ANNUAL REPORT
2016
2016 Annual Report of the Board of Directors
Annual General Meeting, 1 June 2017
MANAGEMENT REPORT
GROUP PROFILE ...... 2 STATUTORY BODIES ...... 3 MESSAGE FROM THE CHAIRMAN AND THE CHIEF EXECUTIVE OFFICER ...... 5 « PROJECT OF THE CENTURY » – COMMITMENTS FOR 2020 ...... 7 THE GROUP'S ACTIVITIES IN 2016 ...... 9 ENVIRONMENT AND QUALITY ...... 12 HUMAN RESOURCES ...... 13 CORPORATE GOVERNANCE STATEMENT ...... 14 FINANCIAL ASPECTS ...... 24 PROPOSALS FOR RESOLUTIONS ...... 27
Page 1 – Annual Report SABCA 2016
Group Profile
The SABCA Group, made up of SABCA (Société Anonyme Belge de Constructions Aéronautiques) and its subsidiaries SABCA Limburg and ASM Aéro, conducts its operations from Belgium's three regions (Brussels Capital Region, Gosselies in Wallonia, and Lummen in Flanders) and from Casablanca, Morocco.
Enhanced by nearly a century of know-how and a corporate culture based on capabilities and performance, the SABCA Group continues to serve the needs of its three traditional markets - aerospace, civil aviation, and defence - focusing on the synergy and complementarity between these three fields at the level of products and services supplied. The SABCA Group gives top priority to customer satisfaction, a solid foundation for developing long-term business relationships based on trust.
The SABCA corporate culture promotes values that are in line with those of the world of aeronautics: strict performance standards, investment in new technologies and innovation not only in terms of technical solutions but also in terms of resources aimed at continuously optimising the services provided, to ensure a high level of customer satisfaction.
In a highly competitive and globalized world, innovation is one of the main levers driving the development of aircraft and space launcher technologies to which the SABCA Group contributes significantly.
Over the years, the Group has been able to benefit from this globalized market by building stable and useful international partnerships. This has allowed it to establish a network of international relationships benefiting the sound management of the Group's operations and projects within its three markets. In Belgium, the SABCA Group continues to be a vital industrial player at both a federal and a regional level.
The principle of continuous improvement is central to the SABCA Group, and allows the continual review of established processes. Compliance with national and international environmental standards is another fundamental principle of the SABCA Group.
Page 2 – Annual Report SABCA 2016
Statutory bodies
SABCA BOARD OF DIRECTORS (AND EXPIRY DATE OF THE CURRENT TERM OF OFFICE)
Chairman SPRL Gestime, represented by its managing director, Remo Pellichero (2020) Directors Benoît Berger, Executive Vice President Procurement & Purchasing - Dassault Aviation 1 (2020) Hans Büthker, Chairman and Chief Executive Officer - Fokker Technologies Group B.V. 2 (2020) Olivier Costa de Beauregard, Chief Executive Officer - Groupe Industriel Marcel Dassault 1 (2020) SA C.G.O., represented by its managing director, Philippe Delaunois, independent director (2020) SA Gefor, represented by its managing director, Jacques de Smet, independent director (2018) Charles Edelstenne, Chief Executive Officer - Groupe Industriel Marcel Dassault 1 (2020) SPRL PASTEC-MIT, represented by its managing director, Michel Martin, independent director (2017) Loïk Segalen, Chief Operating Officer - Dassault Aviation 1 (2018) Remco Smit, Chief Financial Officer - Fokker Technologies Group B.V. 2, director until 31st July 2016 Nick Waters, Head of Corporate Finance and Strategy – GKN plc2, director as of 20th September 2016 (2020) Chief Executive Officer Jean-Marie Lefèvre until 31st August 2016 Thibauld Jongen as of 1st June 2016 Auditor Mazars Réviseurs d’Entreprises SCRL, represented by Lieven Acke, company auditor
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SABCA LIMBURG BOARD OF DIRECTORS (AND EXPIRY DATE OF THE CURRENT TERM OF OFFICE)
Chairman SPRL Gestime, represented by its managing director, Remo Pellichero (2020) Chief Executive Officer Jean-Marie Lefèvre until 31st August 2016 Thibauld Jongen as of 1st September 2016 (2020)
Directors Loïk Segalen, Chief Operating Officer - Dassault Aviation 1 (2019) Remco Smit, Chief Financial Officer - Fokker Technologies Group B.V. 2, until 31st July 2016 Nick Waters, Head of Corporate Finance and Strategy – GKN plc2, as of 30th November 2016 (2020)
Auditor Mazars Réviseurs d’Entreprises SCRL, represented by Lieven Acke, company auditor
ASM AÉRO BOARD OF DIRECTORS (AND EXPIRY DATE OF THE CURRENT TERM OF OFFICE)
Chairman, responsible for day-to-day management SA SABCA, represented by its Chief Executive Officer Jean-Marie Lefèvre until 31st August 2016 and Thibauld Jongen as of 1st September 2016 (2018) Vice-Chairman S.A.S. AAA, represented by its Chairman, Gilles Chauby (2018) Directors Pierre De Graef, Director of the SABCA Brussels plant – SABCA (2016) Cédric Nouvelot, AAA Vice-President (2018)
Auditor Mazars Audit et Conseil SARL, represented by Adnane Loukili, company auditor
1 Elected on the proposal of the Dassault Group 2 Elected on the proposal of the Fokker Technologies Group B.V
Page 4 – Annual Report SABCA 2016
Message from the Chairman and the Chief Executive Officer
2016 remains a difficult year for the SABCA Group. The results of the measures taken in the past have not been satisfactory. The persistent difficulties encountered on several programs are the main reason for the strong deterioration of the result this year again.
The Board of Directors has requested the new Chief Executive Officer to develop and implement a strong plan, with the aim to achieve as from 2017 positive results supporting the future of SABCA. Convinced of the necessity of a significant and deep transformation of the Company, the CEO has prepared a strategic action plan with his team, which has been presented and approved by the Board of Directors.
This strategic action plan with a 3-years horizon was initiated in July 2016 and entered an acceleration phase at the start of 2017. Stating its ambitions under the name of "Project of the Century", it should not only allow SABCA to celebrate its 100th anniversary in 2020, but also make the Group robust, profitable, and performant once again. The plan, as outlined below, must be implemented without impacting our customers and with the involvement of the entire staff who have already begun to contribute to it with passion and conviction, and at the same time respecting all of our obligations towards our clients and partners.
One of SABCA's priorities in 2016 was to meet its customer commitments and to ensure the on time delivery of products and services within the context of a heavy workload and increased production rates for certain programs.
In the field of civil aviation, the main challenge was to secure deliveries for the Airbus A350 with increasing production rates, the need for improved performance and a significant design change to be implemented without affecting deliveries. This challenge will extend into 2017 and will continue to be a key priority.
In the field of aerospace, the development schedule for equipment for the Ariane 6 and VEGA-C launchers remains extremely ambitious and has required a sustained effort from the SABCA teams throughout 2016 to meet the milestones while facing the technological challenges of the specifications. In this respect, the year 2017 will focus on the same objectives as 2016: on time and on spec delivery.
Finally, the workload in the field of defence, in particular within the MRO sector (Maintenance, Repair & Overhaul) of F16 aircraft, remained at a very high level throughout 2016. The announcement that the contracts with the Netherlands Air Force (RNLAF) and the US Air Force (USAF) will be renewed means the MRO workload can be expected to remain high in 2017.
Clearly, the priority for the SABCA Group is therefore to deliver on its customer commitments, while successfully implementing its strategic transformation plan to leverage its ongoing programs as quickly as possible and therefore to be able to participate in the new programs as soon as they will be launched.
This is all the more urgent as the economic environment in the aerospace sector as a whole remains extremely competitive and the public budgets available for Research & Development or Defence are being cut. This is also reflected in the constant pressure from our customers to continue to reduce prices.
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SABCA will address this issue too, through its strategic plan, with the support of its staff and of all its partners.
The Board of Directors put the accent on the necessity of the strategic plan which will be supported in all its phases. Its evolution will be the subject of a particular attention at each board meeting.
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« Project of the Century » – Commitments for 2020
A three-year project, essential and indispensable to speed up SABCA's redeployment in a fast- moving and challenging world.
The technical, operational, and economic difficulties encountered with several programs in recent years, the constant pressure from a number of major customers to reduce prices, the global competition in a downwards cycle market and the relatively small size of the SABCA Group, are all challenges that need to be addressed quickly by the Group in order to secure its future.
The purpose of the "Project of the Century" strategic action plan is to make the SABCA Group robust, profitable, and performant once more. To this end, all aspects related to its value creation processes and cost structure will be reviewed and adapted. Some essential aspects of the action plan are briefly presented below.
One SABCA Full operational integration of SABCA's four industrial sites (Brussels, Gosselies, Lummen, and Casablanca) under a single management team to increase coherence, responsiveness, and efficiency, while improving the Group's capacity to satisfy its customers.
An organisation built around Programs Accountable of customer satisfaction and at the same time of SABCA's economic performance, the Programs will be the cornerstones of the organisation, through which the SABCA capabilities and products can be brought to bear profitably on the pursuit of satisfying customers' needs. To this end, the Program Managers, supported by a Program Team representing the SABCA disciplines, will both manage the customer relationship and control their respective budgets.
Industrial activity around Production Units Whereas SABCA's industrial activities have historically been structured around sites, they will in the future be organised around Production Units, which will be responsible for providing their products and services in accordance with the cost, quality, deadline, personnel safety and equipment safety objectives as laid down by the Programs. A choice has been made to focus the Group's activities on the following Production Units, which will serve as Centres of Excellence, - Integrated structures and "Plug & Fly" equipment - Actuation systems Surface treatment - MRO and modernisation of platforms and equipment - Complex and large-size composite structures - Aerostructure assemblies
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Technology and Innovation With its broad array of skills in several key disciplines of aeronautics, aerospace, and defence, the SABCA Group must organise itself so that these skills are better used to provide unique technological solutions that meet the needs of its customers. To this end, a new Technical Department will be created. Its mission is to ensure not only that the developments undertaken by SABCA are conducted in accordance with the state of the art, but also that the industrialisation of its products and services is a real strength that ensures a 'right first time' approach and complete control over outsourced production. The introduction of new technologies (industry 4.0, digitalisation, additive manufacturing, etc.) in the company should also drive the innovation of new products and services within the Group.
Purchasing – a strategic lever In a globalized, highly-competitive and rapidly-consolidating world, the future of the SABCA Group will depend on its ability to identify, develop and manage partners that bring complementarity to the SABCA Group, in terms of cost, industrial capacity, or skills. A Purchasing Department will be created for this purpose, whose mission will encompass these challenges for all of the Group's needs.
Increased and systematic outsourcing To continue to deploy its skills in its specific disciplines, it is essential for the SABCA Group to be able to regain its competitiveness, in particular by controlling the evolution of its hourly rates. Given its size and the diversity of its disciplines, one way of ensuring the Group's competitiveness is to focus on its areas of excellence, and to outsource activities that are neither core business, nor strategic, nor profitable (therefore probably non-competitive) activities. In the Group's future positioning on tenders, a strong outsourcing component will be an integral part of the proposed solution. In addition, for ongoing activities within the Group, a systematic analysis will be made of the need for outsourcing. The new Purchasing Department's mission will be particularly beneficial in this context.
Improving communication and working relationships The SABCA Group has a wide range of unique skills, passion, and experience among its staff. To succeed together, our internal communication - an essential motivational lever - will be redeployed through various channels. Being an employee of the SABCA Group means adhering to a number of principles and values that will need to be reinforced in order to reach the performance level required to achieve the Group's objectives. In particular, aspects related to safety, activity rate, discipline, and general compliance with the rules will be developed as a priority. Finally, the organisational change implemented through the "Project of the Century" as well as the analyses related to the increased level of outsourcing will affect a number of staff. A Mobility, Redeployment and Competences Management service will be set up to accompany these changes in the interests of staff and to identify the best possible solutions to these key challenges.
Page 8 – Annual Report SABCA 2016
The Group's activities in 2016 Aerospace In 2016, the Group's aerospace activities were focused mainly on the Ariane 5, Ariane 6, VEGA and VEGA-C programs.
Ariane 5 and VEGA maintain a steady pace ensuring continued shipments in the coming years. The development phase for the Ariane 6 and VEGA-C programs intensified in 2016, resulting in the consolidation of different product designs.
The past year has enabled us to consolidate, together with Airbus Safran Launchers, the design aspects of the actuation systems of the solid and liquid propulsion engines as part of the "Step 1" phase of the Ariane 6 development contract. At the end of 2016, the Preliminary Design Review level was reached for the actuation systems of the three engines. An electromechanical actuation system has been chosen for the nozzle of the P120C engine and the Vinci engine, whereas an electro-hydraulic actuator will be used on the Vulcain engine.
Thanks to 8 successful launches by Arianespace in 2016, SABCA has maintained a high level of activity on the Ariane 5 program for which it produces both structural elements (Front Skirt, Rear Skirt, Vibration Absorber) and servo controls for controlling this launcher's engines (thrust vector actuation system, engine activation group, and hydraulic servo-engine group).
The next Ariane 5 production batch (EPC batch) is being negotiated with Airbus Safran Launchers, an agreement on the beginning of the activities is planned for early 2017.
In 2016, SABCA continued shipments of the second VEGA batch, at a rate of three launchers per year – the components are the 0/1 interstage structure and the thrust vector control (TVC) systems of the four stages.
As part of the VEGA development program (VEGA-C), SABCA is responsible for the development of thrust vector actuator for the Z40 (replacing the Z23) and P120C (replacing the P80 and in common with Ariane 6). This development has successfully reached the Preliminary Design Review level. The activities concern both electromechanical actuators, control and power electronics, control software and the 0/1 interstage structure.
2016 also saw SABCA submit various tenders in the field of commercial launchers, which are still being negotiated with the customers. The Ministerial Conference of the European Space Agency took place in Lucerne at the end of 2016. At this meeting, where the policies and budgets for the next 4 years were defined, Belgium unfortunately reduced its participation in launcher-related research and development programs significantly.
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Civil Aviation 2016 was marked by considerable variations in production rates in the civil aviation sector: production rates for the Airbus A320 and A350 went up, whereas those for the A380 program decreased. In 2016, orders for the Airbus A330 program were received at a rate of 6 per month, sustained by the launch of the new A330 NEO version. The shipment rates for the Falcon 900/2000 and Gulfstream 650 were maintained.
For the Airbus A380 program, shipments of T-shapes totalled 22 in 2016 following the announcement by Airbus that it would significantly reduce production rates in the coming years.
Orders of Direct Drive Valves (DDV) specific to the Airbus A318/A319/A320/A321 family reached a monthly production volume of 50 at the end of 2016
2016 has been a strong year for the A350 program, marked by an increase in annual shipments by 47 aircraft as compared to 2015 when only 14 aircraft were shipped. This increase is reflected in the increased production of structural elements under the responsibility of SABCA: the Flap Support Structures (FSS) and the Flap Support Fairings (FSF) reached a total of 70 shipments in 2016.
In the field of business aviation, 2016 was marked by sustained activity, even if the fourth quarter saw a number of SABCA customers announcing falls in production rates.
For Dassault Aviation, SABCA's activities cover virtually all models of the Falcon business aircraft, shipping composite elements upper wing surfaces (extrados), engine hoods, and flight control equipment (servo controls and other hydraulic equipment).
SABCA is also responsible for the production of the composite horizontal stabiliser structures supplied to Fokker Aerostructures for integration and delivery to Gulfstream. Deliveries remained stable throughout 2016.
During 2016, a significant prospection campaign was conducted, primarily targeting subcontracting activities in the fields of metal aerostructures, manufacturing and surface treatment. This has enabled SABCA to win new customers in both the aerospace and the civil aviation markets.
Defence Defence activity is focused mainly on the maintenance, repair and modernisation of platforms (aircraft, helicopters) and equipment for the Belgian and foreign armed forces.
