Advanced batteries. Designed for industry. INTERIM FINANCIAL REPORT FIRST HALF-YEAR 2014

Transcription

1 Advanced batteries. Designed for industry. INTERIM FINANCIAL REPORT FIRST HALF-YEAR 2014

2 Contents interim management report first half sales and consolidated results highlights Results by division Other items of consolidated income Main cash flows over the period Consolidated balance sheet Other significant events during the first half of Related-party transactions Risks and uncertainties with regard to the second half of Financial calenda r 8 2 Condensed Interim Consolidated Financial Statements Consolidated income statement Consolidated statement of comprehensive income Consolidated statement of cash flows Consolidated statement of financial position Consolidated statement of changes in equity Notes to the Condensed Interim Consolidated Financial Statements 15 3 Statutory Auditors review report 23 4 Certificate by the persons responsible 24 Important legal information and cautionary statements: The Condensed Interim Consolidated Financial Statements for the six months ended 30 June 2014 presented in this document have been approved by the Management Board, reviewed by the Audit Committee and approved by the Supervisory Board of Saft. Certain statements contained herein are forward-looking statements relating, in particular, to future events, trends, plans or objectives. By their nature, these forwardlooking statements involve known or unknown risks and uncertainties that could cause Saft s actual results and objectives to differ materially from those expressed or implied in these forward-looking statements. SAFT - INTERIM FINANCIAL REPORT 2014

3 1 I nterim management report First half year first half sales and consolidated results highlights Results by division Other items of consolidated income Main cash flows over the period Consolidated balance sheet Other significant events during the first half of Related-party transactions Risks and uncertainties with regard to the second half of Financial calendar 8 SAFT - INTERIM FINANCIAL REPORT 2014 / 1

4 INTERIM MANAGEMENT REPORT FIRST HALF YEAR 2014 first half sales and consolidated results highlights FIRST HALF SALES AND CONSOLIDATED RESULTS HIGHLIGHTS (in million) Six months ended 30 June 2014 Six months ended 30 June 2013 Six months 2014/2013 ended % Growth (1) 30 June 2012 Revenues % Gross profit % 86.0 Gross margin (%) 28.6% 27.8% 29.4% EBITDA (2) % 50.1 EBITDA margin (%) 15.4% 14.0% 17.1% EBIT (3) % 33.6 EBIT margin (%) 9.5% 7.2% 11.6% Operating profit % 33.5 Net profit from continuing operations % 20.5 Net profit from discontinued operations - (5.2) - (0.5) Net profit for the period % 20.0 EPS total ( per share) % 0.79 EPS from continuing operations ( per share) % 0.81 (1) Percentages changes are at actual exchange rates except for sales which are at constant exchange rates. The average euro/dollar exchange rate during H was 1 = $1.37, compared with 1 = $1.31 during H (2) EBITDA is defined as operating profit, before depreciation, amortisation, restructuring costs and other operating income and expenses. (3) EBIT is defined as operating profit, before restructuring costs and other operating income and expenses. Group first half sales for 2014 amounted to million, up by 15.9% as compared to the first half of 2013 at current exchange rates and up by 18.4% at constant exchange rates. This reflects an 18.9% increase in revenues in the second quarter at constant exchange rates, continuing strong increases recorded since the third quarter of The excellent performance during the first half of 2014 encompasses a strong sales growth within the Industrial Battery Group and a more limited growth in sales of the Specialty Battery division. Developments by division are discussed below. Gross profit for the first half stood at 94.5 million, an increase of 15.4 million, or 19.5%, on H Gross profit margin in H was 28.6%, versus 27.8% for the same period in the previous year. The sharp improvement in gross profit is mainly due to higher volumes of sales of both nickel and lithium-ion batteries. EBITDA for the first half of 2014 amounted to 50.7 million, equating to an EBITDA margin of 15.4%, compared with 40.0 million or 14.0% of revenue in H In particular, the increase in sales of lithium-ion batteries of more than 60% and solid operational performance of the Jacksonville and Nersac plants significantly reduced the negative contribution of these two plants to EBITDA margin in H The numerous commercial developments, particularly in new market segments, are accompanied by a 2.7 million rise in R&D expenses, mainly linked to the development of new lithium-ion products set to drive future growth. After amortisations and depreciations of 19.2 million (versus 19.4 million in H1 2013), EBIT margin in the first half stood at 31.5 million, representing a margin of 9.5% of revenue, compared with an EBIT margin of 20.6 million or 7.2% of revenue in H After restructuring costs of 0.5 million, Group operating profit for H was 31.0 million, up 18.3% on the same period in the previous year, when the Group recorded non-recurring income totalling 5.8 million. Net financial expense for the first half dropped sharply by 2.9 million at 2.8 million. This significant improvement is mainly due to a foreign exchange gain of 1.5 million in the first half, versus a net foreign exchange loss of 0.9 million in Income tax from continuing operations for the first half of 2014 amounted to 6.8 million, representing an overall Group tax rate of 23.8% compared with 21.3% in H This increase in Group tax rate is mainly due to improved operational performance. 2 / SAFT - INTERIM FINANCIAL REPORT 2014

