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2005

16.02.2005, Sagem
Groupe Sagem - Annual results 2004 (pdf)

PRESS RELEASE

PRESS RELEASE

18.03.2005, Sagem
Snecma and Sagem merge, changing name to SAFRAN

Paris, March 18 2005 – SAGEM SA Supervisory Board met today under the Chairmanship of Mario COLAIACOVO and noted the success of the public offer initiated by SAGEM over SNECMA shares. The number of SNECMA shares involved represents more than 83% of the capital and 94.4% of the shares which could be tendered.

SAFRAN is the new name proposed by the Supervisory Board to the General Meeting of shareholders, which will be convened on 11 May 2005 to approve the merger between Sagem and Snecma. The name SAFRAN has been chosen following a process of reflection, creation and validation. The employees of both Snecma and Sagem played an active role in the entire process. The new name was selected from among a total of 4,250 names submitted, including 1,750 proposed by employees. The new name SAFRAN was chosen for the broad range of meanings it evokes for the new group. First, it’s the French word for the rudder blade on a boat, thus encompassing the ideas of direction, goal, heading, movement and strategy. These connotations seem particularly apt for a holding company whose mission is to guide the group. At the same time, the subsidiaries in the group will retain their names, to ensure continued support for the marketing of their respective product lines. SAFRAN is also of course the name of one of the spices ("saffron") that inspired the beginning of international trade, opening channels between East and West. Furthermore, it is remarkably compatible with international usage, since it has the same root in virtually all countries, with just the spelling changing slightly.

SAFRAN will have a workforce of nearly 55,000 people and a high growth potential in all its activities. The new management along with all employees are eager to create a large international high technology group. Everybody is already working to develop it.

During the meeting, the Chairman has welcomed the new Supervisory Board members, who had been appointed after the General Meeting of shareholders last December 20, and who took up their duties after the success of SAGEM’s public offer over SNECMA shares.

As from today, the Supervisory Board members are:

Mr Mario COLAIACOVO, Chairman Mrs Anne LAUVERGEON, Deputy Chairman, and Mr François de COMBRET, Mr Armand DUPUY, Mr Jean-Marc FORNERI, Mr Yves GUENA, Mr Philippe JOST (French State’s official), Mr Xavier LAGARDE, Mr Jean-Yves LECLERQ (French State’s official), Mr Shemaya LEVY, Mr Michel LUCAS, Mr Pierre MORAILLON (French State’s official), Mr Dominique PARIS, Mr Jean-Bernard PENE (French State’s official), Mr Jean RANNOU, Mr Michel TOUSSAN, Mr Bernard VATIER, Mr Michel WACHENHEIM (French State’s official). Mr Georges CHODRON de COURCEL and Mr Patrice DURAND are the censors.

The Supervisory Board has confirmed the appointment of the Executive Board’s new members:

Mr Jean-Paul BECHAT, Chairman, Mr Grégoire OLIVIER, Mr Yves IMBERT.

In order to implement as soon as possible the merger between both Groups, the General Meeting of Shareholders will be convened on 11 May 2005 at 9.00 a.m at the following address : “la Maison de la Chimie (75007 Paris)” to approve this friendly transaction. Items on the agenda are: To authorize the contribution-split of SAGEM operational activities in order to build the new Group’s organisation around four branches: Defense-Security, Aerospace Equipment, Propulsion and Communications, To ratify the Headquarters transfer to the following address: 2 boulevard Martial Valin – 75015  Paris , To approve the Corporate name’s change into SAFRAN.

PRESS RELEASE

09.03.2005, Sagem
Sagem-Snecma merger : Successful public share offer

Paris, March 9, 2005 – The planned merger between SAGEM and SNECMA has just taken a decisive step with the official publication of the results of SAGEM’s public offer for SNECMA shares. This offer was a major success, since the number of SNECMA shares involved represents more than 83% of the capital and 94.4% of the shares which could be tendered.

The SAGEM Executive Board met today, expressing its satisfaction with the success of the offer. In application of the decision by the Annual General Meeting of Shareholders last December 20, the Board proceeded to issue 187,774,170 new shares in payment for the SNECMA shares tendered to the offer.

