Safran

Interim / Quarterly Report • Aug 3, 2022

2022

INTERIM FINANCIAL REPORT

CONTENTS

DECLARATION BYTHE PERSON RESPONSIBLE ¹

1 INTERIM 2022 ACTIVITY REPORT 2

	Foreword	2
	Reconciliation between the consolidated income statement and the adjusted consolidated income statement	3
1.1	First-half 2022 results based on adjusted data	5
1.2	Business commentary	8
1.3	First-half 2022 results based on
	consolidated data	10
1.4	Balance sheet and cash flow	12
1.5	Currency hedges	13
1.6	Portfolio review	13
1.7	Full-year 2022 outlook	14
1.8	Related-party transactions	14
1.9	Bonds convertible into new Safran shares and/or exchangeable
	for existing Safran shares	15

2
	RISK FACTORS	16

3 INTERIM FINANCIAL STATEMENTS 18

4	STATUTORY AUDITORS' REVIEW REPORT	56
	Notes to the Group condensed interim consolidated financial statements	23
	Consolidated statement of cash flows	22
	Consolidated statement of changes in shareholders' equity	21
	Consolidated balance sheet	20
	Consolidated statement of comprehensive income	19
	Consolidated income statement	18

5 CORPORATE GOVERNANCE ⁵⁷

Safran's Ordinary and Extraordinary Shareholders' Meeting of May 25, 2022	57
Membership structure of the Board of Directors and its standing Committees	57

"The forecasts and forward-looking statements described in this document are based on the data, assumptions and estimates considered as reasonable by the Group as at the date of this document. These data, assumptions and estimates may evolve or change as a result of uncertainties related in particular to the economic, financial, competitive, tax or regulatory environment. The occurrence of one or more of the risks described in the Universal Registration Document may also have an impact on the business, financial position, results and prospects of the Group and thus affect its ability to achieve such forecasts and forward-looking statements. The Group therefore neither makes any commitment, nor provides any assurance as to the achievement of the forecasts and forward-looking statements described in this document."

The Interim Financial Report is available on the website at

safran-group.com

DECLARATION BYTHE PERSON RESPONSIBLE

"I certify that, to the best of my knowledge, the condensed interim consolidated financial statements have been prepared in accordance with the applicable accounting standards, and give a true and fair view of the assets and liabilities, and of the financial position and results of the Company and all its consolidated subsidiaries, and that the accompanying interim activity report provides a true and fair view of the main events of the first six months of the year, their impact on the condensed interim consolidated financial statements and the significant transactions with related parties, and also describes the main risks and uncertainties for the next six months."

Paris, July 28, 2022 Chief Executive Officer,

Olivier Andriès

INTERIM 2022 ACTIVITY REPORT

FOREWORD

1

To reflect the Group's actual economic performance and enable it to be monitored and benchmarked against competitors, Safran prepares an adjusted income statement in addition to its consolidated financial statements.

Readers are reminded that Safran:

• ◼ is the result of the May 11, 2005 merger of Sagem SA and Snecma, accounted for in accordance with IFRS 3, "Business Combinations" in its consolidated financial statements;
• ◼ recognizes, as of July 1, 2005, all changes in the fair value of its foreign currency derivatives in "Financial income (loss)", in accordance with the provisions of IFRS 9 applicable to transactions not qualifying for hedge accounting (see Note 3.f of the 2021 Universal Registration Document).

Accordingly, Safran's consolidated income statement has been adjusted for the impact of:

◼ purchase price allocations with respect to business combinations. Since 2005, this restatement concerns the amortization charged against intangible assets relating to aircraft programs remeasured at the time of the Sagem-Snecma merger. With effect from the first-half 2010 interim financial statements, the Group decided to restate:

• the impact of purchase price allocations for business combinations, particularly amortization and depreciation charged against intangible assets and property, plant and equipment recognized or remeasured at the time of the transaction and amortized or depreciated over extended periods due to the length of the Group's business cycles, and the impact of remeasuring inventories, as well as
• gains on remeasuring any previously held equity interests in the event of step acquisitions or asset contributions to joint ventures;
• ◼ the mark-to-market of foreign currency derivatives, in order to better reflect the economic substance of the Group's overall foreign currency risk hedging strategy:
• revenue net of purchases denominated in foreign currencies is measured using the effective hedged rate, i.e., including the costs of the hedging strategy,
• all mark-to-market changes on instruments hedging future cash flows are neutralized.

The resulting changes in deferred tax have also been adjusted.

RECONCILIATION BETWEEN THE CONSOLIDATED INCOME STATEMENT AND THE ADJUSTED CONSOLIDATED INCOME STATEMENT

The impact of these adjustments on first-half 2022 income statement items is as follows:

		Currencyhedging		Business combinations
(In Euro million)	H12022 consolidateddata	Remeasurement of revenue(1)	Deferredhedging gain/loss(2)	Amortizationof intangibleassets – Sagem-Snecma merger(3)	PPA impacts – otherbusiness combinations(4)	H12022 adjusteddata
Revenue	8,675	(115)	-	-	-	8,560
Other operating income and expenses	(7,723)	3	3	19	157	(7,541)
Share in profit from joint ventures	16	-	-	-	12	28
Recurring operating income	968	(112)	3	19	169	1,047
Other non-recurring operating income and expenses	(92)	-	-	-	-	(92)
Profit (loss) from operations	876	(112)	3	19	169	955
Cost of debt	(38)	-	-	-	-	(38)
Foreign exchange gains/losses	(5,828)	112	5,601	-	-	(115)
Other financial income and expense	(40)	-	-	-	-	(40)
Financial income (loss)	(5,906)	112	5,601	-	-	(193)
Income tax expense	1,283	-	(1,447)	(5)	(42)	(211)
Profit (loss) for the period	(3,747)	-	4,157	14	127	551
Attributable to non-controlling interests	(15)	-	-	-	-	(15)
ATTRIBUTABLE TO OWNERS OF THE PARENT	(3,762)	-	4,157	14	127	536

(1) Remeasurement of foreign-currency denominated revenue net of purchases (by currency) at the hedged rate (including premiums on unwound options) through the reclassification of changes in the fair value of instruments hedging cash flows recognized in profit or loss for the period.

(2) Changes in the fair value of instruments hedging future cash flows that will be recognized in profit or loss in future periods (positive €5,601 million excluding tax), and the impact of taking into account hedges when measuring provisions for losses on completion (positive €3 million at June 30, 2022).

(3) Cancellation of amortization/impairment of intangible assets relating to the remeasurement of aircraft programs resulting from the application of IFRS 3 to the Sagem SA-Snecma merger.

(4) Cancellation of the impact of remeasuring assets at the time of the Zodiac Aerospace acquisition for €139 million excluding deferred tax and cancellation of amortization/impairment of assets identified during other business combinations.

Readers are reminded that the condensed interim consolidated financial statements are subject to review by the Group's Statutory Auditors. The condensed interim consolidated financial statements include the revenue and operating profit indicators set out in the adjusted data in section 3, Note 5, "Segment information" of this interim financial report.

Adjusted financial data other than the data provided in Note 5, "Segment information" are subject to the verification procedures applicable to all of the information provided in this interim financial report.

1

Reconciliation between the consolidated income statement and the adjusted consolidated income statement

The impact of these adjustments in first-half 2021 was as follows:

		Currencyhedging		Business combinations
(in Euro million)	H12021 consolidateddata	Remeasurement of revenue(1)	Deferredhedging gain/loss(2)	Amortizationof intangibleassets – Sagem-Snecma merger(3)	PPA impacts – otherbusiness combinations(4)	H12021 adjusteddata
Revenue	6,769	107	-	-	-	6,876
Other operating income and expenses	(6,454)	6	(2)	20	162	(6,268)
Share in profit from joint ventures	36	-	-	-	15	51
Recurring operating income	351	113	(2)	20	177	659
Other non-recurring operating income and expenses	(195)	-	-	-	-	(195)
Profit (loss) from operations	156	113	(2)	20	177	464
Cost of debt	(51)	-	-	-	-	(51)
Foreign exchange gains/losses	860	(113)	(775)	-	-	(28)
Other financial income and expense	(5)	-	-	-	-	(5)
Financial income (loss)	804	(113)	(775)	-	-	(84)
Income tax expense	(273)	-	221	(6)	(42)	(100)
Profit (loss) for the period	687	-	(556)	14	135	280
Attributable to non-controlling interests	(13)	-	2	-	-	(11)
ATTRIBUTABLE TO OWNERS OF THE PARENT	674	-	(554)	14	135	269

(1) Remeasurement of foreign-currency denominated revenue net of purchases (by currency) at the hedged rate (including premiums on unwound options) through the reclassification of changes in the fair value of instruments hedging cash flows recognized in profit or loss for the period.

(2) Changes in the fair value of instruments hedging future cash flows that will be recognized in profit or loss in future periods (negative €775 million excluding tax), and the impact of taking into account hedges when measuring provisions for losses on completion (negative €2 million at June 30, 2021).

(3) Cancellation of amortization/impairment of intangible assets relating to the remeasurement of aircraft programs resulting from the application of IFRS 3 to the Sagem SA-Snecma merger.

(4) Cancellation of the impact of remeasuring assets at the time of the Zodiac Aerospace acquisition for €145 million excluding deferred tax and cancellation of amortization/impairment of assets identified during other business combinations.

1.1 FIRST-HALF 2022 RESULTS BASED ON ADJUSTED DATA

All figures concerning the first-half income statement and commented in sections 1.1 and 1.2 represent adjusted data, except when noted otherwise. Comments on the interim consolidated income statement are provided in section 1.3 of this document.

Adjusted interim income statement

	H12021	H12022
(In Euro million)	Adjusteddata	Adjusteddata
Revenue	6,876	8,560
Other income	166	210
Income from operations	7,042	8,770
Change in inventories of finished goods and work-in-progress	34	830
Capitalized production	155	169
Raw materials and consumables used	(3,645)	(5,241)
Personnel costs	(2,494)	(2,869)
Taxes	(151)	(160)
Depreciation, amortization and increase in provisions, net of use	(477)	(443)
Asset impairment	30	(90)
Other recurring operating income and expenses	114	53
Share in profit from joint ventures	51	28
Recurring operating income	659	1,047
Other non-recurring operating income and expenses	(195)	(92)
Profit from operations	464	955
Cost of net debt	(51)	(38)
Foreign exchange gain (loss)	(28)	(115)
Other financial income and expense	(5)	(40)
Financial income (loss)	(84)	(193)
Profit before tax	380	762
Income tax expense	(100)	(211)
PROFIT FOR THE PERIOD	280	551
Attributable to:
◼ owners of the parent	269	536
◼ non-controlling interests	11	15
Earnings per share attributable to owners of the parent (in €)
Basic earnings per share	0.63	1.26
Diluted earnings per share	0.61	1.22

1

FIRST-HALF 2022: STRONG OPERATING MARGIN AND CASH PERFORMANCE

Air traffic data in first-half 2022

The global narrowbody capacity(1) increased throughout the semester in all geographies but China. In H1 2022, narrowbody ASK were at 78% (on average) of 2019, with Q2 2022 at 81% of Q2 2019.

Adjusted revenue

1

H1 2022 revenue amounted to €8,560 million, up 24.5% compared to H1 2021, 17.3% organic. Change in scope was €(37) million(2) .

Currency impact of €533 million reflects a positive translation impact of USD revenues, with an average €/\$ spot rate of 1.09 in H1 2022 (1.21 in H1 2021). €/\$ hedge rate was at 1.15 (1.16 in H1 2021). Q2-22 sales increased by 27.0% at €4,489 million (17.6% in organic) compared to Q2 2021.

On an organic basis, H1 2022 revenue increased by 17.3%.

Research & Development

Total R&D, including R&D sold to customers, reached €719 million, compared with €640 million in H1 2021.

Self-funded R&D expenses before tax credit were up 9.2% at €465 million in H1 2022 including:

• ◼ Development expenses slight increase at €259 million (€249 million in H1 2021);
• ◼ Research & Technology (R&T) self-funded expenses at €206 million (€177 million in H1 2021) mainly driven by the RISE program.

Adjusted recurring operating income

H1 2022 recurring operating income reached €1,047 million, +59% compared to H1 2021 (+54% organic). It includes scope changes of €(3) million and a currency impact of €36 million.

Adjusted profit from operations

One-off items (In Euro million) H12021 H12022 Adjusted recurring operating income 659 1,047 % of revenue 9.6% 12.2% Total one-off items (195) (92) Capital gain (loss) on asset disposal 19 60 Impairment reversal (charge) (180) (128) Other infrequent & material non-operational items (34) (24) ADJUSTED PROFIT FROM OPERATIONS 464 955 % of revenue 6.7% 11.2%

The impact on recurring operating income of expensed R&D was €358 million, down (0.5) point of revenue compared to H1 2021, driven by phasing of some R&D programs for which EIS is delayed. It represents 4.2% of sales, consistent with mid-term target of 4.5% on average for 2021-2025.

Recurring operating margin improved by 260bps at 12.2% of sales (9.6% in H1 2021).

⁽¹⁾ Measured in billions of available seat kilometers (ASK) (= number of available seats multiplied by the distance traveled by the global fleet).

⁽²⁾ Divestment of EVAC in June 2021 and Safran Ventilation Systems Oklahoma (Enviro Systems) in November 2021.

Adjusted net income – Group share

In H1 2022, non-cash one-off items were €(92) million including impairment charge for several programs €(148)M (of which €(90)M related to sanctions against Russia) and capital gain on disposals of €60 million.

Adjusted net income – Group share was €536 million in H1 2022 (basic EPS of €1.26 and diluted EPS of €1.22) compared with €269 million in H1 2021 (basic EPS of €0.63 and diluted EPS of €0.61).

It includes:

• ◼ Net adjusted financial expense of €(193) million, including €(115) million exchange revaluation of positions in the balance sheet, €(48) million impairment of financial assets in Russia (notably non-consolidated investments) and cost of debt of €(38) million;
• ◼ An adjusted tax expense of €(211) million (27.7% apparent tax rate).

In total, the non-cash impairment charge related to the sanctions against Russia amounts to €(160) million pre-tax.

The reconciliation between H1 2022 consolidated income statement and adjusted income statement is provided on page 3 of this report.

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1.2 BUSINESS COMMENTARY

First-half 2022 key figures

Segment breakdown of adjusted revenue

Segmentbreakdownofadjustedrevenue (In Euro million)	H12021	H12022	% change	% changeinscope	% changecurrency	% changeorganic
Propulsion	3,249	4,176	28.5%	-	8.3%	20.2%
Equipment & Defense	2,972	3,506	18.0%	-	6.5%	11.5%
Aircraft Interiors	646	870	34.7%	(5.6)%	10.7%	29.6%
Holding company & Others	9	8	N/S	N/S	N/S	N/S
TOTAL GROUP	6,876	8,560	24.5%	(0.5)%	7.7%	17.3%

Segment breakdown of adjusted recurring operating income

Segmentbreakdownof recurringoperatingincome
(In Euro million)	H12021	H12022	% change
Propulsion	504	723	43.5%
% of revenue	15.5%	17.3%
Equipment & Defense	270	411	52.2%
% of revenue	9.1%	11.7%
Aircraft Interiors	(110)	(82)
% of revenue	(17.0)%	(9.4)%	25.5%
Holding company & Others	(5)	(5)	N/S
TOTAL GROUP	659	1,047	58.9%
% of revenue	9.6%	12.2%

Adjusted revenue by quarter

2022revenuebyquarter
(In Euro million)	Q12022	Q22022	H12022
Propulsion	1,942	2,234	4,176
Equipment & Defense	1,716	1,790	3,506
Aircraft Interiors	409	461	870
Holding company & Others	4	4	8
TOTAL GROUP	4,071	4,489	8,560

Segment operations review

Aerospace Propulsion

Propulsion increased by 20.2% driven by a solid civil aftermarket activity (+47% in USD) highlighting strong spare parts sales for CFM56. In contrast, spare parts sales for widebody and services contracts exhibited lower growth. In H1 2022, combined shipments of CFM engines reached 492 units (465 LEAP and 27 CFM56), compared with 448 in H1 2021, with a notable increase in LEAP spare engines. Military engine activities were down due to lower M88 deliveries and despite higher services. Helicopter turbine activities registered a slight decrease both for services and OE.

Q2-22 sales increased by 21.6% due to civil aftermarket revenue, up 41% compared to Q2-21 (as a reminder civil aftermarket: +53% in Q1-22).

Propulsion recurring operating margin increased by 1.8pts driven by services (mostly civil aftermarket) and favorable volume of LEAP spare engines. Profitability was impacted by lower CFM56 deliveries and a negative contribution from military OE deliveries. Helicopter turbine activities had a slight negative impact on the margin compared to H1 2021. The first-half was also impacted by the non-cash impairment of CFM engines stranded in Russia for €(22) million, related to Shannon Engine Support (equity accounted joint-venture).

Aircraft Equipment, Defense and Aerosystems

Equipment & Defense was up 11.5% driven by aftermarket services in all divisions but Defense. OE sales were up mainly thanks to nacelles (LEAP-1A powered A320neo and A330neo). Avionics activities registered a slight increase during the first part of the year. The widebody market remained low, notably on the 787 program impacting the wiring and landing gear businesses.

Q2-22 sales increased by 10.7% compared to Q2-21 mainly due to landing gear and nacelles services.

Equipment & Defense recurring operating margin increased by 2.6pts reflecting an improvement in all divisions except Defense which has been flattish. The strong margin upswing is mainly due to growth in services notably landing gear, carbon brakes, aerosystems and nacelles. OE nacelles had a positive contribution thanks to A330neo and A320neo programs.

Aircraft Interiors

Aircraft Interiors revenue increased by a solid 29.6% from a low comparison base a year ago. Growth was primarily driven by services for both Seats and Cabin activities. OE Cabin (toilets for A320, A350, 737 and galleys) performed well during the first half of the year. A positive contribution was recorded in IFE activities, both OE and services.

Aircraft Interiors posted a recurring operating loss of €(82) million. The recurring operating margin increased by 7.6pts compared to H1 2021, supported both by Seats and Cabin thanks to a strong growth in services. Cabin activities recovery is on track whereas Seats is facing supply chain and program cost-overruns. The breakeven target is therefore moving from full-year 2022 to H2 2022.

1

1

1.3 FIRST-HALF 2022 RESULTS BASED ON CONSOLIDATED DATA

(In Euro million)	H12021	H12022
Revenue	6,769	8,675
Other recurring operating income and expenses	(6,454)	(7,723)
Share in profit from joint ventures	36	16
Recurring operating income	351	968
Other non-recurring operating income and expenses	(195)	(92)
Profit from operations	156	876
Financial income (loss)	804	(5,906)
Profit (loss) before tax	960	960
Income tax benefit (expense)	(273)	1,283
Profit (loss) from continuing operations	687	(3,747)
Profit from discontinued operations and disposal gain	-	-
Profit for the period attributable to non-controlling interests	(13)	(15)
PROFIT (LOSS) FOR THE PERIOD ATTRIBUTABLE TO OWNERS OF THE PARENT	674	(3,762)

Consolidated revenue

For first-half 2022, consolidated revenue was €8,675 million, compared to €6,769 million in the same period a year ago.

