FIRST HALF 2012 SNCF GROUP HALF-YEAR ACTIVITY REPORT

Transcription

1 BOARD OF DIRECTORS MEETING OF 26 JULY 2012 FIRST HALF 2012 SNCF GROUP HALF-YEAR ACTIVITY REPORT IFRS In millions

2 CONTENTS THE SNCF GROUP IN MAJOR EVENTS IN THE FIRST HALF OF KEY FIGURES SUBSEQUENT EVENTS... 3 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, RESEAU FERRE DE FRANCE AND LOCAL AUTHORITIES EMPLOYEE MATTERS CHALLENGES AND OUTLOOK CORPORATE GOVERNANCE BOARD OF DIRECTORS MANAGEMENT TEAM THE SNCF GROUP IN MAJOR EVENTS IN THE FIRST HALF OF TRANSPORT CONCESSION AGREEMENT IN ILE-DE-FRANCE The agreement between Syndicat des Transports en Ile-de-France (STIF) and SNCF, which transports some 3.5 million passengers daily in Ile-de-France, was signed on 3 May 2012 by both parties. Under this agreement, a portion of rolling stock falls within the scope of IFRIC 12 Service concession arrangements according to the financial asset model. This involves rolling stock for which STIF has an option to purchase at the end of the contract or has granted SNCF a redeployment guarantee. Thus, it is no longer recorded in the Group s property, plant and equipment. However, a concession financial asset was recorded in the consolidated balance sheet, thus reflecting the receivable payable by the region for the transport of Ile-de-France passengers by the SNCF Group. The coming into force of this agreement resulted in a 727 million decrease in the Group s property, plant and equipment (see Note 4 to the condensed consolidated half-year financial statements), a 1,410 million increase in concession financial assets (see Note 5 to the condensed consolidated half-year financial statements) and a 683 million rise in operating liabilities. In the statement of comprehensive income, it led to a 76 million decline in revenue, gross profit and depreciation and amortisation without any impacts on other aggregates RESTRUCTURING OF KEOLIS CAPITAL Following the restructuring of Keolis capital approved in April 2012, the interest of SNCF Participations in its subsidiary will be increased to almost 70%. This restructuring involves the buy-out by SNCF Participations of the shares held by the other current shareholders (particularly Axa Private Equity and Pragma Capital) followed by an investment by the Caisse des Dépôts et Placements du Québec (CDPQ), resulting in shareholdings of almost 70% for the SNCF Group and 30% for CDPQ, with the remainder being held by the FCPE and Keolis Group as treasury shares. Following the buy-outs on 31 May 2012, SNCF Participations held, directly and indirectly, around 78% of Keolis Group capital as at 30 June The governance principles and crossed option mechanism were maintained between the shareholders, SNCF Participations and CDPQ. 2

3 The second phase, which provides for the set-up of a new governance and the removal of the crossed options is subject to the fulfilment of certain conditions, particularly the receipt of authorisations from the relevant competition authorities. The impacts of the transaction are described in Note 3 to the condensed consolidated half-year financial statements. 1.3 PURCHASE OF 30 TGV EURODUPLEX TRAINS FROM ALSTOM On 2 April 2012, the SNCF parent company signed a contract for the purchase of 40 Euroduplex trains (very high-speed double decker train), with the possible cancellation of 10 trains. The exercise of this purchase option forms part of the agreement entered into by the SNCF parent company and Alstom on 27 June This order of 1,473 million was recorded in off-balance sheet commitments as at 30 June 2012 (see Note 12 to the condensed consolidated half-year financial statements). The Euroduplex trains, built to run on French, German, Swiss and Luxembourg networks, have signalling equipment compatible with all these European networks and traction equipment adapted to the various electric voltages used in Europe. These additional trains will be delivered as from KEY FIGURES in millions First half 2012 First half 2011 Revenue 16,773 16,289 Gross profit 1,332 1,366 Current operating profit Finance cost (233) (142) Net profit attributable to equity holders of the parent Cash flow from operations 1,020 1,056 Equity-financed intangible asset and PP&E investments 850 1,126 ROCE (1) 6.8% 5.3% Employees 245, ,020 (1) 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. They are adjusted for asset impairment. The average with the prior year s equity gives the average equity. The ROCE presented here was calculated on a 12-month rolling basis. in millions 30/06/ /12/2011 Net debt 9,010 8, SUBSEQUENT EVENTS 3.1. NOVATRANS Given the financial difficulties encountered by the Novatrans subsidiary, several scenarios were analysed by the Group, including its sale. On 10 July 2012, the Group received a takeover bid from the Charles André Transports (GCA) group. This bid is being reviewed and its possible acceptance will be decided later after a final negotiation phase with the buyer and following the approval of the relevant employee representative bodies. 3

