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The "book-to-bill ratio" (orders intake/net sales) was 1.0 for 2018.

BACKLOG 

The backlog as of December 31, 2018 was EUR 19,376 million, compared to EUR 19,460 million as of December 31, 2017 (IFRS 15 pro forma).

The Defense Export backlog stood at EUR 14,217 million, compared with EUR 13,964 million at December 31, 2017. It includes in particular 36 Rafale for India, 36 Rafale for Qatar and 1 Rafale for Egypt (versus 36 Rafale for India, 24 Rafale for Qatar and 10 Rafale for Egypt in 2017).

The France Defense backlog stood at EUR 3,011 million compared to EUR 3,039 million as of December 31, 2017. It includes 28 Rafale, versus 31 Rafale at the end of 2017.

The Falcon backlog stood at EUR 2,148 million, compared with EUR 2,457 million at December 31, 2017. In particular, it includes 53 Falcon (no longer including Falcon 5X), compared with 52 Falcon (including Falcon 5X) as of December 31, 2017.

RESULTS

Operating income

2018 operating income was EUR 669 million compared to EUR 357 million in 2017 (IFRS 15 pro forma).

The operating margin was 13.2%, compared to 7.3% in 2017. Without the compensation of USD 280 million received from Safran following the termination of the Silvercrest engine contract, the operating margin would stand at 9.2%.

The improvement in the operating margin can also be explained by the recovery in the pre-owned aircraft market and by the improvement in the hedge rate (USD 1.19/EUR in 2018 vs. USD 1.21/EUR in 2017). Besides, 2017 had been adversely impacted by the depreciation of inventories and work-in-progress resulting from the end of the Falcon 5X program.

The higher percentage of self-financed Research and Development expenses (7.7% of net sales in 2018 compared with 6.4% in 2017) partially offsets these positive elements.

Net financial result

The 2018 net financial result was EUR -77 million compared to EUR -57 million in 2017 (IFRS 15 pro forma). The negative net financial result is the consequence of the financing component recognized for Rafale contracts in a first time as a financial expense before being recognized in net sales along with deliveries.

Net income

2018 net income was EUR 681 million compared to EUR 410 million in 2017 (IFRS 15 pro forma). Thales' contribution to the Group's net income was EUR 290 million, compared to EUR 206 million in 2017 (IFRS 15 pro forma).
The net margin was 13.4% in 2018, compared to 8.4% in 2017. Without the compensation of USD 280 million received from Safran following the termination of the Silvercrest engine contract, the net margin would stand at 10.8%.

Net income per share in 2018 stood at EUR 82.1/share, compared with EUR 49.8/share in 2017.

AVAILABLE CASH

Available Cash of the Group amounted to EUR 5,211 million as of December 31, 2018 versus EUR 4,121 million as of December 31, 2017, up by EUR 1,090 million mainly due to the net income for the period and the down payments received under the ongoing Rafale Export contract.

BALANCE SHEET (data in IFRS)

Total equity was EUR 4,277 million as of December 31, 2018 compared with the opening balance of EUR 3,721 million. This increase is mainly due to the consolidated net income for the period.

Customers down payments received net of down payments paid to suppliers went up by EUR 563 million as of December 31, 2018 due primarily to down payments received under the ongoing Export Rafale contracts.

Inventories and work-in-progress decreased by EUR 68 million and stood at EUR 3,403 million as of December 31, 2018. The decrease in inventories and work-in-progress resulting from Falcon activity was partly offset by the increase in work-in-progress related to Rafale Export contracts.

Borrowings and financial debt amounted to EUR 991 million as of December 31, 2018, compared to EUR 1,095 million as of December 31, 2017. They include loans subscribed by the Group in 2014 and 2015 which totaled EUR 875 million as of December 31, 2018 (EUR 75 million were paid back in 2018) and locked-in employee profit-sharing funds.

Derivative financial instruments had a market value of EUR 14 million as of December 31, 2018, compared to EUR 161 million as of December 31, 2017. This increase is mainly due to the change in the $/€ exchange rate between December 31, 2017 (1.20 $/€) and December 31, 2018 (1.15 $/€).

Note: data restated for the application of IFRS 15 and IFRS 9.

DIVIDENDS AND PROFIT-SHARING/INCENTIVES

The Board of Directors decided to propose to the Annual Shareholders' Meeting the distribution of a dividend of €21.2/share in 2019, corresponding to a total of EUR 177 million, i.e. a payout of 26%, as in the previous year.

Under the earnings distribution policy, Group employees will receive, in profit-sharing and incentives, EUR 140 million (whereas the legal formula would have led to the amount of EUR 30 million), i.e. EUR 168 million including 20% correlated social tax.

All information relating to the publication of our results is available on our website:
www.dassault-aviation.com.

Contacts:
Stéphane Fort                                                                                                                            Armelle Gary
Corporate Communication                                                                                                  Investor Relations
Tel.: +33 (0)1 47 11 86 90                                                                                     Tel.: +33 (0)1 47 11 84 24

Appendix 1: table of reconciliation between the consolidated income statement and the adjusted income statement
The impact in 2018 of adjustments to income statement aggregates is presented below:

(in EUR thousands)	2018 consolidated income statement	Foreign exchange derivatives		THALES PPA	Adjustments applied by Thales	2018 adjusted income statement
		Foreign exchange gain/loss	Change in fair value
Net sales	5,119,219	-30,162	-5,223			5,083,834
Operating income	707,529	-30,162	-8,527			668,840
Financial income	-145,883	30,162	38,243			-77,478
Share in net income of equity associates	205,849			39,580	48,545	293,974
Income tax	-194,693		-9,505			-204,198
Net income	572,802	0	20,211	39,580	48,545	681,138
Group share of net income	572,741	0	20,211	39,580	48,545	681,077
Group share of net income per share (in EUR)	69.1					82.1

The impact in 2017 of adjustments to income statement aggregates (IFRS 15 pro forma ) is presented below: