Group 2012/2013 HALF-YEAR FINANCIAL REPORT. Contents /2013 Half-Year Operating Report p.1

Transcription

1 Group 2012/2013 HALF-YEAR FINANCIAL REPORT Contents /2013 Half-Year Operating Report p Consolidated financial statements at 30 September 2012 p Other information p Statutory Auditors Report on the 2012/2013 half-year financial information p.60

2 1. Half-Year Operating Report of the Management Board presented at the meeting of the Supervisory Board of Faiveley Transport of 21 November 2012 The consolidated financial statements were approved by the Management Board on 21 November 2012, and were presented to the Supervisory Board and approved at their meeting of 21 November The Group s functional and presentation currency is the Euro. Figures are expressed in thousands of Euros unless indicated otherwise. A. COMMENTS ON THE FIRST HALF OF 2012/2013 Group key results 2012/2013 HY1 2011/2012 HY1 2011/2012 FY Sales 461, , ,523 Profit from recurring operations 52,179 39,840 94,689 Operating profit 51,378 39,431 93,272 Profit from continuing operations 28,395 20,847 51,175 Net profit (Group share) 26,139 19,881 47,428 Share capital 14,190 13,942 14,187 Equity (Group share) 492, , ,143 Net financial debt 252, , ,358 Total assets 1,445,747 1,323,798 1,474,729 Sales order book ( millions) 1,680 1,614 1,690 Workforce end of period 5,516 5,135 5, Significant events during the first 6 months of the 2012/2013 financial year: To partly refinance the acquisition of US company Graham-White Manufacturing Co., finalised on 3 February 2012, and diversify its financing sources, on 12 April 2012 the Group finalised its first private placement bond issue in the US with two institutional investors, for a total of USD 75 million. This bond issue was made up of two tranches: one for USD 30 million, with a 10-year final maturity and redeemable between 2017 and 2022, and a USD 45 million bullet loan with a 10-year maturity. The average fixed interest is 4.91% per year. The Combined General Meeting of 14 September 2012 delegated authority to the Management Board to proceed with the allocation of free ordinary shares in the Company, either in existing shares or shares to be issued, including the waiver of the pre-emption right in relation to new shares. At 30 September 2012, the Management Board had not used this authority. 2012/2013 half-year report - 1

3 2. Half-year financial statements Order book At 30 September 2012, the order book totalled 1,680 million, a year-on-year increase of 4.1% and a decline of 0.6% during the first six months. On a like-for-like basis, the year-on-year increase was 2.1% and the decline was 1.3% during the first six months. Major contracts awarded to the Group during the half-year include: In France: - The project to entirely retrofit platform doors for 18 stations of the Lille Metro Line 1; - An additional order for air conditioning systems, brake components and access doors for 70 trains of the Paris RER, built by Alstom and Bombardier on behalf of RATP. In Germany: - An order for the braking systems of 90 ET430-type regional trains set to operate in the Frankfurt region and built by Alstom and Bombardier. In Morocco: - Access doors, interior doors and braking systems for 14 high speed trains built by Alstom for the Tangier Casablanca line. In Asia-Pacific: - A contract with Alstom for the access doors of 42 new trains for the Singapore metro; - In China, an order for access doors and air conditioning systems for 46 CRH1-250 high-speed trains built by Bombardier Sifang Transportation; - In Russia, the supply of braking systems and pantographs for Transmashholding s new EP20 type locomotives and a new order for air conditioning systems for the Moscow metro. Half-year sales (by destination region) 2012/2013 HY1 2011/2012 HY1 2011/2012 FY Europe 260, , ,978 Americas 76,596 40, ,263 Asia Pacific 119, , ,043 Rest of the world 3,630 1,449 6,239 GROUP TOTAL 461, , ,523 Overall, for the first half of 2012/2013, sales totalled million, an increase of 21.2% compared to the first half of 2011/2012, comprising growth of 11.1% on a like-for-like basis, a 3.9 % positive foreign exchange effect and a 6.2% positive group structure effect (integration of Graham-White). 2012/2013 half-year report - 2

4 On a like-for-like basis, sales grew in all geographic regions: Europe grew by 10% thanks to a favourable comparative basis, strong business activity in Italy, the delivery of equipment for SNCB s Brussels RER trains and the delivery of new trains for the London underground. France also reported growth and remains the Group s leading market with 15% of total Group sales. The Asia-Pacific region recorded growth of 8% on a constant foreign exchange basis, driven by a strong increase in deliveries to Russia. China, the Group s second market with 13% of total sales, experiences a recovery, notably with a significant increase in metro equipment deliveries. The Americas reported organic growth of 18% for the first half of the year, due to the ramp up in the delivery of Passenger projects and in spite of the slowdown in the freight segment since the 2nd quarter. Following the acquisition of Graham-White, the US now accounts for 11% of total Group sales. The Service activity continued to post steady, buoyant growth with a 14% increase on a like-for-like basis over the first six months. Original equipment activities achieved organic growth of 9% during the period. Sales by division 2012/2013 HY1 2011/2012 HY1 2011/2012 FY Energy & Comfort 23% 20% 19% Brakes & Safety 20% 27% 26% Access & Information 17% 18% 19% Services 40% 35% 36% The relative weight of the Services activity within the Group significantly increased following the acquisition of Graham-White (primarily Services) and thanks to a 14% organic growth recorded during the 1 st half. This activity now accounts for 40% of Group sales. In addition, within original equipment activities, the Energy & Comfort division experienced strong growth while the relative weight of Brakes & Safety declined, particularly due to the slowdown in the US freight market and a decrease in the number of locomotive deliveries to China. 2012/2013 half-year report - 3