5 INTERIM MANAGEMENT REPORT FIRST HALF YEAR 2014 Results by division 1 Net profit from continuing operations in H stood at 21.8 million, up 33.7% on the 16.3 million recorded in H Earnings per share from continuing operations amounted to 0.84 at the end of the first half of 2014 versus H EPS of 0.65, an increase over 29%. Net profit for the first half of 2014 was 21.8 million (including net profit attributable to owners of the parent of 21.7 million), versus a net profit of 11.1 million in H1 2013, the latter incorporating the loss of 5.2 million on the sale of the SNB activity of small nickel batteries. Net earnings per share amounted to 0.84 for the first half of 2014, compared with EPS of 0.44 in H RESULTS BY DIVISION SECOND QUARTER SALES BY DIVISION (UNAUDITED) (in million) Second quarter 2014 Second quarter 2013 At actual exchange rates Variations in % At constant exchange rates IBG % 34.9% SBG (3.9)% (1.7)% TOTAL % 18.9% The average euro/dollar exchange rate during Q was 1 = $1.37, compared with 1 = $1.32 during Q HALF-YEAR RESULTS BY DIVISION Revenue ( m) Six months ended 30 June 2014 Six months ended 30 June 2013 Change (in %) (1) EBITDA ( m) EBITDA Margin (in %) Revenue ( m) EBITDA ( m) EBITDA Margin (in %) IBG % % % SBG % % % Other - - (1.8) n.a. - (1.3) n.a. TOTAL % % % (1) Changes in revenue are expressed at constant exchange rates. The average euro/dollar exchange rate during H was 1 = $1.37, compared with 1 = $1.31 during H n.a.: non applicable. E volution of the consolidated turnover per market segment is as follows: 2014 Variations at constant 2013 exchange rates Stationary back-up power and e nergy storage systems % Transportation (aviation, rail and vehicles) % Sales of battery components % TOTAL IBG % Civil electronics % Space & defense (15.3)% TOTAL SBG % TOTAL CONSOLIDATED SALES % SAFT - INTERIM FINANCIAL REPORT 2014 / 3

6 1 Results INTERIM MANAGEMENT REPORT FIRST HALF YEAR 2014 by division A) INDUSTRIAL BATTERY GROUP (IBG) At million, the division s sales increased by 31.7% during the first half of 2014 at constant exchange rates. After sales growth of 28.0% at constant exchange rates during the first quarter, the second quarter recorded a stronger performance with an increase in sales by 34.9% at constant exchange rates compared to the second quarter of the previous year. The increase in H1 sales of the IBG division resulted from strong growth of activity in all market segments of the division. The most substantial contribution to this performance came from sales of batteries for stationary back-up power applications. Sales in the market of telecommunication networks increased sharply compared to the first half of 2013, primarily due to sales of Evolion batteries to Indian telecom network operator Reliance Jio Infocomm Limited but also due to increased sales of nickel batteries in the United States. Sales of back-up power batteries for industrial applications also recorded strong growth, beyond growth of the market. Finally, sales of ESS batteries for energy storage applications increased sharply during the first half of Transportation markets also contributed to this strong performance with sales growth of 19.0% at constant exchange rates. The aviation segment had the strongest growth from both sales of replacement batteries to the civil market and sales of lithium-ion batteries to the military. Sales to the rail segment continued to grow at a similar pace to that noted in IBG division markets will remain positive during the second half of the year noting that as the major sales contract for lithium-ion Evolion in India is fully delivered, sales of batteries in the telecommunications networks segment will decline in the second half of Sales of batteries in the ESS market will be the main source of demand for lithium-ion batteries produced in Jacksonville and Nersac in the second half. The EBITDA margin for the division in the first half of 2014 totalled 22.7 million or 11.0% of sales, against a margin of 7.6% in the first half of This strong increase in profitability is due to higher nickel and lithium-ion batteries. Increased volumes in Jacksonville and Nersac as well as good operational performance resulted in a strong reduction of the combined EBITDA loss of these two factorie s. B) SPECIALTY BATTERY GROUP (SBG) SBG division sales over the first six months amounted to million, a 1.5% increase at constant exchange rates and a 0.3 % decrease on a reported basis. Sales decreased by 1.7% during the second quarter at constant exchange rates, following an increase by 5.2% registered during the first quarter. The strong recovery in sales to the civil electronics markets during the first quarter continued during the second quarter leading to an overall sales growth of 12.3% for the first six months of 2014 at constant exchange rates. Increased activity in the civil electronics is mainly due to increased sales in the metering business in Europe and China. Space and defense market saw a 15% sales drop during the first half of The decline in defense activity is mainly due, as anticipated, to weak sales of military batteries for torpedoes. Combined sales of batteries for other military applications were overall in line with prior year. Space saw reduced sales during the first six months, due to unfavourable timing of deliveries of batteries for satell ites. At 29.8 million, the EBITDA margin of SBG division slightly increased to 23.9% of sales in the first half compared with 23.3% EBITDA margin in H Negative foreign exchange impact due to weak U.S. dollar against the euro and the I sraeli shekel was more than compensated for by strong cost control and positive volume effect. SBG sales should benefit from slow growth during the second half of the year. C) OTHER ACTIVITIES Corporate expenses that are not allocated to the operational divisions have led to a negative EBITDA of the «Other» division of 1.8 million in H1 2014, as compared with an EBITDA loss of 1.3 million for the same period in / SAFT - INTERIM FINANCIAL REPORT 2014

