AKKA Technologies : Half Year 2019 Report

HALF-YEARLY

FINANCIAL REPORT

2019

CONTENTS

A - 2019 HALF-YEARLY FINANCIAL STATEMENTS	3
1	SCOPE AND CONSOLIDATION METHODS	9
1.1	REPORTING STANDARDS	9
1.2	NEW IFRS STANDARDS AND INTERPRETATIONS	9
1.3	MANAGEMENT ESTIMATES	12
1.4	CONSOLIDATION METHODS	12
1.5	SIGNIFICANT ACCOUNTING POLICIES	12
1.6	SCOPE OF CONSOLIDATION	13
2	NOTES TO THE INCOME STATEMENT	15
2.1	SEGMENT INFORMATION	15
2.2	EXTERNAL EXPENSES	16
2.3	EMPLOYEES	16
2.4	DEPRECIATION AND PROVISIONS	17
2.5	INVESTMENTS IN ASSOCIATES	17
2.6	OTHER NON-CURRENT INCOME AND EXPENSES	17
2.7	FINANCIAL INCOME	17
2.8	INCOME TAX	18
3.	NOTES TO THE BALANCE SHEET	19
3.1	GOODWILL	19
3.2	INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT	19
3.3	RIGHTS OF USE (IFRS16)	20
3.4	OTHER NON-CURRENT ASSETS	20
3.5	TRADE RECEIVABLES AND RELATED ACCOUNTS	20
3.6	OTHER RECEIVABLES	20
3.7	CASH AND CASH EQUIVAELNTS	20
3.8	SHARE CAPITAL AND SHARE PREMIUM	21
3.9	CURRENT AND NON-CURRENT PROVISIONS	22
3.10	FINANCIAL LIABILITIES	22
3.11	OTHER LIABILITIES	24
4	NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS	25
4.1	CHANGE IN NET WORKING CAPITAL	25
4.2	IMPACT OF CHANGES IN THE SCOPE OF CONSOLIDATION	25
4.3	DIVIDENDS	25
5.	SUBSEQUENT EVENTS	26
6.	OTHER INFORMATION	27
6.1	FINANCIAL INSTRUMENTS	27
6.2	INFORMATION ON RELATED PARTIES	27
6.3	INFORMATION RELATING TO RISK MANAGEMENT	27
B - HALF-YEARLY ACTIVITY REPORT	28
C - STATEMENT BY THE PERSON RESPONSIBLE FOR THE HALF-YEARLY FINANCIAL REPORT	30
D - REPORT OF THE STATUTORY AUDITOR ON THE LIMITED REVIEW OF THE CONDENSED
	HALF-YEARLY CONSOLIDATED FINANCIAL STATEMENTS OF AKKA TECHNOLOGIES SE FOR	31
	THE SIX MONTHS TO 30 JUNE 2019

This document is an English translation of the RAPPORT FINANCIER SEMESTRIEL 2019 that was issued in French and drafted in accordance with Belgian law. This document is provided solely for the convenience of English readers and in case of any discrepancies with the French version, the French version prevails.

2	2019 HALF-YEARLY FINANCIAL REPORT

A - 2019 HALF-YEARLY FINANCIAL STATEMENTS

CONSOLIDATED INCOME STATEMENT

INCOME STATEMENT	Note no.	30 June 2019	30 June 2018
in thousands of euros
REVENUE	2.1	891,422	711,902
External expenses	2.2	(174,375)	(185,683)
Taxes and duties	2.3	(6,230)	(5,394)
Personnel expenses	(627,617)	(466,978)
Net depreciation and provisions	2.4	(25,647)	(9,900)
Other current expenses		(2,157)	(1,925)
Other current income	2.5	3,411	5,186
Income from equity affiliates	1,209	1,621
CURRENT OPERATING PROFIT		60,017	48,829
Free shares and stock options	3.8	(3,393)	(3,743)
RECURRING OPERATING PROFIT		56,625	45,086
Other non-current income and expenses	2.6	(11,522)	(7,997)
OPERATING PROFIT		45,103	37,089
Income from cash and cash equivalents	2.7	148	129
Cost of gross financial debt	2.7	(8,126)	(8,264)
COST OF NET FINANCIAL DEBT		(7,978)	(8,135)
Other financial income and expenses	2.7	(198)	(1,289)
PROFIT BEFORE TAX		36,926	27,665
Tax expense	2.8	(10,633)	(7,088)
CONSOLIDATED NET INCOME		26,293	20,577
Non-controlling interests		(40)	(1,926)
GROUP SHARE OF NET PROFIT		26,254	18,650
Earnings per share		€1.31	€0.95
Diluted earnings per share		€1.31	€0.93
Weighted average number of ordinary shares outstanding		20,033,086	19,665,442
Weighted average number of ordinary shares plus potential dilutive shares		20,082,061	20,015,882

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME	Note no.	30 June 2019	30 June 2018
in thousands of euros
CONSOLIDATED NET INCOME		26,293	20,577
Actuarial gains and losses on pension obligations	3.9	(1,687)	269
Tax effect of items not to be recycled to profit or loss in subsequent periods		475	(84)
Items not to be recycled to profit or loss in subsequent periods		(1,212)	185
Gains and losses on hedging instruments	3.10	266	223
Change in translation differences		665	(588)
Tax effect of items to be recycled to profit or loss in subsequent periods		(69)	(63)
Items to be recycled to profit or loss in subsequent periods		861	(427)
CONSOLIDATED COMPREHENSIVE INCOME		25,943	20,334
Non-controlling interests		39	1,747
Group share		25,903	18,587

2019 HALF-YEARLY FINANCIAL REPORT

3

A - 2019 HALF-YEARLY FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEET

ASSETS	Note no.	30 June 2019	30 June 2018
in thousands of euros
Goodwill	3.1	361,293	360,847
Intangible assets	3.2	20,412	19,990
Tangible assets	3.2	93,701	91,160
Rights of use - IFRS 16	3.3	155,674	-
Non-current financial assets	2.5	38,842	40,340
Securities of affiliated companies and joint ventures	47,439	46,230
Other non-current assets	3.4	35,098	31,109
Deferred tax assets		34,800	34,092
Non-current assets		787,259	623,767
Inventories and work in progress	3.5	9,359	12,716
Trade receivables	302,589	261,908
Other receivables	3.6	94,563	86,112
Cash and cash equivalents	3.7	187,320	271,785
Current assets		593,831	632,520
TOTAL ASSETS		1,381,090	1,256,289
LIABILITIES	Note no.	30 June 2019	31 Dec. 2018
in thousands of euros
Share capital	3.8	31,047	31,047
Share premium	3.8	656	656
Consolidation reserves		209,857	176,520
Group share of net profit		26,254	50,145
Group share of equity		267,813	258,368
Non-controlling interests		344	305
Shareholders' equity		268,157	258,673
Non-current provisions	3.9	28,731	26,689
Non-current financial liabilities	3.10	472,704	479,860
Non-current IFRS 16 lease liabilities	3.10	128,700	-
Deferred tax liabilities		14,511	13,667
Non-current liabilities		644,646	520,215
Current provisions	3.9	2,905	4,307
Current financial liabilities	3.10	83,479	71,155
Current IFRS 16 lease liabilities	3.10	28,769	-
Trade payables		102,379	118,055
State - income taxes		5,350	7,822
Tax and social security liabilities excluding income tax	3.11	198,068	212,806
Other liabilities	47,338	63,255
Current liabilities		468,287	477,401
TOTAL LIABILITIES		1,381,090	1,256,289

4	2019 HALF-YEARLY FINANCIAL REPORT

A - 2019 HALF-YEARLY FINANCIAL STATEMENTS

CONSOLIDATED STATEMENT OF CASH FLOWS

CONSOLIDATED STATEMENT OF CASH FLOWS	Section	30 June 2019	30 June 2018
in thousands of euros
Consolidated net income		26,293	20,577
Reintegration of expenses (+) or elimination of income (-) connected to depreciation and impairment		25,962	9,439
(excluding working capital)
Elimination of income from equity affiliates		(1,209)	(1,621)
Dividends received by equity affiliates		-	857
Reintegration of tax expenses (+) or elimination of tax income (-)		10,727	7,090
Reintegration of expenses (+) or elimination of income (-) calculated under IFRS (1)		3,669	2,464
Reintegration of expenses (+) or elimination of income (-) from net disposals	2.7	(151)	(1,903)
Reintegration of expenses (+) or elimination of income (-) associated with net financial debt	7,978	8,363
Cash flow before net interest expenses and taxes		73,270	45,265
Tax paid	4.1	(8,981)	(6,167)
Change in net working capital	(101,011)	(40,308)
Net cash flow from operating activities		(36,722)	(1,209)
Acquisitions of fixed assets	3.2	(14,873)	(18,777)
Disposals of fixed assets		537	570
Change in financial assets	4.2	1,330	(1,630)
Impact of changes in the scope of consolidation	(14,217)	(20,844)
Net cash flow from investment activities		(27,223)	(40,679)
Dividends paid to shareholders of the parent company	4.3	-	-
Purchase of treasury shares	3.10	(3,859)	-
Proceeds from new borrowings	10,000	304
Repayment of loans	3.10	(6,894)	(102,496)
Repayment of IFRS 16 lease liabilities	3.10	(13,848)	-
Net interest received		148	129
Net interest paid		(6,314)	(8,561)
Net cash flow from financing activities		(20,767)	(110,624)
Impact of changes in foreign currency exchange rates		247	(189)
CHANGE IN CASH AND CASH EQUIVALENTS		(84,465)	(152,702)
Cash, cash equivalents and bank overdrafts at the start of the year		271,785	430,892
Cash, cash equivalents and bank overdrafts at year end		187,320	278,191
CHANGE IN CASH AND CASH EQUIVALENTS		(84,465)	(152,702)

(1) Expenses calculated on the basis of IFRS consist of the valuation of stock options and free shares (IFRS2) and the capitalisation of loan issue expenses.

2019 HALF-YEARLY FINANCIAL REPORT

5

6

REPORT FINANCIAL YEARLY-HALF 2019

	Number of shares	Share	Share	Consolidated	Profit	Translation	Group share	Non-	Consolidated
Amounts in thousands of euros	Components	Treasury	Outstanding	for
capital	premium	reserves	the	adjustments	of equity	controlling	shareholders'
	of equity	shares	shares				period			interests	equity
Shareholders' equity as at 1 January 2018	20,291,990	626,263	19,665,728	31,047	-	162,394	39,253	(938)	231,756	34,501	266,258
Income for the period	-	-	-	-	-	-	18,650	-	18,650	1,926	20,577
Other comprehensive income	-	-	-	-	-	291	-	(354)	(63)	(179)	(243)
Consolidated comprehensive income	-	-	-	-	-	291	18,650	(354)	18,587	1,747	20,334
Change in the share capital of the parent	-	-	-	-	-	-	-	-	-	-	-
company
Purchase of own shares	-	-	-	-	-	-	-	-	-	-	-
Change in the scope of consolidation	-	-	-	-	-	(2,357)	-	-	(2,357)	-	(2,357)
Appropriation of earnings	-	-	-	-	-	39,253	(39,253)	-	-	-	-
Dividends	-	-	-	-	-	(13,768)	-	-	(13,768)	-	(13,768)
Impact of free shares and stock options	-	-	-	-	-	2,907	-	-	2,907	-	2,907
Other changes	-	285	(285)	-	-	(6)	-	-	(8)	-	(8)
Shareholders' equity as at 30 June 2018	20,291,990	626,548	19,665,443	31,047	-	188,714	18,650	(1,292)	237,119	36,249	273,368
Shareholders' equity as at 1 January 2019	20,291,990	650,960	19,641,031	31,047	656	178,275	50,145	(1,755)	258,368	305	258,673
Income for the period	-	-	-	-	-	-	26,254	-	26,254	40	26,293
Other comprehensive income (1)	-	-	-	-	-	(1,015)	-	665	(350)	(0)	(351)
Consolidated comprehensive income	-	-	-	-	-	(1,015)	26,254	665	25,903	39	25,943
Change in the share capital of the parent	-	-	-	-	-	(0)	-	-	(0)	-	(0)
company
Purchase of own shares	-	61,445	(61,445)	-	-	(3,859)	-	-	(3,859)	-	(3,859)
Change in the scope of consolidation	-	-	-	-	-	(0)	-	-	(0)	-	(0)
Appropriation of earnings	-	-	-	-	-	50,145	(50,145)	-	-	-	-
Dividends	-	-	-	-	-	(14,026)	-	-	(14,026)	-	(14,026)
Impact of free shares and stock options	-	(421,459)	421,459	-	-	1,610	-	-	1,610	-	1,610
Other changes	-	(32,042)	32,042	-	-	(184)	-	-	(186)	-	(186)
Shareholders' equity as at 30 June 2019	20,291,990	258,904	20,033,086	31,047	656	210,945	26,254	(1,090)	267,813	344	268,157

(1) As at 30 June 2019, the amount of actuarial gains and losses was €(4,057) thousand, and that of hedging reserves was €(332) thousand.

EQUITY CONSOLIDATED IN CHANGES OF STATEMENT

STATEMENTS FINANCIAL YEARLY-HALF 2019 - A

NOTES TO THE INTERIM CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

These notes contain additional information regarding the consolidated balance sheet, the total of which is €1,381,090 thousand, and the consolidated income statement, which shows a Group share of comprehensive income of €25,903 thousand.

Such information is only included when its importance is material.

Unless otherwise stated, all figures are expressed in thousands of euros.

The Board of Directors of the AKKA Technologies Group approved the financial statements on 4 September 2019.

AKKA Technologies' business operations:

AKKA ranks as the European leader in engineering consulting and R&D services in the mobility sector. As an innovation accelerator for its clients, AKKA supports leading industry players in the automotive, aerospace, rail and life sciences sectors throughout the life cycle of their products A dynamic force in innovation for its clients, AKKA offers them all the benefits of its unique dual expertise in both engineering and state-of-the-art digital technologies (AI, ADAS, IoT, Big Data, robotics, embedded computing, machine learning, etc.).

Founded in 1984, AKKA has a strong entrepreneurial culture and is pursuing its fast-paced growth and international development in line with its CLEAR 2022 strategic plan. With over 20,000 employees, who are passionate about technology and dedicated to advancing the future of industry, the Group recorded revenues of €1.5 billion in 2018.

The company's registered office is located at 143 avenue Louise, 1050 Brussels, Belgium.

AKKA Technologies is listed on Euronext Paris - Segment A - ISIN code: FR0004180537.

Significant events and transactions during the first half:

Not applicable.

2019 HALF-YEARLY FINANCIAL REPORT

7

8	2019 HALF-YEARLY FINANCIAL REPORT

01

CONSOLIDATED FINANCIAL STATEMENTS

1. SCOPE AND CONSOLIDATION METHODS

1.1 Reporting standards

The interim condensed consolidated financial statements of the AKKA Technologies Group are prepared in accordance with the standards, amendments and interpretations issued by the IASB (International Accounting Standards Board) and adopted by the European Union as of the reporting date.

The standards, amendments and interpretations used to prepare the consolidated financial statements for the six months to 30 June 2019 and comparative data for 2018 are those published in the Official Journal of the European Union (OJEU) before 30 June 2019 and whose application was mandatory as of that date.

These standards are available on the European Commission website at the following address: https://ec.europa.eu/info/ business-economy-euro/company-reporting-and-auditing/company-reporting/financial-reporting_fr

The interim condensed consolidated financial statements of the AKKA Technologies Group are prepared in accordance with IAS 34 "Interim Financial Reporting", the IFRS framework adopted in the European Union for interim financial reporting.

These interim consolidated financial statements have been prepared and presented in condensed form. The notes cover the significant features of the half-year, and should be read in conjunction with the consolidated financial statements for the year ended 31 December 2018 included in the registration document filed with the French financial markets authority (Autorité des Marchés Financiers - AMF) on 30 April 2019, and available on the company's website, at www.akka-technologies.com, in the investors area, under "Access all financial reports".

1.2 New IFRS standards and interpretations

1.2.1 IFRS 16 - Leases

IFRS 16 "Leases", issued by the IASB in 2016 and adopted by the European Union in November 2017, is applicable for financial years beginning on, or after, 1 January 2019.

Before that date, each lease was classified as either an operating lease or a finance lease, with a specific accounting treatment for each category.

Under IFRS 16, for leases not subject to an exemption under the standard, lessees are now required to recognise as:

• Assets, a depreciable Right of Use;
• Liabilities, a Lease Liability which corresponds to the present value of future payments.

The lease term is defined on a contract-by-contract basis and corresponds to the firm period of the commitment taking into account any optional periods that are reasonably certain to be exercised.

Lease payments for low-value assets (less than USD 5,000) or a short-term lease (less than 12 months) were recognised directly as expenses.