The share capital of SAGEM SA now comprises 365,274,170 shares and 73,054,834 Euro. The new shares will be delivered on March 17, and the advance dividend payment of 0.10 Euro per share will be paid on March 18.

The corporate management teams of SAGEM and SNECMA are both delighted with the success of this public share offer, which allows to proceed with the merger between SNECMA and SAGEM and therefore to create a large international high technology group. This merger will reach achievement within the next few weeks with the legal merger of both companies.

PRESS RELEASE

10.01.2005, Sagem
SAGEM: 12.3 % increase in 2004 revenue

Paris, January 10th, 2005 – The provisional consolidated revenue of Groupe SAGEM amounted to €m 3,570 which represents a 12.3 % increase compared to the financial year 2003.

Breakdown by branch:

€M	Financial year 2004	Financial year 2003	Difference
Communications branch	2,409	2,097	+ 14,9 %
Defense and Security branch	1,161	1,083	+ 7,2 %

The results of the financial year 2004 will be published on February 16th, after closing of the Stock Exchange.

Groupe SAGEM is an international high-technology group. Major league player in the world, and number one of the French mobile telephones market, SAGEM is Europe’s first actor in fax machines and provider of global solutions and multi-service networks. Third largest European group in the defence and security electronics market, world leader in fingerprint biometrics as well as major actor in avionics and on-board information systems for aircraft, SAGEM maintains a presence in more than 20 countries world-wide.

PRESS RELEASE

12.04.2005, Snecma ; Sagem
Fusion par absorption de la société Snecma par la société Sagem SA (French only)

Synthèse des principales caractéristiques de l’opération présentée dans le document E enregistré par l’AMF le 8 avril 2005 sous le numéro E.05-039

Paris, le 12 avril 2005

Société absorbante :

Sagem SA Société anonyme à Directoire et Conseil de surveillance de droit français. Siège social : Le Ponant de Paris, 27 rue Leblanc, 75512 Paris Cedex 15. Secteur d’activité Footsie : équipements destinés aux technologies de l’information (93).

Société absorbée :

Snecma Société anonyme à Conseil d’administration de droit français. Siège social : 2, boulevard du Général Martial-Valin, 75724 Paris cedex 15. Secteur d’activité Footsie : aérospatiale et défense (21).

Objectif de l’opération :

Nature de l’opération : fusion par absorption de Snecma par Sagem.

But de l’opération : cette fusion s’inscrit, conformément aux accords conclus entre Sagem et Snecma en fin d’année 2004, dans le prolongement de l’offre publique visant les actions de Snecma réalisée par Sagem au cours du premier trimestre 2005 (cf. note d’information conjointe visée par l’AMF le 17 janvier 2005 sous le numéro 05-0017). L’opération stratégique de rapprochement par fusion de Sagem et Snecma vise à permettre la création d’un acteur majeur -qui sera dénommé Safran(*)- dans le domaine des hautes technologies électroniques et mécaniques, présent à l’échelle mondiale dans les quatre métiers suivants : la Propulsion, les Equipements Aéronautiques, les Télécommunications et la Défense-Sécurité. Cette fusion permettra de continuer le processus d’intégration des structures tout en simplifiant l’organigramme juridique du groupe.

(*) Sous réserve de l’approbation de l’assemblée générale des actionnaires de Sagem du 11 mai 2005

Titres à émettre :

Type de titres : actions Sagem.

Nombre : 51 755 415.

Montant nominal : 0,20 euro.

Date de jouissance : 1er janvier 2004 ; ces actions donneront droit à l’intégralité du dividende versé par Sagem au titre de l’exercice 2004, en ce compris l’acompte sur dividende de 0,1 euro par action mis en paiement le 18 mars 2005.

Date de cotation : les actions nouvelles feront l’objet d’une demande d’admission aux négociations sur le marché Eurolist d’Euronext Paris S.A. dans les meilleurs délais, de sorte qu’elles soient négociables dès la réalisation définitive de la fusion.

