S.A.B.C.A. ANNUAL REPORT 2015 ANNUAL REPORT 2015

2015 report of the board of directors

Annual General Meeting, 26 May 2016

MANAGEMENT REPORT

Group profile ...... 3

Statutory bodies ...... 4

Message of the Chairman and the Chief Executive Officer ...... 6

1. Principal activities in 2015 ...... 9

2. Business Environment and Outlook ...... 21

3. Research and Development ...... 31

4. Human Resources ...... 39

5. Corporate Governance ...... 43

6. Financial aspects ...... 52

The detailed annual accounts are inserted hereafter

1 SABCA Annual Report

2 Airbus A350XWB-900 (MSN 002) Group profile

Now approaching its 100th anniversary, the SABCA Group FOCUS ON NEW TECHNOLOGIES (made up of SABCA – Société Anonyme Belge de Constructions Investment in new technologies and modern infrastructures Aéronautiques – and its subsidiaries SABCA Limburg and ASM is part of the strategic plan drawn up by the Group. This Aéro) is continuing to make its presence felt in its 3 markets, investment policy is a way of giving added momentum to the aerospace, civil aviation and defence. The SABCA corporate Group’s operations and of strengthening customer relations. culture focuses on synergy and complementarity between these three fields at the level of products and services supplied, and THE IMPORTANCE OF STAFF TRAINING in particular within its engineering offices and production lines. Skill development is a key topic within the Group, as reflected by the many training courses held throughout the year for all A NATIONAL AND INTERNATIONAL MARKET departments. The high level of qualifications demanded from SABCA activities are spread over four production plants, one staff and the upgrading of skills are the subject of training in each of Belgium’s three regions and one in Morocco. Its plans compiled by the HR department. participation in Belgian and international programs as prime contractor, partner or subcontractor is also relevant. Exports ROBUST PARTNERSHIP AGREEMENTS account for nearly 85% of total sales. Over the years, the Group has evolved in a globalised market, establishing stable international partnerships. This has allowed COMPLETE COVERAGE OF A PROJECT it to build up a network of international ties benefiting the In all three fields, realising a project covers all steps, from study proper management of the Group’s operations and projects. and design to the manufacture of such components as metal In Belgium, given the specific nature of its operations and and composite structures, servo-systems and fully equipped the indispensable role of the public authorities, the Group is sub-assemblies. dedicated to being an active industrial player at both federal and regional levels. MODERNISATION OF EQUIPMENT As part of its defence support business, it handles the maintenance CUSTOMER SATISFACTION, A PRIORITY and modernisation of military aircraft, as well as the production The Group is characterised by its functional flexibility and its of kits and replacement parts. The Group has always been able effectiveness when working in team with its customers, from to contribute to the realization of special customised products the design phase to the certification phase, via production, meeting the needs of its customers. delivery and after-sales service, all of the time listening to what its customers are saying. Customer satisfaction is one INNOVATION, AT THE HEART OF ITS OBJECTIVES of the Group’s top priorities and is part of the Group’s policy In order to best contribute to the technological development of maintaining long-term and personal relationships with its of the aircraft and space launcher programs in which it customers. participates, the Group is boosting the development of its innovative technologies and efficient manufacturing processes FUTURE-ORIENTATED such as additive manufacturing (3D printing), and composite The Group is constantly looking out for ways of optimising its and microcontroller manufacturing. Mastering the requisite resources, especially via controlling costs. This involves not skills remains one of the main objectives, particularly in the just enhancing control of suppliers and subcontractors in the context of research and development. long term, but also permanently increasing the effectiveness and quality of the services provided. RESPECT OF THE ENVIRONMENT The Group pays particular attention to environmental norms and respect thereof via appropriate investments. This respect of national and international norms applies to both civil and military projects. SABCA Annual Report

Airbus A350XWB-900 (MSN 002) 3 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 (2016)

Directors

Benoît Berger, Executive Vice-President Charles Edelstenne, Industrial Operations and Purchasing Chief Executive Officer - Groupe Industriel Dassault Aviation 1 (2016) Marcel Dassault 1 (2016)

Hans Büthker, Chairman and Chief SPRL PASTEC-MIT, represented Executive Officer - Fokker Technologies by its Manager, Michel Martin, 2 Group B.V. (2016) independent director (2017)

Olivier Costa de Beauregard, Loïk Segalen, Chief Executive Officer - Groupe Industriel Chief Operating Officer - Marcel Dassault 1 (2016) Dassault Aviation 1 (2018)

SA C.G.O., represented by its managing director, Philippe Delaunois, Remco Smit, Chief Financial Officer - 2 independent director (2016) Fokker Technologies Group B.V. (2016)

Chief Executive Officer SA Gefor, represented by its managing Jean-Marie Lefèvre director, Jacques de Smet, Statutory auditor independent director (2018) Mazars Réviseurs d’Entreprises SCRL, represented by Lieven Acke, company auditor

SABCA LIMBURG ASM AÉRO Board of directors (and expiry date of the current term of office) Board of directors (and expiry date of the current term of office) Chairman Chairman, responsible for day-to-day management SPRL Gestime, represented by its managing director, SA SABCA, represented by its Chief Executive Officer Remo Pellichero (2016) Jean-Marie Lefèvre (2018) Chief Executive Officer Vice-Chairman Jean-Marie Lefèvre (2016) S.A.S. AAA, represented by its Chairman, Gilles Chauby (2018) Directors Directors Loïk Segalen, Chief Operating Officer - Dassault Aviation 1 (2019) Pierre De Graef, Director of SABCA’s Brussels plant (2018) Remco Smit, Chief Financial Officer - Fokker Technologies Cédric Nouvelot, Vice-President - AAA (2018) Group B.V. 2 (2016) Commissaire

SABCA Annual Report Statutory auditor Mazars Audit et Conseil SARL, represented by Adnane Mazars Réviseurs d’Entreprises SCRL, represented Loukili, company auditor by Lieven Acke, company auditor

4 1 Elected on the proposal of the Dassault Group • 2 Elected on the proposal of the Fokker Technologies Group B.V. Group B.V. SABCA Annual Report

Airbus A400M 5 R. Pellichero J-M. Lefèvre

Message of the Chairman and the Chief Executive Officer

As a result of the impending retirement of SABCA’s CEO, Jean-Marie Lefèvre, at the end of 2016, the Board of Directors has appointed Thibauld Jongen as CEO as of 1 June 2016. Mr Jongen is currently a executive or executive director Techspace Aero Group. One of his main missions will be to finalise and implement SABCA’s strategic plan.

The difficulties encountered in several programs in 2014 continued On the positive side, a contract was concluded with ASL (Airbus in 2015, negatively impacting results. While the strategic plan aimed Safran Launchers) for the development of the Ariane 6 thrust at ensuring SABCA’s long-term prospects made progress in 2015, control systems, a new F16 maintenance contract was gained, and the results gained were insufficient. the production rate for the Gulfstream program was confirmed.

In particular, considerable effort needs to be invested in keeping However, the Group’s situation was negatively impacted by its lack hourly rates under control, a key success factor for SABCA. To achieve of participation in the development of Ariane 6 structural elements this, possibilities of producing less complex elements abroad will be as well as by the decisions of several customers to reduce production reviewed again, as will ways of improving productivity and reducing rates or even to freeze certain programs. internal organisational, workforce and supply chain costs, all with a view to achieving the targets the company has set itself – a sine In the civil aviation field, production rates have developed in qua non for the company’s future. various directions. While the A350 XWB and A320 programs have seen increases in production rates, the A330 program has been hit SABCA has always been able to adapt to developments in its markets by a reduction caused by the transition to the new neo version. As well before any situation turned critical. a result of its recent commercial successes, Airbus has announced that production is set to increase from 2017 onwards. The company and its Board of Directors are again determined to make this necessary transformation a success, with the indispensable As of 2016, the A380 program is reducing SABCA shipments of help of the whole workforce and all partners. T-shapes to 20 a year. SABCA Annual Report

2015 was characterised by contrasting developments in the Group’s In the field of business aircraft, following shipments made different operating sectors. under a tight schedule in the first half of the year, SABCA (for 6 the lower T34 rear section) and SABCA Limburg (for horizontal Group Committee

stabiliser components) are now facing a production freeze for the expected to generate a very high level of business. On the other F5X program decided by Dassault Aviation. hand, with the structural engineering office not involved in the Ariane 6, this will create workload problems in the medium term. These variations in production rates are resulting in an overall drop in the workload of the Brussels plant. In the field of defence, the F16 export maintenance contracts have allowed a stabilisation of workload at the Charleroi plant, At SABCA Limburg, volumes remain high due to the production of though at an unsatisfactory level. Gaining further maintenance composite panels for the Gulfstream G650 and Falcon 900/2000 or modernisation orders thus remains crucial for maintaining as well as the production of fairings for the A350 XWB and casings operations at the Charleroi plant. for the A400M. With the F16 replacement program currently being launched by With a view to meeting their deadline, quality and cost targets, the Belgian government, SABCA and other industrial companies in these programs are the subject of – unfortunately still insufficient – the sector are stepping up their contacts to the various competitors improvements on the part of the SABCA Limburg production teams. as well as to political authorities with a view to gaining significant industrial participations in this program. At ASM Aéro, the workload is also decreasing due to the adjustments in the A330 and Falcon production rates. In 2015, shipments of A400M aircraft to the client countries were below forecasts. Production rates at SABCA and SABCA Limburg In the field of aerospace, 2015 was a nominal year, with all have as a result been adapted, but are expected to go up again launches of Ariane 5 (6) and Vega (3) successful. from 2016 onwards.

The plans are for these launch rates to be maintained in the following Having defined its strategic plan around this challenge, SABCA intends years, with a peak of 8 Ariane 5 launches planned for 2016. to overcome it with the help of its workforce and all its partners.

An additional tranche of 18 launchers is currently being negotiated, R. Pellichero J-M. Lefèvre allowing the transition to Ariane 6 operations as of 2020. Chairman Chief Executive Officer SABCA Annual Report

SABCA’s mechatronics engineering office has now started design activities for the Electro-Mechanical Thrust Vector Actuation Systems (EMTVAS) of all Ariane 6 and Vega-C stages which are 7 8 SABCA Annual Report ACTIVITIESIN 2015 PRINCIPAL 9 SABCA Annual Report ANNUAL 2015 REPORT

Aerospace

ARIANE 6 ARIANE 5 2015 was a decisive year for the Ariane 6 program. This new The Ariane 5 program remains a key SABCA project, with launcher will be offered in two versions: the A62, capable of activities regarding this launcher involving the production of putting a 4.5-tonne payload into geostationary orbit (mainly the front and back skirts and their pre-integration at SABCA for institutional missions), and the A64, capable of putting Limburg, the production of the acceleration rocket frame (ARF) an 11-tonne payload into geostationary orbit (mainly for for its structural activities, and the production of the engine commercial missions). activation groups, the thrust vector actuation systems, the hydraulic servo-engine groups and the pneumatic snatch-off As part of the Ariane 6 program, SABCA is responsible for connectors for its mechatronics activities. developing all actuation systems: 2016 is set to be a record year, with 8 launches planned • The Solid Thrust Vector Actuation Subsystem (S-TVAS) for the (against 6 in 2015). P120C solid rocket motor. The Ariane 62 configuration will be fitted with two S-TVAS, while the A64 will have four of them. VEGA • The Lower-Liquid Thrust Vector Actuation Subsystem (LL-TVAS). 2016 turned out to be a successful year for the Vega launcher. It began with the successful flight of the IXV (Intermediate • The Upper-Liquid Thrust Vector Actuation Subsystem (UL-TVAS). eXperimental Vehicle) on 11 February and was followed by two further particularly complex missions. 2016 is also set to The approval of the new launcher concept (the PHH configuration: be a positive year with two launches already planned. powder-hydrogen-hydrogen) at the Ministerial Council meeting in December 2014 allowed the contractualisation of Phase A of In 2015, SABCA and its customers ELV (European Launch its development in January 2015, and that of Phase B in June Vehicle) and EUP (Europropulsion) signed a new contract for 2015. During this period, numerous trade-offs were made by the production of 10 additional launchers. This batch covers SABCA with a view to optimising costs without compromising the period from mid-2015 to 2018, with a production rate of 3 the launcher’s reliability. launchers a year. The first ones were delivered in autumn 2015.

In July 2015, SABCA signed a framework agreement with Airbus Safran Launchers for the development of the TVASs for all Ariane VEGA CONSOLIDATION (VEGA-C) 6 stages. The subsequent negotiations between Airbus Safran The aim of this major program, decided at the ESA Ministerial Launchers and SABCA led to the signing of the development Council meeting, is to enhance the performance of the Vega contract for the three thrust vector actuation systems for the launcher in response to increased market demand for launching Ariane 6 launcher in December 2015. 2-tonne satellites.

2015 was also marked by the wish – at both ASL (Airbus Safran The Vega’s current Zefiro 23 stage will be replaced by a new, Launchers) and ELV (European Launch Vehicle) – to arrive at more powerful stage, the Z40, while the lower P80 stage will a joint design for the P120C powder booster and TVASs of be replaced by the new P120C powder booster, developed both the Ariane 6 and the Vega-C launcher. As a result of this jointly for both the Vega-C and Ariane 6. joint approach, the two main contractors intend to optimise this stage and thus to benefit from cost reductions in both The activities carried out in the course of 2015 consisted development and production. It will however be a challenge, mainly of negotiating the technical specifications of the TVAS as the two launchers have different requirements, in particular subsystems for the P120C solid rocket motor (jointly with in terms of deadlines and technical specifications. Ariane 6) and the Zefiro 40. The Preliminary Design Review stage was reached at the end of the year. SABCA Rapport AnnuelAnnual Report

10 1. Principal activities in 2015

The interstage 0/1 skirt is also to be further developed (higher Negotiations for the Vega-C framework contract started in payload, greater diameter and height) as part of the Vega-C December 2015. The contract is expected to be signed in 2016. program.

In the second half of 2015, SABCA worked on various technical solutions and on optimising costs in response to the tender put out by ELV.

Thrust vector actuator for the Vulcain engine (Ariane 5) SABCA Rapport AnnuelAnnual Report

11 12 12

SABCA RapportAnnual Report Annuel

REPORT ANNUAL

AIRBUS andDassaultprograms. medium term become involved in assembly activities for other willinthe aresultofthisfavourabledevelopment,ASMAéro As results, allowingtheexpectedlevelofqualitytobeattained. there. Training courses and mentoring measures have led to positive 2015saw other assemblies being successfully transferred Aéro. Work associatedwiththetailconeremains themainactivityofASM modifications. SABCA isonlymoderatelyimpactedbyitasaresultoffewminor While contributingtothedevelopmentofA330neoprogram, assembly line. In 2015,atotalof91tailconeswereshippedtotheToulouse from thelaunchofnewA330neoversion. further at the end ofthe year to 6per month. This slowdown results The decreaseintheproductionratefrom10to9permonthdropped meeting thespecificrequirementsandneedsofclientcompanies. The solutions to the various change requests were conclusive, shipments ayear. of2016,theplannedproductionratewilldecreaseto20 As completed inlinewiththecontractschedule. The 28shipmentsofT-Shapes plannedfor2015weresuccessfully and thosefor theA320andA350programs increasing. course of2015withregard to production rates, withthosefor theA330program decreasing The civilaviation programs inwhichSABCAisinvolved developed indifferent directions inthe Civil aviation AIRBUS A380 AIRBUS A330

2015 in 2015,amajorincreaseover2014. continuestogoup, reachingatotalofnearly40shipments (FSF) the flap support structures (FSS) and the flap support fairings SABCA, Production ofthestructuralelementsunderresponsibility to airlines,with14aircraftdelivered. A350XWB-900 2015 wasmarkedbyincreaseddeliveriesoftheAirbus of 494theseaircraftin2015. SABCA Limburg supplied sets of composite ribs for the vertical fin These DDVs areintegratedinthebrakingsystemsofA320family. continued in2015,reachingamonthlyproductionfor46aircraft. toMessierDelivery ofdirectdrivevalves(DDV) BugattiDowty continued to be supported in 2015. The delivery of nearly 1200 continued tobesupportedin2015. Thedeliveryofnearly1200 to Dassaultforitsbusinessaircraft Falcon F900 andF2000 andotherhydraulicequipment Deliveries ofservo-controls hoods. SABCA Limburg, as well as a contract for the Falcon 900’s engine surfaces (extrados) made of composite materials in its subsidiary SABCA also has a contract with Dassault Aviation for the upper wing assembles therearstabiliserforDassaultAviation. which rear spars.TheproductisshippedtoFokkerAerostructures, horizontal stabiliserpanelswithintegratedstiffenersandfront SABCA Limburg is also involved in this program, producing the slat actuators. the Falcon 5X–the TASFU (Trim SlatFlapUnit) Airbrake andthe assembliesfor SABCA isalsosupplyingotherelectro-mechanical 5X toDassault. The GroupdeliveredseveralrearfuselagesectionsfortheFalcon AIRBUS A350 XWB A318/A319/A320/A321AIRBUS FALCON

1. Principal activities in 2015

assemblies a year requires regular training for the production GULFSTREAM 650 teams to keep up the production momentum in response to SABCA Limburg is responsible for constructing the composite customer demand. horizontal stabiliser structures supplied to Fokker Aerostructures for integration and delivery to Gulfstream. Throughout 2015, production remained stable.

