Imerys S.A.

Ladies and gentlemen, good morning. Olivier Pirotte I, thank you for attending our Annual Meeting, and we’ll be pleased to comment on the results of the Imerys Company.

We’ll begin with a brief introduction of our accounts, the highlights and then, of course, we will be available to answer any questions you may have. So I will begin with the highlights.

But before we get into these economic and financial aspects, I would like to just make a few comments about the evolution of the group’s governance. And you have seen in this respect that we have recently appointed a new Managing Director in the person of Alessandro Dazza, who will be joining us next Monday, on the 17th of February.

And from this date, I will be continuing my duties as Chairman of the Board of Directors of Imerys. And I will, of course, leave the CEO controls to Alessandro for the implementation of the group’s transformation and everything that has to do with his role as a CEO.

Concerning the group’s financial performance. We have suffered from the significant impact of the deterioration of the industrial markets with a 6.1% drop in volumes, to which was added the negative effect of the closure of our factory, wollastonite, in the U.S.

and the deconsolidation of our talc activities. These negative factors were partially offset a solid price product mix effect of plus 2.2%, which was higher, in fact, than the inflation of the variable costs, and also, thanks to savings in fixed costs and overheads.

Current operating and current EBITDA margins were 10.1% and 17.6%, respectively, and the net current result decreased by 22.4% in accordance with the outlook communicated to you in October of last year for the Q3 results. In such difficult conditions with net current free operating cash flow, nevertheless, is robust, reaching €348 million, thanks to strict management of working capital and investments.

And this allows the group to display a ratio of net financial debt at the end of this year, the ratio to currency EBITDA of 2.2% at December 31. In this context, the Board of Directors has decided to propose maintaining the dividend at €2.15 per share.

And with this year, exceptionally, I think option given to shareholders to choose all part of the dividend for payment in shares. This will be a suggestion made during the general meeting.

You’ll remember that the board on the 21st of October 2019, following the departure of Conrad Keijzer, had asked me to undertake a role for an interim period. And on the 17th of September on proposal of the vote, the board dissociated the - rather decided to once again, split the function of Chairman and the Chief Executive Officer, entrusting the Chief Executive Officer’s function to Mr.

Alessandro Dazza and asking me to continue as Chairman. I don’t know if you all are familiar with Alessandro Dazza, but he’s had a long experience in Imerys.

He spent 16 years in the group. And he was notably Executive Vice President and in charge of the three divisions, which are High Temperature Materials & Solutions, and we’ll be coming up to this in a moment.

I’m convinced, that being said, that he is perfectly positioned to carry out the transformation plan that was launched last year and pursue the group’s profitable growth strategy, and he can certainly count on my full support and that of the Board of Directors. Let’s talk now about 2019.

Regarding volumes, if the construction markets have continued to do well, we have had to face a sharp deterioration in market conditions, especially in industrial markets here in Europe, resulting for us in an overall drop in volumes of over 6%. The deterioration of manufacturing activity is seen in some of the figures that I shall give you now, the 6% drop in automotive production in Europe in the fourth quarter compared to the same period of the previous year and a 10% drop in crude steel production in the European Union during the same fourth quarter.

In addition, we’ve also faced an acceleration of the fall in the paper market, in particular, in the United States, which reached minus 14% over the year compared to 2018. But we’ve also seen a weakening of the demand in filtration and significant destocking in refractories, in particular, at the end of the year.

Now beyond these economic context trends, we do not see any structural change in our markets, and we remain confident in the relevance of the group’s strategy. In this difficult market environment, we have, once again, managed to maintain a positive price mix effect over the year.

And as you can see, in each of the quarters of 2019, this price effect has more than offset the inflation of variable costs. Expressing figures in euros, this price product mix effect resulted in a contribution of €100 million in 2019 to be compared with an inflation of the variable cost of €78 million.