2016 was marked by commercial successes, including the renewal of the maintenance contracts for the military F16 aircraft for the United States Air Force (USAF) and the Royal Netherlands Air Force (RNLAF).
Long-term support for fuselage repair operations, wing inspections, replacements of cockpit structural spars and phase inspections was also incorporated into the existing contract with the Danish Air Force (RDAF).
For its reference customer (the Air Component of the Belgian Armed Forces), SABCA extended its activities on different platforms (F16, Alpha-Jet, Agusta A109, etc.), strengthening its status of "Depot Level Organization" towards the Air Component. The high level of maintenance and repair of accessories and equipment was also sustained.
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Also in 2016, SABCA was granted an extension of the contract for continuing airworthiness of the refurbished Alpha-Jets for the French Air Force (DGA). The notion of "continuing airworthiness" was incorporated into the management contract of the Supplementary Type certificate.
As part of the modernisation of the Mirage 2000D decided by the French Air Force (DGA), SABCA was awarded an important contract for the design and construction of the gun pods, as subcontractor of Dassault Aviation.
The European military transport aircraft (Airbus A400M) has more or less stable production rates, with 20 shipments in 2016, for 6 customers operating this type of aircraft. Under the A400M program, SABCA is responsible for the development and production of the wing flap deployment structures and for the production of the composite casings for these wing flaps.
Research and Development Four Research and Development projects reached major milestones in 2016.
The REMOCO (REliable MOtor COntrol) project subsidised by the Brussels Capital Region and aimed at developing control algorithms for fault tolerant electric motors, was completed in 2016. This project was critical in SABCA being selected for the design and production of the TVAS (thrust vector actuation systems) of ARIANE 6.
2016 also saw the completion of phase 1 of the CLP (Control Loop Processor) project developed under the GSTP5 program of the ESA, with the full validation of the FPGA (Field-Programmable Gate Array) code. This processor is used on the powder boosters of ARIANE 6 and VEGA-C. In addition, its specific characteristics (determinism, robustness, flexibility, etc.) could allow it to be marketed for numerous applications outside the launcher domain.
AEROSTREAM, a project financed under the Marshall Plan and aimed at enhancing the expertise of universities (ULB, UCL, KUL), manufacturers (Layerwise) and end users (SABCA) in the field of additive manufacturing, led to the fabrication of a first part in 2016.
AXE (Avionic-XE), the technological development program initiated by Airbus Safran Launchers, has enabled SABCA to mature various technologies, one of which was selected for Ariane 6 (IGBT desaturation function) and two others for future programs (MULAS or MULtiturn Angular Sensor and Supercapa).
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Environment and Quality
The SABCA Group is determined and committed to maintaining the same high level of requirements and quality for all its products and services. This policy is based on compliance with the standards and the certifications conducted by the audit agencies; and with national and international environmental standards.
In 2016, the re-certification audit of the Quality management system allowed SABCA and its subsidiaries to renew, based on the 2009 terms of reference, the EN9100, ISO 9001 and the AQAP 2110 certifications, the latter only for SABCA excluding its subsidiaries. As of 2018, the new version of EN9100 will be applied.
Also in 2016, SABCA obtained PART 145 certification for the Airbus A320 equipment on the Brussels site and for the Falcon structures on the Charleroi site.
SABCA maintains its PRI-NADCAP certification for surface treatment and non-destructive testing, as well as the POA certifications in line with PART 21, and specific customer certifications (Boeing, Lockheed Martin, etc.).
Page 12 – Annual Report SABCA 2016
Human Resources Headcount development
On 31st December 2016, the SABCA Group employed 1,079 people, compared with a headcount of 1,159 at the end of 2015.
This decrease is mainly due to retirement of staff who were not replaced and to a number of redundancies caused by the variation in the company's workload.
Headcount development (SABCA Group) 1159
1130
1100 1079
1037
2012 2013 2014 2015 2016
Page 13 – Annual Report SABCA 2016
Corporate Governance Statement
As a Belgian company listed on the Euronext market of Brussels, SABCA S.A. (“SABCA” or “the company”) is committed to comply with the corporate governance principles set forth in the 2009 version of the Belgian Corporate Governance Code (CGC).This code is available on the website www.corporategovernancecommittee.be
As required by the CGC, a Corporate Governance Charter was established, with the first version gaining Board approval on 13 September 2011. In accordance with statutory provisions, the charter is posted on the company’s website www.sabca.com in a section named « Investor Corner », clearly separated from commercial information. The Charter is reviewed in line with the development of the company and current regulations.
The SABCA Board recognizes the importance of diversity in general and of gender diversity in particular, and will pay special attention to this aspect when identifying candidates for future nominations of directors.
Taking into account the size and the nature of the company, as well as the specific structure of its shareholders, the Board has considered it reasonable for the company not to fully comply with certain CGC provisions.
These derogations concern the following provisions:
Provision 4.1: There should be a rigorous and transparent procedure for the efficient appointment and re-appointment of directors. The Board should draw up nomination procedures and selection criteria for board members, including specific rules for executive and non-executive directors where appropriate.
Due to the structure of company shareholders, comprising one majority shareholder and a second leading shareholder, the company has not yet established specific procedures related to the appointment of directors. The Board itself, led by the chairman, decides the appointments and possible re-appointments to be proposed to the general shareholders’ meeting. For the same reason, the company has not set up a nomination committee (see provision 5.3 hereafter).
This implies that the company derogates from all provisions of the CGC calling for nomination committee proposals or recommendations when directors or the management are to be nominated or assessed. This is the case for the following CGC provisions:
• 4.2: […] The nomination committee should recommend suitable candidates to the board. […] • 4.6: […] accompanied by a recommendation from the board, based on the advice of the nomination committee • 5.3: […] The board shall set up a nomination committee following the provisions set out in Appendix D. • 6.3: The nomination committee should assist the board on the nomination and succession planning of the CEO and the other members of the executive management […]
• Appendix D : nomination committee
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The reasons why the Board has not created a nomination committee until now are given in the justification of provision 4.1 here-above.
1. Composition of the SABCA board of directors
1.1. Composition There are currently ten members of the Board; the list of members, plus an indication of the main function they exercise outside SABCA and the shareholder at whose proposal they were elected, is shown on page 4.
All members of the Board are non-executive directors, and three are independent directors.
1.2. Nomination rules The Board has not adopted any particular rules, either in relation to a possible age limit for its members, or with regard to exercising the position of director.
2. Functioning of the board of directors
2.1. Frequency of meetings The Board of directors meets whenever the company’s interest so requires. This frequency enables the board to examine amongst others the half-yearly accounts and the annual accounts as well as any investments.
The board met on five occasions in 2016.
Attendance of directors at board meetings
M. Remo Pellichero1 5 M. Benoît Berger 4 M. Hans Büthker 4 M. Olivier Costa de Beauregard 4 M. Philippe Delaunois2 4 M. Jacques de Smet3 5 M. Charles Edelstenne 4 M. Michel Martin4 4 M. Loïk Segalen 5 M. Remco Smit, until 31st July 2016 2 M. Nick Waters, as of 20th September 2016 3
1representing SPRL Gestime 2representing SA C.G.O. 3representing SA Gefor 4representing SPRL PASTEC-MIT
2.2. Competences In the absence of any statutory restrictions, the board holds all powers assigned by law. The board determines the strategic and short-term objectives for the company, approves and decides on the means needed to achieve these objectives. At each meeting and in a general manner, the Board reviews all operating issues affecting the company.
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2.3. Control of day-to-day management At each board meeting, the CEO reports on business progress, the search for new business and market prospects, as well as the order book, the financial situation and opportunities for investing or disinvesting.
3. Committees created by the board of directors
3.1. Permanent Committee The Permanent Committee has been in existence since 1970. The members are: Mr Remo Pellichero, chairman, representing SPRL Gestime; managing director Mr Jean-Marie Lefèvre (until 31st August 2016); and Mr Thibauld Jongen (as of 1st June 2016); and two representatives chosen by the main shareholders. For 2016, these two representatives were Mr Loïk Segalen (Dassault Aviation); and Mr Remco Smit (Fokker Technologies Group B.V.) (until 31st July 2016); and Mr Nick Walters (GKN plc) (as of 20th September 2016). Further members of the Permanent Committee are Mr Philippe Delaunois, representing SA C.G.O., independent director; Mr Jacques de Smet, representing SA Gefor, independent director; Mr Michel Martin, representing SPRL PASTEC-MIT, independent director; and Mr Dimitri Duray, CFO. Generally speaking, the Permanent Committee meets before board meetings. It assists the Board in preparing its decisions. The PermanentStanding Committee met twice in 2016.
Attendance of directors at Permanentg Committee meetings
M. Remo Pellichero1 2 M. Philippe Delaunois2 2 M. Jacques de Smet3 2 M. Michel Martin4 2 M. Loïk Segalen 2 M. Remco Smit, until 31st July 2016 1 M. Nick Waters, as of 20th September 2016 0
1representing SPRL Gestime 2representing SA C.G.O. 3representing SA Gefor 4representing PRL PASTEC-MIT
3.2. Audit Committee The Audit Committee instituted pursuant to the law of 17th December 2008 is chaired by Mr Jacques de Smet, independent director, conversant with matters relating to accounting and auditing and representing S.A. Gefor. The non-executive directors, Mr Loïk Segalen and Mr Remco Smit (until 31st July 2016); and Mr Nick Waters (from 20th September 2016), are the other members of the Committee. From time to time the committee is assisted by the external auditor, the CEO, the CFO, the internal auditor who is also in charge of risk management; and any other adviser deemed appropriate.
The internal rules of procedure of the Audit Committee are included in Appendix C of the SABCA Corporate Governance Charter. The Audit Committee reports to the Board on the exercise of its duties, making recommendations on steps to be taken.
In 2016, the Audit Committee met three times, in particular to examine the company’s half-yearly and annual statutory and consolidated accounts; it also examined the results of the audit programme aimed at ensuring the effectiveness of the internal control and risk management systems.
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Responsibility for the internal audit and risk management have been merged into one function reporting directly to the CEO. A staff member is appointed full-time to ensure this double responsibility.
Attendance of directors at Audit Committee meetings
M. Jacques de Smet1 3 M. Loïk Segalen 3 M. Remco Smit, until 31st July 2016 1 M. Nick Waters, as of 20th September 2016 1
1representing SA Gefor
4. Day-to-day management
The Board chooses the person responsible for day-to-day management from among its members or not (articles 11 and 20 of the articles of association). Day-to-day management of the company is executed by the CEO, Mr Jean-Marie Lefèvre until 31st August 2016 and st Mr Thibauld Jongen as of 1 June 2016.
A Group Committee and an Operational Committee (COp), both chaired by the CEO, meet once a month and contribute to the day-to-day management of the company.
The members of the Group Committee for 2016 were: Mr Jean-Marie Lefèvre, CEO (until 31stAugust 2016), Mr Thibauld Jongen, CEO (as of 1st June 2016), Mr Dimitri Duray, CFO, Mr Marc Dubois, marketing and sales director, Mr Pierre De Graef, head of the Brussels plant, Madame Sabine Lelièvre, head of the Charleroi site and Mr Peter Reynaert, head of SABCA Limburg.
The members of the Operational Committee for 2016 were the members of the Group Committee, plus Ms Josianne Evrard, head of the quality department, Mr André Ghysens, head of human resources, Mr André Baus, head of IT, Mr Pierre-Michel Léonard, head of the supply chain department.
Mr Peter Reynaert is head of SABCA Limburg.
Mr Jean-Marie Lefèvre represents SABCA as CEO of the ASM Aéro SAS subsidiary until 31st August 2016 et Mr Thibauld Jongen as of 1st September 2016.
5. Profit appropriation policy
In its proposals to the general meeting of shareholders, the board of directors aims at reconciling the high level of investments required for the company’s aerospace activities with a reasonable return on capital.
6. Shareholders
Dassault Belgique Aviation S.A., a virtually 100% subsidiary of the Marcel Dassault Industrial Group, holds 53.28% of the company’s capital. As of 28 October 2015, the British company GKN Plc indirectly holds 43,57% of the capital, notably through its r Technologies Group B.V., holds 43.57% of the capital notably through its subsidiary, Fokker Aerospace B.V. The balance of 3.15% is quoted on the Euronext market in Brussels.
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7. Related-party transactions
Sales and purchases are made at market price.
Balances outstanding at the year-end are not guaranteed and are made in cash. No guarantees were provided or received in 2016 for related-party receivables.
For the 2016 financial year, the Group did not recognize any provisions for bad debts relating to amounts receivable from related parties.
This evaluation is done by examining the financial position of the related parties and the market in which they operate.
The identifiers and the values are listed in note 14 of the consolidated accounts.
8. Internal audit and risk-management system
SABCA has formalised its internal audit activities via the internal control system based on the COSO2 model. In doing so, it has defined its control environment, identifying and classifying risks in order to highlight the ones with the greatest consequences, and making sure that internal controls exist and are effectively executed. Communication and information together with monitoring and surveillance are part of this approach.
The main objective is to increase process efficiency by reducing the level of risk, thereby improving overall performance and creating added value.
As in any control system, the risk management system installed provides reasonable assurance that the operational targets will be achieved.
8.1 Control Environment The functioning of the various units is managed via “Management Processes” describing the principles and procedures with their input and output and how they interact together.
An Environmental Policy Statement and an Internal Audit Code as well as a Quality Policy Statement exist and are communicated to all staff. Their compliance with legislation and regulations, and whether they take into account of any changes which have taken place in our field of activity are reviewed on an annual basis.
8.2 Risk management process SABCA has started formalising the process of analysing and assessing its business risks from 2009. These have now been categorised and prioritised in 7 areas on the basis of their probability and their impact level. The missions defined in an annual audit programme relate to risks considered as being major, with attention mainly focused on operational risks.
The financial side is the subject of particular attention, being focused on in the chapter on financial risk (see chapter 8.6 below).
8.3 Control activities Control activities consist in the measures taken by the company to make sure that the main risks identified are kept under adequate control.
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To accomplish this, the position of an internal auditor has been created, covering all processes within the SABCA Group.
The annual audit programme is submitted to the Audit Committee for approval.
The control (i.e. audit) activities aim at making sure that standards and laws are complied with and procedures applied, with the focus placed mainly on the operational side.
Audit activities benefit from performance indicators already used within processes, together with actions emanating from the control plans.
In addition, the process of the financial department includes internal control measures. Reviews of the financial process supplement this approach.
Quality audits are carried out by internal quality auditors using the appropriate existing procedures. They are also responsible for following up the actions and recommendations coming from internal or external audits.
The external company auditor and his team are responsible for external audits, along with a number of both Belgian and foreign audit organisations.
8.4 Information and communication Each audit gives rise to a specific report. This method has now been extended to all processes, with a final report submitted for approval to the Audit Committee.
The results of quality audits carried out internally or by external agencies are channelled through the quality department which also makes sure that any points are followed up.
Performance indicators are presented on a monthly basis to the various committees responsible for managing the company.
8.5 Management The management of internal audits including risk management is the responsibility of senior management which reports on this subject to the Audit Committee.
8.6 Principal risks and uncertainties 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 any 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 that 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.
Page 19 – Annual Report SABCA 2016
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.
It hedges its net future cash flows only if they are considered sufficient as to exercise the foreign exchange hedges in place. The amount of the hedge may be adjusted according to the variability in the timing of expected net cash flows.
Risks from long-term programs The Group is exposed to a risk from its long-term programs due to the fact that technical, economic and financial developments may jeopardize their profitability. These risks are typically linked to the capacity to deliver the products and services in compliance with customers’ needs (quality and lead times), the continual pressure on prices leading to a margin reduction, the lack of capacity of equipment or human resources, etc.