The difference between adjusted revenue and consolidated revenue is due to the exclusion of foreign currency derivatives from the adjusted figures. Neutralizing the impact of foreign currency hedging increased first-half consolidated revenue by €115 million in 2022 and decreased first-half consolidated revenue by €107 million in 2021. The year-on-year change in the impact of foreign currency hedging on revenue results from movements in average exchange rates with regard to

Consolidated recurring operating income

Recurring operating income came in at €968 million for first–half 2022, compared to €351 million for first-half 2021. The difference between recurring operating income and adjusted recurring operating income, which came in at €1,047 million, results in particular from:

• ◼ amortization charged against intangible assets measured when allocating the purchase price for the May 2005 Sagem-Snecma business combination, representing €19 million for first-half 2022 (versus €20 million for first–half 2021);
• ◼ amortization charged against intangible assets measured when allocating the purchase price for other business combinations, representing €169 million for first-half 2022

Consolidated profit from operations

Profit from operations came in at €876 million for first–half 2022, compared to €156 million for first-half 2021.

Profit from operations includes recurring operating income of €968 million (versus €351 million for first-half 2021) and a non-recurring expense of €92 million (versus an expense of €195 million for first-half 2021).

the effective hedged rates for the period on the portion of foreign-currency denominated flows hedged by the Group. For example, the hedged EUR/USD rate for first-half 2022 was 1.15 against an average rate of 1.09, which explains why netting out the effect of foreign currency hedging results in a consolidated revenue figure that is higher than adjusted revenue.

Year-on-year changes in revenue by operating segment are analyzed above (see sections 1.1 and 1.2).

(versus €177 million for first-half 2021), and including the impact of remeasuring assets at fair value as part of the provisional allocation of the Zodiac Aerospace purchase price for €139 million;

◼ a €112 million positive impact resulting from foreign currency transactions (compared to a €113 million negative impact for first-half 2021), including the remeasurement of foreign-currency denominated revenue (a €115 million positive impact) and of "Other recurring operating income and expenses" (a €3 million negative impact).

Changes in recurring operating income, excluding the impact of adjusting items, are analyzed above (see sections 1.1 and 1.2).

Changes in profit from operations in adjusted data as well as the non-recurring items are analyzed above (see section 1.1).

1

Consolidated financial income (loss)

The Group reported a consolidated financial loss of €5,906 million for first–half 2022, compared to financial income of €804 million for first-half 2021.

The financial loss for the period mainly comprises a €5,601 million loss on foreign currency hedging instruments, a €145 million foreign exchange loss and €82 million in net foreign exchange losses on provisions.

In first-half 2022, the €5,601 million loss on foreign currency hedging instruments reflects changes in the fair value of these instruments attributable to operating cash flows that will be recognized in profit or loss in future periods.

Income tax benefit (expense)

The Group reported an income tax benefit of €1,283 million for first-half 2022, compared to an income tax expense of €273 million for first-half 2021.

Group tax is calculated by using the projected annual rates in each of the Group's tax jurisdictions, adjusted for the main permanent differences identified.

Consolidated profit for the period

This caption represented a loss of €3,747 million for first-half 2022, compared to profit of €687 million for first-half 2021.

The fair value of the portfolio reflects the immediate liquidation value of the portfolio at the closing rate for the half year (USD 1.0392 to €1) compared with the average rate of the portfolio. The change in the fair value is theoretical for the Group, as currency hedges are unwound when future dollar inflows are received.

A projected income tax rate of 25.83% was used to calculate the effective tax rate applicable to French entities in first–half 2022. For the United States, the rate is 23.5%.

1.4 BALANCE SHEET AND CASH FLOW

Consolidated balance sheet

Assets

1

(In Euro million)	Dec.31,2021	June30,2022
Goodwill	5,068	5,124
Tangible & Intangible assets	12,319	12,140
Investments in joint ventures and associates	1,969	1,992
Right of use	606	588
Other non-current assets	1,148	2,648
Derivatives assets	728	570
Inventories and WIP	5,063	6,050
Contracts costs	552	616
Trade and other receivables	6,504	6,954
Contracts assets	1,853	1,896
Cash and cash equivalents	5,247	6,208
Other current assets	659	765
TOTAL ASSETS	41,716	45,551

Equity and liabilities

(In Euro million)	Dec.31,2021	June30,2022
Equity	13,270	10,046
Provisions	2,856	2,739
Borrowings subject to sp. conditions	327	325
Interest bearing liabilities	6,814	6,627
Derivatives liabilities	1,796	7,151
Other non-current liabilities	1,391	1,332
Trade and other payables	4,950	5,973
Contracts liabilities	10,141	11,151
Other current liabilities	171	207
TOTAL EQUITY & LIABILITIES	41,716	45,551

Cash flow highlights

(In Euro million)	H12021	FY2021	H12022
Recurring operating income	659	1,805	1,047
One-off items	(195)	(405)	(92)
Depreciation, amortization, provisions (excluding financial)	610	1,336	677
EBITDA	1,074	2,736	1,632
Income tax and non-cash items	(341)	(550)	14
Cash flow from operations	733	2,186	1,646
Changes in working capital	297	250	426
Capex (tangible assets)	(183)	(387)	(243)
Capex (intangible assets)	(10)	(53)	(29)
Capitalization of R&D	(136)	(316)	(135)
Free cash flow	701	1,680	1,665
Dividends paid	(188)	(188)	(225)
Divestments/acquisitions and others	(287)	(244)	(321)
NET CHANGE IN CASH AND CASH EQUIVALENTS	226	1,248	1,119
Net cash/(Net debt) at beginning of period	(2,792)	(2,792)	(1,544)
Net cash/(Net debt) at end of period	(2,566)	(1,544)	(425)

1

Free cash flow

Free cash flow(1) of €1,665 million benefited from significant advance payments from Rafale's export customers. Safran resumed its investments in production capacity and low carbon initiatives with capital expenditures (tangibles and intangibles) increasing to €(407) million (€(329) million in H1 2021).

The favorable working capital evolution (€426 million) reflects significant customer advance payments and strong deferred income from rate per flight hour service contracts. Inventories significantly increased during the first half in an effort to protect on time deliveries to customers.

Net debt and financing

Net debt was €425 million as of June 30, 2022 (€1,544 million as of December 31, 2021), as a result of a strong free cash flow generation.

At the end of June 2022, cash and cash equivalent stood at €6,208 million, up from €5,247 million at the end of December 2021.

Replacing the 2015 Revolving Credit Facility coming to maturity at the end of the year, Safran has set up a €2 billion undrawn sustainability-linked revolving credit facility available until May 2027 (with two one-year extension options) with a cost indexed on reaching two ESG annual objectives (Scope 1 & 2 CO² emissions and percentage of women among senior executives).

1.5 CURRENCY HEDGES

The hedge book amounts to \$45.1 billion in July 2022, compared to \$32.6 billion in April 2022 notably due to the activation of additional hedging related to the EURUSD rally towards parity. In the meantime Safran continued to hedge year 2025 while lowering the probability of knock-out of the portfolio. The book is composed of options with knock-out barriers spanning from 1.18 to 1.30, representing a risk on the size of the book and on targeted rates in case of a sudden increase of the euro.

2022 is hedged: targeted hedge rate of \$1.15, for an estimated net exposure of \$9.0 billion.

2023, 2024 and 2025 are hedged: targeted hedge rate from \$1.14-1.16, for a respective estimated net exposure of \$10.0 billion, \$11.0 billion and \$12.0 billion respectively.

2026 is partially hedged: targeted hedge rate from \$1.14-1.16; \$7 billion hedged out of an estimated net exposure of \$13.0 billion.

1.6 PORTFOLIO REVIEW

Safran continues to manage actively its asset portfolio:

• ◼ The divestment of Safran Aerosystems Arresting Systems was closed on June 30th , 2022;
• ◼ The acquisition of Orolia was closed on July 7 th; the activity will be integrated within Safran Electronics & Defense in H2 2022;

^◼ The share purchase agreement of Aubert & Duval was signed with Airbus and Tikehau Ace Capital on June 21st (closing expected in Q4 2022).

⁽¹⁾ This non-accounting indicator (non-audited) is equal to cash flow from operating activities less change in working capital and acquisitions of property, plant and equipment and intangible assets.

1

1.7 FULL-YEAR 2022 OUTLOOK

Safran raises its revenue and free cash flow full–year 2022 outlook (at current perimeter, adjusted data) to reflect a stronger USD and significant customer advance payments:

• ◼ Revenue of €18.2-18.4 billion at a €/\$ spot rate of 1.10 (versus €18.0-18.2 billion at 1.14 previously);
• ◼ Free Cash Flow generation of €2.4 billion (versus €2.0 billion previously).

Safran confirms its recurring operating margin outlook of c.13.0%.

The main underlying assumptions are confirmed, in particular those relating to the civil aftermarket revenue growth between 25% and 30% (in \$ compared to 2021) and no further disruption to the world economy.

1.8 RELATED-PARTYTRANSACTIONS

Agreement of July 22, 2022 between Safran, Airbus SE, Tikehau ACE Capital, AD Holding and the French State on Aubert & Duval SAS' sensitive assets

Persons concerned at the date of this report:

• ◼ Stéphanie Besnier, representative of the French State;
• ◼ Alexandre Lahousse, Director put forward by the French State;
• ◼ the French State (shareholder holding more than 10% of Safran's voting rights).

The acquisition of 100% of the share capital and voting rights of Aubert & Duval SAS (hereinafter "AD SAS") held by Eramet SA is underway, through a holding company (hereinafter "AD Holding") owned by a consortium composed of Safran, Airbus SE and Tikehau Ace Capital.

AD SAS and its subsidiaries directly or indirectly hold assets that are directly related to protecting the French State's strategic interests in materials that are essential for national defense needs in the aviation, naval, land and nuclear sectors and, in particular, preserving innovation, design and production capacities, as well as securing the supply of such materials.

Accordingly, the French State intends, at the latest upon completion of the acquisition of AD SAS' share capital by AD Holding and in order to protect France's essential interests, to set up a specific share within AD SAS (the "Specific Share"), which will replace the specific share within Eramet SA(1) .

Furthermore, it has been agreed between Safran, Airbus SE, Tikehau Ace Capital and the French State (collectively the "Parties") that an agreement (the "AD Agreement") is necessary for the Specific Share, in order to ensure full protection of France's national interests and therefore the continuity of AD SAS' sovereignty-related operations and give the French State:

• ◼ control over the ownership and, where applicable, the devolution of all or part of the sensitive defense assets defined by the AD Agreement; and
• ◼ rights of representation on the governing bodies of AD Holding and, where applicable, AD SAS.

In particular, the AD Agreement provides for:

Protection scope:

• ◼ assets identified as sensitive defense assets that are essential for national defense needs in the aviation, naval, land and nuclear sectors;
• ◼ shares in AD Holding, AD SAS and its subsidiaries, as well as interests held directly or indirectly by AD SAS, or any company to which its rights and obligations are transferred, if said company holds or operates an asset identified as a sensitive defense asset ("Protected Sector Interests").

On corporate governance matters:

◼ the French State shall be entitled to appoint a non-voting representative to the Board of Directors of AD Holding and, where applicable, the Board of Directors of AD SAS if there is one.

⁽¹⁾ Specific share set up within Eramet SA by Decree no. 2022-206 of February 18, 2022 covering the sensitive assets of AD SAS or any company to which its rights and obligations are transferred, or one of the subsidiaries that it controls within the meaning of Article L. 233-3 of the French Commercial Code (Code de commerce).

On sensitive assets and entities holding such assets:

• ◼ the French State shall have a prior right of approval over:
• any proposal to sell sensitive defense assets to a third party,
• any proposal from a third party to purchase shares in AD Holding, AD SAS, its subsidiaries and Protected Sector Interests,
• any proposal to sell all or part of the interest held by AD Holding in AD SAS to a third party,
• any proposal to confer rights on a third party for the purpose of transferring expertise, technology or intellectual property rights related to a sensitive defense asset or to confer rights of representation on the administrative or management bodies of AD Holding or AD SAS.

Failure by the French State to respond within one month (renewable once) shall be deemed to constitute agreement, without prejudice to the application of the provisions of the Specific Share;

◼ the French State shall be informed beforehand of any proposal to change the distribution of AD Holding's share capital between Airbus, Safran SA and Tikehau Ace Capital or of any proposal to restructure AD Holding or AD SAS;

Other related-party agreements

◼ if the French State establishes that AD Holding or AD SAS has failed to comply with the essential obligations undertaken in respect of the French State in the AD Agreement (in particular, failure to comply with the above-mentioned right of approval or the rights linked to the Specific Share), and that such non-compliance continues for more than three months after notification is received from the French State, the French State may acquire all or part of the sensitive defense assets at a price to be set by a panel of experts.

The AD Agreement was authorized by Safran's Board of Directors on February 23, 2022 (the representative of the French State and the Director put forward by the French State did not take part in the vote).

It was signed on July 22, 2022 and will come into effect on the date on which the acquisition of AD SAS by AD Holding is completed, subject to said completion.

It will be submitted for shareholder approval at Safran's Ordinary Shareholders' Meeting to be held in 2023 to approve the financial statements for the year ending December 31, 2022.

Readers are invited to refer to section 3, Note 24 of this report and section 7.1.4 of the 2021 Universal Registration Document filed with the French financial markets authority (Autorité des marchés financiers – AMF) on March 31, 2021 under number D.22–0217.

1.9 BONDS CONVERTIBLEINTO NEW SAFRAN SHARES AND/OR EXCHANGEABLEFOR EXISTING SAFRAN SHARES

Adjustment to the conversion ratio of the bonds convertible into new Safran shares and/or exchangeable for existing Safran shares, due May 15, 2027 (2027 OCÉANEs)

As a reminder, on May 15, 2020 Safran issued 7,391,665 bonds (the "Initial Bonds") convertible into new shares and/or exchangeable for existing shares, due May 15, 2027 (2027 OCÉANEs). On October 12, 2020, Safran carried out a tap issue of 1,847,916 bonds (the "New Bonds") convertible into new shares and/or exchangeable for existing shares. The New Bonds carry the same terms and conditions as the Initial Bonds, with the exception of the issue price. They are fungible with the Initial Bonds, with which they form a single 2027 OCÉANE series. The background, terms and conditions and purpose of the 2027 OCÉANE bond issues are presented in section 7.2.3.2, section 3.1, Note 27 and section 3.3, Note 3.9 of the 2021 Universal Registration Document and section 3, Note 18.d of this interim financial report. The reports on the 2027 OCÉANEs are presented in section 8.4.2 of the 2021 Universal Registration Document.

At the Annual General Meeting of May 25, 2022, the shareholders approved a dividend payment of €0.50 per share. The ex-dividend date was May 31, 2022 and the record date was June 1, 2022. Consequently and in accordance with the terms and conditions of the 2027 OCÉANEs, the 2027 OCÉANE conversion ratio – previously 1.004 Safran shares for 1 OCÉANE bond – was adjusted to 1.009 Safran shares for 1 OCÉANE bond, effective June 2, 2022. Readers are also invited to refer to section 3, Note 18.d, "Consolidated shareholders' equity" of this report.

At June 30, 2022, all of the 9,239,581 OCÉANEs issued were still outstanding.

1

2 RISK FACTORS

There have been changes in some of the risk factors identified in Safran's 2021 Universal Registration Document filed with the French financial markets authority (Authorité des marchés financiers – AMF) on March 31, 2022 under number D.22‑0217. The changes may exacerbate or increase the risk factors, with impacts on the Group's operations and performance, potentially into future periods. The changes in the risk factors are described below.

Readers are invited to refer to chapter 4 of the Universal Registration Document for the other risk factors that have not been subject to significant changes and which are not therefore set out below.

The information is based on assumptions and forecasts that may, by nature, prove inaccurate.

1. Risks relating to the environment in which the Group operates

Geopolitical risks

The worsening of geopolitical tensions is weighing on the Group's operations, particularly on its supplies. The tensions have led the Group to reconsider its exposure, in three major areas: its strategy for the location of its supply chains (make or buy), disruptions in raw materials and sensitive components procurement (titanium and forged parts, energy and electronic components), and resulting inflationary impacts. Certain economic factors are exacerbating the situation, such as the ongoing Russo-Ukrainian conflict, heightened tensions between the People's Republic of China and the United States, particularly around Taiwan, increased sanctions and embargoes, and repeated public health lockdowns in Asia. Safran is deploying targeted action plans to reduce its dependence on certain suppliers and develop or reactivate a panel of alternative sources in certain competitive geographical areas. In the current context of the Russo-Ukrainian conflict, Safran is therefore reducing its exposure to titanium and forged parts sourced from Russia by reallocating market share to US, European and Asian suppliers.

Numerous other decisions have been taken and coordinated by the crisis cell activated at Group level on February 24, 2022 in response to the Russo-Ukrainian conflict. Managed by the Group International and Public Affairs Department, the crisis cell includes key corporate functions such as human resources, country deputies, export control, security, legal affairs, communications, risk and insurance, purchasing and programs. The main decisions taken by the unit concern:

◼ the immediate suspension of all projects in Russia and Ukraine and the repatriation of all Safran staff and their families expatriated in Russia;

• ◼ immediate reinforcement of IT security measures to counter possible cyberattacks;
• ◼ a halt of all shipments, deliveries, technical support and other activities, including development work, that may breach the new sanctions;
• ◼ an inventory of Safran's assets in Russia (industrial assets, leased engines, etc.) and of its cash flows with Russia, in order to get a clear picture of the Group's exposure and protect its interests;
• ◼ support for humanitarian initiatives (a donation of €200,000 by Safran and the organization of collections and deliveries of essential goods to support Ukrainian refugees);
• ◼ readjustment of local staff, mainly through voluntary departures. By September 30, if the sanctions are maintained, Safran's workforce in Russia will be only about 10% of the employee numbers in the country at the start of the year.

Legal and regulatory risks

Safran is bound by ever increasing legislation and regulations issued by French and international authorities, particularly the European Union and the United States. With regard to chemicals, some difficulties in meeting the 2024 sunset date provided for in the REACH Regulation(1) are emerging. Some Group entities may not be sufficiently prepared to reach agreements with their airframer or helicopter manufacturer customers holding type certification on alternative solutions that will be certified within the deadline. Monitoring has been stepped up and regular meetings with type certification holders are being scheduled.

⁽¹⁾ European Regulation 1907/2006, which came into force in 2007, to make the manufacture and use of chemical substances in European industry safer.

2. Risks relating to the Group's strategic development

Human resources risks

In the current tight global job market, Safran is suffering from the lack of attractiveness of the aerospace industry, and its ability to retain talent is being tested. The risk scenario has been expanded to include difficulties in all types of recruitment. Additional action plans have been deployed to adapt the hiring salary policy, strengthen communication on the Group's commitments and accelerate the recruitment process. An employee referral program has been launched, together with specific initiatives to retain talent and identify key skills and other individual measures to foster employee loyalty.

3 INTERIM FINANCIAL STATEMENTS

The Board of Directors' meeting of July 27, 2022 adopted and authorized the publication of Safran's consolidated financial statements and adjusted income statement for the six-month period ended June 30, 2022.

