MEETING TOMORROW’S CHALLENGES THROUGH INNOVATION

2011 Annual Report

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02 I Message from the Chairman

ASSETS INNOVATIONS PEOPLE 06 I Safran at a glance 24 I A revamped organization 46 I Attracting and training 08 I Strengthened market to spur innovation top talents positions 26 I Designing tomorrow’s engines 50 I Motivating and recognizing 10 I New corporate 30 I Developing an all-electric performance governance energy train 52 I Encompassing a wealth 12 I Corporate officers 32 I Reduce fuel consumption of diversity Safran is a leading international high- 14 I A solid shareholding and noise on the ground 54 I A universal commitment structure 34 I Safran technologies to the future technology group and a Tier-1 supplier of 16 I Strong rise in earnings in operation 20 I International scope 38 I ID document security 40 I Traveler security systems and equipment for aerospace, defense and security. Operating worldwide, the Safran group has nearly 60,000 employees. In 2011, it generated sales of 11.7 billion euros and its share was added to the French stock market index CAC 40. Safran’s global presence Discover the enriched version of the Safran enhances its competitiveness and allows it to 2011 annual report on your tablet, with photos and videos, by downloading the application at the App Store or on Google play. build industrial and commercial relations with the world’s leading prime contractors and You can also scan the following QR code: operators, while providing fast local service to customers everywhere. Working alone or in partnership, Safran holds world or European leadership positions in its core markets. 2 I Safran I 2011 Annual Report I 3 MESSAGE FROM THE CHAIRMAN

JEAN-PAUL HERTEMAN, CHAIRMAN AND CHIEF EXECUTIVE OFFICER

If you had to name only one, what was the business of Herakles, the world’s second largest manufacturer highlight of 2011 for Safran? of solid rocket motors. We also added L-1 Identity With more than 3,000 orders during the year, the new LEAP Solutions, consolidating our world leadership in biometric engine received a remarkably warm welcome! Chosen by solutions and making Safran one of the top three players , and Comac for the next generation of single- in the security technology market, with 1.5 billion euros aisle commercial jets, it is already on track to be a worthy in sales and over 7,000 employees. In the defense sector, successor to the best-selling CFM International CFM56. In 2011, we signed an agreement with Thales, paving the way for the CFM joint venture between Safran and GE set an all-time a restructuring of the French optronics industry to ensure record, with fi rm orders and commitments worth 52 billion its long-term viability in a globalized market. We also dollars at list prices. These orders, which also provide solid formed a joint venture with Honeywell, a world leader foundations for tomorrow’s service business, a source of in aircraft equipment, to develop electric green taxiing recurring income, will guarantee a smooth, controlled transition systems. We have formed a winning team that will between our two generations of best-selling aircraft engines. off er a new technology, one that will improve airlines’ operational effi ciency and ensure the sustainable What doors does this open for Safran? development of air transport. With recurring operating income up 35% and buoyant cash flow to support our signifi cantly increased investments, From the outside, we see an enterprise on the move, we largely confi rmed our growth potential. Safran is investing one that has reached a certain of maturity. in new technologies, modernizing our industrial facilities, How would you evaluate the situation? expanding our presence in growth markets and consolidating Last year saw the rollout of a new corporate governance for our leadership on the next generation of single-aisle jets, Safran, more aligned with today’s competitive environment. the A320neo, 737 MAX and C919. At the same time, Another highlight was the entry of the Safran share in the we are already gearing up for the breakthrough technologies French stock market index CAC 40, refl ecting the market’s needed on the next generation, which will come to market appreciation of our development potential. In recent years, in about fi fteen years. Safran has successfully repositioned itself in three core businesses (aerospace, defense, security), managed the air Through our major acquisitions, structural What were the other business highlights in 2011? transport crisis with calm confi dence, successfully replaced Among our many successes last year, two are particularly the CFM56 and invested in the booming security market partnerships and remarkable business signifi cant for our future: in Brazil, we were selected by through several major acquisitions. I believe that we can wins, Safran has established positions in to provide the electrical distribution system and integrate this look ahead to our long-term future with confi dence. system on the new KC-390 transport, signaling a further step all core markets that ensure the sustainable towards new business segments for more electric aircraft. Under current conditions, there are very few companies success of our business model. In , the national identity program Aadhaar passed the that enjoy such a strong position… milestone of 100 million unique ID numbers assigned to True, but to accelerate our growth even further, we must now residents of the country, and has reached an enrollment rate amplify our research eff orts and focus on innovation, meet of nearly 1 million new persons per day! the industrial challenge of delivering LEAP engines, and increase the share of service business in our total revenues to energize Wouldn’t you say the year was also very rich in terms our business model. Meeting these goals will depend on of external growth and partnerships? attracting top talents. After hiring nearly 6,000 new employees Defi nitely! Safran successfully completed several strategic in 2011, half in , we will recruit just as many in 2012, transactions that have bolstered our positions. The acquisition including both men and women who love their jobs, and of SNPE Matériaux Énergétiques (SME) will lead to the creation are motivated, responsible and want to help shape the future. 4 I Safran I 2011 Annual Report I 5

WE HAVE THE ASSETS NEEDED TO MEET OUR AMBITIOUS GOALS

Safran has a number of assets to tackle the future with confidence, including stronger positions in key markets, a new corporate governance structure to make us even more efficient in today’s increasingly demanding and competitive environment, a solid shareholding structure, strong earnings growth and international reach that keeps us close to our customers. 6 I Safran I 2011 Annual Report I 7

Safran at a glance

AEROSPACE DEFENSE SECURITY AEROSPACE AIRCRAFT PROPULSION EQUIPMENT 58% 47%  11% 27% Identifi cation  Landing  55% 38% Military systems Engine systems Avionics aviation and equipment Optronics 25% e-documents 60% 12% Civil Ballistic aviation missiles and space

24% 7% 17% 2% Electrical systems Electronics and safety- 17% Helicopter engines Other equipment and engineering critical software Detection

€6,110 million €3,097 million €1,264 million €1,249 million sales +9% sales +9.3% sales +1.9% sales +20%

Commercial aircraft engines Landing gear Helicopter fl ight controls Biometric ID documents Gaming terminals No. 1 worldwide No. 1 worldwide No. 1 worldwide No. 1 worldwide No. 2 worldwide (mainline commercial jets with over 100 seats, Wheels and carbon brakes Inertial navigation Automated fi ngerprint Smart cards in partnership with GE) No. 1 worldwide No. 3 worldwide identifi cation systems (AFIS), in Iris No. 4 worldwide Military aircraft engines (mainline commercial jets No. 1 in Europe and Face Recognition solutions Trace detection equipment No. 4 worldwide with over 100 seats) No. 1 worldwide Optronic systems A world leader Helicopter engines Aircraft wiring No. 1 in Europe Explosive detection systems (EDS) No. 1 worldwide No. 1 worldwide for hold baggage Tactical drones No. 1 worldwide Space engines Aircraft engine nacelles No. 1 in Europe No. 2 worldwide in cryogenic propulsion A world leader Multibiometric technology No. 2 worldwide in solid propulsion No. 1 worldwide Airborne power electronics A world leader 8 I Safran I 2011 Annual Report I 9

engines in 2011, in addition to the 200 engines already ordered LEADER IN THE SECURITY MARKET in 2010. These orders accounted for nearly 80% of all engine orders Safran finalized its acquisition of L-1 Identity Solutions in July 2011, for the new single-aisle commercial jets. In June 2011, Air Asia chose becoming the world leader in biometric ID solutions. Safran is now the LEAP to power 200 Airbus A320neo twinjets, the largest order one of the world’s three leading players in the security sector, STRENGTHENED in the history of commercial aviation. Southwest Airlines, the launch after steadily strengthening our market positions. Since 2008, customer for the CFM56 on the Boeing 737 in 1981, was also Safran has invested some 1.7 billion euros in targeted acquisitions: the launch airline for the LEAP-1B, which will power its Boeing the aforementioned L-1, plus Sdu-Identification (secure ID 737 MAX airplanes, in a contract worth 4.7 billion dollars, documents, 2008); Printrak (automated fingerprint identification announced in December. systems, 2009) and GE Homeland Protection (computer tomography MARKET POSITIONS explosive detection, 2010).

