alstom

Valuation and risks We value Alstom on 10.5x FY10e EV/EBIT, a 10% premium to the long term sector average of 9.6x to reflect the strength of Alstom’s backlog.

Risks „ Corporate activity: Bouygues currently own 30% of Alstom shares. Any changes to Bouygues’ holding in Alstom, or market perception as to Bouygues’ intentions, could materially affect the share price.

„ Emerging markets competition: Emerging markets competitors may begin to compete outside their home markets, potentially reducing industry profitability. India and China are major markets for boilers in the power generation industry. Local companies dominate in those markets and may be a threat to established western manufacturers over the long term. The extent to which western companies protect intellectual property may have a significant bearing on the long-term outlook for the industry.

„ Cyclical risk: Power generation is amongst the most cyclical end markets in the capital goods universe. Any sharp change in the outlook for the cycle could materially change earnings forecasts and the multiple which the market may apply to those earnings. Key upside risks include:

„ Margin potential may be higher than we forecast: If Alstom can generate margins in its Power business greater than we forecast then this would result in earnings greater than we currently model.

Deutsche Bank AG/London Page 7 8 July 2008 Electrical Equipment Alstom

Figure 6: Alstom P&L Year to March (Euro million) 2006 2007 2008 2009E 2010E 2011E Year Year Year Year Year Year Divisional sales Power Systems 5,079 5,673 7,768 9,442 10,669 11,736 Power Service 2,853 3,198 3,602 3,790 4,074 4,359 Total Power 7,932 8,871 11,370 13,232 14,743 16,095 Transport 5,128 5,288 5,509 5,747 6,092 6,458 Corporate & Other (Eliminations) 92 49 29 32 35 39 Continuing 13,152 14,208 16,908 19,011 20,871 22,592 Businesses now disposed 261 Group 13,413 14,208 16,908 19,011 20,871 22,592 Reported sales growth -1.8% 5.9% 19.0% 12.4% 9.8% 8.2% Organic sales growth NA 14.0% 19.0% 15.7% 9.8% 8.2% Divisional operating income Power Systems 101 201 415 614 907 1,056 Power Service 442 510 592 625 680 728 Total Power 543 711 1,007 1,239 1,587 1,784 Transport 324 350 397 437 487 549 Corporate & Other (Eliminations) -137 -104 -109 -110 -110 -110 Continuing 730 957 1,295 1,566 1,965 2,223 Group 746 957 1,295 1,566 1,965 2,223 Operating income margin Power Systems 2.0% 3.5% 5.3% 6.5% 8.5% 9.0% Power Service 15.5% 15.9% 16.4% 16.5% 16.7% 16.7% Total Power 6.8% 8.0% 8.9% 9.4% 10.8% 11.1% Transport 6.3% 6.6% 7.2% 7.6% 8.0% 8.5% Continuing 5.6% 6.7% 7.7% 8.2% 9.4% 9.8% Group 5.6% 6.7% 7.7% 8.2% 9.4% 9.8% Other operating income (expense) -19 -230 -74 -50 -60 -60 EBIT 727 727 1,221 1,516 1,905 2,163 Adjusted EBITA (post restructuring) 666 889 1,260 1,516 1,905 2,163 Margin 5.0% 6.3% 7.5% 8.0% 9.1% 9.6% Net interest -222 -111 -69 -52 -34 -17 Adjusted pre-tax profits 444 778 1,191 1,464 1,871 2,147 Other exceptional items 61 -162 -39 Reported pre-tax profit post goodwill 505 616 1,152 1,464 1,871 2,147 Tax charge (clean) -125 -145 -291 -381 -505 -580 Tax rate (clean) 24.8% 23.5% 25.3% 26.0% 27.0% 27.0% Minorities (clean) -3 9 -10 -13 -16 -19 Stated Net Income 178 480 852 1,071 1,349 1,548 DB Net Income 117 642 891 1,071 1,349 1,548 Fully diluted shares in issue (m) 276 287 287 288 288 288 Stated EPS: diluted (Euro) 0.64 1.67 2.96 3.72 4.68 5.37 DB Operating EPS: diluted (Euro) 0.42 2.23 3.10 3.72 4.68 5.37 DPS (Euro) 0.40 0.80 0.93 1.17 1.34 Source: Deutsche Bank, company data

