FIRST HALF 2011 SNCF GROUP HALF-YEAR ACTIVITY REPORT. IFRS In millions of euros

Transcription

1 FIRST HALF 2011 SNCF GROUP HALF-YEAR ACTIVITY REPORT IFRS In millions of euros

2 Contents SNCF Group in Major events in the first half of Key figures Subsequent events... 4 Group results and financial position General observations on Group results Activity and results by division Intangible asset and PP&E investments and net debt Consolidated statement of financial position and ratios Financial relations with the French State, Réseau Ferré de France and local authorities Employee matters challenges and outlook Corporate governance Board of Directors Management team SNCF Group in Major events in the first half of Entry into force of the Trains d Equilibre du Territoire The Trains d Equilibre du Territoire (TET) (balancing of regional train service) agreement entered into force on 1 January The agreement, signed on 13 December 2010, covers the Intercités, Téoz and Lunéa trains, with the exception of special trains and auto-trains. Results are monitored under the new Intercités activity, the trade name for all the Trains d Equilibre du Territoire. Initially broken down between the Intercités and Standard rolling stock (Corail, Elipsos) CGUs of the respective SNCF Proximités and SNCF Voyages divisions, the assets covered by the agreement have now been combined into a single CGU within the SNCF Proximités division. The Group s segment reporting has been adapted accordingly so that results for the Téoz and Lunéa trains, with the exception of special trains and autotrains, are reported with the SNCF Proximités results rather than those of SNCF Voyages SeaFrance At the end of September 2010, the Group subsidiary, SNCF Participations, announced the planned sale of its subsidiary SeaFrance, specialising in cross-channel freight between France and the UK. SeaFrance has been under the protection of the Trade Courts through collective proceedings since 28 April The observation period that was scheduled to end on 28 April 2011 was extended by six months, while the recapitalisation request submitted to Brussels in February 2011 is following its course. On 22 June 2011, the European Commission began an extensive investigation on the SeaFrance restructuring to determine whether the recapitalisation plan was compatible with the European Union regulations covering State aid. As was the case for the year ended 31 December 2010, the financial figures for this subsidiary for the period ended 30 June 2011 have been aggregated under Net profit/(loss) from discontinued operations in the income statement and Assets classified as held for sale and Liabilities associated with assets classified as held for sale in the balance sheet. The comparative income statement has been adjusted accordingly (see Note 1.4 to the condensed consolidated financial statements). SNCF Group consolidated financial statements First half

3 1.3. Creation of the new Systra group The first half of 2011 saw the materialization of the draft agreement signed on 28 October 2010 between SNCF and RATP to develop transport engineering in all the components of their common subsidiary Systra. Following the first phase completed on 30 June 2011, SNCF and RATP transferred exclusive control and 49% of their engineering subsidiaries, respectively Inexia and Xelis, to Systra. Initially under joint control, Systra is now subject to the significant influence of the SNCF group following its governance review. As at 30 June 2011, the Systra and Inexia subsidiaries have changed from proportional and full consolidation, respectively, to the equity method. The Xelis entity falls within the equity method scope. The impacts of the operation on the condensed consolidated half-year financial statements are described in Note 3.1. The impacts on the scope are described in Note 20. The remaining 51% stake held by SNCF in Inexia and by the RATP in Xelis should be transferred by no later than 31 December The transfer should not generate any subsequent disposal gain or loss in the consolidated financial statements. Only the percentages of interest in the new Systra group entities should change slightly, the equity consolidation method remaining unchanged Memorandum of agreement between RFF and SNCF for 2011 network maintenance On 17 March 2011, RFF and SNCF validated a memorandum of agreement, prior to the signature of the national rail network maintenance agreement for Specifically, the two players have agreed on the principle of a sound economic relationship. The management agreement for 2011 amounted to a little over 2.1 billion. This remuneration should allow SNCF Infra to fully cover its expenditure regarding the production volume requested by RFF for 2011 network maintenance, and consequently anticipate a sound economic relationship. The signature of this agreement will improve the SNCF Infra division s revenue by 99 million compared to the first half of SNCF Group consolidated financial statements First half

4 2. Key figures (In millions) First half 2011 First half 2010 (1) Revenue Gross profit Current operating profit Finance cost Net profit attributable to equity holders of the parent Cash flow from operations Equity-financed intangible asset and PP&E investments ROCE (2) 5,3% 3,3% Employees (1) Restated for modifications described in point 1.1. of the Group results and financial position section. (2) ROCE or return on capital employed = the ratio between current operating profit and average capital employed. The capital entering into this calculation is the algebraic sum of equity including non-controlling interests (minority interests) and net indebtedness and is adjusted for the impairment of assets. The average with the prior year s equity gives the average equity. The ROCE presented here was calculated on a 12-month sliding basis. (In millions) 30/06/ /12/2010 Net debt Subsequent events 3.1. Entry into force of the NOME Law as at 1 July 2011 The entry into force of the NOME Law (New organisation of the electricity market) replaces the TARTAM system under which SNCF purchased electrical traction energy. The implementation of the system allowing regulated access to historical nuclear energy (ARENH) provided by this Law gives rise in higher energy costs. The application of this law as at 1 July 2011 should result in a 65 million increase in energy expenses in the second half of Downgrading of the SNCF Group rating by Moody s On 1 July 2011, the financial rating agency, Moody s, downgraded SNCF from AAA, the highest possible rating, to the next highest. The SNCF long-term debt rating is now rated Aa1 with a stable outlook. The downgrade was due to the anticipation by the rating agency of a gradual slackening in the "very close" relationship between SNCF and the French government, due to the gradual opening of the French rail transportation market to competition. SNCF Group consolidated financial statements First half