Operational risks Following the analysis done by those in charge of risk management and internal controls, several operational risks were identified and mapped out according to their acceptability: . The production rate variations expressed in customer requirements, under existing contracts, and the uncertainty associated with obtaining new contracts, lead to a variable charge and -in long-term- a lower charge than the company's internal capacity, which could lead to difficulties in financial results. . The age distribution within the workforce, especially the high average age, makes succession to key positions, training, and transmission of know-how particularly challenging, especially in the complex regulatory and technological environment of the aeronautics and space industries. . The impact on production costs, and in particular on the hourly rate, due to Belgian inflation and indexation, and more generally to wage developments at national and sectoral level.
9. Remuneration report
9.1 Remuneration Committee
9.1.1 Composition and activities The Committee is made up of : . SPRL Gestime represented by its manager Remo Pellichero, president, chairman of the board of directors. . SA C.G.O. represented by its CEO Philippe Delaunois, independent director. . SA Gefor represented by its CEO Jacques de Smet, independent director.
The following also took part in the meetings: . Jean-Marie Lefèvre, CEO until 31st August 2016 and Thibauld Jongen as of 1st June 2016 (except for the part concerning him) . The secretary of the Remuneration Committee: André Ghysens, head of HR.
Page 20 – Annual Report SABCA 2016
In the course of 2016, two meetings were held.
For each member of the Operating Committee (COp) the Committee looked at: - The different remuneration components, with particular attention paid to the fixed and variable parts - the group insurance policies - remuneration policy
The Remuneration Committee's rules of procedure are to be found in Appendix D of the SABCA Corporate Governance Charter.
Attendance of directors at Remuneration Committee meetings:
M. Remo Pellichero1 2 M. Philippe Delaunois2 2 M. Jacques de Smet3 1
1representing SPRL Gestime 2representing SA C.G.O. 3representing SA Gefor
9.1.2 Remuneration policy The aim of the company is to develop and maintain an attractive remuneration policy for its staff, balancing the interests of the company and those of its shareholders.
The Remuneration Committee reviews the situation of Operational Committee (COp) members, including members of the Group Committee.
The Committee listens to the explanations of the CEO and, after discussion and exchanges of views between its members, submits its final proposals to the Board which then decides on the matter.
Executives concerned: - the members of the Group Committee: . Jean-Marie Lefèvre, CEO (until 31st August 2016) and Thibauld Jongen, CEO (as of 1st June 2016) . Dimitri Duray, CFO, . Pierre De Graef, head of the Brussels plant, . Marc Dubois, marketing and sales director, . Sabine Lelièvre, head of the Charleroi plant, . Peter Reynaert, head of SABCA Limburg.
- Other members of the COp: . André Baus, head of the IT department, . André Ghysens, head of the human resources department, . Josianne Evrard, head of the quality department, . Pierre-Michel Léonard, head of the supply chain department.
The remuneration consists of the fixed remuneration, the variable remuneration and the (supplementary) pension plan.
Page 21 – Annual Report SABCA 2016
The Committee seeks to maintain the right balance between these three elements, the sum of which determines the company's ability to attract, motivate and retain highly skilled professionals, taking into account the scope of responsibilities and market standards.
The fixed remuneration is based on the level of responsibility, with its evolution dependent on individual performance appraisals and market trends.
The remuneration committee submits the remuneration modification proposals to the board of Directors.
The variable remuneration for COp members is dependent on the assessment of their individual performance and company results.
Group Committee members benefit from a specific supplementary pension plan, annual payments to which are dependent on the company’s net result.
The variable remuneration for a specific financial year is subject to Annual General Meeting approval.
A supplementary pension is established for each COp member.
There has been no significant change in remuneration policy since the last financial statements.
The remuneration policy contains no specific rules for severance compensation.
9.2 Remuneration of members of the board of directors and its committees *
Non-executive directors in EUR SPRL Gestime, represented by its manager Remo Pellichero, Chairman 4.000
Benoît Berger, Executive Vice President Procurement & Purchasing - Dassault Aviation 17.601
Hans Büthker, Chairman and Chief Executive Officer – Fokker Technologies Group B.V. 17.601
Olivier Costa de Beauregard, CEO - Groupe Industriel Marcel Dassault 17.601
SA C.G.O. represented by its CEO Philippe Delaunois, independent director 19.601
SA Gefor represented by its CEO Jacques de Smet, independent director 22.101
Charles Edelstenne, CEO - Groupe Industriel Marcel Dassault 17.601 Sprl PASTEC-MIT, represented by its manager, Michel Martin, independent director 18.601 Loïk Segalen, Chief Operating Officer - Dassault Aviation 20.101 Remco Smit, Chief Financial Officer - Fokker Technologies Group B.V., until 31st July 2016 11.267 Nick Waters, Head of Corporate Finance & Strategy GKN plc, as of 20th September 2016 5.878 in EUR * Board of Directors, Audit Committee, Permanent Committee and Remuneration Committee.
Page 22 – Annual Report SABCA 2016
There is no significant change in the remuneration policy of non-executive directors since the last financial statements.
Committee members receive an attendance allowance of EUR 500 (EUR 1000 for the chairman) for each meeting attended. The corresponding amounts are included in the table above.
Via his company Gestime SPRL, Mr Remo Pellichero has a service contract for an annual fee of EUR 75,000 excl. VAT.
Modifications to the remuneration of the members of the board and committees are defined by the General Meeting following the proposal of the remuneration committee.
9.3 Remuneration of the CEO and other COp members Following the proposal of the Remuneration Committee, the Board set the following amounts as remuneration for the CEO and the other COp members in 2016.
CEO Other COp members Jean-Marie Lefèvre, salaried until 31st August 2016 in EUR Thibauld Jongen, salaried as of 1st June 2016 Fixed Remuneration 250.952 905.811 Variable Remuneration 0 0 Total 250.952 905.811 Supplementary Pension 87.916 207.414 Other 6.424 27.170
Page 23 – Annual Report SABCA 2016
Financial Aspects
Belgium Investments (MEUR) 16,32% 20 19,00
Outside Europe 3,34% 15 12,48 Geographical distribution 10 8,75 8,62 of turnover (%) 7,11 6,14 5,65 5,38 5 4,00 4,01
0,65 0,01 0,02 0 2012 2013 2014 2015 2016 Europe 80,34% Financial Intangible Tangible
Turnover per field Orders (MEUR) of activities (%) 500 60 54,1 412 50 406 48,4 388 397 50 400 370
39 40 40 300 33 31 29 30 30 30 28 25,2 189 200 179 20,7 21,6 20 150 20 139 146
100 10
0 0 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016
Defence Aerospace Civil Aviation Order book Placement of orders
Page 24 – Annual Report SABCA 2016
1. SABCA Group
Consolidated key results - Condensed consolidated income statement pursuant to IFRS
(en MEUR) 2012 2013 2014 2015 2016 Revenue from ordinary activities 175,79 206,15 203,30 190,85 197,58 Turnover 146,95 171,51 176,41 183,49 202,14 Changes in work in progress 7,13 16,84 9,56 -1,19 -14,26 Capitalized production 17,57 10,14 6,55 3,79 5,80 Other revenue from ordinary activities 4,14 7,66 10,78 4,76 3,90 Operating expenses -166,10 -197,52 -223,94 -194,20 -202,87 Operating result 9,69 8,63 -20,64 -3,35 -7,29 Financial income 6,01 4,63 4,78 3,00 5,31 Financial expense -2,97 -2,92 -5,24 -11,49 -6,59 Operating result post financial result 12,74 10,34 -21,11 -11,84 -8,57 Income tax -1,83 -1,49 6,77 3,84 2,83 Net result for the period 10,90 8,85 -14,34 -8,00 -5,74 Whereof attributable to owners of parent 10,95 9,03 -14,35 -7,87 -5,77 Non-controlling interests -0,05 -0,18 0,01 -0,13 0,03 Total 10,90 8,85 -14,34 -8,00 -5,74
Result per share (en EUR) 2012 2013 2014 2015 2016 (number of shares : 2.400.000) * basic 4,54 3,69 -5,98 -3,33 -2,39 * diluted 4,54 3,69 -5,98 -3,33 -2,39
2012 2013 2014 2015 2016 Headcount at 31 december 1.037 1.100 1.130 1.157 1.079
The SABCA Group has realized a turnover of 202,1 MEUR, increasing by 10 % compared to 2015.
The Group’s result from continuing operations is a loss of -7,3 MEUR, due to an impairment of intangible assets and additional provisions for risk and charges resulting from continuing difficulties on some programs as well as the implementation of the action plan to reduce operational costs.
The financial result is a loss of -1,3 MEUR mainly due to currency exchange differences.
In 2016, the Group generates a net loss of -5,7 MEUR after taxes.
The net result for the period attributable to the owners of the parent company amounts to -5,8 MEUR.
Page 25 – Annual Report SABCA 2016
2. SABCA
Unconsolidated key results – Statutory accounts (pursuant to Belgian accounting principles)
(en MEUR) 2012 2013 2014 2015 2016 Turnover 140,35 164,43 169,57 173,70 192,41 Equity capital 67,21 70,61 42,79 30,47 21,35 Investments 28,41 18,14 14,76 9,38 9,78 Results - operating 10,80 4,69 -27,34 -2,64 -7,73 - financial 1,82 1,24 1,86 -10,04 -1,11 - current 12,62 5,93 -25,48 - extraordinary -0,49 -0,01 -2,69 - before tax 12,13 5,92 -28,17 -12,68 -8,84 - tax -2,26 0,16 0,12 0,01 -0,01 - after tax 9,87 6,08 -28,05 -12,67 -8,85 Total dividends 3,26 2,02 0,00 *0,00 *0,00 * proposed to the Annual General Meeting
Current result per share (EUR) 5,26 2,47 -10,62 Result before tax per share (EUR) -5,28 -3,68 Result for the period per share (EUR) 4,11 2,53 -11,69 -5,28 -3,69 Net dividend per share (EUR) 1,02 0,63 0,00 0,00 0,00
The turnover amounts to 192,4 MEUR, increasing by 10,8 % against 2015.
The operating result shows a loss of -7,7 MEUR .
The financial result is a loss of -1,1 MEUR due to currency exchange differences.
Taking account of the action plan to reduce operating costs, the Board is of the opinion that the accounting rules can be applied on an on-going concern basis.
The Board will propose to the Annual General Meeting of June 1st, 2017 that no dividend will be paid for 2016.
Page 26 – Annual Report SABCA 2016
Proposals for resolutions to be submitted to the Annual General Meeting of Shareholders of June 1st, 2017
APPROPRIATION OF RESULTS The appropriation account included in the annual financial statements submitted to the AGM is as follows :
1. Loss of the period available for appropriation -8.922.814,03 EUR 2. Accumulated profits (losses) 3.018.388,33 EUR 3. Loss to be appropriated -5.904.425,70 EUR
Taking account of the recorded result, the Board of Directors will be proposing to the Annual General Meeting that non dividend be paid for 2016. The Board requests the AGM to approve the following appropriation :
Loss to be carried over 5.904.425,70 EUR
Page 27 – Annual Report SABCA 2016
SABCA S.A. Société Anonyme Belge de Constructions Aéronautiques Chaussée de Haecht 1470 B-1130 Brussels Belgium
Telephone: +32.2.729 55 11 Fax: +32.2.705 15 70 e-mail : [email protected] www.sabca.com
Page 28 – Annual Report SABCA 2016
ANNUAL ACCOUNTS
2016
2016 Report to the board of directors
Ordinary General Meeting of June 1st, 2017
ANNUAL ACCOUNTS
Consolidated accounts 2
Statutory auditor's report on the consolidated financial statements 25
Non consolidated accounts 28
Statutory auditor's report on the annual accounts 46 Declaration of the persons responsible for the report
We attest that, to our knowledge, the financial statements authorized by the Board of Directors on April 26 th, 201 7 , have been prepared in accordance with the applicable a c counting standards and g ive a fair view of the ass e ts and liabilities, of the financial sit u ation and of the incom e statement of the company a s well as the other compan ies included in the scope of consolidation , and that the management report includes a fair review of the evolution of the business , of the results and of the financia l situation of the company and the other compan ies included in the scope of consolidation as well as a description of the principal risks and uncertainties they are fac ing .
Brussels, April 26 th , 20 1 7 .
T. JONGEN R. PELLICHERO Chief Executive Officer Permanent representative of GESTIME ppll Chairman of the Board
SABCA Annual accounts 2016 1
Consolidated statement of financial position Following the standards IFRS (International Financial Reporting Standards)
(in thousands of euros) Notes 2016 2015
Assets
Non-current assets 115.045 122.504 Intangible assets 4. 45.815 51.066 Property, plant and equipment 3. & 7. 68.909 71.117 Affiliated enterprises 5. 112 112 Financial assets and other non-current assets 5. 209 209
Current assets 223.555 220.926 Inventories 8. 38.733 50.931 Work-in-progress 8. 62.868 77.132 Trade and other receivables 10. 64.984 59.713 Cash and cash equivalents 55.728 32.251 Consolidated statement of cash flow & 9. Other current assets 1.242 899
Total assets 338.600 343.430
Equity and liabilities
Total equity 80.932 87.147
Total equity attributable to owners of the parent company 80.826 87.068 Capital 12.400 12.400 Reserves and results carried forward 68.426 74.668
Non-controlling interests 106 79 Consolidated statement of changes in equity
Non-current liabilities 143.997 156.472 Long-term borrowings 7. & 11. 102.915 116.021 Non-current provisions 6. & 13 40.691 36.986 Deferred taxation 12. 391 3.465
Current liabilities 113.671 99.811 Trade and other payables 7. 69.045 59.759 Tax and social liabilities 7. 12.919 12.394 Other current liabilities 7. 14.850 14.841 Short-term borrowings 7. 2 21 Current provisions 6. 16.855 12.796
Total equity and liabilities 338.600 343.430
2 Annual accounts 2016 SABCA
Consolidated income statement
(in thousands of euros) 2016 2015
Revenues 197.581 190.847 Turnover 202.146 183.489 Increase (+), decrease (-) in work in progress -14.264 -1.188 Own construction capitalized 5.801 3.790 Other operating income 3.898 4.756
Operating expenses (-) -204.869 -194.200 Raw materials and consumables used 47.236 48.768 whereof change in inventories 7.677 -8.430 Services and other goods 56.951 60.835 Wage and salaries, social security costs and pensions 69.199 69.849 Depreciation and amortization of intangible and tangible assets 18.721 12.297
Write offs on stocks, contracts in progress and trade debtors 3.941 1.099 Provisions for liabilities and charges 6.994 -195 Other operating expenses 1.827 1.547
Result from continuing operations (+) -7.288 -3.353
Finance income (-) 5.311 3.007 Income from financial fixed assets 4 0 Income from current assets 120 113 Other finance income 5.187 2.894
Finance costs -6.590 -11.492 Debt charges 601 670 Other finance costs 5.989 10.822
Result from continuing operations after finance result (+) -8.567 -11.838
Income tax expense 2.827 3.838 Income taxes -3 1 Deferred taxes 2.830 3.837
Net result for the period (+) -5.740 -8.000 Attributable to owners of parent -5.766 -7.866 Share of non-controlling interests 26 -134
Result per share (number of shares : 2,400,000) (in EUR) (in EUR) * Basic result per share -2,39 -3,33 * Diluted result per share -2,39 -3,33
SABCA Annual accounts 2016 3
Consolidated statement of comprehensive income
(in thousands of euros) 2016 2015
Net result for the period -5.740 -8.000
Other comprehensive income -475 1.298
Items not to be reclassified to profit, net of taxes -475 1.298 Actuarial gains / losses on post-employment benefits -720 1.966 Deferred taxes 245 -668
Total comprehensive income, net of taxes, for the period -6.215 -6.702
Attributable to : -6.215 -6.702 owners of parent -6.241 -6.568 non-controlling interests 26 -134
Total comprehensive income result per share (number of shares : 2.400.000) (in EUR) (in EUR) * basic result per share -2,59 -2,79 * diluted result per share -2,59 -2,79
Consolidated statement of changes in equity
t s l s t e u
n v s e r g d e e r h e (in thousands of euros) n t t y w i a
m R t l s n i l o o s l l R u e e w t t u f o
d r s r r r a l
r t r s
t q 9 e a n t o i a l e h s e n t f p e 1 a n b
p n r s
n
o o l i a o i e d a e a
w s t T t S t a c h e c o u t g t e - C a i n
A b i r f o v n I i n u i n r r l r o T t o g o a t e a c d a N s v e e e H R R Balance at 1 January 2015 12.400 525 86.444 -5.733 0 93.636 213 93.849 Result for the period -7.866 -7.866 -134 -8.000 Items transferred directly to equity -525 525 0 Items not to be reclassified to profit, net of taxes 1.298 1.298 1.298 Total comprehensive income -525 -7.341 1.298 0 -6.568 -134 -6.702 Dividends 0 0 0 0 Balance at 31 December 2015 12.400 0 79.102 -4.435 0 87.068 80 87.147
Balance at 1 January 2016 12.400 0 79.102 -4.435 0 87.067 80 87.147 Result for the period -5.766 -5.766 26 -5.740 Items not to be reclassified to profit, net of taxes -475 -475 -475 Total comprehensive income 0 -5.766 -475 0 -6.241 26 -6.215 Dividends 0 0 0 0 Balance at 31 December 2016 12.400 0 73.336 -4.910 0 80.826 106 80.932
4 Annual accounts 2016 SABCA
Consolidated statement of cash flow
(in thousands of euros) 2016 2015
Cash flow from operating activities 28.129 7.210 Net income before tax -8.567 -11.838 Result on hedging instruments -128 8.283 Depreciation and amortization on fixed assets 16.841 10.626 Change in working capital 12.942 333 Change in provisions, deferred taxes and reserves 7.041 -194 Incomes taxes paid 0 0
Cash flow from investing activities -9.381 -9.057 Acquisition of intangible, tangible and financial non-current assets -11.291 -10.734 Disposals of intangible, tangible and financial non-current assets 1.910 1.671 Increase and decrease in receivables 0 6
Cash flow from financing activities 4.729 -118 Change in short-term liabilities 90 75 (except trade and financial debts) Change in long-term liabilities 4.995 -1.585 (except trade and financial debts) Change in short-term financial liabilities -237 2 Change in long-term financial liabilities -223 1.098 Interests - earned 170 381 - paid -66 -89 Dividends paid to shareholders 0 0
Net increase (decrease) in cash and cash equivalents 23.477 -1.965 Cash and cash equivalents, at the beginning of the period (*) 32.251 34.216 Cash and cash equivalents, at the end of the period (*) 55.728 32.251
(*) consistent with the consolidated statement of financial position
SABCA Annual accounts 2016 5
Notes (Except contrary indication, all the data are in thousands of euros)
1. Information about consolidation Subsidiary SABCA Limburg ASM Aéro S.A.S. Dellestraat, 54 Technopôle de l'Aéroport Med 5 3560 - LUMMEN NOUACEUR - CASABLANCA / MAROKKO Company number : 0438215146 Commercial register 258999 Number patent 32020377 VAT number 40489159 % of ownership interest 99,99 % 60,00 % Capital 12.394.676,24 EUR 12,000,000.00 MAD (EUR 1,080,000) Flabel and SABCA (C.D.R.) have been left out of the scope of consolidation because not yet very significant.
