Pierre Mathieu Metro de Londres

Slide1 : Pierre Mathieu Vice-président, Financement des ventes et projets pour le Groupe Transport, Bombardier - Métro de Londres - Atelier 1: Expériences nationales et internationales de PPP


London Underground PPP The BCV and SSL Projects : London Underground PPP The BCV and SSL Projects October 31, 2003


Metronet : Metronet Metronet has acquired two Infraco companies who, under a Service Contract, are responsible for the renewal, upgrade and maintenance of 9 of the 12 lines comprising the London Underground Network The companies, Infraco’s BCV and SSL, are existing, performance-driven businesses accounting for 75% of the total underground network mileage SSL District Circle Metropolitan Hammersmith & City East London BCV Bakerloo Central Victoria Waterloo & City


BCV : BCV Route Stations Current Length Served Trains for KM service Bakerloo 23 25 32 x 7 cars Central 74 49 72 x 8 cars Victoria 21 16 37 x 8 cars


SSL : SSL Route Stations Current Length Served Trains for KM service Hammersmith & City 27 28 17 x 6 cars Circle 21 27 14 x 6 cars District 64 60 74 x 6 cars Metropolitain 67 34 44 x 8 cars


Bombardier’s supply contracts is valued at £3.4 billion (Cdn $7.9 billion) over 15 years : Bombardier’s supply contracts is valued at £3.4 billion (Cdn $7.9 billion) over 15 years The contracts include: Project management System integration Rolling stock (1,738 cars) Signalling systems Refurbishment (450 cars) Maintenance services The project is privately financed via a Public Private Partnership with Metronet and will bring significant benefits to London’s traveling public


Rolling Stock : Sub Surface rolling stock compared with the smaller Tube stock Rolling Stock


Introduction to LUL PPP : Introduction to LUL PPP


Introduction to LUL PPP : Introduction to LUL PPP Following the general election in 1997, the UK Government considered various options for LUL to reverse a generally acknowledged lack of investment in the Underground Network The Government concluded that full privatization was not the best solution and instead opted for a Public-Private Partnership (PPP) To facilitate the implementation of the LUL PPP, the infrastructure maintenance business of LUL was reorganized into three separate divisions responsible for different Lines of the Underground Network called “Infracos” On May 2, 2001, the Metronet Consortium was appointed preferred bidder for Infraco BCV. The same consortium was subsequently appointed preferred bidder for Infraco SSL on September 19, 2001. The last Infraco JNP was awarded to another consortium (“Tubelines”) Financial Close was achieved on April 4, 2003


London Underground Restructuring for Private Public Partnership (PPP) : LUL- Opsco (approx 10,000 staff) Network Control Train Operations Timetabling Revenue collection Station management Infraco - BCV (2585 staff) Metronet Infraco - SSL (2510 staff) Metronet Infraco - JNP (2014 staff) Tubelines Metronet Consortium - Bombardier, Balfour Beatty, WS Atkins, SEEBOARD, Thames Water Tubelines Consortium - Bechtel, Jarvis, Halcrow, Amey LUL in Brief 2002/03 Passengers carried 942m Revenues £1244m Gross Margin (£420m) Capital Investment £510m Network 408 Km Stations 253 Cars 3954 London Underground Restructuring for Private Public Partnership (PPP)


Key Features of LUL PPP : Key Features of LUL PPP LUL retains core operations through “Opsco” overall management responsibility ticketing, drivers, timetabling, network control, patronage risk Metronet and Tubelines have acquired shares in the Infraco’s Infraco scope includes: Maintenance of assets Financing Replacement of rolling stock and Upgrading of E&M systems, structures, trackwork and stations


Statutory Framework : Statutory Framework The GLA Act established the new arrangements for the Governance of Greater of London by the Greater of London Authority TfL was formed as a statutory corporate body pursuant to the GLA Act to act as the executive arm of the GLA responsible for implementing the Mayor’s integrated transport strategy TfL is funded largely by a combination of internally generated sources (fare revenues), GLA grants and Mayor’s allocation to TfL of general purpose central government grant. There are other sources coming from the Mayor’s office


Statutory Framework : Statutory Framework The Secretary of State can also provide additional funding to GLA TfL was assigned a credit rating of “AA” by S&P on June 6, 2000 and is currently rated “AA” with a negative outlook Under the Service Contract LUL has the obligation to ensure that when the ownership of LUL is transferred from LRT to TfL, the obligations of LRT under the Guarantee are also transferred to TfL A Letter of Comfort (not a guarantee) was also issued by the Secretary of State. Lenders viewed this “implicit government support” as central in their risk assessment