Airbus A350XWB-900 Flap Support Structure (C-Rib 2) SABCA Rapport AnnuelAnnual Report

13 ANNUAL 2015 REPORT 1. Principal activities in 2015

Defence

SABCA CHARLEROI several replacements of structural spars and phase inspections At SABCA Charleroi, the majority of activities involve the for 2016. maintenance and modernisation of aircraft, helicopters and accessories for the Belgian and foreign armed forces. In the context of the management contract for the Supplementary Type Certificate (STC) for the French Alpha-Jet, the French defence The activities carried out for “Défense Belge”, Belgian armed agency – Direction Générale de l’Armement – has awarded forces remained stable thanks to the F16 structural refurbishment several studies and activities to SABCA. programs and the planned P9+ inspections for the Alpha-Jet. These two programs achieved their nominal rate in 2015, and SABCA BRUSSELS AND SABCA LIMBURG are set to continue at this rate. Regarding the A400M military transporter, SABCA Brussels is Activities involving foreign F16 planes reached a particularly responsible for the development and production of the wing high level in 2015: flap deployment structures, while SABCA Limburg is supplying the composite casings for the wing flaps. • USAFE: continuation of fuselage and cockpit repairs, inspections of the wings and preventive anti-corrosion treatment. This program is maintaining its production rates, with 16 planes delivered in 2015. Delivery deadlines were met throughout • Royal Dutch Air Force (RNLAF): continuation of 300-hour phase the year, with an additional focus on logistics performance. inspections, along with the gaining of MLE145 accreditation. The initial contract for 6 planes has been extended in 2016. In the field of mechatronics, SABCA is also responsible for the maintenance of the servo-steering, and the aileron and elevator • Royal Danish Air Force (RDAF): a new contract was gained at servo-controls for the Alpha-Jet program. the end of the year for long-term support for fuselage repair operations and wing inspections, as well as the scheduling of SABCA Annual Report

14 F-16 - Replacement of Canopy Sills Longerons SABCA Annual Report

F-16 - Preparation to Bead Blasting operations 15 1. Principal activities in 2015

SUPPLY CHAIN

In 2015, the Purchasing Department was restructured into The External Logistics Department has submitted an application commodities. Thanks to this new organisation, knowledge of to have SABCA certified as an AEO (Authorized Economic markets and their main players is expected to improve, allowing Operator). This certification will lead to the simplification of SABCA to streamline its range of suppliers and simplify follow- certain customs formalities. An application has also been made up activities. to set up a bonded warehouse on the SABCA Gosselies site.

The operating modes of the Supplies Department were subjected The Suppliers Quality Control Department, functionally part to an analysis, checking the methods used for forecasting of the Supply Chain process, is focused on analysing the root needs as identified and then transmitted by the Planning causes of non-conformities within supplier responsibility. This and Scheduling Department. The focus of the improvements work has enabled the number of non-conformities to be reduced identified is inter alia on the detailed definition of supply by almost 30% against 2014. Important work has also been processes and the introduction of new procedures linking performed in the context of having certain special processes suppliers, the standardisation and sequencing of the steps certified for the A350 and Falcon 5X programs. involved in processing orders, the pilot introduction of new delivery programs and a training plan for young supply staff.

Warehouse informatization SABCA Annual Report

16 Quality

In 2015, the compliance monitoring audit for the Quality The preparatory work for obtaining PART 145 certification Management System enabled SABCA to renew its EN9100 for civil maintenance has been completed at 2 SABCA plants. certification in line with the latest “2009” version of the standard. SABCA is moreover ISO9001- and AQAP2110-certified. SABCA Limburg and ASM Aéro have both had their EN9100 (2009 version) certifications renewed. The company also has PRI-NADCAP certification for chemical processes as well as for non-destructive testing (NDT). SABCA Limburg has also gained an extension of its Production Organisation Approval (POA) under the EASA PART 21/G The “materials and procedures” labs have prepared certifications regulation for manufacturing the flap casings for the A400M applicable to surface treating operations in line with the and the flap support fairings (FSF) for the A350 XWB. specifications of new customers or programs.

Environment

After the successful completion of the environmental audit in • a reduction in electricity consumption (-12% at Charleroi). 2014 resulting in SABCA’s Environmental Management System (EMS) becoming certified at Level 2 (of 3) pursuant to the NFX • a 80%+ reduction in the emissions of volatile organic compounds 30-205 standard, 2015 was a year devoted to consolidation. (VOC) at the Brussels plant thanks to the elimination of the The environmental contribution of each employee has been use of perchloroethylene in all the plant’s workshops. detailed in an environmental function description aligned with his position in the hierarchy. Insulating the roof of the Brussels plant and replacing an oil- fired boiler with a gas-fired one will soon help us to further

From the point of view of environmental practices, 2015 was reduce our CO2 emissions. a year in which some remarkable results were notched up: At Charleroi, the commissioning of a new dry painting booth • a substantial reduction in water consumption at Charleroi (without a water curtain) with LED lighting and heat recovery (-30%). will soon help us improve our environmental performance indicators. SABCA Annual Report

17 1. Principal activities in 2015

INDUSTRIAL INVESTMENT PROJECTS

The majority of industrial investment projects completed in The work on modernising and sprucing up the Brussels plant 2015 involved the replacement and modernisation of existing was completed by the construction of a new visitor parking facilities: production equipment, measuring instruments, lot and improvements to the plant’s roads. ergonomic workplaces. At SABCA Charleroi, a new painting booth for the treatment of An in-depth study was carried out to choose a new-generation large-size objects has been commissioned, freeing up capacity multi-function CNC lathe required for manufacturing complex to treat whole aircraft in the existing booths. parts used in the production of the actuators developed by SABCA. The machine is due to be commissioned in 2016. SABCA LIMBURG has installed and commissioned two new machines replacing now obsolete ones: a lathing machine for A new clean-room for manufacturing circuit boards and large-site composite parts and an android robot system used assembling electronic units is currently being installed. for the ultrasound inspection of composite parts. These two machines are indispensable for improving productivity. The production facilities needed to extend the range of surface treatments to meet new environmental standards have been The building housing the two machines is also intended to make approved. production flows more efficient and competitive, operating under the ‘lean’ principle. Several energy-saving investments have been made, such as insulating buildings and replacing boilers.

MOVEMENTS IN THE USD DOLLAR EXCHANGE RATE

The company applies a hedging policy, covering it against favourable than market conditions at the close of the financial currency exchange risks for running contracts through organising year have led to a major financial loss. its purchases of goods and services in foreign currency and making use of financial instruments to hedge the residual risk. This loss is not however representative of the results that will be recognised when the hedges are realised. Given the current EUR/USD exchange rate, variations in the value of financial instruments contracted at conditions less

NEW ORDERS

SABCA booked EUR 189 million of new orders in 2015, bringing This backlog includes an amount of EUR 169 million SABCA Annual Report backlog up to EUR 412 million. corresponding to SABCA’s contractual participation in firm orders received by its customers and for which confirmation is only given shortly before delivery. 18 SABCA Annual Report

3D Measurement of precise mechanical component 19 SABCA Annual Report

20 Ariane 5 skin machining AND OUTLOOK ENVIRONMENT BUSINESS 21 SABCA Annual Report Front skirt of the Solid Rocket Booster (Ariane 5) Preaparation before painting of Ariane 5 JAV SABCA Annual Report

22 2015 2. Business Environment and Outlook ANNUAL REPORT Aerospace

2016 has started on a positive note, with the submission of an The signing of the Ariane 6 contract in 2015 and the planned offer for a new batch of Ariane 5 launchers, and the continuation signing of the Vega-C contract in 2016 will boost the technical of development activities for the Ariane 6 and Vega-C. skills of the engineering offices, as these projects will require creativity and the application of new technologies. This additional batch of Ariane 5 launchers relates to 18 ECA launchers. Gaining this contract is of crucial importance to SABCA, 2016 will also see us developing and making the most of the as it will allow the company to continue producing launcher design commonalities between Ariane 6 and Vega-C. For SABCA, components until 2023, the date when Ariane 6 will take over. this optimisation is crucial for ensuring the competitiveness of the two European launchers. . The goal of Ariane 6 is still to complete its first flight in 2020 and to be fully operational by 2023. As for the Vega-C, the plans are for the first flight to take place in 2018. The first preliminary design reviews (PDRs) are planned for the first half of 2016.

Thrust vector control system for the P80 engine (Vega)

Front skirt of the Solid Rocket Booster (Ariane 5) Preaparation before painting of Ariane 5 JAV SABCA Annual Report

23 ANNUAL 2015 REPORT 2. Business Environment and Outlook

Civil aviation

Civil aviation activities are holding up well, with regard to the A320 As regards the A380, deliveries will be in the order of 20 assemblies and A350 XWB programs. a year.

Production of A320 direct drive valves (DDVs) is set to increase In the course of 2016, SABCA will continue implementing its action to 48 planes a month. Also planned is the commencement of plan aimed at constantly improving the quality of its products and maintenance and repair work on these DDVs once PART 145 delivery deadlines, while at the same time reducing production certification has been gained. costs in response to customer demands. This is a priority for the Group, enabling it to best meet the targets of the different contracts. In the course of the year, the A350 program will see an increase in the production rates for the flap support structures (FSS) and flap As regards business aircraft, the production outlook remains good support fairings (FSF), rising to 6 deliveries a month. for the Gulfstream 650.

The drop in the production rates for the A330 ceo has been confirmed, but the launch of the A330 neo will see production rates rising again after 2017.

Airbus A350XWB-900 Flap Support Structure (C-Rib 2) SABCA Annual Report

24 SABCA Annual Report

Airbus A350XWB-900 Flap Support Structure (C-Rib 3) on DEA CMM 25 ANNUAL 2015 REPORT

Defence

SABCA CHARLEROI with regard to wing repairs, preventive anti-corrosion treatment, In the field of defence, restrictions on military budgets in phase inspections and major structural repairs. Europe are forcing the armed forces to reduce their expenditure on personnel. However, the increase in military operations Various collaboration projects with foreign users are under conducted throughout the world requires additional resources discussion, some of which have led to orders received in the for maintenance. Armed forces are therefore being forced to course of 2015. Others are still being negotiated, with a view outsource part of their aircraft maintenance activities or to to starting operations in 2016. develop partnerships with industry to maintain their fleets at an operational level. The future of the Alpha-Jet and, more generally, of the training of military pilots, has the potential to open up new opportunities The company’s primary aim in this field is to consolidate its F16 for redeploying activities at SABCA Charleroi. As with the F16, business on the basis of the unique experience and know-how national armed forces are looking at potential candidates for gained through working with the Belgian armed forces and outsourcing their aircraft maintenance. The selection of SABCA other users of the plane over the last 35 years, in particular as a potential provider of such services by SIAé (Service SABCA Annual Report

26 Main MRO Hangar 2. Business Environment and Outlook

Industriel de l’Aéronautique) on behalf of AIA-CF (Ateliers In the longer term, the replacement of the F16 fighter planes Industriels de l’Aéronautique à Clermont-Ferrand) can be seen foreseen in the strategic plan of the Belgian armed forces and as belonging to this approach and could come to a concrete the drop in military headcount could have a positive effect on conclusion in 2016. SABCA activities.

Winning contracts for modernisation programs remains an important goal for SABCA, on the basis of the experience SABCA BRUSSELS AND SABCA LIMBURG acquired in various modernisation programs carried out over The quantity of deliveries for the A400M is set to rise in the last few years for several types of fighter or training planes 2016. SABCA and SABCA Limburg have sufficient material and for helicopters. and human resources to meet the delivery schedules.

Due to its high dependency on export contracts, the workload of the Charleroi plant remains a major cause for concern in a context of heightened competition. SABCA Annual Report

27 2. Business Environment and Outlook

Quality

SABCA’s quality management system will be the subject of a PART 145 certification for the maintenance of civil aviation renewal audit in 2016 with regard to its EN9100, ISO9001 and equipment is expected to be finalised in 2016 at the Brussels AQAP2110 certifications. and Charleroi plants.

SABCA is also preparing for the PRI-NADCAP certification of its Brussels plant for chemical treatments and non-destructive testing as has already been gained at SABCA Limburg for composite production.

Toolings and prototypes workshop

Environment

In 2016, in response to all ISO 14001 requirements, SABCA’s In this context, various projects are set to be started or to Environmental Management System (EMS) will be completed continue: by the introduction of the final (currently missing) parts of the EMS, including the assessment of regulatory conformity, • the introduction of a system for automatically recording environmental audits, and the treatment of non-conformities. consumption. The goal is to obtain full certification of the EMS pursuant to ISO 14001 in the next few months. • the systematic detection of all forms of leaks (water, compressed air, etc.). From a technical perspective, the main goals set by the management board remain: • the removal of old asbestos roofs.

• the reduction of harmful emissions (CO2 and VOC). • the replacement of old forms of lighting by LED lights.

• the reduction of water, electricity and primary energy SABCA will also spend 2016 continuing its staff awareness-raising SABCA Annual Report consumption. campaign to encourage environmentally-friendly initiatives.

• maintaining conformity with the latest regulations issued at 28 European, federal and regional level. SABCA Annual Report

Airbus A380 29 SABCA Annual Report

30 Flux diffusion system (ESA - FLPP programme) DEVELOPMENT RESEARCHAND 31 SABCA Annual Report Aerospace

ARIANE 6 to the success of the bids for the TVAS for the Ariane 6 and A highlight of the ESA Ministerial Council meeting held on 2 Vega-C launchers. December 2014 was the decision to develop a common powder booster (the P120C) for both the Ariane 6 and Vega-C launchers. PLASTIC BALL GRID ARRAY (PBGA) The development work on the TVAS (thrust vector actuation Mastering this report and control printed circuit technology for systems) of the three stages of Ariane 6 in 2015 consisted complex industrial components is required for their use in the basically of measures aimed at reducing recurring and one- context of an aerospace contract. The validation program and off costs. the search for subcontractors have been completed.

With regard to the cryogenic upper stage, the EMA (Electro Mechanical Actuator) solution developed as part of the A5ME ADDITIVE MANUFACTURING (AM) program has been entirely reused, thus allowing development Additive manufacturing technology (3D printing) constitutes a costs to be kept down. Partial redevelopment of the electronics break with conventional subtractive manufacturing processes. was however necessary to adapt it to the requirements of the Computer-controlled, the technology involves producing items Ariane 6 avionics. layer-by-layer on the basis of a 3D model.