Safran consolidated its positions in A RECORD YEAR FOR THE CFM56 CLOSER COLLABORATION WITH THE WORLD’S several markets in 2011. It was a truly With nearly 23,000 delivered to date, the CFM56 is the best selling THIRD LARGEST AIRCRAFT MANUFACTURER exceptional year for CFM International, engine in the history of aviation. Last year saw a new production Safran, the world leader in landing systems through its subsidiary the equal joint venture of Safran and GE, record, as CFM International delivered more than 1,300 CFM56 Messier-Bugatti-Dowty, was chosen by Brazilian aircraft with a record of 52 billion dollars engines, compared with 1,250 in 2010. With an installed base manufacturer Embraer, No. 3 worldwide, to provide various systems in orders and commitments at list prices. of engines powering 9,500 aircraft belonging to more than and equipment for the KC-390, a new military transport designed At the same time, we are clearly 500 operators, airlines and leasing companies, the size of the for both logistics and humanitarian missions, that can also be positioned to affi rm our leadership maintenance market consolidates the company’s business model, converted into an in-flight tanker. In addition to providing major in the security market. giving it a recurring income stream. Furthermore, the depth and landing and braking systems, Safran was also chosen to provide breadth of the maintenance network is another strong sales point an electrical actuation system, both primary and secondary in convincing customers to buy CFM. A total of 1,500 CFM56 engines electrical distribution systems, and complete integration The MorphoCardScan™ station is used by police forces to quickly identify were ordered in 2011, including both commercial and military suspects. of the aircraft’s electrical system. customers. Out of the firm orders for the Airbus A320 and Boeing 737 in 2011, CFM took 87% of the engine orders.

CREATING A WORLD LEADER IN SPACE PROPULSION Safran finalized its acquisition of SNPE Matériaux Énergétiques (SME) from the SNPE Group in April 2011. The acquisition included SME’s subsidiaries: a 50% stake in Roxel, specialist in tactical missile propulsion, and 40% in Regulus, which makes solid propellants for launch vehicles. The new entity, to be named Herakles in 2012, makes Safran the world’s second largest space propulsion company. Furthermore, this new business model gives France a very structured space propulsion industry, consolidating the production of rocket motors and propellants. Embraer’s KC-390 transport can be converted into a tanker.

A CFM56-powered aircraft takes off somewhere in the world every two seconds.

GROUND REVOLUTION IN AIR TRANSPORT LEAP, TOMORROW’S ENGINE The Electric Green Taxiing System is an economical and ecological While CFM56 orders were once again buoyant, and would by solution to allow airplanes to taxi on the ground without have to use themselves make 2011 a banner year, the orders recorded for their jet engines. Demanding expertise in a number of different the LEAP (Leading Edge Aviation Propulsion) engine show that disciplines, this system will revolutionize the air transport industry. the future of this new-generation powerplant is also assured. Safran, fully aware that an efficient partnership is a source of higher The LEAP-1A version will power the Airbus A320neo, the LEAP-1B performance, instigated the creation of a joint venture with version the Boeing 737 MAX, and the LEAP-1C the Comac C919. Honeywell to develop the electric green taxiing concept, giving All in all, CFM signed 3,056 orders and commitments for LEAP it all the advantages needed to be a leader in this upcoming sector. Handling a rocket stage in the casting pit. 10 I Safran I 2011 Annual Report I 11

NEW CORPORATE GOVERNANCE

BOARD OF DIRECTORS BOARD COMMITTEES

The change in corporate governance to a structure solely based on a Board of Directors Three committees prepare the Board’s deliberations was approved on April 21, 2011. This change refl ects an economic, industrial and competitive and submit proposals for consideration by the Board. environment that demands ever-faster decision-making.

The current makeup of the Safran Board of Directors is as follows: Strategy and Major Projects Audit and Risk Management Nomination and Committee Committee Remuneration Committee The Strategy and Major Projects Committee The Audit and Risk Management Committee The Nomination and Remuneration issues opinions on the Group’s major examines fi nancial statements and provides Committee assists the Board in selecting strategic objectives and the development follow-up on questions concerning its members and corporate offi cers, and policy proposed by corporate management the generation and control of fi nancial draws up recommendations concerning to the Board of Directors. and accounting data. In addition, it oversees the compensation of corporate offi cers. the effi ciency of the company’s internal Committee members: Committee members: control and risk management systems. (chairman) Michel Lucas (chairman) Giovanni Bisignani Committee members: Giovanni Bisignani Christophe Burg Jean-Marc Forneri (chairman) Christophe Burg Odile Desforges Elisabeth Lulin Francis Mer Xavier Lagarde Astrid Milsan Astrid Milsan Astrid Milsan Michèle Rousseau Laure Reinhart Caroline Grégoire-Sainte Marie

Jean-Paul Herteman, Chairman and CEO

Francis Mer, Vice Chairman

Marc Aubry Jean-Marc Forneri Astrid Milsan Giovanni Bisignani Christian Halary Laure Reinhart Christophe Burg Xavier Lagarde Michèle Rousseau Jean-Lou Chameau Michel Lucas Caroline Grégoire-Sainte Marie, Odile Desforges Elisabeth Lulin Board advisor

14 I Safran I 2011 Annual Report I 15

SAFRAN SHARE PRICE January 1 to December 30, 2011

20 Safran CAC 40 A SOLID SHAREHOLDING 15 10 STRUCTURE 5 0

– 5 The Safran share was added to the French SAFRAN SHAREHOLDERS stock market index CAC 40 in at December 31, 2011 – 10 September 2011, a result that was directly €23.20 related to actions undertaken since the –12% creation of the Group in 2005. In particular, – 15 these actions were designed to increase 3,159.81 POINTS the fl oat in its share capital, which 51.9% – 20 –17% increased to over 50% in 2011 because Public of the gradual reduction of Areva’s legacy – 25 stake in Safran’s capital.

Safran gives shareholders clear, complete – 30 and accessible information to address January February March April May June July August September October November December their requirements, no matter what their 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 level of fi nancial expertise. A number of communications and information After a promising start to the year, the CAC 40 index was penalized by the unstable economic environment in 2011. Crises in certain Arab channels are deployed for our countries led to a sharp rise in oil and raw material prices, Europe was unable to provide a unified response to the persistent sovereign debt shareholders, including the annual report, 1.9% crisis, and austerity budgets were applied by governments. Out of the 40 shares in the CAC 40 benchmark index, only seven rose in 2011, reference document, Shareholders Guide, and the index as a whole fell 17% during the year. Given these conditions, Safran posted the twelfth best performance among companies Shareholders Newsletter, Safran Magazine, Treasury shares in the index, as its share price decreased 12%. website, toll-free number and fi nancial news releases. To foster closer relations with our 7+(6$)5$16+$5( individual shareholders, based on mutual 30.2% Name: SAFRAN trust, we off er members of the French State The Safran share is listed in Compartment ISIN code: FR0000073272 Shareholders Club the opportunity to visit A of Euronext , and is eligible for Abbreviation: SAF our plants. In 2011, for example, seven 16% Deferred Payment Service (SRD). Index: CAC 40 visits allowed more than 200 shareholders Employees to get a special close-up view of the Group’s operations. ),1$1&,$/$*(1'$ Safran management also organizes 6$)5$1,19(67255(/$7,216 regular meetings with fi nancial analysts Publication of 2012 Q1 results: 2, boulevard du Général-Martial-Valin and institutional investors from France April 26 75724 Paris Cedex 15, France and abroad, during presentations of Annual General Meeting of Shareholders: Investor and Analyst contact Phone: +33 (0)1 40 60 83 53 financial results, as well as specialized May 31 e-mail: [email protected] conferences and seminars. Corporate Publication of 2012 H1 results: Individual shareholder and Shareholders management also presented the Group’s July 31 Club contact fundamentals and its market growth e-mail: [email protected] during a special Investors Day on Publication of 2012 Q3 results: December 13, 2011. October 25 16 I Safran I 2011 Annual Report I 17