So a pricing power of €22 million, a positive net contribution to current operating profit for the financial year close to the levels, in fact, reached in 2017 and 2018, and this pricing power effect that is pricing power reduced by the reduction of the variable costs led to around - an effect of around €30 million. And for the period, inflation on variable costs has gradually slowed down.

The increase or the inflation of variable costs of €78 million for the year came mainly from increases in certain raw materials and, to a lesser extent, from pricing of energy and freight. The second positive element in this balance that we’ve experienced and the operating performance in 2019 was substantial savings on costs because the fixed cost, the variable costs have more than offset the inflation of those items and provisions also for the depreciation undertaken over the recent years.

So we have a net effect. If you come back to the previous slide, please.

We have a contribution of variable costs - sorry, could we please get the previous pages? Yes, the contribution of cost.

Can we go two more slides, please? Next one, yes, there we are.

So the increase of fixed cost and overheads of €80 million, €12 million coming from the withdrawal from the ceramic proppants activity in the United States and the mothballing of our natural graphite activities in Namibia. And also reduction of industrial cost base of €28 million and corresponding to the increase in depreciation.

This can be seen in a net effect of €31 million, of which €28 million for Connect & Shape. So now if we come back to the previous slide, concerning the Connect & Shape transformation program.

May I remind you that we established the organization in November 2018, and that it was gradually rolled out across the group. And focusing on customer proximity in the markets and also to improving the cost competitiveness and the simplification and streamlining of the organization and also for an optimization of our support functions.

And as I said in the previous meeting, the rationale for this program and its objectives are and have been absolutely confirmed. Let me remind you, too, that the organization, as you can see it in the pie charts here on this slide, are built around two segments.

One is Performance Minerals, and the other is Materials & Solutions for High Temperature. And we have five areas of business with the operating managers in each of these sectors.

Performance Minerals have a geographic segmentation, and of course, have coordinated, essentially, in their plastics, paints and coatings, renewable energies and paper and cardboard as the sectors and other high-temperature solutions and materials. So we have the building, civil engineering and the refractory industry.

And this is essentially intended for the refractory industry with also building chemicals. And on this slide, you see the modest acquisitions, which are not big in terms of financial payment but interesting from a strategic point of view, acquisitions of targeted companies and that have been creating value.

Now if we can go back to the cost-saving slides, please, that I’ve already started to comment on. I was saying that you can see that thanks to Connect & Shape, we have a group savings effect of €28 million.

That is the second bar line here in light blue. And we’ve had €100 million gross cost reduction in 2019.

So in line with the plan that we’ve provided for and is continuing to be unfolded for the 2022 target that we had scheduled for this cost reduction. And these savings will continue therefore in this coming year.

I will now hand over to Olivier, who will comment on the detailed results of the financials for 2019. Olivier, the floor is yours.

The good news is that I don’t need to adjust the microphones this time. Thank you, Chairman.

I now suggest that we go further into the analysis about performance and to review our fiscal 2019 results, starting with revenue as is usual. Now what does the graph tell us about the change in sales over the past financial year?

As Patrick Kron mentioned, the hardening of the economic environment weighed on the level of our sales. Thus, volumes were down by 6.1%, i.e., coming to minus €278 million, including €101 million in the fourth quarter of the year alone.

And they alone explain the decrease of 5.1% in revenues to €4.354 billion. Now in addition to this volume effect, there are two factors that you know well.

The first is the negative impact of 2.7% of revenues due to the deconsolidation of the sales of our North American talc subsidiaries on the order of €126 million. The second negative factor was the negative scope effect linked to the disposal of non-core assets in the portfolio.

All in all, this is the equivalent of a 9.5% reduction in revenues, which weighed on fiscal 2019. In this context, the good news has come from the fact that the group has maintained a positive price product mix of 2.2% over the year, which contributed €103 million to revenues for the period.

And finally, the positive foreign exchange effect delivered another €100 million and are mainly linked to the appreciation of the U.S. dollar versus the euro and also helped to reduce the aforementioned effect.