Airbus Safran Launchers handed the development contract for In 2015, SABCA decided to develop skills in this field, starting up these three TVASs to SABCA in December, conferring on the two research programs, one focused on aerospace applications company the title of “Design Definition Authority” and thereby and the other on civil aviation applications. delegating heightened decision-making powers to SABCA. These two programs are being developed in partnership with universities and companies specialised in 3D printing. CONTROL LOOP PROCESSOR (CLP) This program aimed at developing a generic processor for controlling electric motors in a space environment continued in FLPP 2015, in cooperation with the IMEC research centre in Leuven Within the context of the Future Launcher Preparatory Program and the company SPACEBEL. (FLPP), ESA has awarded SABCA the task of designing the architecture and innovative technologies needed for the inter- Phase 1 was extended beyond the demonstration of the proper stage metal structures. functioning of motor control in June. The version selected for the lower stages of the Ariane 6 and Vega-C launchers is now Numerous combinations of technologies have been studied an industrial FPGA (Field Programmable Gate Array). and compared, leading to two main focuses being identified:

• The use of extruded panels assembled by friction stir RELIABLE MOTOR CONTROL (REMOCO) welding for manufacturing inter-stage structures. In The motor control algorithm developed as part of this contract 2015, a structure based on this approach was developed. with the Brussels Capital Region has successfully passed the An extrusion die was used to make the biggest extruded required tests, demonstrating the failure tolerance of the panels ever produced for an aerospace application. The power electronics. use of friction stir welding to join these panels together has enabled a large-scale demonstrator structure to be This led to a patent being filed in 2015 and greatly contributed built, confirming the advantages of this type of assembly. SABCA Annual Report

32 3. Research and Development

The tests on the demonstrator are set to take place in demonstrate its ability to distribute the load in such a way early 2016. as to avoid concentrations of constraints to which structures made of composite materials are particularly sensitive. The • The attachment of the booster rockets: in view of the results system used to carry out this load distribution is now the of the initial study, ESA suggested pushing forward the project subject of a recently filed patent application. up to the completion of a demonstrator. A quarter of the structure was manufactured, fitted with an attachment system. At the same time, the system needed to apply an equivalent load to the booster rocket was also designed and made. The first tests have demonstrated the concept’s simplicity and robustness. Complementary tests have now been started to

Rear skirt of the Solid Rocket Booster (Ariane 5) SABCA Annual Report

33 34 SABCA Annual Report Sept 2015 Sept Show,Sanicole Air Demo Flight, Solo Component F16 Air Belgian 2015 3. Research and Development ANNUAL REPORT DEFENCE

SABCA CHARLEROI SABCA BRUSSELS On the basis of the experience acquired in previous modernisation For the A400M program, the modifications made to the projects, the engineering office has developed drafts for production process are bearing fruit and will allow SABCA modernising the Alpha-Jet avionics in collaboration with to meet the production rates required in future years in an Dassault Aviation. efficient and satisfactory way.

Various technical drafts have also been developed in support of the commercial strategy. CIVIL AVIATION

A350 XWB office is looking at ways of optimising these structures, simplifying The development of the A350-900 XWB, including the procedures and reducing manufacturing costs. modifications initiated by Airbus and their incorporation in the certification files, is drawing to an end. All these studies are to be seen as part of the effort to continually improve the program, while at the same time meeting customer A new modification relating to improving the aerodynamics needs. of the support fairings is currently being analysed. As part of this modification, design-to-cost analyses are to be carried out, allowing the mass to be optimised while taking account DASSAULT FALCON 5X of the economic aspect of these changes. SABCA is responsible for developing and manufacturing the plane’s rear fuselage section. The pre-maiden flight activities and those in support of the plane’s certification are continuing AIRBUS A320 - DIRECT DRIVE VALVE – PRESSURE in line with customer schedules. REDESIGN (DDVPR) As part of its work on the A320 direct drive valves, the engineering

Airbus A380 SABCA Annual Report Belgian Air Component F16 Solo Demo Flight, Sanicole Air Show, Sept 2015 35 3. Research and Development

COMPOSITE MATERIALS

SABCA is continuing its research into alternative processes • SQRTM – Same qualification RTM, a process involving in the use of composite materials throughout national or pre-impregnated and non-dry fabrics and used by SABCA to European research programs. In this context, subsidies have build two types of demonstrators, one with increased geometric been granted by either the Belgian Federal Government or the integration (a double stiffened panel), and the other a large- European Commission. size demonstrator (a spar).

The processes planned and currently being evaluated are These two processes ensure highest precision on all surfaces, mainly non-autoclave processes intended to reduce costs as well as the increased integration of the parts. or to allow more elaborate or more integrated structures. They are not aimed at replacing existing capacities, but instead at A number of these processes are the subject of ongoing complementing them with a view to being able to diversify technological R&D on ambitious demonstrators serving as our targets. the basis for future designs, all with a view to maturing the technologies and assessing their technical and economic The most promising manufacturing processes in the short to potential and ultimately using them in production programs. medium term are:

• Resin transfer moulding (RTM), a process already used by SABCA on prototype fuselage elements using preformed sections produced via braiding.

Airbus A350XWB-900 Flap Support Fairing (Moveable) SABCA Annual Report

36 SABCA Annual Report

Dassault Aviation Falcon 5X Horizontal Stabilizer Skin (CFRP) 37 SABCA Annual Report

38 Training and certification of personal RESOURCES HUMAN 39 SABCA Annual Report 4. Human Resources

Headcount development

On 31 December 2015, SABCA employed 1.157 people. In comparison to the headcount at the end of 2014 (1,130), the increase is mainly due to an increased headcount at SABCA Limburg. Training

The permanent upgrading of skills has been the subject of experienced trainers. The success was there to be seen: the particular attention. job-seekers were able to acquire the expected operational skills by the end of their training. A significant number of technical training courses and specific courses were held in the context of both supporting Ensuring efficient skill transfer on the ground is essential. technological developments and taking account of new Pedagogical training was given to the field specialists assigned contractual requirements. These courses related mainly to 3D to this activity. printing, assembly techniques, surface treatment methods and aircraft maintenance systems. Newly promoted supervisors were given training in leadership and team leadership. In response to a shortage of skilled labour, the SABCA Group has developed a major training program for aircraft sheet metal Last but not least, quality management was the subject of workers/fitters in its Brussels plant targeting job-seekers. This particular attention. Business development was thus accompanied 780-hour program developed in close collaboration with the by specific training measures targeting both human factors regional employment and training authorities (Iristech and and new regulations. VDAB) and attended by several job-seekers was conducted by

Health and safety at work

Training in ways of preventing “accidents” and in safety in Safety is “everybody’s business”, concerns all staff members: general is regularly provided for both junior an senior staff. SABCA has developed a self-training module called “Safety challenge” which has now been taken by the whole workforce. At the same time, workshops on interventions in confined spaces, driving forklifts and other handling equipment, first PERSONNEL DEVELOPMENT ( SABCA GROUP) aid, electrical safety and other more specific topics have been held, again in line with operational needs. 1157 1200 1100 1130 1037 964 1000

800

600

400 SABCA Annual Report

200

0 40 2011 2012 2013 2014 2015 A400M Flap Skin (CFRP) SABCA Annual Report

41 SABCA Annual Report

Airbus A350XWB-900 42 Flap Support Fairings (Fixed) STATEMENT GOVERNANCE CORPORATE 43 SABCA Annual Report 5. Corporate Governance Statement

As a Belgian company listed on the Euronext market of Brussels, This implies that the company derogates from all provisions SABCA S.A. (“SABCA” or “the company”) is committed to comply of the CGC calling for nomination committee proposals or with the corporate governance principles set forth in the 2009 recommendations when directors or the management are to version of the Belgian Corporate Governance Code (CGC). be nominated or assessed. This is the case for the following CGC provisions: This code is available on the website www.corporategovernancecommittee.be. • 4.2 : […] The nomination committee should recommend suitable candidates to the board. […] As required by the CGC, a Corporate Governance Charter was established, with the first version gaining Board approval on • 4.6 : […] accompanied by a recommendation from the board, 13 September 2011. In accordance with statutory provisions, based on the advice of the nomination committee. the Charter is posted on the company’s website www.sabca. com in a section named “Investor Corner” clearly separate from • 5.3 : see hereafter. commercial information. • 6.3 : The nomination committee should assist the board on The Charter is reviewed in line with the development of the the nomination and succession planning of the CEO and the company and current regulations. other members of the executive management […].

When identifying potential candidates for directorship positions, • Appendix D : nomination committee. the Board will do its utmost to comply with the regulation on internal diversity, in particular with regard to gender. Provision 5.3 : […] The board shall set up a nomination committee following the provisions set out in Appendix D. Taking into account the size and the nature of the company, as well as the specific structure of its shareholders, the Board has The reasons why the Board has not created a nomination considered it reasonable for the company not to fully comply committee until now are given in the justification of provision with certain CGC provisions. These derogations concern the 4.1 here-above. following provisions:

Provision 4.1 : There should be a rigorous and transparent 1. COMPOSITION OF THE SABCA BOARD procedure for the efficient appointment and re-appointment OF DIRECTORS of directors. The Board should draw up nomination procedures 1.1. There are currently nine members of the Board; the list and selection criteria for board members, including specific rules of members, plus an indication of the main function they for executive and non-executive directors where appropriate. exercise outside SABCA and the shareholder at whose proposal they were elected, is shown on page 6. Due to the structure of company shareholders, comprising one majority shareholder and a second leading shareholder, All members of the Board are non-executive directors, and the company has not yet established specific procedures three are independent directors. related to the appointment of directors. The Board itself, led by the chairman, decides the appointments and possible 1.2. The Board has not adopted any particular rules, either in re-appointments to be proposed to the general shareholders’ relation to a possible age limit for its members, or with meeting. For the same reason, the company has not set up a regard to exercising the position of director. nomination committee (see provision 5.3 hereafter). SABCA Annual Report

44 investing ordisinvesting. the orderbook,financialsituationandopportunitiesfor the searchfornewbusinessandmarketprospects, as well At eachboardmeeting,theCEOreportsonbusinessprogress, management day-to-day of Control 2.3. all operatingissuesaffectingthecompany. At eachmeetingandinageneralmanner, reviews theBoard to achievetheseobjectives. for the company, approvesand decides on the means needed The boarddeterminesthestrategicandshort-term objectives all powersassignedbylaw. In theabsenceofanystatutoryrestrictions,boardholds Competences 2.2. 4 3 2 1 Attendance ofdirectorsatboardmeetings The boardmetonfiveoccasionsin2015. as anyinvestments. amongst othersthehalf-yearly andannualaccounts,aswell so requires.Thisfrequencyenablestheboardtoexamine interest ofdirectorsmeetswheneverthecompany’s The Board 2.1. of meetings Frequency 2. representing SPRL PASTEC-MIT SA Gefor representing representing SA C.G.O. representing SPRL Gestime M. RemoPellichero M. RemcoSmit M. Loïk Segalen M. MichelMartin Edelstenne M. Charles M. JacquesdeSmet M. PhilippeDelaunois M. OlivierCosta deBeauregard M. HansBüthker Berger M. Benoît

FUNCTIONING OF THE BOARD OF DIRECTORS 4 1 3 2 4 4 4 5 5 4 4 2 3 4 adviser deemedappropriate. auditor alsoinchargeofriskmanagement, andanyother assisted bytheexternalauditor, theCEO, theCFO, theinternal members ofthecommittee.From timetothecommitteeis directors, MrLoïkandRemcoSmitaretheother Segalen Gefor. Thenon-executive auditing, andrepresentingS.A. director conversantwithmattersrelatingtoaccountingand December 2008 is chaired by Mr Jacques de Smet, independent CommitteeThe Audit instituted pursuant to the law of 17 3.2. Audit Committee 4 3 2 1 Attendance ofdirectorsatStandingCommittee meetings met fourtimesin2015. in preparing its decisions. The Standing Committeethe Board the StandingCommittee meetsbeforeboardmeetings.Itassists Mr DimitriDuray, CFO(asof1May2015).Generallyspeaking, and MrRaymondDeDobbeleer, CFO(until 2015), 30April Martin, representingSPRLPASTEC-MIT, independentdirector, representing SAGefor, independentdirector, MrMichel the SAC.G.O., independentdirector, MrJacquesdeSmet, Standing Committee are Mr. Philippe Delaunois, representing (Fokker Technologies Holding B.V.). Further members of the were Mr Loïk (Dassault Aviation) Segalen and Mr Remco Smit by themainshareholders.For2015,thesetworepresentatives Gestime, MrJean-MarieLefèvre andtworepresentativeschosen MrRemoPellichero, chairman, representing SPRL members are: The StandingCommittee hasbeeninexistencesince1970.The 3.1. Standing Committee 3. attend boardmeetings. Members oftheGroupCommittee aretraditionallyinvitedto participants Invited 2.4. representing SPRL PASTEC-MIT SA Gefor representing representing SA C.G.O. representing SPRL Gestime M. RemcoSmit M. Loïk Segalen M. MichelMartin M. JacquesdeSmet M. PhilippeDelaunois M. RemoPellichero

BY THE BOARD OF DIRECTORS COMMITTEES CREATED 4 1 3 2

4 4 4 4 3 4

45 SABCA Annual Report 5. Corporate Governance Statement

Internal rules of procedure have been established for the Mr Jean-Marie Lefèvre represents SABCA as CEO of the ASM Audit Committee. The Committee reports to the Board on the Aéro SAS subsidiary. exercise of its duties, making recommendations as regards steps to be taken. 5. PROFIT APPROPRIATION POLICY In 2015 the Audit Committee met four times, in particular to In its proposals to the general meeting of shareholders, examine the company’s half-yearly and annual statutory and the board of directors aims at reconciling the high level of consolidated accounts; it also examined the results of the investments required for the company’s aerospace activities audit programme aimed at monitoring the effectiveness of the with a reasonable return on capital. internal control and risk management systems.

Responsibility for the internal audit and risk management have 6. SHAREHOLDERS been merged into one function reporting directly to the CEO. Dassault Belgique Aviation S.A., a virtually 100% subsidiary A staff member is appointed full-time to ensure this double of the Marcel Dassault Industrial Group, holds 53.28% of the responsibility. company’s capital. As of 28 October 2015, the British company GKN Plc indirectly holds 43.57% of the capital, notably through Attendance of directors at Audit Committee meetings its subsidiary, Fokker Aerospace B.V. The balance of 3.15% is quoted on the Euronext market in Brussels. M. Jacques de Smet 1 4 M. Loïk Segalen 4 M. Remco Smit 4 7. RELATED-PARTY TRANSACTIONS Sales and purchases are made at market price. 1 representing SA Gefor

Balances outstanding at the year-end are not guaranteed and 4. DAY-TO-DAY MANAGEMENT are made in cash. The Board chooses the person responsible for day-to-day management from among its members or not (articles 11 and No guarantees were provided or received in 2015 for related- 20 of the articles of association). Day-to-day management of party receivables. the company is executed by the CEO, Mr Jean-Marie Lefèvre. For the 2015 financial year, the Group did not recognize any A Group Committee and an Operational Committee (COp), both provisions for bad debts relating to amounts receivable from chaired by the CEO, meet once a month and contribute to the related parties. day-to-day management of the company. This evaluation is done by examining the financial position The members of the Group Committee for 2015 were: Mr Jean- of the related parties and the market in which they operate. Marie Lefèvre, CEO, Mr Raymond De Dobbeleer, CFO, (until 30 April 2015), Mr Dimitri Duray, CFO, as of 1 May 2015), Mr Marc The identifiers and the values are listed in note 14 of the Dubois, marketing and sales director, Mr Pierre De Graef, head consolidated accounts. of the Brussels plant, Ms Sabine Lelièvre, head of the Charleroi site and Mr Peter Reynaert, head of SABCA Limburg.

