At the end of the 2005/06 fiscal year, ALSTOM successfully completed its recovery programme initiated three years ago, with results in line with the stated targets. This year, a decisive one for the Group’s future, involved a number of key decisions that have already produced very encouraging results.

In 2005/06, we have returned to a normal level of business volume, with significant increase in orders and revenue. Our operating performance improved sharply, with an operating margin which reached 5.6%. Today, ALSTOM is back on track with a return to profit and a strong increase of the positive free cash flow. Our financial structure has been reinforced, with a strong rise in equity and reduced debt. A new bonding programme should cover our needs until 2008.

This performance is the result of major internal efforts: further reductions in costs, improved contract execution and greater selectivity in the contracting process, a more efficient organisation and more rigorous project management. The industrial restructuring programme, essential for our turnaround, has been achieved as planned. Our past difficulties with the GT24/GT26 turbines are now behind us: contract wins in key markets, including Germany, Italy and Spain, confirm our full return to the gas turbine market, with high-performance products incorporating the latest technological advances.

The announced programme of disposals is in the final stage of completion. We have established partnerships in India, Russia and China in order to improve our positions in the energy markets. We have also concluded a strategic industrial partnership with the Italian company AnsaldoBreda to launch the AGV, our new generation of single-deck, very high speed trains.

With the disposal of ALSTOM Power Conversion and ALSTOM Marine, whose future is now assured within the Norwegian shipbuilding group Aker Yards, we have refocused on our core businesses: power generation and rail transport.

In April 2006, we signed a framework agreement with the Bouygues group. This agreement, which provides for extensive operational and commercial cooperation, will help to consolidate and develop ALSTOM. By pooling our expertise, our two groups will be mutually reinforced and our combined strengths will better serve the needs of our customers. Under this agreement, Bouygues has declared its intention to acquire a 50% stake in our hydro power business, which will allow us to fulfil the commitment made to the European Commission in 2004.

Finally, by purchasing the 21% stake in ALSTOM held by the French State, Bouygues will become our reference shareholder, the strong partner we need at our side in the long term.

Backed by our 60,000 employees, our stronger and more focused Group is geared today to take full advantage of its broad technology offering, its unique wide range of systems, products and services, its strong positions in markets worldwide and the confidence of its customers.

The stock market saluted our performance with a strong and steady increase in our share price.

We know that much remains to be done and the operating targets we have set ourselves for the coming years bear witness to our commitment to further improve our performance. We will leverage the strong growth potential of our markets, both in power generation and rail transport, and will initiate a programme of external growth through selected acquisitions or partnerships as they arise.

The men and women of ALSTOM have worked hard to bring the Group back on the path to growth and I would like to take this opportunity once more to thank each and every one of them. They will be the key drivers of our future success. We have put in place a programme called “It’s All About People”, which will allow us to better assist them in their career development and to better meet their needs. We have given them a greater stake in the future of ALSTOM through a programme which broadens the scope of employee share ownership. We have also launched a recruitment drive targeting young graduates so as to attract the most qualified candidates, revitalise our teams and prepare our Group to face tomorrow’s challenges.

Lastly, we have examined our achievements in corporate responsibility and sustainable development: we will raise our standards in this area over the next few years.

ALSTOM is now set to undertake a new challenge with confidence: ensuring profitable growth.