Dassault Aviation : 2016 first half-year results financial release - 2016/07/21

1e0373f2-9462-47a7-90f8-8dcafc807011.pdf HALF-YEARLY RESULTS OF DASSAULT AVIATION GROUP

H1 2016	H1 2015
Order intake	EUR 1,378 million 22 FALCON 11 FALCON 5X cancellations	EUR 4,331 million 25 FALCON 20 FALCON NetJets cancellations 24 RAFALE Egypt
Net sales	EUR 1,662 million 15 FALCON 4 RAFALE France 3 RAFALE Egypt	EUR 1,675 million 18 FALCON 1 RAFALE France

As at June 30, 2016	As at December 31, 2015
Backlog	EUR 13,931 million 87 FALCON 34 RAFALE France 42 RAFALE Export	EUR 14,175 million 91 FALCON 38 RAFALE France 45 RAFALE Export

H1 2016	H1 2015
Adjusted Net Income (*)	EUR 185 million EUR 21.4 per share	EUR 179 million EUR 20.1 per share
Adjusted net margin (*)	11.1% of net sales	10.7% of net sales

(*) See table of reconciliation between consolidated income and adjusted income in the appendix.

N.B.: DASSAULT AVIATION recognizes the RAFALE Export contracts in their entirety (i.e. including the THALES and SNECMA parts), whereas for France, only the DASSAULT AVIATION part is recognized.

Saint-Cloud, July 21, 2016 - The Board of Directors, chaired today by Mr. Éric Trappier, closed the financial statements for the first half of 2016. The Statutory Auditors performed a limited review of these consolidated financial statements and have expressed an unqualified opinion.

Highlights of the first half of 2016 mainly included:

ORDER INTAKE

Consolidated order intake in the first half of 2016 amounted to EUR 1,378 million, compared to EUR 4,331 million in the first half of 2015, which was marked by the Egyptian order for 24 RAFALE.

Exports accounted for 64% compared to 95% in the first half of 2015. FALCON programs

FALCON consolidated order intake amounted to EUR 778 million, compared to EUR 610 million in the first half of 2015.

In the first half of 2016, we recorded, in particular, 22 FALCON orders and 11 FALCON 5X cancellations, as a result of delays on the SilverCrest engine by SAFRAN AIRCRAFT ENGINES. Order intake in the first half of 2015 totaled 25 FALCON, and 20 FALCON NetJets were canceled.

DEFENSE programs

DEFENSE order intake totaled EUR 600 million in the first half of 2016, compared to EUR 3,721 million in the first half of 2015.

The decrease in DEFENSE Export order intake (EUR 146 million in the first half of 2016, compared to EUR 3,524 million in the first half of 2015) was mainly due to the Egyptian order for 24 RAFALE in the first half of 2015.

The increase in DEFENSE France order intake (EUR 454 million in the first half of 2016, compared to EUR 197 million in the first half of 2015) was primarily due to the contract for the MIRAGE 2000D upgrade.

NET SALES

Consolidated net sales in the first half of 2016 were EUR 1,662 million, compared to EUR 1,675 million in the first half of 2015. Exports accounted for 81% of net sales.

FALCON programs

FALCON net sales in the first half of 2016 totaled EUR 853 million, compared to EUR 919 million in the first half of 2015.

15 new aircraft were delivered in the first half of 2016, compared to 18 in the first half of 2015.

FALCON net sales accounted for 51% of consolidated net sales in the first half of 2016.

DEFENSE programs

DEFENSE net sales totaled EUR 809 million, compared to EUR 756 million in the first half of 2015 (which in- cluded the delivery of the Indian MIRAGE 2000 modernization works).

4 RAFALE were delivered to France and 3 RAFALE to Egypt in the first half of 2016, compared to 1 RAFALE to France in the first half of 2015.

xxxxx The "book to bill" ratio (order intake / net sales) was 0.83. BACKLOG

The consolidated backlog at June 30, 2016 was EUR 13,931 million, compared to EUR 14,175 million at De-

cember 31, 2015, including:

 87 FALCON (91 at end-2015),

• 34 RAFALE France (38 at end-2015),
• 42 RAFALE Export (45 at end-2015). OPERATING INCOME

  Consolidated operating income in the first half of 2016 was EUR 125 million, compared to EUR 144 million in the first half of 2015.

  The operating margin was 7.5%, compared to 8.6% in the first half of 2015.

  The decrease was due to:

• competitive pressure on FALCON sales prices, which intensified between the two half-years,

• the adverse impact of the conversion into EUR of USD items in the balance sheet in the first half of 2016 (USD/EUR 1.11 at June 30, 2016, compared to USD/EUR 1.09 at December 31, 2015) whereas it was favor- able in the first half of 2015 (USD/EUR 1.12 at June 30, 2015, compared to USD/EUR 1.21 at December 31, 2014). The change in this conversion impacts the income statement, without being indicative of the financial performance over the period,

• partially offset by the decrease in the weighting of self-financed R&D.

  ADJUSTED FINANCIAL INCOME

  Adjusted financial income in the first half of 2016 was EUR 17 million, comparable to that in the first half of 2015 (EUR 16 million).

  THALES CONTRIBUTION

  The contribution of THALES adjusted net income, before amortization of the Purchase Price Allocation, was

  EUR 89 million in the first half of 2016, compared to EUR 72 million in the first half of 2015. ADJUSTED NET INCOME

  Adjusted net income in the first half of 2016 was EUR 185 million, compared to EUR 179 million in the first half of 2015. The adjusted net margin was 11.1% in the first half of 2016, compared to 10.7% in the first half of 2015.

  N.B.: IFRS net income in the first half of 2016 was EUR 238 million, compared to EUR -132 million in the first half of 2015. For the record, the loss in the first half of 2015 was wholly due to the change in the market value of foreign exchange instru- ments which did not qualify for hedge accounting: EUR +69 million in the first half of 2016, compared to EUR -280 million in the first half of 2015. These instruments are used to hedge commercial flows; DASSAULT AVIATION neutralizes this change, as it considers that gains or losses on hedging should impact income at the same time as the commercial flows occur.

  BALANCE SHEET

  Total equity amounted to EUR 3,254 million at June 30, 2016, compared to EUR 3,771 million at December 31, 2015, a reduction of EUR 517 million.

  This decrease was mainly due to the buyback of 502,282 treasury shares for EUR 477 million (for the record, at June 30, 2016, the Group held 912,253 treasury shares, recognized as a deduction from equity for EUR 879 million).

  Borrowings and financial debts amounted to EUR 1,192 million at June 30, 2016, compared to EUR 1,210 million at December 31, 2015. They include:

• the bank borrowings subscribed in 2014 and 2015 for a total of EUR 1,000 million. It should be noted that the Company did not subscribe any new bank loan for the purpose of share buybacks in the first half of 2016,

• locked-in employee profit-sharing funds.