Adjusted net margin thus stood at 3.3% for the first half of 2020, vs 9.3% for the first half of 2019.
2. financial structure
2.1 available cash
The Group uses a specific indicator called “Available cash”, which reflects the amount of total liquidities available to the Group, net of financial debts. It includes the following balance sheet items: cash and cash equivalents, current financial assets (at market value) and financial debts; it excludes the impact on financial debts of the application of IFRS 16 “Leases”.
The Group’s available cash stands at €3,921 million, lower by €664 million compared to December 31, 2019. This decrease is mainly caused by the raise of working capital (decrease in Export contracts’ down payments due to first half deliveries, increase in inventories and work-in-progress), investments being offset by the cash flow generated during the first half year.
2.2 balance sheet (IFRS data)
Total equity stands at €4,277 million as of June 30, 2020, vs. €4,446 million as of December 31, 2019.
Borrowings and financial debts stand at €322 million as of June 30, 2020 vs. €558 million as of December 31, 2019. €250 million of bank borrowings were reimbursed during the 1st semester. Borrowings and financial debts are mainly composed by locked-in employees’ profit sharing plan for €131 million and finance lease liabilities booked following the implementation of IFRS16 for €175 million.
Inventories and work-in-progress increased by €191 million and stand at €3,560 million as of June 30, 2020. The increase of the Falcon and Defense France components was partly offset by the decrease of the Defense Export component linked to Rafale Export deliveries.
Down-payments collected on orders net of down-payments paid lower by €293 million as of June 30, 2020 mainly due to Rafale Export deliveries and associated services during the period.
The market value of derivative financial instruments stands at €-134 million as of June 31, 2020 vs. €-71 million as of December 31, 2019. This decrease is partly due to the variation of the US Dollar exchange rate between June 30, 2020 and December 31, 2019 (1.1198 $/€ vs. 1.1234 $/€) and the decrease in US Dollar interest rates (decrease of forward points).
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IFRS 8 “Operating Segments” requires the presentation of information per segment according to internal management criteria.
The entire activity of the Dassault Aviation Group relates to the aerospace domain. The internal reporting made to the Chairman and Chief Executive Officer, and to the Chief Operating Officer, as used for the strategy and decision-making, includes no performance analysis, under the terms of IFRS 8, at a level subsidiary to this domain.
DEFINITION OF ALTERNATIVE PERFORMANCE INDICATORS
To reflect the Group’s actual economic performance, and for monitoring and comparability reasons, the Group presented an adjusted income statement of:
- gains and losses resulting from the exercise of hedging instruments which do not qualify for hedge accounting under IFRS standards. This income, presented as financial income in the consolidated financial statements, is reclassified as net sales and thus as operating income in the adjusted income statement,
- the value of foreign exchange derivatives which do not qualify for hedge accounting, by neutralizing the change in fair value of these instruments (the Group considering that gains or losses on hedging should only impact income as commercial flows occur), with the exception of derivatives allocated to hedge balance-sheet positions whose change in fair value is presented as operating income,
- amortization of assets valued as part of the purchase price allocation (business combinations), known as “PPA”,
- adjustments made by Thales in its financial reporting.
The Group also presents the “available cash” indicator which reflects the amount of the Group’s total liquidities, net of financial debt. It covers the following balance sheet items:
- cash and cash equivalents,
- other current financial assets (essentially available-for-sale marketable securities at their market value),
- financial debt, except for lease liabilities recorded following the application of IFRS 16 “Leases”.
Only consolidated financial statements are audited by statutory auditors. Adjusted financial data are subject to the verification procedures applicable to all information provided in the annual report.
IMPACT OF ADJUSTMENTS
The impact of the adjustments of income statement aggregates for the 1st half 2020 is set out below:
|(in EUR thousands)||Consolidated
|PPA||Adjustments applied by Thales||Adjusted
|Change in fair value|
|Net financial income/expense||-37,733||4,430||14,897||-18,406|
|Share in net income of equity associates||17,251||1,427||41,249||59,927|
|Group share of net income||32,009||0||10,647||3,457||41,249||87,362|
|Group share of net income per share (in euros)||3.8||10.5|
The impact of the adjustments of income statement aggregates for the 1st half 2019 is set out below: