AIRBUS - 2020 Universal Registration Document

2. Management’s Discussion and Analysis of Financial Condition and Results of Operations /

2.1 Operating and Financial Review

Airbus Defence and Space The following table presents a breakdown of deliveries of Airbus Defence and Space by product type for the past three years.

2020

2019

2018

(In units)

2

A400M

9

14

17

A330 MRTT (Tanker)

4

7

6

Light & Medium aircraft

10

8

6

Telecom satellites

1

2

2

Total

24

31

31

For 2019, research and development expenses increased by 4.4%, from € 3.2 billion for 2018 to € 3.4 billion for 2019, particularly related to the DDMS project ramp-up and A350 XWB programme. In addition, an amount of € 133 million of development costs has been capitalised, mainly linked to Airbus programmes. and Other Expenses Other income and other expenses typically include gains and losses on disposals of investments, of fixed assets and income from rental properties. Other income and other expenses was € -1,326 million net as compared to €14 million net for 2019. The decrease is driven by the restructuring provision recorded in 2020 in response to the COVID-19 pandemic, see “–2.1 Operating and Financial Review”. For 2019, other income and other expenses was €14 million net as compared to €1,474 million net for 2018. The decrease is mainly related to the release of liabilities on the A380 programme in 2018, partly compensated by the capital gains from the sale of PFW Aerospace GmbH and Alestis Aerospace S.L in 2019. 2.1.4.6 Share of Profit from Investments Accounted for under the Equity Method and Other Income from Investments Share of profit from investments accounted for under the equity method and other income from investments principally include results from companies accounted for under the equity method and the dividends attributable to unconsolidated investments. Please refer to the “Notes to the IFRS Consolidated Financial Statements – Note 9: Investments Accounted for under the Equity Method” and “– Note 16: Share of Profit from Investments Accounted for under the Equity Method and Other Income from Investments”. The Company recorded € 152 million in share of profit from investments accounted for under the equity method and other income from investments as compared to €303 million for 2019. For 2019, the Company recorded €303 million in share of profit from investments accounted for under the equity method and other income from investments as compared to €439 million for 2018. 2.1.4.5 Other Income

Airbus Defence and Space’s revenues amounted to €10.4 billion in 2020 (2019: €10.9 billion). The decrease is due to lower volume and the impact of the COVID-19 pandemic on business phasing. It also re ects the lower order intake in Space Systems in the prior years. For 2019, Airbus Defence and Space revenues of €10.9 billion in 2019 (2018: €11.1 billion) remained broadly stable compared to the previous year. 2.1.4.2 Cost of Sales Cost of sales decreased by 26.2% from €60.0 billion for 2019 to €44.3 billion for 2020. This was driven by lower deliveries, also impacted by charges recorded as a result of the comprehensive review performed by the Company of its operational assets and liabilities in response to the COVID-19 pandemic, see “–2.1 Operating and Financial Review”. For 2019, cost of sales increased by 9.2% from €54.9 billion for 2018 to €60.0 billion for 2019. This was principally due to higher deliveries and provisions recognised on the A400M programme of €1.2 billion. Selling and administrative expenses decreased from €6.1 billion for 2019 to €2.1 billion for 2020. The decrease was mainly due to the €3.6 billion penalties recognised in 2019, as a consequence of the final agreements reached with the French PNF, the UK SFO and the US DoS. For 2019, selling and administrative expenses increased from €2.4 billion for 2018 to €6.1 billion for 2019. This was driven by the €3.6 billion penalties recognised in the fourth quarter. 2.1.4.4 Research and Development Expenses Research and development expenses decreased by 14.9%, from €3.4 billion for 2019 to €2.9 billion for 2020, mainly re ecting cash containment measures in response to the COVID-19 pandemic. In addition, an amount of €101 million of development costs has been capitalised, mainly linked to Airbus programmes. See “– 2.1.2.2 Capitalised Development Costs”. 2.1.4.3 Selling and Administrative Expenses

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Airbus / Registration Document 2020