Safran : Consolidated balance sheet and income statement 06/30/2022

CONSOLIDATED

BALANCE SHEET

AND INCOME STATEMENT

June 30, 2022

The Board of Directors' meeting of July 27, 2022 adopted and authorized the publication of Safran's consolidated financial statements and adjusted income statement for the six-month period ended June 30, 2022.

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TABLE OF CONTENTS
Foreword...............................................................................................................................................	3
Comparative adjusted interim consolidated income statement and segment information ....................	6
Group condensed interim consolidated financial statements..............................................................	11
Consolidated income statement..........................................................................................................	12
Consolidated statement of comprehensive income ............................................................................	13
Consolidated balance sheet................................................................................................................	15
Consolidated statement of changes in shareholders' equity...............................................................	16
Consolidated statement of cash flows ................................................................................................	17
Notes to the Group condensed interim consolidated financial statements .........................................	18
Note 1 - Comments regarding the russo-ukrainian crisis ................................................................	19
Note 2 - Accounting policies............................................................................................................	21
Note 3 - Main sources of estimates.................................................................................................	23
Note 4 - Scope of consolidation ......................................................................................................	27
Note 5 - Segment information .........................................................................................................	28
Note 6 - Revenue............................................................................................................................	30
Note 7 - Breakdown of the other main components of profit from operations.................................	31
Note 8 - Financial income (loss)......................................................................................................	34
Note 9 - Income tax.........................................................................................................................	35
Note 10 - Earnings per share..........................................................................................................	35
Note 11 - Goodwill...........................................................................................................................	36
Note 12 - Intangible assets .............................................................................................................	38
Note 13 - Property, plant and equipment ........................................................................................	39
Note 14 - Leases.............................................................................................................................	40
Note 15 - Current and non-current financial assets ........................................................................	41
Note 16 - Investments in equity-accounted companies ..................................................................	42
Note 17 - Cash and cash equivalents .............................................................................................	44
Note 18 - Consolidated shareholders' equity ..................................................................................	45
Note 19 - Provisions........................................................................................................................	49
Note 20 - Borrowings subject to specific conditions........................................................................	50
Note 21 - Interest-bearing financial liabilities ..................................................................................	51
Note 22 - Other current and non-current financial liabilities............................................................	56
Note 23 - Management of market risks and derivatives..................................................................	56
Note 24 - Related parties ................................................................................................................	61
Note 25 - Off-balance sheet commitments and contingent liabilities ..............................................	62
Note 26 - Disputes and litigation .....................................................................................................	64
Note 27 - Subsequent events..........................................................................................................	65

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Foreword

To reflect the Group's actual economic performance and enable it to be monitored and benchmarked against competitors, Safran prepares an adjusted income statement in addition to its consolidated financial statements.

Readers are reminded that Safran:

• is the result of the May 11, 2005 merger of Sagem SA and Snecma, accounted for in accordance with IFRS 3, "Business Combinations" in its consolidated financial statements;
• recognizes, as of July 1, 2005, all changes in the fair value of its foreign currency derivatives in "Financial income (loss)", in accordance with the provisions of IFRS 9 applicable to transactions not qualifying for hedge accounting (see Note 3.f of the 2021 Universal Registration Document).

Accordingly, Safran's consolidated income statement has been adjusted for the impact of:

• purchase price allocations with respect to business combinations. Since 2005, this restatement concerns the amortization charged against intangible assets relating to aircraft programs remeasured at the time of the Sagem-Snecma merger. With effect from the first-half 2010 interim financial statements, the Group decided to restate:
• • the impact of purchase price allocations for business combinations, particularly amortization and depreciation charged against intangible assets and property, plant and equipment recognized or remeasured at the time of the transaction and amortized or depreciated over extended periods due to the length of the Group's business cycles, and the impact of remeasuring inventories, as well as
  • gains on remeasuring any previously held equity interests in the event of step acquisitions or asset contributions to joint ventures;
• the mark-to-market of foreign currency derivatives, in order to better reflect the economic substance of the Group's overall foreign currency risk hedging strategy:
• • revenue net of purchases denominated in foreign currencies is measured using the effective hedged rate, i.e., including the costs of the hedging strategy,
  • all mark-to-market changes on instruments hedging future cash flows are neutralized.

The resulting changes in deferred tax have also been adjusted.

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RECONCILIATION OF THE CONSOLIDATED INCOME STATEMENT WITH THE ADJUSTED INCOME STATEMENT

The impact of these adjustments on first-half 2022 income statement items is as follows:

				Currency hedges		Business combinations
		First-half 2022		Remeasurement		Deferred		Amortization of		PPA impacts -	First-half 2022
		consolidated					adjusted
				hedging		intangible assets		other business
		data		of revenue				data
				gain/loss		from Sagem-		combinations
								Snecma merger
	(in € millions)		(1)	(2)	(3)	(4)
	Revenue	8,675		(115)		-		-		-	8,560
	Other recurring operating income and expenses	(7,723)	3	3	19	157	(7,541)
	Share in profit from joint ventures	16	-	-	-	12	28

Recurring operating income

Other non-recurring operating income and expenses

Profit from operations

968	(112)	3	19	169	1,047
(92)	-	-	-	-	(92)
876	(112)	3	19	169	955

Cost of net debt	(38)	-	-	-	-	(38)
Foreign exchange gain/loss	(5,828)	112	5,601	-	-	(115)
Other financial income and expense	(40)	-	-	-	-	(40)

Financial income (loss)

Income tax benefit (expense)

Profit (loss) for the period

Profit for the period attributable to non-controlling interests

Profit (loss) for the period attributable to owners of the parent

(5,906)	112	5,601	-	-	(193)
1,283	-	(1,447)	(5)	(42)	(211)
(3,747)	-	4,157	14	127	551
(15)	-	-	-	-	(15)
(3,762)	-	4,157	14	127	536

1. Remeasurement of foreign-currency denominated revenue net of purchases (by currency) at the hedged rate (including premiums on unwound options) through the reclassification of changes in the fair value of instruments hedging cash flows recognized in profit or loss for the period.
2. Changes in the fair value of instruments hedging future cash flows that will be recognized in profit or loss in future periods (a positive €5,601 million excluding tax), and the impact of taking into account hedges when measuring provisions for losses on completion (a positive €3 million at June 30, 2022).
3. Cancellation of amortization/impairment of intangible assets relating to the remeasurement of aircraft programs resulting from the application of IFRS 3 to the Sagem SA-Snecma merger.
4. Cancellation of the impact of remeasuring assets at the time of the Zodiac Aerospace acquisition for €139 million excluding deferred tax and cancellation of amortization/impairment of assets identified during other business combinations.

Readers are reminded that the condensed interim consolidated financial statements are subject to review by the Group's Statutory Auditors. The condensed interim consolidated financial statements include the revenue and operating profit indicators set out in the adjusted data in Note 5, "Segment information".

Adjusted financial data other than the data provided in Note 5, "Segment information" are subject to the verification procedures applicable to all of the information provided in the interim report.

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