4 GROUP RESULTS AND FINANCIAL POSITION 1. GENERAL OBSERVATIONS ON GROUP RESULTS in millions First half 2012 First half vs change Revenue 16,773 16, % Infrastructure fees (1,980) (1,891) (89) 4.7% Purchases and external charges (6,301) (6,015) (286) 4.7% Taxes and duties other than income tax (565) (562) (3) 0.5% Employee benefit expense (6,700) (6,488) (213) 3.3% Other income and expenses % Gross profit 1,332 1,366 (34) (2.5%) Depreciation and amortisation (731) (798) 67 (8.4%) Net movements in provisions (20) (31.6%) Current operating profit % Net proceeds from asset disposals (62) (74.8%) Fair value remeasurement of the previously held interest (113) (99.8%) Impairment losses (72) (46) (26) 57.0% Operating profit (188) (24.1%) Finance cost of employee benefits (81) (20) (61) 311.5% Net borrowing and other costs (152) (123) (29) 23.6% Finance costs (233) (142) (90) 63.5% Net profit before tax (279) (43.5%) Income tax expense (93) (72) (21) 29.1% Share of profit of associates (1) 3 (4) (138.7%) Net profit from ordinary activities (304) (53.1%) Net profit/(loss) from discontinued operations n/a Net loss attributable to non-controlling interests (minority interests) (15) (13) (2) 12.3% Net profit attributable to equity holders of the parent (305) (54.7%) Gross profit/revenue 7.9% 8.4% Current operating profit / revenue 3.8% 3.9% ROCE = current operating profit / average capital employed (1) 6.8% 5.3% (1) See definition of ROCE in Key figures. 4

5 1.1. Comparability of the financial statements The comparability of 2012 results with those of 2011 was impacted by the following Group structure and exchange rate changes: in millions SNCF Infra division SNCF Proximités division SNCF Voyages division SNCF Geodis division Common operations and investments Inter-division eliminations Impact on revenue Changes in 2011 Group structure (1) Creation of the new Systra entity (123) Changes in 2012 Group structure Transfer of SNCF Consulting to Common Operations and Investments (4) Changes in 2011 Group structure (1) Acquisition of Keolis in the United States 32 Acquisition of Keolis in Belgium 2 Exchange rate fluctuations 39 Changes in 2011 Group structure (1) Acquisition of Westbahn 3 Exchange rate fluctuations 16 Changes in 2011 Group structure (1) Acquisition of the Ciblex business 10 Acquisition of Pharmalog 8 Acquisition of One Source Logistics 4 Changes in 2012 Group structure Acquisition of the Sernam business 21 Acquisition of MF Cargo 4 Acquisition of Benga 1 Exchange rate fluctuations 45 Changes in 2012 Group structure Transfer of SNCF Consulting from the SNCF Infra division 4 Indirect impact of the transfer of the new Systra entity 2 Total impact of changes in Group structure and exchange rate fluctuations 63 SNCF Proximités division Impact of the application of the new agreement between Syndicat des Transports en Ile-de-France (STIF) and SNCF (see point 1.1 in Major events of the first half) (76) Total changes (13) (1) Operations carried out in 2011 having an impact on 2011/2012 revenue trends First-half 2012 results Revenue SNCF Group consolidated revenue totalled 16,773 million for the first half of 2012, up 484 million (+3.0%) compared to This increase breaks down as follows: - a Group structure impact of million (see point 1.1), - a foreign exchange impact of 99.6 million (see point 1.1), - the impact of million arising from the application of the new agreement signed between Syndicat des Transports en Ile-de-France (STIF) and SNCF (see point 1.1), 5

6 - an organic increase of million for the Group (+3.1%); the changes for divisions were as follows: SNCF Infra million +8.1% SNCF Proximités million +3.9% SNCF Voyages million +3.6% SNCF Geodis million -2.8% Gares & Connexions - 99 million -17.3% Gross profit In 2012, gross profit decreased by 34 million or 2.5% while gross profit over revenue declined from 8.4% to 7.9% between 2011 and in millions First half 2012 First half vs change 2012 vs change on a constant Group structure and exchange rate basis (1) Revenue 16,773 16, % % Employee benefit expenses (6,700) (6,488) (213) 3.3% (226) 3.5% Purchases and external charges (excluding infrastructure fees, traction (5,555) (5,358) (196) 3.7% (132) 2.5% energy and fuel prices) and other income and expenses Infrastructure fees (1,980) (1,891) (89) 4.7% (75) 4.0% Traction energy and fuel prices (642) (624) (18) 2.9% (10) 1.7% Taxes and duties (565) (562) (3) 0.5% (5) 0.9% Gross profit 1,332 1,366 (34) (2.5%) % Gross profit/revenue 7.9% 8.4% (1) and excluding the impact on revenue (- 76 million) arising from the new agreement between Syndicat des Transports en Ile-de-France (STIF) and SNCF (see point 1.1 Major events in the first half of 2012). NB: the analyses below involve changes on a constant Group structure and exchange rate basis. Employee benefits expense increased by 226 million, or +3.5%. This increase was attributable to the 2.2% rise in average employee costs by employee and the 1.2% rise in the number of employees (see point 6.1 Employee matters). Purchases and external charges (excluding infrastructure fees and traction and fuel energy expenses) and other income and expenses increased by 132 million (+2.5%). This increase was primarily due to the growth in business (revenue up by 3.1%). The 75 million increase in infrastructure fees (+4.0%) resulted from a negative price impact of 78 million involving the RFF infrastructure fees paid by SNCF EPIC. 6

