I - Management Report

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2 I - Management Report 1. Summary 3 2. H highlights Reorganisation of SPIE s activities in France 2.2 Bank debt refinancing 2.3 Bolt-on acquisitions 3. Financial Review Consolidated 3.2 Segmental review 3.3 Results 3.4 Cash flow 3.5 Balance sheet full-year outlook 8 5. Transactions with related parties 8 6. Risk factors 9 7. g 8. g Statutory Auditor s review report on the 2018 half-yearly financial information (Sixmonth period ended June 30 th, 2018) Statement by the person responsible for the half-year financial report as of June 30 th, g 10 g II Interim Consolidated Financial Statements SPIE 2018 FIRST-HALF FINANCIAL REPORT 2

3 1. Summary In the first half of 2018, SPIE benefitted from a good momentum in both of its two main geographies: France and Germany. In France, the market environment continued to improve and SPIE completed the reorganisation of its activities into national marketfocused divisions. This new set-up is expected to enhance SPIE s future growth and profit in France through the better sharing of innovations and specific areas of expertise, enabling SPIE to provide integrated solutions with consistent high-end service to each of its strategic markets in France. In Germany, in a context of increasing demand for technical services, SPIE consolidated its position as a market leader as it entered the last stage of the integration process of SPIE SAG, acquired in March On June 7 th, 2018, SPIE finalised the refinancing of its bank debt through two new facilities: a 1,200 million term loan and a 600 million revolving credit facility, both with extended maturity (2023 vs for previous facilities) and lower cost. Consolidated revenue 1 grew by +15.2% 2 in H1 2018, driven by acquisitions (+12.6%) and a healthy organic growth (+3.4%), while foreign exchange accounted for -0.8%. EBITA 1 was million, stable year-on-year. EBITA margin was 4.8%, down compared to H (5.5%), mainly due to the first full-year consolidation of SPIE SAG and Ziut, both having strongly seasonal activities. On a pro forma basis 3, it was slightly up, notably reflecting the ramp up of cost synergies in Germany, following the acquisition of SAG. Taking into account the amortisation of allocated goodwill, which increased year-on-year as a result of the acquisition of SPIE SAG, as well as non-recurring items, mainly costs related to restructuring and disposals, operating income amounted to 87.3 million, compared to million in H (-24.4%). Net income attributable to owners of the parent was (17.5) million, impacted by one-off costs linked to the disposal of distribution networks activities in the UK and to a negative performance from the discontinued SAG Gas & Offshore activities. Net cash flow from operating activities is typically negative in the first half of the year due to margin and working capital seasonality. In H1 2018, it was (340.3) million, compared to (203.6) million in H Net cash flow from investing activities was a 12.6 million inflow in H1 2018, including proceeds from the disposal of SPIE s Moroccan operations. Including the impacts of the bank debt refinancing, the payment of the 2017 final dividend for (61.6) million ( 0.40 per share, on top of a 0.16 interim dividend paid in September 2017), net cash flow was (159.1) million in H1 2018, compared to (178.2) million in H Net debt increased in H1 2018, as expected, to (1,996.7) million at June 30 th, Leverage 4 was 4.3x at June 30 th, 2018, compared to 3.3x at December 31 st, 2017 due to working capital seasonality, which is expected to fully reverse in the second half of the year. The Group s liquidity remained high, at 691 million at June 30 th, 2018, including 361 million euros in net cash and 330 million of undrawn revolving credit facility. To date, SPIE has completed 3 bolt-on acquisitions, totalling annualised revenue of 85 million. Based on a rich pipeline, the Group expects to complete additional acquisitions in the second half of On the back of this solid H performance, SPIE is confirming its full-year outlook of a strong revenue growth, in excess of 7.0% at constant currency in 2018, an EBITA margin of 6.0% or more, a cash conversion of c. 100% and a dividend pay-out ratio of c. 40% of adjusted net income. 1 Revenue and EBITA (Earnings Before Interests, Taxes and Amortisation) are non GAAP measures used by management to assess the performance of the Group. Please refer to notes 6 of the interim consolidated financial statements for reconciliation with GAAP measures 2 H have been restated in accordance with IFRS 5, consistently with 2017 full-year published figures. Refer to note 10 of the interim consolidated financial statements. 3 Including all acquisitions made in 2017 as if they had been consolidated starting in January 1 st, Net debt / pro-forma EBITDA on a trailing twelve-month basis SPIE 2018 FIRST-HALF FINANCIAL REPORT 3