STRONG RISE IN EARNINGS

Safran’s operating Safran posted sales of SALES SALES BY BUSINESS SECTOR CONSOLIDATED ORDER BOOK performance showed strong 11,736 million euros in 2011, improvement in 2011, versus 10,760 million euros (adjusted data, millions of euros) (billions of euros) as we recorded record orders in 2010, for year-to-year during the year and a record growth of 9.1%, or 6.3% 11,736 43 order book at the end of organic growth. 10,760 10,448 the year. We booked 21 billion We posted recurring operating 52% euros worth of orders in 2011, income of 1,189 million euros, Aerospace 26% a 60% rise over the previous equal to 10.1% of sales, Propulsion Aircraft Equipment 30 year, and our order book stood a jump of 35% over the 2010 28 at 43 billion euros at figure of 878 million euros December 31, 2011. (8.2% of sales). Furthermore, this fi gure does not include the potential sales generated by CFM56 spare parts, a business with intrinsically signifi cant revenues over the coming decades. 2009 2010 2011

11% 2009 2010 2011 Security

Sales for the year grew by 976 million euros, thanks to 11% All-time high in yearly orders and record order book increased volumes of new aircraft sales, the increase in aircraft Safran booked 21 billion euros worth of orders in 2011, 60% over the previous support business, the soundness of our defense business Defense year, clearly proving the market’s resilience and dynamic performance. The order (optronics) and dynamic growth in the security market book at the end of the year stood at 43 billion euros, including recent firm orders (biometric identification, e-documents). for CFM56 and LEAP engines. 18 The increaseintheworkforcewasmainlyduetoacquisitionsFranceandinternationalmarkets. EMPLOYEES EARNINGS ONTHERISE OA MLYE MLYE YRGO EMPLOYEES BY JOB TYPE EMPLOYEES BY REGION TOTAL EMPLOYEES (adjusted data,millionsofeuros) OPERATING INCOME RECURRING 54,300 2010 2010 I 878 59,800

2011 2011 1,189 (outside France) (adjusted data,millionsofeuros) GROUP SHARE INCOME,NET Asia/Oceania 2010 Middle East Middle 508 Europe Europe Africa & 11% 5% 4% Americas

19% 2011 644 (euros) 2010 PER SHARE PROFITNET 1.27 France 61%

2011 1.59 Production 50.5% (millions ofeuros) 2010 DEBTNET 24

2011 (997) R&D 20.5% Other 29% with theex-dividenddatebeingsetatJune 5. euros. ThebalancewillbepaidstartingonJune 8, 2012, paid in2012,foratotalpayoutofabout150 million December 2011, thebalanceof0.37 euro /share willbe given theinterimpaymentof0.25 euro persharein and 0.25 euro in2008.Ifthisproposalisapproved,and previous yearswere0.50 euro in2010,0.38 euro in2009 Shareholders onMay 31, 2011.Dividendsinthethree subject toavote The paymentofadividend€0.62/shareis (euros) 2009 PER SHARE DIVIDEND 0.38

2010 by the Annual General Meeting of bytheAnnualGeneralMeetingof 0.50

2011 0.62 of 30%onanorganicbasis. to 209 million euros,an increase aforementioned items)came the allocationofbonussharesand incentive plansin2011(including contribution toprofit-sharingand euros in2011.TheGroup’stotal for thisplanamountedto8 million and performance.Expenditures stake inSafran’sobjectives,success give employeesagreaterpersonal ownership operation,designedto a leveragedemployeestock Safran decidedtoimplement statements. Atthesametime, euros isincludedin2011financial The accountingimpactof20 million eligible employeeinFrenchentities. pay aprofit-sharingbonustoeach with employeerepresentativesto voted in2011,theGroupagreed In applicationofanewFrenchlaw PROFIT-SHARING facilities worth2.6 billion euros. as confirmed,non-drawncredit had 1.4 billion eurosincash,aswell At December 31, 2011,Safran and capitalinvestments. to increasingR&Dexpenditures requirements, partlydedicated 62 million eurosinworkingcapital in cashflowandareductionof the resultof1,185 million euros cash flowof532 million euroswas euros atDecember 31, 2010.Thefree a netcashpositionof24 million December 31, 2011,comparedwith stood at997 million eurosat euros infreecashflow.Netdebt Operations generated532 million CASH POSITION STRUCTURE AND BALANCE SHEET business sales. business (inUSdollars). aircraft engineservice increase 20% total R&D expenditures. billion euros 1.3 increase 8.4% in security insecurity in commercial Safran

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2011 Annual Report 2011 AnnualReport I

19 20 I Safran I 2011 Annual Report I 21

EUROPE 42,780 EMPLOYEES France 36,426 NORTH AMERICA Great Britain 2,056 INTERNATIONAL 10,404 EMPLOYEES Belgium 1,448 Germany 1,047 United States 5,718 Russia 272 Mexico 3,601 Other 1,531 SCOPE Canada 1,085

The aerospace, defense and following the successive security markets are global, acquisitions of Printrak and and Safran is an international GE Homeland Security, group. Our systems and increase Morpho’s North equipment have been chosen American identity. for all major aircraft, whether At Safran, we have clearly made in Europe, North identifi ed all facets of this America, Brazil, China, India challenge, and we are making or Russia. Our local facilities major eff orts to facilitate guarantee customers close integration. One of the roles support and quick of Safran Corporate University ASIA/OCEANIA responsiveness. is to accelerate the 3,088 EMPLOYEES The International division development of a common coordinates Safran delegations corporate culture. India 1,488 in all the main countries where The internationalization China 838 we operate. These national of Safran is taking place Singapore 507 delegations coordinate our concurrently with the Australia 181 local companies, and oversee development of our Other 74 the pooling of support production capacity in France, functions. In addition, including the opening of our delegations oversee major new facilities that will SOUTH AMERICA our relationships with ensure the long-term viability the country’s government of employment in industry. 1,255 EMPLOYEES and major customers. Brazil 920 To keep pace with our growth, Other 335 Safran must meet the challenge of an increasingly AFRICA/ internationalized workforce. In our security business, MIDDLE EAST for instance, the addition of the 1,300 employees of L-1 2,278 EMPLOYEES Identity Solutions in 2011, Morocco 1,898 South Africa 251 United Arab Emirates 100 Other 29

Safran Delegations

   Countries with more than 10 employees 22 I Safran I 2011 Annual Report I 23

FOCUS ON VALUE- ADDED INNOVATIONS

Safran’s many business wins clearly reflect the relevance of the solutions we offer our markets. Whether in aerospace, defense or security, we are leveraging our proven capabilities in technological innovation to build solid foundations for the future and develop products with ever-higher performance that meet our customers’ economic needs and are compatible with growing environmental demands. Clearly demonstrating our ability to innovate, Safran now files for the second most patents in France. 24 I Safran I 2011 Annual Report I 25

“Safran, now No. 2 in patent fi lings in France”

A revamped organization to spur innovation Safran revamped its organization in 2011 to more closely match the requirements of a fast-changing economic, industrial and competitive environment. The overall aim is to foster greater cross-functionality and innovation.