5 Income statement 2012/2013 HY1 2011/2012 HY1 2011/2012 FY Sales 461, , ,523 EBITDA (*) as % of sales Profit from recurring operations as % of sales Operating profit (EBIT) as % of sales 59, % 52, % 51, % 46, % 39, % 39, % 108, % 94, % 93, % Net finance cost (7,517) (7,983) (15,185) Income tax (15,465) (10,602) (26,912) Profit from continuing operations as % of sales 28, % 20, % 51, % Net profit 28,395 20,847 51,175 Minority interests (2,256) (966) (3,747) Group share of net profit as % of sales 26, % 19, % 47, % Number of shares 14,190,405 13,952,249 14,012,090 Net earnings per share (*) Operating profit plus amortisation, depreciation and provision charges. - Operating profit The Group reports an operating profit of 51.4 million for the first half of 2012/2013 (11.1% of sales), compared to 39.4 million for the first half of 2011/2012 (10.4% of sales), resulting in a 0.7 percentage point increase in EBIT. Gross profit (sales less cost of sales) was 119 million (25.8% of sales), compared to million (27.7% of sales) in the previous financial year. 0.4 percentage points of the decline in gross margin was attributable to a more consistent allocation of certain expenses (between fixed costs and cost of sales). Excluding this effect, the 1.5 percentage point decline in gross margin was due to the ramp-up of certain major projects that involved significant start-up engineering costs and an unfavourable overall product and project mix. General, selling and administrative costs were 59 million in the first half of 2012/2013, accounting for 12.8% of sales, compared to 58.8 million, or 15.5% of sales in the first half of 2011/2012. This significant decline, as expressed as a percentage of sales, was due to successful administrative and general cost cutting efforts and the volume effect driven by sales growth. The Group s research and development costs, recognised as overheads, totalled 6.4 million in the first half of 2012/2013, being 1.4% of sales, compared to 5.8 million and 1.5% of sales in the first half of 2011/2012. Most of the railway business research and development effort came within engineering included in contracts. Other operating income and expenses represented a net expense of 1.5 million for the period to 30 September 2012, compared to a net expense of 1 million for the period to 30 September /2013 half-year report - 4

6 Consequently, profit from recurring operations was 52.2 million (11.3% of sales), compared to 39.8 million for the period to 30 September 2011 (10.5% of sales). Most other non-recurring income and expenses resulted from restructuring costs and gains and losses on the sale of property, plant and equipment and intangible asset items. Restructuring costs amounted to 0.7 million, compared to 0.3 million for the period to 30 September During the period, costs mainly related to the Chinese platform screens door subsidiary. - Net profit Consolidated net profit was 28.4 million, compared to 20.8 million for the half-year to 30 September Net profit was affected by the following items: The net finance cost decreased to 7.5 million, compared to 8 million for the period to 30 September This includes the net cost of financial debt of 5.5 million, a slightly favourable foreign exchange effect on financial instruments of 0.1 million, realised and unrealised foreign exchange losses of 0.5 million, bank guarantees fees of 0,5 million and various financial expenses of 0.3 million. The net cost of financial debt increased slightly compared to the previous financial year due to the financing of the Graham-White acquisition, partly offset by a reduction in euro debt (decrease in outstanding debt, decrease in market rates and improved hedges). The income tax charge was 15.5 million for the period to 30 September 2012, compared to 10.6 million for the period to 30 September The effective tax rate was 35.3% compared to 33.7% for the period to 30 September This 1.6% increase was due to a reduce contribution to Group profits of foreign subsidiaries operating in countries with the most favourable tax rates compared to the previous financial year, and to the substantial increase in taxation in France (a 5% hike in the corporation tax rate and application of the 3% tax on dividends). - Minority interests: Minority interests comprise shares held by minority shareholders in Shanghai Faiveley Railway Technology (51%-owned), URS Dolder AG (80%-owned), Nowe GmbH (75%- owned) and Amsted Rail LLC (67.5%-owned). - Groupe share of net profit Taking the above-mentioned items into account, the Group s consolidated net profit for the period was 26.1 million, compared to 19.9 million for the period to 30 September Net earnings per share was 1.84 compared to 1.42 for the period to 30 September The net earnings per share calculation takes account of the deduction of the 423,747 treasury shares held by Faiveley Transport at 30 September 2012, compared to 452,462 shares at 30 September /2013 half-year report - 5