CONSOLIDATED INCOME STATEMENT

(in € millions)	Note	First-half2021	First-half2022
Revenue	6	6,769	8,675
Other income	7	166	210
Income from operations		6,935	8,885
Change in inventories of finished goods and work-in-progress		34	830
Capitalized production		155	169
Raw materials and consumables used	7	(3,649)	(5,242)
Personnel costs	7	(2,496)	(2,871)
Taxes		(151)	(160)
Depreciation, amortization and increase in provisions, net of use	7	(659)	(622)
Asset impairment	7	31	(90)
Other recurring operating income and expenses	7	115	53
Share in profit from joint ventures	16	36	16
Recurring operating income		351	968
Other non-recurring operating income and expenses	7	(195)	(92)
Profit from operations		156	876
Cost of net debt		(51)	(38)
Foreign exchange gain (loss)		860	(5,828)
Other financial income and expense		(5)	(40)
Financial income (loss)	8	804	(5,906)
Profit (loss) before tax		960	(5,030)
Income tax benefit (expense)	9	(273)	1,283
PROFIT (LOSS) FOR THE PERIOD		687	(3,747)
Attributable to:
◼ owners of the parent		674	(3,762)
◼ non-controlling interests		13	15
Earnings per share attributable to owners of the parent (in €)	10
Basic earnings (loss) per share		1.58	(8.81)
Diluted earnings (loss) per share		1.53	(8.81)

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(in € millions)	Note	First-half2021	First-half2022
Profit (loss) for the period		687	(3,747)
Other comprehensive income
Items to be reclassified to profit		200	541
Translation adjustments		187	479
Remeasurement of hedging instruments		(1)	13
Income tax related to components of other comprehensive income to be reclassified to profit		(1)	(5)
Share in other comprehensive income of equity-accounted companies to be reclassified to profit (net of tax)	16	15	54
Items not to be reclassified to profit		69	199
Actuarial gains and losses on post-employment benefits		91	214
Income tax related to components of other comprehensive income not to be reclassified to profit		(22)	(54)
Share in other comprehensive income of equity-accounted companies not to be reclassified to profit (net of tax)		-	39
Other comprehensive income for the period		269	740
TOTAL COMPREHENSIVE INCOME (EXPENSE) FOR THE PERIOD		956	(3,007)
Attributable to:
◼ owners of the parent		939	(3,031)
◼ non-controlling interests		17	24

In first-half 2022, other comprehensive income relating to translation adjustments includes:

• ◼ €477 million in translation gains (€187 million in translation gains in first-half 2021) arising in the period on foreign operations;
• ◼ €2 million in translation gains (zero in first-half 2021) arising in the period on long-term financing granted to foreign subsidiaries. This financing meets the criteria for classification as a net investment in a foreign operation, and is treated in accordance with the applicable provisions of IAS 21.

In first-half 2022, other comprehensive income resulting from the remeasurement of hedging instruments includes positive fair value adjustments totaling €13 million (negative fair value adjustments of €1 million in first-half 2021) relating to cash flow hedges of interest payments on senior unsecured notes (i) as of the end of first-quarter 2019 and (ii) as of July 2020. The outstanding balance of the ongoing cash flow hedging reserve is a positive €11 million (see the consolidated statement of changes in shareholders' equity).

Other comprehensive income relating to equity-accounted companies (net of tax) includes (see Note 16, "Investments in equity-accounted companies"):

• ◼ €54 million in foreign exchange gains arising in the period on foreign joint ventures (€18 million in foreign exchange gains in first-half 2021);
• ◼ zero relating to cash flow hedges of joint ventures (a negative amount of €3 million in first-half 2021).

In accordance with the amended IAS 19, changes in actuarial gains and losses are shown in "Other comprehensive income" and are not subsequently reclassified to profit.

The discount rates used to calculate post-employment benefit obligations are determined by reference to the yield on private investment-grade bonds (AA), using the Iboxx index. The main discount rate assumptions used to calculate post–employment benefit obligations at the dates shown were revised as follows:

	Dec.31,2020	June30,2021	Dec.31,2021	June30,2022
Eurozone	0.50%	0.90%	1.00%	3.30%
UK	1.45%	2.00%	1.90%	3.80%

The inflation rate assumption used to calculate obligations in the United Kingdom was as follows:

	Dec.31,2020	June30,2021	Dec.31,2021	June30,2022
UK inflation rate	2.80%	3.15%	3.35%	3.35%

CONSOLIDATED BALANCE SHEET

Assets

(in € millions)	Note	Dec.31,2021	June30,2022
Goodwill	11	5,068	5,124
Intangible assets	12	8,382	8,170
Property, plant and equipment	13	3,937	3,970
Right-of-use assets	14	606	588
Non-current financial assets	15	688	746
Investments in equity-accounted companies	16	1,969	1,992
Non-current derivatives (positive fair value)	23	23	6
Deferred tax assets		449	1,887
Other non-current financial assets		11	9
Non-current assets		21,133	22,492
Current financial assets	15	104	530
Current derivatives (positive fair value)	23	705	570
Inventories and work-in-progress		5,063	6,050
Contract costs		552	616
Trade and other receivables		6,504	6,954
Contract assets		1,853	1,896
Tax assets		555	235
Cash and cash equivalents	17	5,247	6,208
Current assets		20,583	23,059
TOTAL ASSETS		41,716	45,551

Equity and liabilities

(in € millions)	Note	Dec.31,2021	June30,2022
Share capital	18	85	85
Consolidated reserves and retained earnings	18	12,713	13,283
Profit (loss) for the period		43	(3,762)
Equity attributable to owners of the parent		12,841	9,606
Non-controlling interests		429	440
Total equity		13,270	10,046
Provisions	19	1,798	1,790
Borrowings subject to specific conditions	20	327	325
Non-current interest-bearing financial liabilities	21	5,094	5,434
Non-current derivatives (negative fair value)	23	8	6
Deferred tax liabilities		1,275	1,257
Other non-current financial liabilities	22	116	75
Non-current liabilities		8,618	8,887
Provisions	19	1,058	949
Current interest-bearing financial liabilities	21	1,720	1,193
Trade and other payables		4,950	5,973
Contract liabilities		10,141	11,151
Tax liabilities		109	106
Current derivatives (negative fair value)	23	1,788	7,145
Other current financial liabilities	22	62	101
Current liabilities		19,828	26,618
TOTAL EQUITY AND LIABILITIES		41,716	45,551

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

(in € millions)	Share capital	Additional paid-in capital	Treasury shares	Remeasurement ofhedging instruments	Translation adjustments	Consolidated reserves andretained earnings	Actuarialgains andlosseson post-employment benefits	Profit(loss) forthe period	Other	Equity attributable toownersof theparent	Non controlling interests	Total
At January 1, 2021	85	4,688	(36)	(13)	(158)	7,735	(571)	352	307	12,389		401 12,790
Comprehensive income (expense) for the period	-	-	-	(1)	202	(3)	89		674 (22)(a)	939	17	956
Acquisitions/disposals of treasury shares	-	-	(77)	-	-	-	-	-	-	(77)	-	(77)
Dividends	-	-	-	-	-	(183)	-	-	-	(183)	(5)	(188)
2021-2028 OCÉANEs	-	-	-	-	-	29	-	-	-	29	-	29
Repurchase of 2023 OCÉANEs	-	-	-	-	-	(50)	-	-	-	(50)	-	(50)
Other movements, including appropriation of profit	-	-	-	-	-	352	-	(352)	31	31	-	31
At June 30, 2021	85	4,688	(113)	(14)	44	7,880	(482)	674	316	13,078	413	13,491
Comprehensive income (expense) for the period	-	-	-	12	297	(3)	81		(631) (25)(a)	(269)	17	(252)
Acquisitions/disposals of treasury shares	-	-	63	-	-	(42)	-	-	-	21	-	21
Dividends	-	-	-	-	-	-	-	-	-	-	-	-
2021-2028 OCÉANEs	-	-	-	-	-	-	-	-	-	-	-	-
Repurchase of 2023 OCÉANEs	-	-	-	-	-	-	-	-	-	-	-	-
Other movements, including appropriation of profit	-	-	-	-	-	-	-	-	11	11	(1)	10
At December 31, 2021	85	4,688	(50)	(2)	341	7,835	(401)	43	302	12,841		429 13,270
Comprehensive income (expense) for the period	-	-	-	13	529	-		262 (3,762) (73)(a)		(3,031)		24 (3,007)
Acquisitions/disposals of treasury shares	-	-	9	-	-	(10)	-	-	-	(1)	-	(1)
Dividends	-	-	-	-	-	(213)	-	-	-	(213)	(12)	(225)
2021-2028 OCÉANEs	-	-	-	-	-	-	-	-	-	-	-	-
Repurchase of 2023 OCÉANEs	-	-	-	-	-	-	-	-	-	-	-	-
Other movements, including appropriation of profit	-	-	-	-	-	43	-	(43)	10	10	(1)	9
At June 30, 2022	85	4,688	(41)	11	870	7,655		(139) (3,762)	239	9,606		440 10,046

(a) The comprehensive expense of €73 million for first-half 2022 (attributable to owners of the parent) comprises a negative tax impact on actuarial gains and losses of €68 million and a negative tax impact on foreign exchange differences of €5 million (negative impacts of €21 million and €1 million in first-half 2021, respectively).

3

CONSOLIDATED STATEMENT OF CASH FLOWS

(in € millions)		Note	First-half2021	First-half2022
I. CASH FLOW FROM OPERATING ACTIVITIES
Profit (loss) attributable to owners of the parent			674	(3,762)
Depreciation, amortization, impairment and provisions(1)			698	922
Share in profit/loss from equity-accounted companies (net of dividends received)		16	114	64
Change in fair value of currency and interest rate derivatives(2)		23	(734)	5,477
Capital gains and losses on asset disposals			(22)	(51)
Profit attributable to non-controlling interests			13	15
Other(3)			(10)	(1,019)
Cash flow from operations, before change in working capital			733	1,646
Change in inventories and work-in-progress			(15)	(1,014)
Change in operating receivables and payables			577	680
Change in contract costs			(28)	(61)
Change in contract assets and liabilities			(324)	930
Change in other receivables and payables			87	(109)
Change in working capital			297	426
	TOTAL I		1,030	2,072
II. CASH FLOW USED IN INVESTING ACTIVITIES
Capitalization of R&D expenditure(4)		12	(136)	(135)
Payments for the purchase of intangible assets, net(5)			(10)	(29)
Payments for the purchase of property, plant and equipment, net(6)			(183)	(243)
Payments for the acquisition of investments or businesses, net			(10)	(7)
Proceeds arising from the sale of investments or businesses, net			74	13
Proceeds (payments) arising from the sale (acquisition) of investments and loans, net(7)			(210)	(206)
Other movements			-	-
	TOTAL II		(475)	(607)
III. CASH FLOW USED IN FINANCING ACTIVITIES
Change in share capital – owners of the parent			-	-
Change in share capital – non-controlling interests			-	-
Acquisitions and disposals of treasury shares		18.b	(77)	(4)
Repayment of borrowings and long-term debt(8)		21	(1,293)	(539)
Increase in borrowings(9)		21	2,151	514
Change in repayable advances		20	(8)	(17)
Change in short-term borrowings		21	(1,005)	(249)
Dividends and interim dividends paid to owners of the parent		18.e	(183)	(213)
Dividends paid to non-controlling interests			(5)	(12)
	TOTAL III		(420)	(520)
EFFECT OF CHANGES IN FOREIGN EXCHANGE RATES	TOTAL IV		45	16
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	I+II+III+IV		180	961
Cash and cash equivalents at beginning of period			3,747	5,247
Cash and cash equivalents at end of period		17	3,927	6,208
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS			180	961

(1) Including in first-half 2022: depreciation and amortization for €681 million (€677 million in first-half 2021), impairment charges for €227 million (€29 million in first‑half 2021) and provision charges for €14 million (provision reversals for €8 million in first-half 2021).

(2) Including in first-half 2022: a negative €5,492 million arising on currency derivatives (a negative €732 million in first-half 2021) (see Note 23, "Management of market risks and derivatives").

(3) Including in first-half 2022: cancellation of deferred tax income arising on changes in the fair value of currency derivatives for a negative €1,447 million (a positive €221 million in first-half 2021), cancellation of tax expense for €164 million (€52 million in first-half 2021), €206 million in taxes paid (€110 million in first-half 2021), €48 million in interest paid (€50 million in first–half 2021), and €3 million in interest received (€7 million in first-half 2021).

(4) Including in first-half 2022: capitalized interest of €3 million (€3 million in first-half 2021).

(5) Including in first-half 2022: €32 million in disbursements for acquisitions of intangible assets (€121 million in first-half 2021), €2 million in proceeds from disposals (€9 million in first-half 2021), changes in amounts payable on acquisitions of non-current assets representing a positive €4 million (a positive €108 million in first–half 2021), and changes in amounts receivable on disposals of non-current assets representing a negative €3 million (a negative €6 million in first-half 2021).

(6) Including in first-half 2022: €263 million in disbursements for acquisitions of property, plant and equipment (€193 million in first-half 2021), changes in amounts payable on acquisitions of non-current assets representing a negative €6 million (a negative €7 million in first-half 2021), €22 million in proceeds from disposals (€17 million in first-half 2021), and changes in amounts receivable on disposals of non-current assets representing a positive €4 million (zero in first-half 2021).

(7) Including in first-half 2022: €200 million in investments that do not qualify as cash and cash equivalents (€200 million in first–half 2021).

(8) Including in first-half 2022: an outflow of €470 million relating to the redemption of tranche 2 of the USPP.

(9) Including in first-half 2022: an inflow of €500 million relating to the drawdown of the EIB loan.

NOTES TO THE GROUP CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1	Comments regarding the russo-ukrainian crisis	24
NOTE 2	Accounting policies	25
NOTE 3	Main sources of estimates	26
NOTE 4	Scope of consolidation	28
NOTE 5	Segment information	29
NOTE 6	Revenue	30
NOTE 7	Breakdown of the other main components of profit from operations	31
NOTE 8	Financial income (loss)	33
NOTE 9	Income tax	34
NOTE 10	Earnings per share	34
NOTE 11	Goodwill	35
NOTE 12	Intangible assets	36
NOTE 13	Property, plant and equipment	37
NOTE 14	Leases	38
NOTE 15	Current and non-current financial assets	39

NOTE 16	Investments in equity-accounted companies	40
NOTE 17	Cash and cash equivalents	41
NOTE 18	Consolidated shareholders' equity	42
NOTE 19	Provisions	44
NOTE 20	Borrowings subject to specific conditions	45
NOTE 21	Interest-bearing financial liabilities	45
NOTE 22	Other current and non-current financial liabilities	49
NOTE 23	Management of market risks and derivatives	49
NOTE 24	Related parties	52
NOTE 25	Off-balance sheet commitments and contingent liabilities	53
NOTE 26	Disputes and litigation	55
NOTE 27	Subsequent events	55

Safran (2, boulevard du Général-Martial-Valin – 75724 Paris Cedex 15, France) is a société anonyme (joint-stock corporation) incorporated in France and permanently listed on Compartment A of the Euronext Paris Eurolist market.

The condensed interim consolidated financial statements reflect the accounting position of Safran SA and the subsidiaries that it controls, directly or indirectly and jointly or exclusively, as well as entities over which it exercises significant influence (the "Group").

The condensed interim consolidated financial statements and accompanying notes are drawn up in euros and all amounts are rounded to the nearest million unless otherwise stated.

The Board of Directors' meeting of July 27, 2022 adopted and authorized for issue the 2022 condensed interim consolidated financial statements.

NOTE1 COMMENTS REGARDING THE RUSSO-UKRAINIAN CRISIS

On February 24, 2022, at the start of the conflict in Ukraine, Safran activated a Group crisis cell to monitor the conflict, anticipate and address the consequences on its operations, customers, partners and suppliers, and ensure the safety of its employees.

In compliance with the European, US and UK sanctions against Russia, Safran has suspended all exports and services to Russia and halted the operations of its manufacturing joint ventures in the country and with its Russian partners until further notice.

The most impacted business operations are the following:

• ◼ the supply of engines, equipment and aftermarket services for the regional Sukhoi Superjet 100 program, the MC21 program and the Kamov 62 and Kamov 226 helicopter programs;
• ◼ service activities for CFM engines powering approximately 500 A320 and Boeing 737 aircraft operated by Russian airlines;
• ◼ Soyouz launches carried out by Arianespace and Starsem;
• ◼ leased engines fitted on aircraft in Russia or on russian aircraft.

The suspension of all commercial exports (products and services) to Russia and the halt of all operations in the country represents a loss of business of approximately 2% of revenue.

1.1 Assets and liabilities

Goodwill

At June 30, 2022, Safran reviewed its cash-generating units (CGUs) and carried out impairment tests on those with an indication of impairment and for which the carrying amount of their assets was close to the recoverable amount.

The approach used and the results obtained are described in Note 11, "Goodwill".

Other intangible assets

The Group analyzed its other intangible assets (development expenditures, programs, etc.).

As in every half-year period, the Group tested assets allocated to programs for which there could be an indication of impairment.

These impairment tests were carried out based on projections updated to reflect the best information available at the reporting date.

Due to the russo-ukrainian conflict, Safran wrote down certain intangible assets for €68 million.

The results and methodology of the tests are described in Note 12, "Intangible assets".

Investments in equity-accounted companies

Safran is indirectly exposed through:

• ◼ its partnership in the ArianeGroup joint venture. Arianespace has paid and received advances for the Soyouz program, for which Roscosmos has taken the decision to suspend rocket launches operated by Arianespace. Negotiations with customers regarding the advances received are underway;
• ◼ its partnership in Shannon Engine Support with Aercap, with leased CFM56 and LEAP engines stranded in Russia. In first-half 2022, Safran recognized an asset write-down of €22 million in recurring operation income.

Other investments

Safran reviewed its other investments in companies operating in Russia and recognized in "Financial income (loss)":

• ◼ impairment of equity investments, for €34 million;
• ◼ impairment of loans to investments, for €14 million.

Inventories

Safran analyzed its exposure to russian programs and wrote down inventories by €17 million.

Trade and other receivables

Particular attention was paid to the situation of russian airline customers.

A provision was accrued for any receivables or assets considered at risk (i.e., payment default at maturity, insolvency proceedings, etc.), based on a case-by-case analysis.

At June 30, 2022, the impact was not material.

1.2 Description of the impacts of the russo-ukrainian crisis

The impacts of the russo-ukrainian crisis on the Group's businesses affect the whole income statement and balance sheet.

As mentioned in Note 7, "Breakdown of the other main components of profit from operations", non-recurring items, essentially impairment losses (including on equity-accounted companies), capital gains and losses on disposals of businesses, and transaction and restructuring costs, are unchanged from previous periods.

NOTE2 ACCOUNTING POLICIES

The consolidated financial statements of Safran and its subsidiaries have been prepared in accordance with the International Financial Reporting Standards (IFRS) published by the International Accounting Standards Board (IASB) and adopted by the European Union at the date the condensed interim consolidated financial statements were approved by the Board of Directors. They include standards approved by the IASB, namely IFRS, International Accounting Standards (IAS), and interpretations issued by the IFRS Interpretations Committee (IFRS IC) or its predecessor, the Standing Interpretations Committee (SIC).

The condensed interim consolidated financial statements at June 30, 2022 have been prepared in accordance with IAS 34, "Interim Financial Reporting" and with all the standards and interpretations adopted by the European Union and applicable to accounting periods beginning on or after January 1, 2022.

In preparing these condensed interim consolidated financial statements at June 30, 2022, Safran applied the same accounting rules and methods as those applied in the preparation of its consolidated financial statements for the year ended December 31, 2021 (see section 3.1, Note 3 of the 2021 Universal Registration Document), except as regards the specific requirements of IAS 34 (use of projected annual rates in calculating the Group's income tax, adjusted for the main permanent differences) and the changes described below.