Conditions d’échange :

Montant de l’actif net global apporté : 1 283 872 990 euros (sur la base des comptes au 31 décembre 2004).

Parité d’échange : 15 actions Sagem pour 13 actions Snecma.

Prime de fusion : 202 863 920 euros.

Mali de fusion : 3 268 227 110 euros.

Appréciation de la parité :

Principaux éléments d’appréciation : L’opération de fusion projetée s’inscrivant dans le prolongement de l’offre publique (offre publique d’échange à titre principal assortie à titre subsidiaire d’une offre publique d’achat) visant les actions de Snecma initiée par Sagem, la parité de fusion correspond à la parité d’échange de l’offre principale. Dans ce cadre, les éléments utilisés pour comparer Sagem et Snecma dans le cadre de la fusion correspondent aux éléments utilisés pour apprécier la parité d’échange de l’offre principale, après prise en compte des résultats de l’exercice 2004, à savoir :
 Cours de bourse récents ;
 Cours cibles publiés par les analystes financiers ;
 Bénéfice net courant par action ;
 Application des multiples boursiers de sociétés comparables ;
 Actif net comptable consolidé par action ;
 Dividende net par action ;
 Référence à la parité d’échange de l’offre principale.

Les commissaires à la fusion, Messieurs Legorju et Ledouble, ont conclu, d’une part, que le rapport d’échange de 15 actions de la société Sagem pour 13 actions de la société Snecma est équitable, d’autre part, que la valeur des apports s’élevant à 1 283 872 990 euros n’est pas surévaluée et, en conséquence, que l’actif net apporté est au moins égal au montant de l’augmentation de capital de la société absorbante, augmentée de la prime d’émission.

Autres informations :

Date de l’assemblée générale mixte de Sagem : 11 mai 2005.

Date de l’assemblée générale mixte de Snecma : 10 mai 2005.

La fusion prend juridiquement effet le 11 mai 2005, sous réserve de l’approbation du projet de fusion par les assemblées générales de Snecma et de Sagem, avec un effet rétroactif comptable et fiscal au 1er janvier 2005.

Mise à disposition du document E :

Le document E enregistré par l’Autorité des marchés financiers (AMF) le 8 avril 2005 sous le n°E.05-039 et les documents qu’il incorpore par référence (à savoir le document de référence de Sagem déposé auprès de l’AMF le 28 février 2005 sous le n°D.05-0156, le document de référence de Snecma enregistré auprès de l’AMF le 25 mars 2005 sous le n°R.05-0032, la note d’information conjointe relative à l’offre publique initiée par Sagem sur les actions Snecma visée par l’AMF le 17 janvier 2005 sous le n°05-0017, ainsi que la note d’opération relative à l’offre réservée aux salariés d’actions existantes Snecma visée par l’AMF le 25 mars 2005 sous le n°05-0185) peuvent être obtenus sans frais auprès de Snecma au 2, boulevard du Général Martial-Valin, 75724 Paris cedex 15, de Sagem à Le Ponant de Paris, 27 rue Leblanc, 75512 Paris cedex 15, de BNP Paribas Securities Services, GTC Service aux émetteurs, Immeuble Tolbiac, 75450 Paris Cedex 09, ainsi que sur le site Internet de l’AMF (www.amf-france.org).

Communiqué publié sur demande de l’Autorité des marchés financiers

PRESS RELEASE

17.02.2005, Snecma
Snecma reports growth in consolidated sales and earnings for 2004

Sales: 6,812 million euros, up 6 percent EBIT: 511 million euros, up 7 percent Net income, Group share: 234 million euros, up 29 percent

Paris, February 17, 2005 - The Snecma Board of Directors met on February 16, 2005, with Chairman Jean-Paul Béchat presiding, to approve the 2004 financial statements which will be submitted to the Annual General Meeting of Shareholders, called for May 10, 2005.

With both air traffic and the aviation industry showing a gradual recovery, the Snecma group recorded good business volumes in 2004, and results in line with objectives.

