Nexans S.A. (NEX) Earnings Call Transcript & Summary

Ladies and gentlemen, dear shareholders, good afternoon. I'm very pleased to welcome you here to this shareholders' meeting, and I would like to thank you for following this meeting on the Internet under very special conditions again this year. In accordance with the emergency measures adopted by the government to curve the spread of COVID-19, the meeting is being held today behind closed doors without the physical presence of shareholders and other persons usually authorized to attend. At my side, Christopher Guérin, Chief Executive Officer; Jean-Christophe Juillard, Chief Financial Officer; and Nino Cusimano, General Counsel and Corporate Secretary. Later on, we'll have for presentations, Anne Lebel, Independent Lead Director; Vincent Dessale, Chief Operating Officer; David Dragone, Director of Human Resources, CSR and Communication. I would like to welcome the members of the Board of Directors attending today's broadcast as well as the statutory auditors whose statements have been -- were recorded previously. As you know, the COVID-19 pandemic continues and still affects millions of people. Despite these unprecedented global health and economic crisis, 2020 marked a turning point for Nexans. With the main concern, the protection of our teams and the continuity of our business and the service of our customers, our group has demonstrated its ability to accelerate its transformation and exceed its financial objectives. On behalf of the Board of Directors, I would like to thank and congratulate Christopher Guérin, Chief Executive Officer, and his executive committee for his leadership in this very special context. I would like to attribute to all employees who are fully committed to serving our customers. At this Annual General Meeting, we will comment on the performance of 2020 on how Nexans has come through this year and how it intends to continue its successful trajectory. Chris will detail our new ambition, electrify the future, and we'll outline the strategic positioning that establishes your group as a major player in renewable energies and energy transitions. At all levels, we are fully mobilized to open up the new chapter in your group's history and execute an ambitious program. Furthermore, this shareholders' meeting will be the opportunity to renew the terms of office of Marc Grynberg, Andrónico Luksic Craig and Francisco Pérez Mackenna. Three directors, whose knowledge of the group, the industrial managerial and financial experience are particularly valuable to the work of the Board in pursuing Nexans' transformation. We submit for your vote, the candidacy of Selma Alami at Nexans for nearly 20 years, Deputy Managing Director for Northwest Africa to represent employee shareholders and the Board. Finally, in order to implement more transparent dividend policy and to involve you more closely in our results, we proposed the payout of a dividend of EUR 0.70 per share. Before starting the meeting, I would like to express my sincere thanks to a member of the Board, whose term of office is coming to an end today, Marie-Cécile de Fougières. She has been a member of the Board for 5 years, representing our employee shareholders. She has given us the benefit of her experience in the field, her perfect knowledge of the group. I would like to thank -- or to announce that the French Work Council of Nexans has reconducted the term of office of Angéline Afanoukoé as Director representing employees for a term of office of 4 years. I declare open the shareholders' meeting of Nexans for the ordinary and extraordinary sessions. I remind you that exceptionally, it is not possible to vote live during this meeting. Your votes were all recorded. They've been recorded until yesterday at 4 -- at 3:00. We will announce the results of the resolutions at the end of the meeting, and the details will be available online at the end of this broadcast. All documents relating to this meeting, including the notice of meeting and the universal registration document can be downloaded from our website. It is my responsibility as Chairman of the Board of Directors to constitute the officers of the meeting. The Board of Directors has appointed as scrutineers the 2 shareholders holding the largest number of votes, investments representing by [indiscernible] and Bpifrance Participations represented by [ Emmanuel LeBlue ]. Both participate in the meeting via video conference. Nino Cusimano, Secretary General and General Counsel of the group will act as Secretary. The bureau is therefore validly constituted. I remind you that this meeting is convened on the first call. The legal required quorum having been largely reached over 83%. Consequently, the officers note that the combined shareholders' meeting may validly deliberate on the items on the agenda, which are the responsibility of the ordinary shareholders meeting for Resolutions 1 to 17 and 30 and A, and of the extraordinary shareholders meeting for resolutions 18 to 29. This meeting will be conducted as follows: first, we will proceed with the usual formalities, then the video entitled Turning Adversity Into Opportunity will review the key moments of the year 2020. Christopher Guérin will continue with a commentary on the results of the past year as well as -- and then Jean-Christophe Juillard will continue the presentation with the financial results of 2020 and the revenues for the first quarter 2021. Chris will take again the floor for a presentation of the new strategic orientation of the group. Then, Vincent Dessale, Chief Operating Officer of Building & Territories Europe and North America, will explain, in particular, our activities and ambitions in the electrician value chain. David Dragone, Executive Vice President, Human resources, CSR and Communication will then present our corporate culture, the living history of Nexans and how employees embody the new values the group has adopted. Finally, we will offer you an update on governance, on the candidates for the Board of Directors and on the conversation with a presentation by Anne Lebel, the Independent Lead Director, Chairperson of the Appointment and Corporate Governance Committee and the Compensation Committee. Anne's presentation will include short videos introducing the 2 candidate directors representing the shareholders as well as the new employee representative. After that, we will hear the presentation of the statutory auditors, which was recorded a few days ago. Finally, Nino Cusimano will inform you of the results of the votes on the resolutions. The company has not received any requests for the inclusion of resolutions or items on the agenda. We will answer written questions during the meeting and the questions you may ask directly. Nino -- I call upon Nino Cusimano to call to order the documents placed on the desk of this meeting.

Thank you, Chairman. All the documents required for the shareholders have been made available to the shareholders on the company's website and at the registered office. In particular, you will find the report of the Board of Directors on Pages 21 to 179 and 294 and following of the universal registration document 2020. As usual, we will not read them out. Thank you.

I will then turn -- give the floor to Christopher Guérin.

Thank you, Jean. Ladies and gentlemen, shareholders of Nexans, it's a great pleasure and the feeling of an accomplished duty, we welcome you during this shareholders' meeting. Let me explain to you through a very short video how Nexans went through this year, and this health crisis successfully. This health crisis turned out to be as well an economic crisis, and it is unprecedented. [Presentation]

As you've seen, this year, will have allowed us to transform the crisis into several opportunities. And we are in a favorable position to take the challenge of tomorrow and to make the Nexans leadership a leader -- a global leader. We made strong choices. Our 2 priorities would be, of course, to protect the health of each of our employees, but also to make sure that most of our production tool would remain active while securing the health of our employees. We succeeded, and therefore, it was possible to recover very soon at the end of the first wave. And then we took the opportunity to carry out management analysis and we're going to detail that. Very quickly, we were convinced of the fact that complexity was a real obstacle from an industrial, economic, financial point of view. So the free cash flow was a major item, and we had to respond. And therefore, we carried out in 2020 complete researching of all our activities, portfolio, customers and products and the way we manage cash on a daily basis. And then we were proven to be right because never in the history of Nexans, the group found itself 1-year later with such a high level of free cash flow and a low level of debt. This is, of course, reassuring in front of possible new health crisis, and it's possible to contemplate an external growth. So on this slide, let's go back to our performance, financial performance of 2020, EBITDA of EUR 347 million, in line with the guidance, ROCE above expectations, 10.2%, thanks to these in depth work. And a free cash flow beyond expectations, EUR 157 million before disposal and EUR 310 million with the disposal of the cable entity in the U.S. At the same time, in the last 2 years, we have strengthened our ESG commitments, and we are very proud. Nexans was acknowledged as real emblematic by the CDP. So Nexans, therefore, is on the A List -- the prestigious A List against the climate fight. We were awarded for the actions aiming at reducing the CO2 emissions and mitigating the climate risk and developing a low-carbon emission. Let's move on to next slide. Let's see the performance of various businesses. First, the Building & Territories and energy distribution. The revenues were strongly impacted by the various lockdown measures during the first half year and energy networks compared to building were a bit more resistant. Altogether, for Building & Territories, we recorded a drop by 8% in revenues and backlog increasing by 6%. So for the high voltage, subsea and land and projects, in spite of the health crisis, was okay. And with a solid execution of projects, you see that revenues remained stable and a good backlog growth by over 17% versus last year. Next slide, a few words on industry and telecom. For industry, well, without any surprise, the automotive industry was strongly impacted. Our drop -- our sales dropped by over 60% in April, but a very good recovery during the second half year. And 2 other subsectors, like renewable energies, the business in 2020 was good throughout the year. So altogether, for industry, we recorded a drop in 13% for the revenues, but the backlog is rather stable. Telecom. Telecom & Data. The deployment of optic fiber was strongly impacted in 2020. Two reasons: the stoppage of the deployment of optic fiber in countries because of strict actions and then the arrival of the Chinese competitors, especially on the French market, the subsea telecom cable, however, was very good, record backlog in 2020, and it will be beneficial in 2021. So altogether, we record revenues, a drop by 15%. The backlog is on the increase. Altogether, transformation as I said, the Nexans team carried out remarkable work in cost management, in the productivity management in this complex context. And what is very important is that a huge work has been done on the working capital requirements, and Jean-Christophe will detail that later on. So I would like to mention that this work carried out in 2020 is not just due to the context that is structural in-depth work, and it will persist over time. I will finish with this slide, an important point for this energy transition. In 2019, we decided to upgrade our American site of Charleston in South Carolina to convert it into a dedicated site, dedicated mainly to the connection between the wind farms, and a very good choice. It was possible to be awarded major contracts and to be #1 on this sector in the U.S. And I invite you to go and see our website, our second investment and to look at our new vessel, cable laying vessel, called Aurora, being almost completed now. And these vessels started the first trials at sea 3 days ago. It is unique in its design. And this will be dedicated 100% of its time to the connection of the energy transition from one country to another. I would like to give the floor to Jean-Christophe who is going to detail the financial statements of 2020 and our financial performance of the first quarter of 2021.