Changes in accounting policies

New IFRS standards, amendments and interpretations effective as of January 1, 2022

• ◼ Amendments to IAS 16, "Property, Plant and Equipment" Proceeds before Intended Use.
• ◼ Amendments to IAS 37, "Provisions, Contingent Liabilities and Contingent Assets" – Onerous Contracts – Cost of Fulfilling a Contract.
• ◼ Annual Improvements to IFRSs published in May 2020 (2018-2020 cycle).
• ◼ Amendments to IFRS 3, "Business Combinations" Reference to the Conceptual Framework.

The standards, amendments and interpretations effective for reporting periods beginning on or after January 1, 2022 do not have a material impact on the Group's consolidated financial statements.

New published IFRS standards, amendments and interpretations early adopted by the Group as of January 1, 2022

None.

New published IFRS standards, amendments and interpretations not yet effective or not early adopted by the Group

• ◼ Amendments to IAS 1, "Presentation of Financial Statements" Classification of Liabilities as Current or Non-Current.
• ◼ Amendments to IAS 1, "Presentation of Financial Statements" and IFRS Practice Statement 2 – Disclosure of Accounting Policies.
• ◼ Amendments to IAS 8, "Accounting Policies, Changes in Accounting Estimates and Errors" – Definition of Accounting Estimates.
• ◼ Amendments to IAS 12, "Income Taxes" Deferred Tax related to Assets and Liabilities arising from a Single Transaction.
• ◼ Amendments to IAS 28, "Investments in Associates and Joint Ventures" and IFRS 10, "Consolidated Financial Statements" – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture.
• ◼ IFRS 17, "Insurance Contracts" and its amendments.

The amendments to IAS 1 – Classification of Liabilities as Current or Non-Current, IAS 12 and IAS 28/IFRS 10 have not yet been adopted by the European Union and cannot therefore be applied ahead of their effective date even where early adoption is permitted by the texts concerned. The other new standards, amendments and interpretations have not been early adopted by the Group.

3

NOTE3 MAIN SOURCES OFESTIMATES

The preparation of consolidated financial statements in accordance with the International Financial Reporting Standards (IFRS) described above requires management to make certain estimates and assumptions that affect the reported amounts of consolidated assets, liabilities, income and expenses.

The assumptions used vary from one business to the next, but are considered reasonable and realistic in all cases. The resulting estimates are based on the Group's past experience and factor in the economic conditions prevailing at the end of the reporting period and any information available as of the date of preparation of the financial statements, in particular of a contractual or commercial nature.

Estimates and underlying assumptions are reviewed on an ongoing basis, and take into account the impacts of the health crisis and the russo-ukrainian conflict identified to date.

When unforeseen developments in events and circumstances occur, particularly as regards global economic trends and the Group's own business environment, actual results may differ from these estimates. In such cases, the assumptions and, where appropriate, the reported amounts of assets and liabilities concerned are adjusted accordingly.

The Group also tests its sensitivity to changes in the assumptions underlying its main estimates in order to analyze the impact of volatility and lack of visibility in the global economic environment and particularly in certain Group segments. These analyses are regularly reviewed by management.

The main accounting policies which require the use of estimates are described below.

a) Estimates relating to programs and contracts

The main material estimates used by the Group to prepare its financial statements relate to forecasts of future cash flows under programs and contracts (business plans). Forecast future total cash flows under programs and contracts represent management's best estimate of the rights and obligations expected to derive from the program or contract.

The assumptions applied and resulting estimates used for programs and contracts cover periods that are sometimes very long (up to several decades), and take into account the technological, commercial and contractual constraints as well as the impacts of the climate strategy of each such program and contract.

These estimates primarily draw on assumptions about the volumes, output and selling prices of products sold and associated production costs, including inflation assumptions. They also draw on exchange rates for foreign-currency denominated sales and purchases as well as normal risks and uncertainties in respect of forecast cost overruns and, for discounted future cash flows, the discount rate adopted for each program and contract.

The Group's volume assumptions are prepared internally for each market in which Group companies are present (e.g., commercial, business and military aviation; helicopters, etc.). For short-term estimates, these assumptions are based on available inputs (programs, orders, etc.), while external inputs (publications, airframer press releases, IATA announcements, market surveys, etc.) are used for estimates covering the medium to long term. The assumptions are regularly revised, particularly those used for short-term estimates, in order to reflect the latest developments in the Group's programs, and all assumptions used for medium- to long-term forecasts are validated by management at least once a year.

Cash flow forecasts, which may or may not be discounted, are used to determine the following:

• ◼ impairment of non-current assets: goodwill and assets allocated to programs (aircraft programs, development expenditures and property, plant and equipment used in production) are tested for impairment as described in section 3.1, Note 3.m of the 2021 Universal Registration Document. The recoverable amount of these assets is generally determined using cash flow forecasts;
• ◼ capitalization of development expenditures: the conditions for capitalizing development expenditures are set out in section 3.1, Note 3.j of the 2021 Universal Registration Document. Determining whether future economic benefits are expected to flow to the Group is instrumental in deciding whether project costs can be capitalized. This analysis is carried out based on future cash flow forecasts. The Group also uses estimates when determining the useful life of its projects;
• ◼ profit (loss) on completion of contracts accounted for on a percentage-of-completion basis: the Group accounts for contracts on a percentage-of-completion basis (cost–to–cost method). Under this method, revenue is recognized based on the percentage of work completed, calculated by reference to the costs incurred. This method requires an estimate of results on completion using future cash flow forecasts that take into account contractual indexes and commitments as well as other factors inherent to the contract based on historical and/or forecast data. This method also requires an estimate of the contract's stage of completion.

When the total costs that are necessary to cover the Group's risks and obligations under the contract are likely to exceed total contract revenue, the expected loss (i) is recognized within provisions for losses on completion or (ii) leads to the write-down of contract fulfillment costs (if any) and to the subsequent recognition of a provision for losses on completion for the remaining amount of the loss;

• ◼ timing of revenue recognition: the recognition of revenue under certain contracts is based on delivery volume assumptions. These assumptions therefore influence the timing of revenue recognition;

• ◼ variable consideration: the transaction price may be comprised of both a fixed amount and a variable amount. This variable amount may, in particular, depend on volume assumptions which therefore require the use of estimates;

• ◼ losses arising on delivery commitments: sales contracts (or combinations of contracts) may be onerous. For all sales contracts or combinations of contracts, the Group estimates the volume of goods to be delivered as well as spare parts and services directly related to the delivery commitment, which may be contractual or highly probable. Accordingly, the Group recognizes a provision for losses arising on delivery commitments when the combination of contracts is onerous and a loss is likely to be incurred. It uses estimates, notably as regards the volume of goods to be produced and delivered under the sales contracts or combinations of contracts, as well as the volume of directly-related spare parts and services, projected production costs and the expected economic benefits;

• ◼ repayable advances: the forecast repayment of advances received from public bodies is based on revenue from future sales of engines, equipment and spare parts, as appropriate. As a result, the forecasts are closely related to the business plans prepared by the operating divisions.

Any changes in estimates and assumptions underlying cash flow forecasts for programs and contracts could have a material impact on the Group's future earnings and/or the amounts reported in its balance sheet. Consequently, the sensitivity of key estimates and assumptions to such changes is systematically tested and the results of these tests reviewed by management on a regular basis.

b) Provisions

Provisions reflect management's best estimates using available information, past experience and, in some cases, estimates by independent experts.

When estimating provisions relating to the Group's contractual commitments on timeframes and technical specifications in connection with the development phase, the general stage of development of each of the Group's programs is taken into account, particularly as regards changes made to specifications during the development phase. Contractually defined liability limits are also taken into account.

Provisions for restructuring costs represent the best estimate of the costs at the end of the reporting period.

Contractual provisions relating to performance warranties given by the Group take into account factors such as the frequency and estimated cost of repairs. The value of these commitments may be based on a statistical assessment.

Provisions relating to financial guarantees given by the Group are based on the estimated value of the underlying assets, the probability that the customers concerned will default, and, where appropriate, the discount rate applied to cash flows.

The costs and penalties actually incurred or paid may differ significantly from these initial estimates when the obligations unwind, and this may have a material impact on the Group's future earnings.

At the date of this report, the Group has no information suggesting that these inputs are not appropriate taken as a whole.

c) Post-employment benefits

The Group uses statistical data and other forward-looking inputs to determine assets and liabilities relating to post-employment benefits. These inputs include actuarial assumptions such as the discount rate, salary increase rate, retirement age, and employee turnover and mortality. Actuarial calculations are performed by independent actuaries. At the date of preparation of the consolidated financial statements, the Group considers that the assumptions used to measure its commitments are appropriate and justified.

However, if circumstances or actuarial assumptions – especially the discount rate – prove significantly different from actual experience, the amount of post-employment liabilities shown in the balance sheet could change significantly, along with equity.

d) Trade receivables, contract assets and other receivables

The Group estimates any collection risks based on commercial information, prevailing economic trends, and information concerning the solvency of each customer, in order to determine any necessary write-downs on a case-by-case basis. These write-downs are in addition to any allowances recognized for expected losses, which are calculated on a collective basis for all customers except major customers deemed low risk and the government.

The specific nature of any receivables from government-backed entities is taken into account when determining bad debt risk for each receivable and therefore when estimating the amount of any impairment loss.

e) Allocation of the cost of business combinations

Business combinations are recorded using the acquisition (purchase) method. Identifiable assets acquired and liabilities and contingent liabilities assumed are measured at fair value at the date control is acquired.

One of the most important areas in which estimates are used in accounting for a business combination concerns the calculation of fair value and the underlying assumptions applied. The fair value of certain items acquired in a business combination can be measured reliably, for example property, plant and equipment using market prices. However, the fair value of other items such as intangible assets or contingent liabilities may prove more difficult to establish. These complex measurements are usually performed by independent experts based on a series of assumptions. These experts are generally required to estimate the impact of future events that are uncertain at the date of the combination.

f) Disputes and litigation

Certain Group subsidiaries may be party to regulatory, legal or arbitration proceedings which, because of their inherent uncertainty, could have a material impact on the Group's financial position (see Note 26, "Disputes and litigation").

The Group's management takes stock of any outstanding proceedings and monitors their progress on a regular basis. It also decides whether to book a provision or adjust the amount of any existing provision if events arise during the

NOTE4 SCOPE OF CONSOLIDATION

Main changes in the scope of consolidation in 2022

Disposal of Safran Arresting Systems business (emergency ground arresting systems for military aircraft business)

On January 21, 2022, Safran signed an agreement with Curtiss-Wright to sell the assets of its "emergency ground arresting systems for military aircraft" business in France and the United States. The transaction was subject to the usual regulatory approvals and was completed on June 30, 2022.

Disposal of Pioneer Aerospace Corporation

On April 15, 2022, Safran sold its subsidiary Pioneer Aerospace Corporation, an aviation market player specialized in safety control systems and parachute release and launch platforms.

These two disposals represented a capital gain of €60 million, recognized in the Group's non-recurring operating income.

Other changes in the scope of consolidation are in progress but have not yet been finalized:

Acquisition of Aubert & Duval

After signing a Memorandum of Understanding with the mining and metallurgical group Eramet on February 22, 2022 to acquire its subsidiary Aubert & Duval, the consortium comprising Safran, Airbus and Tikehau Ace Capital signed the purchase agreement on June 21, 2022.

The transaction is expected to be completed by the end of the year, subject to obtaining the necessary regulatory approvals.

proceedings that require a reassessment of the risk involved. The Group consults legal experts both within and outside the Group in estimating the risk and determining the costs that may be incurred.

The decision to book a provision in respect of a given risk and the amount of any such provisions are based on an assessment of the risk associated with each individual case, management's estimate of the likelihood that an unfavorable decision will be issued in the proceedings in question, and the Group's ability to estimate the amount of the provision reliably.

Acquisition of a stake in CILAS

On April 14, 2022, Safran and MBDA signed an agreement to purchase the shares held by ArianeGroup SAS in Compagnie Industrielle des Lasers (CILAS), representing a 63% stake in CILAS' capital.

For the purposes of the acquisition, Safran and MBDA have created HMS Laser, a new joint holding company with equal ownership rights.

The transaction is expected to be completed in the second half of 2022, subject to obtaining the necessary regulatory approvals.

CILAS is a recognized expert in laser and optronics. The defense company is specialized in laser rangefinders for tanks, helicopters, naval firing control systems and laser designators for guided weapons.

Main changes in the scope of consolidation in 2021

On June 1, 2021, Safran sold the operating businesses of EVAC GmbH, its German subsidiary, and of Monogram Train LLC, its subsidiary based in the United States. The subsidiaries manufacture lavatories and integrated lavatory compartments for trains.

In addition, Safran sold its subsidiary Safran Ventilation Systems Oklahoma on November 30, 2021. The subsidiary, which has now reverted to its original name "Enviro systems LLC", is a leading manufacturer of environmental control systems (ECS) for the general aviation segment.

These two disposals represented a capital gain of €71 million for the Group.

NOTE5 SEGMENT INFORMATION

Segments presented

In accordance with IFRS 8, "Operating Segments", segment information reflects Safran's different businesses.

The Group's operating segments reflect the organization of subsidiaries around tier-one entities ("consolidation sub-groups").

For monitoring purposes, Safran has three operating segments which are organized based on the type of products and services they sell and the markets they serve.

Aerospace Propulsion

The Group designs, develops, produces and markets propulsion and mechanical power transmission systems for commercial aircraft, military transport, training and combat aircraft, civil and military helicopters, and drones. This segment also includes maintenance, repair and overhaul (MRO) activities and the sale of spare parts.

Aircraft Equipment, Defense and Aerosystems

Safran covers the full life cycle of systems and equipment for civil and military aircraft and helicopters.

The Group is involved in landing gear and brakes, nacelles and reversers, avionics (flight controls and onboard information systems), security systems (evacuation slides, emergency arresting systems and oxygen masks), onboard computers and fuel systems.

It also operates at the different phases of the electrical cycle and provides electrical power management systems and associated engineering services.

It includes all activities serving the naval and land defense markets, including optronic equipment and sights, navigation equipment and sensors, modernized infantry and drones.

This segment also includes maintenance, repair and overhaul (MRO) activities and the sale of spare parts.

Aircraft Interiors

The Aircraft Interiors business includes all operations related to the buyer-furnished equipment (BFE) market, whose direct customers are mostly airline companies. The Group designs, develops, manufactures and markets, for example, aircraft seats for passengers (First, Business and Economy Class) and crew, as well as cabin equipment, overhead bins, class dividers, passenger service units, cabin interior solutions, chilling systems, galleys, electrical inserts and trolleys and cargo equipment.

This segment also includes complex cabin equipment and passenger comfort-focused solutions such as water distribution, lavatories, air systems and in-flight entertainment and connectivity (IFEC).

Holding company and other

In "Holding company and other", the Group includes Safran SA's activities and holding companies in various countries.

Business segment performance indicators

Segment information presented in the tables on page 8 is included within the information presented to the Chief Executive Officer who – in accordance with the Group's governance structure – has been designated as the "Chief Operating Decision Maker" for the assessment of the performance of business segments and the allocation of resources between the different businesses.

The assessment of each business segment's performance by the Chief Executive Officer is based on adjusted contribution figures as explained in the Foreword (see page 3).

Data for each business segment are prepared in accordance with the same accounting principles as those used for the consolidated financial statements (see section 3.1, Note 3 of the 2021 Universal Registration Document), except for the restatements made in respect of adjusted data (see Foreword).

Inter-segment sales are performed on an arm's length basis.

Free cash flow represents cash flow from operating activities less any disbursements relating to acquisitions of property, plant and equipment and intangible assets.

Quantified segment information for 2021 and 2022 is presented on pages 8 to 10.

NOTE6 REVENUE

Breakdown of revenue by business

First-half 2022

(in € millions)	Aerospace Propulsion	AircraftEquipment, Defenseand Aerosystems	Aircraft Interiors	Holdingcompany andother	Total
DESCRIPTION OF PRODUCTS/SERVICES
Sales of original equipment and other equipment	1,444	2,007	608	-	4,059
Services	2,710	1,341	258	-	4,309
Sales of studies	54	126	7	5	192
Other	48	64	-	3	115
TOTAL REVENUE	4,256	3,538	873	8	8,675
TIMING OF REVENUE RECOGNITION
At a point in time	3,325	3,142	867	6	7,340
Over time	931	396	6	2	1,335
TOTAL REVENUE	4,256	3,538	873	8	8,675

First-half 2021

		AircraftEquipment,		Holdingcompany
(in € millions)	Aerospace Propulsion	Defenseand Aerosystems	Aircraft Interiors	andother	Total
DESCRIPTION OF PRODUCTS/SERVICES
Sales of original equipment and other equipment	1,220	1,790	453	-	3,463
Services	1,923	976	174	-	3,073
Sales of studies	44	137	12	6	199
Other	11	20	-	3	34
TOTAL REVENUE	3,198	2,923	639	9	6,769
TIMING OF REVENUE RECOGNITION
At a point in time	2,404	2,556	635	6	5,601
Over time	794	367	4	3	1,168
TOTAL REVENUE	3,198	2,923	639	9	6,769

Revenue is broken down into four categories which best reflect the Group's main businesses:

◼ Sales of original equipment and other equipment

These sales reflect quantities delivered under contracts or aircraft, helicopter and defense programs as well as contractual financing received from customers to develop these products.

◼ Services, which include deliveries of spare parts and maintenance contracts

These sales are contingent on repairs and maintenance requested by airline or helicopter companies and correspond to services and volumes that are less predictable since they depend on the condition of fleets.

◼ Sales of studies, research and development

Contracts are drawn up for all such development work, which represents separate performance obligations. This category relates to specific work carried out for a given project or program.

◼ Miscellaneous activities, which are included in "Other" In terms of revenue recognition, it should be noted for each of the business segments that:

• Most revenue within the Group is recognized "at a point in time".
• Revenue recognized on a percentage-of-completion basis ("over time") mainly concerns service and after–sales support contracts in the Propulsion segment and aerospace activities in the Aircraft Equipment, Defense and Aerosystems segment.

Revenue from contract-related activities accounted for as an overall performance obligation is also recognized on a percentage-of-completion basis.

NOTE7 BREAKDOWN OFTHE OTHER MAIN COMPONENTS OF PROFIT FROM OPERATIONS

Other income

(in € millions)	First-half2021	First-half2022
Research tax credit	82	80
Other operating subsidies(1)	73	118
Other operating income	11	12
TOTAL	166	210

(1) Including €107 million in research and technology subsidies in 2022 (€66 million in 2021).

Raw materials and consumables used

This caption breaks down as follows for the period:

(in € millions)	First-half2021	First-half2022
Raw materials, supplies and other	(1,582)	(2,129)
Bought-in goods	(12)	(9)
Changes in inventories	(19)	202
Contract costs	28	60
Sub-contracting	(1,128)	(1,927)
Purchases not held in inventory	(177)	(275)
External service expenses	(759)	(1,164)
TOTAL	(3,649)	(5,242)

Personnel costs

(in € millions)	First-half2021	First-half2022
Wages and salaries	(1,716)	(1,885)
Social security contributions	(628)	(761)
Statutory employee profit-sharing	(41)	(67)
Optional employee profit-sharing	(10)	(59)
Additional contributions	(5)	(2)
Corporate social contribution	(16)	(22)
Other employee costs	(80)	(75)
TOTAL	(2,496)	(2,871)

Depreciation, amortization and increase in provisions, net of use

(in € millions)	First-half2021	First-half2022
Net depreciation and amortization expense
◼ intangible assets	(337)	(331)
◼ property, plant and equipment	(291)	(300)
◼ right-of-use assets	(49)	(50)
Total net depreciation and amortization expense(1)	(677)	(681)
Net increase in provisions	18	59
DEPRECIATION, AMORTIZATION AND INCREASE IN PROVISIONS, NET OF USE	(659)	(622)

(1) Of which depreciation and amortization of assets measured at fair value at the time of the Sagem SA-Snecma merger: €19 million in first-half 2022 and €20 million in first-half 2021; during the acquisition of the former Zodiac Aerospace: €139 million in first–half 2022 and €145 million in first-half 2021; and during other acquisitions: €18 million in first-half 2022 and €18 million in first-half 2021.

Asset impairment

	Impairmentexpense		Reversals
(in € millions)	First-half2021	First-half2022	First-half2021	First-half2022
Intangible assets, property, plant and equipment, and right–of–use assets	(11)	(6)	7	24
Financial assets	-	(1)	-	-
Contract costs	-	(9)	4	3
Inventories and work-in-progress	(113)	(176)	143	73
Receivables	(39)	(28)	41	30
Contract assets	(1)	-	-	-
TOTAL	(164)	(220)	195	130

Other recurring operating income and expenses

(in € millions)	First-half2021	First-half2022
Capital gains and losses on asset disposals	3	(21)
Royalties, patents and licenses	(12)	(2)
Losses on irrecoverable receivables	(6)	(1)
Other operating income and expenses(1)	130	77
TOTAL	115	53

(1) Of which income of €99 million in 2021 and €0 million in 2022 relating to the revised repayment probability for borrowings subject to specific conditions (see Note 20, "Borrowings subject to specific conditions").

Other non-recurring operating income and expenses

(in € millions)	First-half2021	First-half2022
Capital gains on asset disposals	19	60
Asset impairment net of reversals	(180)	(128)
Other non-recurring items	(34)	(24)
TOTAL	(195)	(92)

In first-half 2022, capital gains on asset disposals result from the disposals outlined in Note 4, "Scope of consolidation".

The write-downs of €128 million taken against intangible assets break down as follows:

• ◼ €68 million relating to aircraft programs in the Propulsion and Equipment segments impacted by the russo-ukrainian crisis;
• ◼ €58 million (net of tax) relating to the intangible assets of an equity-accounted company;
• ◼ €2 million relating to an aircraft program in the Aircraft Equipment, Defense and Aerosystems segment.

Other non-recurring items mainly correspond to:

• ◼ asset impairment totaling €22 million;
• ◼ transaction and integration costs totaling €2 million.

In first-half 2021, other non-recurring items mainly corresponded to:

• ◼ restructuring costs totaling €31 million, including €15 million relating to adaptation plans and €16 million in costs relating to the Activity Transformation Agreement;
• ◼ transaction and integration costs totaling €3 million.

NOTE8 FINANCIAL INCOME(LOSS)

(in € millions)	First-half2021	First-half2022
Financial expense on interest-bearing financial liabilities	(61)	(40)
Financial income on cash and cash equivalents	10	2
Cost of net debt	(51)	(38)
Gain (loss) on foreign currency hedging instruments	775	(5,601)
Foreign exchange gain (loss)	112	(145)
Net foreign exchange gain (loss) on provisions	(27)	(82)
Foreign exchange gain (loss)	860	(5,828)
Gain (loss) on interest rate hedging instruments	-	3
Capital gain (loss) on financial asset disposals	-	1
Change in the fair value of assets at fair value through profit or loss	3	(30)
Impairment of loans and other financial receivables	-	(14)
Dividends received	1	1
Other financial provisions	1	(1)
Interest component of IAS 19 expense	(3)	(3)
Impact of unwinding the discount	(3)	13
Other	(4)	(10)
Other financial income and expense	(5)	(40)
FINANCIAL INCOME (LOSS)	804	(5,906)
◼ Of which financial expense	(98)	(5,926)
◼ Of which financial income	902	20

In first-half 2022, the €5,601 million loss on foreign currency hedging instruments reflects changes in the fair value of these instruments attributable to operating cash flows that will be recognized in profit or loss in future periods.

The fair value of the portfolio reflects the immediate liquidation value of the portfolio at the closing rate for the half year (USD 1.0392 to €1) compared with the average rate of the portfolio. The change in the fair value is theoretical for the Group, as currency hedges are unwound when future dollar inflows are received.

The €145 million foreign exchange loss includes:

◼ a €112 million foreign exchange loss, reflecting the loss on unwinding currency derivatives hedging operating cash flows recognized in profit or loss in the period. This foreign exchange loss reflects the difference between the EUR/ USD exchange rate guaranteed by the currency derivatives unwound in the period (USD 1.15 to €1) and the actual EUR/USD exchange rate observed during the period;

◼ a net foreign exchange loss of €33 million primarily attributable to the remeasurement of monetary items at the closing exchange rate.

Net foreign exchange losses amounting to €82 million on provisions carried in USD were recorded in the Propulsion segment and result from the impact of fluctuations in the EUR/USD exchange rate between the start of the period (USD 1.13 to €1 at December 31, 2021) and the end of the period (USD 1.04 to €1 at June 30, 2022) on the opening amount of the provision.

NOTE9 INCOMETAX

Group tax is calculated by using the projected annual rates in each of the Group's tax jurisdictions, adjusted for the main permanent differences identified.

A projected income tax rate of 25.83% was used to calculate the effective tax rate applicable to French entities in first–half 2022. For the United States, the rate is 23.5%.

The tax benefit in first-half 2022 amounts to €1,283 million.

In first-half 2022, changes in the fair value of outstanding currency derivatives generated deferred tax income of €1,434 million.

In first-half 2021, changes in the fair value of outstanding currency derivatives generated a deferred tax expense of €213 million.

NOTE10 EARNINGS PER SHARE

Index	First-half2021	First-half2022
(a)	674	(3,762)
(b)	427,238,616	427,242,440
(c)	976,620	414,587
(d)=(b-c)	426,261,996	426,827,853
(d')	426,622,547	426,832,583
(e)	14,168,106	13,482,802
(f)=(d'+e)	440,790,653	440,315,385
(g)=(a*1 million)/(d')	1.58	(8.81)
(h)=(a*1 million)/(f)	1.53	(8.81)

At June 30, 2022, potentially dilutive ordinary shares essentially comprise shares that may be issued if all of the bonds convertible into new shares and/or exchangeable for existing shares issued by the Group (2020-2027 OCÉANEs and 2021-2028 OCÉANEs: see Note 18.d, "Convertible bond issues") are converted.

NOTE11 GOODWILL

Goodwill breaks down as follows:

	Dec.31,2021	Changes inscopeof			Effectof changes in foreignexchange	June30,2022
(in € millions)	Net	consolidation(1)	Reallocation	Impairment	ratesandother	Net
Safran Aircraft Engines	392	-	-	-	-	392
Safran Helicopter Engines	308	-	-	-	-	308
Safran Aero Boosters	47	-	-	-	-	47
Other Propulsion	1	-	-	-	-	1
Safran Electronics & Defense	349	-	1	-	5	355
Safran Nacelles	213	-	-	-	-	213
Safran Engineering Services	74	-	-	-	-	74
Safran Electrical & Power	702	-	-	-	13	715
Safran Landing Systems	190	-	-	-	-	190
Safran Aerosystems	798	(74)	(1)	-	-	723
Safran Seats	765	-	-	-	1	766
Safran Cabin	1,229	-	-	-	111	1,340
TOTAL	5,068	(74)	-	-	130	5,124

(1) Related to the disposals described in Note 4, "Scope of consolidation".

Impairment tests

Given the health crisis and the russo-ukrainian conflict, at June 30, 2022 the Group reviewed its cash-generating units (CGUs) and carried out impairment tests on those with an indication of impairment and for which the carrying amount of their assets was close to the recoverable amount.

The impairment tests performed included the Safran Seats and Safran Cabin CGUs.

The measurement method used to determine the value in use of the CGUs was the same as that used at December 31, 2021.

The value in use of the CGUs was determined based on the following assumptions:

• ◼ Expected future cash flows are determined over a period consistent with the useful life of the assets in each CGU. This is generally estimated at 10 years but may be extended for businesses with longer development and production cycles.
• ◼ Operating projections used to determine expected future cash flows take into account general economic data, specific inflation rates for each geographic area, a USD exchange rate based on available market information and mid- to long-term macroeconomic assumptions.

The projections and assumptions used by the Group are drawn from the medium-term business plan for the next four years, as prepared in the second half of 2021, while the projections and assumptions beyond this period are based on the best estimate (prepared by management and validated by the Board of Directors) of the long-term scenario. For the CGUs tested for impairment at June 30, 2022, in the absence of a new medium-term plan for 2022 (which will be prepared and validated during the second half of the year), the projections and assumptions were adjusted where necessary for any new assumptions such as delivery rates known at the reporting date, volumes, loss of service activities and inflation.

• ◼ The value in use of the CGUs is equal to the sum of these discounted expected future cash flows plus a terminal value, calculated by applying the growth rate expected for the relevant businesses to standardized cash flows representing long-term business activity, which usually corresponds to the last year of available forecasts.

• ◼ The growth rate used to calculate terminal value was set at 2.5% (updated at June 30, 2022 – 2% in 2021).

• ◼ The average hedged USD exchange rate adopted for years 2022 to 2025 is USD 1.16 to €1. This exchange rate assumption takes into account the available foreign currency hedging portfolio (see Note 23, "Management of market risks and derivatives"). A rate of 1.30 is adopted thereafter.

• ◼ The benchmark post-tax discount rate used is 8% (updated at June 30, 2022 to reflect an increase in the risk premium and in market volatility – 7.5% in 2021) and is applied to post-tax cash flows.

Based on these tests, the recoverable amount of each CGU tested wholly justifies its net asset value, including the goodwill balances recorded in Group assets.

No impairment of goodwill was recognized as a result of the annual impairment tests in 2021.

The Group tested the sensitivity of the two CGUs tested to the following changes in the main assumptions used for its forecasts as from 2022:

• ◼ a 5% increase or decrease in the EUR/USD exchange rate;
• ◼ a 0.5% increase in the benchmark discount rate;
• ◼ a 0.5% decrease in the perpetual growth rate.

The above changes in the main assumptions taken individually do not result in values in use lower than the carrying amounts of goodwill balances for the Safran Seats CGU. A 0.5% increase in the discount rate would lead to the recognition of impairment before tax of €50 million against the value of the Safran Cabin CGU.

In view of the economic situation, sensitivity analyses using higher rates were performed on these CGUs for which Safran expects an upturn in business.

Additional assumptions were tested on these CGUs, as described below:

• ◼ An across-the-board decrease of 10% in future cash flows as from 2022 and in the terminal value. Based on this test, impairment before tax of €80 million would be recognized against the value of the Safran Cabin CGU.
• ◼ An across-the-board decrease of 20% in future cash flows as from 2022 and in the terminal value. The change in this assumption would lead to the recognition of impairment before tax of €502 million against the value of the Safran Seats and Safran Cabin CGUs.

NOTE12 INTANGIBLE ASSETS

Intangible assets break down as follows:

	Dec.31,2021			June30,2022
(in € millions)	Gross	Amortization/ impairment	Net	Gross	Amortization/ impairment	Net
Aircraft programs	2,335	(1,848)	487	2,337	(1,856)	481
Development expenditures	6,848	(2,966)	3,882	7,017	(3,170)	3,847
Commercial agreements	905	(225)	680	914	(242)	672
Software	746	(679)	67	758	(700)	58
Trademarks(1)	703	-	703	703	-	703
Commercial relationships	1,911	(623)	1,288	1,916	(694)	1,222
Technology	1,383	(630)	753	1,374	(708)	666
Other	862	(340)	522	882	(361)	521
TOTAL	15,693	(7,311)	8,382	15,901	(7,731)	8,170

(1) As trademarks are not amortized, they are tested for impairment based on their respective CGUs.

Movements in intangible assets break down as follows:

		Amortization/
(in € millions)	Gross	impairment	Net
At December 31, 2021	15,693	(7,311)	8,382
Capitalization of R&D expenditure(1)	135	-	135
Capitalization of other intangible assets	16	-	16
Acquisitions of other intangible assets	16	-	16
Disposals and retirements	(114)	33	(81)
Amortization	-	(331)	(331)
Impairment losses recognized in profit or loss	-	(56)	(56)
Reclassifications	-	-	-
Changes in scope of consolidation	(17)	6	(11)
Foreign exchange differences	172	(72)	100
AT JUNE 30, 2022	15,901	(7,731)	8,170

(1) Including €3 million in capitalized interest on R&D expenditure at June 30, 2022 (€3 million at June 30, 2021).

Research and development expenditure recognized in recurring operating income for the period totaled €438 million including amortization (€403 million in first-half 2021). This amount does not include the research tax credit recognized in the income statement within "Other income" (see Note 7, "Breakdown of the other main components of profit from operations").

Amortization recognized in the period includes €127 million relating to the remeasurement of intangible assets within the scope of the acquisition of the former Zodiac Aerospace, €19 million relating to the remeasurement of aircraft programs in connection with the Sagem-Snecma merger, and €18 million relating to assets identified as part of other business combinations.

The impairment tests carried out at June 30, 2022 on assets allocated to programs, projects or product families were based on the approach described in section 3.1, Note 3.m of the 2021 Universal Registration Document.

Expected future cash flows were updated to reflect the latest information available at the reporting date. An 8% discount rate was used, plus a risk premium depending on the programs tested.

As a result of the impairment tests carried out at June 30, 2022, intangible assets relating to various aircraft programs were written down by €70 million, mainly due to the situation in Russia. The write-down was recognized in non-recurring operating income.

As a result of the impairment tests carried out at June 30, 2021, intangible assets relating to various aircraft programs were written down by €56 million.

NOTE13 PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment break down as follows:

	Dec.31,2021
(in € millions)	Gross	Depreciation/ impairment	Net	Gross	Depreciation/ impairment	Net
Land	225	-	225	226	-	226
Buildings	2,212	(1,162)	1,050	2,344	(1,252)	1,092
Technical facilities, equipment and tooling	6,661	(4,684)	1,977	6,822	(4,892)	1,930
Assets in progress, advances	510	(63)	447	577	(65)	512
Site development and preparation costs	78	(44)	34	79	(46)	33
Buildings on land owned by third parties	91	(48)	43	97	(48)	49
Computer hardware and other equipment	713	(552)	161	702	(574)	128
TOTAL	10,490	(6,553)	3,937	10,847	(6,877)	3,970

Movements in property, plant and equipment break down as follows:

		Depreciation/
(in € millions)	Gross	impairment	Net
At December 31, 2021	10,490	(6,553)	3,937
Internally produced assets	22	-	22
Additions	241	-	241
Disposals and retirements	(101)	72	(29)
Depreciation(1)	-	(300)	(300)
Impairment losses recognized in profit or loss	-	6	6
Reclassifications	36	(11)	25
Changes in scope of consolidation	(4)	3	(1)
Foreign exchange differences	163	(94)	69
AT JUNE 30, 2022	10,847	(6,877)	3,970

(1) Including €12 million relating to the remeasurement of property, plant and equipment within the scope of the acquisition of the former Zodiac Aerospace.

NOTE14 LEASES

3

a) Right-of-use assets

Right-of-use assets break down as follows:

	Dec.31,2021
(in € millions)	Gross	Depreciation/ impairment	Net	Gross	Depreciation/ impairment	Net
Right-of-use assets relating to property	815	(225)	590	818	(245)	573
Right-of-use assets relating to transport equipment	7	(3)	4	7	(3)	4
Right-of-use assets relating to other assets	20	(8)	12	20	(9)	11
TOTAL	842	(236)	606	845	(257)	588

Movements in right-of-use assets break down as follows:

(in € millions)	Gross	Depreciation/ impairment	Net
At December 31, 2021	842	(236)	606
Increases	49	-	49
Disposals and retirements	(44)	32	(12)
Depreciation	-	(50)	(50)
Reclassifications	(34)	7	(27)
Changes in scope of consolidation	(1)	-	(1)
Foreign exchange differences	33	(10)	23
AT JUNE 30, 2022	845	(257)	588

b) Lease liabilities

The maturity of lease liabilities can be analyzed as follows at June 30, 2022:

(in € millions)	Dec.31,2021	June30,2022
Maturing in:
◼ 1 year or less	97	101
◼ More than 1 year and less than 5 years	310	334
◼ Beyond 5 years	202	178
TOTAL	609	613

c) Lease items presented in the income statement

In first-half 2022, rental expenses recognized in "Profit from operations" (see Note 7, "Breakdown of the other main components of profit from operations") under "External services" totaled €45 million. These expenses have not been restated due to the application of the practical expedients allowed under IFRS 16 (exemption for short-term leases, leases of low-value assets and licensing agreements, such as for IT equipment), or because they relate to a "service" component identified in the lease.

Interest expense on lease liabilities recognized in "Financial income (loss)" under "Cost of net debt" amounted to €4 million in first-half 2022 (see Note 8, "Financial income (loss)").

d) Lease items presented in the cash flow statement

In first-half 2022, disbursements under leases recognized in the cash flow statement and relating to the repayment of lease liabilities represented €60 million and are shown within "Cash flow used in financing activities". They are increased by payments of interest on lease liabilities, which are included within "Cash flow from operating activities".

NOTE15 CURRENT AND NON-CURRENTFINANCIAL ASSETS

Financial assets include:

	Dec.31,2021			June30,2022
(in € millions)	Gross	Impairment	Net	Gross	Impairment	Net
Non-consolidated investments			267			254
Other financial assets	642	(117)	525	1,159	(137)	1,022
TOTAL			792			1,276

Equity investments in non-consolidated companies are classified at fair value through profit or loss.

Other financial assets are measured at amortized cost.

The Group reviewed the value of its other financial assets in order to determine whether any items needed to be written down based on available information. No write-downs were recognized in first-half 2022.

Other financial assets

Other financial assets break down as follows:

(in € millions)	Dec.31,2021	June30,2022
Loans to non-consolidated companies	126	95
Loans to employees	36	36
Deposits and guarantees	16	18
Other(1)	347	873
TOTAL	525	1,022
◼ Non-current	421	492
◼ Current	104	530

(1) Including €400 million in investments at June 30, 2022 that do not qualify as cash and cash equivalents (€200 million at December 31, 2021).

Loans to non-consolidated companies correspond to revolving credit agreements.

The table below shows movements in other financial assets:

(in € millions)
At December 31, 2021	525
Increase	444
Decrease	(12)
Impairment (reversals/additions)	(8)
Effect of changes in foreign exchange rates	15
Reclassifications	58
AT JUNE 30, 2022	1,022

The fair value of other financial assets approximates their carrying amount.

3

NOTE16 INVESTMENTS IN EQUITY-ACCOUNTED COMPANIES

The Group's share in the net equity of equity-accounted companies breaks down as follows:

Dec.31,2021 (in € millions)	June30,2022
Associates -	-
ArianeGroup 1,300	1,272
Other joint ventures 669	720
TOTAL 1,969	1,992

Movements in this caption during the period break down as follows:

(in € millions)
At December 31, 2021	1,969
Share in profit (loss) from ArianeGroup	(8)
Share in profit from other joint ventures	24
Joint venture impairment losses	(58)
Dividends received from joint ventures	(22)
Changes in scope of consolidation	(15)
Foreign exchange differences	69
Other movements	33
AT JUNE 30, 2022	1,992

The Group's off-balance sheet commitments with joint ventures are described in Note 24, "Related parties".