R&T challenges Transformation At the same time, we enjoy regular and enriching contacts with Lean is based on an active local presence, and seeks to eliminate Safran created a Transformation division based on a simple major corporations and organizations carrying out research in related tasks that don’t add value, while also simplifying processes. Safran’s focus on innovation observation. While the excellence of our technologies, the quality areas, such as the aerospace giant EADS, and the French atomic Six Sigma offers improvement tools to make processes more stable is expressed through several of our products and the engagement and expertise of our people are and alternative energy commission CEA. We have formed a cross- and predictable, especially through statistical variability analysis. imperative research objectives, widely recognized by customers, we are facing a fiercely competitive disciplinary research organization, based on seven major technology The systematic deployment of these operational improvement starting with environmental protection. This means making environment, where new players can quickly gain a foothold. areas, including materials and processes, aeronautical turbomachinery, techniques continued throughout 2011. The core of this system is products that help reduce To maintain our leadership, we have to make sure that the innovations electrical systems and onboard electronics. The R&T teams in each the training of expert Black Belts, who work full time on Lean-Sigma the noise and greenhouse invented by Safran benefit from the proactive support they need to company apply this research to their specific field, with their own projects, and Green Belts, operational managers who also take gases generated by air transport, developing greener operating be fully developed and reach the market in timely fashion. The role of advances flowing back to enrich Safran’s general knowledge base. responsibility for improvement projects. At the end of 2011, Safran procedures and integrating the the Transformation division is to realize major breakthroughs, such as Safran now deploys an organization designed to accelerate had certified more than 200 Black Belts and 790 Green Belts. entire life cycle in product design. the introduction of carbon brakes on commercial aircraft in the 1990s. the transformation of innovative concepts into successful products Our decentralized improvement initiatives call on the participative Our Research & Technology eff orts Provided we meet this goal, innovation becomes a source of vitality, in the marketplace. innovation concept, which means fostering the emergence of have to address a number of often interlinked issues, including unity, growth and influence for Safran. improvement ideas using a bottom-up approach. To encourage the rising cost of energy and raw Integrate costs from the design phase employees throughout the Group to take the initiative, Safran materials, growing air traffi c and A new approach to facilitating R&T and innovation Safran initiated 15 “design to cost” projects in 2011, focusing on organizes an innovation competition every year. Open to employees the resulting airport congestion, an increased need for smoother Safran’s Research & Technology activities are anchored in a robust, ways to optimize the production costs for our products. In fact, at all Group companies, this competition provides recognition for and more secure travel and yet flexible organization. The combination of strategic management, Safran Corporate University has provided specific training in this our people’s creativity, initiative and dynamism. transactions. At the same time, decentralized execution and a dense network of partnerships helps methodology for 300 employees. Safran must also address issues concerning its defense businesses. precisely direct R&T work, from fundamental research to technology and product demonstrators. For basic research, Safran counts on A structured, decentralized improvement initiative recommendations from our Scientific Council, comprising eminent The Safran+ continuous improvement initiative, originally launched scientists from outside the Group. We have also established major in 2009, is now at the heart of all Group operations. It is based on partnerships with the French national scientific research agency CNRS, five Group-wide projects, 50 major projects covering all lead the French aerospace research agency ONERA, and a number of companies, and another thousand projects in the field, managed research labs and organizations around the world (including Georgia on a decentralized basis. Safran mainly calls on the Lean-Sigma Tech and Virginia Tech in the United States, Astar in Singapore, etc.). methodology to underpin our continuous improvement drive.

30 I Safran I 2011 Annual Report I 31

DEVELOPING AN ALL-ELECTRIC ENERGY TRAIN

1. Final wiring of an . 2. Boeing 787 electric brake.

MORE ELECTRIC 1 Contributors

3. Didier Godart AIRCRAFT Director, Safran Innovation “Safran is a global leader in aircraft propulsion, power electronics, wiring, landing systems and Safran plays a pivotal role in the ongoing the key technologies in airborne electrical nacelles, and will soon add revolution in aircraft energy sources, with systems, as shown by the Safran Power green taxiing. We have all the competencies and technologies the traditional hydraulic and pneumatic Electronics Center (SPEC) and our Electric needed to set us apart and systems being replaced by electrically- Green Taxiing System. become a pivotal player in driven systems in the upcoming Safran organized the fourth SPEC tomorrow’s more electric aircraft.” 3 generations of commercial jets. symposium at the National Institute 4. Serge Bérenger By eliminating heavy pipes, electrical for Applied Sciences (INSA) in Lyon in Director, Safran Power systems save weight, which in turn reduces November 2011. SPEC is the Group’s center “Electrical system optimization has to integrate the complete fuel consumption and CO2 emissions, of expertise in power electronics, bringing energy train, and especially facilitates maintenance because of together specialists in the enabling the physical and functional the use of plug and play components, technologies needed for “more electric” 2 integration of key components, such as the generators, and eliminates the problem of leaks. aircraft. A dozen Group companies distribution, wiring and power In other words, “more electric” aircraft participated in this symposium, along electronics.” offer a host of advantages. with about 20 laboratories, universities and 5. Jean-François Weibel The development of solutions to favor Safran’s industry and government partners. 800 kW Program manager, electrical the use of electrical power is now driven The presentation of technology actuation systems, Sagem by proven advantages in operational demonstrators was a highlight of The electrical power “Replacing hydraulic and pneumatic energy by electrical performance and competitiveness. the meeting. 4 needed to handle all of power means that various power Over both the medium and long term, electronics units have to be shared the optimization potential for the use of the technical and cabin by different functions, including functions on a jet the critical flight controls and electrical energy on aircraft is much larger their actuators.” than for systems based on hydraulic with 150 to 200 seats. or pneumatic power. However, to ensure this energy transition, we must master

5 32 I Safran I 2011 Annual Report I 33 1. The Airbus A320 flying testbed acquired by Safran. 2. Safran and Honeywell sign the collaboration agreement.

REDUCE AIRCRAFT NOISE AND FUEL CONSUMPTION ON THE GROUND

ELECTRIC 1 GREEN TAXIING

SYSTEM 2

3% 3 4 5 An Electric Green Taxiing System allows of a service entry in 2016. The partnership aircraft to move on the ground without is based on the complementary Contributors having to use their jet engines, a major capabilities of the two companies: to 4% innovation in air transport and a Honeywell is a world leader in APUs 3. Olivier Savin 6. Émeline Faugère breakthrough for tomorrow’s aircraft. and cockpit systems, while Safran brings Annual reduction in fuel eGTS programs Director, Safran Doctoral student in Safran’s Electric Green Taxiing System to the table the combined expertise consumption by airlines “The Electric Green Taxiing System thermomechanical simulation, uses electrical power generated by the of its companies: Hispano-Suiza for will enable airlines to save several Messier-Bugatti-Dowty plane’s auxiliary power unit (APU) to drive power electronics, Labinal for wiring, operating airplanes hundred thousand dollars per year “The actuators’ size and on each airplane.” mass restrictions have electric motors located in the wheels Sagem for control electronics, Technofan with the Electric Green a significant impact on (left). Because the jet engines can be for actuator cooling and Messier-Bugatti- Taxiing System. 4. Éric de Wergifosse how much they heat up turned off while the plane is taxiing on Dowty for overall design, and integration Power electronics product manager during operation. “Green taxiing uses the power So we are performing the ground, this system significantly in the landing gear, wheels and brakes. from the plane’s own APU sophisticated numerical reduces operating costs and pollution, We have even acquired an Airbus A320, 6 to power the electric motors modeling to eliminate insofar 8,500 located in the wheels as possible the risks of thereby considerably improving airlines’ operating out of the Montpellier airport, on the main landing gear.” a thermally-induced failure.” operational and environmental as a development testbed. The test and performance. Safran is creating a joint demonstration platform will be made to 9,000 5. Anas Farid venture with American company available for a wide range of other Electrical engineer, Messier-Bugatti- Dowty Honeywell to accelerate the time innovative projects, particularly to support The number of aircraft “Tests kicked off in November to market for this system, with the aim the development of “more electric” aircraft. at Montpellier, and are designed on which the Electric to evaluate the runway conditions Green Taxiing System and calculate the power needed could be installed, to move the plane on the ground.” as original equipment or retrofi t, between 2016 and 2030. 34 I Safran I 2011 Annual Report I 35

SAFRAN TECHNOLOGIES IN OPERATION 1. JIM LR binoculars with integrated third-generation infrared imager. 2. An AASM underneath a Rafale wing. 34 DEFENSE Contributors 3. Jeanne-Marie Lota Program Director, Sagem Optronics & Defense division “Building on our experience as prime contractor for the FELIN program, Sagem can offer APPLICATIONS custom-tailored solutions for all armies, from optronics devices to complete systems.”

France has ordered 22,600 FELIN systems showed that it was particularly well 4. Laurent Godard for its army, and they are gradually being suited to strikes against targets with Production manager, Land combat deployed by all infantry regiments as part uncertain coordinates, and offered very program, Sagem “Working with the Poitiers plant, of the country’s soldier modernization high final impact accuracy. In fact, French in charge of making optronics program. Designed to support all combat defense procurement agency DGA has for FELIN, the Fougères plant phases, this integrated equipment suite successfully launched the laser terminal is specialized in the production of pc boards and logistics is now in service in theaters of operation guidance AASM version against a land services.” where French forces have been target moving at 80 km/h. This version deployed. FELIN easily adapts to all will go into volume production types of missions because of its open, for the air force and navy starting modular and scalable architecture. at the end of 2012. The French air force and navy have both started deployment of a new infrared terminal guidance version of the AASM 1 Hammer, a new-generation modular air- to-ground weapon. Designed as a “smart” fire & forget guided weapon, the AASM Hammer comprises a guidance kit and a range augmentation kit attached to a standard bomb. The IR version features 22,600 an infrared imager located in the nose, operating in conjunction with the FELIN systems ordered standard GPS/inertial guidance unit. Deployed in combat, this new version for the French army.

