Schneider Electric S.E. (SU) Earnings Call Transcript & Summary

[Presentation] [Interpreted] We don't do transport, and we're not in lifts or elevators. Forget about elevators. This is what we do. This is what we're good at. And we make all of this possible. So this is where you'll find us, here and there. We don't generate energy, but we help you save energy. And we also protect the environment. We connect and provide energy for everything that surrounds you and we help the machines communicate with one another. We help customize your everyday life. We try to address social problems with transparency, how to optimize resources. And access to energy and digital technology is fundamental. So we hear partners, developers, investors and manufacturers all decided to do the right thing. We're open-minded. People from all over the world, and we learn from one another. We're not going to save the world necessarily, but we are here to be your partner -- digital partner. The service of your sustainable development and your performance. Life is on. So that light can shine for everyone at every moment. [Interpreted] Hello, everyone. Thank you for being in attendance. Ladies and gentlemen, shareholders, I declare the combined shareholders meeting of the 4th of May 2023 open. I would like to draw your attention to the fact that this meeting is a public meeting, which will be broadcast live and recorded on the company's website. In accordance with the Article 19 of the statutes, the shareholders' meeting is chaired by the Chairman of Board of Directors, and it is in this capacity that I am chairing this meeting, and I'm very glad to see you here today. By my side, is Fred Kindle, Vice Chairman and Independent Lead Director; Hilary Maxson, Chief Financial Officer of Schneider Electric; Peter Herweck, who will succeed me, as from today, as Chief Executive Officer. We'll come back to that later. And Ségolène Simonin-du Boullay, Secretary of the Board of Directors. I shall appoint the officers of the shareholders' meeting. I call scrutineers, Frederique Debril, representing Amundi Asset Management; and [ Caroline Casu ], representing the shareholders -- employee shareholders' Group Schneider, [indiscernible] . You're both shareholders in attendance through the greatest number of voting rights and accept these functions as scrutineers. I invite Ségolène to act as Secretary and I note the presence of our statutory auditors, Mr. Jean-Christophe Georghiou, Juliette Decoux Guillemot, Mathieu Mougard. I beg your pardon, and I would like to greet the members of the Board of Directors who are in attendance. And in the first row, Nive Bhagat, where she is? There she is. Cécile Cabanis, Giulia Chierchia, Rita Felix, Linda Knoll, Léo Apotheker, Abhay Parasnis, Mr. Anders Runevad and Bruno Turchet. I welcome the members of the Shareholders Consultative Committee. And I'd like to take this opportunity to thank all the members of the committee, on your behalf, for the work they do and the advice they give us to improve our communication with our shareholders. Headphones will be distributed or have been distributed to you that you can listen to the translation of some of our speakers because Schneider is also an international company. And some of the presentation was made in English. Channel 1 for English and Channel 2 for French. And I will hand the floor to our Secretary to make the legal announcement.

[Interpreted] We have the convening for 2023 and the [ Journouise Speciale D'Associate ] was published on 14th of April 2023. The shareholders present and represented own a number of shares. The definitive number of shareholders present or represented will be specified to you before the vote of the resolutions. As of for now, the general meeting, gathering more than 25% of the share capital, is regularly constituted and can validly deliberate both on an ordinary and extraordinary basis. The members of the bureau will certify the attendance sheet by signing it. The shareholders are invited to decide on the simplified agenda, which is displayed on the screen, and we'll note before hand in the convening documents. In accordance with the customary practice, the documents relating to convening of the shareholders' meeting have been placed on the desk and provisions of Article L. 225-81 to L. 225-83 and L. 225-88 of the French Commercial Code relating to shareholder information have been complied with and the documents referred to in Article 25 -- L. 225-89 and L. 225-90 of the same code have been made available to shareholders within the limits set by the regulations. We ask the shareholders meeting to dispense with the reading of the report, the Board of Directors in so far as shareholders, will be able to read after the shareholders' meeting. The legal formalities will -- have been completed, and the shareholders' meeting having been duly constituted, we may proceed with the proceedings of the meeting itself. [Presentation]

[Interpreted] So we're going to move on to the main presentation of the shareholders' meeting after these introductory remarks. And I would, first of all, to say once again, I'm glad I am here -- to be here with you today. We've worked together during the COVID years. So we were not able to have the meeting together during the COVID crisis, and it's been a pleasure to resume these shareholder meetings in person. We've explained our operations. And we -- this is a time where we meet. And we take the decisions for the company -- for the future of the company. For me, this is a very special event because after 20 years as the CEO of Schneider Electric, one of the new piece of news today is, I'm going to hand over the baton to Peter Herweck as CEO. And this brings to the end of cycle of 20 years. And before starting to give some explanations, so I'd like to start by thanking you. Thank you for these 20 years, where you've supported us. You have been there with us in all the things we've done, that the challenges we've taken up, the problems we've had to address throughout the many crises that have taken place during these last 20 years. And you have supported us in this industrial technological transformation that we have made during these recent years. And all of this would have been impossible without the support of our shareholders. So I'm extremely glad to be here with you today and very pleased to bring to the end, this cycle, and to start a new page. I'd like us to do three things. First of all, that we share with you the changes, the -- in our sector in energy and digital technologies. Second thing, since we are coming to the end of the cycle and we're beginning a new cycle is to look at what has been done, what we have achieved during the last 20 years. And to understand what are the base -- what is the basis that we establish for the future to go on and to talk about 2022 and talk about the beginning of the new year. Now this is a rather intense program, but I'd like to thank you again for your support, for your partnership, for your help in this company. This enabled us to change -- entirely changed the profile of Schneider Electric. We're ready for the future. And when you look to the future, what you understand is what is happening in the world. We've just experienced 3 years of crisis that have accelerated the transitions in our sector, digital transition, dual climate and energy crisis, meaning that the world is accelerating in the electrification of energy and reduction of carbon energy, fossil energies. And there is also a polarization of the political environment. There's more and more relocation of manufacturing around the world and in the sector of Schneider Electric as well. In the world, energy is changing. World needs much more energy for simple reason. We have all the 800 million people who do not have access to electricity. In the 30 coming years, so 2 billion people, more people will arrive in parts of the world where there's little energy, namely in Africa, Southern Asia and in regions in the world where we don't have enough access to energy. And at the same time, we know that 75% of carbon emissions and climate change is due to the way that we generate and consume energy. So it is essential to give access to all -- access to energy because energy -- access to energy is access to a decent lifestyle. And at the same time, we have a collective duty to find solutions for the planet. And when we look at the figures, the situation is somewhat worrying -- concerning because when we look at the figures that was published by major research institute, we have to move 3x faster and 3x further. Because everything we have to do in the next few years build buildings that are net zero and the buildings that do not emit carbon emissions is going to be a challenge. Everything that we will build that has a negative impact on carbon emissions will be, therefore, decades to come. And at the same time, we have to do 3x more because when we sum up all the commitments of countries and societies in the world -- the companies of the world, we have 4 megatons of reduction of carbon emissions. We'd have to reduce 10 to 50 megatons, so 3x faster and 3x further. And there is, however, some good news. Because each time that humanity has had to face up to challenges, we've been able to invent technologies that made it impossible to solve challenges in different ways, historical challenges, different ways. And Schneider Electric has one -- being one of the major players is to be able to start up two new technologies, participated, in the beginning of new technologies such as the development of digital technologies, the Internet of people that has changed the way that we live, the way that we work, that has changed everything in our lens. And today, for a number of years now, it's the second phase of Internet, the Internet of objects, is going to completely change the way that we live in our environment and enable us to be much more efficient. And the second revolution is electric -- electricity. Electricity is an old technology, but it's not the same electricity. It's a renewable electricity that is decentralized, that can be stored and that is used everywhere around us. And in the last 2 decades, the increase every 10 years in consumption, it's 5,000 terawatt hours. And most of this has been in emerging countries. China represent more than half of this increase at the global level. So when we make forecasts concerning consumption of electricity, it's multiplied by 2 in this decade, but multiplied by 4 in the coming decade. This means that the world that surrounds us is going to be twice or 3x more electrified than today. Our cars are going to become electric, heating, air conditioning, and our buildings is going to be electric with a lot more heat pumps rather than having gas boilers. So we have a complete transformation that's underway and enable us to have the same comfort and same lifestyle whilst meeting less carbon. So the solution, as we are working on it at Schneider Electric is to work on decarbonization with a different outlook or a different approach. When we talk about energy and climate normally around you, we're always talking about what is supply, people for nuclear people against nuclear people who like wind-generated energy and others are against it. But if you look at the reality in energy transitions, it's always been driven by demand. Cars are not going to become electric because there's more electricity, that is the supply. They'll become electric because one company in California and a French company, like Renault have invented the first electric cars that are cost effective that can replace traditional cars. So 95% of what Schneider does today is to support customers in the transition of this demand. And if we are able to transition this demand to greater efficiency and electric energy, because electric energy is the only way -- or use of electric energy is the only way of eliminating carbon-emitting fuels, that will enable us to decarbonize the energy chain. As long as we are able to produce the solutions and the electricity in a sustainable manner on roofs of buildings, of homes, or micro grids for individual communities. This is teamwork that has to be done. But your company, Schneider Electric, is the global leader in the transition of demand towards more digital technologies for greater efficiency and more electricity for decarbonization. And we could take many, many different examples. But one example that we all share is our homes. And here, you have the figures. The figures you see here, what we can do with existing technologies today regarding the average residence in Europe. If you use thermostats and building management systems to control your energy consumption, I suggest you use Schneider. You can save up to 25% of energy. If you transition your model towards electric vehicles and heat pumps, you'll gain another 25% in energy efficiency. And if you produce a great amount of your electricity locally, you can decarbonize all of your energy footprint at an individual level. If we all do this, the collective problem of the management of electric grid is reduced because this problem will be distributed and be the responsibility of each and every one of us. So that is what we're doing in buildings in industrial centers in infrastructure. And this is the first objective of Schneider Electric. And the problem is more global. It's not just homes, residences. We look at [ energy ] forecasts, 8 billion inhabitants today. In 30 years, there'll be 10 billion inhabitants on the planet. We have 800 million people who do not -- 10% of the world population do not have access to electricity. In 30 years, I hope that all people will have access to energy and electricity. And lastly, we have a middle class that miss -- less than 50% of the global population. We hope in 30 years, there'll be a much larger proportion of the global population will have access to the type of prosperity of middle classes. So if we keep the same energy models, we'll have a curve of energy consumption, which is the red curve that you see above, which is not sustainable one bit. The International Agency on Energy is working on different scenarios. The yellow curve is -- corresponds to all the commitments of the different world governments. This is where we would be if they commit to this. But in fact, what you see in green is what we need to do is to get back to 1.5 degrees in -- increase in temperature, so to keep things simple. The strategy that we have at Schneider is simple: Priority for energy efficiency, which will enable us to mitigate for -- or compensate or enable to handle the energy we need to have the same quality of life, much more electric energy consumption. And these are not Schneider figures. The Schneider figure is much more ambitious. 20% of consumption will be electric and in 30 years will probably be 50%. And we believe it will be more 60% to 65%. But in all scenarios, there remain another 20%, at least of fossil energy consumption. And since the scenario put here is one of the most optimistic scenarios for carbon reduction, it is therefore essential that we should continue to work on decarbonization of fossil energies. Because in 30 years, there'll still be a lot of fossil energies being consumed in the world. And this energy has to be reduced. The strategy of Schneider in 95% in efficiency and decarbonization and the rest to accompany fossil energies in their efforts to decarbonize. Our [indiscernible] to enable each individual to be as energy efficient as possible and to help in terms of sustainable development and progress, provide energy for everyone so that everyone can have an improved living conditions. So our mission is to be the digital partner of our customers in sustainable development and energy efficiency. So there you have the global context, general context. Now we're going to go very close from here. We're going to visit the customer -- a building that exists with existing technologies from Schneider to attain energy consumption, which is 1/5 or 1/6 of the energy consumption -- average energy consumption in buildings in Europe. Video. [Presentation]