5 Group results and financial position 1. General observations on Group results First half 2010 (In millions) First half 2011 (1) 2011 vs 2010 comparative Revenue ,5% Infrastructure fees ,0% Purchases and external charges ,5% Taxes and duties other than income tax ,0% Employee benefit expense ,9% Other income and expenses ,5% Gross profit ,0% Depreciation and amortisation, net of grants ,1% Net movements in provisions ,8% Current operating profit ,1% Net proceeds from asset disposals ,6% Positive impacts of Group structure operations ,2% Impairment losses ,7% Operating profit ,6% Finance cost of employee benefits ,3% Net borrowing and other costs ,3% Finance costs ,4% Net profit before tax ,1% Income tax expense ,2% Share of profit of associates ,0% Net profit from ordinary activities ,0% Net loss from discontinued operations ,5% Net loss attributable to minority interests ,5% Net profit attributable to equity holders of the parent ,1% Gross profit/revenue 8,4% 6,8% Current operating profit / revenue 3,9% 1,5% ROCE = current operating profit / average capital employed (2) 5,3% 3,3% (1) Restated for the modifications described in point 1.1. (2) See definition of ROCE in Key figures. SNCF Group consolidated financial statements First half

6 1.1. Comparability of the financial statements Due to the classification of SeaFrance under activities held for sale, the financial figures for this subsidiary have been reclassified under Net profit/(loss) from discontinued operations in the 1st half of 2010 column. Compared to the published consolidated financial statements for the half-year ended 30 June 2010, the reclassification had the following impacts on the income statement: - a 73 million decrease in revenue; - improvements in gross profit, current operating profit and net profit from ordinary activities before tax by 16 million, 37 million and 81 million, respectively; - an 81 million decrease in net profit from discontinued operations. The Systra transaction carried out on 30 June 2011 does not impact the comparability of the financial statements. The results of Systra and Inexia remain proportionately and fully consolidated in the first half of The contribution of Xelis to Group profit was nil as at 30 June The comparability of results for the first half of 2011 with those of the same period in 2010 was impacted by the following Group structure and exchange rate changes: Impact on revenue SNCF Infra Division SNCF Proximités Division SNCF Voyages Division SNCF Geodis Division Inter-division eliminations 2010 changes in Group structure Acquisition of Afacor 3 Exchange rate fluctuations changes in Group structure Takeover of Keolis 294 Exchange rate fluctuations changes in Group structure Creation of Eurostar International Limited -22 Acquisition of Findworks Technologies changes in Group structure Acquisition of Giraud 97 Acquisition of Ciblex 53 Takeover of Ermewa 26 Acquisition of BSL S.p.a 20 Other Group structure changes -1 Exchange rate fluctuations 13 Indirect impact of the creation of Eurostar International Limited 11 Impact of changes in Group structure and exchange rate fluctuations 516 SNCF Group consolidated financial statements First half

7 first-half results a) Revenue Group revenue totalled 16,289 million for the first half of 2011, up 1,417 million (+9.5%) compared to This increase breaks down as follows: - a Group structure impact of million (see 1.1), - a foreign exchange impact of + 34 million (see 1.1), - an organic increase of million for the Group (+6.1%); the increases for divisions were as follows: SNCF Infra + 97 million, +3.9% SNCF Proximités million, +6.7% SNCF Voyages million, +3.6% SNCF Geodis million, +6.3% Gares & Connexions + 33 million, +6.1% b) Gross profit In 2011, gross profit increased by 354 million or 35% to 1,366 million and gross profit over revenue rose from 6.8% to 8.4% between 2010 and (In millions) First half 2011 First half 2010 (1) 2011 vs 2010 change 2011 vs 2010 change on a constant Group structure and exchange rate basis Revenue ,5% 901 6,1% Employee benefit expense ,9% ,7% Purchases and external charges (excluding infrastructure fees, traction and fuel energy) ,6% ,3% Infrastructure fees ,0% ,4% Traction and fuel energy ,8% ,8% Taxes and duties other than income tax ,0% ,2% Other income and expenses ,5% ,4% Gross profit ,0% ,2% Gross profit/revenue 8,4% 6,8% (1) Restated for modifications described in point 1.1. NB: the analyses below involve changes on a constant Group structure and exchange rate basis. Employee benefits expense increased by 164 million, or +2.7%. This increase was attributable to a price impact (3.8% rise in average employee costs by employee), partly offset by a volume impact (1.0% decline in the number of employees - see point 6.1 in Employee matters). Purchases and external charges (excluding infrastructure fees and traction and fuel energy expenses) and other income and expenses increased by 155 million (+3.1%). The turnaround in business recorded for SNCF Geodis resulted in higher subcontracting costs (+ 136 million), particularly in the Global Offering activity. The 5.4% increase in infrastructure fees (+ 97 million) mainly resulted from an unfavourable price impact involving RFF infrastructure fees for 116 million. Traction and fuel energy expenses increased by 57 million (+10.8%) due to rising thermal traction energy (+ 26 million) and fuel (+ 34 million) prices. The increase in income taxes amounted to 65 million, of which 50 million for the Territorial Economic Contribution set up to finance the Trains d Equilibre du Territoire. SNCF Group consolidated financial statements First half