Service Contract : Service Contract The Service Contract is the “centerpiece” of the PPP contractual structure The Service Contract is for a period expiring 30 years from Financial Close achieved on April 4, 2003 This 30-year period is divided into four (4) periods each of 7.5 years At the end of each of the first three (3) periods there will be a Periodic Review under which (and subject to certain limitations) LUL will be allowed to require changes to the services the Infraco will be required to provide and/or the terms on which they will be provided


Metronet Service Contract obligations : Metronet Service Contract obligations Maintenance Ensure (new/inherited) assets maintained to contractual standards Upgrade of Assets Deliver line upgrades (new trains and signals) Modernisation and refurbishment of stations Capability - JTC improvements to increase number of passengers carried Performance Availability - Improve reliability of trains, signals and stations based asset Ambience - Improve cleanliness of trains and stations Services Points - Improve rectification times for minor faults on trains and stations In return for services provided, Metronet will be paid monthly an Infrastructure Service Charge (ISC)


The Infrastructure Service Charge (ISC) : The Infrastructure Service Charge (ISC) The ISC is being adjusted to reflect the Infraco ’s performance: The Infracos revenues will be increased if performance for Capability, Ambience and Availability exceeds the performance benchmark (capped bonuses except for Availability) Infracos revenues will be reduced if performance falls below the benchmark measures (uncapped abatements and twice the rate for increase of revenues for improved performance) The ISC is also subject to annual indexation based on RPIX and is being paid each four weekly periods The ISC is an amount that was fixed at Financial Close for the first 7.5 years


Infrastructure Service Charge (ISC) : Infrastructure Service Charge (ISC) At each Periodic Review, the ISC will be reset by agreement between the parties or, where the parties cannot agree, by direction from the Statutory Arbiter if abbreviated dispute resolution process fails The Arbiter is a central figure in this PPP and has been appointed by the Secretary of State under the GLA Act. He is independent of LUL/TfL


Statutory Arbiter : Statutory Arbiter The role of the Statutory Arbiter: To ensure that LUL has the opportunity to review and amend the requirements imposed or proposed to be imposed on the infraco under the Service Contract To promote efficiency and economy in the provision, construction, renewal, improvement and maintenance of the infrastructure To ensure that any rate of return incorporated in the Service Contract would, in the opinion of the Statutory Arbiter, be earned by a company which is efficient & economic To enable an infraco to plan the future performance of its obligation under the Service Contract with reasonable certainty The Arbiter can be asked to intervene during: Periodic Reviews; and Extraordinary Reviews


Periodic Reviews : Periodic Reviews This periodic review concept distinguishes this PPP from a standard UK PFI/PPP This concept was introduced because: (i) LUL required the flexibility to changes the service requirements (i.e. the “Restated Terms”); (ii) LUL recognized that it was not possible to obtain fixed prices for 30 years; and (iii) It also provides a major mitigant against potential costs overruns. Each year Infraco may request the Statutory Arbiter that he confirms if Infraco is operating in an economic & efficient manner


Economic & Efficient : Economic & Efficient This concept is critical in several respects: It will affect both Infracos’ recovery of additional costs or shortfalls in revenues at an Extraordinary Review and whether the level of ISC should be adjusted following the finalization of financing at a Periodic Review The direction by the Statutory Arbiter will affect the level of compensation payable upon Mandatory sale initiated as a result of a Periodic Review Infraco may request guidance from the Statutory Arbiter in the form an annual report. It will give Infraco an opportunity to remedy any “shortcomings” Infraco may also request from the Statutory Arbiter’s direction as to the level of costs or shortfalls in revenues which have up to that time qualified as “Net Adverse Effects”


Extraordinary Review : Extraordinary Review An Extraordinary Review can also be instigated by an Infraco when the Infraco has incurred, or expects to incur, additional costs or shortfalls in revenues which are in excess of an agreed Base Case level within any Review Period


The partners & their respective scope : The partners & their respective scope


Metronet’s responsibility vis-a-vis London Underground will be through a series of Supply Contracts : Metronet’s responsibility vis-a-vis London Underground will be through a series of Supply Contracts Track Works Balfour Beatty Trains & Signalling Bombardier Transportation (Total Transit Systems) Stations Balfour Beatty Thames Water Atkins Seeboard Civils Balfour Beatty Thames Water Atkins Seeboard Bombardier Transportation (Metros): Vehicles Westinghouse Signalling Bombardier Transportation (Services): Enhancements Refurbishments Train Maintenance