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OPTRONICS PARTNERSHIP WITH THALES AN ULTRAMODERN PLANT FOR INERTIAL NAVIGATION WORLD FIRST: ELECTROMECHANICAL CASSIOPÉE, A NEW CONSTELLATION On December 20, 2011 Safran and Thales signed a memorandum Sagem is the world leader in inertial navigation. Last year it opened AILERON ACTUATOR TESTED IN FLIGHT OF AVIATION SERVICES of understanding to create a joint venture covering technical, an ultramodern new plant in Montluçon, specialized in the production In a world first, the electromechanical actuator (EMA) developed Designed for airlines as well as business aircraft and helicopter commercial and program activities for optronics, with industrial assets of laser gyros and hemispherical resonator gyros (HRG). Inertial and produced in partnership with Airbus was tested for the first time operators, Cassiopée is an innovative modular range of five families of remaining at the parent companies. This collaboration will concern navigation systems allow airplanes, surface ships and submarines as a primary flight control on the aileron of an Airbus A320 flying services: Flight Safety & Risk Management, Maintenance Performance, future defense systems, for which the combination of skills offered to navigate safely and precisely, with full autonomy. These systems testbed. This new type of actuator will eventually replace conventional Flight Operations, Airline Organization, and Cost Savings. At the end by Safran and Thales will provide an offering that is optimized for offer extreme precision, but require an ultra-clean production hydraulic flight control actuation with electrical drive. of 2011, United Arab Emirates company MBM Aeronautics chose both customers and the two parent companies. environment. The new Coriolis building in Montluçon spans Sagem to market and distribute the Cassiopée Exclusive service 14,000 square meters, including 6,500 square meters of clean rooms, in countries belonging to the Gulf Cooperation Council. and features 5,000 square meters of photovoltaic cells on the roof. SALES SUCCESS FOR JIM LR 2 In 2011, French defense procurement agency DGA awarded Sagem a contract for 1,175 JIM LR 2 long-range multifunction infrared binoculars. Drawing on operational feedback from the previous JIM LR unit, the new JIM LR 2 incorporates several improvements, including longer detection and identification range, increased target designation distance, image fusion from the visible and thermal channels, still image and video recording. The two versions are interoperable with the FELIN command and coordination systems. More than 5,000 JIM LR units are now in service or on order around the world.

Safran and Thales sign the optronics MoU. Cassiopée, a new modular range of innovative aviation services. Measurements in a clean room at the new Montluçon plant in France. LEADER IN OPTRONICS TECHNOLOGIES The portable multifunction optronics systems and equipment made by Sagem and its subsidiary Vectronix are used daily by a number of armed forces. Vectronix is participating directly in the British soldier modernization program, designated FIST (Future Infantry Soldier Technology). In addition, some 4,000 Moskito night vision goggles are now in service with the British army, or on order. This market has also seen the launch of new products. For example, TACS-M is a new miniature thermal imager for infantry, clipped to image intensifiers, to enhance visibility JIM LR, the long-range multifunction infrared binoculars from Sagem. and control over tactical situations. Used in conjunction with binoculars, STERNA is an ultra-light, high-precision target location system adapted to the requirements of artillery forward observers. 38 I Safran I 2011 Annual Report I 39

ID DOCUMENT SECURITY

BIOMETRICS, 1 TO BENEFIT ALL CITIZENS

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Finalizing the acquisition of L-1 Identity ID program. Now being deployed, 2 Solutions in 2011, Safran confirmed this first phase concerns 200 million Contributors its world leadership in biometric identity persons. The largest biometric ID 1. An Indian citizen being enrolled solutions. Morpho, the Group company program in the world, Aadhaar gives in the Aadhaar program, 3. Jessica Westerouen 5. Robert Vinco specialized in the security business, each resident of India a unique using the MorphoTop system. Van Meeteren Marketing and Sales Director 2. Automated Fingerprint Identification Managing Director, Morpho BV for Latin America, Morpho has established long-standing relations identification number, based on dual System (AFIS). “Morpho holds an unrivaled “Morpho won the contract with most American states, as well as biometric security (fingerprints and iris position in today’s ID market to supply a complete solution US federal agencies. It has worked with the recognition), to provide secure access because of the combination of for Chile, giving citizens a new our different areas of expertise, ID card and passport.” State of New York for twenty-three years, to a wide range of social services and spanning secure electronic and with the FBI for thirty-seven years, benefits. Another future growth market ID documents, border control 6. Paul Jeremias for example. Products and technologies for security is Latin America, where Safran systems, secure electronic Director of Operations, Morpho 110 transactions and more.” South Africa by Morpho cover all requirements in continued its development strategy 6 “The Botswana police reiterated these markets. The operational synergies by winning major contracts in Argentina, 4. Sanjeev Shriya their trust in us by signing generated by the L-1 acquisition should Mexico, Chile, Panama and other million enrollments Managing Director, Smart Chip Ltd. a two-year maintenance contract already completed at “Safran plays a major role in for the Automated Fingerprint account for annual savings of about countries. During the year, Safran also the success of Aadhaar. Identification System (AFIS), one $30 million, taking full effect by mid-2013. finalized its acquisition of the Valores the end of 2011 in India, It’s the only partner to offer of the most advanced in Africa.” In India, technologies developed by Plasticar bank card production and the requisite expertise in all for the Aadhaar program. three areas, namely biometric Morpho are playing a pivotal role in personalization centers from the Carajal acquisition terminals, enrollment the first phase of the Aadhaar national group of Colombia. 7,200 services and biometric systems.” Safran employees work in the security business. 40 I Safran I 2011 Annual Report I 41 1. Using the CTX 5800 explosive detection system to inspect luggage. 2. Itemiser® DX, capable of detecting a wide range of explosives.

TRAVELER SECURITY Contributors

3. Catherine Herold 34Doctoral student, Telecom ParisTech, Morpho “The IDentity & Security Alliance, the joint research center of Morpho and Telecom ParisTech, was inaugurated in 2011. It will help unleash the application potential of research on secure DETECT AND ID management technologies.” 4. Richard Mikhael Morpho Sales & Marketing Director, Middle-East “Morpho was selected by the United Arab Emirates to carry out a pilot project to improve traveler IDENTIFY 5 flows. For the first time in the Middle East, three biometric technologies – fingerprint, iris and facial recognition – will be The time it takes to complete formal have demonstrated their detection used to check the identity of procedures during aircraft check-in effectiveness, operational efficiency travelers entering national territory. From the moment and border controls could hinder and speed, enabling European airports 1 they are registered, travelers can the development of air travel, and that’s to install these high-performance systems freely pass through the gates.” why Safran is focusing on speeding up for checked luggage inspection with full 5. Bruno Pattyn these controls while still bolstering confidence. This marks a major step Managing Director, Morpho security. The MorphoWay e-gate identifies towards the deployment of Morpho’s Australasia passengers in real-time, calling on three computed tomography systems in “Thanks to the deployment of the new SmartGate, and biometric technologies recommended Europe. In the United States, Morpho by working hand in hand by the International Civil Aviation has signed major contracts with the with the customs services 6 Organization (ICAO): fingerprint, iris Transportation Security Administration in New Zealand and Australia, Morpho facilitated border checks and face recognition. This system greatly (TSA) for the maintenance of explosive 8% with full security, despite simplifies the ID control process, while detection systems and the supply the increase in air traffic during maintaining an optimum level of personal of mobile trace detection devices, of revenues the Rugby World Cup in 2011.” security. A total of 94 Safran e-gates confirming Safran’s leadership from the security 6. Jay Hill are now in service, half of them in in this key security market. Executive Vice President, Strategy & the pioneering countries of Australia business are Technology, Morpho Detection “The comprehensive expertise and New Zealand. reinvested in R&D. available at Morpho gives us The European Civil Aviation Conference an unrivaled ability to integrate (ECAC) said in 2011 that Morpho’s high- technologies for document verification, identification and speed explosive detection systems 7 detection. This will enable us met the ’s Standard 3 to revolutionize air travel security requirements. Safran’s CTX 9400 and seconds to pass by making processes more efficient, while still keeping costs CTX 9800 explosive detection systems border controls affordable for our customers.” using an e-gate.