Now moving on to the current operating results, so called EBIT in financial jargon. Current operating results amounted to €439 million in fiscal 2019, down almost 22% over prior year.

This decline is to be compared with the impact that I have just described to you with respect to revenues and have been contained by the operational enablers, which we implemented to partially offset the effects. So you will see that operating margin stabilized at about 10%.

You can see on the graph that the impact of the total sales volumes totaled €145 million over the year, including €49 million in Q4 alone. And the loss of contribution from the North American talc activities delivered negative impact of €19 million on current operating results.

You also observed that the enablers, which have made it possible to protect the performance as presented by Patrick Kron, is that we maintained a positive price-mix impact, which continued to cover the increase in variable costs with the variance of positive €22 million over the year. On the other hand, we took measures to reduce fixed and general costs, which translated into a reduction in fixed cost and overheads of €31 million net of inflation.

Now if we zoom in on the operating margin for our two business areas, starting with the Performance Minerals segments, which accounts for a bit more than half of the revenues, that is 54% with sales amounting to €2.450 billion in fiscal 2019. You will see that there is a notable decline of 5.6% in revenues in this segment or €143 million.

And in fact, it is largely originating in the scope effect connected with the deconsolidation of the North American talc subsidiaries, which are part of the Americas business area. Now at comparable exchange rate and scope, the revenue for Performance Minerals is down at 3.1%, which can be adjusted, in fact, down to 2.4% if we are to exclude the lower contribution from the Willsboro plant in the U.S., and you will remember that this plant was closed temporarily in the first half.

Now the main factor remains that there’s been a contrasted development of demand in the various markets that we serve. And among the markets most affected by the economic environment, we may mention the paper market, both in the U.S.

and Europe, filtration for food and beverages in the U.S. mainly, and traditional ceramics business that is sanitary, wall and floor tiling, mainly in Europe was affected.

Now on the other hand, a certain number of markets have remained well oriented, including construction, paints and coatings, plastics and rubber, graphite as well for lithium-ion batteries in Asia, in particular. All in all, the current operating profit fell by some 20% to €279 million for the year with an operating margin of 11.6%.

Now in the second business segments, which covers high performance materials and solutions, the market environment deteriorated in the second half of the year as other companies and players in this industry already have reported now and published reported data. The revenues for this segment decreased 4.6% and a bit more than 5.3% in organic terms to coming at about €2 billion.

Knowing that in the fourth quarter, this drop reached to 12%, reflecting the weakness of the automotive market and more specifically, automotive production, Refractories and Abrasives and the continued decline of the steel market due to capacity reductions implemented by the main steel producers. Now in contrast with these trends, we need to mention that there was relatively good performance in building chemicals, which has mitigated the decline in volumes.

Now all in all, our current operating profit amounted to €151 million with an operating margin of 7.6% in fiscal 2019. Now if we move on with the breakdown of the other items of the income statement, up to the net income from current operations, which is the financial indicator, which we established our perspectives on, which comes in at €277 million after IFRS 16, down 22.4% compared to 2018, which is in line with the forecast we issued in October of 2019.

That is - that this will be an indicator with a drop and would be around minus 2020 - minus 22%. That is the drop.

This result is understood after an improvement in our financial income and expenses with financial expenses being limited to €44 million, thanks to a profit of €17 million coming in linked to a liability management transaction, basically buying back a Japanese private placement earlier than maturity date. And this result is also incorporating a tax change amounting to minus €140 million, which reflects an effective tax rate of some 28.8%.

So the net income growth share per share is €121 million after IFRS 16. And it’s understood after recognizing some operating income and expenses on the order of €156 million, net of taxes, more than half of these other operating income and expenses, that is €84 million, are for so-called restructuring costs linked to the transformation program, i.e., around three quarters of the final estimate for these costs.

We also have incorporated indeterminate of non-strategic assets on the order of €46 million for assets which either were sold or closed, and these impairment of assets are non-cash. And we have a balance of a EUR€25 million, which includes some of the one-off items like costs connected with the temporary closure of our Willsboro plant in the U.S., the impact being a bit more than €6 million as well as some specific expenses connected with the Chapter 11 filing for some of our activities on the order of €7 million.