7 Financial position - Consolidated cash flow statement 2012/2013 HY1 2011/2012 HY1 2011/2012 FY Net profit 28,395 20,847 51,175 + Movements in amortisation, depreciation and provision charges 10,338 3,898 18,165 Self-financing capacity 38,733 24,745 69,340 + Change in WCR (59,009) (58,063) (4,030) Net cash from /(used in) operating activities (20,276) (33,318) 65,310 Purchase of PPE and intangible assets (8,659) (8,787) (16,920) Movement in other financial assets 695 1, Net cash from (used in) acquisitions/sales of subsidiaries - - (77,608) Net cash used in investing activities (7,964) (7,554) (94,324) Share capital increase Sale (purchase) of treasury shares Change in share and merger premium Other movements (cash flow hedges) 524 (1,493) (104) Cash dividends paid (12,194) (18 094) (18,094) Movement in loans (23,864) (809) 57,707 Net cash used in financing activities (35,418) (20,324) 40,441 Net foreign exchange difference (237) 857) (2,149) 1,169 Impact of increase/(decrease) in value of derivates 2,613 2,197 1,516 Cash and cash equivalents at start of period 206, , ,711 Cash and cash equivalents at end of period 145, , ,823 Net cash used in operating activities was 20.3 million, a significant improvement compared to the first half 2011/2012. During the first half of the year, this net cash from operating activities was particularly affected by the seasonal reduction in the receivable deconsolidation programme, which had a 26.1 million negative impact on the period. Excluding this seasonal movement, net cash used in operating activities would have been 5.8 million compared to 19.7 million in the previous period. This improvement was primarily due to a 14 million increase in the self-financing capacity compared to the previous period. The change in working capital requirement during the period, excluding the receivable deconsolidation programme, was an increase of 35.7 million, mainly attributable to: A 23.3 million increase in inventories, to adjust inventory levels in anticipation of the activity volumes and deliveries expected in the second half; A 7.5 million increase in work-in-progress on projects, which includes engineering activity on new train platforms awarded to the Group over the last two years, which have not yet entered the delivery phase; A 23.4 million decline in trade receivables and customer prepayments at the end of September 2012; A 3 million increase in other assets, primarily comprising tax assets and deferment of certain charges; A 10.9 million decrease in trade payables; 2012/2013 half-year report - 6

8 A 14.3 million reduction in other liabilities, primarily due to lower tax and social contribution liabilities than at 31 March Net cash used in financing activities increased slightly to 8.0 million, compared to 7.6 million in the previous 2011/2012 half year. Cash flow from financing activities for the period primarily included the 12.2 million dividend distribution and 23.9 million in financial debt repayments. Overall, cash and cash equivalents declined from million at the end of March to million at the end of September At 30 September 2012, the Group s net financial debt was 252 million, compared to 213 million at 31 March From a financial point of view, Group equity includes treasury shares, which are held for transfer as part of the share purchase or subscription option plans. The exercise of share options (423,747 at the end of September 2012) would result in an increase of 17 million in the Group s cash and cash equivalents. The value of treasury shares not allocated amounted to 7.6 million at 30 September 2012 share price (including treasury shares held as part of the liquidity contract). After restatement for treasury shares, the Group s net adjusted financial debt was 235 million at the end of September Summary balance sheet 2012/2013 HY1 2011/2012 FY Goodwill 650, ,981 Non-current assets 115, ,752 Deferred tax assets 42,177 43,598 Current assets 487, ,151 Cash and cash equivalents 150, ,247 Total ASSETS 1,445,747 1,474,729 Equity 526, ,145 Current and non-current provisions 115, ,566 Deferred tax liabilities 25,338 22,090 Current and non-current financial debt 427, ,285 Other current liabilities 350, ,643 Total EQUITY and LIABILITIES 1,445,747 1,474,729 Goodwill increased by 1.5 million. This was due to the foreign exchange difference measured on Ellcon National, Amsted Rail and Graham White Manufacturing Co. s goodwill (valued in USD), for 3.5 million, the restatement of Graham White s goodwill during the allocation period, for 0.5 million (USD 0.7 million) and the restatement of Nowe GmbH s goodwill following the discounting of the put option held by minority interests, for a negative 2.5 million. 2012/2013 half-year report - 7

9 Non-current assets increased by 0.7 million, primarily due to: million in non-current asset purchases; million in amortisation and depreciation charges; million in non-current asset disposals; million negative restatement of Graham-White s opening goodwill during the allocation year; million in foreign exchange differences on opening balances measured on the basis of existing non-current assets at 1 April 2012; Deferred tax assets decreased by 1.4 million compared to 31 March Current assets increased by 29.9 million during the period, primarily relating to inventories, which totalled million at 30 September 2012, compared to 144 million at 31 March This increase in inventory levels was due to the significant business volume expected in the second half of the year. Equity totalled million, a 21.7 million increase during the period. Provisions for liabilities and charges decreased by 0.9 million to million at 30 September 2012, compared to million at 31 March Financial liabilities posted to the balance sheet (before adding back cash and marketable securities) decreased by 20.6 million during the period. This reduction was primarily due to: - the repayment of the senior debt and other borrowings for 21.4 million; - the setup of the private placement bond issue in the US for 57.8 million (USD 75 million); - the 59 million net decline in drawdowns on credit facilities ( 94 million repaid and 35 million in new drawdowns); - a 0.4 million increase in overdrafts and current accounts; - a 1.3 decrease in the fair value of liability derivatives; - the valuation of the USD-denominated loan, which increased by 0.8 million, given the USD/EUR rate at 30 September Current liabilities totalled million at 30 September 2012, compared to million at 31 March This 32.4 million reduction can be analysed as follows: - a 7.9 million decrease in customer prepayments; - a 19.7 million decrease in trade payables and tax and social contribution liabilities; - a 4.8 million decrease in other operating liabilities. 2012/2013 half-year report - 8