4 2. H highlights 2.1 Reorganisation of SPIE s activities in France The reorganisation of SPIE s French activities has been completed at the date of this report. On January 1 st, 2018, SPIE created SPIE France, a holding company with all necessary means, designed to bring full functional autonomy to the Group s French activities, which have been legally attached to it on June 29 th, On July 2 nd, 2018, SPIE France announced the creation of a new national subsidiary SPIE Industrie & Tertiaire, which represents the final stage of organising SPIE France s activities into national, market-focused, subsidiaries. This vertical set-up will enhance SPIE s future growth and profit in France through the better sharing of innovations and specific areas of expertise. It will therefore enable SPIE to provide integrated solutions with consistent high-end service to each of its strategic markets in France. 2.2 Bank debt refinancing On June 7 th, 2018, SPIE finalised the refinancing of its bank debt through two new facilities: a 1,200 million term loan and a 600 million revolving credit facility, both with a longer maturity (2023 vs for previous facilities) and lower cost. The cost of these new facilities are margins added to EURIBOR (or any other applicable base rate) and vary according to leverage ratio (Net Debt / EBITDA). 2.3 Bolt-on acquisitions External growth, through targeted bolt-on acquisitions financed by a strong and regular free cash flow, constitutes the pillar of SPIE s growth model, increasing the Group s network density, expanding the range of its services and broadening its customer portfolio. In 2018 to date, SPIE has made 3 acquisitions, totalling annualised revenue of 85 million. On April 27 th, 2018, SPIE finalised the acquisition of Systemat in Belgium. Systemat is a provider of services in the management of ICT equipment, software and infrastructure. The company employs around 150 employees and forecasts full-year revenue of approximately 70 million for the current fiscal year. Systemat enables SPIE Belgium to enter into the ICT business and therefore offer a new range of services, already well-represented in the Group s portfolio in other countries. On May 23 rd, 2018, SPIE, through its subsidiary SPIE Nucléaire, acquired Fluigetec in France. Fluigetec is specialised in the installation, control and maintenance of gas distribution networks in industrial environments. The company generates full-year revenue of 2 million. This acquisition will allow SPIE Nucléaire to complement the wide range of services it offers to the nuclear sector. On July 12 th, 2018, SPIE acquired Buchet in France. Buchet is specialised in electrical installation for the commercial and housing sectors. The company benefits from a strong footprint in a dynamic local market and generates full-year revenue of 13 million. The term loan margin varies between 1.25% and 2.25% per year, compared to 1.625% to 2.625% with the previous facility. The revolving credit facility margin varies between 0.85% and 1.95% per year, compared to 1.525% to 2.525% with the previous facility. SPIE 2018 FIRST-HALF FINANCIAL REPORT 4

5 3. Financial review 3.1 Consolidated Preliminary comment: H figures presented in this Management Report have been restated, where applicable, in accordance with IFRS 5. Refer to Note 10 to the 2018 interim consolidated financial statements for further details. Consolidated revenue was 3,109.0 million in H1 2018, up +15.2% compared to H1 2017R on the back of a +3.4% organic growth and of the full-year consolidation of 2017 acquisitions. Foreign exchange impact was - 0.8%, reflecting the strengthening of the Euro against the USD, the GBP and the CHF. EBITA was million in H1 2018, up +4.7% compared to H pro forma and in line with H1 2017R. EBITA margin was 4.8%, slightly up compared to H pro forma level of 4.7%. As a result of the first full-year consolidation of SPIE SAG and Ziut, it was down compared to H1 2017R (5.5%) as both have strongly seasonal activities. 3.2 Segmental review The France segment revenue grew +7.8% in H In a well oriented market, France recorded organic revenue growth of +2.3%, moderating from Q1 as expected. Activity with industrial customers was good and telecom infrastructure services, both fixed and mobile, saw strong and sustained growth. In the commercial sector, maintenance activities recorded better momentum, while contract selectivity in installation activities, which remained very competitive, impacted Q2 organic growth. The EBITA margin of 5.7% was in line with H proforma level, as operational improvements compensated, as anticipated, for the decrease in CICE. The Germany & Central Europe segment s revenue increased by +36.5% in H1 2018, primarily reflecting the full-year consolidation of SPIE SAG and Lück. Organic growth was strong, at +7.2%. EBITA margin was 4.2%, strongly up compared to H pro forma level of 3.0%. In Germany, organic growth stood at +5.3%, with good customer activity in all divisions, particularly in High Voltage and Building Technology activities. Continued progress in EBITA margin (compared to H pro forma) resulted from the ramp up of cost synergies as well as improved operational performance. Reflecting the Group s strong development and quality of delivery, SPIE was ranked number one facility services company in Germany in the 2018 Lünendonk study. The acquisition of SPIE SAG is proving very successful, with Transmission & Distribution activities now fully integrated, delivering a strong performance and facing good medium-term prospects. Their complementarity with our historical service portfolio is already evidenced by the first commercial synergies delivered in the E- mobility and Smart City markets. The disposal process of SAG Gas & Offshore activities is ongoing. In Central Europe, revenue growth was good, particularly in Transmission & Distribution Services. In Switzerland, margins made further progress, benefitting from contract selectivity and from the better-performing organisation implemented in Revenue in the North-Western Europe segment grew by +13.2% in H1 2018, including a +10.7% contribution from bolt-on acquisitions and a +3.4% organic growth. EBITA margin was 2.4%, slightly down compared to H pro forma level of 2.7%. In the Netherlands, activity is gaining momentum after a slow start to the year, with strong order intake and good prospects across the board. The turnaround of Ziut is a key area of focus; the company is however at the forefront of Smart City innovation, having won the 2018 Dutch IoT award, for its Internet of Things solution for public lighting management. In the UK, revenue held up well in the second quarter, propped up by Data Center contracts, however margins remained under pressure. In July 2018, SPIE UK completed the disposal of its distribution networks activities (underground and overhead). In Belgium, revenue grew strongly in H1 2018, on the back of very dynamic market trends. The acquisition of ICT specialist Systemat was completed on April 27th and the integration process started immediately. EBITA margin was solid although lower than in H due to a slow start in nuclear maintenance activities. The Oil & Gas and Nuclear segment contracted by %, a combination of a -5.9% organic decline and a -4.6% negative foreign exchange impact. EBITA margin was 8.0%, compared to 8.8% in the same period of In Oil & Gas Services, organic revenue contraction moderated in the second quarter, while margins remained under pressure as anticipated. Recent tendering activity and the continued development in downstream activities provide encouraging signs that activity levels are bottoming out. SPIE s Nuclear activities reported a mid-single digit organic contraction, reflecting the anticipated EPR contract ramp down, and solid margins. The second half of the year should benefit from an increase in Grand SPIE 2018 FIRST-HALF FINANCIAL REPORT 5