Thank you, Chris. So as Chris just explained to you, despite the fact that we had a worldwide unprecedented health and economic crisis, this 2020 was a turning point for Nexans. We proved that we could accelerate the transformation of our group and even go beyond the financial objectives in terms of ROCE and cash generation. And that means that our indebtedness was at its very lowest in the 10 years. What's more, we had even improved our prospect and our ranking with Standard & Poor's. So now as you can see with our organic growth, it's minus 8%. It's a slight improvement compared to the first quarter of 2020, which was down by 10%. We carried on with our selective -- our clients, and we concentrated more on the value growth than on volume. So now before the COVID contact of EUR 446 million, we find that the EBITDA is at EUR 446 million, and that is thanks to the shutting down of off-site, operational site, and particularly in the first half year. But there was a clear improvement in the second half year. So now EBITDA is at EUR 347 million and a margin of 6.1%. For 2020, we have reached our aim as estimated first half of 2020, and so now we are in a bracket between EUR 320 million and EUR 360 million. Our EBITDA margin has only gone down by minus 13 basis points in compared to 2019 despite COVID-19. And this is essentially, thanks to our selective volume effort and that we simplified our portfolio and accelerated cost reduction. The operational margin has been maintained and is at 3.4%. As you see on this graph, we are very much in line with the aims that we had fixed during our last meeting. And this is based on 3 main axis. Firstly, it is cost reduction. End of 2020, we were already at 79% of our commitment of EUR 210 million of reduction over 3 years. The COVID-19 crisis enabled us to accelerate our effort and most of these EUR 90 million that we were able to earn in 2020 were recurrent. Secondly, was the shift program. We aimed at EUR 100 million over 3 years of the plan. And so far, we earned 360 -- EUR 36 million, sorry, in 2020. The program was deployed in all the lines of work in our group and reinforced during the crisis with a major concentration on working capital that I'll talk about later. And finally, selective growth on strategic markets, particularly insofar as subsea high-voltage was concerned, led to an extra EUR 11 million of EBITDA for this year. Now the context, as you see, and the growth is negative of EUR 31 million, and that essentially related to a drop in volume in the second half of last year following the pandemic, particularly in Buildings & Territories. So now operational net income that you see is at EUR 246 million. And this is inclusive of reorganizational costs. So EUR 107 million were EUR 44 million, which remain of the costs following the restructuring New Nexans plan that we'd announced in 2019. The total cost was EUR 250 million, of which EUR 20 million -- EUR 200 million were taken in 2019. The second half of these reorganizational costs are more recurrent, EUR 63 million. For example, we reorganized our production tool in Brazil and shut down our factory in Chester in the U.S.A. in June 2020. Another important point in our operational income is the divestiture income that we had by the sale of our cable -- LAN cable factory, Berk-Tek, in the U.S.A. for EUR 140 million. The other elements that have an impact on our operational income is the increase in copper prices in the last few months of 2020, plus improvement, therefore, EUR 42 million in the stocks and depreciation of assets by EUR 21 million in Brazil. Now the tax expenditure is higher, particularly with the sale of Berk-Tek of EUR 40 million roughly in the U.S.A. In general, the net income of the group has improved, and it is up to EUR 80 million as opposed to EUR 118 million loss in 2019 despite COVID. As I said in the introduction, this financial performance is more highlighted in 2020 and shows our ability to generate free cash flow, which is really at record levels before sale of assets and despite a drop of 17% of EBITDA. In fact, we have gone way beyond our aims of our cash flow of EUR 157 million, without counting M&As. And as we had said, of EUR 50 million and EUR 100 million. And this is really thanks to the exceptional improvement of EUR 366 million of our working capital needs. I'll touch upon this point a little later in the presentation, but most of this improvement is structural and long lasting. Now the cash impact of the reorganization cost is high. And that is due to the New Nexans plan, it's up to EUR 170 million. We have maintained a high level of investment at EUR 225 million in 2020, essentially because of CapEx -- strategic CapEx of EUR 130 million, thanks to the conversion of our factory in Charleston and the construction of a new vessel, Nexans Aurora, and which will carry out its first trials in sea next week and will be operational end of May. Now to add to the M&A, and particularly the divestment of Berk-Tek, the cash flow is at EUR 310 million in 2020, and that shows that our gearing ratio is very low at 0.7 EBITDA and the lowest possible debt in 10 years for the group. Let's take a look now at our working capital needs. We are often questioned about our low level of working capital needs and the ups and downs that we have. Now in Nexans between the first and the second half of the year, the crisis we went through last year for Nexans was a real catalyzer and it obliged the group to change itself and structurally reduce its working capital needs. With a rigorous application of the SHIFT methodology, we've gone from a working capital ratio on sales of 12% in June 2019 to 77% in June 2020 and 5% at the end of 2020. This graph is a perfect illustration of this dropping trend in our working capital needs ratio right through 2020, which is among the lowest and the best in the industry at the end of the year. As you see in the blue circle, despite the fact that turnover has started going up as of the third quarter, the ratio is still improving, and it just goes to show the efficiency of the method. We fully believe that we must maintain a lower level, up from 7% in the future, thanks to a very strict management of our customers and of our products, while continuing to reduce the complexity that we have within the group. Now as far as the return on capital employed days, or the ROCE, not counting the negative impact of COVID, it is limited to just 15% in 2020, which is very much in line with our estimate of our equity story. In fact, we've even overstepped it, which was 15.2%. The work carried out in 2020 has enabled us to reduce to EUR 336 million, the working capital required, despite the drop in operational margins due to COVID and the return on employed capital remains above 10% in 2020, which was much better than what we had announced in the beginning of the year. Now in conclusion. So of course, I'm finishing with the presentation of our financial results in 2020, I'd like to remind you that this year 2020, we were able to maintain our high levels, a very sound balance, and that's all thanks to the work we did. So the interest rates on EBITDA has slightly gone up due to a drop in EBITDA related to pandemic and interest rates. Now on the other hand, our gearing ratio is the lowest possible of 14% in our history, just like our net debt ratio is at 0.7x of EBITDA. Excellent ratios for us. Our excellent level of cash end of 2020, EUR 1.7 billion, enabled us to pay back in February in advance our state-guaranteed loan of EUR 280 million in June 2020 as well as the loan -- the bond loan that we have made of EUR 250 million in May of this year. I may also point out to you that Standards & Poor's, the rating agency, has improved our prospects from negative to positive, and has reconfirmed our BB ranking. So this is certainly a sign of recognition of our success and of the transformation of the group and all the work that we have done in generating cash flow as well as a return of confidence in the future of Nexans. And now very briefly, let me share some of the key figures for Nexans S.A. On the 31st of December 2020, Nexans S.A. is then the mother company, the holding company, and works as a holding. So let me start off, firstly, with the operating income, which is essentially made up of the shared part of the management cost of the group. In other words, it's minus EUR 34 million in 2020 and minus EUR 36 million in 2019 comparatively. The nonoperational income is EUR 48 million, and this is made up of dividends received by the subsidiaries as well as the cost of financing. Now the -- this drop is essentially, thanks to the drop in dividends that were paid out to the subsidiaries because of the pandemic. Now these exceptional results have slightly gone up, and this is essentially because of the sale of [ proprietary act ] and the fact that there has been EUR 1.3 million of [ free ] shares that were paid out. Now the financial debt has gone up to EUR 270 million because of the state-backed loan that was of the same amount that we reduced. Now let me get back to the financial information of our first quarter. Now in the first quarter, the turnover was of EUR 1.537 million at standard rates. So this was a 1.3% increase in organic growth and 5.8% compared to the last quarter of 2020. So this just goes to show our ability to take advantage of the key growth areas despite the constraints related to pandemic. And secondly, that we have continued with our selective portfolio of customers. And thirdly, to share the first consequence of inflation in raw material impact on prices. Besides, Nexans has also shown that our order book is now shooting up in all sections because of solid commercial dynamics. So now the bidding area, particularly in subsea high-voltage has remained extremely powerful, and is a source of much acceleration right through this year, we hope. Now let's start with Building & Territories. Now in this particular sector, we are, as you can see, it's EUR 615 million at standard metal rate in the first quarter of 2021. And given the Chester factory is shut, organic growth is minus 2% compared to the same period in 2020. So if you correct this shutdown, then it is plus 3.2%. And now the growth in turnover is 2.8% compared to the fourth quarter of 2020. And this is thanks to a coming back of order, particularly in most of our geographies and most of our areas. Plus this constitution of customers because of the change in prices. Now let's talk about Projects & High Voltage. Here, we are at EUR 147 million first quarter of 2020, so that's a drop of 24.7% compared to the earlier year. Now this division is suffering through -- because of this high comparison, and the first quarter 2020 showed an increase of 56% compared to 2019, which clearly showed that there were 2 contracts, for repair and dephasing, which were favorable to the projects that have been carried out. Now despite a very slow start in 2021, we expect a major organic growth in 2021, particularly due to the backlog of our order book, which is extremely high and also our new Charleston factory and the coming of our new vessel, or Aurora. Let's have a look at Telecommunications & Data. We are up to EUR 74 million in the first quarter of 2021. Organic growth is down by 4.2% compared to 2020, same period, but there is 2.2% in consequential improvement, thanks to improvement in cables and land systems, which were really impacted by the low demand in optical fibers and accessories. Now in conclusion, the turnover of Industry & Solution is at EUR 344 million of at standard metal rates in the first quarter of 2021, organic increase of 5.8% compared to the earlier year. And saw an improvement, a sequential improvement of 10.9%, and this is essentially because of a record performance in automobile harnesses. However, aero spatial business is deeply impacted by the pandemic. Now the group is on the right path to finalize its transformation plan, meet all its objectives, both the financial and operational, and prepare its ambition for 2022-'24 despite the crisis. And now Chris will introduce this to you -- us.

