FAIVELEY TRANSPORT : 2011/12 Annual Results

Regulatory News:

Faiveley Transport (Paris:LEY):

IFRS (? millions)		31/03/2012		31/03/2011		% change
Sales		900.5		913.9		(1.5%)
Profit from recurring operations*		94.7		129.8		(27.0%)
Operating profit		93.3		126.7		(26.4%)
Operating margin (as % of sales)		10.4%		13.9%
Net profit- Group share		47.4		75.7		(37.3%)
Net margin (as % of sales)		5.3%		8.3%
Earnings per share (?) **		3.38		5.43		(37.6%)

(*) Excluding restructuring costs and gains/losses from disposal of assets
(**) After elimination of treasury shares

? 900.5 MILLION ANNUAL SALES

Faiveley Transport generated sales of ? 900.5 million for the 2011/2012 financial year, a decrease of 1.5% compared to the previous year and a 2.3% decline on a like-for-like basis. Over the full-year, the foreign exchange effect was slightly unfavourable at 0.6% and acquisitions had a positive contribution of 1.5%.

This change in sales reflects diverse developments in each region: strong organic growth in America (up 27%), a moderate decrease in European sales (down 3%) and a decline in Asia-Pacific (down 9%).

The group recorded a sustained growth in its Services activity (+6%), as a result of its policy of expansion of engineering services for trains in operation and thanks to the growth of its installed base.

A RECORD ORDER BOOK OF ? 1,690 MILLION

Thanks to an exceptional year in terms of order intake, the Group posted a record order book of ? 1,690 million at 31 March 2012, reflecting an increase of 16.3% compared to the end of March 2011. Faiveley Transport notably won a historic contract awarded by Siemens and Bombardier for the provision of brakes, on-board doors and air-conditioning systems for the first 130 German high-speed ICx trains, valued in excess of ? 210 million. In addition to this major contract, the Group continued to book various new orders in all regions where it operates on significant platforms: Moscow metro (air-conditioning), Chennai metro (brakes, couplers, on-board doors), German ET430 intercity trains (on-board doors) and Swiss intercity trains (air-conditioning).

GROUP RESULTS: CONTROLLED STRUCTURE COSTS, SATISFACTORY CASH GENERATION AND SOUND BALANCE SHEET POSITION

Gross profit reached ? 233.8 million for the 2011/12 financial year, a decline of 2.6 margin points to 26.0% of sales, compared to 28.6% in the previous year. As previously announced, this decrease was primarily due to project execution issues encountered in the platform door unit in China. These difficulties have led to significant downward margin revisions on a series of platform door contracts managed in China. The Group has rapidly taken drastic reorganisation and restructuring action to remediate this situation. Excluding this specific platform doors issue in China, the Group's gross profit only fell by 0.3 margin points, as a consequence of lower volume in China and Spain and a less favourable project mix.

The fixed cost reduction programmes implemented enable general and administrative costs to remain stable (up 0.6% at constant group structure). Sales and marketing costs grew moderately (up 2.5% at constant group structure) due to significant tendering activity during the year and the continued strengthening of teams in strategic development regions.

Operating profit amounted to ? 93.3 million, a decline of 3.5 margin points compared to the previous year, representing 10.4% of sales, compared to 13.9% in 2010/2011. This reduction in operating profit margin was primarily due to the margin revisions on platform door projects managed in China.

Effective tax rate for the group increased to 34.5% (vs. 28.3% in 2010/11) due to a decrease of profits in lower taxation countries (China) and to an increase of taxes in France.

Net profit - Group share was ? 47.4 million, representing a 5.3% net margin, down 3.0 margin points compared to the previous year. Taking treasury shares into account, net earnings per share was ? 3.38.

Cash generation remained satisfactory with free cash flow of ? 48.6 million over the financial year, before acquisitions. In particular, good operational management of working capital requirements (inventories, trade receivables, downpayments) offset engineering and project management costs incurred in relation to the major projects awarded over the last two years (? 25 million increase in work-in-progress on projects).

Net debt at 31 March 2012 totalled ? 196 million, taking into account treasury shares. Excluding the acquisition of Graham-White, cash generation allowed for a ? 28 million reduction in net financial debt compared to the previous year. The balance sheet structure therefore remains very sound, with a net debt to EBITDA ratio of 1.8x. The Group successfully carried out two refinancing transactions over the last twelve months, including a significant addendum to its syndicated facility and a private placement in the US, which enabled to extend the average maturity of the debt by two years, as well as to diversify and strengthen the Group's financing sources at favourable conditions.

STRATEGIC ACQUISITION IN THE US

On 3 February 2012, Faiveley Transport acquired the American company Graham-White, a global leader in compressed air drying technology for railway braking systems and a leading provider of brake components in the US locomotive and rail transit markets. Graham-White generates annual sales of over USD 70 million, with a large share of revenues stemming from after-sales service and re-manufacturing. This transaction will reinforce Faiveley Transport's position in the US, notably in the locomotive and services markets.

DIVIDEND: PROPOSAL TO MAINTAIN THE PAYOUT RATIO

With the goal of maintaining the payout ratio between 20% and 25% of profits over the long-term, the Management Board will propose to the Annual General Meeting, to be held on 14 September 2012, a dividend distribution of ? 0.85 per share.

2012/13 OUTLOOK: RETURN TO ORGANIC GROWTH AND IMPROVEMENT OF PROFITABILITY

The global railway market continues to benefit from highly favourable underlying trends, particularly growing urbanisation, the long-term trend for the development of sustainable means of transportation, and the renewal of ageing fleets in Western countries. These growth drivers are reflected in the launch of numerous programmes in Europe (intercity trains in Germany and Italy, Thameslink, IEP and Crossrail programmes in England, metro and high-speed investments in France) and the development of new geographic regions, such as Russia, India and South Africa. In China, the Ministry of Transport is expected to restart orders for locomotives and high speed trains during the financial year, while the metro market remains buoyant. In the US, the railway freight market, which experienced a significant upturn last year, should continue to grow; growth in the locomotive market should gather momentum over the next few years, driven by new regulatory requirements.

Within this environment, and considering its record order book, Faiveley Transport expects renewed organic growth in the 2012/13 financial year and improved profitability.

Appendix : 2011/12 Consolidated accounts

Shareholders' agenda:
24 July 2012		Q1 sales 2012/2013
14 September 2012		Annual General Meeting
25 October 2012		HY1 sales 2012/2013

Faiveley Transport, a world leader in the railway industry

Faiveley Transport is a global leader in high tech components for rail systems. The Group supplies manufacturers, operators and railway maintenance bodies with the most comprehensive range of systems in the market: air conditioning, passenger access systems, platform doors and gates, braking systems, couplers, power collectors, passenger information and services.

Faiveley Transport employs more than 5,400 people in 25 countries.

Siège social : Le Delage Building - Hall Parc - Bâtiment 6A
6^ème étage- 3, rue du 19 mars 1962 - 92230 Gennevilliers Cedex - France
Tel : +33 (0)1 48 13 65 00 - Fax : +33 (0)1 48 13 66 47

FAIVELEY Transport
Guillaume BOUHOURS, +33 1 48 13 65 03
Chief Financial Officer
guillaume.bouhours@faiveleytransport.com
or
Maryline Berlin, +33 1 48 13 65 76
Financial Communication
maryline.berlin@faiveleytransport.com
or
NewCap.
Florent Alba, +33 1 44 71 98 55
falba@newcap.fr

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