The Group has interests in the following joint ventures which are accounted for using the equity method:

◼ ArianeGroup: space launchers and military activities;

• ◼ Shannon Engine Support Ltd: leasing of CFM56 and LEAP engines, modules, equipment and tooling to airline companies;
• ◼ Lynred: manufacture of infrared detectors;
• ◼ Safran Martin-Baker France: manufacture of ejectable seating;
• ◼ A-Pro: repair of landing gear for regional and business jets;

• ◼ CFM Materials LP: sale of used CFM56 parts;

• ◼ Roxel SAS: holding company;

• ◼ Roxel France SA: motors for tactical missiles;
• ◼ Roxel Ltd: motors for tactical missiles;
• ◼ SAIFEI: electrical wiring;
• ◼ Fadec International LLC: digital engine control systems;
• ◼ Xi'an Cea Safran Landing Systems Co., Ltd: landing gear maintenance;
• ◼ EZ Air Interior Ltd: cabin interiors;
• ◼ Initium Aerospace: design and manufacture of auxiliary power units.

ArianeGroup is the Group's sole material joint venture.

Financial information for ArianeGroup can be summarized as follows:

(in € millions)	Dec.31,2021	June30,2022
Non-current assets	1,686	1,632
Current assets	6,407	6,417
of which: cash and cash equivalents	1,223	1,175
Non-current liabilities	(1,008)	(931)
of which: non-current financial liabilities	(423)	(369)
Current liabilities	(7,423)	(7,387)
of which: current financial liabilities	(129)	(32)
Non-controlling interests	(10)	7
Net assets held for sale	32	31
Net assets of ArianeGroup (excl. goodwill and PPA) – Attributable to owners of the parent (based on a 100% interest)	(316)	(231)
Equity share in net assets of ArianeGroup (excl. goodwill and PPA) (based on a 50% interest)	(158)	(115)
Purchase price allocation, net of deferred taxes	282	211
Safran equity share – Net assets of ArianeGroup	124	96
Goodwill	1,176	1,176
CARRYING AMOUNT OF INVESTMENT IN ARIANEGROUP	1,300	1,272

INTERIM FINANCIAL STATEMENTS

Notes to the Group condensed interim consolidated financial statements

First-half2021 (in € millions)		First-half2022
Profit for the period attributable to owners of the parent	20	8
Other comprehensive income (expense)	(5)	77
Total comprehensive income attributable to owners of the parent	15	85
Safran equity share – Profit for the period	10	4
Amortization of purchase price allocation, net of deferred taxes (15)		(12)
Safran equity share – Profit (loss) of ArianeGroup	(5)	(8)
Impairment losses (124)		(58)
Safran equity share – Other comprehensive income (expense)	(3)	38
Safran equity share – Comprehensive income (expense) of ArianeGroup (132)		(28)

ArianeGroup did not pay any dividends in 2022.

ArianeGroup is strongly impacted by the russo-ukrainian crisis. All Soyouz flights operated by Arianespace and Starsem have been canceled since the start of the conflict on February 24, 2022.

In addition, ArianeGroup has announced the postponement of the inaugural flight of the Ariane 6 launcher until 2023.

Since the above events are indications of impairment, at June 30, 2022 the Company carried out an impairment test on its equity-accounted investments.

The growth rate used to calculate terminal value was set at 2%, unchanged from 2021. The benchmark discount rate used was 8%, up 0.5% compared with 2021.

Based on this test, the recoverable amount of the equity–accounted investments is equal to their carrying amount in the Group's consolidated financial statements.

The Group analyzed the sensitivity of the investments to a 0.5% increase in the benchmark discount rate used (i.e., a rate of 8.5%). Based on this test, the change in this assumption would lead the Group to write down the value of equity-accounted investments in its financial statements by approximately €115 million.

The carrying amount of ArianeGroup includes assets allocated to programs.

An impairment test was carried out on the assets allocated to the Ariane 6 program. In light of the situation concerning the program, projected cash flows were discounted at a higher rate of 8.5%. A net write-down of €58 million representing all the remaining assets of the program was recognized within non-recurring operating income.

In addition, ArianeGroup has entered into exclusive negotiations with MBDA and Safran for the sale of its 63% majority stake in Compagnie Industrielle des Lasers (CILAS). In accordance with IFRS 5, ArianeGroup has classified the corresponding net assets as net assets held for sale.

The contribution of other joint ventures to the Group's comprehensive income was as follows:

(in € millions)	First-half2021	First-half2022
Profit for the period	41	24
Impairment losses	-	-
Other comprehensive income	18	55
TOTAL COMPREHENSIVE INCOME	59	79

NOTE17 CASH AND CASH EQUIVALENTS

The main types of investments used by Safran are summarized in the table below:

(in € millions)	Dec.31,2021	June30,2022
Money-market funds	92	92
Term deposits	3,266	4,641
Sight deposits	1,889	1,475
TOTAL	5,247	6,208

Money-market funds are classified within Level 1 of the IFRS 13 fair value hierarchy.

Term deposits at June 30, 2022 include €1,815 million in investments falling within the scope of master agreements governing the subscription of over-the-counter derivatives with bank counterparties (see section 3.1, Note 24 of the 2021 Universal Registration Document).

The table below presents changes in cash and cash equivalents:

(in € millions)
At December 31, 2021	5,247
Movements during the period	945
Foreign exchange differences	16
AT JUNE 30, 2022	6,208

NOTE18 CONSOLIDATED SHAREHOLDERS'EQUITY

a) Share capital

At June 30, 2022, Safran's share capital amounted to €85,448,488, comprising 427,242,440 fully paid-up shares with a par value of €0.20 each, all in the same class.

Safran's equity does not include any equity instruments issued other than its shares.

b) Breakdown of share capital and voting rights

Changes in the breakdown of share capital and voting rights are as follows:

December 31, 2021

Shareholders	Numberof shares	% sharecapital	Numberof votingrights(1)	% votingrights(1)
Free float	348,856,484	81.65%	395,539,917	72.05%
French State	47,983,131	11.23%	95,966,262	17.48%
Employees(2)	29,946,660	7.01%	57,504,169	10.47%
Treasury shares	456,165	0.11%	-	-
TOTAL	427,242,440	100.00%	549,010,348	100.00%

(1) Exercisable voting rights.

(2) Employee shareholding within the meaning of Article L.225-102 of the French Commercial Code (Code de commerce).

June 30, 2022

Shareholders	Numberof shares	% sharecapital	Numberof votingrights(1)	% votingrights(1)
Free float	349,025,696	81.69%	395,614,637	72.04%
French State	47,983,131	11.23%	95,966,262	17.48%
Employees(2)	29,819,026	6.98%	57,578,234	10.48%
Treasury shares	414,587	0.10%	-	-
TOTAL	427,242,440	100.00%	549,159,133	100.00%

(1) Exercisable voting rights.

(2) Employee shareholding within the meaning of Article L.225-102 of the French Commercial Code.

Each share carries entitlement to one vote. Shares held in registered form for over two years have double voting rights.

The 414,587 treasury shares have no voting rights.

Treasury shares

The number of treasury shares has decreased since December 31, 2021 following:

• ◼ the delivery of a total of 116,939 shares under a multi-year variable compensation plan and employee shareholding plans;
• ◼ the purchase of 75,361 shares under the Group's liquidity agreement, net of shares sold.

The Annual General Meeting has authorized the Board of Directors to buy and sell shares in the Company in accordance with the applicable laws and regulations.

An authorization granted by the Annual General Meeting of May 25, 2022 and valid for 18 months set the maximum purchase price at €165 per share, thereby superseding the authorization granted by the Annual General Meeting of May 26, 2021.

Pursuant to these authorizations and to the liquidity agreement signed in 2012 with Oddo BHF, in first-half 2022 the Company purchased 1,920,787 shares for €199 million and sold 1,845,426 shares for €194 million.

At June 30, 2022, 319,240 shares were held in connection with the liquidity agreement.

c) Share-based payment

Performance shares

The Board of Directors periodically grants performance shares to Group employees and corporate officers.

The vesting of these performance shares is subject to the achievement of internal and external performance conditions, which are assessed over three full consecutive fiscal years, including the year in which the performance shares are granted. In addition, the shares will only vest if the beneficiaries still form part of the Group at the vesting date (see section 6.6.4.2 of the 2021 Universal Registration Document).

The Group set up a performance share plan on March 24, 2022 covering 784,171 shares. Shares under this plan will only vest if certain internal and external performance conditions are met, as assessed over three fiscal years, and provided the beneficiaries still form part of the Group at the vesting date.

Key details of outstanding performance share plans at June 30, 2022 are shown below:

	2020performanceshares	2021performanceshares	2022performanceshares
Shareholder authorization	May 23, 2019	May 23, 2019	May 26, 2021
Grant date by the Board of Directors	March 26, 2020	March 24, 2021	March 24, 2022
Vesting date	March 27, 2023	March 26, 2024	March 24, 2025
Share price at the grant date	€91.92	€116.65	€104.56
Number of beneficiaries at the grant date	797	760	964
Number of performance shares granted	760,500	730,940	784,171
Number of shares canceled or forfeited	(98,507)	(29,995)	-
NUMBER OF PERFORMANCE SHARES OUTSTANDING AT JUNE 30, 2022	661,993	700,945	784,171

The share-based payment expense for these performance share plans, recognized within personnel costs under "Other employee costs", totaled €15.8 million in first-half 2022 (€15 million in first-half 2021).

d) Convertible bond issues

2020-2027 OCÉANEs

On May 15, 2020, Safran issued 7,391,665 bonds convertible into new shares and/or exchangeable for existing shares ("OCÉANEs") (the "initial bonds"), each with a par value of €108.23, i.e., representing a total nominal amount of €800 million. The initial bonds were issued at 100% of par.

On October 12, 2020, Safran carried out a tap issue of 1,847,916 bonds convertible into new shares and/or exchangeable for existing shares ("OCÉANEs") (the "additional bonds"), each with a par value of €108.23, i.e., representing a total nominal amount of €200 million. The additional bonds were issued at a price of €118 per bond, representing a total issue price of €218 million.

The additional bonds carry the same terms and conditions (with the exception of the issue price) as the initial bonds, with which they are fully fungible and with which they form a single series.

The bonds bear interest at an annual rate of 0.875%, payable annually in arrears.

Bondholders have the option of converting their bonds into shares. This option can be exercised at any point from the issue date and up to the seventh trading day preceding the standard or early redemption date.

Following the June 2, 2022 dividend payment and in accordance with the terms and conditions of the bonds, the bond conversion ratio has been 1.009 shares for 1 bond since June 2, 2022. This conversion ratio, which was previously 1.004 shares for 1 bond, was calculated by the bond calculation agent in accordance with the calculation formula stipulated in the terms and conditions of the bonds based on the following inputs:

• ◼ previous bond conversion ratio: 1.004 shares for 1 bond;
• ◼ share price: €98.84864;
• ◼ dividend per share paid in 2022 in respect of 2021: €0.50.

The bonds come with an early redemption option that the bearer may trigger in the event of a change of control and that the issuer may trigger if (i) as from June 5, 2024, the share price multiplied by the bond conversion ratio exceeds 130% of the par value of the bonds or (ii) at any time, the number of bonds outstanding represents less than 20% of the number of bonds originally issued.

Unless converted, redeemed or repurchased and canceled prior to maturity, the bonds are redeemable at par on May 15, 2027.

OCÉANEs are deemed a hybrid instrument comprising equity and debt.

After deducting issuance fees, a total of €760 million was recognized under interest-bearing financial liabilities for the initial bonds on the issue date, corresponding to the present value of cash flows from a similar bond with no conversion rights (see Note 21, "Interest-bearing financial liabilities").

The effective annual interest rate on the liability component is 1.63% including issuance fees.

After deducting issuance fees, a total of €197 million was recognized under interest-bearing financial liabilities for the additional bonds on the issue date, corresponding to the present value of cash flows from a similar bond with no conversion rights (see Note 21, "Interest-bearing financial liabilities").

The effective annual interest rate on the liability component is 1.154% including issuance fees.

The option component recognized in equity for the initial bonds was valued at €33 million on the issue date, or €24 million after the deferred tax impact.

The option component recognized in equity for the additional bonds was valued at €20 million on the issue date, or €15 million after the deferred tax impact.

2021-2028 OCÉANEs

On June 14, 2021, Safran issued 4,035,601 bonds convertible into new shares and/or exchangeable for existing shares ("OCÉANEs"), each with a par value of €180.89, i.e., representing a total nominal amount of €730 million.

The bonds do not carry any coupon.

The bonds were issued at a price of €187.22 per bond, representing a total issue price of €756 million.

Bondholders have the option of converting their bonds into shares. This option can be exercised at any point from the issue date and up to the seventh trading day preceding the standard or early redemption date.

3

Since the bond issuance date, the bond conversion ratio represents 1 share for 1 bond.

The bonds come with an early redemption option that the bearer may trigger in the event of a change of control and that the issuer may trigger if (i) as from April 1, 2025, the share price multiplied by the bond conversion ratio exceeds 130% of the par value of the bonds or (ii) at any time, the number of bonds outstanding represents less than 20% of the number of bonds originally issued.

Unless converted, redeemed or repurchased and canceled prior to maturity, the bonds are redeemable at par on April 1, 2028.

OCÉANEs are deemed a hybrid instrument comprising equity and debt.

After deducting issuance fees, a total of €712 million was recognized under interest-bearing financial liabilities, corresponding to the present value of cash flows from a similar bond with no conversion rights (see Note 21, "Interest–bearing financial liabilities").

The effective annual interest rate on the liability component is 0.376% including issuance fees.

The option component recognized in equity was valued at €39 million on the issue date, or €29 million after the deferred tax impact (see the consolidated statement of changes in shareholders' equity for first-half 2021).

e) Dividend distribution

At the Annual General Meeting of May 25, 2022, the shareholders approved a dividend payment of €0.50 per share in respect of 2021, representing a total payout of €213 million. The dividend was paid in full on June 2, 2022.

NOTE19 PROVISIONS

Provisions break down as follows:

			Reversals		Changesinscope
(in € millions)	Dec.31,2021	Additions	Utilizations	(1) Reclassifications(1)	Surplus(2)	ofconsolidation	Other	June30,2022
Performance warranties	1,155	157	(84)	-	(37)	-	7	1,198
Financial guarantees	2	6	(2)	-	-	-	(6)	-
Post-employment benefits(3)	778	36	(30)	-	(13)	-	(140)	631
Sales agreements	169	43	(14)	-	(2)	-	5	201
Provisions for losses on completion and losses arising on delivery commitments	323	28	(16)	-	(1)	-	(2)	332
Disputes and litigation	31	6	(3)	-	(1)	-	-	33
Other	398	63	(77)	-	(45)	-	5	344
TOTAL	2,856	339	(226)	-	(99)	-	(131)	2,739
◼ Non-current	1,798							1,790
◼ Current	1,058							949

(1) These reversals in respect of expenses for the period or reclassifications had no impact on profit for the period.

(2) Including the foreign exchange difference resulting from fluctuations in the EUR/USD exchange rate in 2022.

(3) Of which a negative €140 million within "Other", corresponding to the impact of changes in the discount and inflation rates, which is recorded through equity.

The impacts on the income statement of overall movements in provisions can be analyzed as follows:

(in € millions)	First-half2022
Additions (-)/Reversals (+) recognized in recurring operating income with income statement impact	(153)
Utilization of provisions against operating expenses and therefore with no income statement impact	212
Additions (-)/Reversals (+) recognized in non-recurring operating income	2
Additions (-)/Reversals (+) recognized in financial income (loss)	(75)
TOTAL	(14)

Movements in provisions had a €153 million negative impact on recurring operating income.

NOTE20 BORROWINGS SUBJECT TO SPECIFIC CONDITIONS

This caption includes repayable advances granted by public bodies.

Movements in this caption break down as follows:

(in € millions)
At December 31, 2021	327
New advances received	-
Advances repaid	(17)
Sub-total: changes with a cash impact	(17)
Cost of borrowings and discounting	6
Foreign exchange differences	1
Other	8
Adjustments to the probability of repayment of advances	-
Sub-total: changes with no cash impact	15
AT JUNE 30, 2022	325

Estimates as to the repayable amounts and the timing of repayments are made regarding borrowings subject to specific conditions. The Group revised the probability of repayment for its repayable advances, mainly with regard to civil aircraft programs.

NOTE21 INTEREST-BEARING FINANCIAL LIABILITIES

Breakdown of interest-bearing financial liabilities:

(in € millions)	Dec.31,2021	June30,2022
Bond issue	1,599	1,630
Convertible bonds (OCÉANEs)	1,684	1,684
Senior unsecured notes (USPP)	1,014	1,029
Lease liabilities	512	512
Long-term borrowings	285	579
Total non-current interest-bearing financial liabilities (portion maturing in more than 1 year at inception)	5,094	5,434
Senior unsecured notes (USPP)	485	-
Lease liabilities	97	101
Long-term borrowings	359	553
Accrued interest not yet due	9	8
Current interest-bearing financial liabilities, long-term at inception	950	662
Negotiable European Commercial Paper (NEU CP)	100	80
Short-term bank facilities and equivalent	670	451
Current interest-bearing financial liabilities, short-term at inception	770	531
Total current interest-bearing financial liabilities (less than 1 year)	1,720	1,193
TOTAL INTEREST-BEARING FINANCIAL LIABILITIES(1)	6,814	6,627

(1) The fair value of interest-bearing financial liabilities amounts to €6,413 million (€6,942 million at December 31, 2021).

Movements in this caption break down as follows:

(in € millions)
At December 31, 2021	6,814
Increase in long-term borrowings at inception (excluding lease liabilities)	514
Decrease in long-term borrowings at inception	(539)
Change in short-term borrowings	(249)
Sub-total: changes with a cash impact	(274)
Net increase in lease liabilities	37
Accrued interest	(1)
Changes in scope of consolidation	(1)
Foreign exchange differences	90
Change in the fair value of borrowings hedged with interest rate instruments(1)	(34)
Reclassifications and other	(4)
Sub-total: changes with no cash impact	87
AT JUNE 30, 2022	6,627

(1) See Note 23, "Management of market risks and derivatives".

Analysis by maturity:

Dec.31,2021 (in € millions)	June30,2022
Maturing in:
◼ 1 year or less 1,720	1,193
◼ More than 1 year and less than 5 years 1,949	2,745
◼ Beyond 5 years(1) 3,145	2,689
TOTAL 6,814	6,627

(1) Mainly OCÉANEs, other bonds and the USPP 2030 and 2032.