Operations

The CFM56 engine maintained its leadership as it won a number of major contracts in 2004 from airlines including Air Berlin, Niki Luftfahrt, Virgin America, Gol Transportes Aereos and China Southern. These and other contracts consolidated the CFM56’s share of the mainline jet market (over 100 seats).
Snecma is a partner in the Boeing 787 program, winning several top-tier equipment contracts to date, including the landing gear (Messier-Dowty), electrical wiring (Labinal) and wheels and electric brakes (Messier-Bugatti).
Military business was sustained as well. France’s defense procurement agency DGA announced orders for the M51 ballistic missile, for which Snecma supplies the propulsion systems, and for 59 Rafale fighters, requiring 118 Snecma M88-2 engines, plus spares, and a wide variety of systems and equipment.
The U.S. Navy chose the Boeing 737 MMA, powered by the CFM56-7, as their new Multimission Maritime Aircraft. Oman selected the RTM322 engine for its NH90 helicopters, making it the ninth of ten NH90 customers to opt for this engine. Messier-Dowty won the integrated landing system contract on the new Airbus A400M military transport, for which Messier-Bugatti will supply the wheels and brakes. Turbomeca was chosen by the U.S. Coast Guard to reengine its fleet of HH-65 helicopters.
Group companies signed several long-term MRO (maintenance, repair and overhaul) contracts.
The production contract for 30 Ariane 5 launchers was also signed last year.

Orders and order book on the rise

Snecma booked consolidated orders worth 7,650 million euros in 2004 (including MRO), up 23 percent over the previous year’s total of 6,240 million euros.

At December 31, 2004, the order book stood at 13,800 million euros, 9.5 percent higher than at December 31, 2003 (12,600 million euros).

Sales growth

Snecma posted consolidated sales of 6,812 million euros, a 5.9 percent rise over 2003 (6,431 million euros). At constant size and exchange rates, the increase was 6.3 percent.
The civil sector accounted for 77 percent of sales and the military sector 23 percent.

The Propulsion business posted sales of 4,523 million euros, or 63 percent of consolidated sales before elimination of inter-branch sales. This was 8.5 percent over the previous year’s total, mainly due to increased deliveries of commercial engines and the growth in service business.
The Equipment business posted sales of 2,628 million euros, or 37 percent of consolidated sales before elimination of inter-branch sales. This was 4.6 percent higher than the previous year’s total.
Service business accounted for 37.6 percent of consolidated sales in 2004, compared with 35.4 percent in 2003.

Sustained operating margin

Snecma posted consolidated operating income of 511 million euros in 2004, compared with 476 million euros in 2003, an increase of 7.3 percent. The operating margin was 7.5 percent. The overall improvement in productivity more than offset the increase in R&D spending, as well as the unfavorable impact of the euro/dollar exchange rate.

Increase in net income

Consolidated net income excluding minority interests came to 234 million euros in 2004, 28.6 percent higher than in 2003 (182 million euros).
This strong growth was due to the increase in operating income, lower financial expenses, and the favorable impact of the research tax credit.
At the end of the year, the group had a positive cash position of 54 million euros, versus debt of 251 million euros at December 31, 2003.

Dividend

Meeting on February 16, 2005, the Snecma Board of Directors decided to allocate all net income for 2004 to retained earnings.
Snecma shareholders who tendered their shares to the public exchange offer closing on February 23, 2005 will receive from Sagem an advance on their dividend of 0.10 euro per share as from the settlement-delivery on March 17, 2005. The Sagem Supervisory Board will propose a supplement of 0.12 euro per Sagem share, bringing the total dividend to 0.22 euro per share, during the Annual General Meeting of Shareholders scheduled for May 2005. Payment of the balance will be made following this meeting.
Snecma shareholders having retained their shares until the Sagem-Snecma merger scheduled for May will also receive, following conversion of their Snecma shares into shares in the new group, the complete dividend of 0.22 euro per share in the new group.

Key Figures

millions of euros	2003	2004
Orders	6,240	7,650
Sales	6,431	6,812
Operating income (EBIT)	476	511
- as % of sales	7.4%	7.5%
Net income – Group share	182	234
Net financial position	(251)	54
Net income per share (euros)	0.64	0.88

---

Snecma
Snecma is one of the world’s leading aerospace groups, specialized in propulsion and equipment. Working alone or in partnership, it holds world or European leadership positions in each of its core businesses. Snecma has operations in 22 countries on five continents, and is present in all major segments of the aerospace market: civil and military airplanes, helicopters, missiles, unmanned aerial vehicles, launch vehicles and satellites.

