UNIVERSAL REGISTRATION DOCUMENT 2019/20 Including the Annual Financial Report CONTENTS
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UNIVERSAL REGISTRATION DOCUMENT 2019/20 including the annual financial report CONTENTS 1 5 DESCRIPTION OF GROUP CORPORATE GOVERNANCE 155 ACTIVITIES AFR 3 Report of the Board of Directors on corporate governance AFR 156 Industry characteristics 4 Executive Committee 196 Information on trends 7 Officer and employee shareholding AFR 198 Competitive position 7 Statutory Auditors’ special report on related-party Our value creation model 8 agreements 205 Strategy 10 Statutory Auditors AFR 206 Acquisition of Bombardier Transportation 11 Industrial footprint 12 Offering 13 Research and development 19 6 SUSTAINABLE DEVELOPMENT: 2 CORPORATE SOCIAL RESPONSIBILITY AFR 207 MANAGEMENT REPORT ON CONSOLIDATED Extra-Financial Performance Declaration 208 Methodology 257 FINANCIAL STATEMENTS, Report by one of the Statutory Auditors, appointed AS OF 31 MARCH 2020 AFR 23 as an independent third party , on the consolidated human resources, environmental and social Main events of year ended 31 March 2020 24 information included in the management report 259 Commercial performance 26 Additional information for stakeholders 261 Orders backlog 28 Synthesis of indicators/Key figures 2019/20 274 Income statement 28 Free Cash Flow 31 Net Cash/(debt) 32 7 Equity 32 Non-GAAP financial indicators definitions 33 ADDITIONAL INFORMATION 279 Information on the Group and the parent company AFR 280 3 Information on the share capital AFR 285 AFR Simplified organisation chart of the Group FINANCIAL STATEMENTS 37 as of 31 March 2020 298 Information on the annual financial report 300 Consolidated financial statements 38 Information on the Universal Registration Statutory financial statements 111 Document AFR 301 Other financial information relating to ALSTOM SA 130 Reconciliation table 302 4 RISK FACTORS, INTERNAL CONTROL AND RISK MANAGEMENT AFR 133 Operational and strategic risks 134 Security risks 139 Human resources risks 140 Legal & regulatory risks 140 Risks relating to acquisitions, disposals and other external growth transactions 142 AFR The Content of the Annual Financial Report is identified in the summary table with the help Financial risks 143 of this pictogram. Risk management and control environment 144 UNIVERSAL REGISTRATION DOCUMENT 2019/20 including the annual financial report Société anonyme with share capital €1,587,852,560 48, rue Albert Dhalenne – 93400 Saint-Ouen-sur-Seine (France) – RCS: 389 058 447 Bobigny The French language version of this Universal Registration Document was filed on June 2nd, 2020 with the French financial markets authority (Autorité des marchés financiers – AMF) in its capacity as competent authority within the meaning of EU Regulation 2017/1129, without prior approval, in accordance with Article 9 of said regulation. The Universal Registration Document may also be used for the offer to the public or the admission to trading of securities on a regulated market, provided it is accompanied by a securities note and, if applicable, a summary of all amendments applied to the Universal Registration Document. All of these items are approved by the AMF in accordance with the abovementioned regulation. The English language version of this report is a free translation of the original, which was prepared in French. In all matters of interpretation, views or opinions expressed in the original language version of the document in French take precedence over the translation. A table of reconciliation is provided on pages 302 to 304. This Universal Registration Document is available on our website: www.alstom.com. UNIVERSAL REGISTRATION DOCUMENT 2019/20 — ALSTOM 1 2 UNIVERSAL REGISTRATION DOCUMENT 2019/20 — ALSTOM DESCRIPTION 1 OF GROUP ACTIVITIES ●●INDUSTRY CHARACTERISTICS AFR 4 Market drivers 4 Market perspective 6 ●●INFORMATION ON TRENDS 7 ●●COMPETITIVE POSITION AFR 7 ●●OUR VALUE CREATION MODEL 8 ●●STRATEGY AFR 10 Growth by offering greater value to our customers 10 Innovation in smarter and greener mobility solutions 10 Efficiency, powered by digital 10 One Alstom Team: an agile, inclusive and responsible culture 10 ●●ACQUISITION OF BOMBARDIER TRANSPORTATION 11 A unique opportunity to accelerate Alstom’s strategic roadmap, Alstom in Motion 11 Price structure and financing 11 Indicative timetable and next steps 12 ●●INDUSTRIAL FOOTPRINT 12 ●●OFFERING AFR 13 Rolling stock 13 Systems 15 Services 16 Signalling 17 ●●RESEARCH AND DEVELOPMENT AFR 19 Development of the range 20 Innovation 21 AFR The Content of the Annual Financial Report is identified in the summary table with the help of this pictogram. UNIVERSAL REGISTRATION DOCUMENT 2019/20 — ALSTOM 3 DESCRIPTION OF GROUP ACTIVITIES 1 Industry characteristics Alstom, leading the way to greener and smarter