6 Carénage activity and from the Group s strengthened position in general electrical installations Results Consolidated revenue under IFRS Consolidated revenue under IFRS amounted to 3,125.4 million in H1 2018, a strong increase compared to H ( 2,697.1 million). The table below shows the reconciliation between consolidated revenue as per management accounts and consolidated revenue under IFRS. Refer to note 6.1 of the attached interim financial statements for further details. m H H1 2017R Consolidated revenue as per management accounts 3, ,698.0 Holding activities OCTG activities (1.0) (4.9) Others 6.4 (10.7) Consolidated revenue under IFRS 3, , Operating income Consolidated operating income (including equityaccounted companies) amounted to 87.4 million in H1 2018, compared to million in H The table below shows the reconciliation between EBITA and consolidated operating income. Refer to note 6.1 of the attached interim financial statements for further details. m H H1 2017R EBITA Amortisation of intangible assets (allocated goodwill) (28.9) (6.6) Restructuring costs (9.7) (14.3) Financial commissions (0.7) (0.7) Non-controlling interests 0.1 (0.6) Others (23.0) (11.8) Consolidated operating income Cost of net financial debt Cost of net financial debt amounted to (38.1) million in H1 2018, compared with (23.5) million in H This year-on-year increase mainly results from (i) the writeoff of non-amortised borrowing costs from the previous bank debt package, following the June 7 th, 2018 refinancing and (ii) an additional quarter of interest charge related to the 600 million bond issued in March The average cost of debt following the refinancing is estimated at 2.2% for 2018, lower than its 2017 level of 2.4% Pre-tax income Pre-tax income was 41.4 million in H1 2018, a decrease compared to H ( 82.4 million), primarily reflecting higher amortisation of allocated goodwill, due to recent acquisitions, and a higher cost of net financial debt Income tax A (22.2) million income tax charge was recorded in H (vs. (34.1) million in H1 2017). This charge reflects a 30% effective corporate income tax rate for the period (excluding the French CVAE levy and adjusted for non-recurring items), in line with H Including the full-year impact of the bond issued in March 2017 SPIE 2018 FIRST-HALF FINANCIAL REPORT 6

7 3.3.6 Net income attributable to owners of the parent H The H net loss includes a (36.8) million contribution from discontinued operations. Net income attributable to owners of the parent was (17.5) million in H1 2018, compared to 34.0 million in 3.4 Cash flow Net cash flow from operating activities was (340.3) million in H1 2018, compared to (203.6) million in H The first half of the year decrease in financing from working capital (which stems from both the seasonality of the Group s activity and the payment cycle of certain personnel and social security costs) was higher, in value, in H than in H mostly as a result of the increase in the size of the Group following strong M&A activity in Including a (0.1) million impact from changes in exchange rates ( (3.5) million in H1 2017), net cash flow amounted to (159.1) million in H1 2018, compared with (178.2) million in H Cash and cash equivalents as at June 30 th, 2018 amounted to million, compared to million as at June 30 th, Net cash flow from investing activities was a 12.6 million inflow in H1 2018, including proceeds from the disposal of SPIE s Moroccan operations. Net capital expenditure amounted to (22.3) million, a slight increase compared to H ( (16.1) million), reflecting the increasing size of the Group. Capital expenditure remained however within the long term average when expressed as a percentage of revenue (0.6%). Net cash flow from financing activities was a million inflow in H1 2018, as the Group drew on its revolving credit facility to finance the seasonal change in working capital, as it does every year. 3.5 Balance sheet Shareholder equity attributable to owners of the parent at June 2018 amounted to 1,361.6 million compared to 1,439.4 million at December Net debt as per the Group s Senior Facility Agreement totalled 1,996.7 million at the end of June 2018 (see note 18.4 of the 2018 interim financial statements), including a 1,200 million senior term loan facility with a 2023 maturity, a 600 million bond placed in March 2017, with a 2024 maturity and a fixed 3.125% annual coupon, and 270 million drawn from the Group s revolving credit facility, which matures in Financial leverage 1 reached 4.3x at June 30 th, Leverage at June 30 th, 2017 was 4.0x. The Group s liquidity remains high, at 691 million at June 30 th, 2018, including with 361 million euros in net cash and cash equivalent and 330 million of undrawn Revolving Credit Facility. The following margins apply to the group financial debt based on the ratchet table below: Group s debt net/ebitda ratio Revolving Facility Senior Term Loan Facility > 4.0X 1.950% 2.250% 4.0X and > 3.5X 1.600% 2.000% 3.5X and > 3.0X 1.300% 1.700% 3.0X and > 2.5X 1.150% 1.550% 2.5x and > 2.0X 1.000% 1.400% 2.0X 0.850% 1.250% 1 Net debt / pro-forma EBITDA on a trailing twelve-month basis SPIE 2018 FIRST-HALF FINANCIAL REPORT 7

8 full-year outlook SPIE expects strong revenue growth in 2018: Acquisitions made in 2017 are expected to bring additional incremental revenue in 2018 in the order of 370 million; As a result, Group revenue is expected to grow in excess of 7.0% at constant currency in Group EBITA margin is expected to be 6.0% or more, higher than 2017 pro forma level 1. Group organic growth is expected to improve compared to 2017; Full-year revenue acquired in 2018 through bolt-on acquisitions is expected to be c. 200 million. Cash conversion is expected to be c.100%. The dividend pay-out ratio will be c.40% of Adjusted Net Income attributable to the Group.. 5. Transactions with related parties No material related party transactions arose during the period ending June 2018, and there were no significant changes concerning the related party transactions in the consolidated financial statements as at December 31 st, Including all acquisitions made in 2017 as if they had been consolidated starting in January 1 st, 2017, 2017 pro forma EBITA margin would have been 5.9% SPIE 2018 FIRST-HALF FINANCIAL REPORT 8

