SAFRAN IN 2013 2013 REGISTRATION DOCUMENT SAFR_1402217_RA_2013_GB_CouvDocRef.indd 1 26/03/14 12:12 Contents GROUP PROFILE 1 1 PRESENTATION OF THE GROUP 8 5.3 Developing human potential 203 5.4 Aiming for excellence in health, 1.1 Overview 10 safety and environment 214 1.2 Group strategy 14 5.5 Involving our suppliers and partners 224 1.3 Group businesses 15 5.6 Investing through foundations 1.4 Competitive position 32 and corporate sponsorship 224 1.5 Research and development 32 5.7 CSR reporting methodology and Statutory 1.6 industrial investments 37 Auditors’ report 226 1.7 Sites and production plants 38 1.8 Safran Group purchasing strategy 43 6 CORPORATE GOVERNANCE 232 1.9 Safran quality performance and policy 43 6.1 Board of Directors and Executive 1.10 Safran+ progress initiative 44 Management 234 6.2 Executive Corporate Officer 2 REVIEW OF OPERATIONS IN 2013 compensation 263 AND OUTLOOK FOR 2014 46 6.3 Share transactions performed by Corporate Officers and other managers 272 2.1 Comments on the Group’s performance 6.4 Audit fees 274 in 2013 based on adjusted data 48 6.5 Report of the Chairman 2.2 Comments on the consolidated of the Board of Directors 276 financial statements 66 6.6 Statutory Auditors’ report 2.3 Comments on the parent company on the report prepared by the Chairman financial statements 69 of the Board of Directors 290 2.4 Outlook for 2014 71 2.5 Subsequent events 71 7 INFORMATION ABOUT THE COMPANY, 3 THE CAPITAL AND SHARE FINANCIAL STATEMENTS 72 OWNERSHIP 292 3.1 Consolidated financial statements 7.1 General information and bylaws 294 at December 31, 2013 74 7.2 Information on share capital 300 3.2 Statutory Auditors’ report on the consolidated financial statements 7.3 Share ownership 306 (Year ended December 31, 2013) 151 7.4 Relations with shareholders 310 3.3 Parent company financial statements 7.5 Stock market information 312 at December 31, 2013 153 3.4 Statutory Auditors’ report 8 ANNUAL GENERAL MEETING on the financial statements (Year ended December 31, 2013) 180 OF MAY 27, 2014 314 8.1 Agenda 316 4 RISK FACTORS 182 8.2 Proposed resolutions 317 8.3 4.1 Identified risk factors 184 Dividend payment policy 341 8.4 4.2 General risk management policy 191 Five-year financial summary 342 8.5 4.3 Insurance 193 Statutory Auditors’ reports 343 5 CORPORATE SOCIAL 9 ADDITIONAL INFORMATION 348 RESPONSIBILITY 194 9.1 Persons responsible 350 9.2 Statutory Auditors 351 5.1 Safran’s Corporate Social Responsibility Policy 196 9.3 Documents on display 352 5.2 Perpetuating the integrity culture 198 9.4 Cross-reference tables 353 GROUP PROFILE KEY INFORMATION Safran employs 66,289 people worldwide. It is a leading international high-technology group with three core businesses: Aerospace (propulsion and equipment), Defence and Security. It is a leading global player on markets in which the technological and financial barriers to entry are high, with sustainable and profitable service activities and long-lasting partnerships and customer relations built on trust. Revenue The Group differentiates itself from the competition through its technological expertise. Its complementary businesses give it a genuine advantage, driving growth and enabling the Group to withstand economic cycles. From both a €14.7 billion technological and managerial point of view, the Group’s various businesses are highly integrated and complementary. Safran has a strong positioning in Aerospace. Its installed fleet of engines, especially the CFM56, offers significant new vistas for value creation thanks to associated maintenance and overhaul activities. Its engines and equipment are R&D spending present in most current and future aircraft programs, with the successful LEAP engine set to pick up where the CFM56 leaves off. The Group is organized so as to offer comprehensive offerings to aircraft manufacturers and airlines, including €1.8 billion propulsion and landing systems. Safran is confident that the move towards more electric aircraft systems represents new opportunities and is therefore reinforcing its expertise in the whole electrical energy chain (through its own growth and through targeted acquisitions) to offer comprehensive, world-class electrical systems. In Defence, the Group is renowned for its avionics and optronics expertise, which contributes significantly to the competence of armed forces Headcount around the world. In the Security segment, Safran develops multi-biometric technology for personal identification and secure documents such as passports and identity cards, and for the detection of dangerous and illicit substances in 66,289 order to respond to growing needs in terms of security and authentication. Safran enjoys particularly sound fundamentals with front-ranking technical and commercial positions, profitable and sustainable recurring service activities, truly innovative research and development, a healthy financial situation and Footprint strong operating cash flow, which allow it to leverage opportunities for organic growth and acquisition-led development across all of its businesses. 