Safran : 2018 Registration Document

2018 REGISTRATION DOCUMENT

including the Annual Financial Report

CONTENTS

-	MESSAGE FROM THE CHAIRMAN OF THE BOARD		2	-5
	OF DIRECTORS AND THE CHIEF EXECUTIVE OFFICER
- GROUP PROFILE			3
- RESULTS			4
-	2018 KEY FIGURES BY BUSINESS		5
-	CORPORATE GOVERNANCE		6	-6
-	MEDIUM-TERM OUTLOOK 2018 - 2022		8
-1	PRESENTATION OF THE GROUP		11
	1.1	Safran overview	13
	1.2	Group strategy	17
	1.3	Group businesses	18
	1.4	Competitive position	36
	1.5	Research and development	36
	1.6	Industrial investments	42
	1.7	Sites and production plants	44
	1.8	Group purchasing policy	46
	1.9	Safran performance and quality policy	46
- 2	REVIEW OF OPERATIONS IN 2018 AND OUTLOOK FOR 2019		49
	2.1	Comments on the Group's performance	51	-7
	2.2	in 2018 based on adjusted data
		Comments on the consolidated	71
		financial statements
	2.3	Comments on the parent company	74
		financial statements
	2.4	Outlook for 2019	77
	2.5	Acquisition of Zodiac Aerospace	78
	2.6	Subsequent events	79
- 3	FINANCIAL STATEMENTS		81	-8
	3.1	Group consolidated financial statements at	83
		December 31, 2018
	3.2	Statutory Auditors' report on the consolidated	165
		financial statements
	3.3	Parent company financial statements at	170
		December 31, 2018		-9
	3.4	Statutory Auditors' report on the financial	193
		statements
- 4	RISK FACTORS		197
	4.1	Risk management	199
	4.2	Internal control system	200
	4.3	Risk factors	203
	4.4	Insurance	211

CORPORATE SOCIAL RESPONSIBILITY		213
	Introduction: CSR policies	215
	and corporate strategy
5.1	Social information	217
5.2	Human resources information	228
5.3	Environmental information	238

5.4CSR reporting methodology

	and independent third party report	242
CORPORATE GOVERNANCE		249
6.1	Safran's corporate governance structure	251
6.2	Membership structure of the Board of Directors	256

6.3Operating procedures and work of the Board

of Directors and the Board Committees

288

6.4Application of the AFEP-MEDEF Corporate

Governance Code

298

6.5Directors' interests in the Company's share

capital

298

6.6Compensation policy for corporate officers and Directors and compensation and benefits

awarded

300

6.7Cross-referencetable for the corporate governance report prepared in accordance with Article L.225-37 of the French

	Commercial Code	320
INFORMATION ABOUT THE COMPANY, THE CAPITAL
AND SHARE OWNERSHIP		323
7.1	General information and bylaws	325
7.2	Information on share capital	331
7.3	Share ownership	336
7.4	Relations with shareholders	340
7.5	Stock market information	341
ANNUAL GENERAL MEETING		343
8.1	Agenda	345

8.2Report of the Board of Directors on the

resolutions proposed to the Annual General	347
Meeting and text of the proposed resolutions
8.3 Statutory Auditors' Reports	387

ADDITIONAL INFORMATION		399
9.1	Persons responsible	401
9.2	Statutory Auditors	402
9.3	Historical financial information	402
9.4	Documents on display	403
9.5	Cross-reference tables	403
9.6	Glossary	411

2018

REGISTRATION DOCUMENT

INCLUDING THE ANNUAL

FINANCIAL REPORT

The Registration Document is available on the website at www.safran-group.com

The French version of this Registration Document (document de référence) was filed with the French financial markets authority (Autorité des marchés financiers - AMF) on March 29, 2019 pursuant to Article 212-13 of the AMF's General Regulations. It may only be used in connection with a financial transaction if it is accompanied by a memorandum approved by the AMF. This document has been established by the issuer and is binding upon its signatories. The English language version of this report is a free translation from the original, which was prepared in French. In all matters of interpretation, views or opinions expressed in the original language version of the document in French take precedence over the translation. This Registration Document contains the Annual Financial Report in accordance with Article 222-3 of the AMF's General Regulations. The cross-reference table referring to information required in an Annual Financial Report is provided in section 9.5.3 of this Registration Document.

SAFRAN - 2018 REGISTRATION DOCUMENT 1

FROM THE CHAIRMAN OF THE BOARD OF DIRECTORS

AND THE CHIEF EXECUTIVE OFFICER

MESSAGE

Safran, took on a new dimension in 2018, with the shareholder-backed integration of Zodiac Aerospace making us the world's third largest aerospace group(1). Safran's international profile was strengthened, with operations now extending to 26 countries on all

continents and more than half of its

92,639 employees working outside France.

Results are in line with our enhanced scale and status, with revenue increasing 32% on a reported basis to top the €21 billion-mark (up 10.4% on 2017 organically), and recurring operating income of €3,023 billion, of which 59% was converted into free cash flow.

This performance explains why we are proposing to the Annual General Meeting to increase the dividend to €1.82 per share for 2018, from €1.60 one year ago.

Credit for Safran's achievements in 2018 goes to our capacity to take on collective challenges, starting with ramp-up of the LEAP program, which is critical to the Group's future. Deliveries have soared from 77 units in 2016 - the first year of production -

to more than 1,100 units in 2018. It has taken the LEAP engine just two years to accomplish what it took twenty to achieve on the CFM56.