9 6. Risk factors Risk factors do not differ from those identified in the 2017 Registration Document, which received the AMF visa n R on April 26 th, Information on risk factors included in Section 4 Risk factors of the 2017 Registration Document is complemented by the information included in note 19 of the interim consolidated financial statements as at June 30 th, Statutory Auditor s review report on the 2018 half-yearly financial information (Six-month period ended June 30 th, 2018) This is a free translation into English of the statutory auditors' review report on the half-yearly financial information issued in French and is provided solely for the convenience of English-speaking users. This report includes information relating to the specific verification of information given in the Group s half-yearly management report. This report should be read in conjunction with, and construed in accordance with, French law and professional standards applicable in France. To the Shareholders In compliance with the assignment entrusted to us by your General Meetings and in accordance with the requirements of Article L III of the French Monetary and Financial Code (Code monétaire et financier), we hereby report to you on: the review of the accompanying condensed half-yearly consolidated financial statements of SPIE SA, for the six months ended June 30, 2018; the verification of the information contained in the halfyearly management report. These condensed half-yearly consolidated financial statements are the responsibility of your Board of Directors. Our role is to express a conclusion on these financial statements based on our review. 1. Conclusion on the financial statements We conducted our review in accordance with professional standards applicable in France. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with professional standards applicable in France and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed half-yearly consolidated financial statements are not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting, as adopted by the European Union. 2. Specific verification We have also verified the information presented in the half-yearly management report in respect of the condensed half-yearly consolidated financial statements subject to our review. We have no matters to report as to its fair presentation and consistency with the condensed half-yearly consolidated financial statements. Neuilly-sur-Seine and Paris-La Défense, July 26 th, 2018 The Statutory Auditors PricewaterhouseCoopers Audit Yan Ricaud ERNST & YOUNG et Autres Henri-Pierre Navas SPIE 2018 FIRST-HALF FINANCIAL REPORT 9

10 8. Statement by the person responsible for the half-year financial report as of June 30 th, 2018 I certify, to the best of my knowledge, that the condensed half-year consolidated financial statements have been prepared in accordance with the applicable financial reporting standards and give a true and fair view of the assets and liabilities, financial position and results of the operations of the Company and of the Group formed by the companies included in the consolidated financial statements, taken as a whole, and that the management report for the half-year period faithfully presents the important events that have occurred during the first six months of the financial year and their impact on the half-year financial statements, of the main transactions between related parties, as well as a description of the main risks and uncertainties in respect of the remaining six months of the financial year. On July 27 th, 2018 Mr Gauthier Louette Chairman and Chief Executive Officer, SPIE 2018 FIRST-HALF FINANCIAL REPORT 10

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12 TABLE OF CONTENTS 1. CONSOLIDATED INCOME STATEMENT CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONSOLIDATED CASH FLOW STATEMENT CONSOLIDATED STATEMENT OF CHANGES IN EQUITY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. GENERAL INFORMATION Accounting policies and measurement methods NOTE 2. BASIS OF PREPARATION STATEMENT OF COMPLIANCE ACCOUNTING POLICIES CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS NOTE 3. ADJUSTEMENTS ON PREVIOUS PERIODS Significant events of the period NOTE 4. SIGNIFICANT EVENTS ARIANE AND GALILEO PROJECTS FRENCH SEGMENTS FINANCIAL DEBT REFINANCING AS AT JUNE 7th EMPLOYEES SHAREHOLDERS PLAN Scope of consolidation NOTE 5. SCOPE OF CONSOLIDATION CHANGES IN SCOPE CHANGES IN CONSOLIDATION METHOD Segment information NOTE 6. SEGMENT INFORMATION INFORMATION BY OPERATING SEGMENT NON-CURRENT ASSETS BY ACTIVITY PERFORMANCE BY GEOGRAPHIC AREA INFORMATION ABOUT MAJOR CUSTOMERS Notes to the consolidated income statement NOTE 7. OTHER OPERATING INCOME AND EXPENSES NOTE 8. NET FINANCIAL COST AND FINANCIAL INCOME AND EXPENSES NOTE 9. INCOME TAX TAX RATE CONSOLIDATED INCOME TAXES NOTE 10. DISCONTINUED OPERATIONS NOTE 11. EARNINGS PER SHARE NET EARNINGS NUMBER OF SHARES EARNINGS PER SHARE NOTE 12. DIVIDENDS Notes to the statement of financial position NOTE 13. GOODWILL NOTE 14. INTANGIBLE ASSETS INTANGIBLE ASSETS GROSS VALUES SPIE RAPPORT FINANCIER SEMESTRIEL

13 14.2. INTANGIBLE ASSETS AMORTIZATION AND NET VALUES NOTE 15. EQUITY NOTE 16. PROVISIONS PROVISIONS FOR EMPLOYEE BENEFIT OBLIGATIONS OTHER PROVISIONS NOTE 17. WORKING CAPITAL REQUIREMENT CHANGE IN WORKING CAPITAL CHANGE IN WORKING CAPITAL: RECONCILIATION BETWEEN BALANCE SHEET AND CASH FLOW STATEMENT NOTE 18. FINANCIAL ASSETS AND LIABILITIES NON-CONSOLIDATED SHARES NET CASH AND CASH EQUIVALENTS BREAKDOWN OF FINANCIAL ENDEBTEDNESS NET DEBT RECONCILIATION WITH THE CASH FLOW STATEMENT POSITIONS SCHEDULED PAYMENTS FOR FINANCIAL LIABILITIES FINANCIAL DISCLOSURES FROM COMPANIES ACCOUNTED FOR UNDER THE EQUITY METHOD NOTE 19. FINANCIAL RISK MANAGEMENT DERIVATIVE FINANCIAL INSTRUMENTS INTEREST RATE RISK FOREIGN EXCHANGE RISK COUNTERPARTY RISK LIQUIDITY RISK CREDIT RISK Other notes NOTE 20. RELATED PARTY TRANSACTIONS NOTE 21. CONTRACTUAL OBLIGATIONS AND OFF BALANCE SHEET COMMITMENTS OPERATING LEASE COMMITMENTS OPERATIONAL GUARANTEES PLEDGING OF SHARES NOTE 22. SUBSEQUENT EVENTS EXTERNAL GROWTH EMPLOYEES SHAREHOLDERS PLAN SHARE FOR YOU 2018 INCREASE ON SHARE CAPITAL ON JULY 20, SPIE RAPPORT FINANCIER SEMESTRIEL