[Interpreted] So there you are, a very practical example of what can be done with technology. This building is as comfortable as a conventional building. It has higher usability and it consumes 6 to 7x less energy than a conventional building in Paris. And if we can do this all over Paris, we can, of course, reduce energy consumption and the carbon footprint in a spectacular way. Second topic we wish to review with you today, what we have done together with Schneider Electric in the past 20 years. And taking a step back, allows us to realize what we have succeeded in transforming and the robustness of the foundations we have created for the future. So if you look at the 20-year balance sheet, we have repositioned Schneider Electric on digital, on sustainable development. We have multiplied its size by 4. We have multiplied R&D spend by the same multiple. And we have increased -- grown the value of the business 7x. So a full positioning change, a change of scale and a change of valuation. And what we have built together is a business that is acknowledged all over the world as a tech company, a leader in sustainable development, a leader in digitalization, a leader in electrification. The second thing is that we have created probably one of the most global players in the world with a geographical footprint that is fully balanced. And finally, we are a company with an impact, with a unique culture committed to technology and sustainable development. Where did we start from? Everything started with the heritage we took over in 2003 when we were essentially a product-based company, low-voltage leaders already at the time by just a little and also present in other power distribution elements. And patiently and systematically, what we did over the past 20 years is to complement and strengthen our leadership in low voltage into medium voltage, secure energy, secure power, terminal distribution, meaning that we now have the ability to offer our customers a global leading products to allow them to create the integrated power systems with digitalized architectures for better mastery of energy. What we conducted in parallel alongside the products is to create new value propositions for our customers to allow us to be more present in the life cycle. First of all, a systems activity for their critical missions, data centers, hospitals, which were so very critical during the pandemic and are, of course, critical on a day-to-day basis. Water and power networks, smart cities, transportation, all of that requires engineering and engineering capacity or build capacity that represents revenues of EUR 8 billion today. We have complemented this with a services business that did not exist 20 years ago, EUR 3.5 billion in revenues. Through digitalization, we have created a software branch with EUR 2.6 billion in revenues and around EUR 1 billion in sustainable development -- consulting services for a great many customers around the world. So if we look at these 20 years, the three major changes were digitalization, multiplied by EUR 15 billion last year; electricity where revenues were EUR 6 billion in 2003 and today, EUR 26 billion multiplied by 4; global leadership in all fields of the business. And then a reposition towards energy efficiency and the reduction of CO2 emissions multiplied by 60, and now reaching EUR 25 billion in this year's revenues. So Digital was probably the most important transformation at Schneider Electric. A lot of companies are trying to achieve this. And I think we can rightfully say that with EUR 15 billion and more than 40% of our revenues drawn from this business, we have succeeded in our transition while building on our basics, energy, electric power. And what we chose to do was to digitalize our activity with customers. So we specialized in projects around the world with our customers, buildings, factories, infrastructure, cities, with a very strong desire to provide our customers with a digital twin from the design phase to the build phase to the operation and maintenance phase in the interest of circularity to allow customers to have a collaborative digital platform and reduce wastage that can occur on any construction site anywhere in the world. What we have done is that we have repositioned all of this in a portfolio, the industrial part, the energy part and the building, the construction part, to achieve a very simple customer experience based on a database, a data hub, Digital Twin, a customer experience based on the platform developed by AVEVA and the ability for our customers to integrate their entire company through EcoStruxure, which is our IoT platform. So a lot could be said about this, but I suggest we now share the benefits of this type of software in our next video. Video please. [Presentation]

[Interpreted] So what we've just presented are things that have already been rolled out with our customers. You can train new entrants, new employees to avoid the dangers of the shop floor. Train them before they're actually on the shop floor. You can train them -- give them fire training, leakage training, and they can just do that with a virtual reality mask. And also, when an operator and this was very much used during COVID, employees can be remotely assisted and told exactly what they need to touch, what they must not touch, the sequence of operations to guarantee their safety real time. Before that, people used to manage their business building per building, factory per factory. You can consolidate all of the data from a company in order to optimize on the scale of the entire company. And for all of those who worked in construction, I'm sure that you're well aware that 30% of the cost is rebuild. Because when you reach the site, the plumbing specialist is fighting with the AC guy and so on. Everything is now virtualized, and that helps to cut down construction costs considerably. So that's what we're already doing with our customers, with our most advanced customers and which will certainly be generalized across the company in the coming years. So this allows you to connect everything, to access the same data and to mobilize all of the stakeholders, both internal and external to the company to work on energy optimization. And in order to achieve this, in the past 3 years, you have supported the rationalization of our software business portfolio to accelerate synergies between our software companies, to accelerate technological convergence based on a single platform to allow our customers to integrate it all, build, process, energy. And in order to achieve this, we have supported you in the acquisition -- the 100% acquisition of RIB that digitalizes buildings, IGE that digitalizes power systems, and AVEVA, a deal that closed earlier this year to integrate the Digital Twin within a software repository. In doing this, together, we have created a software company with revenues of EUR 2.6 billion, which positions us pretty much in the 30th position of all software developers in any sector and places us in the top 3 of industrial software businesses. And this is just a start. We're going to be growing this business. Naturally, the big event for 2022 and 2023 is the 100% integration of AVEVA, our industrial software platform. And if you remember because, of course, you were involved in all of this, we had constituted the birth of AVEVA by acquiring a number of companies, Citect around 20 years ago, Telvent, Wonderware, Invensys until 2013. And we brought all of these companies together with a British company, AVEVA. And then we acquired OSIsoft to constitute a unique portfolio of industrial software applications. So first point in the transformation, digitalization and software. And to show you what our partners are doing with this, how they're leveraging this power, I would like to show you a video about a French partner who uses our automation and software systems. [Presentation]