8 c) Current operating profit Current operating profit totalled 632 million, up 417 million compared to The revenue to current operating profit conversion rate increased from 1.5% in 2010 to 3.9% in The increase in net depreciation and amortisation charges (+ 67 million) was due to a Group structure impact of 22 million and depreciation of rolling stock for Trains d Equilibre du Territoire of 28 million; impairment losses recorded in the 2010 half-year financial statements for the rolling stock of this activity were reversed at the end of 2010 following the entry into force of the Trains d Equilibre du Territoire agreement. The net change in provisions was a 64 million reversal as at 30 June 2011, compared to a 65 million charge as at 30 June Net provision reversals of 2011 mainly involve the provision relating to the litigation with RTE (+ 106 million). d) Operating profit Operating profit increased by 279 million to million. The profit from the sale of assets for the half-year ended 30 June 2010 had included the sale of highvoltage lines to RTE ( 80 million). The positive impacts of business combinations recorded in the first half of 2011 arose from the creation of the new Systra group ( 113 million). In the first half of 2010, this heading had included the acquisitions of Keolis and Ermewa. Impairment losses recognised in the first half of 2011 decreased by 150 million, compared to the same period in 2010, of which 140 million for rail freight. e) Finance costs Finance costs declined by 163 million; adjusted for fair value impacts ( 103 million), finance costs decreased by 60 million. This change was mainly due to the following factors: - a 23 million reduction in the financial cost of employee benefits; the revision of the discount rate used for the calculation of occupational accident annuities and the provision for the gradual cessation of activity had given rise to a 23 million expense in the first half of 2010, whereas it had little impact in the first half of 2011; - a 19 million increase in foreign exchange gains involving Ermewa; - the recognition of financial income in the amount of 10 million corresponding to a swap portfolio transfer allowance. f) Income tax The 51 million increase in income tax included the new tax on the profits of rail companies for the financing of Trains d Equilibre du Territoire in the amount of 38 million. g) Net profit/(loss) from discontinued operations Following the Group s decision to sell its SeaFrance subsidiary, the financial items of this company were reclassified to Net profit/(loss) from discontinued operations in the comparative income statement for the half-year ended 30 June 2010 (see point 1.2 under Major events in the first half of 2011). In the consolidated financial statements for the year ended 31 December 2010, a provision and asset impairment were recognised for 194 million prior to the company s classification as held for sale given its financial position. No events occurred in the first half of 2011 that could call into question the valuation determined at the end of December 2010 or have an impact on Net profit/(loss) from discontinued operations. SNCF Group consolidated financial statements First half

9 h) Net profit attributable to equity holders of the parent As a result of all these changes, the net profit attributable to equity holders of the parent totalled 558 million, compared to 80 million in the first half of 2010, after recognition of net profit attributable to noncontrolling interests (minority interests) of 13 million. The 478 million improvement in net profit was due to the following non-recurring items in the amount of 113 million: - changes in impairment recorded for rail freight, Trains d Equilibre du Territoire, Infrastructure Maintenance and works and SeaFrance (+ 187 million); - impact on 2011 profit of the creation of the new Systra group (+ 113 million); - reversal in 2011 of the provision relating to the litigation with RTE (+ 106 million); - changes in fair value recorded in finance costs (+ 103 million); - capital gain from sale to RTE recorded in 2010 (- 80 million); - impact on 2010 profit of the acquisitions of Keolis and Ermewa (- 316 million). Recurring net profit increased by 365 million to million for the half-year ended 30 June The ROCE (calculated on current operating profit) rose from 3.3% to 5.3%. SNCF Group consolidated financial statements First half