The members of the Operational Committee for 2015 were the members of the Group Committee, plus Ms Josianne Evrard, head of the quality department, Mr André Ghysens, head of SABCA Annual Report human resources, Mr André Baus, head of IT, Mr Pierre-Michel Léonard, head of the supply chain department.

46 Mr Peter Reynaert is head of SABCA Limburg. focused oninthechapterfinancialrisk (see chapter8.6below). The financialsideisthesubjectofparticularattention,being major, with attentionmainlyfocusedonoperationalrisks. annual auditprogrammerelatetorisksconsideredasbeing probability andtheirimpactlevel.Themissionsdefinedinan categorised andprioritisedin7areasonthebasisoftheir assessing itsbusinessrisksfrom2009.Thesehavenowbeen SABCA hasstartedformalisingtheprocessofanalysingand 8.2 Riskmanagementprocess place inourfieldofactivityarereviewedonanannualbasis. and whethertheytakeaccountofanychangeswhichhavetaken to allstaff. Theircompliancewithlegislationandregulations, as wellaQualityPolicyStatementexistandarecommunicated Code Environmental Policy Statement andanInternal Audit An input andoutputhowtheyinteracttogether. Processes” describing the principles and procedures with their The functioningofthevariousunitsismanagedvia“Management 8.1 Control environment will beachieved. provides reasonableassurancethattheoperationaltargets inanycontrolsystem,theriskmanagementsysteminstalled As creating addedvalue. the levelofrisk,therebyimprovingoverallperformanceand The mainobjectiveistoincreaseprocessefficiencybyreducing monitoring andsurveillancearepartofthisapproach. executed. Communication and information together with and makingsurethatinternalcontrolsexistareeffectively in ordertohighlighttheoneswithgreatestconsequences, defined its control environment, identifying and classifying risks control system based ontheCOSO2 model. In doing so, ithas SABCA has formalised its internal audit activities via the internal 8.

AND RISK MANAGEMENT SYSTEM INTERNAL CONTROL

the variouscommitteesresponsible formanagingthecompany. Performance indicatorsarepresentedonamonthlybasisto also makessurethatanypointsarefollowedup. agencies are channelled through the quality departmentwhich The resultsofqualityauditscarriedoutinternallyorbyexternal Committee.for approvaltotheAudit been extended to all processes, with a final report submitted Each auditgivesrisetoaspecificreport.Thismethodhasnow 8.4 L’information et lacommunication foreign auditorganisations. and for externalaudits,alongwithanumberofbothBelgian The external company auditor and his team are responsible from internalorexternalaudits. for following up the actions and recommendations coming the appropriateexistingprocedures.Theyarealsoresponsible Quality audits are carried out by internal quality auditors using supplement thisapproach. internal controlmeasures.Reviewsofthefinancialprocess In addition,theprocessoffinancialdirectorateincludes the controlplans. used withinprocesses,togetherwithactionsemanatingfrom activitiesbenefitfromperformanceindicatorsalready Audit focus placedmainlyontheoperationalside. and lawsarecompliedwithproceduresapplied,the The control(i.e. audit) activitiesaim atmakingsurethatstandards for approval. Committee The annualauditprogrammeissubmittedtotheAudit been created,coveringallprocesseswithintheSABCAGroup. To accomplishthis,thepositionofaninternalauditorhas adequate control. to make sure that the main risks identified are kept under Control activitiesconsistofthemeasurestakenbycompany 8.3 Control activities 47 SABCA Annual Report 5. Corporate Governance Statement

8.5 Management Operational risks The management of internal audits including risk management Following the analysis done by those in charge of risk is the responsibility of senior management which reports on management and internal controls, several operational risks this subject to the Audit Committee. were identified and listed according to their acceptability:

8.6 Principal risks and uncertainties • The difficulty of finding staff on the Belgian labour market, The principal risks and uncertainties faced by the Group are in particular for design and manufacturing activities; outlined below: • the difficulty of obtaining supplies of raw materials and Cash and liquidity risks components; The financial debts do not constitute any significant risk for the Group, as its cash resources enable the Group to meet its • uncertainty with regard to Belgian project funding policy; commitments without any liquidity risk. • IT system security; Credit risk The Group performs its cash and foreign exchange transactions • the level of workload at the Charleroi plant, which is highly with recognized financial institutions. dependent on export contracts;

The Group limits counterparty risk by performing most of its • supply chain reliability in the face of increases in production sales in cash and ensuring that the granted loans are secured rates. by the Belgian Export Credit Insurer (DUCROIRE) or collateral.

Considering the trade receivables impairment method applied 9. REMUNERATION REPORT for the drawing up of consolidated financial statements the 9.1 Remuneration Committee percentage of outstanding receivables not impaired at the 9.1.1 Composition and activities closing accounts is immaterial. The Committee is made up of: - SPRL Gestime, represented by its manager, Remo Pellichero, Market risks President, chairman of the board of directors; - SA C.G.O., represented by its CEO, Philippe Delaunois, independent Exchange risks director; Though the major part of its expenses is incurred in Euros, the - SA Gefor, represented by its CEO, Jacques de Smet, independent Group is exposed to an exchange risk on sales denominated director in USD, despite the fact that USD purchases have increased. The following also took part in the meetings: The Group covers this risk using forward sales contracts and, if necessary, foreign exchange options. - Jean-Marie Lefèvre, CEO (except for the part concerning him).

It hedges its net future cash flows only if they are considered - The secretary of the Remuneration Committee: André Ghysens, highly probable and partially to ensure that the first future cash head of HR. flows will be sufficient to exercise the foreign exchange hedges in place. The amount of the hedge may be adjusted according In the course of 2015, four meetings were held. to the variability in the timing of expected net cash flows. For each member of the Operating Committee (COp) the Risks from long-term programs Committee looked at: SABCA Annual Report The Group is exposed to a risk from its long-term programs due - the different remuneration components, with particular to the fact that technical, economic and financial developments attention paid to the fixed and variable parts. may imperil their profitability. - the group insurance policies. 48 - remuneration policy. The Committee seeks to maintain the right balance between these The Committee seeks to maintain the right balance between these variable remuneration and the (supplementary) pension plan. The remuneration consists of the fixed remuneration, the - othermembersoftheCOp: -  Executives concerned: on thematter. Board whichthendecides submits itsfinalproposalstothe after discussionand exchanges ofviewsbetween its members, The Committee listenstotheexplanationsofCEOand, Committee. Committee (COp) members,includingmembersoftheGroup The Remuneration Committee reviews the situation of Operational company andthoseofitsshareholders. remuneration policy forits staff, balancing the interests of the The aim of the company is to develop and maintain an attractive 9.1.2 Remuneration policy 3 2 1 Attendance ofdirectorsatRemunerationCommittee meetings: D of the SABCA Corporatefound in Appendix Governance Charter. The RemunerationCommittee’s rulesofprocedurearetobe representing SA Gefor representing representing SA C.G.O. representing SPRL Gestime M. RemoPellichero M. JacquesdeSmet M. PhilippeDelaunois the membersofGroupCommittee: department, Léonard, headofthesupplychain - Pierre-Michel - JosianneEvrard,headofthequalitydepartment, department, Ghysens,headofthehumanresources - André headofthe ITdepartment, Baus, - André - PeterReynaert,headofSABCALimburg. - SabineLelièvre, plant, headoftheCharleroi - MarcDubois,marketingandsalesdirector, - PierreDeGraef, headoftheBrusselsplant, - DimitriDuray, CFO(asof1May2015), - RaymondDeDobbeleer, CFO(until 2015), 30April - Jean-MarieLefèvre, CEO, 1 3 2 4 4 4 compensation. The remunerationpolicycontainsnospecificruleforseverance since thelastfinancialstatements. There has beennosignificant changein remunerationpolicy A supplementarypensionisestablishedforeachCOp member. GeneralMeeting approval. to Annual The variableremunerationforanyonefinancialyearissubject netresult. company’s pension plan,annualpaymentstowhicharedependentonthe Group Committee members benefit from a specificsupplementary results. the assessmentoftheirindividualperformanceandcompany The variableremunerationforCOp membersisdependenton modification proposalstotheboard. The remunerationcommitteesubmitsthe appraisals andmarkettrends. with itsevolutiondependentonindividualperformance The fixedremunerationisbasedonthelevelofresponsibility, standards. taking accountofthescoperesponsibilitiesandmarket ability toattract,motivateandretainhighlyskilledprofessionals, three elements,thesumofwhichdeterminescompany’s 49 SABCA Annual Report 5. Corporate Governance Statement

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 8.000 Benoît Berger, DExecutive Vice-President Industrial Operations and Purchasing - Dassault Aviation 17.601 Hans Büthker, Chairman and Chief Executive Officer – Fokker Technologies Group B.V. Olivier Costa de Beauregard, CEO - Groupe Industriel Marcel Dassault 17.601 SA C.G.O. represented by its CEO Philippe Delaunois, independent director 21.101 SA Gefor represented by its CEO Jacques de Smet, independent director 25.601 Charles Edelstenne, CEO - Groupe Industriel Marcel Dassault 17.601 Sprl PASTEC-MIT, represented by its manager Michel Martin, independent director from March 26 2014 19.601 Loïk Segalen, Chief Operating Officer - Dassault Aviation 21.601 Remco Smit, Chief Financial Officer - Fokker Technologies 21.601

in EUR *Board of Directors, Audit Committee, Standing Committee and Remuneration Committee.

There is no significant change in the remuneration policy of Modifications to the remuneration of the members of the board non-executive directors since the last financial statements. and committees are defined by the General Meeting following the proposal of the remuneration committee. Committee members receive an attendance allowance of EUR 500 (EUR 1000 for the chairman) for each meeting attended. 9.3 Remuneration of the CEO and The corresponding amounts are included in the table above. other executives Following the proposal of the Remuneration Committee, the Via his company Gestime SPRL, Mr Remo Pellichero has a Board set the following amounts as remuneration for the CEO service contract for an annual fee of EUR 75,000 excl. VAT. and the other COp members in 2015.

CEO Other in EUR Jean-Marie Lefèvre, salaried COp members Fixed remuneration 236,880 1,013,154 Variable remuneration 0 0 Total 236,880 1,013,154 Supplementary pension 108,000 388,834 Other 3,428 26,556 SABCA Annual Report

50 SABCA Annual Report

Rear engine cowling Falcon 51

FINANCIAL SABCA Annual Report Airbus A350XWB-900 Flap Support Fairing (Moveable) - 52 ASPECTS Lay-up in curing mould Belgium Outside 14,76% Investments (MEUR) Europe 4,11% 20 19,00

15 13,72 Geographical 12,48 10 distribution 8,75 8,62

6,32 6,14 of sales (%) 5,65 5,38 5 4,00

0,65 0,01 0 2011 2012 2013 2014 2015

Financiers Intangible Bodily Europe 81,13%

Turnover Orders (MEUR) by business area (%)

55 54,1 50 500 50 407 406 412 45 40 388 397 39 400 40 39

33 35 31 31 30 29 30 30 28 300 25,2 25 20 20,7 20 200 179 189 147 146 15 139 10 100 5 0 0 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015

Defence Space Civil Aviation Backlog Taking orders SABCA Annual Report

53 6. Financial aspects

1 THE SABCA GROUP Consolidated income statement pursuant to IFRS

(in EUR million) 2011 2012 2013 2014 2015

Revenue from ordinary activities 159.06 175.79 206.15 203.30 190.85

Sales 138.25 146.95 171.51 176.41 183.49

Changes in work-in-progress 1.97 7.13 16.84 9.56 -1.19

Capitalised production 12.16 17.57 10.14 6.55 3.79

Other revenue from ordinary activities 6.68 4.14 7.66 10.78 4.76

Operating expenses -145.38 -166.10 -197.52 -223.94 -194.20

Operating result 13.68 9.69 8.63 -20.64 -3.35

Financial expenses -3.75 -2.97 -2.92 -5.24 -11.49

Financial income 6.58 6.01 4.63 4.78 3.00

Operating result post financial results 16.51 12.74 10.34 -21.11 -11.84

Tax on the result -4.18 -1.83 -1.49 6.77 3.84

Net result for the period 12.33 10.90 8.85 -14.34 -8.00

Attributable to the owners of the parent 12.33 10.95 9.03 -14.35 -7.87

Minority interests 0 -0.05 -0.18 0.01 -0.13

Total 12.33 10.90 8.85 -14.34 -8.00

Result per share (in EUR) 2011 2012 2013 2014 2015

(total number of shares : 2,400,000)

* base 5.14 4.54 3.69 -5.98 -3.33

* diluted 5.14 4.54 3.69 -5.98 -3.33

2011 2012 2013 2014 2015

Headcount at 31 December 964 1,037 1,100 1,130 1,157

1 SABCA GROUP (PURSUANT TO IFRS) The SABCA Group achieved sales of EUR 183.5 million in 2015, The Board notes that the losses on financial instruments are up 4% against 2014. not representative of the results which will be determined on realising the hedges. The operating result shows a loss of EUR 3.4 million, due mainly to the unfavourable change in provisions for loss-making projects The positive deferred tax item is due to the increase in recoverable caused by the temporary halt of an aircraft manufacturing tax losses and taxed provisions as well as to the reduction of program, thereby generating additional completion costs in outstanding orders. the future. The Group registered a net loss of EUR 8.0 million after current Moreover, a plan to reduce operating costs has been drawn and deferred tax in 2015. up and will be implemented from 2016 onwards. The net loss for the period attributable to the shareholders of The financial result shows a loss of EUR 8.5 million due to the the parent company amounted to EUR 7.9 million. valuation of currency hedging derivatives, whose variation SABCA Annual Report generated a deterioration of EUR 8.3 million.

54 2 SABCA Unconsolidated key results – Statutory accounts (pursuant to Belgian accounting principles)

(in EUR million) 2011 2012 2013 2014 2015

Sales 132.55 140.35 164.43 169.57 173.70

Equity capital 60.64 67.21 70.61 42.79 30.47

Investments 20.04 28.41 18.14 14.76 9.38

Results

- operating 3.89 10.80 4.69 -27.34 -2.82

- financial 2.75 1.82 1.24 1.86 -9.28

- current 6.64 12.62 5.93 -25.48 -12.10

- extraordinary 0.29 -0.49 -0.01 -2.69 -0.58

- before tax 6.93 12.13 5.92 -28.17 -12.68

- tax -0.60 -2.26 0.16 0.12 0.01

- after tax 6.33 9.87 6.08 -28.05 -12.67 Total dividends 2.11 3.26 2.02 * 0.00 * 0.00 *proposed to the Annual General Meeting Operating result per share (EUR) 2.77 5.26 2.47 -10.62 -5.04

Result per share for the year (EUR) 2.64 4.11 2.53 -11.69 -5.28

Net dividend per share (EUR) 0.66 1.02 0.63 0.00 0.00

2 SABCA STATUTORY ACCOUNTS (PURSUANT TO BELGIAN ACCOUNTING PRINCIPLES) Sales amounted to EUR 173.7 million, up 2.4% over 2014. Finally, exceptional items, including an EUR 0.5 million capital loss on the holding in ASM Aéro and of EUR 0.2 million on The operating result shows a loss of EUR 2.8 million due mainly that of SABCA Limburg, have led to a loss of EUR 12.7 million to the unfavourable change in provisions for loss-making projects for the financial year. caused by the temporary halt of an aircraft manufacturing program, thereby generating additional completion costs in The Board notes that the recognition of provisions and write- the future. downs in the value of financial instruments in 2014 and 2015 respectively led to negative results in two consecutive years. A plan to reduce operating costs has been drawn up and will Taking account of the planned reduction of operating costs, be implemented from 2016 onwards. the Board is of the opinion that the company’s long-term prospects are guaranteed and that the accounting rules used The Board notes that the losses on financial instruments are in assessing the company in the context of these prospects can not representative of the results which will be determined on continue to be applied. realising the hedges.