In addition, the following simplification measures were applied at the transition date:

• Leases with a residual term of less than 12 months as of 1 January 2019, are not recognised as an asset and a liability;
• The discount rates applied at the transition date are based on the Group's marginal borrowing rate. These discount rates were determined with respect to the remaining terms of leases from the date of first-time application, namely 1 January 2019, and also to the geographical area:

Europe

• < 3 years: 1.00%
• 3 to 6 years: 1.50%
• 6 to 9 years: 2.00%
• > 9 years: 2.60%

2019 HALF-YEARLY FINANCIAL REPORT

9

01

CONSOLIDATED FINANCIAL STATEMENTS

North America

• 0 to 6 years: 3.90%
• > 6 years: 4.10%

1.2.2 Impacts of IFRS 16 and comparability of financial statements at opening

The Group leases its offices in most of the cities where it operates. The leases that come under the scope of IFRS 16 also apply to vehicles and certain computer equipment.

ASSETS	31 Dec. 2018	First-time	1 Jan. 2019
in thousands of euros	application of IFRS 16
Goodwill	360,847	-	360,847
Intangible assets	19,990	-	19,990
Tangible assets	91,160	-	91,160
Rights of Use (IFRS 16)	-	166,113	166,113
Non-current financial assets	40,340	-	40,340
Securities of affiliated companies and joint ventures	46,230	-	46,230
Other non-current assets	31,109	-	31,109
Deferred tax assets	34,092	-	34,092
Non-current assets	623,767	166,113	789,880
Inventories and work in progress	12,716	-	12,716
Trade receivables	261,908	-	261,908
Other receivables	86,112	-	86,112
Cash and cash equivalents	271,785	-	271,785
Current assets	632,520	-	632,520
TOTAL ASSETS	1,256,289	166,113	1,422,401
LIABILITIES	31 Dec. 2018	First-time	1 Jan. 2019
in thousands of euros	application of IFRS 16
Share capital	31,047	-	31,047
Share premium	656	-	656
Consolidation reserves	176,520	-	176,520
Group share of net profit	50,145	-	50,145
Group share of equity	258,368	-	258,368
Non-controlling interests	305	-	305
Shareholders' equity	258,673	-	258,673
Non-current provisions	26,689	-	26,689
Non-current financial liabilities	479,860	-	479,860
Non-current IFRS 16 lease liabilities	-	139,344	139,344
Deferred tax liabilities	13,667	-	13,667
Non-current liabilities	520,215	139,344	659,559
Current provisions	4,307	-	4,307
Current financial liabilities	71,155	-	71,155
Current IFRS 16 lease liabilities	-	26,769	26,769
Trade payables	118,055	-	118,055
State - income taxes	7,822	-	7,822
Tax and social security liabilities excluding income tax	212,806	-	212,806
Other liabilities	63,255	-	63,255
Current liabilities	477,401	26,769	504,170
TOTAL LIABILITIES	1,256,289	166,113	1,422,401

Rental expenses for leases that come under the scope of IFRS 16 are now replaced by depreciation expenses and financial expenses; other contracts are still recognised as external expenses as previously.

10	2019 HALF-YEARLY FINANCIAL REPORT

01

CONSOLIDATED FINANCIAL STATEMENTS

The expenses published in note 9.2 of the 2018 consolidated financial statements are reconciled with the new accounting treatment as follows:

in thousands of euros	31 Dec. 2018
Rental expenses 31 December 2018	(55,550)
Rental expenses adjusted under IFRS 16:	(32,682)
2018 lease payments
Rental expenses not adjusted under IFRS 16:	(9,370)
IT and software leases
Real estate rental expenses	(4,819)
Vehicles - commitment < 12 months	(4,721)
Real estate - commitment < 12 months	(2,586)
Others	(1,372)

The impact on the main income statement aggregates at 30 June 2019 is as follows:

in thousands of euros	Excluding IFRS 16	30 June 2019	Published
IFRS 16 impact
Operating profit	59,168	849	60,017
Financial income/(expense)	(6,519)	(1,657)	(8,176)
Consolidated net income	27,101	(808)	26,293

1.2.3 Other IFRS standards and interpretations

IFRIC 23 interpretation "Uncertainty over Income Tax Treatments", published by the IASB in June 2017, is applicable for financial years beginning on, or after, 1 January 2019.

This interpretation of IAS 12 "Income Taxes" clarifies the treatment of any situation of uncertainty regarding the acceptability of a tax treatment relating to income tax. The first-time application of this standard had no significant impact on the Group's financial statements.

The other standards applicable from 1 January 2019 had no significant impact on the Group's financial statements:

• Amendments to IFRS 9 "Prepayment Features with Negative Compensation"
• Amendments to IAS 28 "Long-Term Interests in Associates and Joint Ventures"
• Annual improvements to IFRS standards, 2015-2017 cycle
  Amendments to IFRS 3 "Business Combinations" & IFRS 11 "Joint Arrangements"
  Amendments to IAS 12 "Income Taxes"
  Amendments to IAS 23 "Borrowing Costs"
• Amendments to IAS 19 "Plan Amendment, Curtailment or Settlement"

The Group has elected not to early-adopt the standards, interpretations and amendments adopted by the European Union before 30 June 2019, for which early application was possible, but which become effective after that date. This relates primarily to the following standards:

• IFRS 17 "Insurance Contracts"
• IFRS 3 amendments "Change in Definition of a Business"
• IAS 1 and IAS 8 amendments "Change in Definition of 'Material' "

2019 HALF-YEARLY FINANCIAL REPORT

11

01

CONSOLIDATED FINANCIAL STATEMENTS

1.3 Management estimates

The preparation of consolidated financial statements under IFRS requires the use of estimates and assumptions that have an impact on the financial statements. These estimates and assumptions are based on information available when they are drawn up. Estimates may be revised in the event of change in the circumstances on which they were based. Actual results may therefore differ from the initial estimate.