10 2. Activity and results by division SNCF Group activity is structured according to five divisions that are supported by common operations: SNCF Infra, SNCF Proximités, SNCF Voyages, SNCF Geodis and Gares & Connexions. SNCF GROUP SNCF INFRA SNCF PROXIMITÉS SNCF VOYAGES SNCF GEODIS GARES & CONNEXIONS Rail network operation and management Works and maintenance Engineering Systra Inexia TER Transilien Intercités Chemins de Fer de la Corse Keolis-EFFIA Operators TGV idtgv Eurostar Thalys Lyria Alleo Artesia Elipsos Special trains Auto-trains Sales voyages-sncf.com CRM Services Rail Europe VSC Technologies Avancial Rail Solutions Global transport and logistics operator Transports Ferroviaires de Marchandises (TFM) (Rail freight) Rail freight fleet management Management and development of French train stations AREP A2C Parvis Division contributions to revenue, gross profit, current operating profit and the equity-financed investments of the Group s components break down as follows: In millions SNCF Infra SNCF Proximités SNCF Voyages SNCF Geodis Gares & Connexions Common Inter-division operations & eliminations investments Group Revenue Gross profit/(loss) Current operating profit/(loss) Equity-financed intangible asset and PP&E investments The financial data per division shown in the tables on the following pages includes all transactions between divisions. The entry into force of the Trains d Equilibre du Territoire agreement led the Group to reclassify the results of Téoz and Lunéa, excluding special trains and auto-trains, from SNCF Voyages to SNCF Proximités (see point 1.1 under Major events in the first half of 2011). Data per division for the first six months of 2010 was therefore adjusted in relation to the information produced in This generated external revenue in 2010 for SNCF Voyages in the amount of 62 million, raising the inter-division elimination by the same amount, and resulted in the transfer from SNCF Voyages to SNCF Proximités of the following: - external revenue of 210 million; - gross loss of - 51 million; - current operating loss of - 52 million; - equity-financed investments of 5 million. SNCF Group consolidated financial statements First half

11 2.1. SNCF Infra division SNCF INFRA Parent company Subsidiaries Direction de la Circulation Ferroviaire (rail traffic control) Works and Maintenance Engineering Systra a Inexia The SNCF Infra division includes: - the delegated infrastructure management activities on behalf of Réseau Ferré de France (traffic management and network maintenance); - engineering activities (mainly Systra and Inexia). In millions First half 2011 First half 2010 Change Revenue Gross loss Gross loss/revenue -0,9% -2,0% Current operating loss Equity-financed intangible asset and PP&E investments Highlights On 17 March 2011, the Boards of Directors of SNCF and RFF validated the memorandum of agreement prior to the signing of the network maintenance agreement for On 26 May 2011, the SNCF Board of Directors adopted this agreement (see point 1.4 under Major events in the first half of 2011). A new 3-year agreement between RFF and the Direction des Circulations Ferroviaires (DCF) came into force on 1 January In terms of business, the first half of 2011 was marked by the commissioning of a new Central Network Control phase in Lyons and the new RER C Signal Box at Invalides. Furthermore, the partial doubling of the railway track between Toulouse and Saint-Sulpice got underway in connection with the Midi- Pyrénées rail plan. The first half of 2011 saw the materialization of the draft agreement signed on 28 October 2010 between SNCF and RATP to develop transport engineering in all the components of their common subsidiary Systra. (see point 1.3 under Major events in the first half of 2011). SNCF Group consolidated financial statements First half

12 2011 first-half results Revenue The rise in revenue (+ 99 million or +4.0%) was due to: - the increase in the compensation from the new 2011 network maintenance agreement (+ 99 million); - the impact of the agreement with RFF regarding the 2009 and 2010 supply agreements (+ 42 million); - the growth in the business of subsidiaries, primarily Inexia (+ 13 million). These impacts were curbed by a decline in materials activity for RFF due to the termination of the Rhin- Rhône high-speed line supply project. Furthermore, the new 2011 agreement signed between RFF and the DCF gave rise to a 33 decline in revenue. Gross profit The improvement in the gross profit of SNCF Infra (+ 28 million) was primarily attributable to the revaluation of the principal flat rate for the new 2011 network maintenance agreement (+ 39 million). Current operating profit In addition to the 28 million increase in gross profit, the 42 million improvement in current operating profit was due to the rise in net movements in provisions (the 2011 balance is a net reversal of 6 million compared to a net charge of 8 million in 2010). Equity-financed intangible asset and PP&E investments Investments remained stable for the half-year ended 30 June 2011, compared to the same period in second-half outlook The negotiation and preparation phases of the main agreements with RFF applicable in 2012 will be completed in the second half of The year-end will also be marked by the commissioning of the Rhin-Rhône high-speed line in December and the preparation of train scheduling for the next 2012 annual service. SNCF Group consolidated financial statements First half

13 2.2. SNCF Proximités division SNCF PROXIMITÉS Parent company Subsidiaries TER Transilien Keolis-EFFIA Intercités Chemins de Fer de la Corse The SNCF Proximités division encompasses all the Group s local transport activities: medium distance links (Intercités), rail transport regulated services (TER, Transilien, Chemins de Fer de la Corse and Keolis subsidiaries), bus, tramway and subway (Keolis) and complementary services relating to passenger transport. In millions First half 2011 First half 2010 (1) Change Revenue Gross profit Gross profit/revenue 6,9% 4,4% Current operating profit Equity-financed intangible asset and PP&E investments (1) Restated for modifications described in point Highlights The first half of 2011 was marked by the implementation as at 1 January 2011 of the Trains d Équilibre du Territoire agreement between the French State and SNCF (see point 1.1 under Major events in the first half of 2011). In 2011, Transilien undertook to renegotiate the STIF agreement for an implementation as at 1 January In June 2011, TER commissioned the Nantes-Clisson tram-train and presented the first ever Régiolis train, a new generation of single-level regional trains, in Alsace. On 18 May 2011, Thierry Mariani, the French Secretary of State for Transport, was presented with the report ordered at the end of 2009 by the French Transport Minister and drafted by French senator Francis Grignon on the conditions required to test the opening of regional passenger rail transport services to competition. The GoldLinQ consortium, to which Keolis belongs, was named the successful proponent for the Gold Coast Rapid Transit project by the State of Queensland. The Group company will be responsible for operating and maintaining the line. Work will commence in 2012, with commissioning scheduled for SNCF Group consolidated financial statements First half