2. Employment 2016 2015
* FTE = full time equivalent Total in units FTE * Total in units FTE*
Average number of employees 1.120,0 1.068,8 1.146,0 1.092,7 Total employment at the end of the period 1.079,0 1.039,8 1.157,0 1.103,8
3. Property, plant and equipment note
d
r d e s n d n
t t e n c s a n o d n s h d t i
s a
n t a L
, n e g g n y n
e t a i c l r e a A n r u e g v n i r m
c u e i T r r n d a d d u s p i m t n l l i t t h a i i a i n O l s y s
u i e P e h u n a T a a n d s q r v c b L m e p o s n i e u a c L s a A F m Beginning balance Gross amount (*) 66.460 137.808 19.909 4.483 324 228.984 Depreciation -42.849 -117.573 -17.967 -2.219 -7 -180.615 Adjustments - Third party assets 22.748 22.748 Beginning balance 23.611 42.983 1.942 2.264 317 71.117
Movements during the period Acquisitions 905 2.799 477 7 162 4.350 Disposals -247 -665 -998 -1.910 Transfers from headings 280 36 -316 0 Depreciation on disposals -2.151 -4.392 -819 -329 -6 -7.697 Depreciation write back 246 656 959 1.861 Depreciation transfers -6 6 0
Ending balance Gross amount (**) 67.398 139.978 19.388 4.490 170 231.424 Depreciation -44.760 -121.309 -17.827 -2.548 -7 -186.451 Adjustments - Third party assets 23.936 23.936 Ending balance 22.638 42.605 1.561 1.942 163 68.909
6 Annual accounts 2016 SABCA
4. Intangible assets note Development expenses Beginning balance Gross amount 124.835 Amortization and depreciation -73.769 Beginning balance 51.066
Movements during the period Acquisitions 5.754 Depreciation -11.005 Ending balance Gross amount 130.589 Amortization and depreciation -84.774 Ending balance 45.815
Research costs are not capitalized, are incurred as an expense in the income statement and amount to 1.360 KEUR for the period 2016. In 2015 research costs were 1.592 KEUR. The strategy and efforts of the Group in terms of research and development are described in the Management report.
5. Financial assets note
2016 2015 Affiliated enterprises SABCA (C.D.R) 11 11 FLABEL Corporation N.V. - shares held by S.A.B.C.A. 81 81 - shares held by SABCA Limburg 20 20
112 112
Other participations Arianespace Participation 106 106 - Acquisitions 2.142 2.142 - Depreciation and amounts written down -2.036 -2.036 Others 66 64 Amounts receivable and cash guarantees 37 39
209 209
SABCA Annual accounts 2016 7
6. Provisions note
r r r
o o t o f f
s f
n & s n
s
t t
n s s L i o r e i n u c n l o n n c t i A e i o o a o a l i o o a i s r r h i i T i v t p t s s g i e i s s i v i i n O l n u v n O m o v v o i b T e r q o o o o c r o p p e r r P P P
Beginning balance 14.198 4.100 30.252 1.232 49.782 Actuarial gains /losses on pension plan commitments 720 720 Increase for the period 7.063 3.288 10.351 Decrease for the period -447 -2.860 -3.307 Ending balance * 14.471 4.100 34.455 4.520 57.546
* of which defined benefit plant obligations (note 13) : 14,326
7. Borrowings and payables note
2016 2015 up to 1 to 5 over up to 1 to 5 over TOTAL TOTAL 1 year years 5 years 1 year years 5 years Interest-bearing borrowings according th their maturity Lease contracts 368 1.442 580 2.390 362 1.912 771 3.045 Bank overdrafts 2 2 21 21 Other information Finance leases : - min. lease payments payable, present value 409 1.574 608 2.591 362 1.912 771 3.045 - min. lease payments payable, capital 368 1.442 580 2.390 297 1.693 727 2.717 - min. lease payments payable, interest 41 132 28 201 65 219 44 328 Trade and other payables according to their maturity Trade payables 21.275 21.275 20.257 20.257 Advances received 47.770 19.722 67.492 39.502 37.600 77.102 Tax and social liabilities 12.919 12.919 12.394 12.394 Other liabilities and borrowings 1.542 81.171 82.713 1.301 75.738 77.039
Total long term borrowings included in the consolidated statement of 102.915 116.021 financial position
8 Annual accounts 2016 SABCA
8. Inventories note
Stocks merchandise and Total stocks Work in progress raw materials and work in progress
Net value at the beginning 50.931 77.132 128.063 Movements during the period Change in inventories * -8.497 -14.264 -22.761 Depreciation - increase -4.564 -4.564 Depreciation - decrease 863 863
Net value at the ending 38.733 62.868 101.601
* including goods in reception / acceptance
9. Cash and cash equivalents note 2016 2015
Bank short-term deposits 50.719 23.994 Bank current accounts 4.988 8.226 Cash in hand and other 21 31
55.728 32.251
10. Amounts receivable within one year note 2016 2015
Trade receivables 60.814 56.237 Other receivables 4.170 3.476
64.984 59.713
11. Government grants status 2016 2015
Investment grants 382 647 Carrying amount of capital grants recognised 3.510 3.457 Amount of income grants netted against reported expenses -3.128 -2.810
Deferred tax assets and liabilities on dito 0 0
Advances to be reimbursed conditionally 57.951 54.367 Relating to research activities 4.729 4.522 Relating to development activities 53.222 49.845
Split : 57.951 54.367 - Reimbursement within one year 732 955 - Reimbursement after more than one year 57.219 53.412 57.951 54.367 - Federal Public Services 57.226 53.642 - Brussels Capital Region 725 725
The reimbursement of the advances is conditional upon the commerical success of the product.
SABCA Annual accounts 2016 9
12. Recognized deferred tax assets and liabilities
Total tax charge of the exercise Reconciliation between the theoretical tax charge obtained by applying the nominal taxe rate to the earnings before taxes and the effective tax charge obtained by applying the Group's effective tax rate. Base Tax Result before income tax -8.567 Tax expense at the theoritical rate applicable in the country concerned 2.961 Theoretical income tax at the rate of -34,57% Sources of differences - Non-deductible expenses 1.675 -564 - Notional interests -301 102 - Utilization of deferred tax assets not previously recognized -2.982 1.014 - Others 1.986 -686
Total actual tax expense 2.827 Effective tax rate -33,00%
Consolidated Note on deferred taxes recorded in the consolidated statement Consolidated statement of income statement & financial position of financial position comprehensive income Sources of deferred tax 2016 2015 2016 2015 Assets Intangible assets 36.302 34.852 1.450 6.461 Tangible assets 16.795 16.910 -115 700 Work in progress 5.597 755 4.842 -9.506 Hedging instruments 0 0 0 822
Total Assets 58.694 52.517 6.177 Liabilities Hedging instruments 0 0 Provisions for liabilities and charges -41.587 -30.290 -11.297 -4.324 Short-term debts 0 0 Recoverable loss -8.636 -5.416 -3.220 -5.416
Total Liabilities -50.223 -35.706 -14.517
TOTAL OF SOURCES OF DEFERRED TAX 8.471 16.811 -8.340 -11.263 Deferred income tax
Deferred tax on the fair value adjustments calculated at 33.99% 2.879 5.714 -2.835 -3.829 Deferred tax on hedging instruments Deferred tax on government grants and on realized surplus 40 36 4 -8 Deferred tax on IAS 19R -2.529 -2.284 -245 668
TOTAL DEFERRED TAX 390 3.466 -3.076 -3.169
10 Annual accounts 2016 SABCA
13. Defined benefit plans
1. DEFINED BENEFIT PLAN 2016 2015 2014 2013 2012 R
Components of defined benefit plan assets and liabilities
Present value of wholly or partially funded obligations 28.481 27.678 28.751 24.519 27.793 Fair value of plan assets (-) -14.155 -14.043 -13.122 -13.521 -12.974
Present value of wholly unfunded obligations 14.326 13.635 15.629 10.998 14.819 Unrecognised actuarial gains (losses)
Defined benefit plan obligation (assets), total 14.326 13.635 15.629 10.998 14.819 Expense recognised in income statement for defined benefit 1.553 1.584 1.461 1.832 1.514 Current service cost 1.502 1.589 1.314 1.619 1.248 Interest cost 510 370 761 773 1.023 Expected return on plan assets -240 -160 -407 -353 -551 Contributions by personnel -219 -215 -207 -207 -206
Mouvements in defined benefit plan obligation (assets)
Defined benefit plan obligation, beginning balance 13.635 15.629 10.997 14.819 10.296 Contributions paid -1.582 -1.612 -1.361 -1.797 -1.454 Expense recognised 1.553 1.584 1.461 1.832 1.514
Defined benefit plan obligation, ending balance 14.326 13.635 15.629 10.998 10.356
Principal actuarial assumptions Discount rate used 1,20 1,70 1,20 2,90 2,70 Expected return on plan assets 1,20 1,70 1,20 2,90 2,70 Expected rates of salary increase 3,00 3,10 / 3,00 3,10 / 3,00 3,50 / 3,40 3,90 / 3,40 Future defined benefit increase 1,60 1,60 1,60 2,00 2,00 Expected rate of return on reimbursement rights recognised as an asst not applicable Expected rate of increase of medical costs not applicable
A guarantee of 4.75% is paid by the insurer on premiums paid before 31/12/1998. An interest rate of 3.75% is applied to all increases in premiums between 01/01/1999 and 31/12/2005. From 01/01/2006 to 31/12/2014 the technical interest rate applicable on premium increases amounted to 2.75%. Since 2015, the applicable technical interest rate is 1.00%.
The proportions of the individual reserves as per 31/12/2016 per interest rate are as follows : 4.75% : 26% of reserves; 3.75% : 52% of reserves; 2.75% : 18% of reserves; 1.75% : 3% of reserves. 1.00% : 1% of reserves.
SABCA Annual accounts 2016 11
13. Defined benefit plans
2. DEFINED CONTRIBUTIONS PLAN
The plan insures the employee for a benefit consisting of a capital upon retirement, based upon paid contributions. For defined contributions plans, the Belgian law requires a minimum guaranteed return on the employee's career duration which SABCA insures via an external insurance company that receives and manages the contributions to the plan. As the application of defined benefit accounting to such plans has been recognized by the IASB to be conceptually problematic, the Group accounts for these plans as defined contribution plans, but acknowledges that these plans have some defined benefit features, as the return provided by the insurance company can be below the legally required minimum return, in which case the employer has to cover the gap with additional contributions.
The method applied by SABCA consists in calculating the liability in the statement of financial position as the sum of any individual differences between the mathematical reserves and the minimum guarantee as determined by Article 24 of the law of April 28, 2003 on complementary pensions. At December 31, 2016, this would not have resulted in a net liability position for the Group. Application of this method means that SABCA deems that the current guidelines in IFRS are not suited to defined contribution plans with minimum guaranteed return, and that another relevant and reliable method should be applied until the IASB comes up with an appropriate treatment.
14. Information concerning related-parties 2016 2015 Key management compensation Short-term employee benefits 3.345 3.455 Post-employment benefits 509 605 Other termination obligations 121 158 Considered headcount 29 29
Related-party transactions The Group's related parties are : - Dassault Aviation - FLABEL Corporation - Fokker Technologies - SABCA (C.D.R.)
2016 2015
Related-party sales 32.404 32.045 Related-party purchases 117 514 Related-party receivables 21.147 12.752 Related-party payables 11.515 11.870
Terms and conditions related -party transactions Sales and purchases are at market price. Balances outstanding at the year-end are not guarantieed and payments are made in cash. No guarantees were provided or received for related-party receivables. For the year 2016, the Group did not recognize any provisions for bad debts relating to amounts receivable from related parties. This evaluation is done by examining the financial position of the related-parties and the market in which they operate.
12 Annual accounts 2016 SABCA
15. Financial commitments
2016 2015 Commitments given Mortgages registered 100 100 Mortgage mandates 2.275 2.275 Pledged accounts 3.247 3.247 - FLABEL Corporation 2.000 2.000 - Customs 1.247 1.247 Commitments received Export insurance guarantees 26.574 26.574 Debts and receivables secured by bank guarantees 944 952
16. Appropriation of results (in Euros)
2016 2015 Return on capital 0,00 0,00 or for each of the 2,400,000 shares : a gross dividend 0,00 0,00 a withholding tax of 25 % 0,00 0,00 a net dividend 0,00 0,00
Total capital 12.400.000,00 12.400.000,00 Total shares with voting rights 2.400.000 2.400.000 Total voting rights (denominator) 2.400.000 2.400.000
17. Additional information A. ASSETS : FINANCIAL INSTRUMENTS The valuation method (cost or fair-value) in the consolidated statement of financial position of assets financial instruments is detailed below.