[Interpreted] Second pillar of our strategy, sustainable development, which for us takes on two shapes. First, being a partner in digitalization, strategy and implementation, decarbonization for our customers, and we are partners of around 40% of Fortune 500 businesses. So we are recognized as a business that can provide advice and implement decarbonization strategies. Second element, Schneider, as a company and its own decarbonization and net zero strategy. And it's on this aspect that I'm now going to focus. What we presented last June was our determination to be a business with an impact. With five guiding principles, first, performance, businesses that have performance issues have behavioral issues. So the first aspect of this is good health, what we call do well to do good. And if you're not doing good, it's very difficult to contribute new things to your stakeholders. And then a contribution of all stakeholders in every dimension of ESG. ESG and Strategy, are a single thing and within the Executive Committee, Gwenaelle is also in charge of Sustainable Development. And finally, a model and a culture that emphasize ESG culture locally because it's within the community that we can provide added value. So to give you an illustration of what I mean by multiple stakeholders, Schneider itself has set very ambitious targets in terms of decarbonization. We are also helping our customers to save 100 million tons of carbon a year, thanks to our technologies. But in the face of our suppliers, what we call the Upstream Scope 3, we currently leading an operational, a carbon project, to support our key suppliers in reducing -- in halving their carbon emissions in the coming years. And then as, of course, more than 40% of our work is done in emerging economies. We are committed to providing green electricity to 50 million people on the planet and to train 1 million young people to work in the energy sector. And for our investors, we have committed to generate 80% impact revenue by 2027. So if you look at Schneider Electric's carbon footprint, I know this is a bit of a confusing graph. But Scope 1 and 2 basically means Schneider in-house and surprisingly, in fact, only 1% of Schneider's carbon footprint is generated within the company. And -- but we are well aware that we have responsibility for our entire carbon footprint. 14% is Upstream with our suppliers and 86%, Downstream, or 85% Downstream with our customers. And with that going into the final details, all of this, of course, can be found in our annual report. We are committed to make progress ourselves, but we're also committed to support our customers and help our suppliers to improve their own carbon footprint. And something crucial happened in 2022. We worked with SBTi, an NGO that's recognized as a certification body certifies the reality of our carbon commitments. And we committed first, by 2030 to reduce our carbon footprint by 25%, which in absolute terms. With the growth of Schneider Electric, it means much more per production unit or sales unit. And then by 2050, we are determined to reduce our emissions by 90%. And the graph that you can see here, which is -- may seem rather unclear up on screen, there's the green bit in the middle, which is what we call Scope 1 and 2. What happens within Schneider, it's very limited. And we have already reduced the carbon footprint by 2 over the past 4 years. So we have already worked very hard to reduce our own in-house carbon footprint. And blue is Scope 3, Upstream and Downstream, suppliers and customers. And then the graph at the bottom here is what we call compensation or offsetting, allowing us to offset by purchasing certificates, which at Schneider, of course, we are looking for high-quality certificates for carbon absorption. And we've worked with this highly demanding organization. I think we're the 59th company in the world to obtain certification in this field. And we are now working on the implementation of an action plan to reach that ambition. One thing that's very important, and you know this, is that our focus is on the people in our company. We believe all the changes need to be done through engagement -- very strong engagement on the part of our teams. And therefore, we have, as you can see, once again, this year, developed our values and actions when it comes to diversity, equality, inclusion, and value proposition for employees that is meaningful and in the realm of engagement. This is supported by a number of practical programs, including the global employee shareholder plan, which has subscriptions from -- on the part of employees everywhere in the world. The last transformation I would like to talk about with you has to do with geographical transformation. Schneider is a French company -- the case of a French company that has exceedingly well achieved its objectives internationally. We have multiplied by 8, our presence in the world in Asia. And this is where a lot of urban development, industrialization, digitalization is taking place and where development is strongest. And we've developed our presence fivefold in the States, and we've practically doubled our presence in Europe. Today, we have a business model, which is unique because we believe in globalization, but we also realized because -- I -- people like me have lived in different parts of the world have a long time. And we have articulated the organization of our company to ensure that it's decentralized and to ensure that each region has the means of -- to do its own manufacturing, its own R&D and to be able to work in an independent way. It's always better to be agile and fast on your feet than to be big. So the idea is to be able to make decisions quickly and to move quickly and to work with local actors and as a local actor. And this internationalization is done also in our shareholding at the European level. We are one of the companies with the shareholding, extra European is most developed towards being North America or in Asia. And also to say how proud I am that we have, during the 17 years of my mandate as the CEO of this company, each year, we had an employee shareholding plan. I think there are very few companies in France who have done this except 1 year, which was the year of the COVID since we didn't know exactly where the world was going. So we took the backseat. But wherever in world, whatever the crisis -- the crisis in 2009 or the problems already encountered, we have had an employee shareholding plan, which represent roughly 4% of the shares are in the hands of employee shareholders in France and internationally. And the subscription level is very high everywhere in the world. And in 2022, the ESG funds -- investment funds are important proportion of our shareholders. So that means that our share has performed well, as you know. And I hope that you have benefited from this performance. And if you look over 20 years, we went from 19th ranking to the 7th ranking as one of the main European companies and proves that a strategy that is carried out with the determination and persistence, it does generate value, not only to the company, but also to the shareholders. So we are ready for the future and we are positioned in markets that are promised development. We have generated more value, more systems, more services, more software, more consulting and sustainable development. We have a model, which is unique with a portfolio of activities that is completely integrated between digital and electric. We have a model completely based on partnerships. We work with distributors, integrators and suppliers, a multi-hub model that I've described and ESG integrated at every level of our strategy and at every level of our company. Now I'd like -- since we are at the shareholders meeting of Schneider Electric to look at 2022 and what happened in the previous year. This year has been extremely difficult year. All the things that have happened, first of all, there were human -- perhaps due to war in Russia that has impacted us directly. We were a leader in the Russian market, principally with local technologies. It's an operation that we had developed. Over the last 20 years, we have great teams in Russia. We found ourselves -- we were confronted with the war last year, and we decided to ensure the safety of our Ukrainian teams, 500 people, and to exit people from Russia. This was very difficult. We managed to extract from Russia. We're one of the first companies to do this having our employees exit Russia in October last year. And we transferred these operations to our local employees so that they continue to have gainful employment in the countries. Then we addressed different tensions in the supply chain. I'll talk about the results later, but we managed in this difficult context to be able to perform historically well. And we managed to make savings on a cost structure. And over and beyond all these objectives that we bought all of AVEVA, the whole of the AVEVA stake. And in these 3 years -- past years, we have disposed EUR 1.7 billion of revenue. We were able to focus on what generates the most value. Now if we look at the figures of 2022. So turnover, EUR 34 billion, plus EUR 5 billion in revenue compared to the previous year. Operating result of EUR 6 billion. EBITDA adjusted, EUR 6 billion. Net adjusted result of EUR 4 billion, more than EUR 600 million compared to last year. Cash flow -- free cash flow of EUR 3.3 billion. Cash -- operating cash flow being first time, EUR 5 billion. And the difference between the two comes from the fact that we built up stock to be able to supply our customers in spite of supply chain tensions. A dividend that's increasing. And all of these results of 2022 have been confirmed by first quarter 2023, which shows a strong growth more than 50% for the first quarter, which really confirms this very strong momentum at Schneider. We have two main activities, energy management, industrial automation. In 2022, these two activities contributed to growth and to the increase in operating profit. So the two growth drivers have been working perfectly in coordination. And since we're talking about generation of value, we are here with the shareholders. We have a TSR of 5 years of more than 100% and a dividend that is increasing for the 13th year in a row, which means that we could go back to the -- to pay out a part of the results to the shareholders. So the 20 years have just been past and the last year, but what is important today is to say that, I'm going to hand over the baton to Peter Herweck. And I'm very glad to hand the management of the company to somebody who knows perfectly well the industry. Peter will explain itself. He's been in this sector for 30 years. We've been working for many years together. He's worked in seven different countries. So he's really got this international culture that is part of Schneider's culture. He was a General Manager over the last 2 years, the head of AVEVA. So he's really been trained in this sector. He knows perfectly our industry and the company. Before handing the floor to him, I will once again to thank you for these last 20 years for your support, for your help, and I'm very proud to be able to transform Schneider Electric with your support and help. Thank you very much.