7 1.2.3 Current operating profit Current operating profit totalled 645 million, up 13 million compared to This growth was driven by the SNCF Infra division. The revenue to current operating profit conversion rate dropped from 3.9% in 2011 to 3.8% in The decrease in net depreciation and amortisation charges (- 67 million) was due to the inclusion of Transilien rolling stock within the scope of IFRIC 12 Service concession agreements for 76 million following the new agreement between Syndicat des Transports en Ile-de-France (STIF) and SNCF (see point 1.1 Major events in the first half of 2012). The net movement in provisions was a 44 million reversal as at 30 June 2012, compared to a 64 million reversal as at 30 June Financial year 2011 had been impacted by the reversal of the provision relating to the litigation with RTE (+ 106 million). Net provision reversals of 2012 mainly involved a provision reversal for a litigation that was settled during the period Operating profit Operating profit decreased by 188 million to million. The profit from the sale of assets for the first half of 2012 mainly comprised property sales. The fair value remeasurement of the previously held share related to the creation of the new Systra entity in Impairment losses recognised in the first half of 2012 (- 72 million) mainly comprised the impairment of new SNCF Infra division assets ( 55 million) and the impairment of Westbahn goodwill ( 19 million) Finance costs Finance costs declined by 90 million; adjusted for negative fair value impacts ( 13 million), finance costs decreased by 77 million. This decrease was attributable for 61 million to the impact on employee benefit finance costs of the decline in the discount rate and the update of provision calculation assumptions Income tax Income tax expense rose by 21 million between 2011 and The 40 million increase in income tax on the profits of rail companies was partly offset by the decline in the income tax expense for the tax consolidation group ( 15 million) 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 253 million, compared to 558 million in the first half of 2011, after recognition of a net profit attributable to non-controlling interests (minority interests) of 15 million. The 305 million decline in net profit was attributable to the following non-recurring items in the amount of million: - changes in fair value recorded in finance costs (- 13 million); - changes in impairment recorded (- 26 million); - reversal in 2011 of the provision relating to the RTE litigation (- 106 million); - impact on 2011 profit of the creation of the new Systra entity (- 113 million); - reversal in 2012 of the provision for SeaFrance (+ 21 million). Recurring net profit decreased by 67 million to million for the half-year ended 30 June The ROCE (calculated on current operating profit) rose from 5.3% to 6.8%. 7

8 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 TER Transilien Operators TGV / idtgv Eurostar / Thalys Lyria / Alleo TGV Italia Elipsos / Gala Westbahn / NTV * Special trains Auto-trains Luxembourg - Basel * equity-accounted Global freight transport and logistics operators Rail Freight Business Management and development of French train stations AREP Groupe Engineering Systra * * equity-accounted Intercités Keolis Sales voyages-sncf.com CRM Services Rail Europe Avancial Rail Solutions Rail freight fleet management Groupe A2C Division contributions to revenue, gross profit, current operating profit and the equity-financed investments of the Group s components break down as follows (the financial data per division shown in the tables on the following pages includes all transactions between divisions): in millions SNCF Infra SNCF Proximités SNCF Voyages SNCF Geodis Gares & Connexions Common Operations and Investments (1) Interdivision eliminations Revenue 2,657 6,399 3,708 4, ,785 (3,996) 16,773 Gross profit ,332 Current operating profit Equity-financed intangible asset and PP&E investments (51) (83) (276) (176) (65) (199) (850) (1) Common Operations and Investments Unless stated otherwise, the analyses of results per division are not restated for Group structure and foreign exchange impacts. Group 8

9 2.1. SNCF INFRA DIVISION Parent company SNCF INFRA Subsidiaries Direction de la Circulation Ferroviaire (rail traffic control body) Engineering Systra * * equity-accounted Works and Maintenance The SNCF Infra division includes: - delegated infrastructure management activities on behalf of Réseau Ferré de France (traffic management and network maintenance); - rail infrastructure engineering (Systra). in millions First half 2012 First half 2011 Change Revenue 2,657 2, Gross profit 58 (23) 80 Gross profit/revenue 2.2% (0.9%) Current operating profit 46 (19) 65 Equity-financed intangible asset and PP&E investments (51) (59) 8 Highlights On 31 May 2012, the Board of Directors approved the agreement between Réseau Ferré de France (RFF) and SNCF relating to network maintenance for 2012 and the amendment to the SNCF- Entrepreneur framework agreement (services relating to national rail network investments). Furthermore, RFF and the Direction des Circulations Ferroviaires signed the 2012 amendment to the traffic and circulation management agreement. On 14 February 2012, the SNCF Infra division created SFERIS, a subsidiary in charge of rail infrastructure construction and renovation (tracks and overhead lines). In terms of business, the first half of 2012 was marked by the ongoing major rail network modernisation projects, particularly in the Greater Paris region, and the start of connection work for the future Bretagne-Pays-de-la-Loire and Sud-Europe-Atlantique high-speed lines first-half results Revenue SNCF Infra 2012 revenue increased by 71 million (+2.8%) to 2,657 million. The creation in 2011 of the new Systra entity, which is now equity-accounted, and the transfer of SNCF Consulting from SNCF Infra to Common Operations and Investments in 2012 had negative impacts on the division s revenue for million and - 4 million, respectively. 9