14 1. CONSOLIDATED INCOME STATEMENT In thousands of euros Notes First half 2017 Restated* First half 2018 Revenue 6 2,697,138 3,125,401 Other income 24,320 27,826 Operating expenses (2,584,787) (3,044,783) Recurring operating income 136, ,444 Other operating expenses (23,314) (26,760) Other operating income 2,111 5,625 Total other operating income (expenses) 7 (21,203) (21,135) Operating income 115,468 87,309 Net income (loss) from companies accounted for under the equity method Operating income including companies accounted for under the equity method 115,508 87,393 Interests charges and losses from cash equivalents (23,494) (38,276) Gains from cash equivalents Costs of net financial debt 8 (23,454) (38,095) Other financial expenses (14,567) (22,391) Other financial incomes 4,926 14,454 Other financial income (expenses) 8 (9,641) (7,937) Pre Tax Income 82,413 41,361 Income tax expenses 9 (34,131) (22,230) Net income from continuing operations 48,282 19,131 Net income from discontinued operations 10 (13,211) (36,814) NET INCOME 35,071 (17,683) Net income from continuing operations attributable to:. Owners of the parent 47,170 19,281. Non-controlling interests 1,112 (150) 48,282 19,131 Net income attributable to:. Owners of the parent 33,959 (17,533). Non-controlling interests 1,112 (150) 35,071 (17,683) Net income Share of the Group earning per share (0.11) Net income Share of the Group diluted earnings per share 0.22 (0.11) Diluted earnings per share 0.23 (0.11) * Comparative data for the first half of 2017 have been restated, See Note 3 SPIE RAPPORT FINANCIER SEMESTRIEL

15 2. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME In thousands of euros First Half 2017 Restated* First Half 2018 Net income recognized in income statement 35,071 (17,683) Actuarial losses on post-employment benefits - - Tax effect - - Items that will not be reclassified to income - - Currency translation adjustments (253) (1,267) Fair value adjustments on future cash flows 239 (528) Other Tax effect (83) 182 Items that may be reclassified to income (97) (1,613) TOTAL COMPREHENSIVE INCOME 34,974 (19,295) Attributable to:. Owners of the parent 33,860 (19,143). Non-controlling interests 1,114 (153) * Comparative data for the first half of 2017 have been restated, See Note 3 SPIE RAPPORT FINANCIER SEMESTRIEL

16 3. CONSOLIDATED STATEMENT OF FINANCIAL POSITION In thousands of euros Notes Dec 31, 2017 June 30, 2018 Non-current assets Intangible assets 14 1,075,590 1,048,389 Goodwill 13 3,015,955 3,063,219 Property, plant and equipment 180, ,538 Investments in companies accounted for under the equity method 18 3,062 2,946 Non-consolidated shares and long-term loans ,081 59,333 Other non-current financial assets 5,142 5,449 Deferred tax assets 288, ,057 Total non-current assets 4,634,054 4,643,932 Current assets Inventories 37,281 45,674 Trade receivables 1,850,370 2,011,979 Current tax receivables 41,586 56,725 Other current assets 246, ,884 Other current financial assets 7,881 8,260 Cash management financial assets 18 4,800 4,300 Cash and cash equivalents , ,647 Total current assets from continuing operations 2,727,101 2,842,469 Assets classified as held for sale , ,659 Total current assets 3,123,170 3,132,128 TOTAL ASSETS 7,757,224 7,776,060 In thousands of euros Notes Dec 31, 2017 June 30, 2018 Equity Share capital 15 72,416 72,416 Share premium 1,170,496 1,170,496 Consolidated reserves 86, ,252 Net income attributable to the owners of the parent 110,402 (17,533) Equity attributable to owners of the parent 1,439,399 1,361,631 Non-controlling interests 2,949 2,795 Total equity 1,442,349 1,364,426 Non-current liabilities Interest-bearing loans and borrowings 18 1,729,928 1,793,357 Non-current provisions 16 69,833 74,118 Accrued pension and other employee benefits , ,838 Other non-current liabilities 7,281 7,195 Deferred tax liabilities 369, ,610 Total non-current liabilities 2,897,324 2,966,118 Current liabilities Trade payables 990, ,064 Interest-bearing loans and borrowings , ,620 Current provisions , ,434 Income tax payable 34,355 31,107 Other current operating liabilities 17 1,579,973 1,620,767 Total current liabilities from continuing operations 3,081,859 3,183,992 Liabilities associated with assets classified as held for sale , ,525 Total current liabilities 3,417,553 3,445,516 TOTAL EQUITY AND LIABILITIES 7,757,224 7,776,060 SPIE RAPPORT FINANCIER SEMESTRIEL