The financial result shows a loss of EUR 9.3 million due to the valuation of currency hedging derivatives, whose variation generated a deterioration of EUR 9.1 million.

55 PROPOSALS FOR RESOLUTIONS to be submitted to the Annual General Meeting of Shareholders of 26 May 2016. APPROPRIATION OF RESULTS The appropriation account included in the annual financial statements submitted to the AGM is as follows: 1. Loss for the financial year to be distributed-12,721,490.98 EUR 2. Profit carried forward from the previous financial year 15,739,879.31 EUR 3. Profit available for distribution 3,018,388.33 EUR

Taking account of the recorded result, the Board of Directors will be proposing to the Annual General Meeting that no dividend be paid for 2015. The Board requests the AGM to approve the following appropriation:

Profit to be carried over 3,018,388.33 EUR SABCA Annual Report

56 Registered office at 1130 Brussels, chaussée de Haecht 1470 Production sites in Brussels and Charleroi Site at 6041 Charleroi, rue des Fusillés 11 RPM Brussels V.A.T. BE 0405 770 992 Consolidation includes the subsidiary SABCA Limburg N.V. Registered office at 3560 Lummen, Dellestraat 32 RPR Hasselt V.A.T. BE 0438 251 146

SABCA expresses its gratitude to Mr Guillaume Dedeurwaerder for his artistic and photographic collaboration. Realisation and production: www.comfi.be www E-mail: F Tel: Belgium B-1130 Brussels deHaecht1470 Chaussée deConstructions Belge Aéronautiques Anonyme Société SABCA S.A. ax: .sabca.com [email protected] +32 27051570 +32 27295511

S.A.B.C.A. ANNUAL REPORT 2015 S.A.B.C.A. ANNUAL ACCOUNTS 2015 ANNUAL ACCOUNTS 2015 2015 Report of the board of directors

Ordinary General Meeting of May 26th, 2016

ANNUAL ACCOUNTS

Consolidated accounts ...... 2

Statutory auditor’s report on the consolidated financial statements ...... 27

Non consolidated accounts ...... 30

Statutory auditor’s report on the annual accounts ...... 53 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 14th, 2016, have been prepared in accordance with the applicable accounting standards and give a fair view of the assets and liabilities, of the financial situation and of the income statement of the company as well as the other companies 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 financial situation of the company and the other companies included in the scope of consolidation as well as a description of the principal risks and uncertainties they are facing.

Brussels, April 14th, 2016.

J-M. Lefèvre R. Pellichero Chief Executive Officer Permanent representative of GESTIME ppll Chairman of the Board SABCA Annual Report

1

Consolidated statement of financial position Following the standards IFRS (International Financial Reporting Standards)

(in thousands of euros) 2015 2014

Assets

Non-current assets 122.504 124.073 Intangible assets 51.066 48.195 Property, plant and equipment 71.117 75.551 Affiliated enterprises 112 112 Financial assets and other non-current assets 209 215

Current assets 220.926 211.111 Inventories 50.931 44.400 Work-in-progress 77.132 78.320 Trade and other receivables 59.713 51.997 Cash and cash equivalents 32.251 34.216 Other current assets 899 2.178

Total assets 343.430 335.184

Equity and liabilities

Total equity 87.147 93.849

Total equity attributable to owners of the parent company 87.068 93.636 Capital 12.400 12.400 Reserves and results carried forward 74.668 80.711 Revaluation reserves on property, plant and equipment 0 525

Minority interests 79 213

Non-current liabilities 156.472 140.618 Long-term borrowings 116.021 97.110 Non-current provisions 36.986 36.873 Deferred taxation 3.465 6.635

Current liabilities 99.811 100.717 Trade and other payables 59.759 69.665 Tax and social liabilities 12.394 11.134 Other current liabilities 14.841 4.829 Short-term borrowings 21 19 Current provisions 12.796 15.070 SABCA Annual Report Total equity and liabilities 343.430 335.184 2 > 2 Annual accounts 2015 SABCA

Consolidated income statement

(in thousands of euros) 2015 2014

Revenues 190.847 203.305 Turnover 183.489 176.410 Increase (+), decrease (-) in work in progress -1.188 9.564 Own construction capitalized 3.790 6.550 Other operating income 4.756 10.781

Operating expenses (-) -194.200 -223.942 Raw materials and consumables used 48.768 44.431 whereof change in inventories -8.430 -6.621 Services and other goods 60.835 61.432 Wage and salaries, social security costs and pensions 69.849 67.367 Depreciation and amortization of intangible and tangible assets 12.297 28.755

Write offs on stocks, contracts in progress and trade debtors 1.099 -748 Provisions for liabilities and charges -195 21.134 Other operating income and expenses 1.547 1.571

Result from continuing operations (+) -3.353 -20.637

Finance costs (-) -11.492 -5.244 Debt charges 670 527 Other finance costs 10.822 4.717

Finance income 3.007 4.775 Income from financial fixed assets 0 38 Income from current assets 113 411 Other finance income 2.894 4.326

Result from continuing operations after finance result (+) -11.838 -21.106

Income tax expense 3.838 6.765 Income taxes 1 117 Deferred taxes 3.837 6.648

Net result for the period (+) -8.000 -14.341 Attributable to owners of parent -7.866 -14.354 Share of the minority interests -134 13

Result per share (number of shares : 2,400,000) (in EUR) (in EUR) * Basic result per share -3,33 -5,98 * Diluted result per share -3,33 -5,98 SABCA Annual Report

3 SABCA Annual accounts 2015 > 3

Consolidated statement of comprehensive income

(in thousands of euros) 2015 2014

Net result for the period -8.000 -14.341

Change in fair value of hedging instruments 0 0 Deferred taxes 0 0 Items that may be reclassified subsequently to P&L 0 0 Actuarial gains / losses on pension plan commitments 1.966 -4.531 Deferred taxes -668 1.540 Items that will not be reclassified subsequently to P&L 1.298 -2.991 Income and expense transferred directly to equity 1.298 -2.991

Income and expense booked -6.702 -17.332 Attributable to owners of parent -6.568 -17.345 Minority interests -134 13

Total comprehensive income result per share (number of shares : 2.400.000) (en EUR) (en EUR) * basic result per share -2,79 -7,22 * diluted result per share -2,79 -7,22

Consolidated statement of changes in equity

(in thousands of euros) flow Total owners Capital forward Hedging IAS 19 R Total equity Reserves and Result carried attributable to the the to attributable Minority interests of the mother company ofthe mother instruments on cash Revaluation reserves Balance at 1 January 2014 12.400 525 102.813 -2.742 0 112.997 200 113.197 Result for the period -14.354 -14.354 13 -14.341 Items transferred directly to equity -2.991 -2.991 -2.991 Total comprehensive income -14.354 -2.991 0 -17.345 13 -17.332 Dividends -2.016 -2.016 0 -2.016 Balance at 31 December 2014 12.400 525 86.443 -5.733 0 93.636 213 93.849

Balance at 1 January 2015 12.400 525 86.443 -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 1.298 1.298 1.298 Total comprehensive income -525 -7.341 1.298 0 -6.568 -134 -6.702

SABCA Annual Report Dividends 0 0 0 0 Balance at 31 December 2015 12.400 0 79.102 -4.435 0 87.068 79 87.147 4 > 4 Annual accounts 2015 SABCA

Consolidated statement of cash flow

(in thousands of euros) 2015 2014

Cash flow from operating activities 7.210 3.152 Net income -8.000 -14.341 Income tax -3.838 -6.765 Result on hedging instruments 8.283 3.385 Depreciation and amortization on fixed assets 10.626 28.007 Change in working capital 333 -20.873 Change in minority interests 134 -13 Change in provisions, deferred taxes and reserves -328 14.479 Incomes taxes paid 0 -727

Cash flow from investing activities -9.057 -16.360 Acquisition of intangible, tangible and financial non-current assets -10.734 -16.486 Disposals of intangible, tangible and financial non-current assets 1.671 67 Increase and decrease in receivables 6 59

Cash flow from financing activities -118 365 Change in short-term receivables (except financial debts) - increase 75 166 Change in long-term receivables (except financial debts) - increase 0 1.998 - reimbursements -1.585 Change in short-term financial liabilities - increase 2 - reimbursements 0 -40 Change in long-term financial liabilities - increase 1.098 - reimbursements 0 -230 Interests - earned 381 545 - paid -89 -57 Dividends paid to shareholders 0 -2.016

Net increase (decrease) in cash and cash equivalents -1.965 -12.839 Cash and cash equivalents, at the beginning of the period (*) 34.216 47.055 Cash and cash equivalents, at the end of the period (*) 32.251 34.216

(*) consistent with the consolidated statement of financial position SABCA Annual Report

5 SABCA Annual accounts 2015 > 5

Comments on the consolidated statement of financial position N.B.: The important differences between corresponding headings of compared periods are mentioned in italic.

(in thousands of euros) 2015 2014

Assets

Non-current assets 122.504 124.073

Intangible assets (note 4) 51.066 48.195 This item includes the capitalization of the development costs relating to the programs in civil aviation in which the SABCA Group is a partner.

Property, plant and equipment (notes 3 and 7) 71.117 75.551

Affiliated enterprises and financial assets and other non-current assets (note 5) 321 327

Current assets 220.926 211.111

Inventories (note 8) 50.931 44.400 Inventories have been built-up in anticipation of increases in production rates of civil aviation programs.

Work-in-progress (note 8) 77.132 78.320 Slight reduction as a result of maturation of production in new programs.

Trade and other receivables (note 10) 59.713 51.997 Increase in trade receivables resulting of delayed payment.

Cash and cash equivalents 32.251 34.216 (see cash flow statement and note 9)

Other current assets 899 2.178 SABCA Annual Report

6 > 6 Annual accounts 2015 SABCA

Comments on the consolidated statement of financial position N.B.: The important differences between corresponding headings of compared periods are mentioned in italic.

(in thousands of euros) 2015 2014

Equity and liabilities

Total equity 87.147 93.849

Total equity attributable to owners of the parent company 87.068 93.636 (see statement of changes in equity) Result of the period -7.866 -14.354 Dividends relating to previous financial year 0 -2.016 Total of the other elements of the comprehensive income 1.298 -2.991 Movement during the period -6.568 -19.361

Minority interests 79 213

Non-current liabilities 156.472 140.618

Long-term borrowings (notes 7 and 11) 116.021 97.110 New long-term advances received from customers.

Non-current provisions (notes 6 and 13) 36.986 36.873 The evolution of the provision for pensions and similar obligations and for onerous contracts is detailled in notes 6 and 13.

Deferred taxation (note 12) 3.465 6.635

Current liabilities 99.811 100.717

Trade and other payables (note 7) 59.759 69.665

Decrease of short-term customers advance payments and suppliers debts.

Short-term borrowings (note 7) 21 19

Current provisions (note 6) 12.796 15.070

Other current liabilities (note 7) 27.235 15.963 Major increase due to deterioration in value of hedging instruments between 31/12/2014 and 31/12/2015. SABCA Annual Report

7 SABCA Annual accounts 2015 > 7

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, 32 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 2015 2014

* FTE = full time equivalent Total in units VTE * Total in units FTE*

Average number of employees 1.146,0 1.092,7 1.098,3 1.045,9 Total employment at the end of the period 1.157,0 1.103,8 1.130,0 1.080,3

3. Property, plant and equipment note Plant, Plant, TOTAL vehicles buildings Land and payments equipment construction Leasing and similar rights and advance Assets under Furniture and machinery and

Beginning balance Gross amount (*) 64.484 134.877 19.306 2.950 2.093 223.710 Depreciation -42.635 -109.227 -17.106 -1.858 -81 -170.907 Adjustments - Third party assets 22.748 22.748 Beginning balance 21.849 48.398 2.200 1.092 2.012 75.551

Movements during the period Acquisitions 1.407 3.049 644 1.533 312 6.945 Disposals -1.512 -118 -41 0 0 -1.671 Transfers from headings 2.081 0 0 0 -2.081 0 Depreciation on disposals -1.805 -8.464 -902 -360 153 -11.378 Depreciation write back 1.512 118 41 0 0 1.671 Depreciation transfers 79 0 0 0 -79 0

Ending balance Gross amount (**) 66.460 137.808 19.909 4.483 324 228.984 Depreciation -42.849 -117.573 -17.967 -2.218 -7 -180.614 Adjustments - Third party assets 22.748 22.748

SABCA Annual Report Ending balance 23.611 42.983 1.942 2.265 317 71.117

(*) fuly amortized 2014 45.037 91.109 14.623 0 (**) fuly amortized 2015 45.037 99.770 15.399 0 8 > 8 Annual accounts 2015 SABCA

4. Intangible assets note Development expenses Beginning balance Gross amount 121.045 Amortization -72.851 Beginning balance 48.194

Movements during the period Acquisitions 3.790 Disposals -918 Ending balance Gross amount 124.835 Amortization -73.769 Ending balance 51.066

Research costs are not capitalized, are incurred as an expense in the income statement and amount to 1,592 KEUR for the period 2015. In 2014 research costs were 2,071 KEUR. The strategy and efforts of the Group in terms of research and development are described in the Management report. The proportion of development costs of a program to be included in the trading figures over the course of the financial year is determined by the degree of completion of the particular program, in accordance with the principle of prudence. Amortization of development costs is determined in accordance with the recoveries pro rata to contractual deliveries and the residual risk at the charge of the company.

5. Financial assets note

2015 2014 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 64 64 Amounts receivable and cash guarantees 39 45

209 215 SABCA Annual Report

9 SABCA Annual accounts 2015 > 9

6. Provisions note Other implicit TOTAL onerous contracts obligation pension & provisions equivalent Provision for Provision for Provisions for Provisions for

** Beginning balance 16.704 4.100 29.806 1.333 51.943 Actuarial gains /losses on pension plan commitments -1.966 -1.966 Reclassification -563 563 Increase for the period 11.479 187 11.666 Decrease for the period -540 -10.470 -851 -11.861 Ending balance * 14.198 4.100 30.815 669 49.782

* of which defined benefit plant obligations (note 13) : 13,635 ** The increase in provision for onerous contracts in 2015 is notably due to the temporary manufacturing freeze of an aircraft program, generating supplementary production costs in the future.

