AIRBUS - 2020 Universal Registration Document

2. 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 ows 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

2020

2019

2018

(In € million)

Net Cash position at 1 January Initial application impact of IFRS 16 Gross Cash Flow from operations (1)

12,534

13,281 (1,352) 3,391 2,176 (2,092) (2,340)

13,391

0

0

3,061 (8,197) (2,226) (1,759) (7,362)

5,515 (633)

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

(1,377) (2,285)

Cash used for investing activities (3)

thereof industrial capital expenditures

3,475

3,505

Free Cash Flow (4)

thereof M&A transactions

(551)

(92)

514

(6,811)

3,567

2,991

Free Cash Flow before M&A (5)

thereof Cash Flow from customer financing (net)

124

58

79

Free Cash Flow before customer financing

(7,486) (6,935)

3,417

3,426 2,912 (1,161) (2,519)

Free Cash Flow before M&A and customer financing Cash distribution to shareholders / non-controlling interests

3,509 (1,280) (1,752)

0

Contribution to plan assets of pension schemes Changes in capital and non-controlling interests Change in treasury shares / share buyback

(314)

89 (4)

194 (31)

117 (49)

Others

(631)

(1)

(3)

Net Cash position at 31 December

4,312

12,534

13,281

(1) Represents cash provided by 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 (€70 million in 2020, €102 million in 2019, € -45 million in 2018). It is an alternative performance measure and an indicator used to measure its operating cash performance before changes in other operating assets and liabilities (working capital). (2) Including customer financing, excluding some perimeter change impacts from changes in consolidation. (3) Does not reflect change in securities (net disposal of €6,303 million in 2020, net investment of € -397 million in 2019, net investment of € -93 million in 2018), 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.

Changes in Other Operating Assets and Liabilities (Working Capital)

The net cash position as of 31 December 2020 was €4.3 billion, a 65.6% decrease from 31 December 2019. Please see further details below. 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. Gross Cash Flow from operations decreased to € 3.1 billion for 2020, which re ects lower EBIT Adjusted before charges related to the ongoing COVID-19 pandemic (see “– 2.1 Operating and Financial Review”), offset by the impact the compliance related penalties amounting to € -3.6 billion recognised in 2019. In 2019, the negative impact from recognising these penalties was neutralised by a corresponding decrease in current liabilities included in changes in other operating assets and liabilities (working capital).

Changes in other operating assets and liabilities (working capital), comprises 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 € -8.2 billion for 2020, versus a positive impact of €2.2 billion for 2019. The negative working capital variation from 2019 to 2020 re ects the change in other assets and liabilities (€ -6.5 billion), mainly due to the negative impact of the payment of penalties, the change in trade liabilities (€-3.9 billion) and the change in contract assets and contract liabilities (€ -0.4 billion), which includes final payments received from customers and others parties in anticipation. This was partially compensated by the increase in trade receivables (€+0.3 billion). The change in trade liabilities re ects the phasing impact in line with the production adaptation plan set out in April 2020 in response to the COVID-19 pandemic (see “– 2.1 Operating and Financial Review”) and includes payments made to suppliers in anticipation.

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Airbus / Registration Document 2020