10 B. OUTLOOK FOR THE SECOND HALF OF 2012/ Sales and net profit The Group is maintaining its objective of sales growth over the full financial year, with modest organic growth and the contribution of the acquisition of Graham-White. Europe should report sales growth over the full financial year, with a continued good level of deliveries. In North America, after a strong start to the year, the US freight car market is showing signs of slowing down, with an estimated 40,000 to 45,000 new freight cars on an annualised basis in the second half of the year (compared to initial forecasts of 53,000 for the year), while the locomotive market remains stable at approximately 1,200 locomotives per year. In China, the Group has been selected to supply braking systems for the prototypes of two new high-speed platforms, CRH-3A and CRH-3G, built by the Chinese manufacturers Tangshan Railway Corporation (TRC) and Changchun Railway Corporation (CRC), respectively. These trains will have speeds of 250 km/h and are to be tested for approximately one year before receiving certification from regulatory authorities; production orders may be placed after they have been certified. More generally, the effects of the new investment plans in China will probably not be felt before 2013/2014. In Russia, the Group should benefit from buoyant growth in its projects. The Group is maintaining its objective of improved profitability over the 2012/2013 financial year. 2. Cash generation In the second half of the year, the Group is continuing to take steps to reduce costs, control capital expenditure and reduce the WCR, particularly in relation to inventories and the collection of trade receivables. 3. Description of major risks and uncertainties for the next six months With an order book of 1,680 million at the end of September 2012, the Group has the advantage of very good visibility on business activity for the next six months. The main short term risks relate to customers potential postponement of delivery schedules in relation to various programmes and a more significant slowdown in activities with a short business cycle, such as the US freight car market. 2012/2013 half-year report - 9

11 C. OTHER INFORMATION 1. Risk factors Financial risks (foreign exchange, credit, interest rate and liquidity risks) and their management are exposed in Note 13 to the condensed consolidated financial statements at 30 September 2012 and in Note 14 to the consolidated financial statements at 31 March Other risk factors are exposed in the 2011/2012 Annual Report and Reference Document. No other significant change occurred during the first half of 2012/ Major related party transactions At 30 September 2012, the nature of transactions with related parties, proportionally consolidated and equity-accounted companies did not vary from the description provided in the notes to the consolidated financial statements at 31 March Details of transactions with related parties are provided in note E.26 to the consolidated financial statements. 2012/2013 half-year report - 10

12 2. Faiveley Transport Group consolidated financial statements at 30 September 2012 (IFRS) 2.1 Consolidated Balance Sheet 2.2 Condensed consolidated income statement 2.3 Statement of comprehensive income 2.4 Condensed consolidated cash flow statement 2.5 Consolidated statement of changes in equity 2.6 Notes to the consolidated financial statements 2012/2013 half-year report - 11

13 2 Faiveley Transport Group consolidated financial statements at 30 September 2012 (IFRS Gaap) 2.1 Consolidated Balance Sheet 30 September March 2012 ASSETS Notes Net Net ( thousands) Subscribed uncalled share capital (I) Goodwill E Intangible assets E.2 Other Property, plant and equipment E.3 Land Buildings Plant and machinery Other Financial investments E.4 Shareholdings in unconsolidated subsidiaries Shareholdings in associates - - Other non-current financial investments Deferred tax assets TOTAL NON-CURRENT ASSETS (II) Inventories E Work-in-progress on long term contracts E Advances and prepayments received Trade receivables E Other current assets E Taxation receivable Current financial assets E Short-term investments E Cash E TOTAL CURRENT ASSETS (III) TOTAL ASSETS (I + II + III) The attached notes are an integral part of the consolidated financial statements. 2012/2013 Half-Year Report - 12

14 ( thousands) Notes 30 September March 2012 SHAREHOLDERS' EQUITY Share capital Share premium Translation differences (198) Consolidated reserves Net profit for the period EQUITY ATTRIBUTABLE TO OWNERS OF PARENT COMPANY EQUITY MINORITY INTERESTS Share of subsidiaries equity Share of subsidiaries profit for the period TOTAL MINORITY INTERESTS TOTAL CONSOLIDATED EQUITY (I) E Provisions for non-current liabilities and charges E.11.1 & Deferred tax liabilities Non-current borrowings and financial debt E TOTAL NON-CURRENT LIABILITIES (II) Current provisions for liabilities and charges E Current borrowings and financial debt E Advances and prepayments received Current liabilities E14 E Tax payable TOTAL CURRENT LIABILITIES (III) TOTAL EQUITY AND LIABILITIES (I + II + III) The attached notes are an integral part of the consolidated financial statements. 2012/2013 Half-Year Report - 13