7. Borrowings and payables note 2015 2014 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 362 1.912 771 3.045 260 1.040 260 1.560 Bank overdrafts 21 0 0 21 19 0 0 19 Other information Finance leases : - min. lease payments payable, present value 362 1.912 771 3.045 260 1.040 260 1.560 - min. lease payments payable, capital 297 1.693 727 2.717 210 928 256 1.394 - min. lease payments payable, interest 65 219 44 328 50 111 4 165 Trade and other payables according to their maturity Trade payables 20.257 0 0 20.257 21.490 0 0 21.490 Advances received 39.502 37.600 0 77.102 48.174 19.280 0 67.454 Tax and social liabilities 12.394 0 0 12.394 11.134 0 0 11.134 Other liabilities and borrowings 1.301 0 75.738 77.039 4.569 0 76.530 81.099 Total long term borrowings included in the consolidated statement of 116.021 97.110 financial position SABCA Annual Report

10 > 10 Annual accounts 2015 SABCA

8. Inventories note

Stocks merchandise and Total stocks Work in progress raw materials and work in progress

Net value at the beginning 44.400 78.320 122.720 Movements during the period Change in inventories * 7.630 -1.188 6.442 Depreciation - increase -2.664 0 -2.664 Depreciation - decrease 1.565 0 1.565

Net value at the ending 50.931 77.132 128.063

* including goods in reception / acceptance

9. Cash and cash equivalents note 2015 2014

Bank short-term deposits 23.994 28.993 Bank current accounts 8.226 5.199 Cash in hand and other 31 24

32.251 34.216

10. Amounts receivable within one year note 2015 2014

Trade receivables 56.237 45.066 Other receivables 3.476 6.931

59.713 51.997

11. Government grants status 2015 2014

Investment grants 647 300 Carrying amount of capital grants recognised 3.457 2.867 Amount of income grants netted against reported expenses -2.810 -2.567

Deferred tax assets and liabilities on dito 0 0

Advances to be reimbursed conditionally 54.367 54.366 Relating to research activities 4.522 4.476 Relating to development activities 49.845 49.890

Split : 54.367 54.366 - Reimbursement within one year 955 447 - Reimbursement after more than one year 53.412 53.919 54.367 54.366 - Federal Public Services 53.642 53.598 SABCA Annual Report - Brussels Capital Region 725 768

The reimbursement of the advances is conditional upon the commerical success of the product. 11 SABCA Annual accounts 2015 > 11

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 -11.838 Theoretical income tax at the rate of 33.99 % -4.024 Sources of differences - Non-deductible expenses 2.624 - Change taxed provisions -2.410 - Notional interests 0 - Investments deduction 0 - Fiscal losses 0 - Others 360

Tax base of the Group -11.264 Income tax calculated at 33.99 % -3.829 Deferred tax in statutory accounts -8 Tax on previous years -1

Total income tax expense for the year -3.838

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 2015 2014 2015 2014 Assets Intangible assets 34.852 28.391 6.461 -10.812 Tangible assets 16.910 16.210 700 160 Work in progress 755 10.261 -9.506 8.065 Hedging instruments 0 -822 822 -822

Total Assets 52.517 54.040 Liabilities Hedging instruments 0 0 -1.752 Provisions for liabilities and charges -30.290 -25.966 -4.324 -17.591 Short-term debts 0 0 Recoverable loss -5.416 0 -5.416

Total Liabilities -35.706 -25.966

TOTAL O FSOURCES OF DEFERRED TAX 16.811 28.074 -11.262 -22.752 Deferred income tax

Deferred tax on the fair value adjustments calculated at 33.99% 5.714 9.543 -3.829 -6.628 Deferred tax on hedging instruments 0 0 0 0 Deferred tax on government grants and on realized surplus 36 44 -8 -19 Deferred tax on IAS 19R -2.284 -2.952 668 -1.540

TOTAL DEFERRED TAX 3.466 6.635 -3.169 -8.187 SABCA Annual Report

12 > 12 Annual accounts 2015 SABCA

13. Defined benefit plans 1. SYSTEM AT DEFINED BENEFIT 2015 2014 2013 2012 R 2012

Components of defined benefit plan assets and liabilities

Present value of wholly or partially funded obligations 27.678 28.751 24.519 27.793 26.058 Fair value of plan assets (-) -14.043 -13.122 -13.521 -12.974 -12.974

Present value of wholly unfunded obligations 13.635 15.629 10.998 14.819 13.084 Unrecognised actuarial gains (losses) -6.274

Defined benefit plan obligation (assets), total 13.635 15.629 10.998 14.819 6.810 Expense recognised in income statement for defined benefit 1.584 1.461 1.832 1.514 1.382 Current service cost 1.589 1.314 1.619 1.248 1.102 Interest cost 370 761 773 1.023 968 Expected return on plan assets -160 -407 -353 -551 -501 Contributions by personnel -215 -207 -207 -206 -206

Mouvements in defined benefit plan obligation (assets)

Defined benefit plan obligation, beginning balance 15.629 10.997 14.819 10.296 6.703 Contributions paid -1.612 -1.361 -1.797 -1.454 -1.276 Expense recognised 1.584 1.461 1.832 1.514 1.382

Defined benefit plan obligation, ending balance 13.635 15.629 10.998 10.356 6.810

Principal actuarial assumptions Discount rate used 1,70 1,20 2,90 2,70 2,70 Expected return on plan assets 1,70 1,20 2,90 2,70 2,70 Expected rates of salary increase 3,10 / 3,00 3,10 / 3,00 3,50 / 3,40 3,90 / 3,40 3,90 / 3,40 Future defined benefit increase 1,60 1,60 2,00 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 interest rate is 1.00%.

The proportions of the individual reserves to 31/12/2015 rates for each are as follows : 4.75% : 23% of reserves; 3.75% : 25% of reserves; 2.75% : 49% of reserves; 1.00% : 3% of reserves. SABCA Annual Report

13 SABCA Annual accounts 2015 > 13

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 on complementary pensions. At December 31, 2015, 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 2015 2014 Key management compensation Short-term employee benefits 3.455 3.377 Post-employment benefits 605 917 Other termination obligations 158 215 Considered headcount 29 29

Related-party transactions The Group's related parties are : - Dassault Aviation - FLABEL Corporation - Fokker Technologies - SABCA (C.D.R.)

2015 2014 Related-party sales 32.045 39.006

Related-party purchases 514 193 Related-party receivables 12.752 13.134 Related-party payables 11.870 17

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 2015, 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. SABCA Annual Report

14 > 14 Annual accounts 2015 SABCA

15. Financial commitments

2015 2014 Commitments given Mortgages registered 100 100 Mortgage mandates 2.275 2.275 Pledged accounts 3.247 3.196 - FLABEL Corporation 2.000 2.000 - Customs 1.247 1.196 Commitments received Export insurance guarantees 26.574 30.490 Debts and receivables secured by bank guarantees 952 942

16. Appropriation of profits (in Euros)

2015 2014 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 on consolidated statement of financial position on 31/12/2015 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 59.713 59.713 Cash equivalents 32.251 32.251

Total of assets financial instruments 92.285 0 0 92.285

(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 Report

15 SABCA Annual accounts 2015 > 15

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 on consolidated statement of financial position on 31/12/2015 Fair-value cost or amortized Total cost (1) Impact on result Impact on equity

Non-current liabilities 116.021 116.021 Current liabilities 83.533 74.477 Borrowings and other financial liabilities 1.354 1.354 Suppliers and other payables 82.179 82.179 Cash equivalents -9.056 -9.056

Total of liabilities financial instruments 199.554 -9.056 0 190.498

(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 31/12/2015 31/12/2014

Hedging instruments qualifying for hedge accounting Hedging instruments not-qualifying for hedge accounting -9.056 -773 Derivative financial instruments on exchange (1) -9.056 -773

(1) This amount corresponds to the market value of currency hedging instruments based upon observable data on 31/12/2015 and is not reprensentative 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 -8.283 -8.283

(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 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 2,377 in income and 4,367 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 : 2015 2014

Net value US Dollars in portfolio 24.852 20.572

SABCA Annual Report Closing US Dollar exchange rate 1,0887 1,2141

Fluctuation US Dollar exchange rate, upon closing 1,1887 0,9887 1,3141 1,1141 16 Fluctuation in net value of US Dollars in portfolio -1.920 2.309 -1.289 1.521 > 16 Annual accounts 2015 SABCA

The portfolio of derivative financial instruments is as follows : 2015 2014

Dollars US Euros Dollars US Euros Foreign exchange options 138.000 116.973 39.000 31.851

Total 138.000 116.973 39.000 31.851

The market value of the financial instruments amounts to -9,056 for the exchange options. 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, managers of financial instruments.

2015 2014

Impact on financial income -8.283 -3.385

19. Management of risks and uncertainties Following the analysis done by the internal auditor responsible for risk management, several risks were identified and listed according to their acceptabillity. 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 (Delcredere/Ducroire) 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 Exchange risks The Group is exposed to an exchange risk on sales denominated in US Dollars, the major part of its expenses being incurred in euros. The Group covers this risk using forward sales contracts and/ or foreign exchange options. It hedges its net future cash flows only if they are considered highly probable and partially to ensure that the first future cash flows will be 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.

Operational risks The Group has a risk on long-term programs because of their technical, economic and financial evolutions, which could endanger their profitability. Other risks - the difficulty of finding staff on the Belgian labour market, in particular for design and manufacturing activities; - the difficulty of obtaining supplies of raw materials and components; - uncertainty with regard to Belgian project funding policy; - IT system security; - the level of workload at the Charleroi plant, which is highly dependent on export contracts; - supply chain reliability in the face of increases in production rate. SABCA Annual Report

17 SABCA Annual accounts 2015 > 17

20. Events after the balance sheet date

A plan to reduce operating costs is currently discussed at board of directors level in order to be implemented Atfrom year-end 2016. close, the financial impact cannot be determined precisely since the above mentioned plan is still under construction.

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 2015 2014 Audit services - Auditor's fee SABCA 84 84 - Auditor's fee SABCA Limburg 22 20 - Auditor's fee ASM Aéro 14 13

TOTAL 120 117

23. Split of turnover 2015 2014

Delivery of goods 158.691 136.667 Services 24.798 39.743

Total 183.489 176.410

24. Presentation of the consolidated financial statements

None.

25. Justification of the rules of continuity

'The Board of Directors notes that the recognition of provisions and impairment losses on financial instruments in 2014 and 2015 respectively generates a negative result in two consecutive years. Taking into account the plan to reduce operational costs, the Board believes that the business continuity of the company is ensured and that the accounting rules for valuation of the company in the frame of the continuity of its activities can

SABCA Annual Report continue to be applied.

18 > 18 Annual accounts 2015 SABCA General consolidation principles

Compliance 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, 2015 as adopted for us by the European Union. The Group has not early adopted the standards and interpretations published as of December 31, 2015 but whose application is only mandatory from accounting period beginning on or after January 1, 2016. For those which concern the Group and with respect of actual accounting policies the adoption of these new standards and interpretations should not significantly impact the group’s earnings and financial position, with the exception of the application of IAS19R whose effect is described in Note 13.

Accounting choices and management estimates

The preparation of the Group’s consolidated financial statements requires management to make estimates and issue assumptions susceptible 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 into account historical experience, elements known at the closing of the accounting year and various other assumptions 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 with 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 eliminated.

Reference period

Consolidated companies close their social year on December 31st.

Consolidated subsidiary by global integration

SABCA directly and exclusively controls its subsidiary SABCA Limburg N.V., Dellestraat 32 at 3560 Lummen BE 0438.251.146.

SABCA controls for 60 % its subsidiary ASM Aéro S.A.S. at Technopôle de l’Aéroport Med 5 – Nouaceur Casablanca 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

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19 SABCA Annual accounts 2015 > 19

Application 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 exemption 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 liquid 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 Dividends 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 – Inventory

Inventories are stated at the lower of cost and net realisable value.

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 items related to production or maintenance programs, unusable or whose tolerances, norms, technical configuration, conception have changed; - for items 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.

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20 > 20 Annual accounts 2015 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 Current 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 the 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.

IFRS 8 – Segment reporting

Business segment The Group SABCA is allocated into the business group, aircraft and spacecraft construction for the segment information comply with the standards IFRS. All the activities of the Group 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, the 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 percentage, 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, geographic situation and any legal obligations attached to them. This value was determined within the framework of IFRS 1 and will be maintained SABCA Annual Report for the whole useful life of these plots of land.

21 SABCA Annual accounts 2015 > 21

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 asset 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 depreciation - 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 to 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 reasonable 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 reduced 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 lessor 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 recognised 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. Lease 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.

SABCA Annual Report The corresponding rental obligations, 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.

22 > 22 Annual accounts 2015 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: - 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; - booking of indirect costs through hour rates based on the work of the 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 percentage 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 revenue 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 upon the ratio between on one hand, billing to the customer at the closing date (except down-payment invoices) and on the other hand, the total income expected from the work package; - or by comparing costs incurred for work performed upon closing date and the total estimated costs, if this ratio 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 benefits

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 benefits.

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 recognised 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.

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23 SABCA Annual accounts 2015 > 23

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 recognized 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 Grants

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 accounted 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 factor which generates debt.

Government grants constituted by advances 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 in the income statement as financial result.

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24 > 24 Annual accounts 2015 SABCA

IAS 24 – Information concerning related parties.

Adoption of standards Under the information to take into consideration related to Key management compensation we find : - the directors; - the 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 “Corporate Governance”; - the chiefs of department who are not member of the Management Committee in charge of operations of the mother company and other executive 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 amount 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 event; - 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 many 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 when 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 expenditure arising from the restructuring which is necessarily entailed and is not associated with the ongoing activities of the enterprise.

Provision for losses on contractual commitmentsl 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 the 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.

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25 SABCA Annual accounts 2015 > 25

IAS 38 – Intangible assets

Development Research costs are recognised in the income statement as an incurred expense. Development costs are capitalised if and only if all the conditions disclosed under IAS 38 are met.

The valuation of development costs takes account not only of expenditure incurred but also insurance, guarantees, grants and finance obtained from public authorities as well as the certainty of sales to clients.

The proportion of development costs for a programme to be included in the trading figures over the course of the financial year is determined by the degree of progress of the particular programme, in accordance with the principle of prudence.

Amortisation of development costs is determined in accordance with the recovery of expenditure, pro rata to contractual deliveries, to the residual risk upon charge of the company.

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.

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26 > 26 Annual accounts 2015 SABCA

Statutory auditor’s report on the consolidated financial statements to the general meeting of the company SABCA SA for the year ended December 31, 2015 ______

As required by law, we report to you on the performance of our mandate as statutory auditor. This report includes our opinion on the consolidated financial statements, as well as the required additional statements. The consolidated financial statements comprise the consolidated statement of financial position as at 31 December 2015, and the consolidated statement of comprehensive income, the consolidated statements of changes in equity and the consolidated statement of cash flows for the year ended 31 December 2015 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 31 December 2015, 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 KEUR 343.430 and a consolidated income statement showing a consolidated loss for the year of KEUR 8.000

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 ad fair view in accordance with the International Financial Reporting Standards (IFRS) as adopted by the European Union, and for such internal control as the Board of Directors determines is necessary to enable the preparation of consolidated 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). 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 31 December 2015 and of its results and its cash flows for the year then ended, in accordance with the International Financial Reporting Standards (IFRS) as adopted by the European

Union. SABCA Annual Report

27 SABCA Annual accounts 2015 > 27

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 make the following additional statement, which do 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 the 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, 25 April 2016

Mazars Bedrijfsrevisoren represented by

Lieven Acke

SABCA Annual Report

28 > 28 Annual accounts 2015 SABCA Statutory auditor’s reportontheannualaccounts Statutory auditor’s Non consolidatedaccounts GeneralOrdinary Meeting ofMay26th, 2016 board ofdirectors 2015 Report ofthe ANNUAL ACCOUNTS ......