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ACQUISITIONS GENERATE SYNERGIES MORPHOIDENT, FINGERPRINT IDENTIFICATION A NEW BIOMETRIC SYSTEM FOR CANADIAN POLICE COMPREHENSIVE ROAD SAFETY RANGE Safran has made targeted acquisitions in the security market IN THE FIELD The new MorphoBIS biometric identification system, combining Safran signed a partnership agreement with Selex Elsag in recent years, generating synergies that continued to prove MorphoIDent, launched in February 2011, is a portable terminal technologies from Printrak and Morpho, was deployed for the first (Finmeccanica group) in June, expanding its range of road their pertinence in 2011. For example, the acquisition of Printrak that allows public security personnel to carry out ID checks in time in May 2011 by the Calgary and Edmonton police forces safety and automobile inspection products. The first stage in really allowed the AFIS business to take off in the United States, the field and in real time, using fingerprint recognition technology. in Canada. This new-generation AFIS terminal is an innovative this collaboration concerns the expansion of both companies’ while strengthening our R&D capabilities. The new AFIS platform Calling on the most advanced identification technologies available, solution designed to help police crack cases by checking personal product portfolios. Morpho is contributing its expertise in integrates Printrak’s architecture with Morpho’s biometric engine. MorphoIDent combines robustness with a distinctive ergonomic identities using fingerprints. automated speed control, red light cameras and ticket processing. With the acquisition of Sdu, Morpho staked out a position in design and especially user-friendly features. Fingerprints are read Selex Elsag is specialized in the search for stolen vehicles the e-passport and ID document markets, while generating by an optical sensor certified by the FBI. The fingerprints captured or suspects, especially through advanced license plate new revenues from its identity solutions, including an additional may then be compared to those in local, national or international analysis systems. 40 million euros in sales in 2011 and over 80 million euros databases. The MorphoIDent terminal can be easily integrated in orders for 2012. L-1 Identity Solutions is now being integrated in current information technology architectures, without the cost in the Safran group and should generate synergies leading of additional infrastructure. It meets the needs of police forces to annual savings of 30 million dollars starting in 2013. in the field, who demand reliable yet compact ID solutions.

MorphoBIS uses the latest biometric technologies.

DNA ANALYSIS IN LESS THAN AN HOUR The lightweight Mesta 1000 speed radar facilitates patrol mobility. Drawing on the latest advances in microfluidics and nanotechnologies, Morpho has established partnerships and Morpho produces modern, highly secure ID documents. MorphoIDent provides immediate identification. made investments in DNA analysis. Within a year or two, it intends to develop a system capable of analyzing a DNA profile in the field within an hour, without having to send samples to a lab. 44 I Safran I 2011 Annual Report I 45

WE SUPPORT A RICHLY DIVERSE WORKFORCE, WITH PEOPLE WHO LOVE THEIR WORK

In technology-intensive jobs, the keys to standing out are a passion for one’s work and dedication to innovation. Safran invests heavily in developing our people’s skills and expertise. We foster diversity and cross-fertilization to spur our employees’ creativity, and we provide total support throughout their careers. As a socially responsible enterprise, Safran applies our core values in dealings with both employees and the communities where we do business.

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SAFRAN CORPORATE UNIVERSITY

THREE COMPLEMENTARY • Business: training programs and courses TRAINING CURRICULUMS designed to develop competencies that Safran Corporate University has programs are key to the future of Safran, covering that address all employees, no matter all production jobs and support functions, where they are based. There are three along with general areas such as foreign main types of programs: languages or personal efficiency. These programs, available worldwide, are • Leadership: training programs that common to all companies. prepare management staff to meet the Group’s strategic challenges. Each year, • Gateways: employee support programs more than 500 local managers receive to help them enhance their skills and adapt training in team leadership, and more to major changes in their jobs, or even than 100 managers receive support to support a change in profession. as they are promoted to key positions. 1.2 million hours of training Nurture talents, boost career development, The University also provides training sessions for the Group’s provided yearly at Safran. spur change partners and customers, helping to spread Safran’s influence The training programs offered by Safran Corporate University at all levels. meet three complementary objectives. First, they aim to develop 37,000 skills in professions needed by Safran for successful growth. International deployment Each year, all Safran companies and operating divisions analyze Safran Corporate University operates internationally, in particular employees receive future requirements to identify the skills and professions needed through the creation of campuses that are designed to be melting training each year. to meet the technological and commercial challenges that we will pots to bolster the corporate culture. The University is in effect a very be facing in five to ten years. The University then designs training powerful tool, enabling us to spread our corporate culture, identity programs to meet these needs, covering not only technical jobs, and values throughout all Group companies and all countries where 600 but also support functions. For example, in 2011, it introduced we operate. It deploys the powerful resources needed to accelerate programs on system architecture, industrial processes, design skills development across the Group. In 2011, for example, Safran participants can attend to cost, purchasing, sales & marketing and economics and acquired a 13-hectare (32 acre) campus in Massy, near Paris, to host seminars at the same management. The second objective of the University it to enhance training sessions. Furthermore, it has a 400-seat amphitheater time on the Safran the employability and career development capabilities of all for major in-house events, including orientation days for new hires, Corporate University employees, to keep pace with changes in Group requirements. seminars, conferences and meetings with our partners and campus. The underlying aim is mainly to safeguard useful skills when customers. Other Safran Corporate University facilities are located professions are going to change or even disappear. These programs in Beijing and in Dallas. are an important part of Safran’s employment and skills planning policy. The third objective, accounting for about 15% of our training Leadership model efforts in the coming years, is to help all management staff conduct Safran set up a task force in 2011 to define our Leadership Model, the change process. In 2011 the University launched a new since we are firmly convinced that the attitudes and behaviors “Executive” program to round out its offering of training programs of managers have a decisive impact on our performance as a whole. for tomorrow’s top management. Access to these key positions This Leadership Model will be a pivotal part of all programs. In line is carefully shepherded through intensive, high-level training with our corporate culture, it comprises an array of competencies programs. 22 Group-wide management sessions were organized that all managers must appropriate to guide daily interactions during the year to develop cross-functional project with their teams. and personnel management capabilities. At the same time, Safran Corporate University provides training programs to give local managers concrete solutions to address their own challenges. 50 I Safran I 2011 Annual Report I 51