15 2.2 Condensed consolidated income statement ( thousands) Half - Year 2011/2012 Notes 30 September September 2011 FY SALES E Cost of Sales E.18 ( ) ( ) ( ) GROSS PROFIT as % of Sales 25,8% 27,7% 26,0% Administrative costs (32 782) (33 903) (66 607) Sales and marketing costs (26 186) (24 914) (52 010) Research and development costs (6 402) (5 756) (11 111) Other operating income E Other operating costs E.19 (2 484) (1 882) (12 071) PROFIT FROM RECURRING OPERATIONS as % of Sales 11,3% 10,5% 10,5% Restructuring costs E.20 (693) (322) (1 213) Gain/(Loss) on disposal of non current assets E.20 (108) (87) (204) OPERATING PROFIT as % of Sales 11,1% 10,4% 10,4% Amortisation, depreciation and provision charges included in operating profit Operating profit before amortisation and depreciation charges Net cost of financial debt (5 525) (4 884) (10 700) Other finance income Other finance costs (8 485) (10 237) (18 815) NET FINANCE COST E.21 (7 517) (7 983) (15 185) PROFIT BEFORE TAX Income tax E.22 (15 465) (10 602) (26 912) PROFIT FOR THE YEAR FROM CONTINUING OPERATIONS Profit/(loss) for the period of discontinued activities E.23 PROFIT FOR THE YEAR FROM CONSOLIDATED ENTITIES Minority interests NET PROFIT - GROUP SHARE as % of Sales 5,7% 5,2% 5,3% Number of shares Earnings per share, in Earnings per share 1,84 1,42 3,38 Diluted earnings per share 1,84 1,42 3,38 Net earnings per share, in - continuing operations: Earnings per share 1,84 1,42 3,38 Diluted earnings per share 1,84 1,42 3,38 Net earnings per share, in - discontinued operations: Earnings per share 0,00 0,00 0,00 Diluted earnings per share 0,00 0,00 0,00 The calculation of net earnings per share takes account of the deduction of all treasury shares held by Faiveley Transport, being a total of 423,747 at 30 September 2012, 452,462 at 30 September 2011 and 427,528 at 31 March 'The attached notes are an integral part of the consolidated financial statements. 2012/2013 Half-Year Report - 14

16 2.3 Statement of comprehensive income ( thousands) Half - Year 2011/ September September 2011 FY Net profit of the year Translation adjustment Financial assets held for sale Gains (losses) on financial hedging instruments (1 071) (2 351) (3 064) Actuarial differences Share of profit and losses directly recognised in the shareholders' equity of equity-accounted companies Movement in non-current asset revaluation reserve Other adjustments (258) (473) (210) Income tax on items of other comprehensive income Items of other comprehensive income, after tax Total comprehensive income of which: - Group share attributable to minority interests At 30 September 2011, stock option plans reserved for employees were classified under items of other comprehensive income. A separate line was created in the consolidated statement of changes in equity at 31 March 2012 and the 2011/2012 financial year was restated accordingly. 2012/2013 Half-Year Report - 15

17 2.4 Consolidated cash flow statement ( thousands) Notes Half-Year Half-Year 2011/ / /2012 FY Cash flow from operating activities Net profit for the period - Group share Minority interests Adjustments for non-cash items - Depreciation and amortisation charges Asset impairment (including goodwill) Net movements in provisions (3 349) (4 672) Deferred tax (2 849) - Net loss/(gain) on asset disposal Grant income (202) (157) (526) - Share of profit/(loss) from associates Dilution profit Self-financing capacity Changes in working capital requirement (59 009) (58 063) (4 030) Decrease (+) increase (-) of inventories (20 878) (25 215) (1 417) Decrease (+) increase (-) of trade and other receivables (8 643) (4 802) Increase (+) decrease (-) of trade and other payables (29 222) (23 016) Increase (+) decrease (-) of income tax (266) (5 030) (6 551) Net cash generated from operating activities (20 276) (33 318) Cash flow from investing activities Purchase of intangible assets (2 965) (3 407) (7 007) Purchase of property, plant and equipment (5 694) (5 458) (10 102) Proceeds from grants Proceeds from disposal of PPE and intangible assets Purchase of financial assets (383) (339) (1 001) Proceeds from sale of financial assets Cash and cash equivalent of acquired subsidiaries 0 0 (77 608) Cash and cash equivalent of disposed subsidiaries Net cash used in investing activities (7 964) (7 554) (94 324) Proceeds from new share issues Buyback of treasury shares Movement in share and merger premiums Other movements in equity (cash-flow hedge) 524 (1 493) (104) Cash dividends paid to parent company shareholders (12 062) (16 738) (16 738) Cash dividends paid to minority interests (132) (1 356) (1 356) Proceeds from new borrowings Repayment of borrowings ( ) (26 279) (43 711) Net cash generated from/(used in) financing activities (35 418) (20 324) Net foreign exchange difference (237) (2 149) Impact of increase/(decrease) in value of derivates Net increase/(decrease) in total cash and cash equivalents (61 282) (61 148) Cash and cash equivalents at start of period Cash and cash equivalents at end of the year E /2013 Half-Year Report - 16

18 2.5 Consolidated statements of changes in equity ( thousands) Share Share Translation Profit for Total Minority capital premium Reserves differences the period Group share interests TOTAL Balance at 31 March (3 396) Allocation of 2010/2011 net profit (75 683) 0 0 Dividends paid (16 738) (16 738) (1 356) (18 094) Issue of shares (stock options) Treasury shares (477) (477) (477) Stock option plans reserved for employees (value of services provided by staff) Changes in Group structure 0 0 Net profit for the period Items of other comprehensive income (2 824) (1 694) Total income and expense recognised 0 0 (2 824) Balance at 30 September (2 266) Balance at 31 March (3 396) Allocation of 2010/2011 net profit (75 683) 0 0 Dividends paid (16 738) (16 738) (1 356) (18 094) Capital increase Issue of shares (stock options) Treasury shares (5) (319) (324) (324) Stock option plans reserved for employees (value of services provided by staff) Changes in Group structure Net profit for the period Items of other comprehensive income (2 208) Total income and expense recognised 0 0 (2 208) Balance at 31 March (198) Allocation of 2011/2012 net profit (47 428) 0 0 Dividends paid (12 062) (12 062) (132) (12 194) Capital increase 0 0 Issue of shares (stock options) Treasury shares Stock option plans reserved for employees (value of services provided by staff) Changes in Group structure 0 (109) (109) Net profit for the period Items of other comprehensive income (932) Total income and expense recognised 0 0 (932) Balance at 30 September At 30 September 2012, Faiveley Transport held 423,747 of its own shares, being 2,90 % of share capital. 2012/2013 Half-Year Report - 17