[Interpreted] Thank you very much, Jean-Pascal. Ladies and gentlemen, shareholders. Hello, I am very pleased to be with you today, and it's an honor to take over the role of CEO of Schneider Electric. And I would like to pay tribute to the French language and my first message. It's a beautiful language. And I speak it just a little bit, but to ensure that I can be much more effective in my presentation, I'm going to continue in English. To, first of all, acknowledge and thank Jean-Pascal for his leadership over the past 20 years in Schneider Electric. The figures and the recognition of Schneider's transformations speak for themselves. What is not as easy to convey in the keynote presentation is really the impact Jean-Pascal had on people, how he inspired them, coached them, made their lives and society better. I believe I can speak on behalf of everyone here when I say, thank you very much. Thank you very much, Jean-Pascal, for your vision, relentless commitment, your passion for people. Taking over as the CEO of Schneider is a big responsibility. I come to this role with over 30 years of industry experience, having started my career as a humble electrician, becoming an engineer, working at Mitsubishi Electric and Siemens before joining Schneider in 2016 as Executive Vice President of the Industrial Automation division. Most recently, I was the CEO of AVEVA. If you look across these experiences, I have both hardware and software experience, worked in a lot of functions, have an affinity for technology and software and have a diverse cultural mindset derived from leading teams in both mature and emerging markets. As I start the new role, I will build on the strong foundation that exists today, our leading position in digitization, electrification and, of course, sustainability. Three markets that are in major demand today. Our unique culture of which meaningful impact and continually strives to more diversity, inclusion and equity. And our signature multi-local model, which is a real differentiator for Schneider Electric. I promise you, I will bring all my energy, dedication and experiences to lead this great company into the future, focused on making Schneider Electric even stronger, more resilient and agile, to be able to withstand whatever markets and whatever conditions come our way. I know as we go through this transition, all of our stakeholders, not just our investors, but also our employees and our customers are wanting to see continuity in business and in performance. Our priority is a strong 2023 delivery, focused on sticking to our commitments and driving growth. We have started this year in a very good position with Q1, quarter 1 efforts and will use this as the momentum for the remainder of the year. Personally, I'm very excited for our future and the journey we will go together. I thank you in advance for your trust. Now Hilary, if you would share the performance of the company.

[Interpreted] Thanks, Peter. I'm very happy to continue working with both of you in your new roles. Dear shareholders, good afternoon to you all. I'm delighted to be with you today to comment on your company's results for the past year, and to give you some insight on the performance of our first quarter 2023. First of all, I would like to talk to you about a fundamental value for Schneider as for me, trust. This trust is essential, both in our personal and professional lives. We need the trust of our shareholders, customers, partners and employees. At Schneider, we are committed to high social, environmental, ethical and governance standards. We have developed a framework which is our trust charter that builds trust from 3 perspectives: integrity, transparency and resilience, which are the foundation of our culture. Turning to financial performance. I will begin by presenting the key financials for the entire past year as Jean-Pascal said, we entered the year 2022 with record revenues of EUR 34 billion, up 12.2% on a comparable basis. Also, a record adjusted EBITDA of EUR 6 billion and a record net income of EUR 3.5 billion. We also delivered a resilient gross margin with very complex year, characterized by sustained demand, high inflation and logistical constraints. And we also continued to improve our adjusted EBITDA margin by 40 basis points on a like-for-like basis, while improving our cash conversion ratio, reaching EUR 3.3 billion of free cash flow. All of this translates into a good increase in our ROCE. I would also like to point out that we ended the year with a record backlog of EUR 16.50 billion or about 6 months of sales compared to an average of less than 4 months in the past. The Energy Management business generated sales of approximately EUR 26 billion with like-for-like sales growth of over 13%. We achieved double-digit like-for-like growth in all regions except Asia Pacific which grew by more than 9%, impacted by the resurgence of COVID-19 in China but with strong growth in the rest of the region, notably in India. Demand remains strong in all end markets with a slowdown observed in consumer-related segments such as residential biddings and distributed computing. The Industrial Automation business generated sales of EUR 8 billion, up by more than 10%. Growth was driven by the discrete industries and sales in the process and hybrid markets also grew strongly, benefiting from the recovery in commodity-related economies. North America and Western Europe experienced a double-digit growth. Asia Pacific was impacted by the resurgence of COVID-19 in China, but with strong growth in the rest of the region, notably in India and Japan. The rest of the world grew by more than 8% despite the negative impacts of Russia prior to the group's exit. 2022 was the first year of execution of the plans presented at our November 2021 Investor Day. In '22, we have made good progress in our digitalization journey. More products grew strongly by 13%, driven by underlying demand, pricing and backlog execution. In software and digital services, our energy management software business and digital services grew by double digit for the full year. For its [ part, ] AVEVA continued to generate positive sales despite the acceleration of its transition to an [ abundant ] model. AVEVA ended the year with 23% growth annualized recurring revenue, or ARR, the key metric we track to measure the transition of this business. On-site Services experienced high single-digit growth for the year, impacted by logistical constraints. Our sustainability business had a very good year with over 20% growth for the whole year. Now our digital offerings or what we call digital flywheel represent 53% of group revenues. Within the Software & Services business, approximately 36% of the revenues associated is classified as recurring well on our way to our target of 45%. Now let's turn to our income statement. We ended the year with a record adjusted EBITDA margin of EUR 6 billion, which is up 14% like-for-like. This increase was driven by revenue and EBITDA margin growth of 40 basis points. The adjusted EBITDA margin ended the year at a record level of 17.6% with a significant acceleration at the second half of the year, thanks to the reduction in logistics extensions. This performance in a complicated year is also explained by the resilience of our gross margin, thanks to actions on prices to counter inflation. Finally, we are also improving our SFC to sales ratio while investing in our strategic priorities. I will conclude with a quick update on our debt ratio. Despite the increase in net debt related to financing of the AVEVA acquisition, our balance sheet remains strong with a net debt to adjusted EBITDA ratio of [indiscernible]. This ratio is a bit high for Schneider. But given our strong free cash flow generation, we expect it to normalize over time as it did after the OSI transaction. As Jean-Pascal mentioned, we pay a lot of attention to the return to shareholders. In terms of capital allocation, our priorities remain unchanged. And in this context, we are proposing a progressive dividend this year for the 13th year in a row of EUR 3.15 per share, up 9% on last year. In terms of portfolio development, I'm also pleased to announce that we have successfully completed our divestment program for a total of EUR 107 billion in sales. And as you know, we successfully completed the acquisition of the entire share capital of AVEVA in January. Let's now turn to our first quarter sales, which we announced last Thursday. We've had a very good start to the year with a continuation of trends observed in the fourth quarter. Our 2 businesses had a record first quarter. The Energy Management business ended the quarter at EUR 6.5 billion, up by more than 18% on a like-for-like basis. The Industrial Automation business ended the quarter at EUR 2 billion with like-for-like growth of more than 10%. Let's now turn to some specific points about the dynamics and expectations in our markets in 2023. First of all, we continue to see a persistence of strong demand, supported by underlying trends in electrification, digitization and sustainability. Further reinforced by government incentives and in our key geographies. We continue to expect an improvement in the supply chain situation, to support volumes as well as a reduction in inflationary pressures or tensions. In this context, we're raising our 2023 percent target for like-for-like growth in adjusted EBITDA to between plus 16% and plus 21%. As you know, we pay great attention to the dialogue with our individual shareholders. The cornerstone of this dialogue is our Shareholder's Advisory Committee with which we have a lot of dialogue, the members of our committee meet with Schneider's management and visit some of our sites. I imagine that you have now many questions, so do not hesitate to ask them to the committee. Also, in order to be more attentive to your needs, we have changed the way we interact with you. You can reach the shareholder relations team by telephone or directly by e-mail. Thank you very much for your attention and trust. Now Jean-Pascal, you have the floor.

