Societe Anonyme Belge de Constructions Aeronautiques : Interim Financial Report as of June 30,2017

RPM Bruxelles T.V.A. BE 0405 770 992 B.T.W. RPR Brussel

Regulated information, published on 29/09/2017 after 17:45

1. Corporate information

   The Board of 19thSeptember 2017 approved and authorized the publication of the consolidated financial statements of SABCA Group for the six months ended 30 June 2017.

2. Basis of preparation

   The condensed consolidated interim financial statements of the SABCA group for the six months ended June 30, 2017 have been prepared in accordance with IAS 34 Interim Financial Reporting. The condensed consolidated interim financial statements should be read in conjunction with the consolidated financial statements of the SABCA group for the financial year ended on December 31, 2016, which was prepared in accordance with International Financial Reporting Standards as approved for use in the European Union (endorsed IFRS).

   These condensed consolidated interim financial statements were prepared on the basis of the same principles, calculation methods and presentations as in the SABCA group's financial statements on December 31, 2016.

3. Condensed consolidated statement of financial position

   (in thousands of euros)	30.06.2017	31.12.2016
   ASSETS	110.401	115.045
   Non-current assets
   Intangible assets	44.308	45.815
   Property, plant and equipment	65.771	68.909
   Affiliated enterprises	112	112
   Financial assets and other non-current assets	210	209
   Current assets	217.165	223.555
   Inventories	33.480	38.733
   Work-in-progress	57.040	62.868
   Trade and other receivables	66.213	64.984
   Cash and cash equivalents	58.644	55.728
   Other current assets	1.788	1.242
   TOTAL ASSETS	327.566	338.600
   EQUITY AND LIABILITIES
   Total equity	84.606	80.932
   Total equity attributable to owners of the parent company	84.560	80.826
   Capital	12.400	12.400
   Reserves and results carried forward	72.160	68.426
   Non-controlling interests	46	106
   Non-current liabilities	157.866	143.997
   Long-term borrowings	112.904	102.915
   Non-current provisions	40.729	40.691
   Deferred taxation	4.233	391
   Current liabilities	85.094	113.671
   Trade and other payables	46.637	69.045
   Tax and social liabilities	15.369	12.919
   Other current liabilities	6.205	14.850
   Short-term borrowings	0	2
   Current provisions	16.883	16.855
   TOTAL EQUITY AND LIABILITIES	327.566	338.600

   RPM Bruxelles T.V.A. BE 0405 770 992 B.T.W. RPR Brussel

4. Condensed consolidated statement of profit and loss

   (in thousands of euros)		30.06.2017	30.06.2016
   Revenues		104.981	99.508
   Turnover		105.712	96.621
   Increase (+), decrease (-) in work in progress		-5.829	-2.341
   Own construction capitalized		2.862	3.430
   Other operating income		2.236	1.798
   Operating expenses		-105.283	-93.158
   Raw materials and consumables		23.776	25.710
   Services and other goods		33.307	24.052
   Wage and salaries, social security costs and pensions		36.267	36.971
   Depreciation and amortization of intangible and tangible assets		8.434	4.304
   Write offs on stocks, contracts in progress and trade debtors		2.799	-58
   Provisions for liabilities and charges		-598	1.338
   Other operating expenses		1.298	841
   Result from continuing operations		-302	6.350
   Financial income		10.244	4.480
   Financial costs		-2.427	-3.822
   Result from continuing operations after financial result		7.515	7.008
   Income tax		-3.842	-1.093
   Net result for the period		3.673	5.915
   whereof	Attributable to owners of the parent	3.733	5.939
   Share of non-controlling interests	-60	-24

   Result per share in EUR (number of shares : 2.400.000)	30.06.2017	30.06.2016
   1,53 1,53	2,46 2,46

   • basic

   • diluted

5. Condensed consolidated statement of comprehensive income

   (in thousands of euros)	30.06.2017	30.06.2016
   Net result for the period	3.673	5.915
   Other comprehensive income	0	-1.813
   Items not to be reclassified to profit, net of taxes	0	-1.813
   Total comprehensive income, net of taxes, for the period	3.673	4.102
   Attributable to :	3.673	4.102
   Owners of the parent	3.733	4.126
   Share of non-controlling interests	-60	-24