PRESS RELEASE

11.05.2005, SAFRAN
SAFRAN reports first-quarter pro forma sales

Paris, May 11th, 2005

The SAFRAN group posted sales of 2,380 million euros for the three months ended March 31, 2005, based on International Financial Reporting Standards (IFRS), and 2,480 millions euros based on French accounting standards. These are pro forma figures, calculated by adding the sales of Snecma and Sagem. On the basis of identical accounting standards, sales rose 4.5 percent over the first quarter of 2004. Application of the IAS 39 standard to sales in foreign currencies had an impact of 100 million euros on the Aerospace Propulsion and Aerospace Equipment branches. The following table compares results by branch for the first quarter 2004 and first quarter 2005.

millions of euros	French accounting standards			IFRS
	Q1 2004 Pro forma	Q1 2005 Pro Forma	Change	Q1 2005
Propulsion	1,007	1,082	+7,4%	1,015
Communication	581	551	-5,2%	551
Equipment	605	663	+9,6%	630
Defense and Security	247	263	+6,5%	263
Elimination of inter-branch sales	(67)	(79)		(79)
Consolidated Total	2,373	2,480	+4,5%	2,380

Higher sales by the Aerospace Propulsion branch reflected a growth in service business and increased deliveries of helicopter engines.

Results at the Communications branch were contrasted, with strong growth in the broadband segment (ADSL modems, digital TV set-top boxes), but a decrease in mobile phone sales compared with the first quarter of 2004, when sales were especially strong.

The Aerospace Equipment branch also saw higher sales, mainly due to its wiring, wheels, brakes and nacelle businesses.

The Defense and Security branch posted steady growth in sales of aeronautical systems and security products.

* New name of the Group, pending approval by the Annual General Meeting of Shareholders, taking place on May 11th, 2005.

PRESS RELEASE

13.05.2005, SAFRAN
SAFRAN listed

Paris, May 13, 2005

Effective today, the SAFRAN share is listed on the Eurolist market of Euronext Paris, as “SAFRAN” (code SAF).

SAFRAN’s capital comprises 417,029,585 shares.

The coupon date has been set at May 20, 2005.

The name of the group formed by the merger of Sagem and Snecma, SAFRAN, was approved on May 11, 2005 by the general meeting of shareholders of Sagem SA.

***

About SAFRAN SAFRAN is an international high-technology group with four core businesses: aerospace propulsion, defense and security, aerospace equipment and communications. It has 56,000 employees in over 30 countries, and annual revenues exceeding 10 billion euros. The SAFRAN group comprises a number of companies with prestigious brand names, and holds, alone or in partnership, global or European leadership positions in all of its markets.

PRESS RELEASE

17.06.2005, Snecma
Snecma to receive repayable advance from French government for development of the SaM146 propulsion system

Le Bourget, June 16, 2005

Dominique Perben, French Minister of Transportation, Equipment, Tourism and the Sea, and Marc Ventre, Chairman and CEO of Snecma, signed a Memorandum of Understanding yesterday at the Paris Air Show, for the French government to support the development of a new jet engine, the SaM146, designed to power regional aircraft with 65 to 95 seats, such as the Russian Regional Jet (RRJ).

Jean-Paul Béchat, Chairman of the Executive Board of the SAFRAN group, was present during the signature, and said: “We are very pleased with this partnership with the aircraft-maker Sukhoi and the engine-maker NPO Saturn. We especially wanted to thank the French government for showing their confidence in us on this new program, which will help strengthen the international reach of our group.”

Financial support from the French government will be in the form of a repayable advance of 140 million euros. The MoU reflects a commitment to expanding collaboration on major aviation programs between France and Russia.