Thank you, Jean-Christophe. It's on a sound and healthy basis that we have started our year 2021 to amplify the strategic plan communicated on the 17th of February. So let's focus on our ambition. It is a structuring ambition. We defined it for the next 10 years. And with the management and with the Board of Directors, we designed it for about 18 months. To understand, I would like to share with you the basics of our analysis. All mega trends converge towards the same observation, the electrification of the planet is the main energy challenge of the next decades. We are right at the beginning of an electric revolution, an unmatched one like the electric revolution coming from the after war during 1950s. The global demand of electricity will increase by 20%. 80% of additional electricity generation capacities will be renewable energies to be in line with the COP21 in Paris. So the share of renewable energy and the energy generation worldwide could reach between 30% and 35%. In parallel, the electric grid, which are dating -- are partially obsolete in Europe and North America and require investments to renew the infrastructures. And we should not forget that, unfortunately, EUR 900 million of inhabitants worldwide still do not have access to electricity. So you do understand, easily understand, to which extent electrification will play a major role. And based on those observations, we have changed our recent data. Nexans decided to dedicate its efforts to electrification, the sustainable electrification, 100%. The world needs to have a sustainable, decarbonated electricity, managed and optimize through the digital technology for the benefit of populations, while complying with the environment, strictly. This new electric revolution requires cables and systems of a new generation, able to support massive flows, and we will supply them. So we will be the pioneers of electrification, the future electrification to be consistent with this new ambition. We launched in-depth project to redefine our values, our mission and also our signature, our recent [ deck ] to electrify the future. But I will leave the floor to David Dragone, so that he can give some more details. Let's go to Slide 25. Okay. Let me detail what we call electrification, the ecosystem of electrification. This is just simply the electricity chain starting from generation of energy through the renewable energies, wind farms at sea or solar farms, they will be installed in the next -- in the 9 years. The transmissions through the CO through land, through high voltage cables, distribution to towns and the access of -- to electricity within our buildings and infrastructures. So in a nutshell, Nexans will support through its cables and systems the trajectory of electricity from the wind farm right up to the bulb above our head. There is no electricity without any cable. Okay. So why the wind of change? This is the title of our road map. It is time to refocus. We are at the beginning, as I said, beginning of a new electric revolution, which will require many, many investments, be it from the production to -- or from an innovation point of view. The historic model of the group is based on 8 major sectors, 34 subsectors, it's a generalist model, and it will not allow us to deploy sufficient resources to cover the developments of all those sectors correctly. All those sectors, all of them are promising. This is why by 2024, we decided to simplify our business, our organization, to amplify or impact and therefore, we focus our activities and our deployment, our investments to focus on 4 main factors: energy generation, transmission of energy, distribution right up to the use of this electricity through our cables and systems. So 8 -- from 8 macro sectors and 34 subsectors to 4 macro sectors and 12 subsectors. Slide 27. As you see in the recent announcements throughout the world confirm this trend and this ambition, you see the demand in electricity will increase by about 20% by 2030. Large areas in the world are massively investing in decarbonated energy or the renewal of electricity grids. [ $2,000 billion ] announced by Biden on the renewal of infrastructure, $300 million for solar energy and so many [ EUR 1,000 billion ] in Europe and a 5-year Chinese plan, just as ambitious as China is. But time has come to act because the -- it is time to act because only electrification will allow us to reduce our carbon debt vis-à-vis our children and the future generations. The world in the next few years, and as we explained that this year, will continue facing many risks, health risks, climatic risks, whether they are related to the resilience of electric grids or as a vessel will commence the safety, electricity -- electrical safety of our buildings. So by 2024, Nexans is converting all those resources and strengths to take up the challenge, face those risks and contribute to better solutions, and therefore, a better world. So those new challenges and new risks also generate new customer need. One customer said to me, and rightly so, it was last year. "Chris, if you do not want Nexans to become the Kodak of the industry, time has come to move now, to change now." What does it mean? This customer implies risk of not understanding the migration of our customers. And customers, by 3 or 4 years' time, will want to buy more than just cables. They would like to have systems or subsystems, which are much more complex and exhaustive ready to be connected to their grids. Let me give you one example. In our industry, what is happening is what happened in the telecom industry or in the automotive industry, about -- over 10 years ago. The needs of customers become more sophisticated. The needs of customers are quite demanding. And it's up to us, suppliers, to adapt to meet their requirements. So in a nutshell, if I had to summarize with just one slide, I would use this slide. In the last 130 -- 120 years, Nexans has always been part of the story on electricity. You saw that in our film last year, the discovery by Edison right up to this new world, more and more electrical world, Nexans has always been part and full -- an integral part of this living story. The world changes very rapidly. And opening up a new era, a new era whereby Nexans has to play a key role in order to continue writing its story. And that's why Nexans will become -- I do apologize for this English word, but a pure player, a pure player, which cannot be bypassed in terms of electrification. And I'm going to give the floor to Vincent, he's going to show you around all these activities linked to electricity. Thank you.

Thank you, Chris. Well, good afternoon, ladies and gentlemen, shareholders. It's, of course, much easier to talk about electrification and its different components because generation, transmission, and distribution and the use of energy. Let me start off by talking about generation and production. Let me tell you what Nexans does. It does it on the basis of engineering. We prepare the design in collaboration with our customers and quite obviously, the production of systems, cables, accessories, their installation and their protection. And once a wind farm or an interconnection is being operated, we also propose what we call after sales services, for instance, inspection, maintenance and repairs. So production -- generation and transmission of energy, renewable energy, is undoubtedly a very structuring element worldwide when it comes to energy transition. Just let me give you a few figures. Now wind energy in the next 10 years is going to be huge. We're talking of more than 200 gigawatts that will be installed in the world. Europe is going to be the main market, but Asia and the U.S.A. are also very close behind, which means that there's going to be an annual growth of 11.5%. And between now and 2030 it will be EUR 8 billion. Now Nexans is in an excellent position on this market. We are the only players who are industrially present in Europe with our plants in Valen in Norway, Asia in Japan and in the U.S.A with the Charleston site that you just heard about in Southern Carolina. In the U.S.A., the sites, I must insist that today, we are the only providers of solutions, high voltage subsea ones, which are locally settled. Other structuring elements in the market is the wind farms offshore, which are far from the consumer sights, and that's the reason why we'll have to create and develop what we call energy highways to transport all of this renewable energy to places of consumption. And here too, it's the undersea interconnections and the land connections will grow enormously, nearly 14% in the next 10 years, which is 72,000 kilometers of cables just in the U.S.A. So these energy highways will cut across from north to south, east to west, and will represent EUR 27 billion worth of investment. And our site in Charleston, once again, is ideally located to meet these needs. So we have decided to increase its role by investing once again to meet the technical requirements of these corridors, which will be the high-voltage, direct-to-current connections. Now that's happening in Europe also. Look at what's happening in the Mediterranean with major technical changes, and we'll go down to 3 kilometers. Here, once again, Nexans is perfectly centered to meet this challenge now. With the new vessel, Aurora, I'm sure we'll be able to meet this challenge. Once again, we have decided to more than double our -- capacity of our Norwegian site to meet these challenges. Nexans is and will be an ambitious player in this world to reach carbon neutrality. Now in the last few years, we have achieved several new innovations. Let me just give you a few examples. In 2018, it was the first link between Italy and Montenegro, undersea one. And then in 2019, Hywind, the first floating offshore wind farm, and this is all thanks to dynamic cabling. Our teams are continuously working on this innovation and on innovation in the future by picking the right material, particularly for long distance cables, going down very deep in the sea, dynamic cables with higher voltage. And then the West Coast U.S. farms, wind farms, would be floating firms. Nexans is ready. And we'll continue to be a leader when it comes to generation of electricity and its transmission. I suggest we now talk about distribution, and what is distribution? Distribution is also a key element in this energy chain because it is between generation and use. It's like the spinal column, if you like. But I mentioned to you, those energy corridors. In the next 10 years, we will see an increase in the population, greater urbanization, and that will lead to an exponential increase in the use for energy. 1.8 billion inhabitants more will have access to electricity in the coming years or 17% of extra electricity needs worldwide, EUR 4.4 billion (sic) [ EUR 4.4 trillion ] -- trillion euros of investment. So all this will lead to 2 major developments. To simplify it all, I would say, let's say, in the geographical areas of Europe and North America, and it will be actually just replacement of existing aging grid to move towards what we call smart grids, and that would be a must to optimize and better control consumption. In developing areas, we will be moving towards modernization and extension of existing grids. Now here's something I'd like to share with you, one of our solution when it comes to distribution, and this is NEOGRID. That's what we have as a solution to simplify our role in electrification. We have a complete connectivity plan, including financial. Of course, there's cable production. But in addition to that, there's installation and decommissioning. We have electrified 35 villages in Ivory Coast, and this is in the rural electrification program. There will be another 15 that will be done. Our expertise lies in all of this, and it is much more than just cable production. We are providing complete solutions, which are innovative, and we are participating actively in the economic development of the given countries. Let's just go on with my promenade, if I might say, on our energy highways. Briefly, what is this usage? The usage of electricity is everywhere, all around us. Every time there's a human activity, there's electricity. Be it at home or in shopping malls, factories, hospitals, schools, transportation systems and data centers. This is a very dynamic market with a growth of over 50% in the next 10 years, which would be EUR 26 billion of increase. Now quite obviously, this is due to increase of population, urbanization, electrification in rural areas, just like distribution. And also, and this is really specific to the use of electricity, new rules and regulations. There's going to be the technological revolution of buildings. By that, I mean, tomorrow's buildings will be a sort of mini hub of distribution. They will produce energy, they'll store energy and they'll include photovoltaic panels in the building itself and they will also have docking stations to recharge electric vehicles. In other words, technically speaking, they're going to be much smarter, more sophisticated and will require more power, more energy. Besides, they have to be very safe living spaces. Did you know that 80% of fire in emerging areas are due to counterfeited cables? Whereas in Europe, there's a fire every 2 minutes due to electrical failure. So the use of electricity and its safety is a key component of our everyday life. And for Nexans, which already has a major experience in the field of fire resistant [ ignition ] -- cables with all our own patents, with our own fire testing laboratories, it's quite obviously that we will keep improving on these systems and subsystems concerning fire and security. For the future, innovation is really the moving force of our teams. And we have decided to amplify this capacity to innovate. And that's really part of our DNA, thanks to the organization that is dedicated to the acceleration of innovation. Our operational teams today are counting on what we call design labs, which are distributed right through the world. And the aim here is to reduce the time to market. And that enables us, particularly, to propose innovation to our customers in all the countries where they are at the same time. So it's a simultaneous rollout. Now this, of course, requires a technological development of cables and systems, but it also implies improvement in transportation, fitting, installation of the cables with the end consumers. It also means we must have the right logistical chains and recycling, which is a key element now, plus digital solutions that we propose not just to the final user, but also to our customers. Now Nexans is the final link in this chain in the use of electricity. It's, again, major when it comes to electrification because we offer complete solutions and applications, which are customer-oriented. So together, we have just covered all the highways of energy going from generation to usage. And I hope you notice that Nexans is present in each phase of electrification with systems, subsystems and complete solutions for our customers. We are preparing tomorrow, we are preparing solutions for the future, and we are willing to take advantage of the major increase in this market and the up marketing of electricity.

Well, thank you, Vincent. Thank you so much. So might I just remind you because I didn't really have time to tell you that, that we have signed up several partnerships to help us in this particular approach with Microsoft, Schneider Electric and also for Recycling SUEZ and then Veritas also for safety management and risk. And now I must go on to the financial chapter. So Christophe, you're back again. Over to you, Christophe.

Thank you. So let's move on to our financial commitments and the strategic ambition of Nexans between 2021 and 2024. During this period, we're going to transform the group into a pure player of electrification. As you see on this slide, we will not aim at increasing sales. They will remain about stable, EUR 6 billion or EUR 7 billion in '24. However, the structure of our revenues is going to change in that. Today, the electrification business, in dark yellow on the graph, accounts for about EUR 3 billion. And we're going to grow this activity in an organic way to reach about EUR 3.5 billion by 2024. Our telecommunication and industry businesses will be replaced by about EUR 2 billion, EUR 3 billion of new electrification activities by 2024. During this period, we will reduce the revenues of the metallurgy industry from EUR 1 billion to about EUR 500 million. This activity is critical for Nexans' growth but it is dilutive in terms of margin. Therefore, we will give the priority to the needs of Nexans, and then we will reduce, to a large extent, the external sales in order to limit this dilutive effect. Okay. So what about this turnover of assets? What does it imply? First, we're going to simply the portfolio, concentrate our resources and increase the creation of value. In terms of financial performance, we will make commitments on our existing electrification business but also commitments at a group level. Let's start with our electric -- existing electrification business. First of all, we're going to improve the profitability while increasing the EBITDA margin, which is 8% to 10%, and move up to 11% to 13% by 2024. Later in the presentation, I will show you how we will reach that. In terms of cash flow generation, we'll move on from conversion -- cash flow rate, EBITDA cash flow, which is 30% in 2021 into a ratio above 40% in 2024. The return on capital employed will also increase to a significant extent, moving up from about 15% in '21 to over 20% in 2024. At a group level, we are going to become a pure player of electrification, replacing telecom and data and industry by 3 -- EUR 2 billion or EUR 3 billion purely linked to electrification. This transformation, which is inorganic, will create value for Nexans, thanks to the fundamentals of electrification, thanks to the implementation of the SHIFT program and the expected synergies. For 2024, we make following commitments: the EBITDA margin at the group level, will move from 6% to 8% to a range between 10% and 12% in 2024. At the same time, we will double the cash -- standardized cash flow -- cash conversion ratio above 40%. The working capital requirement will not exceed 6% of the current revenues. Investment CapEx will not exceed 2.5% of sales and our net debt ratio will be 2.5x EBITDA. All those measures to protect the robust balance sheet we have at the moment. So what are our financial commitments by 2024? As I said, during this period, we are committed to improving the existing -- the EBITDA of the electrification portfolio of EUR 150 million, an increase by EUR 150 million of EBITDA. To reach that, first, we'll keep on rationalizing our cost base and improve our industrial performance. We expect an improvement by EUR 15 million through these actions in terms of EBITDA. Second possibility to have an increased EBITDA is what we called Amplify, thanks to additional volumes and the growth in value, especially for Building & Territories activities as well as the ramping up of our new plants over at Charleston and the Aurora vessel for the subsea industry. Those initiatives, amplified, will generate EUR 50 million. Third point, SHIFT. The SHIFT program with an increased price. Thanks to innovation, selectiveness of customers and a reduction in complexity, SHIFT will deliver EUR 40 million during this period. And then we will carry out strategic investments in our subsea industry with 2 lines of productions, additional lines in Alden in Norway in our plant in order to meet the demand of the energy transition market, which is a growing demand. Those 2 additional lines will generate EUR 45 million of EBITDA by 2024. Let's look at the financial trajectory of the Nexans Group between '21 and '24 and how do we see the amplification of the value for the group? And as you see here on this graph, we are going to increase the margin of EBITDA by 3 or 4 points between '21 and '24. In order to do so, as I said just before, we are going to increase by EUR 150 million the EBITDA of our existing electrification business. Next to that, we're going to reduce sales in the metallurgy, as explained, in order to generate an improvement -- an improved EBITDA by 50 basis points. And the third aspect is the disposal of Telecom & Data and Industry, replaced by acquisitions in the electrification. This turnover of assets will improve the margin by about 100 basis points. It will depend on the timing and the type of assets, and that's why we put a range between 100 and 150 basis points of improvement. So thanks to a disciplined execution of our strategic ambition, we're convinced that Nexans will achieve the objective of EBITDA margin between 10% and 12% by 2024. And let's have a look at the way we're going to allocate the cash flow generated by those improvements during this period, '21-'24. Our new equity story will generate before the M&A between EUR 500 million and EUR 600 million cash flow over the 3 years of strategy. We will allocate this cash flow according to 3 categories, main categories. The first one will regard the strategic investments, which will use about 40% to 45% of the cash flow. When I say strategic investments, I mean the 2 additional lines of production CapEx for the subsea high voltage business, as described previously. Number two, second allocation, we redistributed between EUR 150 million, EUR 170 million to the shareholders through the payout of constant dividends, and we'll set up a distribution rate, a minimum one of 20% each year. And number three, we will keep on reducing the debt of the group to have a cash net position in '24. With -- as I said, without exceeding net debt of 2.5, the EBITDA in Nexans, we'll have about EUR 2 billion to have targeted acquisitions. On top of that, the cash flow coming from disposal of assets and including the disposals, the group may account on an investment capacity in between EUR 2.5 billion and EUR 3 billion to execute its strategies. Therefore, we will have the means to achieve our ambition without resorting to capital increase.