53 30 29 SABCA Annual Report Non consolidated balance sheet after appropriation Statutory accounts according to the Belgian accounting policies

(in thousand EUR) Assets Codes 2015 2014 Fixed assets 20/28 37.284 46.173

Intangible assets 21 12.077 17.604

Tangible assets 22/27 22.375 24.975 Land and buildings 22 7.010 7.606 Plant, machinery and equipment 23 13.276 15.279 Furniture and vehicles 24 1.772 2.005 Assets under construction and advance payments 27 317 85

Financial assets 28 2.832 3.594 Affiliated enterprises 280/1 2.653 3.410 Participating interests 280 2.653 3.410 Other financial assets 284/8 179 184 Shares 284 170 170 Amounts receivable and cash guarantees 285/8 9 14

Current assets 29/58 205.588 189.584

Amounts receivable after more than one year 29 1.072 1.050 Trade debtors 290 1.072 1.050

Stocks and contracts in progress 3 109.350 98.303 Stocks 30/36 47.388 41.132 Raw materials and consumables 30/31 18.840 18.143 Goods purchased for resale 34 27.310 21.905 Advance payments 36 1.238 1.084 Contracts in progress 37 61.962 57.171

Amounts receivable within one year 40/41 63.885 53.975 Trade debtors 40 53.050 42.135 Other amounts receivable 41 10.835 11.840

Investments 50/53 23.994 28.903 Other investments and deposits 51/53 23.994 28.903

Cash at bank and in hand 54/58 6.430 4.352

Deferred charges and accrued income 490/1 857 3.001

Total assets 20/58 242.872 235.757 SABCA Annual Report

30 > 30 Annual accounts 2015 SABCA (in thousand EUR) Liabilities Codes 2015 2014 Capital and reserves 10/15 30.467 42.792

Capital 10 12.400 12.400 Issued capital 100 12.400 12.400

Reserves 13 14.401 14.352 Legal reserve 130 1.240 1.240 Reserves not available for distribution 131 595 595 Other 1311 595 595 Untaxed reserves 132 806 757 Reserves available for distribution 133 11.760 11.760

Profit (loss) carried forward 14 3.019 15.740

Investment grants 15 647 300

Provisions and deferred taxation 16 49.103 47.723

Provisions for liabilities and charges 160/6 49.067 47.679 Pensions and similar obligations 160 563 1.074 Major repairs and maintenance 162 1.549 1.987 Other liabilities and charges 163/6 46.955 44.618 Deferred taxes 168 36 44

Creditors 17/49 163.302 145.242

Amounts payable after more than one year 17 81.384 67.417 Advances received on contracts in progress 176 33.529 18.294 Other amounts payable 178/9 47.855 49.123

Amounts payable within one year 42/48 69.407 74.937 Current portion of amounts payable after more than one year 42 652 245 Financial debts 43 21 19 Credit institutions 430/8 21 19 Trade debts 44 18.228 20.780 Suppliers 440/4 18.228 20.780 Advances received on contracts in progress 46 39.005 43.593 Taxes, remuneration and social security 45 11.183 10.060 Taxes 450/3 299 353 Remuneration and social security 454/9 10.884 9.707 Other amounts payable 47/48 318 240

Accrued charges and deferred income 492/3 12.511 2.888

Total liabilities 10/49 242.872 235.757 SABCA Annual Report

31 SABCA Annual accounts 2015 > 31 Non consolidated income statement Statutory accounts according to the Belgian accounting policies

(in thousand EUR) Codes 2015 2014

Operating income 70/74 197.008 197.386 Turnover (notes 5.10) 70 173.700 169.565 Increase (+); decrease (-) in stocks of finished goods, work and contracts in progress (+)/(-) 71 14.133 11.195 Own construction capitalised 72 5.382 8.622 Other operating income (notes 5.10) 74 3.793 8.004

Operating charges 60/64 -199.832 -224.726 Raw materials, consumables and goods 60 40.086 36.549 Purchasesfor resale 600/8 47.889 43.750 Increase (-); decrease (+) in stocks (+)/(-) 609 -7.803 -7.201 Services and other goods 61 66.603 68.957 Remuneration, social security costs and pensions (notes 5.10) 62 62.930 61.921 Depreciation of and other amounts written off formation expenses, intangible and tangible fixed assets 630 17.503 20.696 Increase (+); decrease (-) in amounts written off stocks, contracts in progress and trade debtors (notes 5.10) (+)/(-) 631/4 10.088 6.249 Increase (+); decrease (-) in provisions for liabilities and charges (notes 5.10) (+)/(-) 635/7 1.344 29.087 Other operating charges (notes 5.10) 640/8 1.278 1.267

Operating profit /loss (+) 9901 -2.824 -27.340

Financial income 75 2.802 5.080 Income from financial fixed assets 750 38 Income from current assets 751 159 399 Other financial income (notes 5.11) 752/9 2.643 4.643

Financial charges 65 -12.079 -3.225 Interest and other debt charges 650 618 466 Other financial charges (notes 5.11) 652/9 11.461 2.759

Profit/Loss on ordinary activities before taxes (+) 9902 -12.101 -25.485 SABCA Annual Report

32 > 32 Annual accounts 2015 SABCA Codes 2015 2014

Extraordinary income 76 304 24 Profit on disposal of fixed assets 763 5 22 Other extraordinary income (notes 5.11) 764/9 299 2

Extraordinary charges 66 -879 -2.713 Amounts written off financial fixed assets 661 757 2.620

Losses on disposal of fixed assets 663 15 Other extraordinary charges (notes 5.11) 664/8 122 78

Profit (Loss) for the period before taxes (+)/(-) 9903 -12.676 -28.174

Transfer from deferred taxes 780 10 11 Transfer to deferred taxes 680 -2 -7

Income taxes (notes 5.12) (+)/(-) 67/77 -4 117

Income taxes 670/3 5 Adjustment to income taxes and write- back of tax provisions 77 1 117

Profit (Loss) for the period (+)/(-) 9904 -12.672 -28.053

Transfer from untaxed reserves 789 20 21

Transfer to untaxed reserves 689 -69 -79

Profit (Loss) for the period available for appropriation (+)/(-) 9905 -12.721 -28.111

Appropriation account

Profit to be appropriated (+)/(-) 9906 3.019 15.740 Profit (Loss) of the period available for appropriation (9905) -12.721 -28.111 Profit (loss) brought forward 14P 15.740 43.851

Profit to be carried forward (+)/(-) (14) 3.019 -43.851

Profit to be distributed 694/6 0 0 Dividends 694 0 0 SABCA Annual Report

33 SABCA Annual accounts 2015 > 33 Notes (Unless otherwise specified, all the data are in thousands of euros)

STATEMENT OF INTANGIBLE ASSETS (heading 21 of assets) 1) 2) Research and Codes Concessions, development patents licences a.o. Acquisition value expenses

At the end of the preceding period 805-P 134.211 3.024 Movements during the period: Acquisitions, including produced fixed assets 802 5.382 At the end of the period 805 139.593 3.024

Depreciation and amounts written down At the end of the preceding period 812-P 116.606 3.024 Movements during the period: Recorded 807 10.910 At the end of the period 812 127.516 3.024

NET BOOK VALUE AT THE END OF THE PERIOD 12.077

STATEMENT OF TANGIBLE FIXED ASSETS (headings 22 to 27 of assets) 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 54.571 99.408 18.358 88 Movements during the period: Acquisitions, including produced fixed assets 816 800 2.269 613 312

Sales and disposals 817 -1.512 -118 -41

Transfers from one heading to another (+)/(-) 818 76 -76 At the end of the period 819 53.935 101.559 18.930 324

Depreciation and amounts written down At the end of the preceding period 832-P 46.965 84.129 16.353 3

Movements during the period: Recorded 827 1.471 4.272 846 5

Written down after sales and disposals 830 -1.512 -118 -41

Transfers from one heading to another (+)/(-) 831 1 -1 At the end of the period 832 46.925 88.283 17.158 7

NET BOOK VALUE AT THE END OF THE PERIOD 7.010 13.276 1.772 317

> 34 Annual accounts 2015 SABCA STATEMENT OF FINANCIAL FIXED ASSETS (heading 28 of assets) Enterprises Codes Participating, interests and shares (heading 280) (heading 284)

Acquisition value At the end of the preceding period 839-P 13.141 2.217 At the end of the period 839 13.141 2.217

Depreciation and amounts written down At the end of the preceding period 852-P 9.724 2.047 Movements during the period : Recorded 847 757 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 2.653 170

Amounts receivable (heading 285/8)

Net book value at the end of the preceding period 285-P 13 Movements during the period : Additions 858 1 Reimbursements 859 -5

Net book value at the end of the period (285) 9

INFORMATION RELATING TO THE SHARE IN THE CAPITAL 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 and for the enterprise governed by Belgian law, the enterprise Subsi- Annual Capital and Currency Net result the COMPANY IDENTIFICATION NUMBER (directly) diaries accounts reserves

(+) or (-) Number % % (in thousands of units) SABCA Limburg N.V. Dellestraat 32 B 3560 LUMMEN 499.975 99,99 31.12.2015 EUR 2.444 -226 BE 0438.251.146

SABCA (C.D.R.) SPRL Chaussée de Haecht 1470 1130 Bruxelles BELGIUM 73 97,33 31.12.2015 EUR 11 0 BE 0451.147.295

FLABEL CORPORATION S.A. Boulevard Auguste Reyers 80 1030 Bruxelles 3 BELGIUM 273 27,30 6,50 31.12.2014 EUR 403 2 BE 0465.127.074

ASM Aéro S.A.S. Technopôle de l'Aéroport Med5 27000 Nouaceur CASABLANCA - MOROCCO 600 60,00 31.12.2015 MAD 2.200 -3.713 Foreign company

SABCA Annual accounts 2015 > 35 OTHER INVESTMENTS AND DEPOSITS, ALLOCATION DEFERRED CHARGES AND ACCRUED INCOME (heading 51/53 and 490/1 of assets)

Other investments Codes 2015 2014

Term deposits with credit institutions 53 23.994 28.903 falling due :

up to one month 8686 232 3.707 between one month and one year 8687 21.762 16.096 over one year 8688 2.000 9.100

Deferred charges and accrued income 2015

Analysis of heading 490/1 of assets if the amount is significant. 857 Goods and services to provide 776 Goods in acceptance 44 Accrued bank and loan interests 37

STATEMENT OF CAPITAL AND SHAREHOLDING STRUCTURE

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 2.245.807 Shares to bearer and/or dematerialized 8703 154.193

Structure of shareholdings of the enterprise as at year-end closing date: DASSAULT BELGIQUE AVIATION S.A., avenue des Arts 41 B-1130 Brussels : 1,278,650 shares, being 53.28 % of the total of 2,400,000 voting rights. The share stock of DASSAULT BELGIQUE AVIATION S.A. is held at 99.94 % by the S.A. Groupe Industriel Marcel Dassault, 9 Rond-Point des Champs Elysées Marcel Dassault, F-75008 Paris (France) (Declaration of 09.06.2010). Fokker Aerospace B.V., Industrieweg 4 NL-3351 LB Papendrecht, the Netherlands : 1,045,662 shares being 43.57 % of the voting rights. Fokker Aerospace B.V. is under indirect and ultimate control of GKN Plc, Ipsley House, Ipsley Church Lane, Worcestershire, United Kingdom, B98 OTL (Declaration of 30.10.2015). EURONEXT Brussels : 3,15 %

The annual accounts of SABCA are consolidated by global integration in the company accounts of the Group Dassault.

PROVISIONS FOR OTHER LIABILITIES AND CHARGES

Analysis of heading 163/5 of liabilities if the amount is significant. 2015 Provision for futures losses 41.624 Provision for global risk Ariane 5 and adaptation of the company to civil aviation programs 4.100 Provision for seniority premium 1.031 Provision for employee litigations 200 SABCA Annual Report

36 > 36 Annual accounts 2015 SABCA STATEMENT OF AMOUNTS PAYABLE, ACCRUED CHARGES AND DEFERRED INCOME

Amounts payable current portion

1) not more than one 2) between one and 3) over five years Analysis by current portions of amounts initially Codes year five years payable after more than one year (heading 42) (heading 17) (heading 17)

Advances received on contracts in progress 889 33.529 Other amounts payable 890 652 10.367 37.488

TOTAL 652 43.896 37.488

Amounts payable for taxes, remuneration and social security Codes 2015 Taxes (heading 450/3 of the liabilities) Acruing taxes payable 9073 4 Estimated taxes payable 450 295

Remuneration and social security (heading 454/9 of liabilities) Other amounts payable in respect of remuneration and social security 9077 10.884

Accrued charges and deferred income

Allocation of the heading 492/3 of liabilities if the amount is significant 2015

Accrued charges 12.511

OPERATING RESULTS

Operating income

Net turnover (heading 70) 173.700

Breakdown by type of activity in percentage of turnover Civil aviation 54,1 Defense 20,7 Space 25,2 100,0

Breakdown by geographical markets Domestic 14,8 Export 85,2 100,0 SABCA Annual Report

SABCA Annual accounts 2015 > 37 37 OPERATING RESULTS Codes 2015 2014 Operating income

Other operating income (heading 74) whereof: compensatory amounts received from public authorities 740 79 94

Operating charges

Employees recorded in the personnel register Total number at the closing date 9086 958 954 Average number of employees in full-time equivalents 9087 913,8 894,6 Number of actual working hours 9088 1.371.701 1.331.265

Personnel costs (heading 62) Remuneration and direct social benefits 620 33.794 34.608 Employer's contribution for social security 621 14.902 15.186 Employer's premium for extra-statutory insurance 622 2.831 3.062 Other personnel costs 623 11.403 9.065

Provisions for pensions (included in heading 635/7) Additions (uses and write-backs) (+)/(-) 635 -511 -801

Amounts written off (heading 631/4) Stocks and contracts in progress - Recorded 9110 12.806 10.943 - Written back 9111 2.718 4.694

Provisions for risks and charges (heading 635/7) Additions 9115 15.825 48.866 Uses and write-backs 9116 14.481 19.778

Other operating charges (heading 640/8) Taxes related to operations 640 1.278 1.267 Others 641/8

Hired temporary staff and persons placed at the enterprise disposal Total number at the closing date 9096 90 178 Average number of employees in full-time equivalents 9097 136,2 174,7 Number of actual worked hours 9098 264.259 285.336 Charges to the enterprise 617 11.471 14.887 SABCA Annual Report

> 38 Annual accounts 2015 SABCA 38 FINANCIAL AND EXTRAORDINARY RESULTS

Financial results Codes 2015 2014 Other financial income (heading 752/9) Government grants recognised in the income statement Investment grants 9125 243 78 Allocation of other financial income Exchange differences 2.393 4.516 Technical profits on sales and options 48 Discounts received 1 1 Penalty intrest 7 Other financial charges (heading 652/9) Allocation of other financial charges Exchange differences 2.055 1.572 Technical losses on sales and options (MTM) * 9.105 860 Delcredere 229 250 Bankcharges 63 71 Penalty intrest 5 Others 9

* 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.

Extraordinary results 2015 Allocation other extraordinary income Penalty 257 Various proftis 42 Allocation of other extraordinary charges Penalties 119 Miscellaneous 3

INCOME TAXES Income taxes Codes 2015 Income taxes on the result of the current period : 9134 2 Taxes and withholding taxes due or paid 9135 26 Excess of withholding taxes paid recorded under assets (-) 9136 -24 Income taxes on previous periods : 9138 2 Adjustment of income taxes due or paid 9139 2 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, the main source for such differences with special mention of timing differences.