French minister Dominique Perben added: “The signature of this agreement is solid proof of sustained collaboration with the Franco-Russia aviation industry, a sector that creates jobs and fosters exports. This repayable advance will help Snecma cover R&D investments, and also reflects the government’s policy of enhancing regional development and industrial capabilities.” Note to editors The SaM146 engine, in the 14,000 to 17,500 lb thrust class, is specifically designed for the regional transport market. Sukhoi chose this engine in 2003 to power its family of Russian Regional Jets (RRJ), being developed with support from Boeing. The SaM146 is being developed in partnership with NPO Saturn through the equal joint venture PowerJet, established in 2004. The SaM146 will power all versions of the RRJ, from 65 to 95 seats, providing substantial savings for operators because of commonality across the range. A number of airlines have already expressed their interest in this regional aircraft.

***

Snecma, a SAFRAN Group company, is one of the world’s leading manufacturers of aircraft and rocket engines, with a wide range of propulsion systems on offer. The company designs and builds commercial aircraft engines that are powerful, reliable, economical and environmentally friendly, along with military aircraft engines that have always delivered world-class performance. Snecma also develops and produces propulsion systems and equipment for other launch vehicles, satellites and space vehicles.

PRESS RELEASE

20.07.2005, SAFRAN
SAFRAN Group reports half-year sales

Paris, July 20, 2005

The SAFRAN group reported pro forma sales* for the six months ended June 30, 2005 of 4,943 million euros, based on International Financial Reporting Standards (IFRS). Sales increased 2.3% over the pro forma IFRS figure of 4,830 million euros for the year-earlier period.

According to IFRS, the U.S. dollar-denominated sales are converted at the current dollar exchange rate for the half-year period for the part covered by purchases in dollars, and at the hedging rate for the remainder.

At a constant current and hedged dollar rate, sales would have been 5,060 million euros, an increase of 4.8%.

Sales by branch were as follows:

Pro forma/IFRS/non-audited sales	June 30, 2004 (€ millions	June 30 2005 (€ millions)	Change (%)
Propulsion	2,083	2,070	(0.6%)
Communications	1,134	1,111	(2.0%)
Equipment	1,086	1,187	9.3%
Defense Security	527	575	9.1%
Consolidated sales	4,830	4,943	2.3

The rise in Propulsion branch sales volume, especially for civil sector services and spare parts, was offset by the USD impact and flat military and space business. The branch booked a large number of orders during the half-year period, including both commercial airplane engines and helicopter turbine engines.

The Communications branch, operating in an extremely competitive market, was able to sustain its growth in broadband, with sales volumes for ADSL modems and digital TV set-top boxes showing strong increases. Mobile phone deliveries were stable, against a backdrop of lower prices leading to a decrease in revenues.

All businesses in the Equipment branch continued to advance, with nacelles, wiring and braking systems in particular posting significant growth, a reflection of strong market positions developed in recent years.

The Defense Security branch also continued to log good growth, covering both aeronautical systems and the security sector, in particular electronic money transfer and radar.

* The pro forma sale figure was calculated as if Sagem and Snecma had merged on January 1, 2005.

PRESS RELEASE

10.10.2005, SAFRAN
SAFRAN plans to sell Sagem Communication’s Power and Telecom cables business

Paris, October 10, 2005

SAFRAN announced today that it has received a firm offer from General Cable concerning the acquisition by General Cable Europe of Sagem Communication’s power and telecom cables business.

This transaction should be finalized in the coming months, following consultation with all labor organizations and approval by the appropriate authorities.

Sagem Communication’s cables business primarily makes electrical power. Its areas of expertise include not only high-voltage and extra-high-voltage power cables, but also engineered and industrial cables, standard electrical cables for the general market and cables for telecommunications applications. The company’s cables business generates sales of about 200 million euros a year, and totals about 1,000 employees at its plant in Montereau-Fault-Yonne, near Paris, six regional offices in France, and corporate headquarters in Malakoff, also near Paris.

Sagem Communication’s cables business will thus join one of the industry’s major players, which plans to expand its business in Europe and especially in France, where it has very limited operations for the moment.