Metronet — An independent company owned by five world class shareholders, each with equal participation : Metronet — An independent company owned by five world class shareholders, each with equal participation Bombardier Inc. £9.98 B ($23.7 B Cdn)* 75,000 Bombardier is the global leader in the rail equipment manufacturing and servicing industry Sales *As of Jan. 31, 2003 Employees Balfour Beatty £2.6 B ($6 B Cdn)* 24,000 Largest general and rail civil engineering contractor in the UK Atkins plc £0.6 B ($1.4 B Cdn)* 14,000 Largest rail engineering consultancy in the UK SEEBOARD plc £1.0 B ($2.32 B Cdn)* 3,800 One of the largest power utilities in the UK servicing London area. Parent: EDF Thames Water £1.6 B ($3.7 B Cdn)* 12,000 Largest water company in UK – serves Greater London area. Owned by RWE


Capex Contract Principles : Capex Contract Principles The objective of the Capex supply chain strategy is to provide a program of capital expenditures that delivers the required contractual performance Number of supply contracts minimized Concept of band (low - High) for each category of Capex to allow program flexibility as long as the Capex limits (high and low bands) are not breached at any time Distinct work packages which include: Rolling stock and signalling Tracks Stations Civils


Performance measurements : Performance measurements


Performance Revenue Measure : Performance Revenue Measure Capability A measure of the passenger’s journey time from entering the Station to exiting on reaching his destination Availability A measure of the reliability of the Rolling Stock, Signalling, Track & Station based equipment, assessed in terms of the impact on passengers ’ lost Customer Hours (LCH). The impact of failures and delays varies by location, time of the day and day of the week. Incidents are recorded daily with Availability scores determined as three month rolling averages


Performance Revenue Measure : Performance Revenue Measure Ambience A measure of the condition and cleanliness of Trains and Stations. Trains and Stations surveys by “Mystery Shopper”. Scores are weighted by Station and by Line to obtain an Infraco average score. Each is recorded at least once quarterly with an Infraco’s ambience score only being calculated once a quarter In addition, Services Points subject to a threshold could be incurred for failure to meet specific obligations under the Service Contract or failure to rectify certain faults promptly


JTC Elements : JOURNEY TIME CAPABILITY (JTC) = A measure in minutes of passenger’s journey from entering a station to leaving his destination station Number of Trains in service Number of Seats on a Train Train Door Opening / Closing Minimum runtime over the Line Minimum headway between trains Track Condition Facilities on Platform for Driver e.g. Toilets, Restrooms JTC Elements


A performance based revenue structure : A performance based revenue structure Capability Journey time Consistency Control Availability Train service Station service Lifts & escalators Service points Run times Ambience Facilities Fault rectification Ambience Cleanliness Condition Mileage Adjustment


Funding Plan : Funding Plan


LUL Financing Requirements : LUL Financing Requirements LUL requires that Metronet secure committed financing for Period 1 only (i.e. the first 7.5 years) as the Infrastructure Service Charge (ISC) paid by LUL to Metronet will not be totally sufficient to support the Capex & Opex program LUL did not require further committed funding on the basis that the costs of committing financing 7.5 years in advance for additional support required in subsequent would have been prohibitive and not accessible in the capital market


Financing worth £2.6 Billion : Financing worth £2.6 Billion Third party financing of Metronet is on a non-recourse basis to the shareholders Debt facilities include: Bank Base Facility to fund the capital, operating and financing costs of Infraco in performing its obligations set out in the Service Contract Bank Liquidity facility to fund cost overruns or revenues shortfalls Protected Cost Facility to fund in each contract year of Infraco costs certified by LUL to be related to changes in safety requirements or qualifying changes in law


Financing worth £2.6 Billion : Financing worth £2.6 Billion Equity from shareholders in the form of share capital and shareholders loans. Each shareholder committed £35 M per infraco Returns on investment will depend on Metronet’s performance. Such returns expected to be in line with other UK Private Finance Initiative projects


Bombardier’s Scope of Work : Bombardier’s Scope of Work


Scope of supply - BCV : Scope of supply - BCV Victoria Line 376 new cars - 47 eight-car trains 2 pre-production trains within 3 years Fleet delivery 2009-2011 Project management and system integration New signalling and Control Centre, complete with safety case by 2009 Maintenance of existing trains from 2007 and new trains from delivery through to 2018


Scope of supply - SSL : Scope of supply - SSL 1362 new cars Metropolitan Line 72 eight-car trains Circle and Hammesmith and City Lines 40 six-car trains District Line 78 seven-car trains 2 pre-production trains in 2008 Fleet deliveries 2009-2015 Project management & system integration New signalling and control centre, complete with safety case by 2014 Maintenance of existing trains from 2007 and new trains from delivery through to 2018 Refurbishment/Enhancement District Line trains from 2003 to 2008 (75 six-car trains)