14 A joint venture partnership between SNCF and Keolis was set up to respond to calls for tenders by UK franchises (West Coast Main Line and East Coast Main Line) first-half results Revenue Revenue for the first half of 2011 increased by 683 million (+12.4%) compared to 2010, mainly due to: - the impact of the Keolis acquisition on 4 February 2010 for million, - a positive foreign exchange impact of + 21 million. On a constant Group structure and exchange rate basis, revenue growth totalled million, of which: million for Transilien and TER; their activity was marked by a 62 million rise in traffic income and the 105 million increase in contributions paid to the Organising Authorities, particularly due to a positive indexation impact and offer developments; million for Keolis, of which almost 60% abroad (new contracts won in 2010 and excellent performances observed in the United Kingdom, Belgium and Germany) and the remainder in France, mainly due to the renewal of contracts in Lyons and Lille, and the growth of intercity and EFFIA activity million for Intercités and Teoz, of which million for the Trains d Equilibre du Territoire agreement. Gross profit SNCF Proximités gross profit rose by 181 million (+75%) between 2010 and 2011; excluding the impact of the Keolis acquisition (+ 12 million), gross profit increased by 169 million. This increase was attributable to the set-up of the Trains d Equilibre du Territoire agreement for 122 million. Furthermore, the high production quality in 2011 and the impact of strikes in 2010 improved TER gross profit by 39 million. Current operating profit The division s current operating profit increased by 153 million, mainly driven by the rise in gross profit. Equity-financed intangible asset and PP&E investments The 83 million rise in investments was primarily due to the increase in rolling stock purchases (Francilien trains) by Transilien and the Group structure impact relating to the acquisition of Keolis second-half outlook Keolis is expected to respond to calls for tenders in the second half of the year, particularly in the Netherlands, Scandinavia and Germany; in July, Keolis was chosen to operate the public transport systems of Aix-en-Provence and Orléans. In terms of operations, TER, Transilen and Intercités are preparing to roll out a general scheduled offering in the next annual service of December SNCF Group consolidated financial statements First half

15 2.3. SNCF Voyages division SNCF VOYAGES Parent company Subsidiaries TGV (France) idtgv Eurostar Thalys Operators TGV (Europe) Lyria Artesia Alleo Elipsos Special trains Auto-trains voyages-sncf.com Sales VSC Technologies CRM Services Rail Europe Avancial Rail Solutions The SNCF Voyages division includes: - carrier services through its TGV, Special Trains and Auto-Trains and Europe (Eurostar, Thalys, Lyria, etc.) activities; - supply of services related to the transportation of passengers: distribution (with among others voyages-sncf.com) and train management. In millions First half 2011 First half 2010 (1) Change Revenue Gross profit Gross profit/revenue 13,5% 15,3% Current operating profit Equity-financed intangible asset and PP&E investments (1) Restated for modifications described in point 2. SNCF Group consolidated financial statements First half

16 Highlights The first half of 2011 was marked by the implementation as at 1 January 2011 of the Trains d Équilibre du Territoire agreement between the French State and SNCF (see point 1.1 under Major events in the first half of 2011). The division initiated action plans in order to improve service quality and customer satisfaction: launch of the Impact Sud-Est and Impact Atlantique projects to improve punctuality on these lines; widespread deployment of the SNCF Assistance programme, the purpose of which is to improve information services and the handling of customers during disruptions; in addition, inspectors have begun to use smartphones; organisation of the passenger information enhancement programme; improvement in train comfort and cleanliness; specific measures for TGV subscribers: plan to improve punctuality on problematic lines, special 200 discounts, set-up of a specific Punctuality Commitment; development of the Punctuality Commitment as at 1 March to improve the handling of customers during disruptions and their compensation in the event of major delays. The increase in the volume of work on the network impacted the quality of production and delayed the opening of trains for booking, particularly on the Atlantique line. The ramp-up of new international TGV relations initiated at the end of 2010 (Paris-Geneva via the Haut-Bugey and Paris-Figueras) announced the extension of cooperation with Deutsche Bahn to the Frankfurt-Marseilles line in The voyages-sncf.com website extended its customer relations to social networks by launching a Twitter blog. This tool provides travelling customers with a new information channel designed to answer any questions regarding ticket purchases, bookings or withdrawals first-half results Revenue The division s revenue increased by 105 million (+3%); on a constant Group structure and exchange rate basis, the increase totalled million (+3.6%). Traffic income rose by 115 million, of which 84 million for TGV and idtgv. Gross profit SNCF Voyages gross profit declined by 51 million, of which 31 million relating to a Group structure impact; the new Regional Solidarity Contribution ( 50 million) and the increase in infrastructure fees (+ 123 million, mainly due to a price impact) had a negative impact on the division s gross profit. Current operating profit Current operating profit followed the same trend as gross profit (down 57 million to 285 million). Equity-financed intangible asset and PP&E investments The rise in investments (+ 111 million) was attributable to the renewal of Eurostar, TGV Dasye and TGV 2N2 (2-level 2 nd generation) trains. SNCF Group consolidated financial statements First half