Value in consolidated statement of financial position on 31/12/2016 cost or Fair-value amortized cost Total Impact on result Impact on equity Non-current assets (1) Other financial assets 321 321 Current assets Trade and other receivables 64.984 64.984 Cash equivalents 55.728 55.728
Total of assets financial instruments 121.033 0 0 121.033
(1) The book value of the assets' financial instruments carried at cost or amortized cost corresponds to a reasonable approximation of fair-value.
SABCA Annual accounts 2016 13
B. LIABILITIES' FINANCIAL INSTRUMENTS The valuation method (cost or fair-value) on the consolidated statement of financial position on liabilities financial instruments is detailed below. Value in consolidated statement of financial position on 31/12/2016 Fair-value cost or amortized Total cost (1) Impact on result Impact on equity
Non-current liabilities 102.915 102.915 Current liabilities 92.805 83.876 Borrowings and other financial liabilities 1.116 1.116 Suppliers and other payables 91.689 91.689 Cash equivalents -8.929 -8.929
Total of liabilities financial instruments 195.720 -8.929 0 186.791
(1) The book value of the liabilities financial instruments carried at cost or amortized cost corresponds to a reasonable approximation of fair-value.
C. DERIVATIVE FINANCIAL INSTRUMENTS : value, impact on result and on equity The valuation method of the derivative financial instruments in the consolidated statement of financial position and its impact on result and equity is detailed below.
Market value on Market value on 31/12/2016 31/12/2015
Hedging instruments qualifying for hedge accounting Hedging instruments not-qualifying for hedge accounting -8.929 -9.056 Derivative financial instruments on exchange (1) -8.929 -9.056
(1) This amount corresponds to the market value of currency hedging instruments based upon observable data on 31/12/2016 and is not representative of the results that will be observed upon realization of the hedges. Impact on result result from Impact on equity finance result Total continuing (2) operations
Net change of financial instruments 0 128 128
(2) Change in fair-value of hedging instruments not-qualifying for hedge accounting as defined in IAS39 "Financial instruments".
18. Foreign exchange risks The Group is exposed to a foreign exchange risk on the difference between its sales in US Dollars and its purchases in US Dollars. It partially covers this risk using forward contracts and foreign exchange options.
The Group hedges partially its net future cash flows only if they are considered highly probable and partially as to ensure that the first future cash flows will be sufficient to exercise the foreign exchange hedges in place. The Group has recorded related to the exchange differences 4.867 in income and 5.565 in charges. A sensitivity analysis was performed in order to determine the impact of a 10 cents increase or decrease in the US Dollar / EURO exchange rate : 2016 2015
Net value US Dollars in portfolio 14.249 24.852 Closing US Dollar exchange rate 1,0541 1,0887
Fluctuation US Dollar exchange rate, upon closing 1,1541 0,9541 1,1887 0,9887
Fluctuation in net value of US Dollars in portfolio -1.171 1.417 -1.920 2.309
14 Annual accounts 2016 SABCA
The portfolio of derivative financial instruments consist of : 2016 2015
Dollars US Euros Dollars US Euros Forward sales contracts 66.000 57.298 Foreign exchange options 90.000 77.171 138.000 116.973
Total 156.000 134.469 138.000 116.973
The market value of the financial instruments amounts to -8.929. The change in fair value of the hedging instruments on cash flows of the year is booked on basis of the exchange rate dated December 31 and the "Mark-to-Market" calculated by financial institutions, managing of financial instruments.
2016 2015
Impact on financial income 128 -8.283
19. Management of risks and uncertainties 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 any liquidity risk. Credit risk The Group realises 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 that the granted loans are secured by the 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 risk and exchange risks Despite the fact that USD purchases have increased, the major part of the Group's expenses is incurred in euros, however the Group is exposed to an exchange risk on sales denominated in USD. The Group covers this risk using forward sales contracts and, if necessary, foreign exchange options. It hedges its net future cash flows only if they are considered sufficient to exercise the foreign exchange hedges in place. The amount of the hedge may be adjusted according to the variability in the timing of expected net cash flows.
Risks from long term programs The Group is exposed to a risk from its long-term programs due to the fact that technical, economic and financial developments may jeopardize their profitability. These risks are typically linked to the capacity to deliver the products and services conjoin the client needs (quality and delay), the continuing pricing pressure that might lead to a decrease of margin, to the absence of capacity in human ressources and machinery.
Operational risks Following the analysis done by those in charge of risk management and internal controls, several operational risks were identified and mapped out according to their acceptability: - The production rate variations expressed in customer requirements, under existing contracts, and the uncertainty associated with obtaining new contracts, lead to a variable charge and - in the long term – a lower charge than the company's internal capacity , which could lead to difficulties in financial results. - The age distribution within the workforce, especially the high average age, makes succession to key positions, training, and transmission of know-how particularly challenging, especially in the complex regulatory and technological environment of the aeronautics and space industries. - The impact on production costs, and in particular on the hourly rate, due to Belgian inflation and indexation, and more generally to wage developments at national and sectoral level.
SABCA Annual accounts 2016 15
20. Events after the balance sheet date
A plan to reduce operating costs was implemented in 2016.
21. Identity of the consolidating mother company
DASSAULT BELGIQUE AVIATION Avenue des Arts 41 1040 Brussels - Belgium Company number 0406.122.367
Percentage of control 53.28 %
22. Auditor's fee 2016 2015 Audit services - Auditor's fee SABCA 85 84 - Auditor's fee SABCA Limburg 22 22 - Auditor's fee ASM Aéro 12 14
TOTAL 119 120
23. Split of turnover 2016 2015
Delivery of goods 156.237 158.691 Services 45.909 24.798
Total 202.146 183.489
24. Justification of the rules of continuity
The Board of Directors notes that the negative results of 2014, 2015 and 2016 show a loss carried forward in the balance sheet. Taking account of the action plan to reduce operating costs, the Board is of the opinion that the accounting rules can be applied on an on-going concern basis.
16 Annual accounts 2016 SABCA General consolidation principles
Co mpliance with accounting standards
The SABCA Group has prepared its consolidated financial statements in accordance with IFRS (International Financial Reporting Standards) applicable as of December 31 , 20 1 6 as adopted for us by the European Union. The Group has not early adopted the standards and interpretations published as of December 31, 20 1 6 but whose application is only mandatory from accounting period beginning on or after January 1, 20 1 7 .
Accounting choices and management estimates
The preparation of the Group’s consolidated financial statements requires management to make estimates and issue assumptions sus ce ptible to have a financial impact on assets and liabilities. These estimates concern notably the results on contracts in progress and contingent liabilities. They are evaluated taking int o account historical experience, elements kn own at the closing of the accounting year and various other as sumptions that are believed to be reasonable. Subsequent results may differ from those estimates.
Consolidation method
The consolidation method by global integration has been chosen. This method consists in the incorporation in the company accounts of each assets and liabilities elements of the integrated subsidiary as a substitute for the inventory value of the participation. Similarly, costs and products of the subsidiary are cumulated w ith those of the parent company. Shares that are not held by the consolidated companies are included in assets and liabilities under "third person interests". They represent their part in equities and results. Reciprocal accounts and operations are elimin ated.
Reference period
Consolidated companies close their social year on December 31 st .
Consolidated subsidiary by global integration
SABCA directly and exclusively controls its subsidiary SABCA Limburg N.V., Dellestraat 54 at 3560 L ummen BE 0438.251 .146.
SABCA controls for 60 % its subsidiary ASM Aéro S.A.S. at Technopôle de l’Aéroport Med 5 – Nouaceur Ca sablanca Morocco, register 258999 – VAT 40489159 .
Subsidiary excluded from the consolidation
SABCA (C.D.R.) SPRL, Chaussée de Haecht, 1470 at 1130 Brussels BE 0451.147.295
SABCA Annual accounts 201 6 17
A pplication of IFRS standards (IFRS: International Financial Reporting Standards)
Like all listed European companies, SABCA is required to apply the IFRS accounting standards to its consolidated accounts from the financial year 2005 onwards.
Implementation of these standards adheres to the principle of prudence applied by SABCA when drawing up its accounts. The group has chosen to make use of the exemptio n allowing it to substitute the fair value of certain capital assets for their cost on the IFRS transition date, for plots of land but not for other capital assets.
The principal aspects of the IFRS standards applicable to SABCA are outlined below.
IAS 1 – Presentation of financial statements
Receivables and payables Receivables and payables are stated at the consolidated statement of financial position at their nominal value. The credits are the subject of reductions of value if their refunding at the limit, is in all or partly, dubious or compromise. The accounting of the reductions of value will be done on individualised basis.
Cash and cash equivalents Cash includes cash in hand and deposits with banks. Cash equivalents are short - term, highly liqui d investments that are readily convertible into known amounts of cash and are not subject to an important risk of change in value. Cash and cash equivalents are carried on the consolidated statement of financial position at nominal value.
Dividends Divide nds are recorded in the income statement in the year of their attribution. Dividends declared in respect of the period are no more accrued as short - term payables but included at the end of the financial year in a special heading of shareholders’ equity.
Minority interests Minority interests consist in third party shareholder’s interests in the equity of subsidiaries and the appropriate proportion of profits or losses.
IAS 2 – Inventor y
Inventories are stated at the lower of cost and net realisable valu e.
Cost of inventories includes the purchase, conversion and other costs incurred to bring the inventories to their present location and condition ; other costs are accrued in charge when incurred.
Cost of inventories is determined by the first - in, first - out method (FIFO).
Provisions for amounts written off on stocks are accrued in charges of the period : - for item s related to production or maintenance programs, unusable or whose tolerances, norms, technical configuration, conception have changed; - for item s not moved during the 24 previous months unless their use is expected in the near future.
Amounts written off will be decreased in case of later use of the non destructed parts.
18 Annual accounts 201 6 SABCA
IAS 10 – Subsequent events
Post consolidated statement of financial position events that contribute to confirm changes in circumstances or position which existed at the consolidated statement of financial position date (adjusting events) are reflected in the financial statements.
Post consolidated statement of financial position events that represent charges in circumstances or position appeared after the consolidated statement of financial position date (non - adjusting events) are disclosed in the notes when material.
IAS 12 – Income taxes
Current taxes Cu rrent taxes include expected tax charges based on the accounting profit of the current year and adjustments to tax charges of prior years.
Deferred taxes Deferred taxes are calculated using the liability method, on temporary differences arising between th e tax base of assets and liabilities and their carrying amounts in the financial statements.
Deferred tax assets are only recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.
I FRS 8 – Segment reporting
Business segment The Group SABCA is allocated into the business group, aircraft and spacecraft c onstruction for the segment information comply with the standards IFRS. All the activities of the G roup SABCA are exercised in the sector of aeronautical construction and all the resources are affected to this one sector only. The management report gives further relevant information on the percentage of net sales for each activity platform: civil aviation, defence and aerospace.
Geographical segment Except for the activities by ASM Aéro, t he total of activities of the group is located on the national territory. The sales geographical breakdown between Belgian, Europe and out of Europe is also given in perce ntage, upon further relevant information, in the management report.
IAS 16 – Tangible fixed assets
Tangible fixed assets are recorded at historical cost, less accumulated depreciation and impairment losses.
Cost includes all direct costs and appropriate allocation of indirect costs incurred to bring the asset to working condition for its intended use. There are non borrowing costs capitalised in the costs of the assets.
Repair and maintenance costs are expensed in the period in which they are incurred, if they do not increase the future economic benefits of the asset. Otherwise, they are classified as separate components of items of tangible fixed assets.
The plots of land were valued at their fair value, taking account of their use, geograph ic situation and any legal obligations attached to them. This value was determined within the framework of IFRS 1 and will be maintained for the whole useful life of these plots of land.
SABCA Annual accounts 201 6 19
Tangible assets received from third parties or acquired on behalf of third parties and held by the company for use in the production of goods are posted as tangible fixed assets, insofar as the company bears their risk and benefits from advantages relating to these assets.
The cross - entry for these tangible fixed assets is posted as a long - term debt in liabilities: they are not amortised but valued every year at their fair value. Depreciation of tangible fixed assets is provided over assets’ estimated useful economic lives: the method of depreciation, chosen “straight - line or decreasing” is the method which reflects the best the pattern of economic benefits associated with the asse t considered.
Useful life is defined as follows per main type of tangible fixed assets:
- Land non - depreciable - Buildings 30 years straight - line depreciation - Roofs 10 years straight - line depreciation - Heavy machines tools 10 years straight - line depre ciation - Plant, machinery and equipment 10 years decreasing depreciation - Furniture and office equipment 10 years decreasing depreciation - Vehicles 5 years straight - line depreciation - Computer equipment 5 years decreasing depreciation
Improvements t o leased buildings are capitalised and depreciated over the remaining term of the lease or their expected useful life if shorter. Gains and losses on disposals are included in the operating result.
IFRS 5 : Non - current assets held for the sale
When at the closing date of the financial statements it is more than likely that non - current assets will be disposed of they are qualified as assets held for sale.
Their disposal is considered highly probable when at the closing date a plan to sell them for a rea sonable price in relation to their fair value has been initiated to find a buyer and to realize their disposal within a maximum of one year.
A non - current asset held for sale is evaluated at the lowest between its carrying amount in accordance in the IAS 16 and its fair value reduce d by the costs of the disposal.
IAS 17 – Financial leasing contracts
Leases under which a substantial part of the risks and rewards of ownership are effectively retained by the le ss or are classified as operating leases. Payments under operating lease are considered as an expense in the income statement.
Leases under which the group assumes a substantial part of the risks and rewards of ownership are classified as finance leases.
Financial leasing contracts are recognise d at the fair value of the minimum lease payments at the inception of the lease term and classified as leased tangible asset and are depreciated on their useful life, in line with the politic of depreciation applicable to the assets owned by the company. L ease payments are apportioned between the financial charges and the repayment of the lease liability so as to achieve a constant rate of interest on the remaining consolidated statement of financial position of the liability.
The corresponding rental obli gations, net of finance charges, are included in long - term payables. The reimbursements are allocated between finance charges and the liability of the leasing. It exists so a constant periodic rate of interest on the finance balance outstanding.
20 Annual accounts 201 6 SABCA
IAS 18 - Revenue
Work in progress (also IAS 11 – Construction contracts and IAS 21 – Effects of Changes in Foreign Exchange Rates)
The cost of work in progress comprises direct and indirect costs of production; the indirect costs other than production are charged to the income statement of the period when incurred.
The costs are distributed to production programs as follows: - dir ect booking of raw materials, parts, consumer goods, direct costs and specific subcontract costs, depreciation of specific equipments and relocation, lay - out costs proper to a program; - booking of indirect costs through hour rates based on the work of th e production personnel.
Revenue and charges are booked, in the statutory statements, following the completed contract method.
Concerning all consolidated financial statements, revenue and charges of contracts in progress are recognised using the percenta ge of completion method in line with IAS 18.
At the closing date the estimated total costs of the contract and the costs incurred for work performed to date are determined . When the outcome of a construction contract can be estimated reliably, contract re venue and contract costs are recognised by using the percentage of completion method to measure the amount of these products and charges to be booked during the exercise and the expected losses are charged as expenses immediately.
The stage of completion of contracts is evaluated : - either in accordance with the performance of contractual milestones and / or deliveries in each work package, based up on the ratio between on one hand, billing to the customer at the closing date (except d own - payment invoices) and on the other hand , the total income expected from the work package; - or by comparing c osts incurred for work performed upon closing date and the total estimated costs , if th is r atio is representative of the execution of the contractual work package .
When an outcome of a contract cannot be estimated reliably, contract revenue booked is limited to the amount of recoverable contract costs charged without profit.
