AIRBUS - 2019 Registration Document

REGISTRATION DOCUMENT 2018

Management’s Discussion and Analysis of Financial Condition and Results of Operations  /   2.1 Operating and Financial Review

2.1.6.1 Cash Flows The Company generally finances its manufacturing activities and product development programmes, and in particular the development of new commercial aircraft, through a combination of flows generated by operating activities, customer advances, risk-sharing partnerships with subcontractors and European Governments’ refundable advances. In addition, the Company’s military activities benefit from government-financed research and development contracts. If necessary, the Company may raise funds in the capital markets. The following table sets forth the variation of the Company’s consolidated net cash position over the periods indicated.

2

31 March 2019 (unaudited)

2018

31 March 2018 (unaudited)

2017

2016

(In € million)

Net Cash position at 1 January

13,281

13,391

13,391

11,113

10,003

First time impact of IFRS 16

(1,352)

0

0

0

0

725

206

5,515

4,451

3,565

Gross cash flow from operations (1)

Changes in other operating assets and liabilities (working capital) (2)

(4,703)

(3,797)

(633)

266

346

thereof customer financing

(52)

(7)

79

(100)

(252)

(470)

(65)

(1,377)

(982)

(730)

Cash used for investing activities (3)

thereof industrial capital expenditures

(455)

(393)

(2,285)

(2,558)

(3,060)

(4,448)

(3,656)

3,505

3,735

3,181

Free Cash Flow (4)

thereof M&A transactions

(55)

190

514

886

2,025

(4,393)

(3,846)

2,991

2,849

1,156

Free Cash Flow before M&A (5)

Cash flow from customer financing (net)

(52)

(7)

79

(100)

(252)

Free Cash Flow before customer financing

(4,396)

(3,649)

3,426

3,835

3,433

Free Cash Flow before M&A and customer financing

(4,341)

(3,839)

2,912

2,949

1,408

Cash distribution to shareholders / non-controlling interests

0

0

(1,161)

(1,046)

(1,012)

Contribution to plan assets of pension schemes

(42)

(53)

(2,519)

(458)

(290)

Changes in capital and non-controlling interests

0

0

117

83

60

Change in treasury shares / share buyback

0

(37)

(49)

0

(736)

Others

24

125

(3)

(36)

(93)

Net Cash position at 31 December

7,463

9,770

13,281

13,391

11,113

(1) Represents cash used for operating activities, excluding (i) changes in other operating assets and liabilities (working capital), (ii) contribution to plan assets of pension schemes and (iii) realised foreign exchange results on treasury swaps (€-45 million in 2018, €185 million in 2017, €-151 million in 2016) (31 March 2019: €-30 million). It is an alternative performance measure and an indicator used to measure its operating cash performance before changes in working capital. (2) Excluding reclassification of certain trade liabilities. (3) Does not reflect change in securities (net investment of €-93 million in 2018, net investment of €-1,233 million in 2017, net investment of €337 million in 2016) (31 March 2019: net disposal of €+459 million), which are classified as cash and not as investments solely for the purposes of this net cash presentation. Excluding bank activities. (4) Does not reflect change of securities, change in cash from changes in consolidation, contribution to plan assets of pension schemes and realised foreign exchange results on treasury swaps. Excluding bank activities. Free Cash Flow is an alternative performance measure and indicator that reflects the amount of cash flow generated from operations after cash used in investing activities. (5) Free Cash Flow before M&A refers to Free Cash Flow adjusted for net proceeds from disposals and acquisitions. It is an alternative performance measure and indicator that reflects Free Cash Flow excluding those cash flows from the disposal and acquisition of businesses.

Gross cash flow from operations increased to €5.5 billion for 2018 (first three months 2019: €0.7 billion), which reflects the strong EBIT Adjusted. Changes in Other Operating Assets and Liabilities Changes in other operating assets and liabilities is comprised of inventories, trade receivables, contract assets and contract liabilities (including customer advances), trade liabilities, and other assets and other liabilities. They resulted in a negative working capital variation of € -0.6 billion for 2018, versus a positive impact of € +0.3 billion for 2017 (first three months 2019: € -4.7 billion).

The net cash position as of 31 December 2018 was stable at € 13.3 billion, a 0.8% decrease from 31 December 2017 (31 March 2019: €7.5 billion). The increase in gross cash flow from operations (€5.5 billion) (31 March 2019: €0.7 billion), was offset by the contributions to plan assets of pensions schemes (€ -2.5 billion) (31 March 2019: €42 million), the cash used for investing activities (€-1.4 billion) (31 March 2019: €0.5 billion) and the cash distribution to shareholders / non-controlling interests (€ -1.2 billion). Gross Cash Flow from Operations Gross cash flow from operations is an alternative performance measure and an indicator used by the Company to measure its operating cash performance before changes in working capital.

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Airbus / Registration Document 2018