Thank you, Jean-Christophe. Okay. So this is an ambitious plan, as you can see, but we are going to open up the HR chapter. Because why do we work? Why do we work every day? It becomes even more significant because of the health crisis, the corporate culture, the sense of belonging, valuable assets for our industry. And we pay a lot of attention and even more in this last few year and we are working hard at it with employees, and I invite David Dragone to present the way culture lives on a daily basis within the group. David, the floor is yours.

Well, good afternoon. As we have been saying from the beginning, we are now living in a more connected digital and mobile world, a world which is aware now of environmental stakes. And Nexans, as a key actor in electrification, plays a major part in energy transition for tomorrow's world. And in other word, also to provide greater meaning and link for all employees. We believe that to prepare for the future, we must also honor the past and so we know where we come from. So we started in May in 2020 by making a film that you might have seen last year, it's called Nexans Living History, which explains where Nexans comes from and what the role of Nexans is in electrification. So this film was shown to nearly all the employees, and people were just delighted with it. This was extra proof, as if we needed it, of the pride they had in belonging to the Nexans Group, to understand where we come from and the work we were going to play in the future of the city and to contribute towards electrification of the world. So along the same lines, we asked employees to choose an image representing Nexans today. So we decided to have a photo competition, which we felt was an easy way of involving employees also, so that they share their feelings with us. So the winning photo that you see over here is an employee based in Norway, and this photo was used in several communications kit, both for internal and external communication. Now last summer, with the Executive Board, we took a second look at the foundations of our strategic and cultural transformation. Firstly, we redefined the reason why we exist, so that it'd be a perfect illustration of our strategy, which is electrifying the future. So now this was also shared both within and outside of Nexans during our first ESG event last November. We clarified our mission. And so that helped us to prepare our employees towards the new group strategy, which was announced on our Capital Market Day in February. So now we base it on our culture, our history to show who we are and our DNA to introduce our strategy. We know the reasons for our being here and the why of our mission. What's missing is how. That is the values. So now if our decision was to define our very being in our mission with the Executive Committee, we were -- and we believe belief that we must have as many of our employees as possible to define the new values of the group. So we did that in 2 phases. Firstly, with the top management by asking them about their personal values and Nexans' values today, plus values of Nexans in the future. And on -- in the second phase, by asking all employees, by choosing through a cloud of words, which 3 words are the most representative of Nexans in the future. We're explorers, researchers, founders, and we contribute towards the creation of standards in the future for sustainable future electrification to meet the incredible stakes that we have to now face, which is why we believe that we are pioneers. Pioneers is, therefore, our first value. Our strength lies in the fact that we concentrate on our results, and that's what makes such a success of us in 2020 in the face of COVID. We are dedicated to our stakes, to the means that our company has and the needs of our customers. We are doers and, therefore, we are dedicated. And to get there, we must be united, and that is the third value we have, united. We are united within our company. We must count on each other. It's everyone's commitment. We are done with all the silo organizations and pyramidical ones, both in our organizations and in our minds. We're also united with the outside work with our customers, our shareholders who are with us because they trust us. We are also united with local community, where we are, where we are working with them. And that is thanks to our foundation and local action. We've all united together to meet and reach new summits. These 3 values, pioneers, dedicated, united, are the largest common denominator, which is totally in sync with the choice of employees and the meaning of New Nexans. And that's also why we decided to illustrate our values with the photos of our employees. [ Photo ] in France, these employees, as you see, show the diversity of our company, diversity of gender, age, origin, training and vocational past. So we have the foundations of this new culture, the reason why we here, our missions and our values. It's an essential chapter to deliver this message. But our real history begins only now. These values must be known, they must be visible and they must be imbibed. They must be also appropriated, learned and represented by each one of us. We want everyone to note them and so that our behavior enables us to identify each other. These values will come alive, and that would be through a series of initiatives. Let me talk to you about the first one. The first one is Nexans Remarcable People, which would enable you to recognize or identify an employee or a team who is an incarnation of this value in particular. The next one is called Nexans Living Value, which is a workshop, which is fun and entertaining and participative to recreate social linking and to enable each employee to express the kind of behavior that they would like to see or express in these 3 values. To do so, we hope to have a kind of behavioral model within Nexans in a very inclusive, dynamic way, but do it also very simply, visibly and practically. Now this living history is part and parcel, an essential of our new strategy. Since December 2020, each business unit, and we have about 20, defines its own BU ambition story. BU ambition story, and that's based on group strategy on our CSR commitments and business commitments. So each BU management team defined its mission, and its means and methods to involve the employees. This is extremely well perceived by the employees in each of the BUs. So now each one understands more simply and moderately what the group's strategy is all about and what exactly means in the ecosystem and in their daily lives. It's a great way of belonging. So we are writing this new page in our history and our contribution to electrify the world. Nexans electrify the future.

Thank you, David. That was wonderful. There was such a wealth of information that you put together. So now I suggest that we go on to the Governance and Remuneration -- and Compensation Committee, so Anne Lebel. Anne is a [ independent ] leader director, who is Chairperson of the Committee on Corporate Governance and Compensation. She will speak to us about corporate governance and the compensation of our corporate officers. Over to you, Anne.

Dear shareholders, I'm going to show you the summary of the works of 2 committees, the Designation and Governance Committee and the Compensation Committee and the resolutions, which are submitted to your vote. First of all, the composition of your Board of Directors. 14 members end of 2020. There is a balance in terms of skills, experience and diversities, nationalities, ages and gender. In terms of nationality, 50% of our directors are of foreign nationality, which is important for a company with an international ambition like ours. Our directors have experiences in industry, energy, finance, HR and services, and for a majority of them, in managerial positions. The representation of men and women is well balanced, 7 men, 7 women. The number of women is 45%, in line with the commercial code. The employee and directors who are representing the employee shareholders are not taken into account in this ratio. Our Board is well balanced in terms of representation of different stakeholders, 7 lead -- 7 independent directors, 4 directors representing the main shareholders out of 3, the main shareholder in Nexans. And 3 directors representing the employees, 2 employee representatives and 1 for the employee shareholders. The number of independent directors, 65.3%, which is in line with AFEP- - MEDEF, and they call it -- it is reviewed each year. And beyond the separation, the President is independent, and we also have a lead independent director. We are one of the rare French-listed companies to have a lead independent director. The 4 committees of our Board were -- have been very active in 2020 with a high attendance rate, 92%. And you have here the summary of the main works carried out by each of them. And for the Audit Committee and 5 members, the attendance rate was 100%. And for its mission, beyond the works linked to the financial information and account review, this committee carried out an important work in terms of follow-up on the audit and activities linked to the internal control, including cybersecurity. For Designation and the Governance Committee, 5 members. And at that stage, the attendance rate was 92%. And this committee focused beyond the preparation of [ reproduction ] of terms of office or appointments. They focused on the review of succession plans of the Executive Committee, the diversity policy and the action plan follow-up from the assessment work of the Board in 2019 and then the follow-up of the action plan. Let's talk about the Compensation Committee with 6 members. The attendance rate amounted to 92.7% in 2020. This committee reviewed all items related to compensation and to the Employee Shareholding Plan Act 2020. And on the Strategic and Sustainable Development Committee with 6 members, had an attendance rate of 94.4%, focusing on the review of the strategic plan and the business portfolio as well as on the policies and priorities of the group in terms of social and corporate responsibility. Let's move on to the presentation of resolutions related to the appointments and renewals of directors and statutory auditors, resolutions 4 to 8 and A. We submitted to you about 3 [ reproduction ] of terms of office this year, which I'm going to show you on the following slides. We will welcome a new director, representing the employee shareholders. And then resolution #8 relates to the reconnection of the Mazars firm as the statutory auditor and represented by Juliette-Decoux Guillemot replacing Isabelle Sapet. Resolution #4, the -- the renewal -- recognition of Marc Grynberg, Independent Director, submitted to your vote. He's been a member of the Board since 2017. He is a company manager in the industry and energy industry, has skills, especially in the financial strategy and transformation fields. That's key for our Board of the direction (sic) [ Board of Directors ]. Resolutions 5 and 6 relates to the -- the renewal of 2 major representatives for the major shareholder in Nexans, the group Quiñenco, Andrónico Luksic Craig, the Chair of the Board of Quiñenco, the main shareholders of the company since 2008, joining the Board in 2013. He has an international expertise as a manager and is involved in all strategic decisions of the Board. Francisco Pérez Mackenna, the General Manager of Quiñenco joined the Board of Nexans in 2011. He contributes to the Board as an international manager and contributes to the 4 committees of the Board of Directors, and this is essential. Let me move on to Resolution 7 and A, we -- you had to -- you are going to vote on the choice of a new director representing employees. 2 candidates were submitted to you. Selma Alami, in the group Nexans since 17 years. She is, for the time being, the Deputy General Manager of the operating unit in the Northwestern Africa after having led by several positions within the MERA region, and she is also a director in several subsidiaries of Nexans. And then Selim Yetkin, in the group since 9 years in charge of the ISP Power Sales, Nexans U.K., where having occupied various positions in the sales field. They are two candidates of top quality, and we're going to see a small video clip. [Presentation]

So this is it for the presentations. The Board recommends the application of Selma Alami with the practice of governance and management and an experience in Africa. Since October 2020, we have welcomed a new director representing employees with Bjørn Erik Nyborg. He's in charge of consumables for the warehouse of the plants of Halden in Norway. He's been in the group since 2005. Beyond his knowledge about the activities in Norway, he has skills and practices in social management, having represented the Norwegian workers within the European Works Council, and he's been a member of an external Board of Directors. We are going to see the video clip of Bjørn. [Presentation]

So now we shall speak about compensation for 2020 to begin with, and then for the corporate directors, as you've seen resolutions 11 to 13. To begin with, let's start with the corporate offices. A total of EUR 650,000 was paid in 2020, as you can see up here on the slide. This includes a reduction of compensation for each corporate officer, thanks to all the commitments made for handling the health crisis. It also reflects the activity of 15 meetings of the Board and 22 of the committee in 2020. Now as far as the Chairman's compensation is concerned, resolution #12, and in compliance with the compensation policy of [ ex anti vote] of 2020, the elements of compensation, they remain unchanged since 2019. And I just made off the fixed compensation, that is EUR 237,500. In other words, after deduction related to the management crisis -- of the health crisis. Now let me talk to you about Christopher Guérin, CEO. The compensation for 2020, as you see described in our Resolution 13 submitted to your vote. You were asked to decide all the various elements of this -- elements of this compensation, the fixed portion, the variable portion and the long-term variable portion. You've got the details up here on the slide. Now to start with the fixed compensation, it was at EUR 570,000 in 2020, after deducting the reduction related to the health crisis. The fixed compensation was at EUR 600,000 in 2018 when he was first nominated as Managing Director for 3 years. This has remained unchanged. Concerning the variable portion of the compensation for 2020, this represents 100% of his fixed target compensation. So that means it can go between 0% to 150% of his fixed compensation. It is made up of 60% of collective aims and 40% of individual aims. So now the collective portion is based on the ROCE aims, that is return on capital employed. 25% represents that, and ratio on EBITDA is 50% and free cash flow, 25%. So the achievement of the collective portion represents 96.7% of the maximum potential some. And the ROCE criteria, the free cash flow, as defined in the budget that was revised in July 2020, have largely gone up. The individual portion is based on 5 individual aims that were defined by -- during the year by the committee. These aims were related to the pursuit of transformation operations and meeting aims of the transformation plans as well as meeting the result net -- the net income indicator of EUR 80 million. Now deployment of projects to improve operational efficiency, follow-up and control of costs. And then also the preparation of the strategic plan and Capital Market Day for the RSC also and finalization of the development plan, succession and so on, plus a new mission of values. Beyond these individual aims under the [ ages ] of the Chief Officer, the management of the health crisis was exemplary from all points of view. B, the health and protection of employees or the continuity of operations, if they were all covered. Since all this was anticipated and will -- a lot of mobilization was put in, the meeting of individual objectives was, therefore, considered at 100% by the members of the Board. As far as the long-term compensation is concerned, it's 20,000 performance shares that will be granted to Mr. Guérin in line with -- and in compliance with the policy that we have in terms of fixed compensation. Now let me come to the presentation of resolutions #14 and 15 on the compensation policy for 2021. And to begin with concerning the Chairperson and the corporate officers, this remains unchanged for 2021, be it for the Chairperson or for the corporate officers. As far as the directors or corporate officers are concerned, this is based on fixed compensation completed by variable compensation related to attendance rates to these meetings and committees. As far as the Chairperson of the Board is concerned, it's a fixed fee, and we regularly compare with the panel of companies of the SBF 120. These sums remain unchanged. Now you decided in [ the term ] insofar as the compensation policy for the Director General was concerned. We made the following changes. We submitted to vote the following changes of his fixed compensation and increase. As mentioned earlier, it was EUR 600,000 in 2018, and we wish to take it up to EUR 750,000 for the next 3 years. The main reasons have been detailed here on this slide. As initially fixed, this compensation was 25% below than that of the reference balance and 45% below of the median for the same panel. Now the performance achieved by our director in these 3 years, apart from all that he has already achieved, enabled us to double our market capitalization as Nexans, plus significant growth offered in share, the price share, plus a remarkable management of the pandemic. Now as far as the variable remuneration is concerned, the criteria remain unchanged. I'd like to point out to you that for 2021, as far as individual aims are concerned, 50% are related to ESG as opposed to 15% in the past, which just goes to underline Nexans' commitment in this policy. Two other modifications were made and which was aimed and aligned with our compensation policy for better practices. One is related to the acquisition of performance shares in case of retirement of our Managing Director, and these will be on a pro rata temporary basis. The other's related to the requirement of achievement rate for various objectives for the variable compensation. In case of an enforced departure of the Director -- Managing Director, this has gone from 60% to 80%. Now I would like to talk to you about the employees' share plan that we have. You decided, concerning resolutions 25 and 26, to obtain power of booking 400,000 shares for the members -- employee members of this plan. 100,000 additional shares for employees for countries which are not covered by this group savings plan for employees. And finally, and this is resolutions 27 to 29, concerning long term compensation, Resolutions 27 and 28, aiming at renewing our long-term plans in the same conditions as given below -- before and that you have up here. Resolution #29 is on the introduction of a specific plan related to a new strategic plan. This is ambitious and very demanding and is required to ensure that we meet the commitments and retention of our key players in the company, particularly our Managing Director and key officers in the group. So we would like now the ability to set up an envelope of 100,000 performance shares dedicated to this plan. So with this, I come to the end of my speech, and I thank you all very much for your attention.

Well, thank you, Anne. Thank you very much. Now let's listen to the auditors by Isabelle Sapet and Edouard Demarcq from PricewaterhouseCoopers. They will share with us the reports which are related to the ordinary general assembly for the account as well as reports that are related to the extraordinary general assembly on operations connected to the capital and the allocation of free shares and performance shares. At the same time, I would like to thank Isabelle Sapet for her commitment with Nexans in the last 6 years because 2020 was her very last year as signatory associate of the Mazar firm.