The consolidated financial statements for the year were prepared taking into account the prevailing macroeconomic environment and the financial market parameters available as of the reporting date, in particular for the estimates below.

The use of estimates impacts the following information in particular:

• the assumptions used for asset impairment testing,
• the calculation of deferred tax assets,
• the assessment of earnings based on the state of progress of contracts,
• the measurement of the expense related to the allocation of free and performance shares,
• the measurement of provisions and pension commitments,
• the estimate of projects eligible for research tax credits.

1.4 Consolidation methods

The companies over which the Group directly or indirectly exercises exclusive control are consolidated by the full consolidation method.

Exclusive control is assessed in accordance with the criteria set out in IFRS 10 (power over the relevant activities, exposure to variable returns and ability to use power to affect the amount of returns). This is presumed to be the case in companies in which the Group directly or indirectly holds at least 50% of voting rights. Immediately exercisable potential voting rights, including those held by another entity, are taken into account in assessing control.

The analysis of joint arrangements pursuant to the criteria set out in IFRS 11 has resulted in the identification of joint ventures, but no joint activities. Joint ventures are consolidated by the equity method.

As at 30 June 2019, similarly to 30 June 2018, only one company was consolidated by the equity method (notes 1.6 and 2.5).

1.5 Significant accounting policies

1.5.1 Impairment of non-currentnon-financial assets

Impairment testing is performed at the close of the financial year, as described in Note 2.10 to the consolidated financial statements for the year ending 31 December 2018, which is included in the 2018 Registration Document. Impairment testing was only performed as of 30 June in cases where indications of impairment existed as of 31 December 2018 or were identified during the half-year to 30 June 2019.

The application of these policies did not result in the recognition of impairment in the six months under review.

1.5.2 Tax expense

In accordance with IAS 34, tax expense on earnings is recognised in the interim financial statements on the basis of the best estimate of the weighted average annual income tax rate expected for the full year. Deferred tax assets are recognised only when their recovery is deemed likely.

1.5.3 Subsidies

In accordance with IAS 20, subsidies (including research tax credits) are deducted from the expense to which they relate.

The amount recognised in regard to the six months to 30 June 2019 is calculated based on the estimated eligible expenses.

1.5.4 Leases

Leases are recognised on the balance sheet at the outset of the lease at the present value of future payments. These leases are recognised under "Lease liabilities (IFRS 16)" on the liabilities side, offset by "Rights-of-use IFRS 16" on the assets side.

12	2019 HALF-YEARLY FINANCIAL REPORT

01

CONSOLIDATED FINANCIAL STATEMENTS

They are amortised over the term of the lease, which is typically the fixed period of the lease unless there is a stated intention to renew or terminate. In the Income Statement, depreciation and amortisation expenses are recognised in the operating result and interest expenses in the financial income. The tax effect of this consolidation restatement is accounted for through the recognition of deferred taxes. Leases of low-value assets (less than USD 5,000) or short-term leases (less than 12 months) are recognised directly as expenses.

1.6 Scope of consolidation

Companies	%	%	Consolidation	Country in which the
control	interest	method (1)	company is based
AKKA TECHNOLOGIES SE	-	-	CE	Belgium
AEROCONSEIL SAS	100%	100%	FC	France
AKKA ENERGY SAS	100%	100%	FC	France
AKKA I&S SAS	100%	100%	FC	France
AKKA INFORMATIQUE ET SYSTEMES SAS	100%	100%	FC	France
AKKA INGENIERIE PRODUIT SAS	100%	100%	FC	France
AKKA LIFE SCIENCE SAS	100%	100%	FC	France
AKKA MANAGER SARL	100%	100%	FC	France
AKKA RESEARCH SAS	100%	100%	FC	France
AKKA SERVICES SAS	100%	100%	FC	France
EKIS FRANCE SAS	100%	100%	FC	France
EKIS SAS	100%	100%	FC	France
ELRON CONSULTING SARL	100%	100%	FC	France
ERDIMAT SAS	100%	100%	FC	France
AKKA HIGH TECH SAS	100%	100%	FC	France
MATIS HOLDING SAS	100%	100%	FC	France
MODELISATION ASSISTANCE TECHNIQUE INFORMATIQUE SCIENTIFIQUE (MATIS) SA	100%	100%	FC	France
OPERANTIS SAS	100%	100%	FC	France
OPERANTIS-SI SARL	100%	100%	FC	France
REAL FUSIO SAS	100%	100%	FC	France
SOLIANTIS SARL	100%	100%	FC	France
AKKA DEUTSCHLAND GmbH	100%	100%	FC	Germany
AKKA EMV GmbH	100%	100%	FC	Germany
AKKA GERMANY GmbH	100%	100%	FC	Germany
AKKA SERVICES GmbH	100%	100%	FC	Germany
ATP AUTOMOTIVE TESTING PAPENBURG GmbH	100%	100%	FC	Germany
ELEKTRONISCHE FAHRWERKSYSTEME GmbH	51%	51%	EM	Germany
AKKA MANAGEMENT SERVICES GmbH (formerly GIGATRONIK HOLDING GmbH)	100%	100%	FC	Germany
AKKA DNO GmbH (formerly GIGATRONIK KOLN GmbH)	100%	100%	FC	Germany
AKKA DSO GmbH (formerly GIGATRONIK MUNCHEN GmbH)	100%	100%	FC	Germany
AKKA DSW GmbH (formerly GIGATRONIK STUTTGART GmbH)	100%	100%	FC	Germany
AKKA Consulting GmbH (formerly MBTECH CONSULTING GmbH)	100%	100%	FC	Germany
AKKA EMC GmbH (formerly MBTECH EMC GmbH)	100%	100%	FC	Germany
AKKA GmbH & Co. KGaA (formerly MBTECH GROUP GmbH & Co. KGaA)	100%	100%	FC	Germany
AKKA Verwaltungs GmbH (formerly MBTECH VERWALTUNGS - GmbH)	100%	100%	FC	Germany
AKKA CONCEPT GmbH (formerly PROCEDA GmbH)	100%	100%	FC	Germany
SYSTEM DESIGN GmbH	100%	100%	FC	Germany