19 2.6 Notes to the half-year consolidated financial statements A. GENERAL INFORMATION Faiveley Transport is a French limited liability company (société anonyme) with a Management Board and a Supervisory Board. Its registered office is located at: Immeuble le Delage, Hall Parc, Bâtiment 6A 3 rue du 19 mars GENNEVILLIERS The half-year financial statements were approved by the Management Board on 21 November They were presented to and reviewed by the Supervisory Board at its meeting on 21 November The financial statements have been prepared on the basis that the Faiveley Transport Group is a going concern. The Group s functional and presentation currency is the Euro. Figures are expressed in thousands of Euro unless indicated otherwise. B. HIGHLIGHTS To partly refinance the acquisition of US company Graham-White Manufacturing Co., finalised on 3 February 2012, and diversify its financing sources, on 12 April 2012 the Group finalised its first private placement bond issue in the US with two institutional investors, for a total of USD 75 million. This bond issue was made up of two tranches: one for USD 30 million, with a 10-year final maturity and redeemable between 2017 and 2022, and a USD 45 million bullet loan with a 10-year maturity. The average fixed interest rate is 4.91% per year. 2012/2013 half-year report - 18

20 C. CONSOLIDATION PRINCIPLES AND METHODS 1. Basis of preparation The Group prepared its full-year consolidated financial statements at 31 March 2012 in accordance with IFRS (International Financial Reporting Standards), as adopted by the European Union. The condensed half-year consolidated financial statements at 30 September 2012 were prepared in accordance with IAS 34 Interim financial reporting, which allows the presentation of selected notes. The condensed consolidated financial statements thus must be read in conjunction with the Group s consolidated financial statements for the financial year ended 31 March Changes in accounting policies and presentation: The half-year financial statements were prepared in accordance with the same accounting principles and policies as were applied by the Group to its financial statements for the financial year ended 31 March Changes in accounting policies due to new standards and interpretations, revised or amended, of mandatory application for half-year periods and financial years starting on or after 1 April 2012 The Group s financial statements were not affected by new standards or interpretations, revised or amended, of mandatory application on or after 1 April 2012 in the European Union. New standards and interpretation of mandatory application - Transfers of financial assets (IFRS 7). New standards and interpretations whose application is not yet mandatory The following standards have been published by the IASB but are pending approval by the European Union: - Presentation of items of other comprehensive income (amendments to IAS 1); - Employee benefits (IAS 19 revised); - Separate financial statements (IAS 27 amended); - Investments in associates and joint ventures (IAS 28 revised); - Financial instruments: disclosures (amendments to IFRS 7); - Financial instruments: classification and measurement of financial assets (IFRS 9); - Consolidated financial statements (IFRS 10); - Joint arrangements (IFRS 11); - Disclosure of interests in other entities (IFRS 12); - Fair value measurement (IFRS 13). The Group considers that the application of these provisions cannot be determined with sufficient accuracy at this stage. 2012/2013 half-year report - 19

21 2. Balance sheet date All companies are consolidated on the basis of financial statements at 30 September Translation exchange rates used in the consolidation Closing rate Average rate 30 September September March September September March 2012 Thai Bath Swedish Krona Czech Koruna US Dollar Australian Dollar Hong Kong Dollar Singapore Dollar Taiwan Dollar Swiss Franc Pound Sterling Iranian Rial Brazilian Real Russian Rouble Indian Rupee Korean Won Chinese Yuan Polish Zloty /2013 half-year report - 20

22 D. CHANGES IN CONSOLIDATION SCOPE 1. Newly-created companies Nil. 2. New acquisitions Nil. 3. Disposals Nil. 4. Movements in goodwill during the allocation period The value of assets contributed by Graham White Manufacturing Co., following the acquisition of the company by the Group in February 2012, was restated and offset against goodwill. This restatement resulted in an increase of USD 0.7 million ( 0.5 million) in the opening goodwill balance. 2012/2013 half-year report - 21