IAS 19 – Employee benefit s
The company posts: - a liability where a member of staff has rendered services in return for employee benefits, which will be paid to the latter at a future date, - an expense where the company makes use of the economic benefit resulting from services rendered by a member of staff in return for employee b enefits.
The defined benefit obligation is calculated by independent qualified actuaries using the "Projected Unit Credit" - method and the obligations between the expected costs of any past service (Defined Benefit Obligation) and any plan assets are recog nised in the balance sheet.
In accordance with IFRS 1, the group has opted to recognize all actuarial gains and losses and past service costs at the date of transition to IFRS as an adjustment to equity.
SABCA Annual accounts 201 6 21
First application of the IAS 19 Revised
The revised IAS 19 standard provides:
- The recognition of actuarial gains and losses in income and expense are reco gnized directly in equity. - Immediate recognition of past service cost; - The alignment of the expected rate of return on plan assets in the discount rate; - Accounting for only administrative costs related to the management of assets against their actual performance.
Given the rules previously applied accounting policies, investment characteristics and assumptions, the Group is weakly affected at the consolidated income statement in the application of this new standard.
IAS 20 – Government G rants
Government grants related to assets are, after transfer to deferred taxes, recognised as deferred income and transferred as income over the periods necessary to match them with the depreciation expense of the asset they relate to.
A government grant is ac counted for in the consolidated statement of financial position only when there is reasonable assurance that all the attached conditions can be met.
The receipt of cash creates the fact or which generates debt.
Government grants constituted by a dvances which will be reimbursed conditionally are booked in long - term debts with the exception of the part paid during the year charged in short - term debts.
If there exists a reasonable assurance that the non - reimbursement conditions of those advances are met the reversal of the debt is able to generate a profit result.
IAS 21 – Foreign currency transactions (cf. also IAS 39 – financial instruments)
Foreign currency transactions are recorded initially at the internal exchange rate prevailing at the transaction date.
The internal exchange rate is based on the best estimation of mid - term forecasts and is injected during the year in case of strong variation or official revaluation / depreciation.
Monetary assets and liabilities denominated in foreign currencies are translated at the closing rate at the consolidated statement of financial position date.
Gains and losses resulting from the settlement of foreign currency transactions are recognised i n the income statement as financial result.
22 Annual accounts 201 6 SABCA
IAS 24 – Information concerning related parties.
Adoption of standards Under the information to take into consideration related to Key management compensation we find : - t he directors; - t he members of the Committee of Managers and of the Management Committee in charge of operations of the mother company mentioned in the annual report under the item “Cor porate Governance”; - t he chiefs of department who are not member of the Management Committee in charge of operations of the mother company and other e xecutive members of the subsidiaries .
IAS 36 – Impairment of assets
The carrying amounts of tangible and intangible assets are reviewed at each consolidated statement of financial position date to determine if they may be subjected for impairment losses. An impairment loss is recognised in income whenever the carrying amou nt exceeds its recoverable amount which corresponds to the higher of an asset’s net selling price and value in use such as defined in IAS 36. Reversal of impairment losses recognised in prior years is recorded in income when there is an indication that the impairment losses recognised for the asset no longer exist or have decreased.
IAS 37 – Provisions, contingencies
Provisions Provisions are recognised in the consolidated statement of financial position when: - there is a present obligation (legal or constructive) as a result of a past even t ; - it is probable that an outflow of resources will be required to settle the obligation; - a reliable estimate can be made on the amount of the obligation.
The risks and uncertainties which affect unavoidable man y events and circumstances are taking into account to provide at the consolidated statement of financial position date the best estimate of the expenditure required to settle the obligation.
Restructuring A provision for restructuring is only recognised w hen a detailed and formal restructuring plan has been approved and the restructuring has either commenced or has been announced publicly before the consolidated statement of financial position date.
The restructuring provision only includes the direct exp enditure arising from the restructuring which is necessarily entailed and is not associated with the ongoing activities of the enterprise.
Provision for losses on contractual commitments A provision for losses on commitments is recognised when : - it is likely that a contract is onerous (a contract of which the unavoidable costs required to meet the contractual obligations exceed the expected economic benefits of the contract); - the contract, signed before the closing date, generates obligations for the Group, in the form of the delivery of goods, the provision of services or failing that, the payment of termination fees; - the Group's obligation can be estimated reliably.
The unavoidable costs that make up the provision represent the lowest amount of th e net cost of fulfilling the contract (i.e. the loss forecast for the contract) and the cost arising from failing to fulfil the contract (for example, exit cost in the event of early termination).
The flows used in this analysis are discounted in order to take account of their allocation over time.
SABCA Annual accounts 201 6 23
IAS 38 – Intangible assets
Research & Development costs Research costs are recognised in the income statement as an expense in the period when incurred . Development costs are capitalised if the conditions of the IAS 38 standard are met. Intangible assets are amortized in accordance with the deliveries of the production units and are subject to an impairment test when there is an indicator of impairment.
IAS 39 – Financial instruments
Financial instruments The group uses derivative financial instruments to hedge exposure arising from its industrial and commercial operations. These derivative financial instruments are treated, in accordance with IAS 39, either as « free - standing instruments held for trading” or as qualified for “hedge accounting”.
Derivative financial instruments are initially recorded in the consolidated statement of financial position at cost and are re - measured at their fair value at every closing date.
Changes in the fair value of any such derivative instruments are recognised by their nature or in equity or in finance result.
For financial instruments, SABCA has applied IAS 39 from the financial year 2005.
Financial assets available for sale Financial assets available for sale are carried at fair value and changes in the fair value are recognised directly in the income statement.
24 Annual accounts 201 6 SABCA
Statutory auditor’s report to the general shareholders’ meeting on the consolidated financial statements of the company SABCA SA as of and for the year ended 31 December 2016 ______
As required by law, we report to you in the context of our statutory auditor’s mandate. This report includes our opinion on the consolidated financial statements, as well as the required additional statement. The consolidated financial statements comprise the consolidated statement of financial position as at 31st December 2016, and the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year ended 31st December 2016 and the explanatory notes.
Report on the consolidated financial statements – Unqualified opinion
We have audited the consolidated financial statements of the company S.A.B.C.A SA for the year ended 31st December 2016, prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the European Union, which show a consolidated statement of financial position total of 338.600.(000) EUR and a consolidated income statement showing a consolidated loss for the year of 5.740.(000) EUR. Responsibility of the board of Directors for the preparation of the consolidated financial statements
The board of Directors is responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with the International Financial Reporting Standards as adopted by the European Union, and for such internal control as the board of Directors determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Responsibility of the statutory auditor
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing (ISAs) as adopted in Belgium. Those standards require that we comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the statutory auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the statutory auditor considers the company’s internal control relevant to the preparation of consolidated financial statements that give a true and fair view, in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the board of Directors, as well as evaluating the overall presentation of the consolidated financial statements. We have obtained from the board of Directors and company officials the explanations and information necessary for performing our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Unqualified opinion
In our opinion, the consolidated financial statements of the company S.A.B.C.A SA give a true and fair view of the group’s equity and financial position as at 31st December 2016, and of its results and its cash flows for the year then ended, in accordance with the International Financial Reporting Standards as adopted by the European Union.
SABCA Annual accounts 2016 25
Emphasis of Matter
Without qualifying our opinion, we draw the attention to Note 24 Justification of the rules of Continuity in the financial statements in which the Board expresses its opinion that the company’s continuity is guaranteed and that the accounting rules based on that assumption can be applied.
Report on other legal and regulatory requirements
The board of Directors is responsible for the preparation and the content of the Director’s report on the consolidated financial statements. In the context of our mandate and in accordance with the Belgian standard which is complementary to the International Standards on Auditing (ISAs) as applicable in Belgium, our responsibility is to verify, in all material respects, compliance with certain legal and regulatory requirements. On this basis, we provide the following additional statement, which does not modify the scope of our opinion on the consolidated financial statements: The Director’s report on the consolidated financial statements includes the information required by law, is consistent with the consolidated financial statements and is free from material inconsistencies with the information that we became aware of during the performance of our mandate.
Brussels, 27 April 2017
Mazars Réviseurs d’Entreprises SCRL Statutory Auditor Represented by
Lieven ACKE
26 Annual accounts 2016 SABCA
2016 Report to the board of directors
Ordinary General Meeting of June 1st, 2017
ANNUAL ACCOUNTS
Non consolidated accounts 28
Statutory auditor's report on the annual accounts 46 Non consolidated balance sheet after appropriation StatutaireStatutory rekeningen accounts volgens according Belgische to the boekhoudkundige financial reporting principes framework applicable in Belgium
(in thousand EUR)
Assets Notes Codes 2016 2015
Fixed assets 21/28 32.411 37.284
Intangible assets 6.2 21 9.513 12.077
Tangible assets 6.3 22/27 20.066 22.375 Land and buildings 22 6.577 7.010 Plant, machinery and equipment 23 11.926 13.276 Furniture and vehicles 24 1.400 1.772 Assets under construction and advance payments 27 163 317
Financial assets 6.5.1 28 2.832 2.832 Affiliated enterprises 280/1 2.653 2.653 Participating intrests 6.4.1 280 2.653 2.653 Other financial assets 284/8 179 179 Shares 6.4.3 284 173 170 Amounts receivable and cash guarantees 6.4.3 285/8 6 9
Current assets 29/58 206.662 205.588
Amounts receivable after more than one year 29 736 1.072 Trade debtors 290 736 1.072
Stocks and contracts in progress 3 81.957 109.350 Stocks 30/36 35.630 47.388 Raw materials and consumables 30/31 13.083 18.840 Goods purchased for resale 34 22.062 27.310 Advance payments 36 485 1.238 Contracts in progress 37 46.327 61.962
Amounts receivable within one year 40/41 69.263 63.885 Trade debtors 40 57.368 53.050 Other amounts receivable 41 11.895 10.835
Investments 6.6 50/53 50.719 23.994 Other investments and deposits 51/53 50.719 23.994
Cash at bank and in hand 54/58 2.785 6.430
Deferred charges and accrued income 6.6 490/1 1.202 857
Total assets 20/58 239.073 242.872
28 Annual accounts 2016 SABCA Liabilities Notes Codes 2016 2015
Capital and reserves 10/15 21.354 30.467
Capital 6.7.1 10 12.400 12.400 Issued capital 100 12.400 12.400
Reserves 13 14.476 14.401 Legal reserve 130 1.240 1.240 Reserves not available for distribution 131 595 595 Other 1311 595 595 Untaxed reserves 132 881 806 Reserves available for distribution 133 11.760 11.760
Profit (loss) carried forward 14 -5.904 3.019
Investment grants 15 382 647
Provisions and deferred taxation 16 56.074 49.103
Provisions for liabilities and charges 160/6 56.033 49.067 Pensions and similar obligations 160 145 563 Major repairs and maintenance 162 1.808 1.549 Other liabilities and charges 6.8 164/5 54.080 46.955 Deferred taxes 168 41 36
Creditors 17/49 161.645 163.302
Amounts payable after more than one year 6.9 17 71.645 81.384 Advances received on contracts in progress 176 19.722 33.529 Other amounts payable 178/9 51.923 47.855
Amounts payable within one year 6.9 42/48 77.101 69.407 Current portion of amounts payable after more than one year 42 472 652 Financial debts 43 2 21 Credit institutions 430/8 2 21 Trade debts 44 19.888 18.228 Suppliers 440/4 19.888 18.228 Advances received on contracts in progress 46 44.633 39.005 Taxes, remuneration and social security 45 11.698 11.183 Taxes 450/3 356 299 Remuneration and social security 454/9 11.342 10.884 Other amounts payable 47/48 408 318
Accrued charges and deferred income 6.9 492/3 12.899 12.511
Total liabilities 10/49 239.073 242.872
SABCA Annual accounts 2016 29
Non consolidated income statement Statutory accounts according to the financial reporting framework applicable in Belgium
(in thousand EUR)
Notes Codes 2016 2015
Operating income 70/76A 187.787 197.312 Turnover 6.10 70 192.406 173.700 Increase (+), decrease (-) in stocks of finished goods, work and contracts in progress (+)/(-) 71 -15.193 14.133 Own construction capitalised 72 7.114 5.382 Other operating income 6.10 74 3.012 3.793 Non-recurring operating income 6.12 76A 448 304
Operating charges 60/66A -195.514 -199.954 Raw materials, consumbables and goods 60 37.064 40.086 Purchases 600/8 29.384 47.889 Increase (-)/decrease (+) in stocks (+)/(-) 609 7.680 -7.803 Services and other goods 61 67.995 66.603 Remuneration, social security costs and pensions (+)/(-) 6.10 62 61.918 62.930
Depreciation of and other amounts written off formation expenses, intangible and tangible fixed assets 630 15.978 17.503 Increase (+)/decrease (-) in amounts written off stocks, contracts in progress and trade debtors (+)/(-) 6.10 631/4 3.970 10.088 Increase (+)/decrease (-) in provisions for liabilities and charges (+)/(-) 6.10 635/8 6.932 1.344 Other operating charges 6.10 640/8 1.612 1.278 Non-recurring operating charges 6.12 66A 45 122
Operating profit (loss) (+)/(-) 9901 -7.727 -2.642
Financial income 75/76B 4.929 2.802 Recurring financial income 75 4.929 2.802 Income from financial fixed assets 750 4 0 Income from current assets 751 196 159 Other financial assets 6.11 752/9 4.729 2.643 Non-recurring financial income 6.12 76B 0 0
Financial charges 65/66B -6.042 -12.836 Recurring financial charges 6.11 65 6.042 12.079 Interest and other debt charges 650 555 618 Other financial charges 652/9 5.487 11.461 Non-recurring financial charges 6.12 66B 0 757
Profit (loss) on ordinary activities before taxes (+)/(-) 9903 -8.840 -12.676
30 Annual accounts 2016 SABCA
(in thousand EUR)
Notes Codes 2016 2015
Profit (Loss) on ordinary activities before taxes (+)/(-) 9903 -8.840 -12.676
Transfer from deferred taxes 780 0 10 Transfer to deferred taxes 680 -5 -2
Income taxes (+)/(-) 6.13 67/77 -3 -4 Income taxes 670/3 3 5 Adjustment to income taxes and write-back of tax provisions 77 0 1
Profit (Loss) for the period (+)/(-) 9904 -8.848 -12.672
Transfer from untaxed reserves 789 0 20
Transfer to untaxed reserves 689 -75 -69
Profit (Loss) of the period available for appropriation (+)/(-) 9905 -8.923 -12.721
Appropriation account
Profit (Loss) to be appropriated (+)/(-) 9906 -11.941 3.018 Profit (Loss) of the period available for appropriation (+)/(-) (9905) -8.923 -12.721 Profit (Loss) brought forward (+)/(-) 14P -3.018 15.739
Profit (Loss) to be carried forward (+)/(-) (14) -11.941 3.018
Profit to be distributed 694/7 0 0 Dividends 694 0 0
SABCA Annual accounts 2016 31 Notes (Unless otherwise specified, all the data are in thousands of euros)
STATEMENT OF INTANGIBLE ASSETS (heading 21 of assets - F 6.2) 1) 2) 2) 3) Research costs that Research costs that have been made have been made Codes Concessions, Development costs during a period during a period patents licences a.o. starting before starting after Acquisition value 01/01/2016 31/12/2015
At the end of the preceding period 805-P 108.421 31.172 3.024 Movements during the period: Acquisitions, including produced fixed assets 802 5.754 1.360 At the end of the period 805 114.175 31.172 1.360 3.024
Depreciation and amounts written down At the end of the preceding period 812-P 99.385 28.131 3.024 Movements during the period: Recorded 807 6.589 1.729 1.360 At the end of the period 812 105.974 29.860 1.360 3.024
NET BOOK VALUE AT THE END OF THE PERIOD 8.201 1.312 0
STATEMENT OF TANGIBLE FIXED ASSETS (headings 22 to 27 of assets - F 6.3) 1) 2) 3) 6) Assets under Land Plant, machinery and Furniture and Codes construction and and buildings equipment vehicles advance payments (heading 22) (heading 23) (heading 24) Acquisition value (heading 27)
At the end of the preceding period 819-P 53.935 101.559 18.930 324 Movements during the period: Acquisitions, including produced fixed assets 816 747 2.689 422 161
Sales and disposals 817 -246 -658 -998
Transfers from one heading to another (+)/(-) 818 316 -315 At the end of the period 819 54.752 103.590 18.354 170
Depreciation and amounts written down At the end of the preceding period 832-P 46.925 88.283 17.158 7
Movements during the period: Recorded 827 1.490 4.037 755 6
Written down after sales and disposals 830 -246 -656 -959
Transfers from one heading to another (+)/(-) 831 6 -6 At the end of the period 832 48.175 91.664 16.954 7
NET BOOK VALUE AT THE END OF THE PERIOD 6.577 11.926 1.400 163
32 Annual accounts 2016 SABCA STATEMENT OF FINANCIAL FIXED ASSETS (heading 28 of assets - F 6.4) Enterprises Codes Participating, interests and shares 1) Affiliated 3) Other (heading 280) (heading 284) Acquisition value At the end of the preceding period 839-P 13.141 2.217 Movements during the period : Acquisitions, including produced fixed assets 836 2 At the end of the period 839 13.141 2.219
Depreciation and amounts written down At the end of the preceding period 852-P 10.481 2.047 At the end of the period 852 10.481 2.047
Uncalled amounts At the end of the preceding period 855-P 7 At the end of the period 855 7 Net book value at the end of the period 2.653 172
Amounts receivable (heading 285/8)
Net book value at the end of the preceding period 285-P 9 Movements during the period : Additions 858 1 Reimbursements 859 -3
Net book value at the end of the period (285) 6
INFORMATION RELATING TO THE SHARE IN THE CAPITAL (F 6.5.1) Share in the capital and other rights in other companies List of both enterprises in which the enterprise holds a participating interest (recorded in the heading 280 and 282 of the assets), and other enterprises in which the enterprise holds rights (recorded in the headings 28 and 50/53 of assets) in the amount of at least 10 % of the capital issued.