17 4. CONSOLIDATED CASH FLOW STATEMENT In thousands of euros Notes First Half 2017 First Half 2018 CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD 518, ,113 Operating activities Net income 35,071 (17,683) Loss from companies accounted for under the equity method (40) (84) Depreciation, amortization, and provisions 39,476 56,243 Proceeds on disposals of assets (751) 2,141 Dividend income - - Income tax expense 28,301 6,023 Elimination of costs of net financial debt 24,304 38,659 Other non-cash items (7,888) (5,381) Internally generated funds from (used in) operations 118,473 79,917 Income tax paid (26,778) (34,440) Changes in operating working capital requirements (295,425) (385,956) Dividends received from companies accounted for under the equity method Net cash flow from (used in) operating activities (203,555) (340,278) Investing activities Effect of changes in the scope of consolidation (158,342) 32,950 Acquisition of property, plant and equipment and intangible assets (19,681) (23,497) Net investment in financial assets - - Changes in loans and advances granted (16,308) 1,926 Proceeds from disposals of property, plant and equipment and intangible assets 3,552 1,230 Proceeds from disposals of financial assets 8 - Dividends received - - Net cash flow from (used in) investing activities (190,771) 12,608 Financing activities Issue of share capital 24 - Proceeds from loans and borrowings 845,537 1,865,982 Repayment of loans and borrowings (527,190) (1,596,415) Net interest paid (17,119) (39,239) Dividends paid to owners of the parent (81,660) (61,630) Dividends paid to non-controlling interests - (13) Other cash flows from (used in) financing activities - - Net cash flow from (used in) financing activities 219, ,685 Impact of changes in exchange rates (3,459) (144) Impact of changes in accounting policies - - Net change in cash and cash equivalents (178,193) (159,128) CASH AND CASH EQUIVALENTS AT END OF THE PERIOD , ,985 Notes to the cash flow statement The cash flow statement presented above includes discontinued operations or operations held for sale (see Note 18.2). SPIE RAPPORT FINANCIER SEMESTRIEL

18 5. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY In thousands of euros except for the number of shares Number of outstanding shares Share capital Additional paid-in capital Consolidated reserves Foreign currency translation reserves Cash flow hedge reserves OCI, and others Equity attributable to owners of the parent Non controlling interests Total equity AT DECEMBER 31, ,076,156 72,416 1,170, ,062 (991) 25 (68,919) 1,415,088 2,160 1,417,248 Net income 33,958 33,958 1,112 35,071 Other comprehensive income (OCI) (255) 156 (98) 2 (97) Total comprehensive income ,958 (255) ,860 1,114 34,974 Distribution of dividends (81,660) (81,660) 24 (81,636) Share issue Change in the scope of consolidation and other Other movements 2,063 (1) 2,062 2,062 AT JUNE 30, ,076,156 72,416 1,170, ,423 (1,135) 181 (68,920) 1,369,460 3,298 1,372,758 AT DECEMBER 31, ,076,156 72,416 1,170, ,153 (8,835) 266 (41,095) 1,439,399 2,949 1,442,348 Net income (17,533) (17,533) (150) (17,683) Other comprehensive income (OCI) (1,264) (346) (1,610) (3) (1,613) Total comprehensive income - - (17,533) (1,264) (346) (19,143) (153) (19,296) Distribution of dividends (61,630) (61,630) - (61,630) Share issue Change in the scope of consolidation and other Other movements 3,005 3,005 (1) 3,004 AT JUNE 30, ,076,156 72,416 1,170, ,990 (10,099) (80) (38,091) 1,361,631 2,795 1,364,426 Notes to the consolidated statement of changes in equity See Note 15. SPIE RAPPORT FINANCIER SEMESTRIEL

19 6. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. GENERAL INFORMATION The SPIE Group, operating under the brand name SPIE, is the independent European leader in electrical and mechanical engineering and HVAC services, energy and communication systems. SPIE SA is a joint-stock company (société anonyme) incorporated in Cergy (France), listed on the Euronext Paris regulated market since June 10, SPIE SA s share capital ownership is diversified, with two reference shareholders holding together 19.56%, Caisse de Dépôt et Placements du Québec (14.04%) and FFP Invest (5.52%), and a free float of around 74%. The SPIE Group interim consolidated financial statements were authorized for issue by the Board of Directors on July 26, Accounting policies and measurement methods NOTE 2. BASIS OF PREPARATION 2.1. STATEMENT OF COMPLIANCE The Group condensed interim consolidated financial statements have been prepared in compliance with IAS 34 Interim Financial Reporting. As these are condensed interim financial statements, they do not contain all the disclosures required under the International Financial Reporting Standards (IFRS). They should therefore be read in conjunction with the Group s consolidated financial statements for the year ended December 31, 2016, which were prepared in compliance with IFRS standards as adopted by the European Union ACCOUNTING POLICIES The accounting policies applied in the preparation of the Group s interim consolidated financial statements are identical to those used for the year ended December 31, 2017 and described in the notes to the 2017 financial statements, with the exception of regulations specific to the preparation of interim financial statements and new standards and interpretations. New standards and interpretations applicable from January 1, IFRS 15 and clarification of IFRS 15 Revenue from contracts with customers ; An analysis of the application of the IFRS 15 standard shows that the rules of recognition for the revenue in the Group accounts are compliant with the principles prescribed by IFRS IFRS 9 Financial instruments - Amendment to IFRS 2 Classification and measurement of share-based payment transactions - Amendment to IFRS 4 on Insurance contracts applying IFRS 9 financial instruments with IFRS 4 insurance contracts SPIE RAPPORT FINANCIER SEMESTRIEL