mobility, worldwide At Alstom, we partner with our stakeholders to optimise transport networks by understanding what moves people, listening to their needs and aspirations. We strive to lead the way to smarter and more sustainable mobility, tech-driven innovation is in our DNA. We stay true to our core values as an agile, inclusive, and responsible company. We are proud to work together to reinvent mobility and make transport easier and more intuitive. Alstom offers a complete range of equipment and services, from high-speed trains, metros, trams and e-buses to integrated systems, customised services, infrastructure, signalling and digital mobility solutions. Our Alstom in Motion strategy, unveiled in June 2019, is based on the following pillars: growth by offering greater value to our customers; innovation in smarter and greener mobility solutions; Efficiency, powered by digital; One Alstom Team: an agile, inclusive and responsible culture. ●●INDUSTRY CHARACTERISTICS MARKET DRIVERS The rail transportation market is supported by solid long-term drivers. Sustainable development Soaring urbanisation, economic growth and public & private investment in infrastructure create a growing demand for transport notably in emerging Today more than 90% of the world population lives in areas where air countries. Mature markets, on the other hand, are mainly supported by pollution exceeds the threshold recommended by the World Health Organisation (4) while CO emissions from transport continue to grow. projects aiming at updating and modernising existing infrastructure and 2 rolling stock enhanced by growing environmental concerns. From an international standpoint, transport is now clearly recognised overall as a sector which contributes significantly to worldwide emissions Urbanisation whilst offering a great potential to curb them. The increased visibility of climate change consequences and the threat that air pollution poses on The combination of both economic and demographic growth entices a public health drives the actions of governments and regulation bodies to growing number of people to live in cities. By 2050, world population limit the magnitude of impacts by reducing greenhouse gas and airborne should exceed 9.7 billion inhabitants (1) of which nearly 70% will reside emissions. For instance: (2) in urban areas . This trend towards urbanisation is particularly strong yyThe European Green Deal, unveiled in December 2019, requires action in China, India and in many countries of Africa and Latin America. by all sectors of our economy to reach climate neutrality in 2050. This development triggers the growing saturation of airports, roads and Transportation, which represents approximately 25% of greenhouse existing railways and the need for new infrastructure. In this situation, gas emissions from energy combustion, is expected to decrease by railways typically offer a mass transit solution, safe, reliable and clean. 90% its emissions by 2050 to reach this target. Additionally, in many cities, the population is encouraged to leave behind yyLead pioneer countries and cities announced or strongly consider individual methods of transportation and favour collective transportation future bans on cars running on combustion engines (Norway, France, to limit traffic congestion. This change is usually supported by the active United Kingdom, Netherlands, India…). promotion of public transportation. Rail transportation offers higher performance levels than other People responsible for urban planning and development are looking for transportation modes, which should have a positive impact on the efficient, green, inclusive and intermodal urban transportation systems (3). evolution of the rail transportation market. Indeed, rail represents 8% of worldwide motorised transports but only 2% of the energy consumption In this context also, rail transportation offers ideal mobility solutions in and 4% of CO emissions (source: The UIC-IEA, Railway Handbook term of capacity, punctuality, security, and reduction of noise, pollution 2 2017 Energy consumption and CO emissions). Concerning passenger and energy consumption. 2 transport, the main focus of Alstom products, the CO2 emissions is much lower than other modes as shown by the graph thereafter. (1) UN World population prospects – 2019. (2) UN World urbanization prospects – the 2018 revision. (3) Intermodal transportation corresponds to the use of several methods of transportation over the course of a single trip. (4) World Health Organisation, Ambient Air Pollution: A Global Assessment of Exposure and Burden of Disease, September 2016. 4 UNIVERSAL REGISTRATION DOCUMENT 2019/20 — ALSTOM DESCRIPTION OF GROUP ACTIVITIES Industry characteristics COMPARISON OF AVERAGE ENERGY INTENSITY (MJ) PER Rail is clearly positioned today among motorised transport emitting PASSENGER