Now as a reminder, the net income group share, it cannot be easily compared. In 2018, contrary to this year, we had a significant capital gain realized on the disposal of the roofing activity, which brought net income up to €560 million for fiscal 2018.

So much for what I could say about the results of the year. Now let’s just move on to the cash flow review, which has been satisfactory for the group.

As Imerys posted the robust increase in current free operating cash flow, up strongly by more than 10% to €315 million pre-IFRS 16. And even more, if I include this IFRS 16 impact to €348 million, and this despite a decline in current EBITDA.

Now this result was achieved, thanks to strict management of our capital expenditure and our working capital requirements. Now with respect to our capital expenditure, you can see that they have reached a level of €298 million.

That is a bit less than 6.7% of the turnover, down €41 million. If you compare it to prior year, which shows the group’s ability to adjust capital expenditure in a lower-growth environment.

Number two, operational working capital requirement has significantly improved over prior year, thanks, in particular, to a good vigilance and good inventory control. This current free operating cash flow of €315 million before IFRS 16 makes it possible to cover the cash outflows for the fiscal year, including the payment of our dividend and the buyback of our own shares we conducted for the year for a total amount of €204 million.

It also covers some year-end acquisitions, which Patrick Kron mentioned, on the order of €43 million as well as nonrecurring or exceptional disbursements for €75 million, in particular, related to the implementation of our transformation plan, and we also mentioned the €28 million impact due to deconsolidation of the cash flow of our North American talc subsidiary and also debt servicing. So that at the end of December, net financial debt amounted to €1.420 billion before IFRS 16, i.e., a ratio between net financial debt and current EBITDA of 2.1 times and a gearing ratio of 45%.

If I take into account the IFRS 16 finance lease liabilities for an amount of €265 million, the net financial debt amounts to €1.685 billion. And the financial ratios, as I just mentioned, are very close to those.

Before IFRS versus 2.2 times for net financial debt compared to the current EBITDA and a 52% gearing ratio. Now with respect to liquidity.

Financial resources, which shows how robust our financing structure is. As you may know, net debt is fully covered by market bonds.

And you have here the maturing profile on the chart here. And average maturity, in fact, is a bit more than 5 years, knowing that we are associated with an average interest coupon of 1.7%.

We have abundant cash flow of more than €600 million, which will make it possible, as need be, to largely cover the maturity of the 2020 original bond of €224 million. In addition, the group has credit lines for a bit - for slightly less than €1.3 billion with a dozen banks, which have not yet been drawn down, guaranteeing abundant financial resources that can be directly usable.

So much for what we wanted to review with you. Over to Patrick Kron.

Thank you, Olivier. So concerning the dividend.

Despite the drop in net income from current operation, the Board of Directors will be proposing to the general meeting of shareholders on May 4, the payment of dividend of €2.15 per share, stable compared to what was paid in 2019, and representing a payout of 61% for the net count result group share. This decision, I feel, reflects the confidence of the Board of Directors and the fundamentals and prospects of the group.

Also, subject to the approval of general meeting, the Board of Imerys has also decided to exceptionally offer shareholders who wish to do so, an option to pay or a part of their dividend in new shares of the company at a price corresponding to 95% of the average quoted price of Imerys shares on the regulated market of Euronext during the 20 trading sessions preceding the day of the general meeting. This proposal is based on our desire to maintain a solid financial structure that allows us to seize development opportunities within the framework of the group’s profitable growth strategy.

And GBL has also announced its intention to receive its dividend in full in shares. A word now about the group outlook.

From a macroeconomic point of view, we observed the positions of difficult industrial market conditions during the first part of 2020 and the relatively low level of visibility. And in this context, Imerys will continue to give priority to reducing the cost structure and generating cash, in particular, as mentioned before, by continuing to deploy its Connect & Shape transformation plan.

The group will also maintain a sound financial structure, thanks to strict management of its investment and its working capital requirements. And this should make it possible to receive the same satisfactory results as we obtained in 2019.

In addition, discussions aimed to resolving the top litigation in the United States are continuing. And of course, as in all similar circumstances, I will not give any prognosis as to the outcome.

We also remain confident in the resilience of the group’s business model, the relevance of its profitable growth strategy and its ability to achieve its medium-term objectives. Thank you for your attention, and we are now available to answer your questions.

The nice questions to me and the tough ones for Mr. Pirotte.

May I ask two questions? The first concerns the net operating results for the fourth quarter of 2019.

What concerns me is that it’s down by more than €51 million. Now isn’t there a question of provisioning there that may have been at risk and - which requires, therefore, a great prudential approach to the publication of your results?

Whereas in 2018, you were able to take back some of these provisions. And so is there not a new fact here?

And to come back to the issue of asbestos in December, Imerys asked for an extension, 3-month extension of the delay. Has this been accepted?

Concerning your first item, the simple manner of answering your question is to look at the various components of our P&L. And if you just look at the fourth quarter, it was, indeed, tough.

We had anticipated this because when we published our results in - Q3 results in October, we announced the deterioration of the situation. So this was anticipated.

And objectively, it has been significant. We certainly felt it.

But I have to say that it is - it was particularly strong. As you noted, in the mineral performance, where we were down by 3% to 4% compared to the first part of the year.

But the impact in Abrasives and Refractories and in High Temperature Materials & Solutions was very significant because we had a drop on a like for like basis, a drop of the [indiscernible] up by some 12% to 16%. Now the net operating income was significantly down because of this volume effect.

Now what is this due to? One element that we had anticipated and was clearly presenting a difficult downstream market, strong destocking.

And so inventory reductions at our clients, which obviously, played on our volumes and, therefore, on our P&L. Now another element that I would like to draw your attention to is that also on our side, we have been working on controlling our work capital requirements and our stocks.

We’ve significantly reduced the production. So as to not finish the end with the excessive inventories because clients would not have taken the tonnage we had hoped to sell.

And this reduced activity that we ourselves initiated and accompanied with a simultaneous effort of reducing our own stocks has had a positive effect in terms of the free cash flow, operating free cash flow, but obviously, weighed on our costs by a lesser absorption of fixed costs. So overall, maybe certain provisions at the end of the year indicate us certain prudential approach and indicating the observed slowdown.

But what I can say is that in a tough market, in particular, everything has to do with the steel industry and so on to give some illustrations of slowdown to our customers. And also our determination to not finish the year with oversight stocking, and therefore, adaptation efforts that have had positive results.

Now concerning the discussions around talc. These are continuing.

It’s very tough in such a situation to give a prognosis and outlook as to the outcome. But as I see things, generally, my feeling is that they’re going well.

Yes, the discussions are continuing and the delay has been accepted.

Good morning. Josep Pujal from Kepler Cheuvreux.

I have three questions. The first concerns, volumes down by 6.1%.

Could you tell us how this compares, let’s say, to the competition to the market? Do you consider that you are gaining market share or just maintaining it or are you losing?

And specifically in filtration and steel, please. My second question concerns Slide 10, which shows the reduction of the headcount and what was planned.

I’ve seen there are two different figures between what is projected on the slide and my brochure. One is minus 504, and the others, minus 1,104.

So which figure is correct? And my third question concerns also Slide 10.

Yes, the Slide 10 concerns the coronavirus. Is this having an impact on you?

And above all, how do you see things developing in the coming weeks and months?

Concerning your first question in terms of market share, it’s quite difficult to give a specific and precise answer because it’s, obviously, a question we’re asking ourselves on a regular basis. But one of the features of our company is that we’re serving very diverse markets, both geographically and in terms of applications.

