REVENUE
2013* 2014
(in € millions)
Original equipment and related products and services 6,156 6,473
Sales of defence and security equipment 1,953 1,993
Services 5,351 5,840
Sales of studies 530 594
Other 168 144
Total 14,158 15,044
* The data published for 2013 have been restated to reflect the impact of the change in accounting policy resulting from the retrospective application of IFRS 11, Joint Arrangements (see Note 3.b).
OTHER INCOME
(in € millions) 2013* 2014
Research tax credit (1) 136 151
Competitiveness and employment tax credit (CICE) 26 39
Other operating subsidies 85 86
Other operating income 11 15
Total 258 291
* The data published for 2013 have been restated to reflect the impact of the change in accounting policy resulting from the retrospective application of IFRS 11, Joint Arrangements (see Note 3.b).
(1) Of which €11 million in connection with additional research tax credits in respect of 2013, included in 2014 income (€8 million in respect of 2012 included in 2013 income).
The "CICE" tax credit was introduced in France in January 2013 to boost competitiveness and employment. It is calculated for each calendar year and in 2013 represented 4% of remuneration paid that is equal to or less than 2.5 times the minimum wage (SMIC). This rate was increased to 6% in January 2014. The Group recognizes accrued income to match the corresponding payroll charge.
Given the characteristics of this tax credit and based on the treatment applied to the research tax credit, the Group considers the CICE as an operating subsidy.
RAW MATERIALS AND CONSUMABLES USED
This caption breaks down as follows for the period:
(in € millions) Dec. 31, 2013* Dec. 31, 2014
Raw materials, supplies and other (2,591) (2,681)
Bought-in goods (186) (200)
Changes in inventories (8) (70)
Sub-contracting (3,058) (3,391)
Purchases not held in inventory (437) (422)
External service expenses (2,172) (2,284)
Total (8,452) (9,048)
* The data published for December 31, 2013 have been restated to reflect the impact of the change in accounting policy resulting from the retrospective application of IFRS 11, Joint Arrangements (see Note 3.b).
PERSONNEL COSTS
(in € millions) 2013* 2014
Wages and salaries (2,848) (2,980)
Social security contributions (1,145) (1,214)
Statutory employee profit-sharing (90) (136)
Optional employee profit-sharing (140) (152)
Additional contributions (48) (62)
Profit-sharing bonus for employees (4) (5)
Corporate social contribution (60) (75)
Other employee costs (107) (120)
Total (4,442) (4,744)
* The data published for 2013 have been restated to reflect the impact of the change in accounting policy resulting from the retrospective application of IFRS 11, Joint Arrangements (see Note 3.b).
The increase in wages and salaries reflects compensation policies and the rise in headcount resulting from new hires recruited by Group companies in response to the growth in business.
The increase in statutory and optional employee profit-sharing reflects the Group's improved profit.
To give employees a vested interest in the Group's good performance, Executive Management approved an additional profit-sharing bonus for 2014.
In both 2014 and 2013, since the dividends per share paid by Safran were up on the average dividend paid in the previous two years, the Group paid its employees a profit-sharing bonus, calculated within the scope of the amendment to the profit-sharing agreement signed in 2012.
Further to the French government's sale of some of its Safran shares in March and again in November 2013, an employee share ownership scheme was set up in the second half of 2014. Safran's contribution to this scheme represents €6.7 million. The IFRS 2 expense relating to the discount granted to employees amounts to €3.5 million (see Note 19.b).
The corporate social contribution comprises employer taxes on certain ancillary components of salaries. It is levied at 20% and covers optional and statutory employee-profit sharing, additional employer contributions to the employee savings plan and employee retirement savings plan, pension top-up payments and the profit-sharing bonus.
DEPRECIATION, AMORTIZATION AND INCREASE IN PROVISIONS, NET OF USE
(in € millions) 2013* 2014
Net depreciation and amortization expense
- intangible assets (396) (452)
- property, plant and equipment (334) (366)
Total net depreciation and amortization expense (1) (730) (818)
Net increase in provisions (29) (76)
Depreciation, amortization, and increase in provisions, net of use (759) (894)
* The data published for 2013 have been restated to reflect the impact of the change in accounting policy resulting from the retrospective application of IFRS 11, Joint Arrangements (see Note 3.b).
(1) Of which depreciation and amortization of assets measured at fair value at the time of the Sagem-Snecma merger: €147 million in 2014 and €150 million in 2013; and during recent acquisitions: €134 million in 2014 and €100 million in 2013.
ASSET IMPAIRMENT
Impairment expense Reversals
(in € millions) 2013* 2014 2013* 2014
Property, plant and equipment and intangible assets (15) (13) 3 5
Financial assets (24) (9) 7 4
Inventories and work-in-progress (181) (254) 182 235
Receivables (94) (76) 36 49
Total (314) (352) 228 293
* The data published for 2013 have been restated to reflect the impact of the change in accounting policy resulting from the retrospective application of IFRS 11, Joint Arrangements (see Note 3.b).
OTHER RECURRING OPERATING INCOME AND EXPENSES
(in € millions) 2013* 2014
* The data published for 2013 have been restated to reflect the impact of the change in accounting policy resulting from the retrospective application of IFRS 11, Joint Arrangements (see Note 3.b).
OTHER NON-RECURRING OPERATING INCOME AND EXPENSES
(in € millions) 2013* 2014
Gains on remeasuring previously held equity interests 216 8
Capital gains on asset disposals 39 -
Impairment net of reversals on intangible assets (17) (53)
Other non-recurring items (56) (62)
Total 182 (107)
* The data published for 2013 have been restated to reflect the impact of the change in accounting policy resulting from the retrospective application of IFRS 11, Joint Arrangements (see Note 3.b).
In 2014, gains on remeasuring the Group's previously held interest in Hydrep (see Note 4) were recognized in non-recurring operating items.
An impairment loss of €15 million was recognized against intangible assets relating to technologies and commercial relationships (see Note 11).
Further to Bombardier Inc.'s January 15, 2015 announcement that it was to pause its Learjet 85 business aircraft program, Safran recognized a non-recurring operating expense of €52 million. This expense reflects €38 million in impairment taken against development expenditures (see Note 11) and
€14 million in impairment taken against other assets pledged by the Group to meet its contractual commitments to Bombardier Inc. This second impairment charge was recognized in other non-recurring items.
Besides impairment, other non-recurring items chiefly include €36 million in non-recurring costs to adapt the industrial tool in Security and Aerospace Propulsion activities, and €17 million in transaction and integration costs arising on recent business combinations.
In 2013, gains on remeasuring the Group's previously held interest in the RTM322 program (see Note 4) were recognized in non-recurring operating items.
Capital gains for €39 million were recognized on the disposal of Globe Motors (see Note 4) and on the sale of property assets.
Impairment losses of €17 million were recognized against intangible assets relating to various programs (see Note 11).
Other non-recurring items corresponded mainly to past service costs of €40 million arising on a defined benefit supplementary pension plan with a current eligible population of around 400 Group executive managers (see Note 21), and to transaction and integration costs of €10 million relating to recent business combinations.