7 INTERIM MANAGEMENT REPORT FIRST HALF YEAR 2014 Other items of consolidated income OTHER ITEMS OF CONSOLIDATED INCOME OTHER OPERATING INCOME AND EXPENSES No other operating income or expenses were recorded during the first half of 2014 while the first half of 2013 benefited from non-recurring revenue in the amount of 5.8 million other operating revenue were composed of an insurance indemnity received in the amount of 4.0 million and a 1.8 million negative goodwill generated by the acquisition of the Nersac lithium-ion production plant from Johnson Controls Inc. on 1 January OPERATING PROFIT Factoring in 0.5 million of restructuring charges, the Group s operating profit amounts to 31.0 million for H1 2014, compared with 26.2 million a year ago, a growth of 18.3%. NET FINANCE COSTS Net financial costs in H amounted to 2.8 million as compared to a 5.7 million loss for the first half of Net cost of financial debt was 3.5 million, stable as compared with previous year. Composite interest rate of the Group financial debt, net of hedging, amounted to 3.28% in H1, compare d to a 3.26% rate in full-year H reduction in net financial costs results from a 1.5 million positive result from foreign exchanges against a 0.9 million foreign exchange loss in Main origin of H profit from foreign exchanges is the significant decline in the Swedish krona against the euro and the dollar during the second quarter of 2014, a change that positively impacts the Group s Swedish subsidiary. NET INCOME FROM CONTINUED OPERATIONS After accounting for the Group s 50% share in the profit of the ASB joint venture, representing a positive contribution of 0.4 million during the first half of 2014, profit before tax from continuing operations stood at 28.6 million for H1 2014, compared to 20.7 million in H Group income tax expense related to continuing operations totalled 6.8 million during the first half of 2014, representing a group-wide overall rate of 23.8%, versus a tax expense of 4.4 million in H1 2013, which corresponded to a 21.3% overall tax rate on continuing operations. Thus, the net profit from continuing operations during the first half of 2014 totalled 21.8 million, compared with a net profit of 16.3 million during H NET RESULT FROM DISCONTINUED OPERATIONS The 5.2 million net loss from discontinued activities in H concerns the SNB small nickel batteries activity sold on 28 June NET INCOME Net income for H totals 21.8 million, compared with a net income of 11.1 million in H1 2013, a 96% year-on-year improvement. Earnings per share amounts to 0.84 for the first half of 2014, compared with an EPS of 0.44 in H SAFT - INTERIM FINANCIAL REPORT 2014 / 5

8 1 Main INTERIM MANAGEMENT REPORT FIRST HALF YEAR 2014 cash flows over the period 1.4 MAIN CASH FLOWS OVER THE PERIOD CASH FLOWS FROM OPERATING ACTIVITIES Net cash flows from operating activities amounted to 27.8 million in H1 2014, up by 2.9 million as compared with H Good control of operating working capital has limited its growth to 2.5 million. This excellent performance in the context of strong sales growth was partially offset by a significant net increase in other receivables and payables. Half of this increase in non-operating working capital is due to increased tax credits. The balance is seasonal. CASH FLOWS FROM INVESTING ACTIVITIES As anticipated, cash flows from investing activities during the first half were sharply down at 17.2 million as compared to 34.6 million in H Gross industrial capital expenditure amounted to 14.3 million during H ( 22.3 million in H1 2013), of which 2.7 million ( $3.6 million) related to the completion of the third production line construction of the Jacksonville facility. Investment in this project is completed and this production unit has now three production lines. Investments in intangible assets which are mainly composed of capitalised development costs amounted to 3.1 million as compared to 3.6 million during H These investments relate to the development of new products that will fuel future sales growth. CASH FLOWS FROM FINANCING ACTIVITIES Cash out flows from financing activities amounted to 7.4 million in H Significant cash flows from financing activities related to, on the one hand, the payment of dividend to S aft shareholders for an amount of 9.8 million (knowing that 53% of shareholders opted for payment of dividend in shares) and, on the other hand, a 2.4 million capital increase from exercise of stock options by Group s employees. CASH FLOWS FROM DISCONTINUED OPERATIONS Net cash-flows variations from discontinued operations in the first half of 2013 and 2012 correspond to the small nickel battery business sold on 28 June FREE CASH FLOW As a result of the increase in the Group s profitability during the first half, good control of operating working capital and the expected reduction in capital expenditures following the completion of the Jacksonville project, free cash flow generated by the Group during the first half year of 2014 amounted to 10.6 million compared to a negative free cashflow, before refinancing, of 2.0 million during H / SAFT - INTERIM FINANCIAL REPORT 2014

9 INTERIM MANAGEMENT REPORT FIRST HALF YEAR 2014 Consolidated balance sheet CONSOLIDATED BALANCE SHEET The Group s balance sheet at 30 June 2014 shows the following: an overall stability in non-current assets at 575 million; an increase by 17.5 million of current assets (1) partially offset by the increase of 3.2 million of current liabilities (2), mainly due to non-operating working capital. This increase is partly seasonal; a strong cash position at million after payment of dividend for 9.8 million; an increase of 17.1 million in equity at million, taking into account a 2.4 million capital increase following exercise of stock-options by employees ; finally, a stable gross financial debt at million. 1.6 OTHER SIGNIFICANT EVENTS DURING THE FIRST HALF OF 2014 ANNUAL SHAREHOLDERS MEETING AND DIVIDEND At the Annual Shareholders Meeting on 12 May 2014, Saft Groupe SA s shareholders set the ordinary dividend for 2013 financial year at 0.78 per ordinary share, a year-on-year increase by 4.0%. Moreover, they also approved the option for dividend payment in shares. Taking into account the chosen method, the issue price of shares was fixed at per share. Shareholders accounting for more than 53% of the share capital chose to have dividends paid in shares. The subsequent capital increase is described in note 5 to the Condensed Interim Consolidated Financial Statements. In addition, the shareholders renewed authorisations to the Management Board to decide, within certain limits, on the issue of shares and/or securities giving immediate or future access to the Company s share capital. INVESTMENT PROJECTS commissioned. This line will produce prismatic cells while the first two lines are producing cylindrical lithium-ion cells. This line completes the Group s $200 million investment in Jacksonville production unit. LITHIUM-ION BATTERIES SALES DEVELOPMENT Sales of Li-ion batteries have recorded strong growth of over 60% during H compared to the same period last year. This evolution is mainly due to growth in sales of batteries Evolion to the Indian telecom network operator Reliance Jio Infocomm Limited and, to a lesser extent, sales of large battery systems for energy storage and renewable energy ( ESS market). As deliveries of Evolion batteries under the Indian contract have been completed in the first half, sales of large battery systems to the ESS market will constitute the main source of demand for lithium-ion batteries produced in Jacksonville and Nersac during the second half of the year. The third production line of the new lithium-ion battery factory in Jacksonville has been installed and is currently being (1) Excluding treasury. (2) Excluding financial indebtedness and provisions. SAFT - INTERIM FINANCIAL REPORT 2014 / 7