53 countries Safran must also integrate corporate social responsibility into its strategy to meet the expectations of all stakeholders: employees, partners, customers, shareholders, suppliers and all the communities affected by its business. It is based on ethical standards that are espoused by all of its employees. Responsibility, people development and recognition, meeting commitments and teamwork are the core values of Safran’s corporate culture. Firm in the belief that sustainably successful businesses are those able to manage the present in complete harmony with their vision of the future, Safran is as poised as it has always been to meet all of the challenges it encounters both today and going forward. 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 28, 2014 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 9.4.3. 1 SAFRAN 2013 REGISTRATION DOCUMENT (adjusted data) Key fi gures REVENUE (ADJUSTED DATA)(1) BREAKDOWN OF REVENUE BY BUSINESS (in € millions) 14,695 9% 53% 13,560 Defence Aerospace Propulsion 10% Security 28% Aircraft Equipment 2012 2013 Adjusted revenue climbed 8.4%, driven primarily by the performance Safran is a leading international high-technology Group in of the Aerospace Propulsion and Aircraft Equipment businesses Aerospace. These activities – Propulsion and Equipment – generate which generated growth of 11.2% and 11.6%, respectively. 81% of its revenue. RECURRING OPERATING INCOME PROFIT ATTRIBUTABLE TO OWNERS OF THE PARENT (ADJUSTED DATA)(1) (ADJUSTED DATA)(1) (in € millions) (in € millions) 1,788 1,193 1,444 979 2012* 2013 2012* 2013 * Adjusted for the impact of the application of IAS 19R. Adjusted recurring operating income represented 12.2% of * Adjusted for the impact of the application of IAS 19R. adjusted revenue, up 23.8% year on year. This improvement was Adjusted profit attributable to owners of the parent rose 21.9% in primarily driven by the Aerospace business, which benefited from 2013, representing €2.87 per share, up from €2.36 in 2012. a sharp rise in civil original equipment deliveries and strong growth in the civil aftermarket. (1) The table reconciling the consolidated income statement and the adjusted consolidated income statement, including a description of the adjustments made, is presented in section 2.1.1. DIVIDEND NET DEBT (in € per share) (in € millions) 1.12 2012 2013 0.96 €0.31 €0.48 interim dividend interim dividend paid in 2012 paid in 2013 -932 2012 2013 -1,089 At the Ordinary and Extraordinary Shareholders’ Meeting of May 27, The Group’s capacity to increase its free cash flow in 2013 enabled 2014, the Board of Directors will recommend a dividend of €1.12 it to maintain a low level of debt while financing strategic acquisitions per share, a 17% increase from the previous year. An interim mainly in the Propulsion and Equipment segments for €741 million dividend (€0.48 per share) was paid in December 2013 and the and the dividend payment of €471 million. The Group also disposed final dividend (€0.64 per share) will be paid in 2014. of assets in an amount of €353 million. 2 SAFRAN 2013 REGISTRATION DOCUMENT GROUP PROFILE KEY FIGURES REVENUE (CONSOLIDATED DATA) HEADCOUNT AS OF DECEMBER 31, 2013 (in € millions) 14,490 13,615 66,289 62,558 2012 2013 2012 2013 The Group’s workforce grew by more than 3,700 compared to end-2012, in response to business growth. R&D resources are also being bolstered. RECURRING OPERATING INCOME (CONSOLIDATED DATA) BREAKDOWN OF HEADCOUNT BY BUSINESS (in € millions) 11% 37% 1,243 1,295 Defence Aerospace Propulsion 13% Security 37% 2% Aircraft Equipment Others 2012* 2013 * Adjusted for the impact of the application of IAS 19R. PROFIT ATTRIBUTABLE TO OWNERS OF THE PARENT (CONSOLIDATED DATA) BREAKDOWN OF HEADCOUNT BY GEOGRAPHIC AREA (in € millions) 20% 60% 1,386 11% Americas France Europe (excluding France) 1,282 5% Asia-Oceania 4% 2012* 2013 Africa & Middle East * Adjusted for the impact of the application of IAS 19R. The Group’s expansion continued apace both in France and abroad.