   RPM Bruxelles T.V.A. BE 0405 770 992 B.T.W. RPR Brussel

6. Condensed consolidated statement of cash flow

   (in thousands of euros)	30.06.2017		30.06.2016
   Cash flow from operating activities Pretax income Fair value adjustment of derivatives Depreciation and amortization on fixed assets Change in working capital Change in provisions, deferred taxes and reserves Cash flow from investing activities Acquisition of intangible, tangible and financial non-current assets Disposals of intangible, tangible and financial non-current assets Increase and decrease of receivables Cash flow from financing activities Change in short-term receivables (except trade and financial debts) Change in long-term receivables (except trade and financial debts) Change in short-term financial debts Interests Net increase (decrease) in cash and cash equivalents Cash and cash equivalents, at the beginning of the period (1stJanuary) Cash and cash equivalents, at the end of the period (30thJune)	7.515	6.772	7.008	14.233
   	-9.835	-3.137
   	8.434	4.292
   	592	4.722
   	66	1.348
   	-3.790	-5.152
   	-3.789	-5.169
   	0	17
   	-1
   	-66	390
   	91	10
   	-108	462
   	-186	-137
   	172	81
   	-35	-26
   	2.916	9.471
   			55.728	32.251
   			58.644	41.722

   • received

   • paid

7. Condensed consolidated statement of changes in equity

   (in thousands of euros)	Capital	Revaluation reserves	Reserves and Result carried forward	IAS 19 R	Hedging instruments on cash flow	TOTAL attributable to equity holders of the parent	Non-controlling interests	Total equity
   Balance at 1st January 2016 Result for the period Items not to be reclassified to profit, net of taxes Total comprehensive income Balance at 30th June 2016	12.400 12.400	0 0	79.103 5.939 5.939 85.042	-4.435 -1.813 -1.813 -6.248	0 0 0	87.068 5.939 -1.813 4.126 91.194	79 -24 -24 55	87.147 5.915 -1.813 4.102 91.249
   Balance at 1st January 2017 Result for the period Total comprehensive income Balance at 30th June 2017	12.400 12.400	0 0	73.336 3.733 3.733 77.069	-4.910 -4.910	0 0 0	80.826 3.733 3.733 84.559	106 -60 -60 46	80.932 3.673 3.673 84.606

   RPM Bruxelles T.V.A. BE 0405 770 992 B.T.W. RPR Brussel

8. Notes to the condensed consolidated financial statements

9. Profit and loss

   The operating income for the first half of 2017 has degraded to -302 K€ compared to 6.350 K€ for the first half of 2016. This decrease is explained by the deterioration of margins on civil and space programs as well as by the evolution of the program mix largely exposed to competitive pressure.

   The financial income for the first half of 2017 is 7.817 K€ compared to 658 K€ for the first half of 2016. This increase includes a fair value adjustment of currency hedging instruments for an amount of +9.835 K€ which does not reflect the future financial results upon settlement of such financial instruments. Excluding the effect of this fair value adjustment, the financial result is a loss of -2.018 K€.

   The movement in deferred taxes is due to an increase in tax liabilities generated mainly by temporary differences of the mark-to-market value of the currency hedging instruments.

   The net result for the first half of 2017 is 3.673 K€ compared to 5.915 K€ for the first half of 2016. However, the normalized 1net result, excluding the effect of the fair value adjustment of financial instruments is a loss of -2.818 K€.

10. Balance sheet

11. The total equity amounts to 84.606 K€ on 30 June 2017, compared to 80.932 on 31 December 2016. This increase is due to the consolidated IFRS net income over the period.

    The increase in "long term borrowings" reflects advance payments received from customers for deliveries beyond more than one year.

    The decrease in "other current liabilities" includes the fair value adjustment of currency hedging derivatives.

12. Interim management report

13. The strategic action plan "Project of the century" accelerated since the start of 2017 and a new organisation is being implemented, centred on programs. Following the further deterioration of the financial situation, the Board has confirmed the priority to accelerate the action plan to reduce the operating costs and to take all necessary measures in the second half of 2017.

    In the first half of 2017, the Group has increased the civil aircraft production rates for the single aisle (A320) family, for the A330 and for the A350 while the volumes have decreased for the A380 and for the business jets segment.

    In the space domain, the development phase of actuation systems for the engines of Ariane 6 and Vega-C is running. The maintenance, repair and overhaul activities have increased on the F16 program.

    The principal risks and uncertainties faced by the Group are outlined below :

    Cash and liquidity risks

    The Group is not exposed to any significant market risk with regard to its financial debts. Cash resources enable the Group to meet its commitments without liquidity risk.

    Credit risk

    The Group performs its cash and foreign exchange transactions with recognized financial institutions.

    The Group limits counterparty risk by performing most of its sales in cash and ensuring the granted loans are secured by the Belgian Export Credit Insurer or collateral.

    Considering the trade receivables impairment method applied for the drawing up of consolidated financial statements the percentage of outstanding receivables not impaired at the closing accounts is immaterial.

    Market and exchange risks

    Despite the fact that USD purchases have increased, the major part of the Group's expenses is incurred in EUR, however the Group is exposed to an exchange risk on sales denominated in USD.

    The Group covers this risk using forward sales contracts and foreign exchange options.

    1 Normalised net result is calculated as (Net result - Fair value adjustment of financial instruments * (1-tax rate))