2019 HALF-YEARLY FINANCIAL REPORT

13

01

CONSOLIDATED FINANCIAL STATEMENTS

Companies	%	%	Consolidation	Country in which the
control	interest	method (1)	company is based
AKKA Austria GmbH (formerly GIGATRONIK Austria GmbH)	100%	100%	FC	Austria
AKKA BELGIUM SA	100%	100%	FC	Belgium
AKKA FINANCE SPRL	100%	100%	FC	Belgium
AKKA INTERNATIONAL SA	100%	100%	FC	Belgium
AKKA GROUPE AMERIQUE DU NORD INC	100%	100%	FC	Canada
AKKA TECHNOLOGIES BEIJING Ltd.	100%	100%	FC	China
ERLKONIG MANAGEMENT CONSULTING BEIJING Ltd.	100%	100%	FC	China
MB SIM TECHNOLOGY Co. Ltd.	100%	100%	FC	China
AKKA CONGO SA	70%	70%	FC	Congo
AKKA MIDDLE EAST DMCC	100%	100%	FC	Dubai
AKKA MIDDLE EAST LLC	100%	100%	FC	Qatar
AKKA TECHNOLOGIES SPAIN SL	100%	100%	FC	Spain
ALL ENERGY CORIALIS WEST AFRICA SL	51%	51%	FC	Spain
CORIALIS ANGOLA SL	100%	100%	FC	Spain
EDELWAY SPAIN SL	100%	100%	FC	Spain
AKKA DEVELOPMENT UK LTD	100%	100%	FC	Great Britain
AKKA RESOURCING LIMITED *	100%	100%	FC	Great Britain
MBTECH HUNGARY ENGINEERING AND CONSULTING LLC	100%	100%	FC	Hungary
BERTONE DIGITAL MOBILITY SRL	100%	100%	FC	Italy
AKKA ENERGY Srl	100%	100%	FC	Italy
AKKA ITALIA SRL	100%	100%	FC	Italy
CTP SYSTEM SRL	100%	100%	FC	Italy
AKKA JAPAN K.K	100%	100%	FC	Japan
AKKA DEVELOPMENT SARL	100%	100%	FC	Luxembourg
AKKA NETHERLANDS BV	100%	100%	FC	The Netherlands
AEROCONSEIL PACIFIC SAS	100%	100%	FC	French Polynesia
MBTECH BOHEMIA s.r.o.	100%	100%	FC	Czech Republic
AKKA ROMSERV SRL	100%	100%	FC	Romania
AKKA TECHNOLOGIES SINGAPORE LTD	100%	100%	FC	Singapore
AKKA SLOVAKIA s.r.o.	100%	100%	FC	Slovakia
AKKA SWITZERLAND SA	100%	100%	FC	Switzerland
EDELWAY AG	100%	100%	FC	Switzerland
THE AKKADEMY SWITZERLAND SA	100%	100%	FC	Switzerland
AKKA DIGITAL SWISS AG (formerly GIGATRONIK TECHNOLOGIES AG)	100%	100%	FC	Switzerland
LEORA HUMAN CAPITAL SA	100%	100%	FC	Switzerland
AKKA TECHNOLOGIES MUHENDISLIK VE DANISMANLIK Limited Sirketi LLC	100%	100%	FC	Turkey
MBTECH MUHENDISLIK VE DANISMANLIK Limited Sirketi LLC	100%	100%	FC	Turkey
AKKA DEV US INC	100%	100%	FC	USA
AKKA GROUP NORTH AMERICA Inc.	100%	100%	FC	USA
MBTECH NORTH AMERICA Inc.	100%	100%	FC	USA
MB-TECHNOLOGY NA LLC.	100%	100%	FC	USA
PDS TECH Inc.	100%	100%	FC	USA

(1) CE = Consolidating Entity; FC = Full Consolidation; EM = Equity Method

Changes in the scope of consolidation in the first half of 2019

There was no significant change in the scope of consolidation in the first half of 2019.

Changes in percentage interests

There was no significant change in percentage interests held in the first half of 2019.

14	2019 HALF-YEARLY FINANCIAL REPORT

02

CONSOLIDATED FINANCIAL STATEMENTS

2. NOTES TO THE INCOME STATEMENT

2.1 Segment information

Segment information is provided pursuant to IFRS 8. The information provided in the segment breakdown is based on the internal reporting used by the chief operating decision-maker (Group Executive Committee) to assess the performance of the various segments.

As of the end of June 2019, the Group had identified 4 segments within the meaning of IFRS 8 on segment reporting, representing geographic regions, namely France, Germany, North America and International (excluding Germany and North America).

With the exception of France, Germany and the United States, no country has reached the threshold of 10% in terms of revenue or profit cited in IFRS 8.