Rights held by Data extracted from the most recent annual accounts
NAME, full address of the REGISTERED OFFICE the enterprise Subsi- Annual Capital and and for the enterprise governed by Belgian law, Currency Net result the COMPANY IDENTIFICATION NUMBER (directly) diaries accounts reserves
(+) or (-) Number % % (in thousands of units) - SABCA Limburg N.V. Dellestraat 54 B 3560 LUMMEN 499.975 99,99 31.12.2016 EUR 3.119 675 BE 0438.251.146
- SABCA (C.D.R.) SPRL Chaussée de Haecht 1470 1130 Bruxelles BELGIUM 73 97,33 31.12.2016 EUR 11 0 BE 0451.147.295
- FLABEL CORPORATION S.A. Boulevard Auguste Reyers 80 1030 Bruxelles 3 BELGIUM 273 27,30 6,50 31.12.2015 EUR 404 1 BE 0465.127.074
- ASM Aéro S.A.S. Technopôle de l'Aéroport Med5 27000 Nouaceur CASABLANCA - MOROCCO 600 60,00 31.12.2016 MAD 2.996 1.099 Foreign company
SABCA Annual accounts 2016 33 OTHER INVESTMENTS AND DEPOSITS, ALLOCATION DEFERRED CHARGES AND ACCRUED INCOME (heading 51/53 and 490/1 of assets - F 6.6)
Other investments Codes 2016 2015
Term deposits with credit institutions 53 50.719 23.994 falling due :
up to one month 8686 6.167 232 between one month and one year 8687 42.552 21.762 over one year 8688 2.000 2.000
Deferred charges and accrued income 2016
Analysis of heading 490/1 of assets if the amount is significant. 1.203 Deferred charges : Goods and services 720 Goods in transit 468 Accrued bank and interests to receive 15
STATEMENT OF CAPITAL AND SHAREHOLDING STRUCTURE (F 6.7.1 & 6.7.2) Amounts in Statement of capital Codes Number of shares thousand EUR Issued capital At the end of the preceding period 100P 12.400 At the end of the period (100) 12.400
Structure of the capital Different categories of shares Without mention of nominal value 2.400.000 Registered shares 8702 2.245.817 Shares to bearer and/or dematerialized 8703 154.183
Structure of shareholdings of the enterprise as at year-end closing date:
Droits sociaux détenus DENOMINATION de personnes détenant des droits sociaux dans la société, Nombre de droits de vote avec mention de L'ADRESSE (du siège statutaire pour les personnes morales) Nature % Attachés à Non liés à N et, pour les entreprises de droit belge, mention du NUMERO D'ENTREPRISE des titres des titres o n - DASSAULT BELGIQUE AVIATION S.A. 53,28 1.278.650 l Avenue des Arts 41 B-1040 BRUXELLES BE0406.132.367 - Fokker Aerospece B.V. 43,57 1.045.662 Industrieweg 4 NL-3351 LB PAPENDRECHT (PAYS-BAS) NL 804 549 096 B01
34 Annual accounts 2016 SABCA PROVISIONS FOR OTHER LIABILITIES AND CHARGES (F 6.8) Analysis of heading 163/5 of liabilities if the amount is significant. 2016 Provision for futures losses 42.913 Provision for global risk Ariane 5 and adaptation of the company to civil aviation programs 4.100 Provision for redundancies 2.927 Provision for penalties 2.596 Provision for seniority premium 1.094 Provision for employee litigations 450
STATEMENT OF AMOUNTS PAYABLE, ACCRUED CHARGES AND DEFERRED INCOME (F 6.9) Amounts payable current portion
Analysis by current portions of amounts initially Codes 1) not more than one 2) between one and 3) over five years year five years payable after more than one year (heading 42) (heading 17) (heading 17)
Advances received on contracts in progress 889 19.722 Other amounts payable 890 472 7.344 44.579
TOTAL 472 27.066 44.579
Amounts payable for taxes, remuneration and social security Codes 2016 Taxes (heading 450/3 of the liabilities) Acruing taxes payable 9073 6 Estimated taxes payable 450 350
Remuneration and social security (heading 454/9 of liabilities) Other amounts payable in respect of remuneration and social security 9077 11.342
Accrued charges and deferred income Allocation of the heading 492/3 of liabilities if the amount is significant 2016 Accrued charges 12.899
OPERATING RESULTS (F 6.10)
Operating income Net turnover (heading 70) 192.406
Breakdown by type of activity in percentage of turnover Civil aviation 48,4 Defense 21,6 Space 30,0 100,0 Breakdown by geographical markets Domestic 16,3 Export 83,7 100,0
SABCA Annual accounts 2016 35 OPERATING RESULTS (F 6.10) Codes 2016 2015 Operating income
Other operating income (heading 74) whereof: compensatory amounts received from public authorities 740 26 79
Operating charges
Employees recorded in the personnel register Total number at the closing date 9086 900 958 Average number of employees in full-time equivalents 9087 882,9 913,8 Number of actual working hours 9088 1.312.902 1.371.701
Personnel costs (heading 62) Remuneration and direct social benefits 620 33.538 33.794 Employer's contribution for social security 621 14.284 14.902 Employer's premium for extra-statutory insurance 622 2.818 2.831 Other personnel costs 623 11.278 11.403
Provisions for pensions (included in heading 635/7) Additions (uses and write-backs) (+)/(-) 635 -418 -511
Amounts written off (heading 631/4) Stocks and contracts in progress - Recorded 9110 12.143 12.806 - Written back 9111 8.413 2.718 Trade debtors - Recorded 9112 240
Provisions for risks and charges (heading 635/7) Additions 9115 12.317 15.825 Uses and write-backs 9116 5.385 14.481
Other operating charges (heading 640/8) Taxes related to operations 640 1.612 1.278
Hired temporary staff and persons placed at the company's disposal Total number at the closing date 9096 75 90 Average number of employees in full-time equivalents 9097 62,0 136,2 Number of actual worked hours 9098 112.479 264.259 Charges to the enterprise 617 6.061 11.471
36 Annual accounts 2016 SABCA FINANCIAL RESULTS (F 6.11) Recurring financial income Codes 2016 2015 Other financial income (heading 752/9) Government grants recognised in the income statement Investment grants 9125 318 243 Allocation of other financial income Exchange differences 4.411 2.393 Penalty intrest 7 Recurring financial charges Other financial charges (heading 652/9) Allocation of other financial charges Exchange differences 5.332 2.055 Technical losses on sales and options (MTM) * -128 9.105 Delcredere 199 229 Bankcharges 83 63
* This amount includes the total unrealized loss generated by the negative market value of the currency hedging instruments as of 31/12/2015 and is not represnetative of the results that will be observed upon realization of the hedges. INCOME AND CHARGES OF EXCEPTIONNAL SIZE OR OF EXCEPTIONNAL OCCURRENCE (F 6.12) Codes 2016 2015 Non-recurring operating income (76A) 448 304 Capital gains on disposal of intangible and tangible fixed assets 7630 25 5 Other non-recurring operating income 764/8 423 299 Non-recurring operating charges (66A) 45 122 Capital losses on disposal of intangible and tangible fixed assets 6630 15 Other non-recurring operating charges 664/7 30 122 Non-recurring financial charges (66B) 0 757 Amounts written off financial fixed assets 661 757
INCOME TAXES AND TAXES (F 6.13) Income taxes Codes 2016 Income taxes on the result of the current period : 9134 2 Income taxes and withholding taxes due or paid 9135 34 Excess of withholding taxes paid recorded under assets (-) 9136 -32 In so far as income taxes of the current period are materially affected by differences between the profit before taxes, as stated in the annual accounts and the estimated taxable profit Non-deductible expenses 1.586 Status of deferred taxes representing assets : Accumulated tax losses deductible from future taxable profits 9142 5.150 Other deferred taxes representing assets : reported deduction for investments 5.991
Value added taxes and other taxes borne by third parties Codes 2016 2015
Value added taxes charged to the enterprise (deductible) 9145 21.488 23.457 by the enterprise 9146 11.003 14.139 Amounts withheld on behalf of third parties for:
Payroll withholding taxes 9147 11.006 11.238
SABCA Annual accounts 2016 37 RIGHTS AND COMMITMENTS NOT REFLECTED IN THE BALANCE SHEET (F 6.14) Goods and values not disclosed in the balance sheet, held by third parties in their own 2016 name but at risk to and for the benefit of the enterprise: Raw materials in deposit 1.674 Tooling in deposit 76 Materials in deposit 3.684
Comments relating to technical guarantees, in respect of sales or services. The general sales terms provide for a fonctional guarantee during a 6 month period. There are very few exceptions to the rule. For example, the warranty for space products covers 24 to 60 month stocking. Brief description of supplement retirement or survivors pensions plan in favour of the personnel or the executives of the enterprise and of the measures taken by the enterprise to cover the resulting charges. The company contracted group insurance policies in favour of its employed personnel - a guaranteed retirement or survivor's revenue, as a complement to legal pension and based on seniority as well as on remuneration at the end of the carreer; - a death capital for the benefit of nominees in case of decease of the employee before retirement time. Premiums are paid by the employee and the company according to the insurance plan.
The company took out group insurance policies described firstly as a defined benefit plan insurance and secondly as a defined contribution plan insurance. The defined benefit plan insurance was calculated on an actuarial basis pursuant to IAS 19.
The plan assures the employee a lump-sum payment at retirement based on the contributions made. Belgian law prescribes a minimum guaranteed rate of return over the career of the employee for defined contribution plans, which the SABCA substantially insured with an external insurance company that receives and manages the contributions to the plan.
As the application of defined benefit accounting to such plans has been recognized by the IASB to be conceptually problematic, the Group accounts for these plans as defined contribution plans, but acknowledges that these plans have some defined benefit features, as the return provided by the insurance company can be below the legally required minimum return, in which case the employer has to cover the gap with additional contributions. The method applied by SABCA consists in calculating the liability in the statement of financial position as the sum of any individual differences between the mathematical reserves and the minimum guarantee as determined by Article 24 of the Law of 28 April 2003 regarding occupational pensions (WAP/LPC). At December 31, 2016 , this would not have resulted in a net liability position for the Group. Application of this method means that SABCA deems that the current guidelines in IFRS are not suited to defined contribution plans with minimum guaranteed return, and that another relevant and reliable method should be applied until the IASB comes up with an appropriate treatment.
Other rights and commitments not reflected in the balance sheet
On the basis of the "comfort letter", the parent company SABCA irrevocably and unconditionally undertakes to provide, for a minimum of one year, adequate financial support in order to ensure the continuity of operations of its subsidiary SABCA Limburg.