Well, can give a warm round of applause. You don't realize as a French speaker, how difficult our language is. And when you're talking finance, it's even more difficult to speak in French. Well, thank you, very well. It was very well done, Hilary. An American in Paris, completely integrated, and we're very proud of Hilary. And 3 years, we've just passed together. I've experienced every year, her great competence, her strong resilience and ability to adapt. Now thank you, Hilary. Now before handing the floor to Fred Kindle, who will present the way the Board of Directors functions and the different committees functioned, and he will give you his report on this as Vice Chairman and Independent Lead Director. I would like to talk briefly about the Board of Directors and ask the camera if you can focus on the first row where we have the members of our Board. And a little bit further, I believe. Otherwise, it's going to be difficult for you. So we are very fortunate at Schneider Electric to have Board of Directors that is extremely committed and people who come from other 4 corners of the planet. They will provide great expertise. It's a lot of work being Board of Schneider, especially when you don't live in France or Europe to come here. We have at least 6 meetings per year that requires preparation. Each decision is reviewed in committee before being presented to the Board. We have strategic meetings. So it requires a lot of commitment on the part of our members to attend the meetings, participate at the meetings and in the management of the group. So I would like to welcome 2 new [indiscernible] Giulia Chierchia. Giulia speaks fluent French, and she is a specialist in energy amongst other things and has worked in different companies and provides a lot of expertise. Abhay Parasnis. Abhay comes from California. He came especially from California for this meeting. And Abhay is a software specialist and brings the skill to the Board of Directors when it comes to software and applications. I like to insist 1 point, we don't talk much about Board of Directors. But one of the great opportunities, assets at Schneider is to have Boards that have been very committed over time and have 2 Chairman over 40 years. It's enabled to adjust to short-term contingencies but also to have a very long-term view supported by people who very -- as Leo particularly has been on the Board for a long time, has worked with me as a Lead Director; Fred, who knows perfectly our industry because in the past he worked directly in this sector. So people who know this industry perfectly and who can be partners to really dialogue and work on the management of the company. I'm going to hand the floor to Fred, who's going to speak to us in French.

Dear shareholders, ladies and gentlemen. Good afternoon. [Foreign Language] Unfortunately, I speak, no French. I learned a bit of it in school around 50 years ago. But I'm terribly sorry. That's as far as it goes. And I'm going to need to do this in English, sorry, again. Nevertheless, I'm very happy to be here today and have the opportunity to make a few remarks on a few important resolutions that are coming up for the role today. Altogether, it's I think 28 different votes today, a very large schedule. I will not make remarks on all of them but just highlight a few select ones. Let me start with the first one. It's about the dividend. Jean-Pascal has talked about it already. I think it's fair to say that we are a little bit proud that Schneider Electric has for the 13th time being able to raise the dividend. So the proposal today is a dividend of EUR 3.15 per share, which is an increase of 9% versus the last year. I think this is evidence that the company has actually done very well the last year, and Hilary explained more details about that just a few minutes ago. This is about resolution #3. Let me change topic and talk quickly about the change in governance, which has also been addressed already by Jean-Pascal and Peter has introduced himself. So your company today is changing the top governance model. Up to this point, Jean Pascal was both. He was the Chairman and the CEO. And from today on, you see it up on the slide, we have a Chairman, Jean-Pascal; and the CEO, Peter Herweck. Jean-Pascal continues to serve the company as Chairman, I would say, an active Chairman, not an Executive Chairman, that's not the idea, a real Chairman, but an active Chairman, especially when it comes to sustainability and also representation in Asia. And then, we have Peter, who runs the company. So he and his team will develop the strategy, set up the right organization, manage the operations and take care of the people. And me in between, the smallest figure in this triangle, basically trying to make sure that there's proper governance and the situation in the top governance of the company is in good order, which has been a fairly easy job in recent years. Let me continue then with the Board. You see a lot of faces on this chart altogether, it's 16 people, including the ones that you hopefully will elect today into the Board. It's a large Board, but this is a Board that is actually very active. It's not just the sitting Board. It's a working Board. And you see this also, we have 5 different committees. And each committee typically has 4, 5, 6 members. We can only work with 5 committees if we have a large board with a lot of members, otherwise, the Board members would end up in 3 or 4 committees in the same time, it is not possible. So it's a large board, but necessary so. I think it's a Board staff with high-quality members. And I would like to point out we have 3 names on the right-hand side. I come to speak about those. Those stand for re-election today. And we have 2 faces here and was mentioned already of new Board members that will be elected into the Board today, hopefully. Let me first talk about the 3 that stand for re-election. This is Léo Apotheker, who is here with us today; Gregory Spierkel, far away in North America, and the same with Lip-Bu Tan. I should say, typically, they would be here, but you can imagine it's quite an effort to make a long journey. So they're here, I would say, with their minds more so than with the body. So they stand for re-election, and we are very happy about that because they are very competent, very qualified, high-value Board members. The regular term is expiring today of 4 years. They stand for re-election as it concerns 2 people, that is Greg and Lip-Bu, so they stand for election for another 4-year term. With regard to Léo, he stands for 2 years. Would ask the question why, Léo has reached a threshold where he is no longer considered to be independent, he's a dependent director. And also with regard to age, we are becoming more considerate to be careful about extending directors' terms into eternity. So there's a slight change in attitude. Let me then go on with regard to the new Board members. Jean-Pascal has already introduced them. You see a slide here with 2 faces and a bit of description about them. And I think instead of me talking about them, have them quickly in 1 or 2 minutes, tell them who they are and why they are here today. Let me first start -- ladies first, with Giulia Chierchia. Please, Giulia.

[Interpreted] Thank you, Fred. Ladies and gentlemen, greetings. My name is Giulia Chierchia. I am half Belgium, which means I can speak French. I am currently Executive Vice President of Strategy, Sustainability and Ventures of BP. I joined the Executive Committee at BP around 3 years ago to help the oil company with its decarbonization and energy transition and reaching its net zero target set for 2015. Before joining BP, I worked at McKinsey for 15 years, working with clients in the field of energy and industry, all issues such as the energy transition. And if I could indeed join the Board, I would be delighted because I can contribute expertise from the world of sustainable development and the energy transition. Thank you.

Great to be here. My name is Abhay Parasnis. And as Jean-Pascal said, I live in California, have spent most of the last couple of decades in software. And so my background really is more in software companies like Microsoft and most recently was Chief Technology Officer at Adobe, has been fortunate enough to participate in a couple of software transformations around cloud and data and now more recently, AI. I'm really excited to be here. I mean Schneider Electric, the transformation the company has gone through over the last couple of decades is just phenomenal. And especially with its mission around sustainability and the strategy around digitization and electrification, they're absolutely at the forefront of where the world is going. And as Jean-Pascal was saying earlier, software already is a key part of Schneider Electric strategy today. But as we look ahead, that's going to be even more central to the growth of the next chapter for Schneider Electric. And if I were to be elected, I'm really excited to join to this team Board to be able to go on that next chapter of journey and growth. Thank you.