This project is a genuine opportunity for the cables business, which was not a core business at Sagem Communication. It will ensure the business’s growth as part of a major international corporation that is specialized in this sector. For Sagem Communication, it will allow us to focus on our current growth markets in the telecom sector, which all depend on extensive expertise in electronics.

SAFRAN is an international high-technology group with four core businesses: propulsion, communications, equipment, defense security. It has 56,000 employees in over 30 countries, and annual revenues exceeding 10 billion euros. The SAFRAN group comprises a number of companies with prestigious brand names, and holds, alone or in partnership, global or European leadership positions in all of its markets

Sagem Communication (SAFRAN Group) is a major player in the Mobile and Broadband Communication industries, who has acquired a strong world-wide position thanks to renewed innovation. SAGEM products stand-out particularly in the following activities: mobile phones, printing terminals, residential terminals, digital TV, networks, electronic metering, etc.

PRESS RELEASE

12.10.2005, SAFRAN
SAFRAN reports consolidated first-half results

- Sharp rise in orders

 Growth in operating income (adjusted pro forma figures)

 Growth in net income (adjusted pro forma figures)

Paris, October 12, 2005

Sagem and Snecma merged on May 11, 2005 following the successful share purchase-exchange offer initiated by Sagem and concluded on March 17, 2005. The reported consolidated financial statements for the six months ended June 30, 2005 therefore include six months of operations for the former Sagem group and only three months for the former Snecma group. Furthermore, in compliance with the standard IFRS 3 concerning mergers, Snecma’s assets and liabilities are now consolidated in these reported financial statements not at their book value, but automatically revalued at their fair value.

To enable a comparison of results for 2004 and 2005, and to reflect the group’s actual financial performance, the audited pro forma accounts were drawn up as if the merger had taken place on January 1, 2004.

Furthermore, these pro forma statements were then adjusted so as to exclude the impact of IFRS 3, and enable tracking the group’s actual financial performance during the six-month period.

Given these conditions, the key figures for the first half of 2005 are as follows(1):

• adjusted pro forma sales: 4,943 million euros, an increase of 2.3% over the first half of 2004;
• adjusted pro forma operating income: 347 million euros, an increase of 6.7%;
• adjusted pro forma net income, Group share: 209 million euros, an increase of 8.8%.

Sharp rise in orders

Order intake rose sharply during the first half of 2005, reaching 7,200 million euros, a 50% jump over the first half of 2004 (4,800 million euros).

At June 30, orders had already been booked for more than 1,000 CFM56 engines, an all-time record, 652 helicopter engines and a wide variety of systems and equipment (wheels and brakes for 295 aircraft, cockpit wiring and inertial navigation system for the A400M, etc.).

Sales growth

Sales for the first six months of the year stood at 4,943 million euros, an increase of 2.3% over the year-earlier period (4,830 million euros). At a constant exchange rate, the increase would have been 4.8%.

The Propulsion branch posted sales of 2,070 million euros during the first half of 2005. An increase in business volumes offset both the impact of the weak U.S. dollar and flat military and space sales. Given a constant dollar exchange rate, the increase would have been 2.9%.

The Communication branch posted first-half sales of 1,111 million euros, a slight decrease over the first half of 2004. The mobile phone business was not in line with expected results, despite an increase in deliveries, because of a general steep drop in prices. However, broadband business volumes showed strong growth.

The Equipment branch posted sales of 1,187 million euros for the first half of the year, a 9.3% increase over the year-earlier period. This increase reflects strong positions won in the nacelles, wiring and braking systems markets. Given a constant dollar, the increase would have been 13%.

Sales by the Defense Security branch continued to grow, rising 9.1% over the first half of 2004 to 575 million euros. This increase was driven by the sale of both aircraft systems and security equipment, in particular electronic money transfer and radar systems.

Operating income on the rise

For the first half of 2005, Safran posted adjusted pro forma operating income of 347 million euros, a 6.7% rise over the year-earlier figure of 325 million euros. This result includes a provision covering our entire net risk for Northwest Airlines, which entered Chapter 11 bankruptcy protection on September 14, 2005.

The operating margin stood at 7% despite this event, as well as a first half of the year that proved difficult for the communications business, due to very high pressure on mobile phone prices.

The overall increase in productivity and business volumes at the Propulsion and Equipment branches, especially for spare parts, more than offset these negative factors, as well as the unfavorable impact of the euro-dollar exchange rate.

Net income also on the rise

The Group’s share of adjusted pro forma net income for the first half of 2005 was 209 million euros, an increase of 8.8% over net income of 192 million euros in the first half of 2004.

Healthy financial position

The Safran group’s debt stood at 1,123 million euros at June 30, after providing 1,250 million euros in financing for the share purchase offer.

With shareholders’ equity of 4,821 million euros at June 30, 2005, the group’s debt ratio stood at 23%.

Outlook

Safran confirms its original forecast for 2005: growth in sales, sustained operating margin, and increase in net income.

Financial and Operating Highlights*

millions of euros	H1 2004	H1 2005	Change
Orders	4,800	7,200	+50%
Sales	4,830	4,943	+2.3 %
Operating income	325	347	+6.7%
as % of sales	6.7%	7%
Net income – Group share	192	209	+8.8%
Net financial position	432	(1,123)
Net income per share (euros)	0.46	0.51

(*)Adjusted pro forma data

(1) Reported sales stood at 3,375 million euros, with an operating loss of 6 million euros and net loss, Group share of 23 million euros, given current state of work related to IFRS 3.

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About SAFRAN
SAFRAN is an international high-technology group with four core businesses: propulsion, communications, equipment, defense security. It has 56,000 employees in over 30 countries, and annual revenues exceeding 10 billion euros. The SAFRAN group comprises a number of companies with prestigious brand names, and holds, alone or in partnership, global or European leadership positions in all of its markets.

PRESS RELEASE

12.10.2005, SAFRAN
SAFRAN - Consolidated sales at September 30, 2005 (pro forma)

The SAFRAN Group reported consolidated pro forma sales for the nine months ended September 30, 2005 of 7,473 million euros, an increase of 4.5% over the same period in 2004. Given a constant U.S. dollar, the increase would have been 6.5%.

Millions of euros	2004	2005	Change (%)
Propulsion - Q3 - 9 months ended Sept. 30	970 3,053	1,092 3,162	+ 12.6% + 3.6 %
Communication - Q3 - 9 months ended Sept. 30	568 1,702	537 1,648	- 5.8% - 3.2%
Equipment - Q3 - 9 months ended Sept. 30	531 1,617	631 1,818	+18.8% +12.4%
Defense Security - Q3 - 9 months ended Sept. 30	252 779	270 845	+ 7.1% +8.5%
Consolidated sales - Q3 - 9 months ended Sept. 30	2,321 7,151	2,530 7,473	+ 9% + 4.5%

The Propulsion branch had consolidated sales for the nine months ended September 30, 2005 of 3,162 million euros, an increase of 3.6% over the same period in 2004. This increase reflects the expected growth in commercial engine sales, in line with higher aircraft production rates. Given a constant dollar, sales would have increased 6.4%.

The Communication branch had consolidated sales for the nine months ended September 30, 2005 of 1,648 million euros, a decrease of 3.2% over the same period in 2004. Despite the significant increase in the number of mobile phones sold, the sharp drop in prices, especially for entry-level models, continues to weigh against sales.

The Equipment branch had consolidated sales for the nine months ended September 30, 2005 of 1,818 million euros, an increase of 12.4% over the same period in 2004. All sectors in this branch (nacelles, wheels & brakes, wiring, landing gear, etc.) logged growth. Given the constant dollar, sales would have increased 15.7%.

The Defense Security branch posted sales of 845 million euros, an increase of 8.5% over the same period in 2004, reflecting the solid growth in sales volumes, especially in the civil avionics and security markets.

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About SAFRAN
SAFRAN is an international high-technology group with four core businesses: propulsion, communications, equipment, defense security. It has 56,000 employees in over 30 countries, and annual revenues exceeding 10 billion euros. The SAFRAN group comprises a number of companies with prestigious brand names, and holds, alone or in partnership, global or European leadership positions in all of its markets.

PRESS RELEASE

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