And we don’t have a lot of comparative elements, and it’s a problem that you have, too. So my feeling is that the major part of the reduction in volumes is due to the slowdown of the end markets combined with the destocking mentioned at the end of the year.

But it’s quite possible that in some areas, we may have one or lost the market share. Maybe losing a little bit here because our pricing policy was requiring some arbitration between our determination to maintain a positive price-mix effect and then inflation, and then the competitive environment that could lead us to lose some tonnage here or there.

I don’t think that we have made any substantial market share losses. We have won several, but the delta is basically one relating to destocking the inventory.

We’ll see what our competitors will be announcing, and we’ll look at - with this position that - as shared by Olivier Pirotte with me as well. On your second element concerning the headcount, our HR head said this, I think it’s minus 200.

Is that correct? Sorry, this is being made off mic, a comment being made off mic.

Good morning. Yes.

The chart that you have in the brochure is incorrect. And this was identified this morning.

Please accept our apologies. The - what is projected here is correct.

We have a reduction of the headcount of 1,100 people on a like for like basis. So a strong effort there.

We do have a clear idea of the headcount of the company. And so the figures here are correct.

And the third question concerning coronavirus. My first remark would be positive.

It’s difficult to say something positive in such a context. But the first positive aspect here is that none of our 1,600 Chinese employees has to date been contaminated by this virus.

Second element is, of course, this does have an impact on our business because we have 14 plants in China. And today, nine of them are functioning, five are in shutdown mode.

And we hope to restart them in the coming days. And that’s the situation.

Now our Chinese business is not insignificant because we have done over there of €300 million compared to the group’s overall results. But for me, the main consequence of this situation is going to be what’s going to happen on the downstream situation and the general slowdown of business that we will be observing.

That really is the issue. And for our Chinese business and outside of China, what we are seeing, clearly, I mean, if you want to get us to say that they won’t have any consequences, obviously, I can’t say that.

No. But it will depend on how long it’s going to last.

And what consequences it may have on our customers. And then there are all kinds of phenomenon that are at play.

For example, some clients who - because they are worried, what’s happening in their own supply chain in China are questioning us about deliveries coming from the Western world. So overall, I currently imagine that it will have a negative effect on our activity as it will on all other industries who have a market that goes beyond the strict French market.

And so what will be the scope? I don’t know.

It will depend on how long it lasts, the impact in China and elsewhere and so on. At this stage, clearly, it’s not insignificant.

But we will need to see how things go as we move forward.

And if you look at the numbers for January, the Chinese year-end was in January this year. It was in February last year.

So it did not improve the comparability between the two years for China, at least?

Sven Edelfelt from ODDO BHF. A few questions.

The first question is about philosophical nature on the price volume impact for the longer period, not just for fiscal 2019. My feeling is that Imerys lost market share due to strong - to strong pricing level.

Would you agree with this? Do you believe it will be a continuing trend?

This was my first question. Second question is on gas price, which collapsed recently for Imerys.

The impact was €150 million, if I’m not mistaken. Can you tell us more about the hedging you have in place, so that - so as to know when it will kick in positively for 2020?

And the last and third question relates to asset turnover at Imerys. When you speak about turnover - asset turnover, you’re talking about the paper business because you have low growth in the paper business, right?

Shouldn’t you be looking at the motor blocks because your automotive market is unchanged today? I believe you are manufacturing motor blocks, right?

Will you be manufacturing as many motor blocks in 10 years from now? This is not a philosophical question.

What is your take on these aspects?

Well, I will answer the first question. This is Patrick Kron.

And you will be answering with respect to the gas price. For the first question, with respect to volume and price impact, we believe that [indiscernible] it was true 20 years ago.

It is still true today. It is volume-sensitive.

We have gross margins, which are quite significant. So when you lose out on the top line, it mechanically translates to losses and impact on the bottom line.

Now, our ability, given our positions in the markets we serve, we have a good position in the value chain because for many of our products, we have components, which, in fact, account for a modest shareholder price with the end customer. But which have a significant impact on the performance of the product.