Thank you very much to the 2 of you. Ladies and gentlemen, let me just point out that these 2 people are extremely qualified, they're in high demand. They could have easily taken on another Board membership with a different company. And we are very happy that the 2 of you have made the choice and are here today with us and stand for election into the Board of Schneider. [Foreign Language]. With that, I am changing gear here now to a very interesting topic, compensation. I'll start off by trying to explain to you very quickly about the situation with regard to the compensation of the Board of Directors. What you see here on this chart, in essence, is nothing new compared to the past. It's the same model. If you look at the individual details and I refrain from going through each of these boxes, basically, it's an activity-driven model. The more meetings we have, the more fee they get because we need to get together frequently, more hours invested, more travel and so forth. And then it's also due to function. If you are heading a committee, for instance, then you get a little bit more fee than if you're just a regular member. That's basically the composition of it. You see on the right-hand side, the outcome of this model, what each of the individual directors got in the last year. And you see the total is about EUR 2.2 million. That is what the total fees are for the -- all of the directors, excluding the Chairman. And the proposition today is to increase the maximum. The maximum is at the moment, it's EUR 2.5 million. So we could not issue more than EUR 2.5 million. We would like this to increase slightly to EUR 2.8 million just because we are adding new members into the Board. That's the reason for that. So much about the directors' compensation. We now look into the compensation for our Chairman and CEO for Jean-Pascal. This is looking backward into 2022 instead of '23. So this is looking backward. I want to see here, again, I can use the same statement, is pretty much the same as in the previous years. If you start at the top left-hand side, there's a fixed salary of EUR 1 million, frankly. I think we would need to lift this today if Jean-Pascal stayed on as the CEO. This was set in 2018. And if we do a competitive benchmarking with other CEOs, it's on the lowest side. And that has a consequence also on Peter Herweck. So the same base salary for 2022. When it comes to the annual variable compensation, sometimes also called the short-term incentive plan or bonus. The way this is calculated is the same as in previous years. It's a mechanism that is based on several criteria. You can read them for yourself. And this criteria have clear benchmarks what need to be reached in order to achieve a 100% level of performance or maybe even more. And here, you see the actual figures. You see what the achievement level was in all of these criteria. They yielded different numbers. If you add them all up, you end up at 114.9%. And as it happens, the system work such that if Jean-Pascal has reached 100%, he would [indiscernible] 130% of the base salary as bonus. He achieved actually slightly more, 114%. And the consequence is at the bottom on the left-hand side, the total payout for the bonus is just short of EUR 1.5 million. So this is all very systematic. It's perfect in line with previous years. There's nothing special about it. The only thing that really changed is the performance achievement, which was 115%. That's a short-term bonus. Let me go back. And then we have also the LTIP, the long-term incentive plan, where we have handed out a number of shares. These are performance shares. That means they are subjective to performance criteria. If the performance criteria are not met, then the value goes down. The value that was handed out in theory in this year 2022 is EUR 3.4 million. And then finally, there is a pension scheme. Same as in previous years, which is partly also driven by performance. So all in all, the numbers have slightly changed. The methodology has not. And what you see here is the compensation for Jean-Pascal Tricoire in his function as Chairman and CEO for 2022. Resolution #6. If I then move to Resolution #8. Basically, it's the same topic, but now it's for Peter Herweck. In essence, pretty much the same methodology. If we start at the top left-hand side, we did raise the base salary from EUR 1 million to EUR 1.2 million. Again, because of what I said, the EUR 1 million with Jean-Pascal was on the low side, competitive benchmarking really tells us we need to have a slightly higher base salary. Otherwise, it would be unfair. Then we have a short-term performance measurement or mechanism that is still the same at the Jean-Pascal Tricoire with 2 small exceptions. There is an additional element in these criteria set, the net satisfaction score, which measures the satisfaction of customers and partners, which we think is very, very important. If this measurement was dropping below, it was going down, basically, then it will clearly indicate something wrong and the sales were probably suffered. So we added that. And also the 100% achievement on this short-term performance now yields about 100% in today's salary. No longer 130%. Otherwise, it's the same. Then, we have the LTIP, where we have decreased the cap somewhat. So basically become more moderate than in the past. The pension benefits the same. And we also added so-called Clawback feature. That means if something was going vehemently wrong with the company. Some sort of fraud or gross misconduct. The company now has a contractual opportunity to claim back money that was paid out. It's like a safety mechanism if something went really bad. So this is in Resolution #8, the proposal for Peter Herweck compensation. Continuing with the topic of compensation, looking at Jean-Pascal again. We're now looking into 2023. In 2023, we have 2 different situations. On the left-hand side, until today, he's still the CEO and Chairman. Starting today, he is the Chairman as the right-hand side. On the left-hand side, we have more or less the same thing as in the previous year. We didn't make a big change at all. At the bottom, you see that actually there's a few things that are relevant because he's changing the function. So he was allowed to keep his previous LTIPs from 2021 and 2022. However, he is not getting a new LTIP, long-term incentive plan for 2023. He doesn't receive those shares anymore in 2023. I think that's the most and he doesn't get any severance pay. As a matter of fact, we're very happy that he continues to serve the company as the Chairman. Thank you. And as the Chairman now looking forward, he gets a fixed compensation on the right-hand side. You see it's mentioned there, the total number is EUR 930,000. I think it's a good figure. It's very well justified. It can compares well with competitors. And I think we are all very happy that we have a great Chairman of this company. Having said that, Jean-Pascal has voluntarily signed a non-compete agreement. This is not being paid for by the company. So he basically promised once he ever leaves Schneider, he will not work for the company, and he basically makes this commitment for free. Thank you. I think this is all what I wanted to say with regard to compensation. Last but not least, Jean-Pascal talked about it, the say on climate. This is a new feature in our resolution process at the AGM. I think thanks to Jean-Pascal and the team's effort this company has always been at the front when it comes to sustainability. I can tell you when I joined in 2016 I was surprised how far this company had already gone with regard to sustainability. And we want to maintain this leadership. So the say on climate feature that is introduced now, very few companies have done this already. But we want to be spearheading this again. So this is now coming up as a resolution as well. I don't think I need to comment further. Jean-Pascal has gone into the targets that we want to become net zero by 2050. The process is now such that you can vote. You can give us your votes, support the say on climate, the climate strategy of this company or alternatively, you can say no, if you dislike it. But hopefully you like it and say yes. And of course, if there was too many dislikes, while this vote is nonbinding, it would be a serious concern to us. It will make us rethink what are we doing wrong clearly. And in 3 years' time, there will be the next vote on the same subject. So we will follow up and you can then look what we have achieved and what the new targets are. This is the substance of the resolutions and then there's a whole slew of additional resolutions that are financial in context. It's typically about share capital increases. Again, they're very standard. They're in no way different from previous years. I spare you the details in case you have questions, please come forward and ask them, but I don't think I need to go into the details of those. With that, I think, I reached the end of my presentation in English. And apologies, again, maybe we have time at some point to learn French. It's a beautiful language. We will see. Thank you.

[Interpreted] Thank you, Fred. I'd like to call on Jean-Christophe Georghiou from PricewaterhouseCoopers who is going to sum up the contents of the statutory auditor's report.

[Interpreted] Mr. Chair, and ladies and gentlemen, shareholders, I have the honor on behalf of the college of statutory auditors [indiscernible], we have prepared a report for the shareholders' meeting. We have dropped several reports for the year 2022, consolidated report, the annual report and then we have our special report on regulated agreements. And we also prepared special reports concerning resolutions that have been presented to you briefly concerning the capital of your company. These reports are in the document that is indicated in pages that will be indicated on the screen and propose that I give you a brief summary. Let's start with the report on the accounts. Now the annual accounts and consolidated accounts, we have certified the accounts without any reservations. And we have established opinions based on due diligence. We carried out in France and throughout the world. Our work is adapted to the organization from the group, the nature of the transactions and take into account our appreciation of internal control. A report presents the highlights of the audit, the points that we believe are the most important within the context of the annual audit consolidated accounts. In each of these reports, we present our point of view concerning risks, concerning the corporate accounts. The key point of the audit concerns evaluation of the titles participation that are in the books for EUR 5.5 billion and EUR 2.5 billion, respectively. Concerning consolidated accounts, the key points are two. The first concern, evaluation of goodwill that of more than EUR 25 million in your accounts, over -- in different periods, it's EUR 5.5 billion. The second key point concerning the consolidated accounts concerns provisions for taxes of referred and taxes -- so for our special report on the regulated agreements, we indicate [ that would be ] not any declaration of regulated agreements. So I'm now going to sum up our report containing the resolutions that are proposed and concern the capital of your company. 19, 20, 21, 22 and 23rd resolutions. Concern proposals of delegating the authority to decide the issuance of certain shares and capital increases and to cancel preferential right to subscription. There is a maximum amount for these issuances that have been set. Now concerning the 20 and 21st resolutions, we have no observations to make concerning the modalities of these resolutions for the determining the prices given in the Board meeting report. The definitive conditions in which the issuance would be conducted had not been set. We will not emit any opinion concerning this and concerning the cancellation of the preferential subscription rights. Now there's no modalities for the fixing of the prices. We cannot give any comments concerning those resolutions. We will establish a complementary report when these delegations of authorities would be used or may be used. Now in the 25th, 26 resolution, there was a proposal for delegation of authority, the competence to decide -- authority to decide the issuance of shares or assets or securities with the preferential subscription right. This will be reserved to in company share savings plan. So if these modalities are not fixed for the issuance of these securities, we have no comments to make about this or about the preferential right for subscription. Once again, we will establish a complementary report if this delegation authority were to be used. And to conclude, in our report concerning the 27th resolution, we indicate we have no observations to make concerning the causes or the conditions for the reduction of capital envisaged. This would be the result of the cancellation of -- within limit of 10% of the capital per period of 24 months of shares bought within an authorization given by yourselves for the sale of other shares of another company. This is the end of my presentation. Thank you.

[Interpreted] Thank you, Jean-Christophe. Thank you for your detailed report and the work you've accomplished. For a company of our size, this is a major undertaking. Now we've come to the Q&A session, and I am available with Hilary Maxson and Fred Kindle to answer your questions. Before answering questions. I'd like to inform you that we received 10 questions from the forum for responsible in investment and the answers provided by the Board are published on the site. So as to ensure that we can answer a maximum number of questions, I would ask you to ask your questions. And if you have several questions to ask them in one go. One question per person please because sometimes we have a lot of questions, and I would like to hand the floor to [ Pierre Pelissier ] and Françoise Guelle representing the Shareholders Consultative Committee. Thank you.

[Interpreted] [ Pierre-Yves Pelissier, ] shareholder and member of the consultative committee, the new organization [indiscernible] exact role of each that has been involved with influence of Jean-Pascal Tricoire on strategy in the coming years. Thank you.