17 2011 second-half outlook The second half of 2011 will be marked by: a turnaround in activity, that is already visible in the summer months, but has yet to be confirmed for the rest of the year; the end of access to regulated electricity tariffs (TARTAM) as at 1 July 2011 (see point 3.1 under Major events in the first half of 2011); preparation for the launch of the Rhin-Rhône TGV in December 2011; active preparation for the 2012 annual service, marked by the extension of scheduling and a general timetable revision; preparation, in a difficult context due to technical and regulatory constraints, for the opening of a SNCF TGV service to Italy, replacing the partnership with Trenitalia; expected clarification in the 2013 network reference document of the future changes in medium-term infrastructure fees, based on the work carried out with the French State on the TGV business model; continuation of ongoing projects for the enhancement of service quality and customer satisfaction, with the widespread use of smartphones by inspectors. SNCF Group consolidated financial statements First half

18 2.4. SNCF Geodis division SNCF GEODIS Parent company Subsidiaries Global transport and logistics operator Geodis STVA TFM (Rail freight) Fret SNCF Naviland Cargo Captrain VFLI Novatrans Rail freight fleet management Akiem Ermewa ferroviaire The SNCF Geodis division includes a full range of transport and freight logistics businesses. In millions First half 2011 First half 2010 Change Revenue Gross profit Gross profit/revenue 2,6% 1,2% Current operating loss Equity-financed intangible asset and PP&E investments Highlights In the first half of 2011, the SNCF Geodis division continued to roll out the master development plan for Environmentally-Friendly Rail Freight and set up the Multi-Wagon/Multi-Customer programme. The consolidation as of January 2011 of Lorry-Rail in the division s accounts strengthened the Multi- Modal division. Lorry-Rail announced the launch for Autumn 2011 of a new route between Spain and Sweden, with initially three return journeys per week. This 2,000 km line will reduce the road journey time by 24 hours. On 1 June 2011, Geodis acquired One Source Logistics (OSL), operating in the United States. OSL, which reported a revenue of USD13 million, is a road transport organiser and will report to the Freight Forwarding division. Geodis launched Distripolis, a new urban logistics entity. This means of organising urban rail freight was set up in connection with the Grenelle Environment Roundtable and is designed to develop more environmentally-friendly final-kilometre logistics. SNCF Group consolidated financial statements First half

19 A roundtable discussion gathering all rail freight operators took place on 30 May Its purpose was to identify the barriers that must be removed in order to meet the 25% target for alternative transport to road by The government confirmed a series of measures intended to remove constraints to the development of rail freight in the short-term first-half results Revenue 2011 revenue increased by 479 million (+11.1%) compared to 2010 due to: - a Group structure impact of million (the breakdown of Group structure changes is shown in point 1.1), - a foreign exchange impact of + 13 million. On a constant Group structure and exchange rate basis, revenue increased by 6.3% (+ 270 million). With the exception of Fret SNCF, whose activity declined slightly by 13 million, revenue increased across all the division s entities, including + 65 million for Freight Forwarding, + 63 million for rail carriers excluding Fret SNCF, + 51 million for logistics, and + 48 million for parcel delivery and express. Gross profit The 75 million increase in gross profit was attributable to a Group structure impact in the amount of 9 million. On a constant Group structure basis, gross profit rose by 65 million, of which 20 million for the Global Offering and 32 million for the Rail Freight Transport division due to Fret SNCF cost control. Current operating profit Current operating profit followed the same trend as gross profit (up 70 million to - 76 million). Equity-financed intangible asset and PP&E investments The 82 million decrease in investments ( 98 million on a constant Group structure and exchange rate basis) involved Captrain for 56 million (acquisition of electric locomotives in 2010) and Fret SNCF for 25 million (slowdown in BB rolling stock purchases) second-half outlook As was the case in the first half of 2011, the second half should be marked by the continued improvement in the profitability of entities and the reduction in loss-making areas, including: for Geodis: turnaround in the profits of each entity, based on commercial development and cost control; continuation of transformation projects. for STVA, continued turnaround and development in Germany. for Fret SNCF, the implementation of intrinsic restructuring measures (creation of entities, Multi- Wagon/Multi-Customer offering, overhaul of the production and selling process, reorganisation of services, reduction of structural costs, etc.). for asset managers, the consolidation of the Wagons entity around Ermewa and the development of the Akiem activity. for rail carriers, the restoration and stabilisation of economic balances for subsidiaries. for multimodal, the continued roll-out of offerings. SNCF Group consolidated financial statements First half

