Net operating cash flow increased 8% to €449.1 million for the six months ended June 30, 2016, compared to €416.8 million for the 2015 First Half, reflecting higher net income.

In the 2016 First Half, the Company uses of cash were principally for cash dividends of €101.9 million, share repurchases of €43.3 million, payment for acquisitions net of cash acquired of €11.2 million, and capital expenditures of €18.4 million. The Company received cash for stock options exercised of €10.5 million.

The Company’s net financial position increased to €1.64 billion at June 30, 2016, compared to €1.35 billion at December 31, 2015, reflecting an increase in cash, cash equivalents and short-term investments to €2.64 billion from €2.35 billion, with long-term debt of €1.00 billion unchanged.

Summary of Recent Business, Technology and Customer Highlights

Acquisitions

On July 21, 2016, Dassault Systèmes announced that it has entered into a definitive agreement to acquire CST, the technology leader in electromagnetic (EM) simulation, for approximately €220 million in an all-cash transaction. Based in Darmstadt, Germany, the privately-held CST will extend Dassault Systèmes capabilities for realistic multiphysics simulation to include full spectrum electromagnetic (EM) simulation. CST’s software is used by designers and engineers at more than 2,000 companies in the high-tech, transportation and mobility, aerospace and defense, and energy industries to analyze and solve EM interference, compatibility and environmental effects issues during electronics product development and systems integration. Customers include Airbus Defence and Space, BMW, Continental Automotive, LG, Raytheon, Samsung, and Siemens Energy. The acquisition is expected to be completed in Q4 2016, subject to regulatory approvals.

On June 2, 2016 Dassault Systèmes announced the acquisition of Ortems, a key provider of on premise and on the cloud capacity constraint-based production scheduling and dispatching software. The acquisition of Ortems, based in Lyon, France, extends Dassault Systèmes’ 3DEXPERIENCE platform and its industry solution experiences for next generation manufacturing, supply chain and delivery, by reinforcing production planning and scheduling along with DELMIA Quintiq supply chain planning and optimization capabilities, in order to plan, execute and optimize global industrial operations in manufacturing industries. Ortems complements Dassault Systèmes’ DELMIA brand applications, including DELMIA Apriso, to offer a unified experience to all users in digital manufacturing, manufacturing operations management, and supply chain planning and operations, built on a single referential data model.

Customers

Announced on June 9, 2016, Dassault Systèmes and Airbus Group Extend Collaboration to Additive Manufacturing. Airbus Group, after a two-year comprehensive benchmarking process, is extending its use of Dassault Systèmes’ 3DEXPERIENCE platform to its additive manufacturing programs integrating design, simulation and production.Airbus Group will deploy Dassault Systèmes’ collaborative design and simulation applications as part of the “Co-Design to Target” industry solution experience, for the additive manufacturing of tooling, prototyping and parts for test flights and for production use on commercial aircraft. This provides Airbus Group with digital continuity to optimize its conceptual designs by virtually validating each phase of the additive manufacturing process.

Dassault Systèmes Awarded Best Supplier by Group PSA in May, 2016. Dassault Systèmes was recognized for its 3DEXPERIENCE platform as a key enabler of the digital transformation of Group PSA’s global research and development.

Partnerships

On June 10, 2016 Dassault Systèmes and Cybernaut Investment Group Announced the Signing of an Agreement to Support Innovation in China with the 3DEXPERIENCE Platform. Dassault SystèmesandCybernaut, a leading investment group in China focusing on emerging industries, signed a strategic cooperation agreement on a series of 3DEXPERIENCE platform-related projects including building Industry Parks, cultivating 3D talents and smart city programs.

Other Corporate Events

The Company reaffirmed its 2019 non-IFRS EPS objective of about €3.50 in conjunction with its Capital Markets Day held on June 10, 2016 at its corporate headquarters. The 2019 objective was initially outlined on June 13, 2014 at the Company’s prior capital markets day.