10 1 Related-party INTERIM MANAGEMENT REPORT FIRST HALF YEAR 2014 transactions 1.7 RELATED-PARTY TRANSACTIONS The nature of the Group s related-party transactions remains unchanged as compared to the situation described in note 28 of the 2013 Consolidated Financial Statements, as presented on page 146 of the 2013 Registration Document registered with the French financial markets authority (Autorité des marchés financiers) on 18 February The Group s 50% share in H net income of the ASB joint venture jointly controlled with Airbus group, was 0.4 million, compared with 0.2 million in H RISKS AND UNCERTAINTIES WITH REGARD TO THE SECOND HALF OF 2014 Saft considers that the main risks to which the Group is exposed are the same as those described on pages 21 to 32 of the 2013 Registration Document. The main uncertainties for H concern: trends in the global economic situation, in particularly the economic situation in the United States as well as in Europe and in emerging economies and their impacts on market segments on which the Group operates; trends with regard to public procurement contracts, in particular in the defense sector; finally, the changes in exchange rates and particularly that of the U.S. dollar and the S wedish k rona as compared to the euro but also the I sraeli s hekel against the dollar. 1.9 OUTLOOK In the light of the Group s commercial activity and sales performance during the first half, annual sales and profitability guidances are confirmed. The second half of 2014 should see a continued growth in sales but at a lower rate than that recorded in the first half. (in million) FY 2013 Actual H FY 2014 Initial estimate at average 2013 exchange rates Sales (1) to 700 EBITDA margin to 108 (1) Sales estimates are at constant exchange rates FINANCIAL CALENDAR The Group s indicative financial communication schedule is as follows: 2014 Q3 turnover : 23 October 2014 Investor day in Jacksonville, Florida: 7 November 2014 Annual sales and results for 2014: 18 February / SAFT - INTERIM FINANCIAL REPORT 2014

11 2 Condensed Interim Consolidated Financial Statements At 30 June Consolidated income statement Consolidated statement of comprehensive income Consolidated statement of cash flows Consolidated statement of financial postion Consolidated statement of changes in equity Notes to the Condensed Interim Consolidated Financial Statements 15 SAFT - INTERIM FINANCIAL REPORT 2014 / 9

12 2 Consolidated CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AT 30 JUNE 2014 income statement 2.1 CONSOLIDATED INCOME STATEMENT (in million) Note Period ended 30 June 2014 Period ended 30 June 2013 Period ended 30 June 2012 Revenues Cost of sales (235.6) (205.8) (207.0) Gross profit Distribution and sales costs (21.3) (20.6) (19.4) Administrative expenses (25.0) (23.9) (21.7) Research and Development expenses (16.7) (14.0) (11.3) Restructuring costs (0.5) (0.2) (0.1) Other operating income and expenses Operating profit Finance costs, net 8 (2.8) (5.7) (4.9) Share of profit/(loss) of associates Profit before income tax from continuing operations Income tax on continuing operations 10 (6.8) (4.4) (8.7) Net profit/(loss) from continuing operations Net profit/(loss) from discontinued operations (1) 0.0 (5.2) (0.5) Net profit for the period Attributable to owners of the parent company Attributable to non-controlling interests Earnings per share (in per share) 11 basic diluted Earnings of discontinued operations (in per share) basic diluted (1) Net profit/(loss) from discontinued operations for the first half of 2012 and 2013 relate to the SNB small nickel batteries activity, sold on 28 June CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (in million) Period ended 30 June 2014 Period ended 30 June 2013 Period ended 30 June 2012 Net profit for the period Other comprehensive income Actuarial gains and losses recognised against Statement of Comprehensive Income Tax effect on actuarial gains and losses recognised against Statement of Comprehensive Income Items that will not be reclassified to profit or loss Fair value gains/(losses) on cash flow hedge 1.6 (1.8) (0.1) Fair value gains/(losses) on investment hedge (1.0) (1.0) 6.7 Currency translation adjustments 1.0 (0.4) (0.7) Tax effect on income/(expenses) recognised directly in equity (0.2) 0.9 (2.2) Items that may be reclassified subsequently to profit or loss 1.4 (2.3) 3.7 Total other comprehensive income for the period, net of tax 1.4 (2.3) 3.7 Total comprehensive income for the period Attributable to: owners of the parent company non-controlling interests 0.2 (0.2) / SAFT - INTERIM FINANCIAL REPORT 2014

13 CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AT 30 JUNE 2014 Consolidated statement of cash flows CONSOLIDATED STATEMENT OF CASH FLOWS (in million) Period ended 30 June 2014 Period ended 30 June 2013 Period ended 30 June 2012 Net profit for the period from continuing operations Adjustments Share of profit/(loss) of associates (net of dividends received) Income tax expense from continued operations Property, plant and equipment and intangible assets amortisation and depreciation (1) Finance costs, net Net movements in provisions (1.5) (1.4) - Other0.4 (3.4)0.5 Net cash generated by operating activities, before changes in working capital, interest and income tax Change in inventories (6.1) (14.5) (13.1) Change in trade receivables (2.3) Change in trade payables Change in other receivables and payables (10.3) 0.7 (10.9) Changes in working capital (12.8) (3.3) (23.4) Cash flows generated from operations before interest and income tax Interest paid (3.5) (3.7) (2.9) Income tax paid (6.1) (9.8) (6.8) Net cash generated by operating activities Cash flows from investing activities Purchase/sale of equity securities, net of cash acquired 0.2 (8.5) - Purchase of property, plant and equipment (14.3) (22.3) (24.6) Purchase of intangible assets (3.1) (3.6) (5.0) Proceeds from sale of property, plant and equipment Variation of other non-current financial assets and liabilities - (0.2) - Net cash used in investing activities (17.2) (34.6) (29.3) Cash flows from financing activities Capital increase Purchase/Sale of treasury shares liquidity contract 0.7 (0.2) (0.3) New debt Debt repayments - - (328.5) Grants related to assets Increase/(decrease) in other long-term liabilities (0.7) Dividends paid to Company shareholders (9.8) (9.1) (43.1) Net cash generated by/(used in) financing activities (7.4) (1.4) (155.5) Net cash generated by/(used in) continuing operations 3.2 (11.1) (166.4) Net cash generated by/(used in) discontinued operations (2) - (8.4) (0.2) Net increase/(decrease) in cash 3.2 (19.5) (166.6) Cash and cash equivalents at beginning of period Impact of changes in exchange rate (0.1) (0.8) (1.4) CASH AND CASH EQUIVALENTS AT END OF PERIOD (1) Net of amortization of deferred grants related to assets. (2) Net cash used in discontinued operations for the first halves of 2012 and 2013 relate to the SNB small nickel batteries activity, sold on 28 June SAFT - INTERIM FINANCIAL REPORT 2014 / 11

14 2 Consolidated CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AT 30 JUNE 2014 statement of financial position 2.4 CONSOLIDATED STATEMENT OF FINANCIAL POSITION ASSETS (in million) Note As of 30 June 2014 As of 31 December 2013 As of 31 December 2012 Non-current assets Intangible assets, net Goodwill Property, plant and equipment, net Investment properties Investments in joint undertakings Deferred income tax assets Other non-current financial assets Current assets Inventories Tax credits Trade and other receivables Derivative financial instruments Cash and cash equivalents Assets held for sale (1) TOTAL ASSETS (1) Assets held for sale as of end of 2012 relate to the SNB small nickel batteries activity, sold on 28 June / SAFT - INTERIM FINANCIAL REPORT 2014

15 CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AT 30 JUNE 2014 Consolidated statement of financial position 2 LIABILITIES AND SHAREHOLDERS EQUITY (in million) Note As of 30 June 2014 As of 31 December 2013 As of 31 December 2012 Shareholders equity 5 Ordinary shares Share premium Treasury shares (0.7) (1.5) (2.0) Cumulative translation adjustments Fair value and other reserves Group consolidated reserves Minority interest in equity Total shareholders equity Liabilities Non-current liabilities Debt Other non-current financial liabilities Deferred grants related to assets Deferred income tax liabilities Pensions and other long-term employee benefits Provisions Current liabilities Trade and other payables Taxes payable Debt Derivative instruments Pensions and other long-term employee benefits Provisions Liabilities associated with assets held for sale (1) TOTAL LIABILITIES AND EQUITY (1) Liabilities associated with assets held for sale as of end of 2012 relate to the SNB small nickel batteries activity, sold on 28 June SAFT - INTERIM FINANCIAL REPORT 2014 / 13

16 2 Consolidated CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AT 30 JUNE 2014 statement of changes in equity 2.5 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (in million) Number of shares making up the capital Attributable to equity holders of the Company Share Capital Share Premium Reserves Profit for the period attributable to equity Total Noncontrolling interests Shareholders equity Balance at 1 January ,174,845 25, Appropriation of 2011 earnings (80.2) Employee stock options plans (value of employee services) Dividend paid - - (25.1) (18.0) - (43.1) - (43.1) Purchase/Sale of treasury shares (0.2) - (0.2) - (0.2) Total comprehensive income Balance at 31 December ,174, Appropriation of 2012 earnings (31.4) Employee stock options plans (value of employee services) Capital increase by exercise of stock options 6, Dividend paid (9.0) - (9.0) - (9.0) Dividend paid in shares 583, (9.8) Purchase/Sale of treasury shares (0.1) - (0.1) - (0.1) Total comprehensive income (0.2) 8.8 Balance at 30 June ,765, Employee stock options plans (value of employee services) Capital increase by exercise of stock options 88, Purchase/Sale of treasury shares Total comprehensive income (0.3) 18.1 Balance at 31 December ,853, Appropriation of 2013 earnings (27.4) Employee stock options plans (value of employee services) Capital increase by exercise of stock options 127, Dividend paid (9.8) - (9.8) - (9.8) Dividend paid in shares 467, (10.4) Purchase/Sale of treasury shares Total comprehensive income BALANCE AT 30 JUNE ,448, / SAFT - INTERIM FINANCIAL REPORT 2014

17 CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AT 30 JUNE 2014 Notes to the Condensed Interim Consolidated Financial Statements NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS DETAILED SUMMARY OF NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 Information about the Company and the Group 16 NOTE 2 Accounting policies 16 NOTE 3 Scope of consolidation 17 NOTE 4 Information by business segment and geographical segment 18 NOTE 5 Shareholders equity 20 NOTE 8 Net finance costs 21 NOTE 9 Related-party transactions and investments in joint undertakings 22 NOTE 10 Income taxes 22 NOTE 11 Earnings per share 22 NOTE 12 Post-balance sheet events 22 NOTE 6 Public subsidies 20 NOTE 7 Borrowings and other financial indebtedness 21 SAFT - INTERIM FINANCIAL REPORT 2014 / 15

18 2 Notes CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AT 30 JUNE 2014 to the Condensed Interim Consolidated Financial Statements NOTE 1 INFORMATION ABOUT THE COMPANY AND THE GROUP Saft Groupe SA (the Company, and collectively with its consolidated subsidiaries, the Group or Saft ) was formed on 23 March Saft Groupe SA, a limited company governed by French law, whose registered office is at 12, rue Sadi Carnot, Bagnolet, France, has been listed on Euronext Paris (compartment B) since 29 June On 17 July 2014, the Management Board approved and authorised publication of the Condensed Interim Consolidated Financial Statements of Saft Groupe SA at 30 June Unless otherwise indicated, the Condensed Interim Consolidated Financial Statements are presented in millions of euros. NOTE 2 ACCOUNTING POLICIES 2.1 BASIS OF PREPARATION OF THE CONSOLIDATED FINANCIAL STATEMENTS These Condensed Interim Consolidated Financial Statements for the half year ended 30 June 2014 have been prepared in accordance with IAS 34, Interim financial reporting. They do not include all the detailed information required for the full-year consolidated statements and should be read in conjunction with the Group s consolidated annual financial statements for the year ended 31 December 2013, prepared in accordance with the International Financial Reporting Standards as approved by the European Union. The accounting policies applied in these Condensed Interim Consolidated Financial Statements are identical to those applied by the Company in its Consolidated Financial Statements for the year ended 31 December 2013 with the exceptions set out below. New IFRS standards, interpretations and amendments, as adopted by the EU for periods beginning from 1 January 2014 onwards, have been applied by the Company. They have not led to any significant changes in the methods for measurement of assets, liabilities, income and expenses. The Company has not anticipated the implementation of any standards and interpretations which are not mandatory in CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS The preparation of the Condensed Interim Consolidated Financial Statements in conformity with IAS 34 requires management to make assumptions and estimates that affect the reported amounts set out in the Financial Statements, whether this involves the valuation of certain assets and liabilities or certain income and expenses, such as depreciation, amortisation and provisions. These estimates, which are based on the going concern assumption, are prepared on the basis of the available information at the time of their preparation. They may be revised if the circumstances on which they have been based change as a result of new information. Actual results may differ from these estimates. Where an estimate is revised, this does not correspond to the correction of an error. The impact of changes in accounting estimates is recognised for the period in which the change is made if it only affects such period or for the period in which the change is made and any subsequent periods that may be affected by the change. Within the scope of preparation of the Interim Consolidated Financial Statements at 30 June 2014, the use of assumptions and estimates primarily related to the following, as it did at the time of preparation of the Consolidated Financial Statements for the financial year ended 31 December 2013: impairment tests on goodwill and other fixed assets: the Group carries out impairment tests on unamortised intangible assets and goodwill during the second half of each year. As the operating results of the CGUs recognised at 30 June 2014 excluding the non recurring cost impact of the construction and start-up of Jacksonville factory do not undermine forecasts taken into consideration in the scope of the sensitivity tests of the value in use of the CGUs carried out at 31 December 2013, the estimates of the values in use of the goodwill made as of such date have not been revised when closing off the interim financial statements. With regard to brands, the annual impairment tests that are carried out are based on discounting to present value of the royalties which would be paid by a third party wishing to use them, on the basis of sales guidance by brand. As sales for the first half year of 2014 were consistent with that used to perform impairment tests on brands by the end of 2013 financial year, the estimates of the values in use of the brands made as of such date have not been revised when closing off the interim financial statements; calculation of pension and similar retirement benefit obligations: for the interim financial statements, pension expenses and similar retirement benefit obligations are estimated at half the amount of the annual expense, unless any specific event occurs to justify a specific update; some provisions: contingency provisions and in particular specific provisions for projects are reviewed by Management at the end of each half-yearly closing; construction contracts: they are subject to a monthly review as part of the financial closing at each of the Group business unit; 16 / SAFT - INTERIM FINANCIAL REPORT 2014

19 CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AT 30 JUNE 2014 Notes to the Condensed Interim Consolidated Financial Statements 2 w ith regard to current and deferred tax expense recorded in the interim financial statements, this expense is calculated by applying the average annual estimated rate of tax for the tax year in process for each entity or tax group to profit before income tax for the period. 2.3 SEASONALITY Saft s business is generally not seasonal. However, working capital tends to be higher in the first half as compared to the second due to manufacturing shutdowns during the summer months. NOTE 3 SCOPE OF CONSOLIDATION From 1 January 2014, the commercial subsidiary Saft Russia is included in the scope of consolidation, which is as follows: Company name Activity Country Percentage of control and interest Consolidation method Saft Groupe SA Group Holding Company France 100 Full Friemann & Wolf Batterietechnik GmbH (Friwo) Manufacturing and commercial Germany 100 Full Saft Batterien GmbH Commercial Germany 100 Full SGH GmbH Holding company Germany 100 Full Tadiran Batteries GmbH Manufacturing and commercial Germany 100 Full Saft UK Ltd Manufacturing and commercial United Kingdom 100 Full Saft Australia Pty Ltd Holding company Australia 100 Full Saft Batteries Pty Ltd Assembly and commercial Australia 100 Full Saft Do Brazil Commercial Brazil 100 Full Saft Zhuhai (Ftz) Batteries Co., Ltd Manufacturing and commercial China 100 Full Saft Nife ME Ltd Commercial Cyprius 100 Full Saft Baterias SL Commercial Spain 100 Full Florida Substrate Inc. (PPF) Manufacture of nickel-plated strips United States 100 Full Saft America Inc. Manufacturing and commercial United States 100 Full Saft Federal Systems Inc. (Tadiran US) Commercial United States 100 Full Saft JV Holding Co. Holding company United States 100 Full Saft SAS (previously Saft SA) Manufacturing and commercial France 100 Full Saft Acquisition SAS Holding company France 100 Full ASB (and its subsidiaries) Manufacturing and sale of thermal batteries France 50 EA Saft Hong Kong Ltd Commercial Hong Kong 100 Full Amco-Saft India Ltd Manufacturing and commercial India Full Tadiran Batteries Ltd Manufacturing and commercial Israël 100 Full Saft Batterie Italia Srl Commercial Italy 100 Full Saft Finance Sarl Holding company Luxembourg 100 Full Saft AS Norway Commercial Norway 100 Full Saft Batterijen BV Commercial Netherlands 100 Full Saft Ferak AS Manufacturing and commercial Czech Republic 100 Full Saft Russia Commercial Russia 100 Full Saft Batteries Pte Ltd Holding company and commercial Singapore 100 Full Alcad AB Commercial Sweden 100 Full Fast Jung KB Property investmet company Sweden 100 Full Saft AB Manufacturing and commercial Sweden 100 Full Saft Sweden AB Holding company Sweden 100 Full In the above table, Full signifies that the company is consolidated using the full consolidation method and EA ( Equity Accounted ) means that a company is consolidated using the equity accounting consolidation method. SAFT - INTERIM FINANCIAL REPORT 2014 / 17

20 2 Notes CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AT 30 JUNE 2014 to the Condensed Interim Consolidated Financial Statements NOTE 4 INFORMATION BY BUSINESS SEGMENT AND GEOGRAPHICAL SEGMENT 4.1 INFORMATION BY BUSINESS SEGMENT Since 1 July 2009, the Saft Group has been structured around the following business segments: the Industrial Battery Group (IBG) division, which manufactures rechargeable nickel and lithium batteries and battery systems for demanding industrial applications such as aircraft safety, ground-check and starting systems, high-speed trains, urban transit networks, subways and trams, oil and gas, industrial installations, power generation and distribution, hospitals and public buildings, telecommunications networks and renewable energy storage. The IBG division also manufactured a specialised range of small rechargeable nickel batteries to be used for emergency lighting, professional electronics equipment such as portable medical devices, payment terminals, private mobile radio networks and professional audio and video equipment. This activity has been sold on 28 June 2013; the Specialty Battery Group (SBG) division, which designs and manufactures high-performance primary Lithium and rechargeable Li-ion batteries for the electronics, defence and space industries. The main applications for these products are satellites, utility meters, automatic meter-reading systems, electronic toll collection, medical equipment, launchers, missiles, torpedoes, asset tracking systems, sonar buoys, military radios and night vision goggles; the Other segment, which mainly comprises corporate functions such as IT, research, development of Li-ion cells, central management, finance and administration. Segment reporting data is based on the same accounting policies as those used for the Consolidated Financial Statements, as described in note 2. Performance measurement for each segment is based on EBITDA, EBIT and operating profit. The tables below show the main interim financial information for each of the Group s divisions. Operating profit by division SIX MONTH PERIOD ENDED 30 JUNE 2014 (in million) IBG SBG Other Total Revenue EBITDA (1.8) 50.7 Amortisation and depreciation of intangible assets (2.6) (3.1) (0.3) (6.0) Amortisation of property, plant & equipment (8.1) (4.6) (0.5) (13.2) EBIT (2.6) 31.5 Provisions for restructuring (1.4) (0.1) 1.0 (0.5) Other operating income/(expenses) Operating profit (1.6) 31.0 SIX MONTH PERIOD ENDED 30 JUNE 2013 (in million) IBG SBG Other Total Revenue EBITDA (1.3) 40.0 Amortisation and depreciation of intangible assets (3.9) (3.2) (0.1) (7.2) Amortisation of property, plant & equipment (7.2) (4.5) (0.5) (12.2) EBIT (1.9) 20.6 Provisions for restructuring (0.2) - - (0.2) Other operating income/(expenses) Operating profit / SAFT - INTERIM FINANCIAL REPORT 2014

21 CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AT 30 JUNE 2014 Notes to the Condensed Interim Consolidated Financial Statements 2 SIX MONTH PERIOD ENDED 30 JUNE 2012 (in million) IBG SBG Other Total Revenue EBITDA (1.8) 50.1 Amortisation and depreciation of intangible assets (3.1) (4.1) (0.1) (7.3) Amortisation of property, plant & equipment (4.7) (4.2) (0.3) (9.2) EBIT (2.2) 33.6 Provisions for restructuring (0.1) - - (0.1) Other operating income/(expenses) Operating profit (2.2) 33.5 Investments by division SIX-MONTH PERIOD ENDED 30 JUNE 2014 (in million) IBG SBG Other Total Acquisitions of non-current assets Capitalisation of development costs TOTAL FINANCIAL YEAR 2013 (in million) IBG SBG Other Total Acquisitions of subisidiaries Acquisition of non-current assets Capitalisation of development costs TOTAL FINANCIAL YEAR 2012 (in million) IBG SBG Other Total Acquisitions of non-current assets Capitalisation of development costs TOTAL INFORMATION BY GEOGRAPHICAL REGIONS CONSOLIDATED SALES BY GEOGRAPHICAL REGIONS Consolidated revenue by geographic area, determined on the basis of invoicing data, is as follows: (in million) 6-month period ended 30 June month period ended 30 June month period ended 30 June 2012 Europe North America Asia/Oceania Middle East and Africa South America TOTAL SAFT - INTERIM FINANCIAL REPORT 2014 / 19

22 2 Notes CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AT 30 JUNE 2014 to the Condensed Interim Consolidated Financial Statements INVESTMENTS BY GEOGRAPHICAL SEGMENTS (in million) 6-month period ended 30 June month period ended 30 June month period ended 30 June 2012 Europe North America Asia/Oceania Middle East and Africa TOTAL NOTE 5 SHAREHOLDERS EQUITY The consolidated statement of changes in shareholders equity is presented at the beginning of these statements as a summary table. 5.1 SHARE CAPITAL As of 30 June 2014, Saft Groupe SA s share capital was made up of 26,448,778 ordinary shares with a par value of 1 after a capital increase of 12.8 million (1) made on 12 June 2014 by creating 594,967 shares, of which 467,630 were created for the payment of dividend in shares and 127,337 pursuant to the exercise of stock options by employees. 5.2 DIVIDEND At the Annual Shareholders Meeting of Saft Groupe SA on 12 May 2014, the shareholders set the ordinary dividend for the 2013 financial year at 0.78 per ordinary share. They also approved the option for the payment of dividend in shares. The total amount of the cash dividend paid to shareholders on 11 June 2014 thus amounted to 9.8 million compared with a dividend payout of 9.1 million in NOTE 6 PUBLIC SUBSIDIES 6.1 PUBLIC GRANTS RELATED TO ASSETS Public grants received that relate to assets are presented under balance sheet liabilities as deferred income on a specific line called Deferred grants related to assets. These grants are recorded as income over the depreciation period of the assets that they are used to fund. This income is recorded in cost of sales like the depreciation expense for the related assets. Investment grants deferred as liabilities in the consolidated balance sheet are mainly related to the lithium-ion production unit of Jacksonville, in the state of Florida, United States. 6.2 PUBLIC GRANTS RELATED TO RESULTS Public grants related to results, i.e. grants other than those related to assets, are recorded in income as a deduction from the expenses to which they relate. (1) Share premium included. 20 / SAFT - INTERIM FINANCIAL REPORT 2014

23 CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AT 30 JUNE 2014 Notes to the Condensed Interim Consolidated Financial Statements 2 NOTE 7 BORROWINGS AND OTHER FINANCIAL INDEBTEDNESS 7.1 ANALYSIS OF FINANCIAL INDEBTEDNESS Gross financial debt of the Group is unchanged from 31 December 2013 with the exception of the impact of currency fluctuations on the amount in euro of debt denominated in U.S. dollar. On 14 February 2014 the Group negotiated a 24-month extension on the maturity of its syndicated loan ( 100 million) and its undrawn revolving credit facility ( 100 million ), until 25 February This expansion was accompanied by a decrease of 15 basis points from the credit margins of the two facilities. At 30 June 2014, the Group s net debt (net of cash of $104.5 million) totalled million. The net debt to EBITDA ratio, calculated according to the contractual terms, stood at 1.01 compared with 1.18 to 31 December 2013 (contractual maximum ratio of 3.0) and the interest coverage ratio was 15.9 on 30 June 2014, against a ratio of 14.4 for the year 2013 (contractual min imum ratio of 4.5). 7.2 INTEREST RATE RISK MANAGEMENT 75% of the euro bank debt bear variable interest rate. The balance is at fixed rate through a swap which locks the interest rate (excluding bank margin) paid by the Group to % until June On 7 July 2014, the Group extended the interest rate hedging from June 2015 to September 2018 (up to a nominal amount of 25 million) which guarantees the Group to pay a fixed interest rate (excluding bank margin) of 0.47% over that period. Overall, over the period from June 2014 to September 2018, Saft Group will pay, on a nominal amount of bank debt of 25 million, a fixed interest rate (excluding bank margin) of 0.58%. U.S. dollar bonds are at fixed rates. The $75 million tranche due in February 2019 (7-year maturity) has a fixed coupon of 4.26% and the $75 million tranche due in February 2022 (10- year maturity) is bearing fixed interest rate of 4.73%. NOTE 8 NET FINANCE COSTS The Group s net finance costs for H break down as follows: (in million) Period ended 30 June 2014 Period ended 30 June 2013 Period ended 30 June 2012 Financial income from cash and cash equivalents Finance costs on gross debt (3.7) (3.7) (5.2) Finance costs on net debt (3.5) (3.4) (4.6) Other financial income and expenses: Unwinding of discounts on provisions for pensions and other financial liabilities (0.8) (1.4) (1.2) Foreign exchange gains/(losses) 1.5 (0.9) 0.9 TOTAL (2.8) (5.7) (4.9) The composite interest rate on financial debt (including the cost of interest rate risk hedging) was 3.28% during the first half of 2014, compared to a rate of 3.26% in both H1 and full-year SAFT - INTERIM FINANCIAL REPORT 2014 / 21