2018 Short Form Annual Financial Report
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2018 SHORT FORM ANNUAL FINANCIAL REPORT The audit procedures were performed and the audit report for certification purposes is being issued The English language version of this report is a free translation from the original, which was prepared in French language. All possible care has been taken to ensure that the translation is an accurate presentation of the original. However, in all matters of interpretation, views or opinion expressed in the original language version of the document in French take precedence over the translation. Contents GENERAL 5 Dassault Aviation (Parent Company) 61 5.1 Activities Declaration of the person responsible for 5.2 Results the report 2 5.3 Risk management Group structure 3 5.4 Terms of payment Board of Directors / Management 5.5 Shareholder information Committee 4 6 Proposed resolutions 70 DIRECTORS’ REPORT 7 Conclusion and outlook 73 1 Dassault Aviation Group 5 1.1 2018 results 1.2 Financial structure REPORT OF THE BOARD OF 1.3 Related-party transactions DIRECTORS ON CORPORATE 1.4 Group activities GOVERNANCE 1.5 Group structure 1.6 Research & development 1 Corporate governance 83 1.7 Transformation plan: Leading our future 1.1 Composition of the Board of Directors 1.8 Digital tools, processes and innovation 1.2 Offices held and duties performed by 1.9 Production and industrial resources corporate officers in 2018 in other companies 1.10 Total quality 1.3 Conditions for preparing and organizing the work of the Board of Directors 2 Risk factors 23 1.4 Agreements between a shareholder of the 2.1 Risks related to programs Company and one of its subsidiaries 2.2 Risks related to the supply chain 1.5 Operations of Executive Management 2.3 Risks related to the information system 1.6 Powers of the Chairman and Chief Executive 2.4 Risks related to regulatory changes Officer 1.7 Powers of the Chief Operating Officer 2.5 Risks related to the fight against corruption 1.8 Executive Committee 2.6 Risks related to the fight against tax evasion 1.9 General Meetings of shareholders 2.7 Risks related to the respect of Human Rights 2.8 Risks related to intellectual property 2 Compensation of corporate officers 96 2.9 Risks related to personnel 2.1 Directors’ fees allocation system 2.10 Financial risks 2.2 Compensation of corporate officers in 2018 2.11 Market risks 2.12 Environmental risks 2.3 2019 report on executive compensation policy 2.13 Risks related to security breaches 3 Information mentioned in Article 107 2.14 Insurance L. 225-37-5 of the French 3 Internal auditing and risk 30 Commercial Code management procedures 3.1 Internal auditing objectives CONSOLIDATED FINANCIAL 3.2 Environment and general organization of internal auditing STATEMENTS 3.3 Risk management procedures 3.4 Internal auditing procedures for Financial statements 109 financial and accounting purposes 3.5 2018 actions PARENT COMPANY FINANCIAL 3.6 2019 action plan STATEMENTS 4 Non-financial performance 35 declaration Financial statements 167 4.1 Identification of relevant non-financial risks 4.2 General policy 4.3 Human resources information 4.4 Environmental information 4.5 Corporate responsibility information 4.6 Human Rights 4.7 Business ethics 4.8 Duty of care 2018 short form annual financial report | DASSAULT AVIATION 1 Declaration of the person responsible for the report I hereby certify that, to my knowledge, the financial presents a fair view of the development of the statements have been prepared in accordance with business, performance and financial situation of the the applicable accounting standards and give a true company and of all the other companies included in and fair view of the assets and liabilities, financial the scope of consolidation, together with a position and income or loss of the company and all description of the main risks and uncertainties to the other entities included in the scope of which they are exposed. consolidation, and that the enclosed directors’ report Paris, February 27, 2019 Éric Trappier Chairman and Chief Executive Officer 2 2018 short form annual financial report | DASSAULT AVIATION Group structure as of December 31, 2018 The Dassault Aviation Group is an international group that encompasses most of the aeronautical business of the Marcel Dassault Industrial Group. The main Group companies are as follows: DASSAULT AVIATION Parent Company Consolidated companies Main non-consolidated 100% 25% companies Sogitec Industries 100% 100% Dassault International Dassault Falcon Jet (France) Thales (France) (USA) (France) 100% Dassault Réassurance (France) Dassault Falcon 100% Service (France) Dassault Aviation Dassault Aircraft 100% 100% Participations Services (USA) (France) 50% 100% Dassault Falcon Dassault Falcon Jet 100% Falcon Training Center Business Services Wilmington (USA) (France) (China) 54% Aero Precision Repair 50% SECBAT (France) and Overhaul (USA) 49% Dassault Reliance Dassault Falcon Jet 100% Aerospace Ltd. Leasing (USA) (India) Corse Composites 100% 25% Dassault Falcon Jet Do Aéronautiques Brasil (Brazil) (France) Midway 100% 16% Eurotradia International (USA) (France) Detailed information on the main Group companies is given in paragraph 1.5 of the Directors’ Report. The list of consolidated entities is presented in note 2, “Scope of consolidation”, to the consolidated financial statements. 