June 2019 - in thousands €	France	Germany	International	North America	Other	TOTAL
INCOME STATEMENT	330,823	255,393	152,771	152,435	(0)	891,422
External revenue
% of revenue	37.1%	28.7%	17.1%	17.1%	0.0%	100.0%
Inter-segment revenue	9,029	6,068	11,575	319	26,222	53,212
Revenue	339,852	261,461	164,346	152,753	26,222	944,634
Operating income and expenses	(305,930)	(235,705)	(135,787)	(146,875)	(7,108)	(831,404)
Operating profit	24,893	19,688	16,984	5,560	(7,108)	60,017
Free shares and stock options						(3,393)
Other non-current income and expenses						(11,522)
Cost of net financial debt						(7,978)
Other financial income and expenses						(198)
Tax expense						(10,633)
Net profit						26,293
June 2018 - in thousands €	France	Germany	International	North America	Other	TOTAL
INCOME STATEMENT	306,042	251,970	143,810	10,078	1	711,902
External revenue
% of revenue	43.0%	35.4%	20.2%	1.4%	0.0%	100.0%
Inter-segment revenue	10,092	3,665	7,755	1,172	20,037	42,720
Revenue	316,134	255,635	151,565	11,250	20,038	754,622
Operating income and expenses	(284,143)	(233,465)	(128,430)	(9,966)	(7,070)	(663,074)
Operating profit (3)	21,901	18,504	15,380	112	(7,069)	48,829
Free shares and stock options						(3,743)
Other non-current income and expenses						(7,997)
Cost of net financial debt						(8,135)
Other financial income and expenses						(1,289)
Tax expense						(7,088)
Net profit						20,577
June 2019 - in thousands €	France	Germany	International	North America	Other	TOTAL
REVENUE BY ACTIVITY	252,383	240,431	87,599	135,896	-	716,310
Mobility
Others	78,439	14,962	65,172	16,539	-	175,112
External revenue	330,823	255,393	152,771	152,435	-	891,422
June 2018 - in thousands €	France	Germany	International	North America	Other	TOTAL
REVENUE BY ACTIVITY	231,260	238,959	76,120	9,973	-	556,311
Mobility
Others	74,783	13,011	67,690	105	1	155,591
External revenue	306,043	251,970	143,810	10,078	1	711,902

2019 HALF-YEARLY FINANCIAL REPORT

15

02

CONSOLIDATED FINANCIAL STATEMENTS

June 2019 - in thousands €	France	Germany	International	North	Other	TOTAL
America
BALANCE SHEET	211,601	288,274	99,052	76,801	37,888	713,616
Segment assets (1)
Segment financial liabilities (2)	59,723	78,865	20,613	16,507	537,945	713,652

1. Goodwill, intangible assets and property, plant and equipment, IFRS 16 rights of use, other non-current assets accounted for by the equity method
2. Financial liabilities including IFRS 16 leases

December 2018 - in thousands of euros	France	Germany	International	North	Other	TOTAL
America
BALANCE SHEET	151,280	214,076	80,322	71,454	32,204	549,335
Segment assets (1)
Segment financial liabilities	259	4,927	2,659	18,476	524,694	551,015
(1) Goodwill, intangible assets and property, plant and equipment, other non-current assets accounted for by the equity method
2.2 External expenses

Amounts in thousands of euros	30 June 2019	30 June 2018
Sub-contracting	(72,781)	(73,497)
Other external expenses*	(101,594)	(112,186)
External expenses	(174,375)	(185,683)

* Including restatement of the IFRS 16 rental expense of €16,236 thousand in 2019.

2.3 Employees

2.3.1 Workforce of consolidated companies

	Workforce at end of period	Average workforce
	30 June 2019	30 June 2018	30 June 2019	30 June 2018
France	7,721	7,595	7,861	7,399
Germany	4,911	4,880	4,944	4,874
International	3,907	3,844	3,974	3,756
North America	3,991	214	3,935	198
Others	94	86	92	86
TOTAL	20,624	16,619	20,806	16,313
2.3.2 Personnel expenses
Amounts in thousands of euros			30 June 2019	30 June 2018
Wages and salaries			(502,827)	(358,832)
Social security contributions			(124,790)	(108,144)
Personnel expenses			(627,617)	(466,976)

Subsidies were deducted from personnel expenses in the amount of €11,239 thousand for the period ending 30 June 2019, compared with €15,917 thousand in the period ending 30 June 2018.

This lower amount is as a result of changes to the French tax credit for competitiveness and employment (CICE) reducing social security contributions in 2019.

16	2019 HALF-YEARLY FINANCIAL REPORT

02

CONSOLIDATED FINANCIAL STATEMENTS

2.4 Depreciation and provisions

Amounts in thousands of euros	30 June 2019	30 June 2018
Net depreciation, amortisation and impairment of assets	(11,629)	(10,202)
Depreciation, amortisation and impairment of rights of use - IFRS 16	(15,387)	-
Net impairment of current assets	(225)	(460)
Provisions for risks and expenses	1,594	762
Net depreciation and provisions	(25,647)	(9,900)

2.5 Investments in associates

Elektronische Fahrwerksysteme GmbH (EFS) is jointly owned by AKKA DSO GmbH (51%) and AEV GmbH (subsidiary of the Audi Group) (49%); it has been accounted for by the equity method at 51% since 1 January 2017.

Amounts in thousands of euros		EFS
Percentage interest in equity associates		51%
1 January 2019 *		46,230
Share of net income of equity associates		1,209
Dividends received from associates		-
30 June 2019		47,439
* of which goodwill allocated to associates
2.6 Other non-current income and expenses
	30 June 2019	30 June 2018
Acquisitions, integrations and restructuring	886	374
Transformation and strategic programmes	4,977	4,601
Launch of new activities	3,216	2,132
Others	2,445	890
Other non-current income and expenses	11,523 374	7,997

Other non-current income and expenses consist primarily of expenses intended to consolidate and accelerate the Group's profitable and sustainable development over the next few years, as defined in its strategic plan.