Analysis by currency before hedging:

	Dec.31,2021			June30,2022
(in millions of currency units)	Currency	EUR	Currency	EUR
EUR	4,841	4,841	5,352	5,352
USD	2,038	1,801	1,146	1,103
CAD	8	6	8	6
GBP	26	31	25	29
Other	N/A	135	N/A	137
TOTAL		6,814		6,627

Analysis by currency after hedging:

	Dec.31,2021			June30,2022
(in millions of currency units)	Currency	EUR	Currency	EUR
EUR	6,056	6,056	6,087	6,087
USD	662	586	381	368
CAD	8	6	8	6
GBP	26	31	25	29
Other	N/A	135	N/A	137
TOTAL		6,814		6,627

3

Notes to the Group condensed interim consolidated financial statements

Analysis by type of interest rate:

◼ Analysis by type of interest rate (fixed/floating), before hedging:

	Total			Non-current				Current
	Dec.31, 2021	June30, 2022	Dec.31,2021		June30,2022		Dec.31,2021		June30,2022
				Average		Average		Average		Average
(in € millions)	Base	Base	Base	interest rate	Base	interest rate	Base	interest rate	Base	interest rate
Fixed rate	6,323	6,136	4,963	1.61%	5,309	1.52%	1,360	1.65%	827	0.87%
Floating rate	491	491	131	1.36%	125	1.37%	360	1.00%	366	0.98%
TOTAL	6,814	6,627	5,094	1.60%	5,434	1.52%	1,720	1.51%	1,193	0.90%

◼ Analysis by type of interest rate (fixed/floating), after hedging:

	Total			Non-current				Current
	Dec.31, 2021	June30, 2022	Dec.31,2021		June30,2022		Dec.31,2021		June30,2022
				Average		Average		Average		Average
(in € millions)	Base	Base	Base	interest rate	Base	interest rate	Base	interest rate	Base	interest rate
Fixed rate	6,116	5,932	4,756	1.24%	5,105	1.17%	1,360	0.67%	827	0.87%
Floating rate	698	695	338	1.13%	329	1.18%	360	1.00%	366	0.98%
TOTAL	6,814	6,627	5,094	1.23%	5,434	1.17%	1,720	0.74%	1,193	0.90%

The Group's net debt position is as follows:

(in € millions)	Dec.31,2021	June30,2022
Cash and cash equivalents (A)	5,247	6,208
Interest-bearing financial liabilities (B)	6,814	6,627
Fair value of interest rate derivatives used as fair value hedges of borrowings (C)	23	(6)
TOTAL (A) – (B) + (C)	(1,544)	(425)

The Group's gearing ratio is shown below:

(in € millions)	Dec.31,2021	June30,2022
Net debt	(1,544)	(425)
Total equity	13,270	10,046
GEARING RATIO	11.64%	4.23%

Main long-term borrowings at inception

◼ US private placement (USPP) of senior unsecured notes issued by the Group on February 9, 2012, under which USD 505 million of 12-year notes due February 2024 at a 4.43% fixed-rate coupon was outstanding at June 30, 2022. An interest rate hedge in the form of a cross currency swap (USD floating-rate borrower at inception, followed by EUR fixed-rate borrower from March 2019) was set up on these notes, allowing the USD fixed-rate debt to be fully swapped for EUR fixed‑rate debt.

At June 30, 2022, the average interest rate of the issue came out at 1.76% after taking into account the impact of interest rate derivatives.

• ◼ US private placement (USPP) of senior unsecured notes issued by the Group on June 29, 2020 for a nominal amount equivalent to €564 million, comprising:
• USD 181 million of 10-year notes due June 2030 at a 3.10% fixed-rate coupon (tranche A);

• USD 133 million of 12-year notes due June 2032 at a 3.30% fixed-rate coupon (tranche B);

• €122 million of 10-year notes due June 2030 at a 2.00% fixed-rate coupon (tranche C);

• €164 million of 12-year notes due June 2032 at a 2.05% fixed-rate coupon (tranche D).

A EUR/USD cross currency swap (EUR fixed-rate borrower and USD fixed-rate lender) was set up on tranches A and B on July 21, 2020, swapping USD fixed-rate debt for EUR fixed-rate debt.

After taking this hedge into account, tranche A bears fixed-rate interest at 2.04% and has a notional amount of €158 million, while tranche B bears fixed-rate interest at 2.22% and has a notional amount of €116 million.

After taking this hedge into account, the 10-year notes (tranches A and C) of the USPP carry an effective coupon of 2.02% and have a notional amount of €280 million, while the 12-year notes (tranches B and D) carry an effective coupon of 2.12% and have a notional amount of €280 million.

◼ Issuance on April 11, 2014 of 10-year, 2.875% fixed-rate bonds for €200 million (maturing in April 2024). The bonds were issued at 99.529% of par. A floating-rate swap was set up on the issue. The effective coupon in first-half 2022 was 1.061% after taking into account the impact of interest rate derivatives.

• ◼ Issuance on March 16, 2021 of:
• 5-year, 0.125% fixed-rate bonds for €700 million (maturing on March 16, 2026). The bonds were issued at 99.231% of par. Upon issuance, the bonds were rated BBB+ by Standard & Poor's;
• 10-year, 0.750% fixed-rate bonds for €700 million (maturing on March 17, 2031). The bonds were issued at 99.349% of par. Upon issuance, the bonds were rated BBB+ by Standard & Poor's.
• ◼ Euro private placement ("Euro PP") in the form of a syndicated loan with an original maturity of seven years, contracted by the former Zodiac Aerospace on March 10, 2016 and falling due on March 10, 2023, on which €180 million was outstanding at June 30, 2022 at an adjustable rate of 2.902%.
• ◼ Bonds convertible into new shares and/or exchangeable for existing shares ("OCÉANEs") on May 15, 2020 for a nominal amount of €800 million. The bonds bear interest at 0.875% and were offered at an issue price representing 100% of par, or a gross yield to maturity at the issue date of 0.875%. Unless converted, redeemed or repurchased and canceled prior to maturity, the bonds are redeemable at par on May 15, 2027. The effective annual interest rate on the liability component of the OCÉANEs is 1.63% including issuance fees (see Note 18.d, "Convertible bond issues").
• ◼ Tap issue of bonds convertible into new shares and/or exchangeable for existing shares ("OCÉANEs") on October 12, 2020 for a nominal amount of €200 million. The bonds bear interest at 0.875% and were offered at an issue price representing 109.03% of par, or a gross negative yield to maturity at the issue date of 0.419%. The bonds carry the same terms and conditions as those issued on May 15, 2020, with which they are fully fungible and with which they form a single series. The effective annual interest rate on the liability component of the OCÉANEs issued on October 12, 2020 is 1.154% including issuance fees (see Note 18.d, "Convertible bond issues").
• ◼ Bonds convertible into new shares and/or exchangeable for existing shares ("OCÉANEs") on June 14, 2021 for a nominal amount of €730 million. The bonds do not carry a coupon and were offered at an issue price representing 103.5% of par, or a gross negative yield to maturity at the issue date of 0.50%. Unless converted, redeemed or repurchased and canceled prior to maturity, the bonds are redeemable at par on April 1, 2028. The effective annual interest rate on the liability component of the OCÉANEs is 0.38% including issuance fees (see Note 18.d, "Convertible bond issues").

• ◼ A bank loan from the European Investment Bank (EIB) for €500 million, at a fixed rate of 1.091%. It was signed on March 4, 2021 and drawn down in full on February 21, 2022 for 10 years (maturing in February 2032). The loan is being used to finance some of the Group's research into innovative propulsion systems for the next generation of single-aisle commercial aircraft, marking a major step forward in Safran's roadmap towards achieving carbon free air transportation.

• ◼ Negotiable European Commercial Paper (NEU CP) subscribed by a corporate mutual fund of the Group employee savings plan and amounting to €409 million at June 30, 2022. The average interest rate payable by Safran on this commercial paper was 0.95% at June 30, 2022. The sums managed by the corporate mutual fund and reinvested in Safran NEU CP are frozen for an initial period of five years. In view of the fund's commitments, the NEU CP is classified within long-term borrowings. At June 30, 2022, 84% of the sums managed by the corporate mutual fund will be available within one year. Accordingly, 84% of the €409 million in NEU CP is classified within the current portion of long-term borrowings.

• ◼ Lease liabilities recognized in accordance with IFRS 16 (including former finance lease liabilities) totaling €613 million at June 30, 2022.

The Group's other long- and medium-term borrowings are not material taken individually.

On February 9, 2022, the following borrowings were redeemed at maturity:

◼ The USD 540 million tranche of senior unsecured notes issued on the US private placement market (USPP) on February 9, 2012 a fixed-rate coupon of 4.28%.

Main short-term borrowings

• ◼ Negotiable European Commercial Paper (NEU CP): €80 million (€100 million at December 31, 2021), reflecting the priority given to longer-term debt instruments.
• ◼ Financial current accounts with non-consolidated subsidiaries and joint ventures: €313 million (€328 million at December 31, 2021). Interest is indexed to Euribor.

Other short-term borrowings consist mainly of bank overdrafts.

Sale of receivables without recourse

Net debt at both June 30, 2022 and December 31, 2021 does not include the following trade receivables sold without recourse relating to CFM International Inc. (joint operation):

◼ The confirmed facility renewed in December 2020 and maturing in December 2022 for USD 1,430 million, contracted with a syndicate of seven banks led by Crédit Agricole CIB, increased to USD 1,780 million at end-January 2021 with a syndicate of eight banks, reduced to USD 675 million in December 2021, and then increased to USD 1,065 million in June 2022, had been drawn in an amount of USD 401 million at June 30, 2022 (USD 200 million based on a 50% interest), versus USD 29 million at December 31, 2021 (USD 14.5 million based on a 50% interest).

This facility may be terminated by the bank counterparties if there is a significant deterioration in the credit rating of the customer whose trade receivables have been sold.

NOTE22 OTHER CURRENT AND NON-CURRENTFINANCIAL LIABILITIES

(in € millions)	Dec.31,2021	Movementsduring theperiod	Changes inscopeof consolidation	Foreignexchange differences	Reclassifications	June30,2022
Payables on purchases of property, plant and equipment and intangible assets	176	(2)	-	-	-	174
Payables on purchases of investments	2	-	-	-	-	2
TOTAL	178	(2)	-	-	-	176
◼ Non-current	116					75
◼ Current	62					101

These liabilities are not included in the Group's net financial position at June 30, 2022.

NOTE23 MANAGEMENT OF MARKET RISKS AND DERIVATIVES

The main market risks to which the Group is exposed are foreign currency risk, interest rate risk, counterparty risk and liquidity risk.

The carrying amount of derivatives used to manage market risks is shown below:

	Dec.31,2021		June30,2022
(in € millions)	Assets	Liabilities	Assets	Liabilities
Interest rate risk management	23	(8)	6	(6)
Floating-for-fixed interest rate swaps	-	(8)	6	-
Fixed-for-floating interest rate swaps	23	-	-	(6)
Foreign currency risk management	705	(1,788)	570	(7,145)
Currency swaps	-	(3)	65	-
Purchase and sale of forward currency contracts	101	(68)	124	(265)
Currency option contracts	604	(1,717)	381	(6,880)
TOTAL	728	(1,796)	576	(7,151)

All derivatives are categorized within Level 2 of the fair value hierarchy set out in IFRS 13 (as at December 31, 2021).

Credit valuation adjustment (CVA) and debt valuation adjustment (DVA) are taken into account when measuring the fair value of derivatives.

Foreign currency risk management

Most Group revenue is denominated in US dollars, which is virtually the sole currency used in the civil aviation industry. The net excess of revenues over operating expenses for these activities totaled USD 4 billion in first-half 2022 (USD 3 billion in first-half 2021).

To protect its earnings, the Group implements a hedging policy (see below) with the aim of reducing uncertainty factors affecting operating profitability and allowing it to adapt its cost structure to an adverse monetary environment.

Hedging policy

Three basic principles underscore the foreign currency risk management policy defined by Safran for most of its subsidiaries:

• ◼ to protect the Group's economic performance from random fluctuations in the US dollar;
• ◼ to optimize the quality of hedging whenever possible, without jeopardizing the Group's economic performance (first principle);
• ◼ to provide visibility as regards the exchange rate applied in the Group's consolidated financial statements.

Protecting economic performance means setting a minimum USD exchange rate parity over an applicable term. Minimum parity corresponds to a USD exchange rate that allows Safran to meet its operating profit targets. Hedging arrangements have been made accordingly over a timeframe of three to four years.

Management policy

The hedging policy is based on managing the financial instrument portfolio in order to guarantee a predefined minimum parity.

In building up its hedging portfolio, the Group primarily uses forward sales, accumulators and a combination of options. Certain instruments include knock-in or knock-out barrier options, representing a risk to the size of the hedge book and to targeted hedge rates in certain cases of exchange rate fluctuations.

Optimization measures are also used with a view to improving the minimum exchange rate parity, and seek to protect the Group's economic performance at all times. They are based on products that allow the Group to take advantage of any improvement in the underlying exchange rate parities.

Foreign currency derivatives

The portfolio of foreign currency derivatives breaks down as follows:

		Dec.31,2021			June30,2022
		Notional	Less than			Notional	Less than
(in millions of currency units)	Fair value(1)	amount(1)	1year	1to5years	Fair value(1)	amount(1)	1year	1to5years
Forward exchange contracts	33				(141)
Short USD position	(34)	629	629	-	(242)	3,295	2,886	409
Of which against EUR	(34)	629	629	-	(242)	3,295	2,886	409
Long USD position	(7)	(163)	(163)	-	1	(200)	(200)	-
Of which against EUR	(7)	(163)	(163)	-	1	(200)	(200)	-
Long GBP position against EUR	37	(249)	(202)	(47)	32	(249)	(249)	-
Short GBP position against EUR	-	-	-	-	-	-	-	-
Long CAD position against EUR	12	(89)	(89)	-	17	(104)	(104)	-
Short CAD position against EUR	-	-	-	-	(6)	43	43	-
Long MXN position against EUR	25	(16,304) (10,066)		(6,238)	72	(17,412)	(9,745)	(7,667)
Short MXN position against EUR	-	-	-	-	(15)	5,302	5,302	-
Currency swaps	(3)				65
Cross currency swaps	(3)	(1,359)	(540)	(819)	65	(819)	-	(819)
Currency option contracts	(1,113)				(6,499)
USD put purchased against EUR	404	37,143	34,483	2,660	159	39,940	38,660	1,280
USD call purchased against EUR	29	(1,200)	(1,200)	-	47	(1,650)	(1,650)	-
USD put sold against EUR	(1)	(400)	(400)	-	(5)	(1,775)	(1,475)	(300)
USD call sold against EUR	(1,430)	79,886	74,566	5,320	(6,444)	103,079	100,819	2,260
CAD call purchased against EUR	44	(645)	(645)	-	13	(647)	(391)	(257)
CAD put sold against EUR	-	(1,202)	(1,202)	-	(3)	(1,208)	(698)	(510)
GBP call purchased against EUR	55	(552)	(552)	-	41	(553)	(553)	-
GBP put sold against EUR	(1)	(826)	(826)	-	(11)	(1,107)	(1,107)	-
MXN call purchased against EUR	1	(3,306)	(1,380)	(1,926)	8	(5,050)	(1,380)	(3,670)
MXN put sold against EUR	(20)	(6,613)	(2,760)	(3,853)	(9)	(10,100)	(2,760)	(7,340)
Accumulators – sell USD for EUR(2)	10	2,323	863	1,461	(285)	6,212	1,670	4,543
Accumulators – buy USD for EUR(2)	(204)	(4,190)	(2,805)	(1,385)	(10)	(3,594)	(1,198)	(2,396)
TOTAL	(1,083)				(6,575)

(1) Fair values are expressed in millions of euros; notional amounts are expressed in millions of currency units.

(2) Notional amounts for accumulators represent the maximum cumulative amount until the instrument is unwound.

In the balance sheet, changes in the fair value of outstanding currency hedging instruments between December 31, 2021 and June 30, 2022 represent a negative €5,492 million.

In the income statement, the Group has chosen not to apply hedge accounting to these derivatives. As a result, any changes in the fair value of these instruments are recognized in full in "Financial income (loss)".

Interest rate risk management

The Group's exposure to fluctuations in interest rates covers two types of risk:

• ◼ fair value risk in respect of fixed-rate financial assets and liabilities. Interest rate fluctuations impact the market value of these assets and liabilities as well as the Group's balance sheet;
• ◼ cash flow risks in respect of floating-rate financial assets and liabilities. Interest rate fluctuations have a direct impact on the Group's profit or loss.

Within the framework of its interest rate risk management policy, the Group arbitrates between these two types of risks using financial instruments specific to fixed-income markets (interest rate swaps and options, etc.).

Exposure to EUR interest rate risk

Interest rate swaps were taken out to convert the fixed rate payable on the €200 million bond issue carried out in first–half 2014 and maturing in April 2024 to a floating rate.

These swaps are eligible for fair value hedge accounting.

	Dec.31,2021				June30,2022
(in € millions)	Fair value	Notional amount (€)	Less than 1year	1to 5years	Morethan 5years	Fair value	Notional amount (€)	Less than 1year	1to 5years	Morethan 5years
Interest rate swaps
Fixed-for-floating	8	200	-	200	-	-	200	-	200	-
TOTAL	8					-

Exposure to USD interest rate risk

The interest rate on the outstanding tranche of the US private placement (USPP) issued on February 9, 2012 was converted to a floating rate at inception. A floating-rate borrower/ fixed-rate lender USD swap was set up on this 12-year tranche for USD 505 million. This swap is eligible for fair value hedge accounting.

In March 2019, this 12-year tranche for USD 505 million was reset to euros by means of a cross currency swap (USD floating–rate lender/EUR fixed-rate borrower).

The interest rate portion of the cross currency swap was eligible for hedge accounting.

On July 21, 2020, a cross currency swap (USD fixed-rate lender/EUR fixed-rate borrower) was set up on two USD tranches of the June 29, 2020 senior unsecured notes issue on the US private placement market (USPP), amounting to USD 181 million bearing fixed-rate interest over a period of 10 years (tranche A) and USD 133 million bearing fixed-rate interest over a period of 12 years (tranche B). The interest rate portion of the cross currency swap was eligible for hedge accounting.

	Dec.31,2021						June30,2022
(in € millions)	Fair value	Notional amount (USD)	Less than 1year	1to 5years	Morethan 5years	Fair value	Notional amount (USD)	Less than 1year	1to 5years	Morethan 5years
USD interest rate swaps
Fixed-for-floating	15	1,045	540	505	-	(6)	505	-	505	-
Floating-for-fixed	(8)	1,359	540	505	314	6	819	-	505	314
TOTAL	7					-

Counterparty risk management

The Group is exposed to counterparty risk on the following:

• ◼ financial investments;
• ◼ derivatives;
• ◼ trade receivables;
• ◼ financial guarantees granted to customers;
• ◼ undrawn lines of credit.

Financial investments are diversified and consist of blue-chip securities that are generally traded with top-tier banks.

The sole purpose of the Group's derivative transactions is to reduce the overall exposure to foreign currency and interest rate risks resulting from its ordinary business activities. Transactions are either carried out on organized markets or over-the-counter with top-tier intermediaries.

Credit facilities are taken out with top-tier banks.

In the context of the Covid-19 pandemic, the Group has stepped up the monitoring of its bad debt risks to ensure the collection of its current and future receivables. It has paid close attention to struggling airline companies and has set aside a provision on a case-by-case basis for any receivables or assets presenting a bad debt risk.

Liquidity risk management

Treasury management is centralized within the Group. Where permitted by local legislation, all surplus cash is invested with, and financing requirements of subsidiaries met by, the parent company on an arm's length basis. The central cash team manages the Group's current and forecast financing requirements, and ensures that it has the ability to meet its financial commitments while maintaining a level of available cash funds and confirmed credit facilities commensurate with its scale and debt repayment profile.

At June 30, 2022, consolidated cash and cash equivalents amounted to €6,208 million.

In first-half 2022:

• ◼ Tranche 2 of the USPP issued on February 9, 2012 was redeemed at its maturity on February 9, 2022 for USD 540 million.
• ◼ On February 21, 2022, Safran drew down the entire €500 million loan granted by the European Investment Bank (EIB) on March 4, 2021.
• ◼ For more information on the above operations, see Note 21, "Interest-bearing financial liabilities".

On May 2, 2022, Safran also signed an agreement for a €2 billion revolving credit facility, available until May 2027. At June 30, 2022, the new liquidity line was undrawn. It includes two successive one-year extension options, which have not yet been exercised. The financial terms and conditions of the liquidity line are indexed to the achievement by the Group of two sustainable development criteria: CO² emissions (Scopes 1 and 2) and the proportion of women among senior executives. The new liquidity line replaces the €2.52 billion liquidity line set up in December 2015, which was due to expire in December 2022 and was terminated in advance at the same time as the new line was set up.