So we need to have a value proposition, and we do have such. So our ability, over time, to achieve pricing power positively is one of the strengths, one of the assets of the company.

Now as I answered to a previous question, we engage in a price volume arbitration on an ongoing manner as all companies of the world will do. And we are [indiscernible] depending on the competitive environment and on the value of our product for our customers.

We do trade-offs. We do arbitration.

Now over the long term, over the long run, how we lost out on volumes, due to pricing policy, I’m not sure. We discussed things out.

When we implemented our Connect & Shape brand, when we had set the performance of our plan, we realized that we had historic growth which was slightly lower than that of our underlying markets. We have been working on a number of factors, customer intimacies, sales and marketing organization and so on and so forth, and we want to deliver.

But it is very easy to increase volumes by collapsing the prices. But it doesn’t go in the best interest of the company.

So we always engage in this arbitration. I do not believe that we have lost market share due to a pricing policy in a structural manner, but we did bolster a slower growth than our underlying markets over time.

And we have taken action to offset this trend. Now for raw materials, would you like to answer the question on gas, Olivier?

Yes, Olivier here. In the total energy cost, gas is the first cost item.

The first being electric power. Order of magnitude, you’re not very far off.

€150 million that you mentioned, possibly a bit below, but we have a hedging policy in place, which is a systematic hedging policy based on 12 months, 12 rolling months. We hedged at the maximum of 75% of our consumption levels.

So for gas, we are hedged over 3 to 6 months at some 80%, and over rolling 12 months, at some 60%. So we’ll be benefiting from a positive impact at some point for half of this if the price is keeping oriented as they are.

And we believe - and you know that energy prices are highly volatile. This is why a big corporation like ours do plan ahead and anticipate how to take systematic hedging for gas and for energy.

Having said that, this is Patrick Kron, we’ve been anticipating a drop of the prices of raw materials for some of our lines of business. Now, our clients and customers have noted this, of course, and this is part of our sales and marketing negotiations with them.

So our goal for high inflation of raw material in those markets will maintain these positive areas with our pricing policy and the positive or negative increase or decrease of our variable cost. Now with respect to the turnover of our assets.

Yes, we manufacture model blocks. But we also produce plastics, and there is more and more plastic components in the automotive industry.

So we have more and more natural hedgings due to the high variety and diversity of the markets we serve. So there will be a few more motor blocks, but there’ll be more of other products.

Now I have a question, which is possibly somewhat of a buzzword. Can you report on the CO2 assessment and the stock of CO2 rights, especially for the four aluminate plants you have?

Aluminates rights are the most affected part of your business with the CO2 rise, right?

It’s a fair question, this is Olivier. I don’t have all the facts to answer you, Jean-Christophe.

This is Olivier Pirotte. So we will get back to you and our financial investors.

Vincent’s [ph] team will get back to you about the issue of CO2. And CO2 mitigations going to alternative renewable energy is an area we focus on as part of our general strategy.

We’ve been working on the regional issues and on the global issues. And our annual position is that of an excess situation that we can reallocate across a number of plants and across several markets.

The plants you have been mentioning, the aluminate plants, which have a cement base types of processes, are those plants that we have focused most on to improve energy consumption levels.

And we’ve taken very specific measures to do so with goals to reduce some 30% of our consumption levels by 2030. Patrick Kron now.

And the detailed information on our position and on our commitments is in the registration document, which is being published to support the publication of our financial statements. And regulations are becoming harder, right, starting from 2021.

This is so-called Stage 4 being imposed on us by Brussels.

Will Imerys like other cement groups be not faced with - coming short with respect to allocations? Or is Imerys part of the 10% top-tier of plants?

In this respect, Patrick Kron answering, I don’t have specific information to answer you. We have a program in place to reduce our CO2 emissions over the period.

And there’s no reason that we get badly hit in this respect.

Eric from [indiscernible]. I have two small questions or detail on IFRS 16.