Well, thank you very much, President. Ladies and gentlemen, good morning. We issued 3 reports for the Ordinary Shareholders' Meeting and 7 for the Extraordinary Shareholders' Meeting. Those reports were put at your disposal, and we suggest we summarize them. The report on the financial statements were made in a complex and changing context of the global crisis related to COVID-19, creating specific conditions for the preparation and the audit of accounts for 2020. This crisis and the exceptional measures taken within this framework generates a lot of consequences for companies on activities and their funding and increased uncertainties. Some of the actions such as restricted traveling and working from home had an impact as well on the internal organization of companies and the implementation conditions of audits. Our report on consolidated financial states are between 262 and 266 of the Universal Registration Document. We confirm our independence. The consolidated accounts are in line with the IFRS. We certify them without any reservations. The key audit matters identified are the accounting of contracts for goods and services; antitrust investigation and dispute; measurement of goodwill, property, plant, equipment and intangible assets; and measurement of deferred tax assets. We have no comments on the information presented in the group management report, and we certify the presence of the nonfinancial performance statements. The management of your company decided to be in line with the European regulation. So sorry -- we have no conclusion on the observation of this format in the annual financial report. Our report on the annual financial statements are between 287 and 297 (sic) [ 290 ] of the URD. It's in line with the French accounting rules. We certify them without any reserves. The key audit matters are the evaluation of the shares and antitrust investigations and disputes. We have no comments to make on the management report, on the information of payment terms on the governance report. We certify the accuracy and fairness of the information provided in accordance with the provisions of the French commercial code on the compensation and benefits paid to corporate officers and on the commitments made in their favor.

Our reports on the related party agreements on Pages 317-319 of the URD, and it's based on the information given to us, the characteristics and the essential modalities of the related party agreements, which we would have discovered with our missions without having to make a statement on the justification or the existence of other agreements. Agreements submitted for ratification at the shareholders' meeting. Two new agreements authorized previously by the Board of Directors. The first agreement is on the set of CIR and CICE receivables from the company to Bpifrance Financement. And the second one, State Guaranteed Loan contracted with a banking pool, including Natixis. For agreements already approved by the shareholders' meeting, it's on the letter of commitment of investments. The amendment with a renewable credit December 2015 signed with banks, along with Natixis and -- so another agreement signed with Natixis. Detailed information regarding those related party agreements are in our report and allows you to have an assessment. Now for the Extraordinary Shareholders' Meeting, we issued 7 reports on various resolutions, and which may have an impact on your share capital in the future. For those resolutions, we implemented the necessary measures deemed necessary according to our profession. We have no comments to make on the terms and conditions of the proposed transactions. Ladies and gentlemen, this is a summary of our reports. Thank you very much for your attention.

Thank you. Okay. We are going now to answer questions received from our shareholders, and then we'll take questions directly. I would like to remind you of the fact that the shareholders may ask questions on the dedicated chat on the website of the broadcast of this shareholders' meeting, and we will answer them in the order of arrival.

We have a first written question received before the shareholders' meeting. That's for Chris. "You have communicated a large extent on your ambition in order to fight the climate change. Can you please be more specific in terms of your commitment?"

This is a basic question, yes. So 1.5 is the trajectory of the Parisian Accord. So neutrality -- carbon neutral by 2030, a reduction by 4.2% versus 2019, a reference here. And for Scope 1 and 2 and also partially for Scope 3. And the group has direct action possibility, reduction in waste, recycling of waste, reduction in the traveling and so on. 100% of our waste coming from our productions should be recycled. That's one of our objectives. 100% of R&D projects will be dedicated to the efficiency, energy efficiency, and we signed a partnership with Schneider Electric, so that all our sites worldwide use renewable energy to run our plants. And by 2030, we're going to deploy efficient -- energy efficiency solutions throughout the sites. But we go a bit further than that. And we wondered about the performance management a lot so that the criteria and ESG criteria could go in line with profitability. So in 2020, we thought over our management model, performance management, while taking into account the economic aspect, of course, this is obvious. But taking into account environmental criteria and the commitment of teams, kind of barometer of team commitments and David Dragone talked about it with the corporate culture. And we have it in strategic plan presented last February. We have a model called the E3 -- so 3E: economic, engagement and environmental. And in the last 8 months, every quarter, each of our businesses is assessed based on those 3 criteria. There are about 20 criteria altogether for the 3E, and we analyze the performance, the economic performance of each entity. But we also make sure that this economic performance be not to the detriment of environmental criteria and not a detriment of security and safety criteria. So we have a kind of warning -- award system, sorry, internal awards. We grant an award every quarter for entities having a good balance between the economic, environmental and engagement. So it's innovative and it's to create an internal emulation, and we go further than that in the analysis of our carbon footprint and we calculate what we call the ROCE per square meter. Well, the ROCE is the return on capital employed, but now we cross it for all units. And that's what we are doing. New ROCE, which is the return on carbon employed, we analyze both the financial performance on the one hand, but we want to make sure that our carbon footprint is okay. So in each entity, it's not per square meter, but of course. So we make sure that each entity will be able to achieve their financial obligations, but at the same time, reduce the carbon footprint. For instance, in using short circuits and more and more, we're going to forbid to have shipping or delivery of more than 1,000 kilometers. So we have to use short circuits, and that's why our management teams now will be assessed on the relevance of their business management, and based on those 3 criteria, economic, environmental and engagement criteria. That's it to answer this first question.

Thank you, Chris. Okay. Good. Second question, that's come in through the chat. Now it's about raw material. How are you anticipating the rarefication of certain natural resources? And the difficulty of supplies for strategic resources like copper, in particular? And how would it impact your business? And how are you planning to secure your supplies?

Now that's a very busy question. Let me tell you why. Because when you look at the ecosystem that I just talked to you about, and which Vincent gave us greater details of, which goes from generation of decarbonated energy and the transmission and distribution and use, there is, in fact, a line running right through it, and which is coming to the entire use of it. What is it that does it? It's the copper that links them all up. And since we are now facing an unprecedented electrical revolution in terms of demand, there's going to be high-pressure on raw material, particularly on copper. And that's why a lot of investors have asked us this question through the road show that we held with Jean-Christophe in February and March. And that was about how to maintain metallurgy, which is also one of our own production tools, because it is -- it doesn't contribute very much to group performance. And my answer is as follows: that it's a strategic asset. And you don't see that, but you'll feel it in the future. You'll see it in the future because sooner or later, there's going to be a rarefication, in fact, of this particular resource. Look at the cost of aluminum, because now everybody is now converting towards more electricity. So there's going to be a lot of competition for these metallurgical assets. We have them in North America, an excellent factory in France in Lens and in Montreal as well, which are essentially for our internal needs of copper. We also have a capacity of recycling, which is extremely high. In fact, we recover virtually all the cable waste that hasn't been used or from our customers, and we separate all the polymers on the one side and the copper on the other. And the copper is used again in our foundries in order to live through a second life. And that is a second part of our capacity, which is in the circular economy. And I think it's going to play a fundamental role in the coming years. In fact, there might be some speculation these days concerning the cost of copper, which has really gone up to $10,000 a tonne. But I think it's going to be a physical tension when it comes to supplies. And since Nexans is virtually the only copper player and which has maintained this vertical integration in metallurgy, I think it's a major plus point for us, for our group and particularly for the development and implementation of our ambition.

So metallurgy is really your future. Now here's another question that's just coming live on the chat. And this time, it's on India. And the question is, "How far is the group exposed to the Indian market, given this major crisis it's going through?"

To begin with our heartfelt feelings for this population suffering from COVID, maybe a little later than all the others. But Nexans is not too exposed to the market, Indian market, which is a wonderful market in terms of work, but...

Another question that's just come in live. Your plan is extremely ambitious, and how are you going to manage your acquisitions and your divestitures, at the same time, your sales?