[Interpreted] I will take this question. I'll remind you, if Fred presented a slide which detailed the roles of each of the protagonists concerned when it comes to governments. And I can talk from experience because I was 20 years a CEO of the company. And I always worked on strategy with the leader of the Board, in my case, it was the Chair of the Supervisory Board at the time, [indiscernible] and then independent lead administers such as Léo Apotheker and Fred Kindle. We work on strategy with the Board every year. And during the entire year, but the dedicated session that lasts a week every year that enables us to go in depth on the main topics concerning strategy. But Fred was saying the Board is very active and that most of the Board's activity is dedicated to discussing strategy. And the role of the Board is to provide experience the one has of the industry because the Board knows the industry, but also to have different outlooks from people working in different industries to look at all the different aspects of strategy.

[Interpreted] Françoise Guelle, member of the Consultative Committee for individual shareholders. My question concerned the semiconductor crisis. Your supply chain has been impacted by this crisis. Is it still an issue today? And what measures are you taking to avoid in the future to be faced with another crisis.

[Interpreted] Now if we look at the 2 years that just gone by, it's been one of the main questions and one of the major concerns that was covered or addressed by the company. And I believe because there was an abundant supply. We forgot that electronic components are limited in supply in the end. And this is a very complex value change because there's the design. It's already complex. And then there is the manufacturing and the foundries are huge plants that require much investment and require a lot of adjustments. And everything that I've described, the digitalization of our environment is accelerating, as I explained. It's exponential change. We have electronics everywhere; in cars, there's a huge increase in the number of electronic components in the post-COVID rebound and given this acceleration of digitalization and connectivity, there's a major shortfall in components in many areas. So the situation today is this pressure is lessening when it comes to consumer products. But we're not in the consumer product market. And there's a very strong demand in digitalization is accelerating in the world of Internet of things for cars. All cars are connected. Electric car is electronics, batteries principally. And there's a lot more electronics than in traditional cars and all the objectives in the growth of our connectable objects is very strong and it's growing exponentially. So we have a great deal of pressure on the number of components in the supply chain. The situation is improving, what have we done and what are we doing? I believe that our knowledge of the value change has changed in the last 2 years. And I'm discussing this with -- regularly, and Peter will do this in the future, every month with our main suppliers in electronics at several levels, those who provide components, those who manufacture the components, and we have looked at our relationship in a more strategic manner, reflect on their innovations, our innovations and to ensure they are aligned so that we make sure that our products will use the platforms that are being developed and are most available. And we have also rationalized our offering when it comes to electronics. One of the values of [indiscernible] decentralization and empowerment of local teams, and we've had a lot of duplication in electronics. We've got around the table and said, we're going to sort this out and make some rational choices and streamline things and to ensure that we are a major part of this big suppliers and that we are going to have pressure on the supply chain in coming years because we had 1 year where the demand from China was relatively low because of quarantine and blockage of the Chinese economy. The Chinese economy is going to start up again. And this represents a big part of the electronics sector in the world. So we're progressing in this area. We've recruited a lot of skills in this area. No problem in attracting talent because putting electronics at the service of saving energy, decarbonization and digitalization of the environment is something that's very attractive for a lot of people in the world.

[Interpreted] Mr. Chair, I'd like to thank you for the exceptional growth of Schneider during your mandate. And I think you're very -- it's going to be a challenge to step into our shoes. [indiscernible] if it was American, Australian or Belgium, so I would like to know what his nationality is.

If you heard me speak English, you would have known that I'm French. I can tell you because coming from -- I started learning English very late. It's a compliment you've just made to Peter. And Peter is going to answer.

Born in Germany, and I carried the passport. And since then, I've worked in 7 countries, in the last 30 years, I have moved 17 times. And I think our business is a very global and multi-local business, and that's why I feel at home. Thank you.

Question number 2, and then we'll move to the outside.

If I may, I would like to speak English. Just 1 question about your share buyback. First, I am aware of everything you have just said about the employee ownership plans or other incentive plans. But if I am not mistaken, I have noticed that there is always a big gap between those accounts, which means that the volume of repurchase largely exceeds those [ needs ] and those reasons that you gave. And then there is always a large part of repurchase finished by canceling them. So I mean, if there's only 20% use for those plants, there is [indiscernible] only reason, and then there are, of course, other reasons. And I don't know if you would tell us more about why you do so much share buybacks, please?

Hilary, you can answer in English.

Luckily, thanks. Indeed so in terms of share buyback, actually, we've been on a pause for quite some time. I think because of the AVEVA transaction, we're actually a bit late in finishing the current share buyback plan. We announced at the end of this full year that we're still working on that plan, that EUR 1.5 billion to EUR 2 billion worth of plan. In terms of if you compare it to the dilution that's caused by the benefits that we give to our employees, either long-term compensation or participation in share plans, which is very important to us. We found that's extremely important for employee motivation across the world. Between those in general, we look over time to offset the dilution. Sometimes we're maybe a little bit behind, sometimes maybe ahead. In general, on average, I would say historically, we haven't really particularly been ahead. We're a company that we also balance, obviously, with making acquisition for the future, for example, versus doing share buybacks. So in general, I think we try to balance that dilution, but we haven't announced any new share buyback plans that would cause us to be ahead of buying back that dilution over the last number of years.

[Interpreted] [ Michel, ] an individual shareholder. I have noted that politicians find it difficult to understand what is going on in companies in terms of share buybacks, and I would like you to explain the philosophy of your share buyback attempts both for shareholders and perhaps for politicians and for the general public.

[Interpreted] Okay. So I don't know if my answer will be heard by politicians. All of this, of course, is very much in all of our public documents. Everything is done in a fully transparent manner. But if we talk about the allocation of our company's cash because that's in fact what you're talking about, what do we do with the cash we generate. The #1 priority is to preserve a high-quality rating. What we do is provide solutions, develop technologies. It's not taking financial risk. We always try to make sure that we pay back any loans that we have taken out. We've made an acquisition for around EUR 4.7 billion for the AVEVA deal. Second thing is that we need to pay a fair dividend to our shareholders. As I mentioned in my presentation, this is the 13th year running of rising dividends with an incremental strategy and with clockwork regularity. And again, we need to make choices between share buybacks and Hilary has just explained that every year, we are very keen to make our employees to allow our employees to benefit from an employee shareholder plan. It was interrupted by COVID, and very few companies do that. 4% of our share capital is in the hands of our employees. And in order to do that, we issue shares. And in order to avoid dilution, we try to balance out either beforehand or afterwards. And we compensate that by -- through share back -- share buyback mechanisms. And the other choices that we have to make are choices between the creation of the future through acquisitions or investments in the future through acquisitions and share buybacks. So today, we have an official share buyback program, which is currently under development that was put on that was paused for a number of reasons. But we got to be continuing in order to stabilize the number of shares, while issuing shares, additional shares for our employees. Hence, the mechanism I discussed earlier. What is being said a lot and talked -- a hot topic in France at the moment is sharing value, shared value. We already have a certain number of profit sharing mechanisms in place, and we have consistently involved our employees and compensated them for our common progress we've made together. I hope this answers your question.

I would, first of all, like to start by thanking you for the clarity. And I've updated my software since study mechanic and [indiscernible]. A lot has been going on since then. You congratulated the shareholders for supporting Schneider. I would also like to congratulate you for the manner in which you have steered the ship with your team for the past 20 years also. And I was at Air Liquide yesterday. And indeed, time flies. And I have seen that a number of key figures in our companies are handing over part of their power to others, which is a sign that the world is moving fast, even in boardrooms and businesses. However, my second question I am very worried about what may happen in the South China Sea. And my third question is could there not be meetings organized for the shareholder club? Because I visited your -- visiting your connected house was a very enriching experience.

Many thanks for -- I don't know if the first thing you said was a question, but it's true the time flies and the business leaders change, both men and women. And this is very good news because it means that Schneider can generate within Schneider its own talents with high-level profiles. And Schneider in France has provided a number of France's biggest companies with top-level managers. So their value is acknowledged not only in-house, but elsewhere. And I'm extremely proud that Peter will be replacing me because he comes from within the company with a team. Hilary, Peter and all of the Executive Committee are going to be driving the development and taking the Schneider's development to new levels to new heights. As for the South China Seas, we can talk about the Chinese American tension. What can I say? Our #1 market is the U.S., #2 market is China. So we're in the crossfire. The world despite sanctions and saber rattling, in fact, exports from China to the U.S. remain very high. The supply chain remains highly interdependent and interconnected. I personally lived in the -- both of these countries and other countries too, and we need to accept our differences in a world that will be more multipolar. And I think President Macron recently said that Europe needs to define its own position within these political blocks, and I would fully agree with him. So what do we do at Schneider? We try to have highly autonomous operations. Our Chinese operations have their own technologies, their own R&D, they're in production sites and the U.S. operations are also freestanding. And our principal, the manner in which we empower people. I come from the bottom at Schneider. I've worked for the company for 36 years. Because even when I started out, I felt that I could do something valuable at my level. And that is the culture I've sought to preserve and build. And in fact, our U.S. teams and our Chinese teams work very autonomously. And I've forgotten your third question. Site visits. I'm sure we can probably look into that. And we still have these smart connected houses with lots of new products. But you cannot discover all of that online, too. Why don't we go to this side of the room?