Non-deductible expenses 2.560 Status of deferred taxes Deferred taxes representing assets 9141 12.897 Excess of withholding taxes paid recorded under assets 9142 8.760 Other deferred taxes representing assets : deduction for deferred investments 4.137

Value added taxes and other taxes borne by third parties Codes 2015 2014

Value added taxes charged to the enterprise (deductible) 9145 23.457 24.676 by the enterprise 9146 14.139 15.846 Amounts withheld on behalf of third parties for:

Payroll withholding taxes 9147 11.238 11.232 SABCA Annual Report Withholding taxes on investment income 9148 0 32

SABCA Annual accounts 2015 > 39 39 RIGHTS AND COMMITMENTS NOT REFLECTED IN THE BALANCE SHEET Goods and values not disclosed in the balance sheet, held by third parties in their own name but at risk to and for the benefit of the enterprise: Codes 2015

Raw materials in deposit 1.764 Tooling in deposit 25 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. 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, 2015, 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 AFFILIATED ENTERPRISES Codes 2015 2014

Financial fixed assets (281/1) 3.183 3.410 investments (280) 3.183 3.410 Amounts receivable 9291 22.281 18.820 over one year 9301 1.072 1.050 within one year 9311 21.209 17.770

Amounts payable 9351 14.612 17.096

SABCA Annual Report within one year 9371 14.612 17.096

40 > 40 Annual accounts 2015 SABCA FINANCIAL RELATIONSHIP WITH

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 statement, as long as this disclosure does not concern exclusively or mainly, the situation of a single identifiable person:

Codes 2015

to directors and managers 9503 188

Auditors or people they are linked to Codes 2015

Auditor's fees 9505 84

COMMITMENTS, RIGHTS AND SUSPENSE ACCOUNTS (Art. 4, al. 2 of the R.D of October 8,1976) 2015 2014

Guarantees given by third parties on behalf of the company 4.382 4.325 Guarantees received 28.174 25.335 Goods and values belonging to third parties held in deposit, consignment or for treatment 73.942 109.072 Goods and values belonging to third parties held by third parties on their behals, but at the risk and corporate profits of the comapny 5.473 5.776 Miscellaneous, commitments, rights and suspense accounts including 2,245,807 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

111.983 144.520

THIRD PARTY GOODS (analysis)

2015 2014

Third party goods and values, held in deposit, consignment or for manufacturing

Third party raw materials in the store room 5.240 5.347 Third party aeronautical parts and material, in the manufacturing or overhaul process 3.936 3.972 Third party tooling, in deposit 28.703 25.992 Equipment for repair-overhaul, in deposit 4.339 3.701 Third party materials in deposit 31.724 70.060

73.942 109.072 SABCA Annual Report

SABCA Annual accounts 2015 > 41 41 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 760,1 661,8 98,3 Part-time 1002 199,2 175,0 24,2 Total in full-time equivalents (FTE) 1003 913,8 796,6 117,2 Number of hours actually worked Full-time 1011 1.158.817 1.013.919 144.898 Part-time 1012 212.884 184.076 28.808 Total 1013 1.371.701 1.197.995 173.706 Personnel costs Full-time 1021 52.345 45.575 6.770 Part-time 1022 10.585 9.283 1.302 Total 1023 62.930 54.858 8.072

Codes Total 1. Men 2. Women During the preceding period Average number of employees Average number of employees in FTE 1003 894,6 781,9 112,7 Number of hours actually worked 1013 1.331.265 1.164.129 167.136 Personnel costs 1023 61.921 54.120 7.801

3. Total full-time Codes 1. Full-time 2. Part-time At the closing date of period equivalents

Number of employees 105 773 185 918,0

By nature of the employment contract Contract for an indefinite period 110 754 184 898,8 Contract for a definite period 111 19 1 19,2 According to gender and study level Men 120 674 163 801,7 - primary education 1200 19 4 22,2 - secondary education 1201 408 133 513,7 - higher non-university education 1202 172 22 187,9 - university education 1203 75 4 77,9 Women 121 99 22 116,3 - primary education 1210 1 1 1,8 - secondary education 1211 51 13 61,1 - higher non-university education 1212 30 5 34,0 - university education 1213 17 3 19,4 By professional category Management staff 130 12 12,0 Employees 134 434 93 505,5 SABCA Annual Report Workers 132 327 92 400,5

42 > 42 Annual accounts 2015 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 33 103,2 Number of hours actually worked 151 64.027 200.229

Costs for the enterprise (in thousand EUR) 152 2.779 8.692

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 76 3 77,0 By nature of the employment contract Contract for an indefinite period 210 64 64,0 Contract for a definite period 211 12 3 13,0

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 47 26 66,8 By nature of the employment contract Contract for an indefinite period 310 43 23 61,8 Contract for a definite period 311 4 3 5,0 According to the reason for termination of the employment contract Retirement 340 12 19 27,0 Dismissal 342 15 15,0 Other reason 343 20 7 24,8

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 677 5811 102 Number of training hours 5802 11.015 5812 1.569 Costs for the company 5803 952 5813 143 of which gross costs directly linked to the training 58031 806 58131 122 of which paid contributions and payments to collective funds 58032 153 58132 22 of which received subsidies (to be deducted) 58033 7 58133 1

Total of initiatives of less formal or informal professional training at the expense of the employer Number of participating employees 5821 110 5831 12 Number of training hours 5822 16.071 5832 2.230 Costs for the company 5823 609 5833 74 Total of initiatives of initial professional training at the expense of the employer

Number of employees involved 5841 2 5851 SABCA Annual Report Number of actual training hours 5842 1.538 5852 Net costs for the company 5843 53 5853 43 SABCA Annual accounts 2015 > 43 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 6th Registration Office in Brussels – Volume 131, folio 66 section 18

INTANGIBLE FIXED ASSETS These fixed assets are valued according to art. 60 of the Royal Decree of January 30, 2001. The board of directors decides, depending on the case, on the amount to be passed to the assets side as well as the depreciation rates to be applied. They can be the subject of accelerated or exceptional depreciation, in accordance with the fiscal prescriptions in this matter, if due to their alteration or modifications of the economic circumstances, the book value exceeds the usage value. The research and development costs are depreciated according to the straight-line method over a three year period, the software costs over a five year period. The intangible fixed assets purchased or produced since 2003 are subjected to a daily pro rata applicable to the first period of depreciation.

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, following the depreciation plan in the same way as in the past. DEPRECIATION (a) Method 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 applied 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 December 24, 2002 the new rules related to the daily pro rata depreciation are applied to the new tangible and intangible fixed assets purchased or produced since the 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 fiscal treatment. (b) Applied 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 shift 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: SABCA Annual Report 10% except for vehicles and trailers, office machines, computers, cameras and copiers (20%).

44 > 44 Annual accounts 2015 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 to 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: Up to 100%. (a) for parts related to completed production or maintenance programs, unusable or whose tolerances, norms, technical configuration, conception have changed. (b) for parts that have not moved during the 24 previous months unless their use is expected in the near future.

In case of later use of the non destructed parts, amounts written of are decreased.

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 to 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 temporary 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 SABCA Annual Report amount booked to the balance sheet on an economic and fiscal basis.

45 SABCA Annual accounts 2015 > 45

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 estimation 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 communicated 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 with 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 and 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

They are systematically but very carefully established particularly when they can be fiscally harmful to the company or in case of loss superior to 50% of the capital.

PROVISIONS SET UP FOR TAX PURPOSES They are determined according to fiscal rules, taking into account increases, advance payments, real and fictitious SABCA Annual Report with-holding taxes on investment income, taxes credit, withholding taxes on real estate 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.

46 > 46 Annual accounts 2015 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 companies (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 year 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 31st of December 2014

The valuation rules relating to provisioning for unprofitable 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.

The abolition of bearer shares

The auditor verified if SABCA SA respected the dispositions of Article 11 of the Act of 14 December 2005 and which he confirmed. SABCA Annual Report

47 SABCA Annual accounts 2015 > 47 Comments on the non consolidated balance sheet N.B.: the important differences between correspondig headings of compared periods are mentioned in italic. Unless otherwise indicated, all datas are in thousand of euros Assets Fixed Assets 37.284

Intangible assets 12.077 Research and development costs, know-how Movements during the period Acquisitions 5.382 Depreciation recorded -10.909 Net book value -5.527

The research and development activities focused on civil aviation programs in which the company has been taking part with its industrial partners.

Tangible assets 22.375 Land and buildings 7.010 Plant, machinery and equipment 13.276 Furniture and vehicles 1.772 Assets under construction and advance payments 317 Movements during the period Acquisitions 3.994 Sales and disposals -1.671 Amounts written off PM Depreciation recorded -6.594 Depreciation cancelled after sales & disposals 1.671 Net book value -2.600

The acquisitions in 2015 are mainly related to industrial investments for construction .

Financial assets 2.832 Affiliated enterprises Participating interests 2.653 - SABCA Limburg N.V. 2.443 - SABCA (C.D.R.) SPRL 11 - FLABEL CORPORATION S.A. 81 - ASM Aéro S.A.S. 118 A write-down was performed on the participation in SABCA Limburg N.V. for 228 KEUR and on the particpation in ASM Aéro SAS for 530 KEUR. Other financial assets 179 Shares and other securities: 170 - B.S.C.A. 52 - Sambrinvest 12 - Arianespace Participation 106 - Arianespace PM - Belairbus PM - SONACA PM - IGRETEC PM Intercommunale pour la Gestion et la Réalisation d'Etudes Techniques et Economiques. - SABCA share in the participation of A.B.A.P. to the formation of S.E.C.B.A.T. PM

Amounts receivable and cash guarantees 9 - Cash guarantees 9 SABCA Annual Report

48 > 48 Annual accounts 2015 SABCA Current assets 205.588

Amounts receivable after more than one year 1.072 Trade debtors 1.072 Trade debtors after more than one year are related to advances paid to SABCA Limburg. Stocks and contracts in progress 109.350 Stocks 47.388 Raw materials and consumables 18.840 Goods purchased for resale 27.310 Raw materials and consumables in stock for other contracts partially paid by customers Advance payments 1.238

Contracts in progress 61.962 This item contains principally the following programs: Airbus, Falcon airplanes, Ariane V and equipments civil aircraft. Amounts receivable within one year 63.885 Trade debtors - supply of goods & services 53.050 whereof affiliated enterprises 13.398 Trade receivables are increasing. They go from 42,135 to 53,050 mainly due to the increase in Airbus.

Other amounts receivable 10.835 V.A.T. Recoverable 2.233 Excess of income tax payments to be recovered 24 Loans and advances to the personnel 29 Amounts owed by the State or public institutions 1 Amounts owed by insurers 705 Sundry amounts receivable 7.719 Others 124 Investments 23.994 Other investments and deposits 23.994 Up to one month 232 Between one month and one year 21.762 Over one year 2.000 Cash at bank and in hand 6.430 Bank 6.400 Petty cash 30 Term deposits and cash equivalents amount to 30 million globally compared to 33 million for the previous financial year

Deferred charges and accrued income 857 Valuation USD / MTM 776 Goods in acceptance 44 Accrued bank and loan interests 37

Total assets 242.872 SABCA Annual Report

49

SABCA Annual accounts 2015 > 49 Liabilities

Shareholders' equity 30.467 Capital 12.400 Issued capital 12.400 Represented by 2,400,000 shares without mention of nominal value Reserves 14.401 Legal reserve 1.240 Reserves not available for distribution 595 Extraordinary reserve 595 Untaxed reserves 806 Other untaxed gains: 71 Building and equipment 2 Realized tangible assets of more than five years 69 Collective transport of employee 674 Investment reserve: 61 Surplus after incorporation into the capital Reserves available for distribution 11.760 Reserve for replacement of tangible assets 2.866 Reserve for installations in favour of the personnel 938 Other available reserves 7.956 Profit carried forward - retained earnings 3.019 See page 56 for the appropriation of the result of the financial year 2015.

Investment grants 647 Following the agreements signed with the Brussels-Capital Region in the scope of their political incentives and financial measures for industrial research a gross amount of 590 thousand euros was booked. On the other hand, 243 thousand euros were affected to other financial products.

Provisions and deferred taxes 49.103

Provisions for liabilities and charges 49.067 Pensions and similar obligations 563 Major repairs and maintenance 1.549 Other liabilities and charges 46.955

For globalfuture lossesrisk Ariane 5 and adaptation of the company to civil aviation 41.624 programs 4.100 For senority premium 1.031 For social litigations 200 Provisions for risks and charges are increasing with 1.4 million. The provision for future losses increases with 2.4 million but provision for retirement and similar obligations, major repairs and maintenance and provision for seniority premium in favour of the personnel decreases with 1.0 million.

Deferred taxation 36 Taxes relating to gains on disposals of fixed assets 846 Transfer from deferred taxes on dito -810 SABCA Annual Report

50 > 50 Annual accounts 2015 SABCA Creditors 163.302 Amounts payable after more than one year 81.384 Advances received on contracts in progress 33.529 Customer advances 33.529 Other amounts payable 47.855 Advances on prototypes, received by the State and to be repaid 47.129 - Science Policy PPS - FPS Economy - N.R.C. - A380 22.699 - Science Policy PPS - FPS Economy - N.R.C. - A350 24.430 Advances received from Brussels-Capital Region and to be reimbursed 726 - Servoactuators 427 - No-back device for electromechanical actuators 49 - Zero lead differential roller bearing 250 The amounts payable after more than one year go from 78 million to 67 million. This decrease is due to a sharp reduction in advances received from customers for the A340 program partly balanced by the advances received from the public authorities for the A350

Amounts payable within one year 69.407 Current portion of amounts payable after more than one year 652 Science Policy PPS - FPS Economy and Brussels-Capital Region 652 Financial debts 21 Other banks 21 Trade debts 18.228 Suppliers 18.228 * - Invoices to be paid 17.288 - Invoices to be received 940 whereof affiliated companies 2,167 Advances received on contracts in progress 39.005 Financial invoices in progress 68.322 Amounts not yet received to be deducted -1.711 Long term financial invoices -33.529 Invoices redefined as advances 5.923 Taxes, remuneration and social security 11.183 Taxes 299 - Estimated taxes payable 295 - Taxes payable 3 - Taxes withheld to be paid 1 Remuneration and social security 10.884 - Social Security Office -786 - Remuneration due to the personnel 352 - Holiday pay 5.871 - Provisions for bonus and other personnel charges 4.508 - Insurance for the personnel 911 - Other social obligations 28 Other amounts payable 318 Amounts payable resulting from appropriation of profits 12 - Dividends relating to previous financial years 11 - Other beneficiaries to previous financial years 1 Sundry amounts payable 306 - Contributions 202 - Customers payable 8 - Other 96 Accrued charges and deferred income 12.511 - Accrued charges 12.511

Total liabilities 242.872 SABCA Annual Report

SABCA Annual accounts 2015 > 51 51 Resources and uses of funds

(in thousand EUR)

2015 I. Resources

Depreciation on amortization, write-downs 18.260 Increase in amounts payable after more than one year 13.968 Provisions and deferred taxes 1.379 Investment grants 348 Reserves and capital gains 50

34.005

II. Uses

Increase in amounts receivable after more than one year 22 Loss for the period 12.721 Purchase of fixed assets 9.372

22.115

I. - II. Movement in working capital 11.890

III. Movement in stocks and contracts in progress 11.047 Movement in short-term accounts receivable 9.910 Movement in deferred charges and accrued income -2.144

18.813

IV. Movement in short-term non financial debts -5.532 Movement in accrued charges and deferred income 9.623

4.091

III. - IV. Movement in short-term financing requirements 14.722

V. Movement in investments -4.908 Movement in cash at bank and in hand 2.078

VI. Movement in short-term financial debts -2

V. - VI. Movement in cash -2.832 SABCA Annual Report

52 52 Annual accounts 2015 SABCA Statutory Auditor’s Report to the general meeting of the company S.A.B.C.A. SA for the year ended 31 December 2015

As required by law and the company’s 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 31 December 2015, the income statement for the year ended 31 December 2015, and the disclosures, as well as the required additional statements.

Report on the annual accounts – Unqualified opinion

We have audited the annual accounts of the company S.A.B.C.A. SA for the year ended 31 December 2015, prepared in accordance with the financial-reporting framework applicable in Belgium, which show a balance sheet total of KEUR 242.872 and a loss for the year of KEUR 12.676.

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 five 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 (ISA). 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 equity and financial position of S.A.B.C.A. SA as at 31 December 2015, and of its results for the year then ended, in accordance with the financial-reporting framework applicable in Belgium.

Emphasis of matter paragraph

Without prejudice to the opinion mentioned above, we draw the attention to note C8 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. SABCA Annual Report

53 SABCA Annual accounts 2015 > 53

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 (ISA) 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 includes 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. - 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, 25 April 2016

Mazars Bedrijfsrevisoren represented by

Lieven Acke

SABCA Annual Report

54 > 54 Annual accounts 2015 SABCA

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SABCA Jaarrekening 2014 > 53 www E-mail: F Tel: Belgium B-1130 Brussels deHaecht1470 Chaussée deConstructions Belge Aéronautiques Anonyme Société SABCA S.A. ax: .sabca.com [email protected] +32 27051570 +32 27295511

S.A.B.C.A. ANNUAL ACCOUNTS 2015