Jean-Paul Herteman – Chairman and Chief Executive Officer Ross McInnes – Deputy Chief Executive Officer-Finance

Christian Laughlin – Bernstein Robert Stallard – Royal bank of Canada Rami Myerson – Investec

Welcome to the Safran First Quarter 2015 Revenue Conference Call. I will now hand over to Mr. Jean-Paul Herteman, Chairman and CEO; and Mr. Ross McInnes, Deputy CEO, CFO. Mr. Herteman, please go ahead. Jean-Paul Herteman: Thank you. Good morning everybody. Thank you to be there. This morning well we have also Philippe Petitcolin, of course, attending this conference and ready to address any question you may have. We are under timing pressure because we guess that many of you could be interested in another conference from one of our colleague at 8.30. So we’ll try to squeeze the presentation. You have the slide. I will be so very, very fast for the initial presentation so that we’ll have a little time available for Q&A. Regarding propulsion, a very, very good situation of LEAP. Marketwise more than 8,900 engines in backlog. That’s a 75% market share on narrow bodies and around 56% of the – on the specific A320neo. You have seen the rollout of the A320neo powered by LEAP-1A a few days ago. Truly the test campaign is doing very, very well and that’s true as well for LEAP-1C and LEAP-1B for the Boeing 737 MAX. We will have questions about rumors. We will answer that we do not comment rumors. But beyond that, we are 100% confident to deliver on time and at the right performance level our LEAP-1A, 1C and 1B. Production is a matter of intense industrial investment and so far so good. All our ramp-up plan is very well under control. So, in addition to that, the services in aviation, propulsion are very well oriented with growth in dollars of 17.8% this quarter, which is great. Nevertheless we have been very often vocal about the volatility on a quarter-to-quarter basis. So we do keep our guidance for the year, full year at around 10% and we of course are very happy to have made 17.8% this first quarter. But please do not extrapolate. The overall growth in propulsion is plus 13% in adjusted data and organically wise it is 3.7%. Equipment doing well also with an adjusted growth of 15%. Organic it’s flat – the exact figure is minus 4.5%. Services are up and carbon brakes especially are in a very good mood; new significant orders like Vueling and a very, very strong ramp-up of the Malaysian new plant. Nacelles something significant, as the development of the MRO facility in the U.S. in Indianapolis linked with the development we are doing on the A330neo and A320neo and our strategy to further develop services. On nacelles, defense is plus 8% in adjusted figures; minus 1.2% in organic. These are contracts that you know. Nevertheless, significant orders for instance in Optronics, an upgrade of the FELIN system for French infantry. And in avionics a very good growth and significant wins, just like U.S. Coast Guard, for our brand new BlueNaute navigation system based on a very advanced and very unique diverting hemispherical gyros. Security is up 20%. It’s 6% in organic, with very significant big orders for CTX explosive detection advanced system for London Airport and a very good trend as well in police ID and any other development based on biometrics. So all in all, it’s plus 14.3% growth in adjusted figures. You guess a big part of the growth is due to the bigger growth when you figure out from the first quarter, to the last year, to this first quarter of 2015. Nevertheless, it’s a very positive trend. All in all, we do confirm our guidance for the full year 2015 and that is a growth in revenues in high single-digit, based on an average rate of $1.20. Growth in adjusted recurring operating income is low double-digit at a hedge rate of $1.25 that we do have secured so far. And free cash flow around 30% –35% to 45% of the recurring operating income, subject to usual uncertainties. And we are very, very strong, altogether around this table, of regarding these targets for 2015. Ross, do you have anything to add?

I’ll go through Slides 7 and 8. Slide 7, just to remind you of the currency impact, that EUR374 million you see there. About 75% of it is transaction, hence hedged not only in residual part which is a translation of U.S. dollar turnover, which therefore will have some positive profitability impact. Our guidance, as Jean-Paul said, is unchanged and it’s 7% to 9% growth in turnover at $1.20. If we do the calculation, if the first quarter had been at $1.20 instead of $1.13, we would have been ahead of our guidance at about 10%. So that shows that we’re firmly on track for the guidance. If we now move to Slide 8, which read well with Slide 15 and 16, I would stress particularly the progress in services, 25% in propulsion in euros. The big – one big component of that of course was the 17.8% in civil aftermarket in dollars which Jean-Paul referred to. But there was also healthy contribution driving that number in military and helicopter support activities. You’ll notice the revenue in propulsion’s OE was broadly flat at 1%; of no particular significance, just confirming some of the softness in helicopter OE activity that’s made up for in the rest of the business. In equipment, you will also notice that services this quarter are growing faster than OE, 19% growth in services, 14% in OE. That’s because the OE has plateaued, in particular the 787. But a lot of that will reverse in the course of this year, which means that the trend which we have mentioned to you in the past, of OE growing faster than services and equipment, will remain in 2015 and 2016, notwithstanding what you see in the first quarter. We’re very happy with the growth in security. You see 30% organic. There you see the dollar impact, some of which will trickle through to the profit, to the profit line because it’s a local, indigenous seller. 6% organic with a very good performance in identification and in the banking card business. Lastly, Slide 9 on our hedging. We’ve continued to increase our hedging portfolio; with little change from 2014 and 2015 and 2016 at $1.25. 2017, we’ve increased the hedged portfolio and we’re confirming $1.25. You see the knock-out barriers are a quite long way, so we’re very comfortable about that rate. 2018, we’ve increased the portfolio and improved our target because we are now confident that we have achieved $1.18 and that the target should be comfortably below $1.20. And as we indicate at the bottom of that slide, we’re taking advantage of the current conditions to hedge and improve 2019 and 2020. Those figures aren’t yet solid enough to give the market a figure. In due course when that is done, we shall update you. So that concludes the presentation. Jean-Paul has talked about the outlook and I think it’s now on time, yes. Jean-Paul Herteman: Just in time and let’s go into question-and-answers.