Issues of senior unsecured notes on the US private placement market (USPP) on February 9, 2012 and June 29, 2020 are subject to a financial covenant which states that the net debt to EBITDA ratio must be 2.5 or less (see Note 21, "Interest–bearing financial liabilities"). The covenant is tested every six months and the Group complied with the applicable ratio at June 30, 2022.

The following annual covenant applies to the euro private placement ("Euro PP") in the form of a syndicated loan, set up by the former Zodiac Aerospace on March 10, 2016 and with an original maturity of seven years (see Note 21, "Interest-bearing financial liabilities"): net debt to EBITDA ratio of 3.5 or less. The Group complied with the covenant at June 30, 2022.

The terms "net debt" and "EBITDA" used in the aforementioned covenants are defined as follows:

• ◼ net debt: interest-bearing borrowings (excluding borrowings subject to specific conditions) less marketable securities and cash and cash equivalents;
• ◼ EBITDA: the sum of profit (loss) from operations and the net charge to depreciation, amortization and provisions for impairment of assets (calculated based on adjusted data).

NOTE24 RELATED PARTIES

In accordance with IAS 24, the Group's related parties are considered to be its owners (including the French State), companies in which these owners hold equity interests, associates, joint ventures and management executives.

The French State also holds a golden share in Safran Ceramics allowing it to veto any change in control of the company or sale of company assets.

The following transactions were carried out with related parties other than joint ventures:

First-half2021 (in € millions)	First-half2022
Sales to related parties other than joint ventures 2,023	2,126
Purchases from related parties other than joint ventures (47)	(48)

Dec.31,2021 (in € millions)	June30,2022
Amounts receivable from related parties other than joint ventures 2,380	2,157
Amounts payable to related parties other than joint ventures 2,755	3,101

Dec.31,2021 (in € millions)	June30,2022
Commitments given to related parties other than joint ventures(1) 2,256	2,382

(1) See Note 25.a, "Off-balance sheet commitments and contingent liabilities relating to the Group's operating activities".

Transactions with related parties other than joint ventures primarily concern the delivery of aviation products to Airbus and the French Directorate General of Weapons Procurement (DGA).

The following transactions were carried out with joint ventures:

(in € millions)	First-half2021	First-half2022
Sales to joint ventures(1)	55	139
Purchases from joint ventures	(33)	(35)

(1) Mainly with Shannon Engine Support Limited.

Dec.31,2021 (in € millions)	June30,2022
Amounts receivable from joint ventures 230	323
Amounts payable to joint ventures 51	57

Dec.31,2021 (in € millions)	June30,2022
Commitments given to joint ventures 389	382

NOTE25 OFF-BALANCE SHEET COMMITMENTS AND CONTINGENT LIABILITIES

a) Off-balance sheet commitments and contingent liabilities relating to the Group's operating activities

Commitments given and contingent liabilities

The Group granted the following commitments in connection with its operating activities:

(in € millions)	Dec.31,2021	June30,2022
Purchase commitments on intangible assets	10	11
Purchase commitments on property, plant and equipment	120	135
Guarantees given in connection with the performance of operating agreements	6,290	6,682
Lease commitments	75	101
Financial guarantees granted on the sale of Group products	10	9
Other commitments given	706	722
TOTAL	7,211	7,660

Guarantees given in connection with the performance ofoperating agreements

These guarantees relate mainly to guarantees granted by Safran to customers and principals (essentially aircraft manufacturers) in which Safran or the subsidiary provide a joint and several guarantee that its subsidiaries will perform their duties under their contractual obligations. These guarantees are given in respect of research, design, development, manufacturing, marketing and product support programs in place at Group subsidiaries. They are generally granted for the term of the program concerned, and are capped at a certain amount.

Guarantees granted to Airbus are shown within "Guarantees granted to related parties" in Note 24, "Related parties".

Offsetobligations

In some countries, as a condition to the Group securing major contracts, it may be required to fulfill direct, semi-direct or indirect local offset obligations, as required by law or regulations. This is particularly the case in the defense industry.

Failure to meet these obligations within the required timeframe may lead to penalties for the Group, which may, in some cases, not discharge the obligation. When there are doubts as to the Group's ability to meet its obligations, a provision is recognized as a deduction from revenue in the amount of the penalty stipulated in the contract.

Leasecommitments

Lease commitments given concern leases qualifying for the IFRS 16 exemption criteria (short-term leases or leases of low–value assets), as well as leases signed but not yet started.

Financial guarantees granted on thesale of Group products

The financial guarantees shown in this table concern aerospace financing arrangements in place at the end of the reporting period, granted to support sales of civil engines. These arrangements take the form of aircraft financing or guarantees covering the value of assets.

The Group's gross exposure in respect of these financing commitments in their transaction currency represents USD 9 million at June 30, 2022 (USD 11 million at December 31, 2021), or €9 million (€9 million at December 31, 2021). However, these amounts do not reflect the actual risk to which Safran is exposed. In view of the value of the underlying assets pledged as security, the net exposure represents USD 1 million at June 30, 2022 (USD 2 million at December 31, 2021), for which a provision, based on an assessment of the risk, is booked in the financial statements (see Note 19, "Provisions").

Financing commitments granted to clients alongside aircraft manufacturers in connection with certain civil engine sales campaigns form part of financing packages proposed by aircraft manufacturers to airline companies and generally correspond to the share represented by Group engines in the financing of the aircraft concerned. These commitments are not included in the gross exposure since (i) the probability that they will be called by the airline companies is too uncertain because the deliveries are too far in the future, and (ii) in the past, few commitments have been called due to their dissuasive conditions and to the fact that they represent a "last recourse" after the active rental, banking, credit insurance and investor markets.

Othercommitments given

In connection with the French government's aerospace support plan, Safran undertook to subscribe to the Ace Aéro Partenaires investment fund in an amount of €58 million.

Following the various funding rounds completed, the amount of Safran's commitment was reduced to €35 million at June 30, 2022.

Contingent liabilitiesarising on ordinaryactivities

As part of their ordinary activities, the Group, some of its subsidiaries, or certain joint arrangements or consortia in which they are shareholders or members, may be subject to various claims from customers. These claims usually consist of compensation claims for failing to meet technical specifications, a delay in the development phase, late completion and/or for additional work in connection with product performance and reliability falling outside the scope of the warranties and commitments provisioned or included within contract costs (see Note 3.b, "Provisions", and Note 19, "Provisions"). While the initial amount of any such claim may be material in certain cases, it does not necessarily have any bearing on the costs that may be ultimately incurred to satisfy the customer. As these claims represent contingent liabilities, no provision has been recognized beyond contractual liability limits, if any.

In the absence of an agreement between the parties, some of these claims may give rise to litigation, the most significant of which are indicated in Note 26, "Disputes and litigation".

Commitments received

The Group was granted the following commitments in connection with its operating activities:

(in € millions)	Dec.31,2021	June30,2022
Commitments received from banks on behalf of suppliers	9	8
Completion warranties	7	5
Endorsements and guarantees received	1	1
Other commitments received	54	52
TOTAL	71	66

b) Off-balance sheet commitments and contingent liabilities relating to the Group's scope of consolidation

Vendor warranties are given or received on the acquisition or sale of companies.

Vendor warranties given

Dec.31,2021 (in € millions)	June30,2022
Vendor warranties given(1) 216	221

(1) Vendor warranties, the amount of which may be fixed or determinable.

Vendor warranties received

Dec.31,2021 (in € millions)	June30,2022
Vendor warranties received -	-

Vendor warranties granted in connection with the disposalof the Security businesses

In connection with the sale of the Identity and Security businesses on May 31, 2017, Safran granted Advent International a vendor warranty valued at €180 million at June 30, 2022, as well as a specific indemnity capped at BRL 200 million (€37 million) at June 30, 2022 to cover any financial consequences arising from the dispute between Morpho do Brasil and the Brazilian tax authorities concerning the calculation method for value added tax on certain products.

Guarantees given in connection with acquisitions

None.

c) Off-balance sheet commitments and contingent liabilities relating to the Group's financing

Commitments received in respect of financing relate to:

• ◼ any unused portion of trade receivables factoring facilities, under which the related receivables are deconsolidated (see Note 21, "Interest-bearing financial liabilities");
• ◼ the confirmed syndicated credit facility for €2 billion, set up in May 2022 and undrawn at June 30, 2022 (see Note 23, "Management of market risks and derivatives").

NOTE26 DISPUTES AND LITIGATION

Safran and certain Group subsidiaries are party to regulatory, legal or arbitration proceedings arising in the ordinary course of their operations. Safran and certain Group subsidiaries are also party to claims, investigations, legal action and regulatory proceedings outside the scope of their ordinary operations.

The amount of the provisions booked is based on the level of risk for each case, as assessed by Safran and its subsidiaries, and largely depends on their assessment of the merits of the claims and defensive arguments, bearing in mind that the occurrence of events during the proceedings can lead to a reassessment of the risk at any time.

A provision is only booked to cover the expenses that may result from such proceedings when the expenses are probable and their amount can be either quantified or reasonably estimated.

Safran considers that the provisions booked are adequate to cover the risks it incurs.

The most important proceedings are described below.

• ◼ A number of civil and/or criminal lawsuits have been filed against certain Safran subsidiaries in connection with aviation accidents. The Group's insurance policy would cover any civil damages payable by Safran or its subsidiaries under these proceedings.
• ◼ In the course of the implementation of its compliance program, Safran detected a situation with regards to an activity within a company belonging to the former Zodiac Aerospace business scope acquired in 2018. The activity was sold on June 1, 2021.

After having conducted its internal investigation, Safran concluded that suspicion of non-compliance during a period between 2004 and 2015 could not be ruled out. Safran decided to self-disclose the matter to the competent authorities in Germany and the United States in accordance with applicable regulations and in France. The authorities in each of the countries concerned have opened an investigation. Safran is still waiting to find out what position the authorities will adopt. To date, it is not therefore possible to determine what decision the authorities will take nor the impacts for the Company.

To the best of Safran's knowledge and that of its subsidiaries, there are no other ongoing regulatory, legal or arbitration proceedings that could have a material impact on the financial position of the Company and/or Group.

NOTE27 SUBSEQUENTEVENTS

Acquisition of Orolia

As part of the acquisition of Orolia from Eurazeo alongside the founders and management, a share sale agreement was signed on January 11, 2022.

The transaction was finalized on July 7, 2022 following the receipt of the necessary regulatory approvals.

Orolia is one of the world leaders in Resilient Positioning, Navigation and Timing (PNT) solutions which improve the reliability, performance and safety of critical civilian, military and space operations, including in harsh or altered Global Navigation Satellite System (GNSS) environments. Orolia generates revenue of around €100 million.

FOR THE SIX MONTHS ENDED JUNE 30, 2022

Statutory Auditors' review report on the interim financial information

This is a free translation into English of the Statutory Auditors' review report on the interim financial information issued in French and is provided solely for the convenience of English speaking users. This report includes information relating to the specific verification of information given in the Group's interim activity report. This report should be read in conjunction with, and construed in accordance with, French law and professional standards applicable in France.

To the Shareholders,

In compliance with the assignment entrusted to us by your Annual General Meeting and in accordance with the requirements of Article L.451-1-2 III of the French Monetary and Financial Code (Code monétaire et financier), we hereby report to you on:

• ◼ the review of the accompanying condensed interim consolidated financial statements of Safran for the six months ended June 30, 2022;
• ◼ the verification of the information contained in the interim activity report.

These condensed interim consolidated financial statements are the responsibility of the Board of Directors. Our role is to express a conclusion on these financial statements based on our review.

1. Conclusion on the financial statements

We conducted our review in accordance with professional standards applicable in France.

A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with professional standards applicable in France and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed interim consolidated financial statements have not been prepared, in all material respects, in accordance with IAS 34, "Interim Financial Reporting", as adopted by the European Union.

2. Specific verification

We have also verified the information presented in the interim activity report on the condensed interim consolidated financial statements subject to our review.

We have no matters to report as to its fair presentation and consistency with the condensed interim consolidated financial statements.

Paris-La Défense, July 27, 2022

The Statutory Auditors

Mazars Ernst & Young et Autres Jérôme de Pastors Philippe Berteaux

SAFRAN'S ORDINARY AND EXTRAORDINARY SHAREHOLDERS' MEETING OF MAY 25, 2022

Safran's Ordinary and Extraordinary Shareholders' Meeting was held on May 25, 2022 at the Palais des Congrès in Issy–les–Moulineaux, 25 avenue Victor Cresson – 92130 Issy–les–Moulineaux, France.

All resolutions submitted to the vote of the Annual General Meeting were approved.

In particular, shareholders approved:

• ◼ the financial statements for the year ended December 31, 2021 and voted for the payment of a dividend of €0.50 per share, to be paid as of June 2, 2022;
• ◼ the re-appointment of Monique Cohen and F&P, represented by Robert Peugeot, as Directors;

• ◼ the re-appointment of Mazars and Ernst & Young et Autres as Statutory Auditors;

• ◼ all of the resolutions relating to corporate officer compensation (2021 compensation, disclosures on compensation, 2022 compensation policies);

• ◼ the new authorization allowing Safran to buy back its own shares at a price not exceeding €165 per share. The maximum amount that may be invested in the program is €7 billion. The program description, drafted in accordance with the provisions of Article 241-2 of the General Regulations of the French financial markets authority (Autorité des marchés financiers – AMF), is available on the Company's website (www.safran-group.com, in the Finance/Regulated information section);
• ◼ the proposed amendment to the bylaws to extend the Company's term in advance.

MEMBERSHIP STRUCTURE OF THE BOARD OF DIRECTORS AND ITS STANDING COMMITTEES

The Board of Directors

Following the approval by the shareholders at the May 25, 2022 Annual General Meeting of all the resolutions relating to its membership structure, the Board of Directors now comprises 17 members, down from 18, including:

• ◼ nine independent Directors;
• ◼ one representative of the French State and one Director put forward by the French State;
• ◼ two Directors representing employee shareholders and two Directors representing employees.

At the close of the Annual General Meeting, the proportion of independent Directors increased from 64.3% to 69.2%(1) and the proportion of women on the Board rose from 42.8% to 46.15%(1) .

In addition, the Board of Directors noted the resignation of Vincent Imbert as Director, effective at the close of the Board of Directors' meeting of July 27, 2022, due to his retirement from the French Directorate General of Weapons Procurement (Direction Générale pour l'Armement – DGA).

On the same date and further to a proposal by the French State, the Board of Directors appointed Alexandre Lahousse to replace Vincent Imbert for the remainder of his term of office, i.e., until the end of the Annual General Meeting to be held in 2023. Also on the same date, the Board of Directors appointed Alexandre Lahousse as a member of the Innovation, Technology & Climate Committee, replacing Vincent Imbert.

Ratification of the appointment of Alexandre Lahousse as a Director will be submitted for shareholder approval at the 2023 Annual General Meeting.

Since January 1, 2022, Alexandre Lahousse has been Head of the Industrial Affairs and Economic Intelligence Department (S2IE) at the French Directorate General of Weapons Procurement (DGA).

His appointment has no impact on the proportion of independent Directors and of women Board members resulting from the decisions of the May 25, 2022 Annual General Meeting, as outlined above.

⁽¹⁾ In accordance with the AFEP-MEDEF Corporate Governance Code for Listed Companies and French law, Directors representing employee shareholders and Directors representing employees are not included when calculating the percentage of independent Directors.

At the filing date of this report, the Board of Directors is thus composed of the following members:

Directors	Independent
Ross McInnes, Chairman of the Board of Directors
Olivier Andriès, Chief Executive Officer
Anne Aubert, Director representing employee shareholders
Marc Aubry, Director representing employee shareholders
Hélène Auriol Potier	X
Patricia Bellinger	X
Stéphanie Besnier, representative of the French State
Hervé Chaillou, Director representing employees
Jean-Lou Chameau	X
Monique Cohen, Lead Independent Director and Chair of the Appointments and Compensation Committee	X
F&P, represented by Robert Peugeot	X
Laurent Guillot, Chairman of the Audit and Risk Committee	X
Alexandre Lahousse, Director put forward by the French State
Fabienne Lecorvaisier	X
Daniel Mazaltarim, Director representing employees
Patrick Pélata, Director responsible for monitoring climate issues and Chairman of the Innovation, Technology &
Climate Committee	X
Sophie Zurquiyah	X

17 members, of which 69.2% independent(1)

(1) In accordance with the AFEP-MEDEF Corporate Governance Code for Listed Companies, Directors representing employee shareholders and Directors representing employees are not taken into account when calculating the percentage of independent Directors.

The standing Committees of the Board of Directors

At the filing date of this report, the standing Committees of the Board of Directors are composed as follows:

Auditand Risk Committee	Independent
Laurent Guillot, Chairman	X
Marc Aubry (Director representing employee shareholders)
Stéphanie Besnier (representative of the French State)
Fabienne Lecorvaisier	X
Robert Peugeot (permanent representative of F&P)	X
Sophie Zurquiyah	X
6 members, of which 80% independent (4/5(1))

(1) In accordance with the AFEP-MEDEF Corporate Governance Code for Listed Companies, Directors representing employee shareholders and Directors representing employees are not taken into account when calculating the percentage of independent Directors.

Appointmentsand Compensation Committee	Independent
Monique Cohen, Chair – Lead Independent Director	X
Hélène Auriol Potier	X
Patricia Bellinger	X
Stéphanie Besnier (representative of the French State)
Jean-Lou Chameau	X
Daniel Mazaltarim (Director representing employees) – "appointments" discussions
Patrick Pélata	X
7 members, of which 83.33% independent (5/6(1))

(1) In accordance with the AFEP-MEDEF Corporate Governance Code for Listed Companies, Directors representing employee shareholders and Directors representing employees are not taken into account when calculating the percentage of independent Directors.

Innovation, Technology & Climate Committee	Independent
Patrick Pélata, Chairman – Director responsible for monitoring climate issues	X
Hélène Auriol Potier	X
Hervé Chaillou (Director representing employees)
Jean-Lou Chameau	X
Alexandre Lahousse (Director put forward by the French State)
Laurent Guillot	X
6 members, of which 80% independent (4/5(1))

(1) In accordance with the AFEP-MEDEF Corporate Governance Code for Listed Companies, Directors representing employee shareholders and Directors representing employees are not taken into account when calculating the percentage of independent Directors.

CONTACT

FINANCIAL COMMUNICATIONS DEPARTMENT

Analysts and institutional investors	Individual shareholders
◼ Tel.: +33 (0)1 40 60 80 80	◼ Toll-free number (mainland France only): 0 800 17 17 17 Monday to Friday, 9 a.m. to 5 p.m.
◼ E-mail: investor.relation@safrangroup.com	◼ E-mail: actionnaire.individuel@safran.fr

SAFRAN

2, boulevard du Général-Martial-Valin – 75724 Paris Cedex 15 – France

All financial information pertaining to Safran is available on the Group's website at www.safran-group.com, in the Finance section.

© Photo credits: Flower: G. Dronne/Wipplay; LEAP engine: R. Soret/Safran

Design and production:

Tel.: +33 (0)1 55 32 29 74

Safran

2, boulevard du Général-Martial-Valin – 75724 Paris Cedex 15 – France Tel.: +33 (0)1 40 60 80 80 www.safran-group.com