20 2.5. Gares & Connexions division GARES & CONNEXIONS Parent company Subsidiaries Management and development of French train stations AREP aaa A2C Parvis Created on 1 January 2010, the aim of this fifth division is to introduce innovative services into stations, while inventing new areas of mobility for towns and cities. The main subsidiaries included in this division are the AREP group (architecture and urban planning), the A2C group (commercial enhancement of stations) and Parvis. In millions First half 2011 First half 2010 Change Revenue Gross profit Gross profit/revenue 16,4% 12,7% Current operating profit Equity-financed intangible asset and PP&E investments Highlights The division continued to develop Multimodal Exchange Hubs with the signature of financing agreements for the Cannes and Nice hubs and the inauguration of the Cagnes-sur-Mer hub; these facilities are co-financed by the regions, general regional councils, the French State and SNCF. A call for tenders for the installation of business centres in stations (Bordeaux, Nancy, Le Mans, Angers, Amiens and Lille-Flanders) was initiated in the first half of The ARAF is currently working on the accounting separation rules within SNCF for the passenger station management activity. A research agreement was signed with RFF and Société du Grand Paris for 30 interconnection stations concerned by the future Greater Paris network. AREP signed an agreement on the design of the urban landscape for the Skolkovo innovation centre located 15 km from Moscow first-half results Revenue The division s revenue increased by 33 million (+6.1%), primarily due to the rise in basic services invoiced to rail companies (+ 15 million) and higher fees of train station businesses (+ 7 million). Gross profit The 26 million increase in gross profit was directly related to revenue growth. Current operating profit Current operating profit followed the same trend as gross profit (up 23 million to + 45 million). Equity-financed intangible asset and PP&E investments There were no major changes in investments in the first half of They mainly involved the renovation of the Paris-Lyon and Paris-Saint-Lazare stations and the construction of new stations for the Eastern division of the Rhin-Rhône high-speed line. SNCF Group consolidated financial statements First half

21 2011 second-half outlook The second half of 2011 will be marked by: the opening of two new stations in Belfort and Besançon and the new yellow Paris-Lyon platform in connection with the commissioning of the Rhin-Rhône high-speed line in December; the publication of the decree on rail service infrastructures, specifying the nature of services, the applicable pricing framework and the governance model associated with railway passenger station management Common operations and investments Common Operations and Investments encompasses the Group s support functions, the Equipment and Traction service providers, the Real Estate activities (Real Estate Department, ICF, SNEF) and a few subsidiaries and affiliates such as SeaFrance. a) Equipment The first half of 2011 was marked by the launch of plans to improve production reliability in order to: better manage the relationship between availability and reliability; better manage relations between operators - maintenance in difficult weather conditions (heat waves, dead leaves, harsh winters). The main operations include: ramp-up of Impact TGV Sud-Est programme designed to improve punctuality on the line; launch of a winter proofing-reliability enhancement project involving 333 electric locomotives so as to improve their reliability in poor weather conditions. This project will take place in 2011 and 2012; installation on 50 RER D trains of a mechanism designed to limit blockages and therefore maintenance operations; the TER robustness plan, culminating in a set of measures to secure equipment reliability on problematic lines; additional winter proofing of TGV and TER equipment; review of production systems on several Transilien lines. b) Traction Traction activity in the first half of 2011 was marked by improved productivity as well as a decline in the number of days of service not covered. The set-up of the 2012 annual service will include a slight increase in the passenger activity transport plan (+0.7%). c) Real estate The start of the financial year 2011 was marked by: the validation by RFF of 2010 prices for the services agreement and the financial agreement, thus enabling the outstanding invoices for 2010 to be settled; major disposals in Metz and Tours and the sale of land to ICF Atlantique, ICF Est and ICF La Sablière. d) Maritime transport In a market dominated by road freight and marked by the new surge in oil prices, SeaFrance recorded contrasting performances in 2011 characterised by: a 0.8% rise in the number of crossings compared to 2010 and an offered capacity, expressed in lorry units, down by around 0.4%; a lorry volume, up 11.5% on 2010, in a market that increased by 5.1% in only one year, but still falling 11.7% short of results prior to the 2007 crisis; a total number of cars, down 9.5% on 2010 in a market that declined by 2.4%; a load factor, up sharply to 71.7% compared to 66.5% in SNCF Group consolidated financial statements First half

22 3. Intangible asset and PP&E investments and net debt 3.1. Intangible asset and PP&E investments (In millions) First half 2011 First half 2010 Change Equity-financed intangible asset and PP&E investments A % Net disposals B % Equity-financed intangible asset and PP&E investments, net of disposals A + B % Equity-financed intangible asset and PP&E investments rose by million compared to 2010, to 1,141 million. On a constant Group structure and exchange rate basis, the increase totalled 135 million; the decrease in investments recorded by SNCF Geodis (2010 was marked by the acquisition of electric locomotives by Captrain and diesel locomotives by Fret SNCF) was more than offset by the increase recorded by other Group divisions, particularly SNCF Voyages (renewal of Eurostar and TGV trains) and SNCF Proximités (Francilien equipment). The decline in net disposals was mainly impacted by: - numerous property sales in 2010 (- 148 million, including the Batignolles site and properties in Paris and Lyons); - sale of high voltage lines to RTE in the first half of 2010 ( 80 million) Group net debt (In millions) 30/06/ /12/2010 Change Non-current debt Non-current receivables Net non-current debt Current debt Current receivables Net current debt Net debt Gearing 1,2 1,2 Net debt amounted to 8.8 billion as at 30 June 2011, for a gearing of 1.2 (unchanged since the end of 2010). Cash from operations as a percentage of net debt rose from 17% at the end of 2010 to 21% as at 30 June 2011 (calculated on a 12-month sliding basis). The 0.3 billion increase in net debt compared to 31 December 2010 breaks down as follows: (In millions) Opening net debt Cash from operations Equity-financed investments Net disposals -144 Net external growth 11 Change in operating WCR 407 Change in fair value, amortised cost, translation differences -68 Other (dividends received from associates, taxable WCR, etc.) -28 Closing net debt SNCF Group consolidated financial statements First half