Thank you, gentlemen. [Operator Instructions] Thank you. We have a question from Christian Laughlin from Bernstein. Please, go ahead.

Hi. Good morning, gentlemen. I’m a bit ill, so hopefully you can still understand me. Anyhow, just a quick question really on trends for older engines, particularly older CFM56’s. Have you seen any directional changes in advance bookings for shop visits, or scope of work for shop visits, or overhauls for these old engines that may be related to the low oil price environment or a changing outlook from your customers with respect to running some of these older, less-efficient engines? Jean-Paul Herteman: Okay. The main thing driving the evolution on CFM56 services is the point that now the share of the services business related to the first gen CFM56 engines is below 20% of the total. And this is declining again and again, but the rate of the decline is now very, very weak in the total figures. So the evolution reflects the solid growth on second gen CFM56 engine. It's true to some extent that we perceive some relaxation in cash pressure on a significant number of customers. That's probably helped the scheduling of shop visits on the first shop visit of the latest CFM56 engine fleet and relatively comprehensive work scope on these shop visits. It's not possible to give figures and data very, very accurate regarding that, but it's a positive factor for sure. The main one remaining the fact that the original – the volume of services related to the first gen family is now below 20% and has a very limited impact on the global figure.

Okay, thank you.

Thank you. Our next question is from Robert Stallard from Royal bank of Canada. Please go ahead.

Thanks very much. Good morning. Your colleagues at GE mentioned on their conference call that restocking of spares had helped aftermarket sales in the quarter. How far do you think it has to go on this restocking phase and, equally, how far do you think we are through on the deferred maintenance of engines? Thank you. Jean-Paul Herteman: Well, first of all, you have to keep in mind that, of course, we are in the 50/50 basis, on CFM56 with our friends at GE. But on a broader basis, their mix of fleet is different from ours. So, once again, we see on second gen CFM56 fleet some catch-up effect coming from the year 2011, 2012, 2013 where the work scope was lighter and the – some shop visit has been delayed. And a after that, you know, every airline has his own policy regarding fleet management and it’s very, very hard to draw any generic conclusion. We remain on our guidance on our own Safran commercial engine services business trend around 10% this year. That’s the best estimate we can do – we can give so far.

And, as a follow up, you highlighted the security growth in the quarter? Jean-Paul Herteman: Yes.

How sustainable is this looking forward to the full year and maybe into next year as well? Jean-Paul Herteman: Once again, we are not in a business in which a quarter trend is – can be extrapolated with very, very high accuracy for – on a yearly basis. But globally the mood in security is truly positive after, you remember, two, not disappointing, but two more flat – two flatter years. The trend is – from the last – the second half of last year – and still it’s true – it is still true this year, the trend is on a growth above 5% for sure. Governments are investing and airports as well. And well, okay, once again don’t extrapolate 100% of the first quarter figure. But confident in a solid growth in security, both in terms of revenues and in terms of operating profit as well. You know we have a wide basis as quoted – as Ross has quoted. We have a significant basis of business being done in U.S. dollars and maybe in America so that the translation effect is a significant contributor to the performance of our security business

That 5% Jean-Paul mentioned is organic. Jean-Paul Herteman: Yes, yes, sure.

Whatever the dollar brings is on top of that. Jean-Paul Herteman: Sure.

And you’ll see a lot of that through till September. And of course in the fourth quarter the dollar comparison rate becomes less marked. But it’s very nice to have.

Great. Thanks very much.

Thank you. We have a next question from Rami Myerson from Investec. Please, go ahead.

Good morning, gentlemen. Two questions. One on your expectations for aftermarket in the rest of the year. Comps probably get better in Q2, Q3, but despite the strong growth in Q1 you are reiterating your expectation for only 10% for the year. And I appreciate that it’s still in discussion stage, but could you talk a little bit about what Safran’s view is on the re-engineering of the A380?

We thought you had two questions. Can we have the second one so we can choose which one we answer. Jean-Paul Herteman: A320neo, it’s a question to be asked to Airbus. And of course any re-engineering of an airplane is to be assessed through a return on investment and an assessment of what is the marketplace.

And to the question on trends in the aftermarket? Why have you reiterated that – do you expect a slowdown in aftermarket in the rest of the year?

I think we always say that a particular quarter can have elements of volatility. We’ve said that year in, year out. Therefore we feel that the best thing to do is to stick to our current outlook which we feel extremely comfortable with. Having said that, if later in the year – you know we always strive to do well and not to disappoint. And therefore we’d like to stick to that line of conduct in the future.

Thank you, gentlemen

Thank you. We have no other questions for the moment. [Operator Instructions] Thank you. Jean-Paul Herteman: Okay, if you – if we don’t have any other question, thank you, all of you. And, well, maybe I will have opportunity to meet some of you into the future, but not in this position. So it’s my last quarterly conference call with investors and analysts. And thank you for having been with us all along this – well, these eight years and all the best for all of you.

Thank you. Goodbye.

Thank you. Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.