RELATIONSHIPS WITH AFFILIATED ENTERPRISES AND ENTERPRISES LINKED BY PARTICIPATING INTERESTS (F 6.15) AFFILIATED ENTERPRISES Codes 2016 2015
Financial fixed assets (281/1) 2.653 3.183 investments (280) 2.653 3.183 Amounts receivable 9291 28.367 22.281 over one year 9301 736 1.072 within one year 9311 27.631 21.209 Amounts payable 9351 13.566 14.612 within one year 9371 13.566 14.612 Financial results Income from current assets 9431 75 52
38 Annual accounts 2016 SABCA FINANCIAL RELATIONSHIP WITH (F 6.16) Directors, managers, individuals or bodies corporate who control the enterprise without being associated therewith or other enterprises controlled by these persons
Amount of direct and indirect remunerations and pensions, included in the income Codes 2016 statement, as long as this disclosure does not concern exclusively or mainly, the situation of a single identifiable person: to directors and managers 9503 207
Auditors or people they are linked to Codes 2016
Auditor's fees 9505 85
Fees for exceptional services or special missions executed in the company by the auditor Other missions external to the audit 9506 15
COMMITMENTS, RIGHTS AND SUSPENSE ACCOUNTS (Art. 4, al. 2 of the R.D of October 8,1976) 2016 2015
Guarantees given by third parties on behalf of the company 4.383 4.382 Guarantees received 29.015 28.174 Forex transactions 57.298 Goods and values belonging to third parties held in deposit, consignment or for treatment 80.263 73.942 Goods and values belonging to third parties held by third parties on their behals, but at the risk and corporate profits of the comapny 5.435 5.473 Miscellaneous, commitments, rights and suspense accounts including 2,245,817 registered shares S.A.B.C.A. handed by third parties PM PM Temporary partnership S.A.B.C.A. - SONACA 12 12 Belgian Association for the Maritime Patrol Airplane (A.B.A.P.) PM PM
176.406 111.983
THIRD PARTY GOODS (analysis)
2016 2015
Third party goods and values, held in deposit, consignment or for manufacturing
Third party raw materials in the store room 5.198 5.240 Third party aeronautical parts and material, in the manufacturing or overhaul process 3.894 3.936 Third party tooling, in deposit 27.949 28.703 Equipment for repair-overhaul, in deposit 4.339 4.339 Third party materials in deposit 38.883 31.724
80.263 73.942
SABCA Annual accounts 2016 39 Social report
STATEMENT OF THE PERSONS EMPLOYED
Employees for whom the entreprise submitted a Dimona declaration or who are recorded in the general personnel register
Codes Total 1. Men 2. Women During the current period Average number of employees Full-time 1001 737,3 647,3 90,0 Part-time 1002 188,1 163,8 24,3 Total in full-time equivalents (FTE) 1003 882,9 773,9 109,0 Number of hours actually worked Full-time 1011 1.110.151 985.117 125.034 Part-time 1012 202.751 173.110 29.641 Total 1013 1.312.902 1.158.227 154.675 Personnel costs Full-time 1021 51.707 45.395 6.312 Part-time 1022 10.211 8.879 1.332 Total 1023 61.918 54.274 7.644
Codes Total 1. Men 2. Women During the preceding period
Average number of employees in FTE 1003 913,8 796,6 117,2 Number of hours actually worked 1013 1.371.701 1.197.995 173.706 Personnel costs 1023 62.930 54.858 8.072
3. Total full-time Codes 1. Full-time 2. Part-time At the closing date of period equivalents
Number of employees 105 728 172 864,2
By nature of the employment contract Contract for an indefinite period 110 707 172 843,2 Contract for a definite period 111 21 21,0 According to gender and study level Men 120 638 152 758,4 - primary education 1200 19 4 22,2 - secondary education 1201 385 127 486,5 - higher non-university education 1202 159 17 171,8 - university education 1203 75 4 77,9 Women 121 90 20 105,8 - primary education 1210 2 1,4 - secondary education 1211 49 11 57,8 - higher non-university education 1212 25 4 28,2 - university education 1213 16 3 18,4 By professional category Management staff 130 13 13,0 Employees 134 419 84 484,9 Workers 132 296 88 366,2
40 Annual accounts 2016 SABCA HIRED TEMPORARY STAFF AND PERSONNEL PLACED AT THE ENTERPRISE'S DISPOSAL 2. Persons placed at 1. Temporary During the period Codes the disposal of the personnel enterprise
Average number of employees 150 15,1 46,9 Number of hours actually worked 151 27.965 84.514
Costs for the enterprise (in thousand EUR) 152 1.031 5.030
LIST OF PERSONNEL MOVEMENTS DURING THE PERIOD
Entries 3. Total in full-time Codes 1. Full-time 2. Part-time equivalents
Number of employees recorded in the general personnel register during the financial year 205 32 32,0 By nature of the employment contract Contract for an indefinite period 210 16 16,0 Contract for a definite period 211 15 15,0 Contract for the execution of a specifically assigned work 213 1 1,0
Departures 3. Total in full-time Codes 1. Full-time 2. Part-time equivalents
Number of employees whose contract-termination date has been entered in the general register during the financial year 305 69 21 84,0 By nature of the employment contract Contract for an indefinite period 310 63 20 77,8 Contract for a definite period 311 6 1 6,2 According to the reason for termination of the employment contract Retirement 340 19 12 28,0 Dismissal 342 23 5 26,7 Other reason 343 27 4 29,3
INFORMATION ON TRAINING PROVIDED BY EMPLOYEES DURING THE PERIOD
Total of initiatives of formal professional training at the expense Codes Men Codes Women of the employer Number of involved employees 5801 743 5811 99 Number of training hours 5802 8.616 5812 1.236 Costs for the company 5803 806 5813 110 of which gross costs directly linked to the training 58031 668 58131 91 of which paid contributions and payments to collective funds 58032 156 58132 22 of which received subsidies (to be deducted) 58033 19 58133 3
Total of initiatives of less formal or informal professional training at the expense of the employer Number of participating employees 5821 106 5831 11 Number of training hours 5822 8.481 5832 400 Costs for the company 5823 312 5833 19
SABCA Annual accounts 2016 41 SUMMARY OF THE RULES OF VALUATION (Art. 28 , paragraph 1° of the Royal Decree of January 30, 2001 )
The rules of valuation were deposited on June 7, 1978 at the 6 th Registration Office in Brussels – Volume 131, folio 66 section 18
INTANGIBLE FIXED ASSETS The intangible fixed assets with limited useful life are subject to depreciations calculated according t o an established plan. They can be subject to accelerated or exceptional depreciation, in accordance with the tax prescriptions in this matter.
Supplementary or exceptional depreciation are passed in case, due to alteration or modification of economical o r technical circumstances, the book value exceeds the usage value.
Development costs are depreciated according to the straight - line method over a 3 year period. Research costs are depreciated fully in the same year
TANGIBLE FIXED ASSETS The ACCOUNTING BOOK VALUE is defined in accordance with art. 36 to 39 of the Royal Decree of January 30, 2001 .
ADDITIONAL COSTS AND NON - RECOVERABLE TAXES . Additional ancillary costs are depreciated in the same time and in the same way as the amount in principal of the purchase price or the production cost of the equipment (art. 196, § 2,2° CIR new). . The ancillary costs related to old tangible fixed assets continue to be written off, foll o wing the depreciation plan in the same way as in the past. DEPRECIATION (a) M ethod The straight - line method is applied for the former investments while the decreasing method is used for the investments that have been made since 1977, with the exception of any other fiscally authorized method within the context of investment stimulation. In that case, the board of directors examines the appropriateness of these depreciation methods case per case, as well as the additional depreciation rates related to economic and/or technological reasons (art. 64 ), and the extent to which they should be applied. Since 1977, the whole of the depreciation rules authorized by the various government measures, have been applied (100% and sometimes even 110% of the value). The depreciation rules were ap plied for the whole year and for the first time during the year when the purchase takes place until end 2002 In accordance with the fiscal law dated D ecember 24, 2002 the new rules related to the daily pro rata depreciation are applied to the new tangible and intangible fixed ass e ts purchased or produced since th e fiscal year 2004. The assets purchased or produced before the financial period 2003 can be continued to be depreciated following the old procedure. The advance payments and assets under installation and construction benefit of a specific accounting and f iscal treatment. (b) A pplied depreciation rates Buildings: 5% or more is fiscally allowed, mainly for buildings erected on lands granted by third persons for a determined period and for the lay - out of the rented buildings. Installations, machines, tooling: 10% generally speaking; yet, a rate of 20 or 25% is applied for laboratory or electronic material, numeric control machines i.e. high precision equipment or machines in a sector undergoing a rapid technological evolution; as well as for equipment used in s hift working. Tooling and equipment, templates and numeric control software proper to a program are depreciated at 100% or during the period of the contract in conformity with the allowed fiscal rules. Furniture, office and rolling stock: 10% except for v ehicles and trailers, office machines, computers, cameras and copiers (20%).
42 Annual accounts 201 6 SABCA
Depreciation recoveries can be applied up to the taxed surplus depreciation as well as for the tax exempted depreciations exceeding above mentioned rates; also in case of transfer, sale, catastrophe or compulsory purchase. With effect from the beginning of 2003 the daily pro rata was applied as well as t o the straight - line method as to the decreasing or accelerating method of depreciation.
FINANCIAL FIXED ASSETS
STOCKS AND SHARES VALUES The acquisition, subscription costs are booked as exceptional financial charges. The losses in value of non - quoted shares are considered only if the loss is important and lasting.
RECEIVABLES: (see below)
STOCKS
PURCHASE PRICE of materials, supplies and goods, suppliers invoices plus import, delivery, insurance and commission costs.
VALUATION OF STOCKS AT THE END OF THE FINANCIAL YEAR as well as RAW MATERIALS CONSUMPTION : FIFO method (First In, First Out).
AMOUNTS WRITTEN OFF ON STOCKS F or parts related to completed production or maintenance programs , obsolete, outdated, unusable or whose tolerances, norms, techn ical configuration, conception have changed.
In case of use of the non destructed parts, amounts written of are decreased of which . th e value had been deducted as a result of the absence of movements during the previous 24 months.
CONTRACTS IN PROGRESS ELEMENTS CONSTITUTING THE COST PRICE Cost prices are determined taking into account all direct production costs on the one hand, as well as the whole of indirect costs on the other hand. For the latter, however, the board of directors reserves the right t o book only part of these costs to cost price, individualized by a production program or not, the other part being booked directly to the result of the year or spread over several years. This right will only be used in case of exceptional disruptive and t emporary circumstances (such as strikes, important and prolonged under - activity periods, restructuring and lay - outs) having such an impact on the cost price of works that they would considerably alter its image.
Method of distribution by individualized production programs (a) direct booking of raw materials, parts, consumer goods, direct costs and specific subcontract costs, depreciation of specific equipments and relocation, lay - out costs proper to a program . (b) booking of indirect costs through hour rates based on the work of the production personnel and/or certain machines. These hour rates include all direct and indirect remuneration and related charges as well as overheads and the financial industrial usage cost of the equipment. The latter can be spread over individualised production programs by derogating from the depreciation method and amount booked to the balance sheet on an economic and fiscal basis.
SABCA Annual accounts 201 6 43
VALUATION OF THE WORK IN PROCESS They include unfinished works regarding a same group of contracts, or for which the cost price elements are not complete, or for which definitive acceptance quality controls (possibly to be carried out by the customer) are not yet completed. These work in process are valuated at the cost price after deduction of the already invoiced works.
AMOUNTS WRITTEN OFF (a) on works carried out : they are automatically and fully implemented up to the amount of the incurred costs exceeding the possible total contract invoicing. (b) on works left to be carried out : the estimated costs of these works are added to reductions described in (a) only if the progress of work is higher than 75% and if the estima tion of these costs and of the invoicing to be made can be sufficiently accurate (usual works). In the other cases, provisions for risks on received orders should be made with the greatest care and on an individual basis. (c) on sales realized and communicate d by our customers and on the sales volume considered likely by the company’s management : in case of loss on program, a provision will be constituted to cover our implicit obligations.
RECEIVABLES (a) Valuation of receivables (and payables) in foreign currencies at the internal standard exchange rate per currency, which is modified during the year only in case of important and lasting fluctuation of average rates or in case of official revaluation/devaluation. (b) Amounts written off in the following cases: - fluctuation of the exchange rate of a minimum of 5 % ( and 1,250 euros, was 50,000 BEF) in proportion to the internal standard rate; - bankruptcy, composition, nationalization (high political risks), subordination of receivables w ith risks; - important, lasting and in nature and amount determined litigation of which the recovery is very precarious, the negotiations being concluded; - very negative economical, financial or political information concerning exports. (c) Provision for risks an d costs on litigation in negotiations (d) Decrease in amounts written off if the effective decrease can reasonably be envisaged during the first months of the following year or if the previous reductions were inappropriate or exaggerated.
ACCRUED OR DEFERRED CHARGES OR INCOME (assets - liabilities)
They are used only for amounts that can considerably influence the result of the year on the one hand and that are part of the usual activities of the company on the other hand. The board of directors individually analyzes the elements that are not part of the usual activity.
PROVISIONS FOR LIABILITIES AND CHARGES
The provisions for risks and charges are made system at ically; t hey represent t he best estimate at closing date an d meet the requirement of prudenc e and sincerity.
PROVISIONS SET UP FOR TAX PURPOSES They are determined according to fiscal rules, taking into account increases, advance payments, real and fictitious with - holding taxes on investment income, taxes credit, withholding taxes on real esta te and chargeable foreign taxes. The exceeding part of the previous provisions will be considered only if three booking years have passed after their constitution without complementary enrolment, unless the board decides otherwise.
44 Annual accounts 201 6 SABCA
MISCELLANEOUS RIGHTS AND COMMITMENTS NOT REFLECTED IN THE BALANCE SHEET They are valued at the maximum amount mentioned in the commitment documents. If there are no such documents, the reasonably estimated economic value of the goods they concern will be taken into account. This value will be considered as the net booking value for the goods belonging to the company.
Adaptation to the valuation rules chosen by the compa nies (art. 30 of the Royal Decree)
- Tooling, small equipment and small tooling constituting full individual sets of less than 250 euros (was 10,000 BEF) are no longer included in assets but in the cost price or in overheads depending on the fact that they are specific or not to a contract. This modification of the 1978 rules is dealt with in the new fourth paragraph of section 04,5 of the rules of valuation (Financial y ear 1979). - Modification of the first paragraph of section 14 of the rules of valuation. - At the end of each social financial year, investments granted will be progressively reduced by booking to the profit and loss account, in deduction of: a. either the depreciation regarding fixed assets for the acquisition of which they were obtained; or; b. the loan costs (Financial year 1981).
Starting from 1991, the deferred taxes have been deducted from investments granted and realized gains if necessary. They will be reduced at intervals by booking to the profit and loss account at the rate of the reduction of investments granted and, in the case of realized gains at the rate of the inclusion in the taxable result of the concerned gains.
Modification to the valuation rules as at 31 st of December 2014
The valuation rules relating to provisioning for unprof itable programmes were amended in the sense that the constructive obligations of the company are identified not only according to sales realized and declared by customers but also according to the sales volume considered likely by Management.
SABCA Annual accounts 201 6 45
Statutory Auditor’s Report to the general meeting of the company S.A.B.C.A. SA for the year ended 31 December 2016
As required by law and the by-laws, we report to you in the context of our statutory auditor’s mandate. This report includes our opinion on the annual accounts, as well as the required additional statements. The annual accounts include the balance sheet as at December 31, 2016, the income statement for the year then ended, and the disclosures.
Report on the annual accounts – Unqualified opinion
We have audited the annual accounts of the company for the year ended December 31, 2016, prepared in accordance with the financial-reporting framework applicable in Belgium, which show a balance sheet total of 239.073.419,76 EUR and a loss for the year of 8.847.827,99 EUR.
Responsibility of the board of Directors for the preparation of the annual accounts
The board of Directors is responsible for the preparation of annual accounts that give a true and fair view in accordance with the financial-reporting framework applicable in Belgium, and for such internal control as the board of Directors determines is necessary to enable the preparation of annual accounts that are free from material misstatement, whether due to fraud or error.
Responsibility of the statutory auditor
Our responsibility is to express an opinion on these annual accounts based on our audit. We conducted our audit in accordance with International Standards on Auditing (ISAs) as adopted in Belgium. Those standards require that we comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the annual accounts are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the annual accounts. The procedures selected depend on the statutory auditor’s judgment, including the assessment of the risks of material misstatement of the annual accounts, whether due to fraud or error. In making those risk assessments, the statutory auditor considers the company’s internal control relevant to the preparation of annual accounts that give a true and fair view, in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the board of Directors, as well as evaluating the overall presentation of the annual accounts.
We have obtained from the board of Directors and company officials the explanations and information necessary for performing our audit.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Unqualified opinion
In our opinion, the annual accounts give a true and fair view of the company’s net equity and financial position of the Company as at 31 December 2016, and of its results for the year then ended, in accordance with the financial-reporting framework applicable in Belgium. Emphasis of Matter
Without prejudice to the opinion mentioned above, we draw the attention to note C7 to the financial statements, where the Board of Directors, in accordance with article 96, 6° of the Company Law, motivates the going concern assumption as applied, making reference to a cost reduction plan.
46 Annual accounts 2016 SABCA
Report on other legal and regulatory requirements
The board of Directors is responsible for the preparation and the content of the Director’s report, as well as for the compliance with the legal and regulatory requirements regarding bookkeeping, with the Company Code and with the company’s by-laws.
In the context of our mandate and in accordance with the Belgian standard which is complementary to the International Standards on Auditing (ISAs) as applicable in Belgium, our responsibility is to verify, in all material respects, compliance with certain legal and regulatory requirements. On this basis, we make the following additional statements, which do not modify the scope of our opinion on the annual accounts: - The Director’s report, prepared in accordance with the articles 95 and 96 of the Company Code and to be deposited in accordance with article 100 of the Company Code, includes, both in terms of form and content, the information required by the law, is consistent with the annual accounts and does not present any material inconsistencies with the information that we became aware of during the performance of our mandate. - The social balance, to be deposited in accordance with article 100 of the Company Code, includes, both in terms of form and content, the information required by virtue of the law and does not present any material inconsistencies with the information we have at our disposition in our audit file. - Without prejudice to certain formal aspects of minor importance, the accounting records are maintained in accordance with the legal and regulatory requirements applicable in Belgium. - The appropriation of results proposed to the general meeting complies with the relevant requirements of the law and the company’s by-laws. - There are no transactions undertaken or decisions taken in breach of the by-laws or of the Company Code that we have to report to you.
Brussels, 27 April 2017
Mazars Réviseurs d’Entreprises SCRL Statutory Auditor Represented by
Lieven ACKE
SABCA Annual accounts 2016 47
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SABCA S.A. Société Anonyme Belge de Constructions Aéronautiques Chaussée de Haecht 1470 B - 1130 Bruss el s Belgium
Telephone : +32.2.729 55 11 Fax : +32.2.705 15 70 e - mail : [email protected] www.sabca.com