Motivating and recognizing 12 performance First person 1. Doctor Jacqueline Papin Safran’s social model focuses on the continuous career Health Advisor, Safran “The agreement on stress development and employability of all employees, while also prevention applies at several supporting an active management-labor dialog to make sure levels: raising the awareness and if necessary training all that employees have a stake in the Group’s performance. stakeholders (staff, managers, union representatives, occupational health service), diagnostics organized by steering committees to track the initiative 3 all the way through deployment Maintaining employment and investing in France all companies signed remuneration agreements within the scope of action plans and, at the same Safran has always worked to maintain industrial employment in of France’s mandatory annual wage and salary negotiations in time, providing specific support The Vigeo index includes in particular the employees’ work environment. measures for persons in difficulty.” France. For example, after selling our business in 2009, March 2011. Furthermore, with dividends increasing, a profit-sharing the 700 employees at the telephone production plant in Fougères bonus was paid to all employees in France. Four unions signed 2. Marc Aubry were retrained for jobs in the aerospace and defense sectors. an agreement on employment and skills planning, as Safran seeks CFDT union coordinator, Safran Encouraging employee stock ownership “Each employee has to be able to Reflecting this approach, Safran invests regularly to modernize to anticipate changes in job requirements and make sure that appropriate, build and guarantee Designed to give employees a greater stake in Safran’s objectives and upgrade our industrial facilities. professional itineraries cover these needs. For example, Safran plans his or her career path at Safran. and performance, a leveraged employee stock ownership operation The Group-wide agreement on to facilitate job mobility and use training programs to bolster “The second was organized in France in late 2011, before being expanded to employment and skills planning, employee skills. The agreement encompasses information on in line with this goal, was signed include international entities in early 2012. This operation allows highest employee in November 2011 by four unions the Group’s strategy and medium and long-term outlook, as well as employees to acquire Safran shares under preferential conditions. shareholding rate and Safran management. on employment and skills policy. It provides for the analysis of current The negotiated organization The operation proved very popular in France, with large numbers of defines the role of employees, resources and foreseeable changes in needs, along with the definition among companies employees clearly expressing their confidence in the future of Safran. management, HR managers of an action plan by a Group committee with equal representation and union representatives, Nearly half of all French employees took advantage of this offer, and in the CAC 40.” for all companies. In addition, the agreement lays groundwork for and provides for the associated a large number chose to invest all or part of their profit-sharing bonus resources and tools. It also the future, within the scope of a commitment to being a socially stipulates the opening of Group- in shares. Reactions were so enthusiastic that the 6 million shares responsible enterprise. wide negotiations on in-service assigned by Safran to this operation were fully subscribed. Through training starting in 2012.” this operation Safran was able to further strengthen its employee Safran joins ASPI Eurozone index 3. Catherine Poulain shareholding, already the second highest among companies in Customer and staff manager, Recognizing its performance as a socially responsible enterprise the CAC 40 stock market index. CS SAFIRH, Safran and prior to the agreement, the Safran share was chosen for the ASPI “A Group-level services center now manages payroll for all The employees at Fougères learned new skills. (Advanced Sustainable Performance Indices), established by ratings French companies in the Safran agency Vigeo. Vigeo, the leading European expert in evaluating group.” responsible performance, measures the performance and risks The HR dynamic of companies in six major areas: the environment, human rights, In 2011 all unions signed a Group-wide agreement on the prevention human resources, social commitment, market behavior and corporate of stress, expanding the stress evaluation initiative to cover all facilities governance. The ASPI Eurozone index includes the 120 top-rated in France. And for the first time since Safran was created in 2005, listed companies in the euro zone, based on Vigeo rankings. 52 I Safran I 2011 Annual Report I 53

Encompassing a wealth Foundation for Integration, the Group conducts the Élan project, enabling it to welcome disabled persons under apprenticeship of diversity or vocational work experience contracts. Safran is also a partner in Safran, a signatory of the Diversity Charter, has long been the Salto project, which aims to offer work-study positions in industry committed to equal opportunity and diversity. These goals to disabled persons. Furthermore, it is a founding member of the 12 are considered a major part of our HR policy and an essential Han’Vol association, initiated by French aerospace industry trade association GIFAS, which supports the integration of disabled persons First person factor in driving performance and innovation. in the aerospace sector via work-study contracts. 1. Delphine Dijoud LEAP engineer, Snecma Senior employment: Safran surpasses objective “The large number of production An agreement to support the employment of seniors, signed in 2010 or technical jobs at Safran means that women are still a minority. Cultural diversity and unified commitments and running three years, makes Safran one of the few major But Group management is firmly Cultural diversity, a natural component of a global corporation, takes companies to make a formal commitment in this area. In particular, convinced that certain ‘more on a special dimension at Safran because of the nature of our markets, feminine’ approaches to the accord provides for at least 14% of the Group’s employees to be engineering jobs can spur a focus on international partnerships and external growth. At the same over 55, and this objective was exceeded in 2011. technological innovation!” time, our diversity-oriented human resources policy is consistent with 3 2. Pierre-Arnaud Buzzi our commitments to corporate citizenship. Actions reflecting this Accountant trainee, Sagem policy focus on young people from disadvantaged neighborhoods, “Becoming disabled, I could no longer do my original job. women, seniors and the disabled. Through the Salto project including Safran as a partner, I am now in a work-study program at Sagem, as part of a vocational work experience contract.”

3. Nicolas Franck Production department, Snecma The association "Elles Bougent" in action at the 2011 Paris . “The main challenges of the Frateli mentorship project are to help high-potential youngsters from disadvantaged neighborhoods make ambitious career plans, the Move”), gender equality in recruitment (our aim is to hire at least initiate a network of contacts 25% women in 2012), equal remuneration, and actions designed to and support them through Senior employment is one of Safran’s corporate commitments. employment. The strength of foster women’s promotion to management jobs. During the Women’s this project is that it is mutually Forum in Deauville last October, Safran, a partner in this event, led enriching.” a workshop on “Women’s role in innovation”, and invited about Initiatives for social integration Safran’s HR policy fosters diversity. 30 of our own employees to take part in the roundtables at the forum. Safran’s corporate citizenship is also expressed through various initiatives for social integration. In 2011, Safran continued its Supporting the employment of disabled persons partnership with Frateli, an association founded to support high- Encouraging gender equality For the 15th National Disability Employment Awareness Week in potential students from low-income families, by offering an One of the top priorities in our HR policy is favoring gender equality France last November, Safran, along with AGEFIPH (French fund opportunity to be mentored by top employees. Safran also works through support for women. To attract young women to our management association for the employment of disabled persons) with the Aéronautique solidaire project, developed in collaboration workforce, develop equality in our teams and facilitate women’s launched a major in-house poster campaign, with the tagline, with charity organization Les Restos du Coeur, to train and support access to management positions, Safran deploys a wide range “We are 1,579 disabled workers at Safran, and nothing could be more the hiring of persons in difficulty in the aerospace industry. of actions. These include contacts with female students to promote normal!” The Safran group has been especially mobilized since 2006 scientific and technical jobs, often through our membership in the to support the integration and employment of disabled persons via association founded to support this goal, Elles Bougent (”Women on associations such as Tremplin, ADAPT, etc. Through the Safran 54 I Safran I 2011 Annual Report I 55

A universal commitment to the future Safran is developing a culture based on anticipation and prevention to manage health, safety and environmental risks. Furthermore, we are involved in various corporate philanthropy and sponsorship projects that match our values and benefi t society.

HEALTH, SAFETY, ENVIRONMENT 20% drop in A strong commitment to improving occupational safety the frequency rate had changed very little, staying at 6 to 7, but it occupational In 2011 Safran consolidated the development of its health, safety dropped by 20% in 2011, down to 5. A detailed listing of accidents accident and environment organization, first initiated the previous year. with lost days is now part of the monthly reporting package tracked by frequency The new Sustainable Development division coordinates three corporate management, and this report will become weekly in 2012. vs 2010. geographic zones – Americas, Europe/North Africa, Asia-Pacific/ Middle East/sub-Saharan Africa – covering all Safran sites and A consolidated reference system operations around the world. To foster synergies, several sites In general, Safran continued to structure its Health, Safety, 3,000 that may be close but belong to different companies, have been Environment initiative in 2011, seeking to manage risks and improve organized as regional hubs. The hub coordinators, site prevention performance by consolidating the Safran HSE reference system. The managers staff, occupational health services and decentralized experts form system currently comprises a manual and 27 HSE standards, enabling trained or a network that the Sustainable Development division can call on each Group facility to evaluate its own maturity on a scale of 1 to 4. made aware to deploy its actions. A corporate team supports these correspondents The new Safran reference system has been validated by a third party, of issues in the use of all Group tools, and for all Group-wide subjects. showing its equivalence with certifications to ISO 14001 and Safran has implemented a proactive policy to improve occupational OSHAS 18001 standards. Starting in 2012, the Safran HSE reference involving safety. The main indicators used to evaluate and apply improvement system will gradually replace these certifications. stress in plans are the accident frequency and severity rates. The former the workplace. indicates the number of accidents per million hours worked, while the latter indicates the number of days lost because of occupational accidents per thousand hours worked. Our aim is to cut the frequency rate in half by 2013, in relation to 2008, with very ambitious goals set for each company. At 113 main facilities with a total of more than 54,000 employees, the number of work accidents dropped significantly in 2011 versus previous years, including a 12% decrease from 2010. These results are very encouraging. In fact, since 2005 56 I Safran I 2011 Annual Report I 57