23 3.3. Financing sources and debt management Non-current debt decreased by 0.7 billion while current debt increased by 1.0 billion. These changes were mainly due to: - the issue of three bonds for 0.9 billion; - the repayment of several loans for 0.3 billion; - the decrease in overdrafts for 0.1 billion; - changes in the fair value of financial liabilities for billion. The parent company is responsible for managing most of Group s net debt and carried 88% of the Group s external debt as at 30 June The SNCF Group s long-term debt is rated as follows by the main rating agencies: Long-term rating Outlook Report date Standard & Poor's AA+ Stable 28-avr-11 Moody's Aa1 Stable 01-juil-11 Fitch AAA Stable 09-mars-11 The financial receivable was stable, with a 1.0 billion decrease in the non-current portion and a 1.1 billion increase in the current portion Group exposure to market risks The management of market risks is governed by a general framework, approved by the SNCF Board of Directors, setting out the management principles for parent company risks that may be hedged by financial instruments. This general framework defines the principles governing the selection of financial products, counterparties and underlyings for derivative products. More specifically, the general framework defines risk limits for the management of euro and foreign currency cash balances and long-term net indebtedness. In addition, it details the delegation and decision-making system and the reporting and control system and its frequency (daily, twice monthly, monthly and annually). The breakdown of the strategy implemented is described in Note 21 to the 2010 consolidated financial statements. SNCF Group consolidated financial statements First half

24 4. Consolidated statement of financial position and ratios (In millions) 30/06/ /12/2010 Goodwill Intangible assets Property, plant and equipment Non-current financial assets Investments in associates Deferred tax assets Non-current assets Operating assets Current financial assets Cash and cash equivalents Current assets Assets classified as held for sale TOTAL ASSETS Share capital Consolidated reserves Net profit for the year Equity attributable to equity holders of the parent Non-controlling interests TOTAL EQUITY Non-current employee benefits Non-current provisions Non-current financial liabilities Deferred tax liabilities Non-current liabilities Current employee benefits Current provisions Operating payables Operating liabilities Current financial liabilities Current liabilities Liabilities directly associated with assets classified as held for sale TOTAL EQUITY AND LIABILITIES Gearing (Net debt / Equity) 1,2 1,2 Cash flow from operations / Net debt 21% 17% The statement of financial position recorded the following changes between 31 December 2010 and 30 June 2011: - the increase in investments in associates was attributable to the creation of the new Systra group in the amount of 140 million as at 30 June 2011 (see point 1.3 under Major events in the first half of 2011); - the decline in working capital requirement for 368 million; - the increase in Group equity which primarily includes the net profit for the period ( 558 million); - the decrease in provisions in line with the settlement of the litigation with RTE for 106 million. The changes in financial assets and liabilities are analysed in point 3.3. SNCF Group consolidated financial statements First half

25 5. Financial relations with the French State, Réseau Ferré de France and local authorities SNCF receives: - public service orders (as is the case with any public service agent or supplier to the French State and local authorities) in a monopoly legislative and regulatory framework, - (in addition to operating and investment grants primarily received for the activities of the SNCF Proximités division) compensation for off-balance sheet financial and social security expenses. This compensation is based on European Union regulations intended to equalise competition conditions between rail and other forms of transport Public service orders (In millions) First half 2011 First half 2010 Change Compensation of IM by RFF including Traffic and circulation management agreement including Track and asset management agreement Work for RFF Total RFF Compensation for regional rates Services for the Organising Authorities Total Regions and STIF Newspapers Socially-motivated prices Defence Trains d'equilibre du Territoire (TET) Total French State TOTAL a) Services for RFF The increase in the compensation of the Infrastructure Manager stems from the renegotiation of the network maintenance and operation agreements entered into with RFF. The increase in work for RFF (+ 26 million) was primarily due to the rise in invoicing relating to the supply agreement, as a result of the contract entered into with RFF regarding the 2009 and 2010 supply agreements. b) Services for the Regions and STIF The million increase in these services compared to 2010 was primarily due to the rise in services invoiced at a flat rate to the Organising Authorities. c) Services for the French State The increase in services for the French State was mainly attributable to the new Trains d Equilibre du Territoire agreement. SNCF Group consolidated financial statements First half