If I understand you well, you have additional debt of €263 million and a reduction or an increase of EBITDA of €90 million, right? Is that correct?

Yes, indeed, is the answer by Olivier. This is on Slide 18.

And you have the waterfall in the press release as well.

I’m a bit surprised that the multiple here between these two numbers, is it leasing due to equipment over a very short period of time?

Not necessarily, but the ratio is a factor of 1:3, which is typical to the adjustment that rating agencies do when they - when IFRS 16 was not applicable, and they would restate our numbers. So we are falling within the standard range as far as the main items when you have use contracts and plant, property, equipment falls within this category, fleet of vessels or carriage wagons.

So possibly €28 million of negative impact on EBITDA with right of use of €265 million over fiscal 2019. So 3.2%, which falls within the range.

Another question. This drop in business operations in Q4, not including the coronavirus impact, right?

Did you believe that - do you believe that it will continue for Q1 and Q2? Or do you believe there will be a rally?

Well, I’ve said, this is Patrick Kron, that the situation of Q4 resulted in a combination of low demand and destocking. And I am confident that we won’t reduce our inventories for rest of the year, but end demand remains very sluggish.

This one, I said in the raise, the fact that from the 31st of December going to the 1st of January has solved the issue of inventory reduction, but not that of demand. And the demand has been sluggish for the early part of the year.

I don’t wish to end my message just based on the volumes. I’d like to be able to finish on a more positive note.

Yes, I’m counting on you, sir.

Well, I’ll try and do my best.

The constitution of the board has been significantly changed in terms of size over the recent years. And in 2020, you are taking part in this movement, you are now moving to 10 directors.

The CEO will not be on the board. So in addition to personal issues, is this better?

Does this put the board in a better position to control the company? And could you give us a profile of the new directors?

Well, the CEO is or is not a director changes strictly nothing due to the way the company operates, nor to the - I know how all of the CEO know the relation between such a person and the rest of the board. And you’ll see, if you look at the SPF 120 benchmark for companies that have a split governance, we have pretty much the persistent equivalent imprints of those CEOs who are presenting and those who are not.

Secondly, as I see it. I think it’s good to have 10 directors rather than 12.

This was the general opinion during the evaluations of the board to say that we were more streamlined going from 10 to 12, plus the directors representing employees. And concerning the profiles of the new directors because as it happened, there are three directors who have asked to leave and they’re being replaced by two.

Well, they have skills in industry and strategy and finances. One is a French person.

The other is German, both ladies. And so this is a makeup of the board that, in the new configuration, as in the previous configuration, there are multiple skills and competence is present.

I take part in other boards in French and the international companies. And quite frankly, I observed that the type of the Imerys construct in terms of the board is perfectly normal and, I think, is going in the right direction, quite frankly.

No more questions. Oh, just one, yes, after which, well, we can conclude.

Could you give us an update on the future of the American subsidiaries because of the proceedings there? And what could be the consequences for your results at Imerys, depending on the outcome and the freight reserved to the subsidiaries and the decisions made in that respect?

Well, sir, by definition, it’s more difficult to forecast the past - the future than the past. But the current discussions with the representatives of the thought committee and I’ve said, we’re both free and both very frankly and cautiously.

As long as these discussions haven’t concluded, it’s difficult to give a prognosis as to where we’ll be lending. There are several issues, and they need to be covered.

One was the provisions in the balance sheets of Imerys on the 1st of December. And after examining these, we consider there was no reason to change these, either up or down.

And so based on our analysis of the situation, we feel that the provision they indicated complies with the situation and our analysis of the situation. Now that being said, of course, we’ll try to wrap up these discussions.

And we hope in good - as quickly and with the best of intents. And we’ll be giving you the details of the consequences for the parent company.

But as this stage, of course, I can’t prejudge what the conclusions will be.

So in that case, ladies and gentlemen, thank you for your interest and your presence, and we are available to discuss informally with you after this meeting. Thank you.

And once again, thank you for your trust and your confidence.