Page 8 Deutsche Bank AG/London 8 July 2008 Electrical Equipment Alstom

Figure 7: Alstom Cash-flow Year to March (Euro million) 2005 2006 2007 2008 2009E 2010E 2011E Year Year Year Year Year Year Year

Income from operations 471 746 957 1,295 1,566 1,965 2,223 Restructuring costs charged to P&L -350 -80 -68 -35 -50 -60 -60 Amortization of pension -47 -61 -72 0 0 0 0 Capital gains and other -125 122 -90 -39 0 0 0 EBIT -51 727 727 1,221 1,516 1,905 2,163

EBIT pre restructuring 299 807 795 1,256 1,566 1,965 2,223 Capital gain/loss 34 -144 88 39 0 0 0 Depreciation 355 322 216 223 245 258 270 R&D capitalisation and amort. Of intangibles 72 15 16 -7 -7 -7 -8 Restructuring cash -281 -239 -102 -87 -100 -100 -100 Tax items -92 -85 -116 -127 -281 -430 -480 Financial items -381 -207 -102 -56 -52 -34 -17 Change in WC 580 363 540 777 200 50 50 Operating cashflow 586 832 1,335 2,018 1,572 1,701 1,940

Capex -185 -207 -280 -374 -450 -450 -450 GT 24/26 outflow -366 -115 0 0 0 0 0 Other 42 15 -10 -9 0 0 0 Free cash flow 77 525 1,045 1,635 1,122 1,251 1,490 Dividends 0 0 0 -117 -230 -337 -387 Disposals/(acquisitions) 928 257 -232 -635 -175 0 0 Net issuance of share capital 2,003 6 0 0 0 0 0 Deposit/(return of deposit) for contract bonding -700 0 700 0 0 0 0 guarantee Accounting change 697 0 0 0 0 0 0 Change in cash in discontinued operations 0 -112 0 0 0 0 0 Other 62 44 -329 85 0 0 0 Change in net debt 3,067 403 1,184 968 717 913 1,103 Opening net debt -4,718 -1,651 -1,248 -64 904 1,621 2,534 Closing net debt -1,651 -1,248 -64 904 1,621 2,534 3,637 Equity shareholders funds 1,583 1,840 2,271 2,245 3,060 4,089 5,269 Net debt/Equity 104% 68% 3% -40% -53% -62% -69% Source: Deutsche Bank, company data

Deutsche Bank AG/London Page 9 8 July 2008 Electrical Equipment Alstom

Appendix 1

Important Disclosures Additional information available upon request

Disclosure checklist Company Ticker Recent price* Disclosure Alstom ALSO.PA 70.86 (EUR) 8 Jul 08 2,6,14

*Prices are sourced from local exchanges via Reuters, Bloomberg and other vendors. Data is sourced from Deutsche Bank and subject companies.

Important Disclosures Required by U.S. Regulators Disclosures marked with an asterisk may also be required by at least one jurisdiction in addition to the United States. See “Important Disclosures Required by Non-US Regulators” and Explanatory Notes. 2. Deutsche Bank and/or its affiliate(s) makes a market in securities issued by this company. 6. Deutsche Bank and/or its affiliate(s) owns one percent or more of any class of common equity securities of this company calculated under computational methods required by US law. 14. Deutsche Bank and/or its affiliate(s) has received non-investment banking related compensation from this company within the past year.