2018 short form annual financial report | DASSAULT AVIATION 3 Board of Directors as of December 31, 2018 Honorary Chairman Charles Edelstenne Chairman of the Board of Directors Éric Trappier Directors Catherine Dassault Olivier Dassault Charles Edelstenne Marie-Hélène Habert Mathilde Lemoine Henri Proglio Lucia Sinapi-Thomas Richard Bédère (director representing employees) Executive Management Chief Executive Officer Chief Operating Officer Éric Trappier Loïk Segalen Executive Committee as of December 31, 2018 Chairman of the Committee Éric Trappier Chief Executive Officer Loïk Segalen Chief Operating Officer Benoit Berger Senior Executive Vice-President, Procurement and Purchasing Bruno Chevalier Senior Executive Vice-President, Military Customer Support Denis Dassé Chief Financial Officer Benoît Dussaugey Senior Executive Vice-President, International Jean-Marc Gasparini Executive Vice-President, Military Programs Bruno Giorgianni Executive Committee Secretary and Executive Vice-President, Public Affairs and Security Didier Gondoin(*) Senior Executive Vice-President, Engineering Frédéric Lherm Senior Executive Vice-President, Industrial Operations Gérald Maria Senior Executive Vice-President, Total Quality Philippe Massot Senior Vice-President, Military Sales France Frédéric Petit Senior Vice-President, Falcon Programs Yves Petit Senior Vice-President, Human Resources Jean Sass Chief Digital Officer Olivier Villa Senior Executive Vice-President, Civil Aircraft (*) Nicolas Mojaïsky, since January 1, 2019 Government Commissioner Mr. Paul Fouilland, French Armed Forces General Inspector Auditors Mazars S.A., represented by Mr. Mathieu Mougard, partner Deloitte & Associés S.A., represented by Mr. Jean-François Viat, partner 4 2018 short form annual financial report | DASSAULT AVIATION Directors’ Report TRIBUTE TO SERGE DASSAULT The Board of Directors pays tribute to Serge Dassault, who passed away on May 28 at the age of 93. Serge Dassault, a graduate of the École Polytechnique and the École Nationale Supérieure de l’Aéronautique, started at the Company’s engineering department in 1951 under the direction of Henri Deplante before taking responsibility for flight tests. In that capacity, he oversaw the development of several aircraft, such as the Super Mystère B2, Mirage III, Etendard and Mirage IV. After being appointed Military Export Director, he handled the negotiations that led to the purchase of the Mirage III by Switzerland and Australia. He also launched the Mystère 20 sales campaign in the United States. After his time at Société Electronique Marcel Dassault, which later became Electronique Serge Dassault, he be- came Chairman and CEO of our Company from the end of 1986 until April 2000. During that period, under his leadership, our company successfully deployed long-term and large-scale strategies consistent with the long cycles typical of our products. He was a tenacious and hard worker man with a spirit of conquest. Aeronautics was his passion. At last, he anticipated and settled his successorship by appointing Charles Edelstenne, as head of GIMD with the agreement of all of his children. 2018 short form annual financial report | DASSAULT AVIATION 5 Directors’ Report 6 2018 short form annual financial report | DASSAULT AVIATION DASSAULT AVIATION Dear Shareholders, Before submitting the company and consolidated financial statements for the year ended December 31, 2018, and the appropriation of earnings, we would like to take this opportunity to present our consolidated results, the activities of the Group and of the Parent Company during the past year, their future prospects and the other information required by law. 1. DASSAULT AVIATION GROUP 1.1 2018 RESULTS 1.1.1 Key data 2018 2017 (pro forma IFRS 15) EUR 5,024 million EUR 3,289 million 12 Rafale Qatar Order intake 42 Falcon 38 Falcon (52 orders and (41 orders and cancellation of the last 10 Falcon 5X) cancellation of 3 Falcon 5X) EUR 5,084 million EUR 4,876 million 9 Rafale Egypt 8 Rafale Egypt Adjusted net sales (*) 3 Rafale France 1 Rafale France 41 Falcon 49 Falcon EUR 19,376 million EUR 19,460 million 101 Rafale 101 Rafale Backlog (73 Export and 28 France) (70 Export and 31 France) as of December 31 53 Falcon 52 Falcon (no