10 On a constant Group structure and exchange rate basis, business growth totalled million (+8.1%) mainly in line with: - the rise in work on the infrastructure (+ 81 million); - greater compensation from the network maintenance agreement (+ 51 million); - signature with RFF of a draft settlement agreement regarding the 2011 supply agreement (+ 24 million). Gross profit The increase in SNCF Infra gross profit (+ 80 million) was directly attributable to the rise in infrastructure work carried out for RFF and the aforementioned draft settlement agreement. Current operating profit The 65 million improvement in current operating profit was primarily due to the increase in gross profit, curbed by the net movement in provisions (the 2012 balance is a net charge of 12 million compared to a net reversal of 6 million in 2011). Equity-financed intangible asset and PP&E investments Investments in first half of 2012 did not change significantly compared to the first half of second-half outlook In connection with the planned set-up of a unified infrastructure manager, the second half of 2012 will be marked by an increase in the number of projects handled by the SNCF-RFF common platform and in particular: - high-speed line regeneration policy; - overhead line maintenance policy; - reconciliation of sustainable development strategies; - improved management of significant investment projects. 10

11 2.2. SNCF PROXIMITÉS DIVISION SNCF PROXIMITES Parent company Subsidiaries TER Transilien Keolis Intercités 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 2012 First half 2011 (1) Change Revenue 6,399 6, Gross profit (74) Gross profit/revenue 5.5% 6.9% Current operating profit (8) Equity-financed intangible asset and PP&E investments (83) (292) 209 (1) Presented as a Group contribution, investments totalled million in the published activity report for the half-year ended 30 June Highlights Transilien The first half of 2012 was marked by the signing on 3 May 2012 of the new contract with Syndicat des Transports en Ile-de-France (STIF) (see point 1.1 Major events in the first half of 2012). A task force was set up on 9 February 2012 in order to analyse the creation by 2013 of a common SNCF-RATP entity responsible for the operating management of the Francilien RER B line. Intercités On 2 January 2012, all the Trains d Equilibre du Territoire activities (Corail, Téoz, Lunéa and Intercités) were grouped under a single trade name, Intercités, in order to display a clearer image, develop a coherent offering and meet the challenges of the unique SNCF brand. On 31 March 2012, Intercités adopted the Garantie Voyage business commitment to accompany its passengers and efficiently meet their expectations throughout their journey. Keolis Following the restructuring of Keolis share capital approved in April 2012, SNCF will raise its interest in this subsidiary to 70% (see point 1.2 Major events in the first half of 2012). The main contractual developments involved: start-up of the operation of the Orléans, Aix-en-Provence and Metz networks; 11

12 operation by Aérolis since 1 March 2012 of buses connecting Champs-Elysées to Roissy-Charlesde-Gaulle; this company manages all the bus lines between Paris and Roissy and Orly airports; renewal of operating contracts for the Tours and Château-Thierry urban networks and the bus network in the Danish town of Slagelse; signing of operating contracts for the Amiens urban network, the automatic metro of Hyderabad in India and the bus network of Hisingen in Sweden; pre-selection of the Govia joint venture (Go-Ahead and Keolis) for the Thameslink rail franchise call for tenders in the United Kingdom first-half results Revenue Revenue for the first half of 2012 increased by 236 million (+3.8%) compared to 2011, mainly due to: - acquisitions of Keolis in the United States and Belgium for 34 million at the end of 2011, - a positive foreign exchange rate impact of 39 million, - the - 76 million impact arising from the application of the new agreement signed between Syndicat des Transports en Ile-de-France (STIF) and SNCF (see point 1.1 Major events in the first half of 2012). On a constant Group structure and exchange rate basis and excluding the impact of the new Transilien agreement, revenue growth totalled 239 million (+3.9%), i.e.: million (+7.5%) for Keolis, of which 63 million abroad and 106 million in France through new contracts in Orléans and Aix-en-Provence and the increased offering in Lille and Lyon; million (+4.5%) for TER; the activity was marked by a 69 million rise in traffic income and the increase in contributions paid by the Organising Authorities (positive indexation impact from the agreements). Gross profit SNCF Proximités gross profit declined by 74 million (-17.4%) between 2011 and The negative impact on revenue of the application of the new Transilien agreement (see above) was fully offset against the division s gross profit and primarily accounts for its decrease. Excluding this impact, gross profit rose by 3 million. Current operating profit The division s current operating profit declined by 8 million; the new Transilien agreement did not impact current operating profit, as the resulting decrease in revenue was offset by an equivalent reduction in depreciation and amortisation charges. The decrease in current operating profit therefore reflects that of gross profit (excluding the impact of the new agreement), curbed by the net movement in provisions (the 2012 balance is a net charge of 6 million compared to a net reversal of 8 million in 2011). Equity-financed intangible asset and PP&E investments The 209 million decline in investments was mainly due to the inclusion of Transilien rolling stock within the scope of IFRIC 12 ( 66 million) and the end of the new Francilien train deliveries in the first quarter of second-half outlook For Keolis, the second half of 2012 will be marked by the allocation of the Rennes and Angers contracts and the UK West Coast Main Line franchise; the names of the companies prequalified to take over the East Coast Main Line (UK) and Boston (United States) rail franchises will be made public by the end of the year. For TER, the main challenges will involve the renegotiations of the Limousin, Franche-Comté and Picardie agreements. 12