Well, we've often heard ambitious very often now. But what we were trying to say is that we want to be transparent and honest. We had so many comments from investors. Maybe for an investor, it's not so important to have a very detailed strategic plan just as we've detailed it, but it's important for us to use these strategic intentions as an internal communications tool because when you say that you can't cover all the 34 sectors -- because if you want to be on all fronts, you know where a jack of all trades and a master of none. So as a result, you will underinvest in certain sectors where you really need to invest. So it is this -- the choice of the manager, of the helmsman of the company. And so you have to make the right choices to arbitrate and decide what is good in the short, medium and long term. So our options were as follows. We decided to refocus on our key acquisitions and perhaps just spin-off, for instance, our activity in automotive industry and telecom and so on. So this is business, which are financially doing very, very well. It's also the quality of your assets and the quality of financial assets also reflects the quality of the group. But these are not deals that will take place immediately. However, it was important for us to announce it that it not be something hidden from our internal team. It doesn't mean that they won't have a brilliant future. On the contrary, they really have a brilliant future. It's just for us to find the right partner who do exactly what Nexans will do in electrification. In other words, make major investments, innovate and make acquisitions, do exactly the same thing with all the businesses that we wish to sell, and that is telecom. industry and electric beams, which require new partners who will provide more cash and more investments and help them to grow further and get more modernized. Revamp. Now these are very exogenous factors, and it's always a bit difficult to handle both acquisitions and sales. But in terms of acquisitions, we did a worldwide analysis of the electrification market and all the players on this market, more than 130 that we looked at. So we selected about 20 potential candidates. It doesn't mean there will be 20 acquisitions, but it may be 5 or 6 out of them, as Jean-Christophe explained, with the aim of EUR 1.5 billion of asset acquisition and this over a period of 2021 to 2024. As Jean-Christophe explained to you, we have a free cash flow, which is fairly high. And as a result, we don't need to sell first in order to buy after just because we run short of cash. That's not the case.

Very good. Is there something that you'd like to add on the impact it's likely to have on employees?

Well, we had communicated very quickly in the day that we would be refocusing on just 3 or 4 sectors without prior specifying which ones because this is for legal reasons. Now naturally that -- for several of these businesses, it will take several months because you are not the core businesses. But let me give you an example of our North American business that we sold in 2020. We sold it to a connections company. They don't make cables, but the connections at the end of cables. So now this business that we were involved in for nearly 20 years, generally speaking in the last 8 years, despite our investment capacity, which are, all said and done, limited, we are spending nearly [ EUR 1 million ] of CapEx every year, [ EUR 1 million ]. Whereas we knew that we would need at least 3x or 4x more. So since this business was handed over to Leviton, which is an American company in connections, they have already made an investment of [ EUR 3 million ] per year. They are part of a group, including telecoms, which is the core business. And so they know exactly -- we know exactly what to do. We don't want to be in the generalist system, but in mega specialist systems, and that means revise the entire production chain in order to amplify their effort and their impact.

Thank you. Next question is on the foundation, Nexans Foundation. So which are the projects that you are supporting? And are you planning to increase the budget given that the pandemic took place?

No. Well, we want to increase the budget, it's EUR 300,000 a year. And it will remain at that level because we are also doing something else. And this example of what Vincent just mentioned to you, we are extremely involved in Africa, in village or rural electrification. So the group's working in this field and so is the foundation there. So the foundation was set up in 2013. And since then we have supported maybe 122 projects through 62 NGOs. So now we are well known, particularly when it comes to electrification of villages, health dispensaries schools everywhere in the world. In 2021, we'll have our next foundation board meeting, and we've already received 140 candidates coming from 30 countries. We're very proud of this. Very, very proud of our foundation, and we shall remain very active.

Here's another question on innovation. What sort of innovation are you planning to start in your program?

Now I'm not going to share all the innovation with you because I'm sure that even our competition is listening to us. But these days, we are working in a more ecosystem kind of environment. It's a strange term. And just companies by themselves will not be able to do things alone. We must work together. There has to be a uniting of forces for solving difficult issues like involving environment and innovation. And that is why we have decided to call upon other companies to help us, to shoulder us and either to modernize some of our businesses with Schneider Electric. We are deploying the 4.0 version now right through the world. And Microsoft, in terms of artificial intelligence. We also signed up a wonderful partnership with Orange Business Services. I'd like to greet them now. The -- we now introduce captors in the Internet of Things, which also require energy. So we are going to make them even more smart by putting little detectors in the cables that reach out to them. We are also working on innovation in recycling, new polymers, new conductors in metals. That's why we need that metallurgical asset because we can renew over there. So our partnership with Suez also works us -- helps us hugely in circular economy. So a lot of innovation between now and 2024 from Nexans. We must come out in flying colors and what's more, we must make sure that all our employees are with us in this new embarkment, be extremely innovative and creative. And to meet, as I said, our customers' expectations. And as you said, a customer very dear to us.

And it's time for us to move really quickly. So this is what we are going to do. Thank you. Thank you very much, Chris. So that was the last of the questions. And now I suggest that we carry on with it. And so we shall now go on to the presentation of the resolutions. Nino, over to you.

Thank you, Jean. So here's the outcome of the votes on resolutions. It will be displayed here on your screen and the details will be available on the website after this meeting. So the first resolution was the approval of the company's financial statements 2020 and the management report. First resolution adopted. Second resolution, approval of the consolidated financial statements 2020, second resolution is adopted. Third resolution, allocation of income for the fiscal year ended on December 2020 with the dividend payout. The third resolution adopted. The fourth resolution, renewal of the term of office of Marc Grynberg as a Director. Fourth resolution is approved. The fifth resolution, renewal of the term of office of Andrónico Luksic Craig as Director. The fifth resolution is approved. #6, renewal of the term of office of Francisco Pérez Mackenna as Director. The sixth resolution is approved. The seventh resolution is the appointment of Selma Alami as Director, representing employee shareholders. The seventh resolution is adopted -- is approved. Resolution A, appointment of Selim Yetkin as Director representing employee shareholders. Resolution A was rejected. Resolution #8, renewal of statutory auditor and appointment of an alternate statutory auditor, adopted. Resolution #9, approval of a regulated agreement entered into between the company in Bpifrance Financement, adopted. A resolution of a term approval of regulated agreement entered into between the company and Natixis. It's approved. Resolution 11, approval of the information relating to the compensation items paid during the fiscal year ending on December 2020 for the corporate officers. Approved. Resolution #12, approval of the items of compensation for Jean Mouton, Chairman of the Board of Directors. Resolution #12 is approved. Resolution #13, approval of the items of compensation paid for Christopher Guérin, CEO. Approved. Resolution #14, approval of the compensation policy of the members of the Board of Directors for the fiscal year 2020. Resolution #14 is approved. #15, approval of the compensation policy of the Chairman of the Board of Directors for the fiscal year 2021, is approved. Resolution #16, approval of the compensation policy of Chief Executive Officer for the fiscal year 2021. The resolution #16 is approved. Resolution #17, authorization to be granted to the Board of Directors to carry out transactions involving company shares, is approved. Resolution #18, authorization to be granted to the Board of Directors for the purpose of reducing the company's share capital by consolidation of its own shares. Approved. Resolution #19, delegation of authority to be granted to the Board of Directors to decide upon the capital increase via the issuance of ordinary shares and securities, or securities giving access to the equity securities or giving the right to the allocation of debt securities with preferential subscription rights. Approved. Resolution #20, delegation to the Board of Directors to decide to increase the share capital via the capitalization of premiums, reserves, profits or other amounts limited to EUR 14 million par value. And then Resolution #21 (sic) [ #20 ], it's approved. And Resolution 21, delegation of authority to be granted to the Board of Directors for authorizing the issuance. Then resolution number -- is approved. Resolution 22, delegation of authority to be granted to the Board of Directors for the issuance of ordinary company shares or securities granting rights to equity securities within the limit of a par value of EUR 4.375 million sub ceiling shared. Approved. #23, delegation of authorities to be granted for the purpose of deciding to increase number of securities. Approved. And resolution #24, delegation of power granted to the Board of Directors to issue securities or shares. And it is approved. Resolution #25, delegation to the Board of Directors to issue maximum 400,000 shares for employees. Approved. Resolution 26, delegation of authorities to the Board of Directors to issue a maximum number of 100,000 shares for one financial institution, so that employees of external foreign subsidiaries can benefit from shareholding plan. Approved. Resolution 27, authorization to the Board of Directors to issue -- to grant performance shares. Approved. Resolution #28, authorization to be granted to the Board of Directors for the purpose of granting in 2022 free shares, limit of EUR 50,000. Approved. 29, authorization to the Board of Directors for the purpose of granting in 2021 performance shares -- existing or free shares, sorry. It's approved. And then we have one resolution for the ordinary shareholders' meeting. This is the power to carry out formalities. It's resolution #30, and this resolution is approved. Over to you, Chairman.

Thank you, Nino. Dear shareholders, I would like to thank you once again for your strong mobilization and engagement. You expressed your opinions with a record quorum, over 83%. This participation is an important sign of your involvement in your company. In the last few months, we had the pleasure to exchange our views with a lot of you. Thank you for your availability. You should know that our door is always open, and we keep listening to you. The improvement of our governance and the interest of all stakeholders is our priority. Like each year, we'll come back to you in due time to share with you our priority. So we have no items left on the agenda. So I would like to adjourn the meeting. Thank you to you for attending this meeting remotely, the members of the Board of Directors and statutory auditors and all employees of the group. Thank you very much.