A disciplined approach to rolling stock development : A disciplined approach to rolling stock development Our Metro Division will produce two pre-production trains for each contract to reduce the reliability and safety case risks Pre-production trains will be trial run for approximately three years to prove on board systems and interface with infrastructure On the Derby test track On London Underground track for 40,000 kms Trial runs will include passenger loading in service, as well as empty train running


Maintenance and Services : Maintenance and Services Refurbishment from 2003. A five-year programme to upgrade District Line fleet of 75 six-car trains Maintenance of existing rolling stock on Victoria and all Sub-surface lines from 2007 Maintenance of new trains for Victoria Line and all Sub-Surface Lines from introduction onwards Rolling stock maintenance carried out at eight existing London Underground depots Extensive experience with LUL Piccadilly Line Refurbishment 1994 - 2000 522 cars - 87 six-car trains Metropolitan Line Refurbishment 1994 - 1997 432 cars - 54 eight-car trains


Bombardier has selected Westinghouse as its signalling supplier : Bombardier has selected Westinghouse as its signalling supplier Over 50 years of supply experience with LUL and over 75% of installed signalling equipment on entire LUL network has been supplied by Westinghouse Proven equipment with Safety Case Key projects with LUL: Victoria Line – World’s first automated railway signalled by Westinghouse (1968) Central Line - recently equipped with interlockings, track circuits, ATP, ATO and ATS by Westinghouse (ongoing) Jubilee Line - extension project equipped with Westrace interlockings, track circuits and Westcab backup control centre by Westinghouse - same components for BCV & SSL


Bombardier Transportation in the UK : Bombardier Transportation in the UK Norwich Chart Leacon Ilford York (SIG) Doncaster Derby 2,000 staff (Metros HQ) Reading (SIG HQ) Glasgow (SIG) Crewe 1,000 staff (Services HQ) Swindon Plymouth (SIG) Derby (Bogie/SIG) Dublin Presence:- Etches Park Tyseley Ruislip Hornsea Salisbury Ramsgate Slade Green Leeds (SIG) Horsham (SIG) Haymarket Nottingham East Ham Wakefield 400 staff Central Rivers Manufacturing Services Signalling (RCS) U.K. No. of employees: 5,200 No. of manufacturing sites: 3 Number of services sites: 25 Headquarters: Services, Crewe Rail Control Solutions, Reading Metros, Derby


Bombardier Transportation in the UK Mainline trains : Bombardier Transportation in the UK Mainline trains Voyagers for Virgin CrossCountry Total Ordered 352 Cars Turbostars for around the UK Total Ordered 353 Cars Electrostars for Connex and c2c Total Ordered 1614 Cars Meridians for Midland Main Line Total Ordered 127 Cars


Bombardier Transportation in the UKTransit systems : Bombardier Transportation in the UK Transit systems Croydon Tramlink System A Private FI project that opened in 1999, Bombardier supplied, and now maintains, 24 trams Nottingham Express Transit (NET) Using a P3 approach, the 14-km turnkey system (Line 1) will open in Spring 2004 with 15 trams Docklands Light Railway Bombardier supplied 70 fully automated city-metro vehicles in the early 1990’s and a further 24 vehicles were ordered in 2000


A formidable reference for Bombardier Transportation : A formidable reference for Bombardier Transportation Massive improvements to London Underground’s infrastructure privately financed via a Public Private Partnership deal which will bring significant benefits to London’s travelling public Metronet consists of five world class shareholders, each with equal participation Metronet financing of £2.6 billion ($6 billion Cdn) is on a non-recourse basis to shareholders Bombardier’s supply contracts valued at £3.4 billion ($7.9 billion Cdn) over 15 years: proven technology, extensive pre-production testing, conservative scheduling These contracts build on Bombardier’s extensive capabilities in the UK and reinforce our position as the leading provider of rail equipment manufacture and servicing, both in the UK and on a global basis


Safe Harbour Statement : Safe Harbour Statement This presentation may contain “forward-looking statements” reflecting the Corporation’s expectations regarding its future growth, results and performance. These forward-looking statements reflect the current views of the Corporation’s management and are subject to various risks, uncertainties and assumptions which could cause the Corporation’s future growth, results and performance to differ materially from those expressed in, or implied by, these statements. For additional information identifying legislative or regulatory, economic conditions, climatic, currency, technological, competitive and other important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please consult the documentation filed by the Corporation with securities commissions, including the Management’s Discussion and Analysis. However, the Corporation disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.