13 Sales Operators 2.3. SNCF VOYAGES DIVISION SNCF VOYAGES Parent company Subsidiaries TGV (France) idtgv TGV (Europe) Auto-trains Luxembourg - Basel Special trains Eurostar Thalys Lyria Alleo Westbahn TGV Italia Elipsos Gala NTV * * equity-accounted voyages-sncf.com CRM Services Avancial Rail Europe 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 2012 First half 2011 Change Revenue 3,708 3, Gross profit (9) Gross profit/revenue 12.7% 13.5% Current operating profit (6) Equity-financed intangible asset and PP&E investments (276) (373) 97 Highlights On 31 March 2012, SNCF Voyages launched the Garantie Voyage, the aim of which is to accompany the development of customer relationships and clarify SNCF commitments (service quality, passenger information, management of disruptions) vis-a-vis its TGV and Intercités customers. SNCF Voyages launched its new loyalty programme, the Voyageur Programme, on 31 May 2012; it is free of charge and available to all customers. On 23 March 2012, Deutsche Bahn and SNCF inaugurated a direct service between Marseilles and Frankfurt operated in connection with Alleo. SNCF placed an order with Alstom in April 2012 for additional TGV Euroduplex trains to be delivered as from

14 2012 first-half results Revenue The division s revenue increased by 148 million (+4.2%); on a constant Group structure and exchange rate basis, the increase totalled million (+3.6%). The increase was primarily due to the growth in traffic income by 106 million or +3.6%, of which +2.5% in the domestic market and +7.8% in the European market. Gross profit SNCF Voyages gross profit declined by 9 million to 470 million. The significant traffic income generated helped to absorb most of the rising infrastructure fees and other production charges. Current operating profit Current operating profit decreased by 6 million to 279 million, primarily due to the decline in gross profit. Equity-financed intangible asset and PP&E investments The - 97 million decrease in investments was attributable to the substantial investments in the first half of 2011, marked by Eurostar s payment of a deposit on the renewal of its trains and the acquisition of TGV Dasye and 2N2 trains second-half outlook As from July 2012, SNCF Voyages will propose a new long-distance coach transport offering (idbus) and prepare for the launch in 2013 of a low-cost TGV offering. The division will continue its efforts to improve operating performance, inform passengers and look after customers in difficulty. 14

15 Rail freight fleet management TFM (rail freight business) Global transport and logistics operator 2.4. SNCF GEODIS DIVISION SNCF GEODIS Parent company Subsidiaries Geodis STVA Naviland Cargo Fret SNCF Captrain Lorry Rail Novatrans VFLI Akiem Ermewa The SNCF Geodis division includes a full range of transport and freight logistics businesses. in millions First half 2012 First half 2011 (1) Change Revenue 4,744 4,787 (43) Gross profit (32) Gross profit/revenue 2.0% 2.6% Current operating profit (80) (76) (3) Equity-financed intangible asset and PP&E investments (176) (180) 4 (1) Presented as a Group contribution, investments totalled million in the published activity report for the half-year ended 30 June Highlights The following Group structure changes took place within SNCF Geodis in the first half of 2012: STVA has developed in Europe with the acquisition of 51% of the Romanian automobile logistics operator Benga Autologistics, one of the main automobile distribution players in the country; on 30 March 2012, Geodis acquired MF Cargo, a Hungarian road transport company; following the Nanterre Trade Court s ruling on 13 April 2012, Geodis Calberson took over 48 agencies from Sernam. The main commercial successes involved: the signing of a 15-month contract between the French Ministry of Defence and Fret SNCF for the transport of army personnel and equipment across mainland France; the allocation to Geodis of logistics and distribution services in Southern Europe for Mattel. SNCF Geodis and Hupac, the leader in Swiss intermodal transport, have joined forces in Europe to develop their combined transport networks on the European East-West line via France and Belgium. Since April 2012, SNCF and Hupac have combined their networks on the Antwerp-Dourges line operated by SNCF Geodis. The division s rail motorway activities were grouped under the VIIA trademark. 15

16 2012 first-half results Revenue 2012 revenue declined by 43 million (-0.9%) compared to 2011 and was impacted by: - a Group structure impact of + 48 million (the breakdown of Group structure changes is shown in point 1.1), - a foreign exchange impact of + 45 million. On a constant Group structure and exchange rate basis, revenue decreased by 2.8% (- 135 million). With the exception of the rail freight fleet management business, revenue declined across all the division s entities in an adverse economic climate: Fret SNCF - 68 million, Road - 27 million, Logistics - 15 million, Parcel Delivery and Express - 11 million, rail carriers excluding Fret SNCF - 15 million and STVA - 9 million. Gross profit Gross profit decreased by 32 million; on a constant Group structure and exchange rate basis, gross profit fell by 28 million, mainly at Geodis (- 17 million) and within the Rail Freight Transport entity (- 14 million). The impact on gross profit of the decline in revenue was limited by cost cutting measures. Current operating profit Current operating profit declined by 3 million; the decrease in gross profit ( 32 million) and the 7 million increase in depreciation and amortisation charges were partly offset by the net increase in provisions (+ 36 million). Equity-financed intangible asset and PP&E investments Investments in the first half of 2012 did not change significantly compared to the first half of second-half outlook The division s financial trajectory could be undermined in the second half of 2012 by the long-term recession in Western Europe and the tax measures announced in France (decrease in Fillon reductions, removal of employer contribution exemptions on overtime, employee savings taxation, increase in the tax rate for major businesses). 16