Important Disclosures Required by Non-U.S. Regulators Please also refer to disclosures in the “Important Disclosures Required by US Regulators” and the Explanatory Notes. 2. Deutsche Bank and/or its affiliate(s) makes a market in securities issued by this company. 6. Deutsche Bank and/or its affiliate(s) owns one percent or more of any class of common equity securities of this company calculated under computational methods required by US law.

For disclosures pertaining to recommendations or estimates made on securities other than the primary subject of this research, please see the most recently published company report or visit our global disclosure look-up page on our website at http://gm.db.com.

Analyst Certification The views expressed in this report accurately reflect the personal views of the undersigned lead analyst(s) about the subject issuer and the securities of the issuer. In addition, the undersigned lead analyst(s) has not and will not receive any compensation for providing a specific recommendation or view in this report. Martin Wilkie

Page 10 Deutsche Bank AG/London 8 July 2008 Electrical Equipment Alstom

Historical recommendations and target price: Alstom (ALSO.PA) (as of 08/07/2008)

180.00 Previous Recommendations

160.00 4 Strong Buy 3 Buy 140.00 Market Perform Underperform 2 120.00 Not Rated Suspended Rating 100.00 1 Current Recommendations Buy 80.00 Hold Sell

Security Price Security 60.00 Not Rated Suspended Rating 40.00 *New Recommendation Structure as of September 9, 2002 20.00

0.00 Jul 05 Oct 05 Jan 06 Apr 06 Jul 06 Oct 06 Jan 07 Apr 07 Jul 07 Oct 07 Jan 08 Apr 08 Date

1. 7/3/2007: Hold, Target Price Change EUR90.00 3. 12/7/2007: Hold, Target Price Change EUR125.00 2. 15/5/2007: Hold, Target Price Change EUR100.00 4. 13/11/2007: Hold, Target Price Change EUR145.00

Equity rating key Equity rating dispersion and banking relationships

Buy: Based on a current 12- month view of total share- holder return (TSR = percentage change in share price 400 48% 45% from current price to projected target price plus pro- jected dividend yield ) , we recommend that investors 300 buy the stock. 200 Sell: Based on a current 12-month view of total share- 30% 29% 7% holder return, we recommend that investors sell the 100 30% stock Hold: We take a neutral view on the stock 12-months 0 out and, based on this time horizon, do not recommend Buy Hold Sell either a Buy or Sell. Notes: Companies Covered Cos. w/ Banking Relationship 1. Newly issued research recommendations and target prices always supersede previously published research. European Universe 2. Ratings definitions prior to 27 January, 2007 were: Buy: Expected total return (including dividends) of 10% or more over a 12-month period Hold: Expected total return (including dividends) between -10% and 10% over a 12-month period Sell: Expected total return (including dividends) of - 10% or worse over a 12-month period