Safran equipment - landing gear, wheels and brakes, nacelles, inertial systems, power transmission systems, overhead bins, wiring, etc. - has been delivered to the satisfaction of our customers, as illustrated on the A330 neo, which came into service in December. It has been selected for new programs and for new key partnerships, as with Boeing for auxiliary power units (APUs) and Bell for its future vertical take-off and landing vehicle.

Safran's defense solutions have met great success among French and allied armed forces.

After 100 successful launches for Ariane 5, ArianeGroup, Safran's joint venture with Airbus, is moving ahead with Ariane 6, whose maiden launch is set for 2020.

As a socially responsible group, Safran has worked with conviction and determination on equality

in the workplace and knowledge sharing.

To control our environmental footprint, we have moved ahead with our ambitious, transparent and measurable strategy, spanning both the products themselves and the way they are manufactured. Our commitment here is most evident in our increasingly economical propulsion technologies.

The Group therefore approaches 2019 from a solid position.

This year, we will press ahead with the integration of the former Zodiac Aerospace businesses, where recovery is well under way.

The teams are successfully adopting operational excellence systems developed out of Group best practices, and the results are starting to show.

Synergies have been identified and are beginning to crystallize, in line with the announcements that we have made.

The Zodiac Aerospace businesses were merged into Safran in December 2018, and will all be brought under the Safran banner by mid-2019, reorganized into three entities: Safran Aerosystems, Safran Cabins and Safran Seats. Some have now been placed under the operational management of Safran Electronics & Defense and Safran Electrical & Power.

We will also be pushing ahead with production ramp-up on all fronts, starting with the LEAP where we will need to deliver more than 1,800 engines this year if we are to meet our target of 2,000 for 2020.

Naturally, full customer satisfaction is crucial

on equipment deliveries across programs as diverse as the Patroller drone, Airbus A220 cabins and equipment for the Boeing 777X.

To be selected on future programs, we must also step up innovation. This requires foresight on the aircraft of the future, and sustained front-line positions in technologies such as materials, hybridization, additive manufacturing and digital technology. That is why we're aiming to raise our R&T budget to €600 million in 2022.

We also need to develop our offering of end-to-end solutions drawing on the breadth and complementary coverage of our business portfolio. This will address rising customer demand

on a growth market that is continuing to undergo consolidation.

Safran is helping to shape a world in which travel is safer, more respectful of the environment, simpler and more comfortable.

Our Group is borne by its customers, partners and shareholders. The talent of our people drives its growth. We are advancing confidently toward a clear objective: becoming the world's leading aircraft equipment supplier within the next 15 years.

We would like to thank you for your loyalty and hope you enjoy reading this report.

Regards,

Ross McInnes and Philippe Petitcolin

(1) Excluding airframers.

2SAFRAN - 2018 REGISTRATION DOCUMENT

GROUP PROFILE

Safran is an international	In the aerospace sector, Safran engines	In the defense market, the Group is renowned
high-technology group	and equipment feature on most existing	for avionics, electronics, critical software and
that holds leading	and future airframes. The LEAP engine is	optronics technologies that contribute to
positions in the aircraft
	proving hugely successful, with a spectacular	the performance of armies, navies and air
propulsion, aircraft
	production curve unprecedented in the	forces in many countries around the world.
equipment, space
and defense markets.	aerospace industry. Original equipment
Operations cover	supplies coupled with world-class	As a driving force in the movement toward
original equipment and	aftermarket services for this product mean	the "more electric" aircraft, Safran's
aftermarket service,
	that the outlook is very promising. Also	expertise covers the whole of the aircraft
spanning the whole
	contributing to Safran's good results,	electrical energy chain. Operations in this
product life cycle,
under long-term, trust-	through maintenance, repair and overhaul	field will be stepped up through significant
based partnerships with	revenue, is the substantial fleet of other	increases in Research and Development
customers and suppliers.	Safran engines in service, principally the	investment in the coming years.
The Group's strategy
	CFM56.
includes a sharp focus		Corporate social responsibility (CSR) is an
on strengthening our
	With acquisition of the Zodiac Aerospace	integral part of Safran's strategy, addressing
front-line positions in our
	businesses, Safran can access new markets	the expectations of all its stakeholders:
markets. Safran enjoys
widespread recognition as	and offer airframers and airline companies	employees,	partners,	customers,
an engine manufacturer	more comprehensive product ranges.	shareholders,	suppliers	and all the
for civil and military		communities affected by its business. This
aircraft, and is setting its
	In the aircraft interiors segment, Safran is	holistic commitment to CSR is based on
sights on becoming the
	proceeding with integration of the	ethical standards that are espoused and
world's leading aircraft
equipment supplier within	businesses acquired with Zodiac Aerospace,	embodied by everyone within the Group.
the next 15 years. With	stepping up operational recovery and
its excellent operational	crystallizing cost synergies. Because we	Driven by the belief that sustainably
performance, Safran is
	understand how our customers value	successful businesses are those able to
ideally placed to reap the
	partnership in all of Safran's businesses,	combine delivering in the present with a
full benefit of growth in
the aerospace and defense	we are rolling out action plans to rekindle	clear vision of the future, Safran is fully
markets.	their trust. These are already yielding	engaged on meeting the challenges that
	tangible results.	lie ahead.

SAFRAN ON	INTERNATIONAL	HEADCOUNT	2018
ITS MARKETS	SCOPE	AT DEC. 31,
3rd largest aerospace	369	92,639
group worldwide(1)	sites in 26 countries(2)

(1)Excluding airframers.

(2)Figures and locations shown correspond to consolidated companies in which the Group has a holding of more than 50% (see section 3.1, Note 37).

SAFRAN - 2018 REGISTRATION DOCUMENT 3