17 2.5. GARES & CONNEXIONS DIVISION GARES & CONNEXIONS Parent company Subsidiaries Management and development of French train stations AREP Groupe Groupe A2C 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) and the A2C group (commercial enhancement of stations). in millions First half 2012 First half 2011 Change Revenue (99) Gross profit (3) Gross profit/revenue 19.3% 16.4% Current operating profit (10) Equity-financed intangible asset and PP&E investments (65) (42) (23) Highlights On 22 January 2012, the decree on passenger stations and other rail service infrastructures was published in the Journal Officiel in accordance with the Law on the organisation and the regulation of rail transport for the opening-up of the market to competition. This decree provides for the creation of an autonomous department to manage the infrastructures and stations within the Gares & Connexions division, clarifies the roles of the various players (Réseau Ferré de France, regional authorities and SNCF) and specifies the consistency of regulated station services as well as the related business model. On 1 January 2012, the division set up the Arep Groupe holding company comprising three entities: Arep (project management assistance in France), Parvis (project ownership assistance) and Arep Ville (architecture and urban planning). The new Paris-Saint-Lazare station was inaugurated on 21 March 2012 after fifteen years of renovation work (refurbishment and preservation of the glasswork in the main hall and creation of three new additional levels covering 10,000 m 2 with 80 stores) for a total cost of 250 million, of which 90 million financed by the Gares & Connexions division first-half results Revenue The division s revenue decreased by 99 million (-17.3%). The decline was primarily due to the transfer to Transilien of the operation and daily maintenance of the stations within the division s scope. Gross profit The division s gross profit remained stable in

18 Current operating profit Current operating profit, down 10 million, was impacted by the increase in the depreciation and amortisation of fixed installations. Equity-financed intangible asset and PP&E investments The 23 million rise in investments was primarily attributable to the change in working capital requirement with regard to capital expenditure second-half outlook The second half of 2012 will be marked by the signing with RFF of the agreement relating to passenger station services for the period. In terms of business, the year-end will be marked by the completion of the extension of hall 2 at the Paris-Lyon station and the start of plans to refurbish the Paris-Montparnasse station COMMON OPERATIONS AND INVESTMENTS Common Operations and Investments encompasses the Group s support functions, the Equipment and Traction service providers and the Real Estate activities (Real Estate Department, ICF, SNEF). The objective of the Equipment activity s roadmap is to reduce the holding cost of rolling stock and pursue and meet the activity s main challenges: guarantee the fundamental characteristics of the business, which are safety, reliability, availability and cost control; improve the overlap between maintenance and operating activities; continue its industrial transformation, by aiming for the highest level of technical expertise and constantly improving the efficiency of its teams; win external market shares. 18

19 3. INTANGIBLE ASSET AND PP&E INVESTMENTS AND NET DEBT 3.1. INTANGIBLE ASSET AND PP&E INVESTMENTS in millions First half 2012 First half 2011 Change Equity-financed intangible asset and PP&E investments (850) (1,126) 276 (25%) Net disposals (6) (4%) Equity-financed intangible asset and PP&E investments net of disposals (712) (982) 270 (27%) Equity-financed intangible asset and PP&E investments declined by 276 million compared to 2011 to 850 million. The decrease primarily concerns: - SNCF Proximités (- 209 million): the reclassification of property, plant and equipment in the first half of 2012 under concession financial assets in line with the new agreement signed between SNCF and Syndicat des Transports en Ile-de-France (see point 1.1 Major events in the first half of 2012) had a - 66 million impact on this decline; the remaining decrease in the division s investments was primarily due to the discontinuation of new Francilien train deliveries in the first quarter of 2012; - SNCF Voyages (- 97 million): the first half of 2011 had been marked by substantial investments due to Eurostar s payment of an initial deposit on the renewal of its rolling stock and the acquisition of TGV Dasye and 2N2 trains. Net disposals did not change significantly compared to Disposals in the first half of 2012 mainly involve real estate assets (particularly boulevard Diderot in Paris) and software sold to RFF GROUP NET DEBT in millions 30/06/ /12/2011 Change Non-current debt 16,376 15, Non-current receivables (5,924) (5,915) (9) Net non-current debt 10,451 9, Current debt 5,031 5,418 (387) Current receivables (6,473) (6,695) 222 Net current debt (1,442) (1,277) (164) Net debt 9,010 8, Gearing Net debt amounted to 9.0 billion as at 30 June 2012, for a gearing of 1.3 (1.2 at the end of 2010). Net debt as a percentage of gross profit rose from 2.8% at the end of 2011 to 3.0% as at 30 June 2012 (calculated on a 12-month rolling basis). 19

20 The 0.7 billion increase in net debt compared to 31 December 2011 breaks down as follows: Opening net debt 8,329 Cash from operations (1,020) Equity-financed intangible asset and PP&E investments 850 Concession financial assets 24 Net disposals (137) Net external growth 2 Change in operating WCR 673 Dividend paid to the French State 199 Changes in fair value, amortised cost, translation difference 34 Other 56 Closing net debt 9, FINANCING SOURCES AND DEBT MANAGEMENT Non-current debt increased by 0.9 billion whereas current debt declined by 0.4 billion. These changes were mainly due to: - bond issues for 0.9 billion; - loan repayments for 1.1 billion; they mainly concern bonds for 0.6 billion, finance leases for 0.4 billion and an EIB loan for 0.1 billion; - a 0.2 billion decrease in amounts payable on minority interest buyout commitments mainly due to the restructuring of Keolis capital (see point 1.2 Major events in the first half of 2012). - a 1.0 billion increase in cash borrowings and overdrafts, of which 0.2 billion relating to the restructuring of Keolis capital. The parent company is responsible for managing most of Group s net debt and carried 94% 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 Negative 17-Jan.-12 Moody's Aa1 Negative 17-Feb.-12 Fitch AAA Negative 20-Dec.-11 Current receivables decreased by 0.2 billion primarily due to: - Public Debt Fund receivable payments ( 0.5 billion); - RFF receivable payments ( 0.1 billion); - decrease in cash in the amount of 0.7 billion; - increase in marketable securities in the amount of 1.1 billion. 20