Deutsche Bank AG/London Page 11 8 July 2008 Electrical Equipment Alstom

Regulatory Disclosures SOLAR Disclosure For select companies, Deutsche Bank equity research analysts may identify shorter-term trade opportunities that are consistent or inconsistent with Deutsche Bank's existing longer term ratings. This information is made available only to Deutsche Bank clients, who may access it through the SOLAR stock list, which can be found at http://gm.db.com Disclosures required by United States laws and regulations See company-specific disclosures above for any of the following disclosures required for covered companies referred to in this report: acting as a financial advisor, manager or co-manager in a pending transaction; 1% or other ownership; compensation for certain services; types of client relationships; managed/comanaged public offerings in prior periods; directorships; market making and/or specialist role. The following are additional required disclosures: Ownership and Material Conflicts of Interest: DBSI prohibits its analysts, persons reporting to analysts and members of their households from owning securities of any company in the analyst's area of coverage. Analyst compensation: Analysts are paid in part based on the profitability of DBSI, which includes investment banking revenues. Analyst as Officer or Director: DBSI policy prohibits its analysts, persons reporting to analysts or members of their households from serving as an officer, director, advisory board member or employee of any company in the analyst's area of coverage. Distribution of ratings: See the distribution of ratings disclosure above. Price Chart: See the price chart, with changes of ratings and price targets in prior periods, above, or, if electronic format or if with respect to multiple companies which are the subject of this report, on the DBSI website at http://gm.db.com. Additional disclosures required under the laws and regulations of jurisdictions other than the United States The following disclosures are those required by the jurisdiction indicated, in addition to those already made pursuant to United States laws and regulations. Analyst compensation: Analysts are paid in part based on the profitability of Deutsche Bank AG and its affiliates, which includes investment banking revenues Australia: This research, and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. EU: A general description of how Deutsche Bank AG identifies and manages conflicts of interest in Europe is contained in our public facing policy for managing conflicts of interest in connection with investment research.Disclosures relating to the firm's obligations under MiFiD can be found at http://globalmarkets.db.com/riskdisclosures. Germany: See company-specific disclosures above for holdings of five percent or more of the share capital. In order to prevent or deal with conflicts of interests Deutsche Bank AG has implemented the necessary organisational procedures to comply with legal requirements and regulatory decrees. Adherence to these procedures is monitored by the Compliance- Department. Hong Kong: See http://gm.db.com for company-specific disclosures required under Hong Kong regulations in connection with this research report. Disclosure #5 includes an associate of the research analyst. Disclosure #6, satisfies the disclosure of financial interests for the purposes of paragraph 16.5(a) of the SFC's Code of Conduct (the "Code"). The 1% or more interests is calculated as of the previous month end. Disclosures #7 and #8 combined satisfy the SFC requirement under paragraph 16.5(d) of the Code to disclose an investment banking relationship. Japan: See company-specific disclosures as to any applicable disclosures required by Japanese stock exchanges, the Japanese Securities Dealers Association or the Japanese Securities Finance Company. Disclosures under the Financial Instruments and Exchange Law Company name: Deutsche Securities Inc. Registration number: Registered as a financial instruments dealer by the Head of the Kanto Local Finance Bureau (Kinsho) No. 117 Member of associations: Japan Securities Dealers Association (JSDA), The Financial Futures Association of Japan Commissions and risks involved in stock transactions: For stock transactions, we charge stock commissions and consumption tax by multiplying the transaction amount by the commission rate agreed with each customer. Stock transactions can lead to

Page 12 Deutsche Bank AG/London 8 July 2008 Electrical Equipment Alstom

losses as a result of share price fluctuations and other factors. Transactions in foreign stocks can lead to additional losses stemming from foreign exchange fluctuations. New Zealand: This research is not intended for, and should not be given to, "members of the public" within the meaning of the New Zealand Securities Markets Act 1988. Russia: The information, interpretation and opinions submitted herein are not in the context of, and do not constitute, any appraisal or evaluation activity requiring a licence in the Russian Federation. South Africa: Publisher: Deutsche Securities (Pty) Ltd, 3 Exchange Square, 87 Maude Street, Sandton, 2196, South Africa. Author: As referred to on the front cover. All rights reserved. When quoting, please cite Deutsche Securities Research as the source. Turkey: The information, interpretation and advice submitted herein are not in the context of an investment consultancy service. Investment consultancy services are provided by brokerage firms, portfolio management companies and banks that are not authorized to accept deposits through an investment consultancy agreement to be entered into such corporations and their clients. The interpretation and advices herein are submitted on the basis of personal opinion of the relevant interpreters and consultants. Such opinion may not fit your financial situation and your profit/risk preferences. Accordingly, investment decisions solely based on the information herein may not result in expected outcomes. United Kingdom: Persons who would be categorized as private customers in the United Kingdom, as such term is defined in the rules of the Financial Services Authority, should read this research in conjunction with prior Deutsche Bank AG research on the companies which are the subject of this research. Disclosures relating to the firm's obligations under MiFiD can be found at http://globalmarkets.db.com/riskdisclosures.

Deutsche Bank AG/London Page 13

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