On May 26, 2016, at the Annual Shareholders’ Meeting, Dassault Systèmes’ shareholders approved an annual dividend per share equivalent to €0.47 per share for the fiscal year ended December 31, 2015, representing an increase of 9% compared to the prior year. In addition, shareholders again approved offering shareholders the option to receive payment of their dividend in the form of cash or in new Dassault Systèmes shares. The payment of the dividend was completed on June 24, 2016, with the cash payment in the aggregate amount of €100.1 million and the issuance of 280,734 new ordinary shares.

On May 26, 2016 at a Board of Directors’ meeting, directors approved the appointment of Bernard Charlès as Vice Chairman of the Company’s Board of Directors in addition to his role as Chief Executive Officer.

Business Outlook

Thibault de Tersant, Senior Executive Vice President, CFO, commented, “Our second quarter and first half were well aligned with our financial objectives. And looking ahead we see a second half with significant strength, leading to a year of solid growth in revenue and earnings for 2016, notwithstanding the increased currency headwinds and more volatile macro backdrop we are operating within.

“Since the inception of our 2016 guidance in February we anticipated a first half led by recurring software revenue and that is precisely what has occurred. And we said we expected to deliver a marked acceleration in new licenses revenue growth and to make investments to support our future growth trajectory in the second half and that is precisely what we expect to do.

“Therefore, we are reconfirming our financial objectives for 2016 thanks to the strong traction coming from 3DEXPERIENCE and industry diversification as well as the improving sales trends in our Professional channel with SOLIDWORKS.

“Finally, with respect to the upcoming third quarter, our revenue growth objective reflects a significant improvement in our new licenses revenue performance and continued recurring software revenue strength. Further, taking into account currency headwinds and one-time, R&D tax credit and tax-related benefits in the year-ago period, our EPS growth remains on a double-digit trajectory.”

The Company’s third quarter and full year 2016 financial objectives are as follows:

• Third quarter 2016 non-IFRS total revenue objective of about €715-725 million based upon the exchange rates assumptions below; non-IFRS operating margin of about 30% to 30.5%; and non-IFRS EPS of about €0.54 to €0.57; The Company noted that in the 2015 third quarter, there was the reversal of a R&D tax credit with a one-time benefit to the non-IFRS operating margin of about 90 basis points and to non-IFRS EPS of about 2 cents and the reversal of a tax reserve with a one-time benefit to non-IFRS EPS of about 4 cents.
• 2016 non-IFRS revenue growth objective of about 6% to 7% in constant currencies at €2.990 to €3.015 billion (reflecting the principal 2016 currency exchange rate assumptions below);
• 2016 non-IFRS operating margin of about 31%, compared to 2015 where the non-IFRS operating margin was 30.8%;
• 2016 non-IFRS EPS of about €2.40, representing a growth objective of about 7%, as reported, and currently embedding about 4 percentage points of currency headwinds;
• Objectives are based upon exchange rate assumptions of US$1.15 per €1.00 for the 2016 third quarter and US$1.13 per €1.00 for the full year; and JPY120 per €1.00 for the third quarter and JPY122.2 per €1.00 for the full year before hedging.

The Company’s objectives are prepared and communicated only on a non-IFRS basis and are subject to the cautionary statement set forth below.

The 2016 non-IFRS objectives set forth above do not take into account the following accounting elements and are estimated based upon the 2016 principal currency exchange rates above: deferred revenue write-downs estimated at approximately €2 million, share-based compensation expense, including related social charges, estimated at approximately €78 million and amortization of acquired intangibles estimated at approximately €149 million. The above objectives also do not include any impact from other operating income and expense, net principally comprised of acquisition, integration and restructuring expenses, from one-time items included in financial revenue and from one-time tax restructuring gains and losses. Finally, these estimates do not include any new stock option or share grants, or any new acquisitions or restructurings completed after July 21, 2016.

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