21 3.4. 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 the consolidated financial statements. 4. CONSOLIDATED STATEMENT OF FINANCIAL POSITION AND RATIOS in millions 30/06/ /12/2011 Goodwill 1,659 1,672 Intangible assets 1,392 1,416 Property, plant and equipment 15,929 16,658 Non-current financial assets 7,545 6,265 Investments in associates Deferred tax assets 1,123 1,112 Non-current assets 28,144 27,621 Operating assets 8,583 7,744 Current financial assets 3,441 2,793 Cash and cash equivalents 3,222 3,902 Current assets 15,246 14,440 Assets classified as held for sale 1 1 TOTAL ASSETS 43,391 42,062 Share capital 4,971 4,971 Consolidated reserves 1,819 1,893 Net profit for the year Equity attributable to equity holders of the parent 7,043 6,989 Non-controlling interests (minority interests) Total equity 7,115 7,058 Non-current employee commitments 1,759 1,695 Non-current provisions Non-current financial liabilities 16,376 15,521 Deferred tax liabilities Non-current liabilities 19,383 18,519 Current employee commitments Current provisions Operating payables 11,536 10,711 Operating liabilities 11,858 11,062 Current financial liabilities 5,031 5,418 Current liabilities 16,890 16,480 Liabilities directly associated with assets classified as held for sale 4 4 TOTAL EQUITY AND LIABILITIES 43,391 42,062 Gearing (Net debt/equity) Net debt / Gross profit (calculated on 12-month rolling basis)

22 The inclusion of Transilien rolling stock within the scope of IFRIC 12 Service concession arrangements had the following impacts on the statement of financial position as at 30 June 2012 (1) : - a 727 million decrease in property, plant and equipment compared to that which would have been otherwise obtained; - a 1,220 million increase in non-current financial assets; - a 190 million increase in current financial assets; - a 683 million in operating liabilities. (1) this treatment follows the adoption of the new agreement between Syndicat des Transports en Ile-de- France (STIF) and SNCF (see point 1.1 Major events in the first half of 2012). Between 31 December 2011 and 30 June 2012, the only other material change in the statement of financial position concerns the 696 million increase in working capital requirement, mainly arising from: - a 221 million rise in receivables vis-a-vis RFF; - deferred income of 149 million involving the Intercités agreement; - a 123 million working capital requirement regarding the tax on the profits of rail companies and the Regional Solidarity Contribution. Movements in financial assets and liabilities are analysed in point FINANCIAL RELATIONS WITH THE FRENCH STATE, RESEAU FERRE 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 2012 First half 2011 Change Compensation of IM by RFF 1,581 1, including traffic and circulation management including network and asset management 1,136 1, Work for RFF Total RFF 2,424 2, Compensation for regional rates Services for the Organising Authorities 1,860 1,888 (28) Total Regions and STIF 2,112 2,105 7 Newspapers Socially-motivated prices (1) Defence Trains d'equilibre du Territoire (TET) Total French State TOTAL 4,795 4,

23 5.1.1 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 (+ 112 million) was primarily due to: - agreement for the 2011 supply arrangement; - higher production volumes with regard to project management and subcontracting; - higher production volumes under the SNCF-Entrepreneur agreement (services relating to investments in the national rail network) Services for the Regions and STIF Services for the Regions and STIF did not change significantly Services for the French State The increase in services for the French State was primarily due to the renegotiation of the Trains d Equilibre du Territoire agreement GRANTS AND COMPENSATION FOR FINANCIAL AND SOCIAL EXPENSES Public contributions granted to the Group by the State and local communities are presented in the following table: in millions First half 2012 First half 2011 Change Operating grants (2) Payments received for concession financial assets Investment grants relating to intangible assets and PP&E (14) Total Public contributions included in profit or loss Operating grants These are mainly grants of a social nature paid to companies by the French State in connection with its employment policy Other payments received with no impact on profit or loss Payments received for concession financial assets and investment grants received SNCF receives investment grants in the form of third-party financing, primarily from local authorities, for rolling stock. In accordance with IFRIC 12, grants received as part of a concession are presented in the statement of financial position as a deduction from the intangible assets or financial assets, according to the applicable model, following the analysis of each concession agreement. With regard to concession financial assets, the grants received are considered as a means of reimbursing such assets. In the income statement, investment grants relating to intangible assets and property, plant and equipment are recorded in operating profit or loss (as a deduction from depreciation and amortisation) according to the estimated economic life of the corresponding assets. The inclusion of Transilien rolling stock within the scope of IFRIC 12 Service concession arrangements had a 111 million impact on Payments received for concession financial assets (see point 1.1 Major events in the first half of 2012). 23