So I was here when Mr. Lachman presented you as General Manager and CEO. And you're walking from left to right with great ease. And I saw great potential in you because there are a number of your -- yes, I can run fast indeed. Because there are a few CEOs, if the slides stop, they are lost for words. But what you said was extremely interesting over all of these past few years. So of course, you received many congratulations, but no one mentioned the fact that Schneider's valuation is higher than that of General Electric. And if we look at the and that is indeed the case, which is absolutely extraordinary. General Electrics builds aircraft engines. And for a company that was an industrial foundry 40 years ago, achieving that is pretty amazing. And my question is there was a research reported by Mrs. [indiscernible] said you're probably going to be appointed to as Head of the French nuclear sector with Atos. And [indiscernible] kicked you out 40 years ago, and now you're back in with honors with Mr. Remont. Could you say anything more about your personal strategy or your nuclear strategy?

First of all, it's not because of Luc Remont, because this partnership that we have set up with in fact, is runs 10 years back because when you work on the specifications in nuclear and development products, that are compliant and when you obtain certifications and so when it takes at least 10 years. And if it was purely for economic reasons, we would probably not be doing that. It's for reasons of solidarity within the France's energy chain to provide energy for future generations and to contribute to electrification for decarbonization, as I described earlier. So there are a number of answers to your question. First, it's true that we did not work so much in nuclear because it was a joint venture with Siemens. And when the joint venture was dissolved, things changed, and we put our foot in the door again and try to gain positions. We work in control systems, which are, of course, essential for safety. And there's also the digital studio, which is created on the AVEVA platform, which is, of course, Schneider now. And EDF is a highly demanding client in terms of security and the requirements are extremely strict from a technical point of view. But Luc Remont is another person that we have contributed to the nuclear sector, and he has nothing to do with this decision because it was a decision taken before him. But it's true that it's important in our mix to generate electricity that is low carbon or no carbon. We are focused on decentralized energy essentially with micro networks, as I was explaining on the rooms of buildings and homes in industrial campuses. Let me just take an example. If you go to the U.S., if you go to New York City, most people land at JFK, which is the biggest airport there and slightly aging infrastructure. Schneider is currently in charge of new power generation for the facility, the decarbonization of the entire building, and it's a digitalized system for more efficiency, and it's based on -- broadly based on renewable energies, which will be replacing coal and gas. So that's one of the examples of what we do, but in the European energy mix. Of course, we don't have any natural resources for that. Nuclear power in countries where it is acceptable, and it's something we are witnessing all over the world, should be ramping up in addition to the intermittent power generation and add bio-renewables. And of course, we support low carbon. The energy problem is a huge challenge. It's the challenge for our generation, and we will need every possible energy because electricity won't be everywhere immediately green power. It's therefore essential as part of this transition, which is going to take a long time, although the climate urgency is very real. And now I have worked for 36 years at Schneider, 20 years at the helm. And I think we really need to do whatever we can to decarbonize every source of power and all of that for the duration of the transition, meaning that our commitment, of course, our first commitment is energy efficiency. If we all consume a little bit less, it really helps because power generation essentially comes from burning something burning uranium or other fuels. But to obtain 1 kilowatt hour, you need to burn 3-kilowatt hours at the source. So if you save 1 kilowatt hour, you're saving the equivalent of 3 for carbon -- in terms of carbon. And the second priority is to get rid of combustion and therefore, to electrify. And our priority is to produce renewable electricity and store it as close to possible to the point where it will be consumed. And that has a huge benefit. It empowers us all. We don't need to wait for the state or for a big business to do that. We can all work to reduce our own personal impact and produce our energy locally. So I started with nuclear, which brings me to a broader equation. The energy equation is so complex that it cannot boil down to a single point.

Hello. Good day, shareholder. It's a comment more than a question. With the expose in English, but we are a French company, I'm rather disappointed.

I hear your comment, but you know why we managed to succeed within Schneider, let me finish. It is because of the people who make up this company. 94% of our revenue is outside France. We're present everywhere in France. And under my mandate, under my term of office, we developed many other activities that didn't exist in France: smart buildings, industrial software, energy efficiency. This was not part of the company's portfolio in France. The 94% that we do around the world, we do this with people who don't necessarily speak French. My definition of communication is what -- how do I get myself understood. So when our coworkers prefer to express themselves in English, I learned English late in the day. What I'm interested in is communication. I've learned several languages and continuing to learn different languages. And I will continue to be tolerant of people who speak other languages, although I prefer French.

Second question. Hello [Foreign Language] for the association of individual shareholders. It seems that you have on your lapel 2 awards, [ Légion d'Honneur ]. But can you tell us about the second that you have on your lapel? And my second question, Schneider Electric has signed a partnership with BitSight, leader in detection and management of cyber risks to develop the capacity to identify cyber risks, the budget for cybersecurity are continually increasing. Are you sufficiently covered the risks of cyber risk because you're developing the activity of the company in software? And what is the financial commitment of the group, the Saclay site and the polytechnic campus, where the ambition is to create a European champion in artificial intelligence. Are you part of this endeavor?

The award or the medal, the pin I have on my lapel is that represents SDG's, sustainable development goals of the United Nations. Why do I have this pin on my lapel of the sustainable development goals? When I was appointed and even before I was appointed, when I started working with [indiscernible] more than 20 years ago, we, at the time were convinced, I was convinced that what was important was to define the [ resonate ] of the company will really commit all of the employees of the company and then we should have an objective that really federated us. When you are working in many different countries, you have to have a code of conduct, which is shared by all. And Schneider is not just Schneider, it is an ecosystem. It is a company that includes its suppliers, its partners and its customers that are partners as well. And if you have your own set of references that are independent, it can't work. We were the third French company to join the global compact of the United Nations to bring together companies to seek to increase the amount of ESGs in companies. And I remember the first meeting, there were just 3 of us around the table. There was Carrefour Traders and Schneider. And when we went to see our supplies and said you have to adopt these tenets. And they say, well, who do you represent? Today, the network of the global compact is more than 1,000 companies in France. And I'm very proud to say that the French network is the leading network here. There are small companies and big companies working together to progress in ESGs. And according to the recommendations of the global compact and the objectives that being said. I was in charge of the French Global Compact for 2 terms of office. And that's why I have this pin in the lapel of my jacket. And I was asked at the end of my mandate to be a member of the International Board at the United nations for the global compact. And I am on this Board, and I continue to represent our French global compact on that board and continue to promote this cause in different countries. Now the global compact is undoubtedly the best thing that has been done change companies because it's a coalition, but it's a coalition of people who want to work together to this goal and who need to work together. I'll give you an example. Walmart has asked us to work with its suppliers to eliminate a gigaton of carbon. So if one customer who's asking us to talk to their suppliers to help them to improve because the carbon footprint is -- footprint is dependent on these suppliers. In pharmaceutical industry, you have competing pharmaceutical companies were asked us to work with their suppliers to decarbonate their sector. I was ambassador of HeForShe and Executive Committee, 40% women. It's relatively rare in technical companies. And we have to be ahead in this area, and we have to work with other companies, and the Global Compact is a great form to do this. We should applaud the Global Compact and the Global Compact teams. We are set celebrating the 20th anniversary of the Global Compact this year, which is the leading global network. Now cybersecurity. Now we have to be very humble, very modest because it's a marathon that it's a long distance run. You have to -- you talked about BitSight. BitSight is one of the few companies that is an outside company that does some appraisal, there are sort of auditors in cybersecurity. They say how good your security is. And it is our cyber department that has conducted this for several years with -- we were doing our self appraisal. But in this sector, you're better off being appraised by third parties. We have improved and BitSight is what those companies that challenge us a lot. And this is something that will be never-ending effort. And we have a cybersecurity service. Not to do cybersecurity in the larger sense term, but to provide security for IoT to ensure security of different operational levels. Now when it comes to artificial intelligence, we already have artificial intelligence in many of our products, whether it be on the edge on sites or whether it be in the cloud. And we have done a lot of work, doing a lot of work with universities and with the Saclay campus. And not only with Saclay campus. The investments we made in the last 2 years, we invested in several hundreds of recruitment of AI engineers to work on all the avenues for the optimization of energy. It's fascinating. It's a lot of things we can do with digitalization in this area. So a long answer to 3-pronged question. Question #2, please?