23 E. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND ACCOMPANYING TABLES ( THOUSANDS) 1. Goodwill To expand its product range or strengthen its positions its key geographic regions, the Faiveley Transport Group has acquired specialised companies. The main acquisitions include the Sab Wabco Group (acquired in 2004), which focuses on brake products and couplers, Faiveley Transport NSF (acquired in 2005), which specialises in air conditioning equipment, Nowe GmbH (acquired in 2008), which designs sanding systems, Shijiazhuang Jiaxiang Precision Machinery Co. Ltd (of which 50% was acquired in 2007), which develops and manufactures compressors, Ellcon National Inc. (acquired in 2008), which specialises in brake components for the rail freight market, the purchase of Carbone Lorraine s sintered brake pads activity on 1 April 2008, Faiveley transport Schweiz AG (acquired in February 2011), a company that produces electrical heating devices for the railway industry and Graham-White Manufacturing Co. (acquired in 2012), which manufactures compressed air drying technologies and brake components for the locomotive and railway transit market. Following these acquisitions, the Group allocated goodwill and intangible assets with an indefinete useful life to each of the relevant legal entities or group of companies (which made up the Sab-Wabco Group). A Cash Generating Unit therefore corresponds to an acquired company or group of companies. The allocation of these goodwill amounts has not been subsequently amended. In addition to these acquisitions, additional goodwill was recognised in the financial statements at the time of Faiveley Transport s (formerly Faiveley S.A.) acquisition of the entire minority shareholdings (both direct and indirect) in its subsidiary, Faiveley Transport. This goodwill is subject to an annual impairment test based on the Group s consolidated financial statements. At 30 September 2012, goodwill was analysed as follows: Gross Accumulated impairment Net 30 September 2012 Net 31 March 2012 Faiveley Transport minority interests 265, , ,778 Sab Wabco group 234, , ,004 Graham-White Manufacturing Co. 76,060-76,060 73,087 Amsted Rail-Faiveley LLC / Ellcon National Inc. 34,847-34,847 33,736 Faiveley Transport NSF 10,057-10,057 10,057 Nowe GmbH 5,064-5,064 7,581 Faiveley Transport Tours (1) 6,061-6,061 6,061 Faiveley Transport Schweiz AG (formerly Urs Dolder AG) 2,264-2,264 2,264 Faiveley Transport Gennevilliers 13,470-13,470 13,470 Other 2,943-2,943 2,943 Total 650, , ,981 (1) Goodwill recognised as part of the acquisition of the Espas Group. 2012/2013 half-year report - 22

24 Changes during the period: Gross 1 April 2012 Restatement of opening goodwill Acquisitions Disposals Impairmen t test Other movements Gross 30 Sept Faiveley Transport minority interests 265, ,778 Sab Wabco group 234, ,004 Graham-White Manufacturing Co. Amsted Rail-Faiveley LLC / Ellcon National Inc 73, ,426 (1) 76,060 33, ,111 (1) 34,847 Faiveley Transport NSF 10, ,057 Nowe GmbH 7, (2,517) (2) 5,064 Faiveley Transport Tours 6, ,061 Faiveley Transport Schweiz AG (formerly Urs Dolder AG) 2, ,264 Faiveley Transport Gennevilliers 13, ,470 Other 2, ,943 Total 648, , ,548 (1) These movements relate to the foreign exchange difference on goodwill recognised in US dollars: Graham-White Manufacturing Co. (USD 97,615 thousand) and Amsted Rail-Faiveley LLC / Ellcon National Inc. (USD 45,057 thousand). (2) Restatement of Nowe GmbH s goodwill following discounting of the put option held by minority interests. Goodwill is tested on an annual basis at the 31 March balance sheet date. Considering forecast information at our disposal at 30 September 2012, no impairment indication was identified. As a result, no impairment test was carried out at this balance sheet date. 2012/2013 half-year report - 23

25 2. Other intangible assets Gross Accumulated amortisation Net 30 Sept Net 31 March 2012 Research costs 21,671 11,453 10,218 9,498 Patents, trademarks and licences 24,637 19,686 4,951 3,189 Business goodwill 2, ,427 2,561 Other intangible assets 23, ,399 24,809 Total 72,547 31,552 40,995 40,057 At 30 September 2012, intangible assets are broken down as follows: - Research costs: only include development costs incurred as part of research programmes and that comply with the IFRS capitalisation criteria. These costs are amortised over a maximum of 3 years. - Patents, trademarks and licences: this heading primarily includes patents acquired on the takeover of Carbone Lorraine s sintered brake business ( 4,000 thousand), and computer software amortised over a maximum of 5 years. - Business goodwill: primarily comprises the client list taken over through the acquisition of Graham-White Manufacturing Co., valued at a gross 2.5 million (i.e. USD 3.3 million). - Other intangible assets: primarily includes intangible assets identified and measured (in particular, sales agency agreements) as part of the creation of the Amsted Rail-Faiveley LLC joint venture for an amount of 8.9 million (USD 11.5 million) and costs already incurred of 14.2 million and not yet commissioned, corresponding to the rollout of the Moving Forward project, a significant IT system integration programme, launched in 2007, whose objective is to optimise our organisations, industrial processes, equipment and the sharing of technical data within the Faiveley Transport Group. Changes during the period Research costs Patents, trademarks and licences Business goodwill Other intangible assets TOTAL Gross 1 April ,005 21,963 2,561 25,103 69,632 Change in group structure (505) (505) Acquisitions 1,674 (1) 189 1,102 2,965 Disposals - Other movements (8) 2, (2,048) 455 (2) Gross 30 September ,671 (3) 24,637 2,587 23,652 72,547 Accumulated amortisation at 1 April 2012 (10,507) (18,774) - (294) (29,575) Change in group structure - Charges to provision (947) (859) (122) (10) (1,938) Reversal of provision - Other movements 1 (53) (38) 51 (39) (2) Accumulated amortisation at 30 September 2012 (11,453) (19,686) (160) (253) (31,552) Net 30 September ,218 4,951 2,427 23,399 40,995 (1) Development costs capitalised during the period. (2) Including net impact of exchange differences of 402 thousand. (3) Of which allocated acquisition goodwill: Development costs: 962 thousand 2012/2013 half-year report - 24