24 6. EMPLOYEE MATTERS 6.1. AVERAGE WORKFORCE 30/06/ /06/2011 Change Change on a constant Group structure basis (1) SNCF Infra division 51,849 52,711 (2%) (862) 1% 763 SNCF Proximités division 64,820 61,154 6% 3,666 4% 2,468 incl. Keolis group 48,551 45,149 8% 3,402 5% 2,204 SNCF Voyages division 26,416 26,274 1% 141 0% 87 SNCF Geodis division 46,688 47,079 (1%) (391) (2%) (883) incl. Geodis group 30,808 30,300 2% 508 0% 70 Gares & Connexions 1,667 1,629 2% 38 2% 38 Common Operations and Investments 53,882 54,172 (1%) (290) 1% 470 TOTAL 245, ,020 1% 2,302 1% 2,943 (1) Main impacts of changes in Group structure: - SNCF Infra division: creation of the new Systra entity, now equity-accounted (-1,601); - SNCF Proximités division: acquisitions of Keolis in the United States (+1,159) and Belgium (+44); - SNCF Voyages division: acquisition of Westbahn (+54); - SNCF Geodis division: acquisition of the Sernam business (+196), Pharmalog (+138), MF Cargo (+95) and Benga (+54); - Common Operations and Investments: deconsolidation of SeaFrance (-784). Excluding Group structure impacts, employee numbers only increased significantly at SNCF Proximités, mainly driven by the growth of Keolis in Sweden and France. Changes in subsidiary employee numbers over recent years primarily reflect changes in group structure: First half Parent company (1) 155, , , , , ,213 Subsidiaries 89,415 89,043 83,084 38,326 37,854 35,332 TOTAL 245, , , , , ,545 (1) including seconded employees MAIN AGREEMENTS SIGNED IN FIRST HALF OF 2012 A collective agreement was signed in the first half of 2012 (signature on 20 June 2012). Effective as at 1 July 2012, it concerns the company s housing policy. 24

25 7. CHALLENGES AND OUTLOOK The first half of 2012 confirmed a situation that had been anticipated since the second half of 2011: an activity with no accurate visibility: - regulated activities, which reported a +4.8% increase in revenue in the first half of 2012, should continue on the same course; - the economic and industrial outlooks for the second half of 2012 confirm the recession phase for freight; - long-distance passenger traffic remains uncertain. However, the expectations in the terms of operating performance over the year should be met, without any major economic deterioration, based on the first-half results and continued cost and expenditure cutting measures. Regarding the expected reform of the French rail system, SNCF has undertaken to unify the infrastructure manager businesses and firmly endorses the creation of a unified public tool to ensure the system s operational and economic performance. 25

26 CORPORATE GOVERNANCE 1. BOARD OF DIRECTORS The Board of Directors of the industrial and commercial public enterprise SNCF comprises eighteen members: Seven representatives of the French State appointed by decree, based on the report of the Transport Minister: two at the recommendation of the Transport Minister; one at the recommendation of the Minister for Economy and Finance; one at the recommendation of the Budget Minister; one at the recommendation of the Minister for Planning and Regional Development; one at the recommendation of the Minister for Industry; the Chairman of the Board appointed from among the directors and at their recommendation by a Council of Ministers decree. Five members chosen for their expertise and appointed by decree: a representative of passengers; a representative of shippers; two local councillors chosen for their knowledge of regional, department and local rail-related matters; an individual chosen for his personal expertise in the transport sector. Six members, including a management representative, elected by employees of the Company and its subsidiaries having a minimum workforce of 200 members. A Council of State (Conseil d État) decree lays down the parent company by-laws and sets the procedures for the appointment and election of Board members. Board members are appointed for a five-year term of office. A director may not exercise more than three consecutive terms of office. Directors receive no compensation for their activities. The Government Commissioner or, in his absence, the Assistant Government Commissioner, has an advisory seat on the Board and all committees and commissions created. The head of the Transport Economic and Finance Control Office or his representative has an advisory seat on the Board and all committees and commissions. The Board Secretary and the Secretary of the Joint Labour-Management Committee also have a seat on the Board. The Board of Directors holds at least ten meetings annually. 26

27 Since its renewal in February 2008, the Board of Directors now has six committees: Strategic Committee, responsible for reviewing the annual and long-term strategic and financial directions of the parent company and the Group, as well as Group structure operations; Audit and Risk Committee, responsible for reviewing the annual and half-yearly financial statements, risk mapping and the annual internal audit work programme; Contracting Committee, consulted on projects involving government or private contracts, acquisitions, disposals, building exchanges, based on predetermined thresholds set by the Board; Passengers Committee, responsible for monitoring rail transport agreements between local authorities, public institutions and SNCF, and more generally overall passenger problems. Transport and Logistics Committee, responsible for reviewing the activity and strategies of the SNCF Geodis division. Economic and Social Cohesion Committee, responsible for informing the Board of the social and human challenges of the company s main transformation projects and, more generally, its strategy. 2. MANAGEMENT TEAM The Chairman appoints the members of the Executive Committee and defines their tasks. Within their areas of expertise, Executive Committee members are delegated powers by the Chairman enabling them to act and decide in his name. The Executive Committee has seventeen members (including the Chairman). 27

28 FIRST HALF OF 2012 SNCF GROUP CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (IFRS) In millions 34, rue du Commandant René Mouchotte Paris 28