20 - Amendment to IAS 40 Transfers of investment properties - IFRIC 22 Foreign currency transactions and advance considerations. The Group did not identify any significant impact at the application of these standards and amendments. Published new standards and interpretations for which application is not mandatory as of January 1, 2018 Standards, interpretations and amendments already published by the International Accounting Standards Board (IASB) which are not yet endorsed by the European Union are as follows: - IFRS 14 Regulatory deferral accounts - IFRS 16 Lease contracts ; - IFRS 17 Insurance contracts ; The Group is currently assessing the impact and practical implications resulting from the application of the standards and interpretations published but whose application is not yet compulsory. Impairment of assets No indication of impairment was identified as of June 30, As a result, no interim impairment tests were performed. Employee benefit obligations The net provision for pensions and other employee benefits as at June 30, 2018 is calculated on the basis of the latest available valuations as at December 31, Actuarial assumptions are reviewed to take into account any potential significant changes or one-off impacts during the first half of the year. This review did not led to the identification of significant actuarial differences as at June 30, 2018 compared to the amounts of the Group s equity and to the employee benefit obligations. Income taxes Current and deferred income tax expense is calculated by applying the estimated income tax rate that would be applicable to year-end 2018 taxable income, i.e., by applying the average effective annual tax rate for the current year to the Group s taxable income for the current period. Seasonality Working capital requirements are seasonal, although they are negative throughout the year due to the contractual structure of the activity and to a dynamic approach of the Group in terms of invoicing and cash collection. The Group s cash flow is generally negative during the first half of the year due to the seasonality of the Group s activity (which is less significant during the first half of the year) and also due to the payment cycle of certain personnel costs and social security contributions. By contrast, cash flow is typically positive in the second half of the year due to the increased level of activities during that period generating higher invoicing and collection. SPIE RAPPORT FINANCIER SEMESTRIEL

21 2.3. CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS The preparation of the consolidated financial statements in accordance with IFRSs is based on management estimates and assumptions used to determine the value of assets and liabilities at the reporting date, as well as income and expenses reported during the period. The main sources of uncertainty relating to key assumptions and estimates are related to the impairment of goodwill, employee benefits, revenue recognition and profit margin recognition on long-term service agreements, provisions for liabilities and charges and deferred tax assets recognition. NOTE 3. ADJUSTEMENTS ON PREVIOUS PERIODS The accounts for June 2017 have been restated pursuant to IFRS 5 (non-current assets held for sale and discontinued operations).these restatements refer specifically to activities which were processed as discontinued operations during the first half of 2018 (see Note 10). The financial statements of June 30, 2017 presented in comparison to June 30, 2018 are restated in accordance to the present Note. SPIE RAPPORT FINANCIER SEMESTRIEL

22 Significant events of the period NOTE 4. SIGNIFICANT EVENTS 4.1. ARIANE AND GALILEO PROJECTS FRENCH SEGMENTS ARIANE project In the context of the Ariane corporate project initiated in 2017, SPIE created on January 1st, 2018, a holding company SPIE France, subsidiary of SPIE Operations, destined to bring a functional autonomy to France, comparable to the autonomy of the companies in the other companies (Germany, Netherlands, United Kingdom, Switzerland). From the 1st of January of 2018, the SPIE France company, as head of the French activities of SPIE, has been given all necessary means to lead all French entities which has been legally attached to it on June 29th 2018 (the five French regional multitechnical entities, SPIE Citynetworks, SPIE Facilities, SPIE ICS and SPIE Nucléaire). This structure will ensure the development of the France segment in liaison with the Group and in synergy with the other countries. Thus SPIE Operations focuses on its consolidation and animation purposes for all European holding subsidiaries of the Group, including France. This organization answers the necessity to clearly balance the corporate functions on the whole Group in order to prepare the future development of the Group. GALILEO Project The Galileo project, in continuity to the Ariane project, materialized the merger as at June 30, 2018 of the five regional subsidiaries into one single entity named SPIE Industry & Tertiary. This latter comprises two business units. - One Industry business unit - One Tertiary business unit Their activities are respectively dedicated to industrial environments and their processes, as well as multi-technical solutions dedicated to buildings. With 6,850 employees located over 200 sites throughout the country, SPIE Industrie & Tertiaire designs and implements innovative and high-performance solutions to support the core business and life cycle of the investments of more than 3,000 customers. This project provides the France sector with a new national subsidiary in order to answer our customers expectations and the evolution of a market expected to be in growth. Consequently, a new CGU has been created: SPIE Industrie & Tertiaire (see Note 13) FINANCIAL DEBT REFINANCING AS AT JUNE 7th 2018 On June 7, 2018, as part of the refinancing of its debt, the Group repaid its Facility A and Revolving Credit Facility (RCF) financing lines, both initially due on On the same date, the Group signed a new Senior Credit Agreement, for a nominal amount of 1,200 million euros and a "Revolving Credit Facility "of 600 million euros, for which 270 million euros were drawdown as at June 30, 2018 (See Note 18.3). These facilities bear interest equal to EURIBOR plus a margin of 1.70% for the term loan and 1.30% for the revolving credit facility, compared with 2.38% and 2.28% respectively for the repaid facilities. SPIE RAPPORT FINANCIER SEMESTRIEL

23 4.3. EMPLOYEES SHAREHOLDERS PLAN From May 30th to June 18th 2018, a process of share capital increase had been launched, via the issuance of new shares reserved for current and former employees and eligible corporate officers who are members of a plan d épargne d entreprise (FCPE «SPIE Actionnariat 2018» as a Group savings plan) of the Company. The subscription rate reached 25% of the maximum authorized amount of million euros (see Note 22.2). Settlement-delivery of the shares took place on July 20th, SPIE RAPPORT FINANCIER SEMESTRIEL