26 3. Property, plant and equipment Gross Accumulated depreciation Net 30 Sept Net 31 March 2012 Land 6, ,877 5,848 Buildings 81,590 56,632 24,958 25,662 Plant and machinery 149, ,831 26,597 27,436 Other 40,655 32,658 7,997 8,520 Under construction 3,415-3,415 1,446 Total 281, ,361 68,844 68,912 Changes during the period: Land Buildings Plant and machinery Other Under construction Total Gross 1 April ,086 80, ,405 39,593 1, ,092 Change in group structure Acquisitions , ,207 5,551 Disposals - - (137) (157) (8) (302) Other movements , (230) 2,864 (1) Gross 30 Sept ,117 81, ,428 40,655 3, ,205 Accumulated depreciation at 1 April 2012 (238) (54,900) (117,969) (31,073) - (204,180) Change in group structure Charges to provision (2) (1,566) (3,263) (1,549) - (6,380) Reversal of provision Other movements - (166) (1,654) (174) - (1,994),(1) Accumulated depreciation at 30 Sept (240) (56,632) (122,831) (32,658) - (212,361) Net 30 Sept ,877 24,958 26,597 7,997 3,415 68,844 (1) Including 882 thousand related to exchange differences 2012/2013 half-year report - 25

27 Non-current assets acquired under finance leases The following table provides an analysis of non-current assets acquired under finance leases: Gross Depreciation Net 30 Sept Net 31 March 2012 Software licences 1,079-1,079 1,079 Land 1,088-1,088 1,088 Buildings 8,353 5,793 2,560 2,620 Plant and machinery Total 10,941 6,208 4,733 4,799 Finance leases Finance lease contracts relate to property assets and technical equipment. The future minimum lease payments on non-cancellable leases are shown in the table below: 30 September /2012 Less than 1 year to 5 years More than 5 years Total future lease payments 1,900 2,018 Less financial interest (156) (172) Financial liabilities attached to finance leases 1,744 1, /2013 half-year report - 26

28 4. Non-current financial assets Gross Provisions Net 30 Sept Net 31 March 2012 Investments in unconsolidated subsidiaries (1) Investments in associates Other financial investments 5, ,382 5,538 Total 6, ,627 5,783 (1) Full details of unconsolidated subsidiaries are provided in Note G.2. Changes during the period Investments in unconsolidated subsidiaries Investments in associates Other financial investments TOTAL Gross 1 April ,563 6,485 Change in group structure Acquisitions Disposals - - (196) (196) Other movements (1) - - (74) (74) Gross 30 September ,527 6,449 Provisions at 1 April 2012 (677) - (25) (702) Change in group structure Charges to provision Reversal of provision Other movements - - (120) (120) Provisions at 30 September 2012 (677) - (145) (822) Net 30 September ,382 5,627 (1) Including (194) thousand in respect of translation differences and (120) thousand in respect of reclassifications Maturity date of other financial investments: 1 to 5 years More than 5 years TOTAL 30 Sept TOTAL 31 March 2012 Other non-current investments Loans ,009 Guaranteed deposits and securities 1, ,326 1,134 Other financial receivables (1) 2, ,215 3,266 Total 4,419 1,108 5,527 5,563 (1) Including receivable in respect of sale of land to Cyrela (Brazil): 2,774 thousand at 30 September 2012 and 2,840 thousand at 31 March /2013 half-year report - 27

29 5. Inventories Inventories and work-in-progress include raw materials, work-in progress and finished products. They are stated at the lower of production cost and estimated net realisable value. Raw materials are measured using the weighted average cost method. Work-in-progress and finished products are measured at their production cost. The cost of inventories includes direct raw material costs and, where relevant, direct labour costs as well as overheads incurred in bringing the inventories to their present location and condition. Writedowns are recorded to take into account the risk of obsolescence. Gross Provisions Net 30 Sept Net 31 March 2012 Raw materials 115,841 13, ,620 88,040 Work-in-progress 28, ,883 24,279 Finished products 31,339 1,373 29,966 26,133 Merchandise 7,872 1,014 6,858 5,548 Total 183,779 16, , ,000 Movements in provisions during the period: Provisions at 1 April 2012 Change in group structure Charges to provisions Reversals provisions used Reversals provisions not used Other movements (1) Provisions at 30 Sept Raw materials 14,096-1,403 (1,856) (713) ,221 Work-in-progress (93) Finished products 1, (97) (610) (128) 1,373 Merchandise (168) (26) 21 1,014 Total 17, ,228 (2,121) (1,442) ,452 (1) Including 185 thousand in respect of translation differences During the first half of the 2012/2013 financial year, old inventories and inventories that had become totally obsolete were scrapped. Provisions of 73.4% of the value of these inventories had previously been raised. The impact on the income statement for the period ended 30 September 2012 was a loss of 0.9 million. 6. Work-in-progress on long-term contracts At 30 September 2012, net work-in-progress on projects was valued at 98 million, compared to 91 million at 31 March These primarily include engineering costs on long-term contracts. At each balance sheet date, the Group assesses their recoverable value. In the event of a loss-making contract, writedown is recognised as a reduction of contracts in progress. Gross work-in-progress on projects was 105 million at 30 September 2012, compared to 98 million at 31 March /2013 half-year report - 28