ENVIRONMENTAL PROTECTION, A LONG-TERM INITIATIVE PARTNERSHIP BOAT SPONSORSHIP

Safran continued to efficiently manage its environmental In search of the Oiseau-Blanc A number of improvements for Safran ocean racer footprint in 2011. The Group’s project team for the European IMPROVING Safran has signed a two-year partnership agreement with For the Safran monohull ocean racer, 2011 was above all a year to regulation REACH (Registration, Evaluation and Authorization of Chemicals) benefits from dual reporting lines to both the association La Recherche de l’Oiseau-Blanc (”In Search prepare for the upcoming Vendée Globe solo round-the-world race. the Sustainable Development and Production divisions, of the White Bird”) to participate in search operations off Looking ahead to this mythic race, which will start at the end of 2012, giving it more action levers. It also calls on a network of WORKING the coast of Saint-Pierre-et-Miquelon. The aim is to find the boat underwent a number of changes, including improvements product environment correspondents at each company. These correspondents are tasked with facilitating solutions the wreckage of the legendary Oiseau-Blanc flown by French pilots to the steering system and the construction of a new titanium keel. for growing environmental requirements, in particular Charles Nungesser and François Coli, who may have crossed the The keel was designed with help from Safran’s own designers: those applicable to products. A new campaign to measure CONDITIONS Atlantic in 1927. By participating in this search its panels were forged, machined and welded by various partners the carbon footprint at 69 of our largest plants kicked off in 2011. It enabled verifying data and helped Safran gear up for an outstanding airplane, Safran also hopes to find a piece from the aerospace industry. Construction also started on a new for new regulatory requirements. Results of these Safran continued to deploy its risk evaluation initiative of its own history, namely the plane’s Lorraine-Dietrich engine. mast, with an ambitious weight savings goal. Part of the mast will measurements will be available in 2012. in 2011, including ergonomic analyses of all workstations, use Safran’s proprietary woven 3D composite technology, used on evaluation of chemical risks, environmental and accident Safran is also committed to various significant external the LEAP jet engine’s blades and other critical parts. Safran continues analyses. In particular, this initiative calls on TESSE, a tool actions, such as the creation of the International Aerospace for the traceability and evaluation of health, safety and to show that its contribution as a sponsor goes beyond financial Environment Group (IAEG), which primarily aims to define environmental exposure, bringing together data on all support. Our strong involvement in the design and production common environmental standards for the international occupational risks, no matter where they originate. aerospace industry, also applicable to the entire supply chain. of various upgrades reflects our conviction that cross-fertilization A major player in the European research program Clean Sky, Safran corporate management signed an agreement helps drive progress. In competition results, Marc Guillemot and Safran also teams up with French aerospace industry with five French unions in January 2011 concerning stress co-skipper Yann Eliès finished sixth in the Transat Jacques Vabre association GIFAS to conduct work on the application of prevention in the workplace, thus formalizing in-depth REACH, write professional guides and replace potentially transatlantic race, having shown a real fighting spirit under terrible work on managing psychosocial risks that had started back hazardous chemical substances. in 2004. This agreement provides for the stress evaluation weather conditions. Shortly before that race, Safran had set procedure to be applied to all Group facilities, as well as a new record in the Race around Britain. deploying actions to raise the awareness of all stakeholders. It also defines actions to help detect and take responsibility for employees suffering from stress. In addition, the agreement provides for expanded actions concerning the preservation of employees’ health.

2011: gearing up for the 2012 Vendée Globe.

A 450-hp Lorraine-Dietrich 12EB engine, identical to the one that powered the Oiseau-Blanc. 58 I Safran I 2011 Annual Report I 59

PHILANTHROPY

Since 2005, Safran has provided support for more than 250 projects through its corporate philanthropy and social responsibility policy. All of these initiatives aim to meet two major challenges, namely social solidarity and equal opportunity. They are implemented either through Safran’s two foundations, or directly with the association involved.

The Safran Foundation for Integration supports the social or The Safran Foundation for Music’s primary mission is to support Direct actions based on premium public professional integration of young adults suffering from a physical, young virtuosos as they start their careers, just like Safran supports and private partnerships mental or social disability. The primary criterion is the sustainable the career development of our talented young employees. A long-standing partner, the Orchestre de l’Alliance organized nature of the benefits for aid recipients. International actions in 2011 Our Foundation works with various organizations that already a concert along with Safran to benefit the Mécénat Chirurgie focused on projects in Brazil, India and Morocco, and will have support them, including the museum (”young talents” cycle), Cardiaque, a cardiac surgery association for children with heart a strong leverage effect on populations that are particularly the armed forces museum (“young talents-début” cycle) and defects. We also formed new partnerships last year: with the French disadvantaged. Furthermore, Safran employees stepped up even renowned festivals. The Safran Foundation for Music Award embassy in the United States to organize concerts spotlighting more to help the Foundation on projects carried out in collaboration recognizes a young musician of the year. Since music is also young virtuosos in Washington, D.C. and at American universities, with HR departments from companies or the Group, such as Élan a channel for integration, the Foundation maintained its in conjunction with the French Senate and Ministry of the City, and Frateli (see page 53 for more details). Another excellent commitment to the project “Chamber Music in the Hood”, within the scope of the operation, Talents des Cités. illustration is the ambitious project to design innovative wheelchairs, resulting once again in a concert at the prestigious Salle Pleyel launched in the summer of 2011 in partnership with the Garches concert hall in Paris, with the participation of young students Foundation, leading engineering schools (Centrale Lyon, ISTY and from disadvantaged neighborhoods. Strate College) and a number of Safran employees, mostly engineers.

Wenjiao Wang, winner of the Safran Foundation for Music Award. A child operated on for a heart defect, thanks to National winners of the “Talents des Cités” contest and elected officials in the Senate chamber. the Mécénat Chirurgie Cardiaque. *UDSKLFGHVLJQDQGSURGXFWLRQ  #NBTLDMSOQHMSDCNM"NMC@SRHKJ/$%"F@MCFO@ODQ 3KRWRFUHGLWV)URQWFRYHU/GHKHOOD2SQNOO@l LHS#DXl)D@M %Q@MĝNHR#@LNHR"QD@SHUD"DMSDQ2@EQ@MòSÍQHB#QNTHMòS&DSSXòSÍQHB#QNTHMòS$LAQ@DQ l3QHRS@M/@UHNS,NQOGNl/GHKHOOD2SQNOO@òS1NADQSN%Q@MJDMADQFS1NADQSN%Q@MJDMADQFl$LL@MTDK%Q@CHMòSÍQHB#QNTHM2MDBL@2@EQ@MòS1ġLX/NHMNS "QD@SHUD"DMSDQ2@EQ@MòS3GHDQQX2BGMDHCDQl"%,2MDBL@òS%NKKDSUHRTDKl6DRSHL@FDRòS CD/@AKN,@MFN/QNCTBSHNMl)D@M "GQHRSNOGD,NQD@T"QD@SHUD"DMSDQ 2@EQ@MlÍQHB#QNTHMòS/HDQQD2NHRRNMRòS/@RB@K+D#N@Qġ2@EQ@Ml)D@M "GQHRSNOGD,NQD@T"QD@SHUD"DMSDQ2@EQ@MlÍQHB#QNTHMòSÍQHB%NQSDQQD2@EQ@MòS/HDQQD 2NHRRNMRl MSNHMD#DMNHW2@EQ@MòS2@FDLòS)D@M "GQHRSNOGD,NQD@T"QD@SHUD"DMSDQ2@EQ@Ml#@RR@TKS UH@SHNMl)D@M %Q@MĝNHR#@LNHR2@FDLòS2@EQ@Ml#@MHDK+HM@QĠR 2@FDLòSb KDW@MCQD/@QHMF@TW)(,+1l2@FDLlS LHS#DXòS LHS#DXl&THKK@TLD TANHQDòS#DRHFMDQR RRNBHġRòS&THKK@TLD TANHQD,NQOGN2@EQ@Ml,NQOGN òS QADM"DKHl CQHDMŰ#DMDT,NQOGN2@FDLòS&ġQ@QC5NTHKKNM,NQOGNl CQHDM#DMDTòS/HDQQD2NHRRNMRòS&DSSX(L@FDRòSÍQHB#QNTHMòS)D@M %Q@MĝNHR #@LNHRòSÍQHB#QNTHMòS1NM@M+HDS@Q2MDBL@l1ġLX&THKK@TLNSòS/GHKHOOD2SQNOO@lÍQHB#QNTHMòS3GHDQQX,@LADQSHl/GHKHOOD2SQNOO@òSÍQHB#QNTHM òS/@SQHBD5ġQNMl)D@M ,@QHD+HNS#//(òS2NOGHD MHS@l6DHX@N6@MFòS/GHKHOOD+DEDTUQD