24 Scope of consolidation NOTE 5. SCOPE OF CONSOLIDATION 5.1. CHANGES IN SCOPE Changes in scope of consolidation include: - companies acquired during the period; - companies acquired during previous periods, which did not have the operational resources necessary to prepare financial statements in line with Group standards within the time allocated. These companies are included in the Group's scope of consolidation once the financial information is available; - companies temporarily held as financial assets - newly created companies; - companies disposed of. Nil COMPANIES ACQUIRED AND CONSOLIDATED DURING THE PERIOD COMPANIES ACQUIRED IN THE PREVIOUS PERIOD AND CONSOLIDATED DURING THE PERIOD - On October 23, 2017, the Group acquired two shelter entities remained inactive during 2017 and which were renamed respectively BoDo Shared Services GmbH and SPIE Gastechnischer Service GmbH. These companies were part of a Partial Contribution of Assets from the Bohlen & Doyen GmbH company during the first half of On November 14th, 2017, SPIE Nederland acquired the Dutch company Alewijnse Retail. Based in Zaltbommel, Alewijnse Retail employs 20 people and generated revenue of approximately 6 million in The company specializes in the design and implementation of retail modification plans as well as maintenance management, and closely cooperates with its customers to develop tailor-made solutions. In October 2016, SPIE already acquired a business unit of the Alewijnse Group (Alewijnse Technisch Beheer), specialized in technical management of buildingrelated installations. The transferred counterpart stood at 2.7 million. - On December 4, 2017, SPIE Nederland acquired the Dutch company Inmeco. Founded in 1996, the company is specialized in commissioning, prevention, maintenance and repairing of industrial instrumentation devices. The company generated revenue of approximately 820 thousand in Inmeco employs four people. The transferred counterpart stood at 0.4 million. - On December 20th, 2017, SPIE ICS France acquired the French company S-Cube. Based in Vélizy, France, S-Cube is a company specialized in the design, the integration and the maintenance of digital infrastructure, with a strong focus on datacenter solutions and hyper convergence. S-Cube employs 42 people and generated revenue of approximately 47 million in The transferred counterpart stood at 25.5 million. SPIE RAPPORT FINANCIER SEMESTRIEL

25 COMPANIES ACQUIRED DURING THE PERIOD AND HELD AS FINANCIAL ASSETS - On April 27, 2018, SPIE Belgium acquired the Systemat group. Established in 1981 and active both in Belgium and Luxembourg, Systemat is a provider of IT solutions related to the management of ICT equipment, software and infrastructure. The company employs around 150 employees and forecasts revenue of approximately 70 million for the current fiscal year. The transferred counterpart stands at 14.5 million. - On May 23, 2018 SPIE Nucléaire acquired the Fluigetec company. Based in Pierrelatte, Fluigetec specializes in the installation, control and maintenance of gas distribution networks in industrial environments, with a particular knowhow in the nuclear sector and a leading expertise in inerting systems. The company employs 19 people and generated revenue close to 2 million in The transferred counterpart stands at 1.9 million NEWLY CREATED COMPANIES - The Group created on November 28, 2017 the SPIE Meppel B.V. company, located in the Netherlands. The company was consolidated during the first half of DISPOSED COMPANIES During the first half year 2018, the Group sold or disposed several entities which did not represent any strategic interest for itself. The operations are the following: - On January 9, 2018, the Group liquidated the SAG Finance BV company. Located in the Netherlands, the company was without significant activity since December On December 20, 2017, SPIE signed an agreement in order to sell its activities of SPIE Morocco to ENGIE. SPIE Morocco has more than 1,000 employees and generated in 2016 revenue of approximately 60 million. The final disposal has been concluded on March 2, Nil CHANGES IN CONSOLIDATION METHOD SPIE RAPPORT FINANCIER SEMESTRIEL

26 Segment information NOTE 6. SEGMENT INFORMATION Summarized information intended for strategic analysis by general management of the Group for decision-making purposes (the concept of chief operating decision-maker in accordance with IFRS 8) is based on revenue (as per management accounts) and EBITA indicators broken down by operating segment INFORMATION BY OPERATING SEGMENT Revenue (as per management accounts) represents the operational activities conducted by the Group's companies, while consolidating on a proportionate basis subsidiaries that have minority shareholders or using the equity method. EBITA, as per management accounts, is the Group operating result. It is calculated before amortization of allocated goodwill (brands, backlogs and customers). The margin is expressed as a percentage of revenue (as per management accounts). In millions of euros France Germany and Central Europe North- Western Europe Oil & Gas and Nuclear Holdings TOTAL January 1 to June 30, 2018 Revenue (as per management accounts) 1, , ,109.0 EBITA EBITA as a % of revenue (as per management accounts) 5.7% 4.2% 2.4% 7.9% n/a 4.8% January 1 to June 30, 2017 Restated Revenue (as per management accounts) 1, ,698.0 EBITA EBITA as a % of revenue (as per management accounts) 5.9% 4.6% 3.4% 8.8% n/a 5.5% Reconciliation between revenue (as per management accounts) and revenue under IFRS In millions of euros First Half 2017 Restated First Half 2018 Revenue (as per management accounts) 2, ,109.0 SONAID (a) (4.9) (1.0) Holding activities (b) Others (c) (10.7) 6.4 Revenue under IFRS 2, ,125.4 (a) SONAID is consolidated under the equity method in the Group s IFRS consolidated accounts and proportionally (55%) in the management accounts. (b) Non-Group revenue from SPIE Operations and other non-operational entities. (c) Re-invoicing of services provided by Group entities to non-managed joint ventures; Revenue that does not correspond to operational activity (essentially re-invoicing of expenses incurred on behalf of partners); Restatement of revenue from entities consolidated under the equity method, or not yet consolidated, or for which IFRS 5 restatement has been decided but is pending at the end of the period. SPIE RAPPORT FINANCIER SEMESTRIEL