2.7 Financial income 2.7.1 Cost of net financial debt

Amounts in thousands of euros	30 June 2019	30 June 2018
Income from cash and cash equivalents	148	129
Interest expenses	(6,471)	(8,264)
Interest expenses - IFRS 16	(1,655)	-
Cost of gross financial debt	(8,126)	(8,264)
COST OF NET DEBT	(7,978)	(8,135)

2.7.2 Other financial income and expenses

Amounts in thousands of euros	30 June 2019	30 June 2018
Other financial income and expenses	(198)	(1,289)

2019 HALF-YEARLY FINANCIAL REPORT

17

02

CONSOLIDATED FINANCIAL STATEMENTS

2.8 Income tax

Amounts in thousands of euros	30 June 2019	30 June 2018
Current tax	(6,713)	(3,658)
CVAE (French business tax based on added value)	(3,920)	(3,430)
Total corporation tax	(10,633)	(7,088)

In accordance with IAS 34, the current tax expense for the period under review was recognised on the basis of the average effective rate expected over the full year in 2019.

18	2019 HALF-YEARLY FINANCIAL REPORT

03

CONSOLIDATED FINANCIAL STATEMENTS

3 NOTES TO THE BALANCE SHEET

3.1 Goodwill

Cash-generating unit	30 June 2019	Change in the scope	Translation	Other changes	31 Dec. 2018
of consolidation	adjustments
France	131,291	-	-	-	131,291
Germany	97,455	-	-	-	97,455
USA	70,516	-	431	-	70,085
Italy	32,011	-	-	-	32,011
Benelux	14,117	-	-	-	14,117
Spain	10,610	-	-	-	10,610
Switzerland	5,193	-	16	-	5,176
Romania	100	-	(2)	-	102
Amount of goodwill	361,293	-	446	-	360,847

The implementation of the procedures defined in Note 1.5.1 did not result in the recognition of any impairment in the financial statements for the six months to 30 June 2019, as was the case for the year ending 31 December 2018.

No significant acquisitions were made during the first half of 2019.

The amount of goodwill related to earn-out payments and associated holdbacks came to €3,327 thousand, offsetting a debt to the vendors recorded in the "Other liabilities" line of the balance sheet for the same amount.

3.2 Intangible assets and property, plant and equipment

Amounts in thousands of euros	Gross	Depreciation on	Total
intangible fixed assets	intangible fixed assets
1 January 2018	60,819	(43,451)	17,368
Changes in the scope of consolidation	1,450	(950)	500
Acquisitions	5,707	-	5,707
Transfers	(1,126)	1,091	(35)
Depreciation	-	(5,149)	(5,149)
Translation adjustments	(38)	29	(9)
Other changes	1,618	(11)	1,607
31 December 2018	68,430	(48,440)	19,990
Changes in the scope of consolidation	-	-	-
Acquisitions	3,217	-	3,217
Disposals	(49)	47	(2)
Depreciation and amortisation	-	(2,941)	(2,941)
Translation adjustments	26	(19)	6
Other changes	(262)	404	142
30 June 2019	71,361	(50,949)	20,412
Amounts in thousands of euros	Gross	Depreciation on	Total
intangible fixed assets	intangible fixed assets
1 January 2018	201,236	(118,309)	82,927
Changes in the scope of consolidation	11,737	(9,094)	2,643
Acquisitions	29,286	-	29,286
Transfers	(27,583)	22,060	(5,524)
Depreciation	-	(16,532)	(16,532)
Translation adjustments	(326)	174	(152)
Other changes	(1,637)	148	(1,489)
31 December 2018	212,713	(121,553)	91,160
Changes in the scope of consolidation	(18)	18	-
Acquisitions	11,656	-	11,656
Disposals	(1,619)	1,235	(384)
Depreciation and amortisation	-	(8,626)	(8,626)
Translation adjustments	255	(138)	117
Other changes	(235)	13	(222)
30 June 2019	222,752	(129,052)	93,701

2019 HALF-YEARLY FINANCIAL REPORT

19

03

CONSOLIDATED FINANCIAL STATEMENTS

3.3 Rights of use (IFRS 16)

Analysis of rights of use per category of underlying assets:

Amounts in thousands of euros	Real	Vehicle	Other	Total
estate	rights of	rights of
	rights of use	use	use
31 December 2018	-	-	-	-
First-time application of IFRS 16	154,858	10,646	608	166,113
Changes in the scope of consolidation	-	-	-	-
Acquisitions	3,193	1,895	-	5,088
Disposals	-	(1)	-	(1)
Depreciation and amortisation	(12,729)	(2,526)	(131)	(15,385)
Translation adjustments	(27)	1	(0)	(26)
Other changes	(91)	(24)	-	(115)
30 June 2019	145,204	9,992	477	155,674

3.4 Other non-current assets

This item mainly includes receivables in respect of R&D subsidies for the amount of €35,098 thousand (compared with €31,109 thousand as at 31 December 2018).

3.5 Trade receivables and related accounts

Amounts in thousands of euros	30 June 2019	31 Dec. 2018
Work in progress for customers	124,964	131,696
Unbilled work	186,518	139,100
Gross trade receivables	311,481	270,796
Provisions	(8,892)	(8,888)
Net trade receivables	302,589	261,908

Unmatured receivables assigned to the factor and derecognised totalled €251,818 thousand as at 30 June 2019 compared with €208,775 thousand as at 31 December 2018. They represent the total amount of unmatured receivables assigned to the factor and not yet settled by customers, and are recorded as a credit in the trade receivables account.

3.6 Other receivables

Other net receivables amounted to €94,563 thousand as at 30 June 2019 consisting primarily of Treasury claims in the amount of €46,568 thousand.

Other net receivables amounted to €86,112 thousand as at 31 December 2018, including Treasury claims in the amount of €56,055 thousand.

In 2019, as in 2018, following analysis ofthe maturity ofotherreceivables, the portion due in more than one yearhas been reclassified in "Other non-current assets" (see Note 3.4).

3.7 Cash and cash equivalents

This item breaks down as cash in the amount of €187,225 and cash equivalents in the net amount of €95 thousand.

Cash includes funds which were made available by the factor but not used in the amount of €65,859 thousand as at 30 June 2019 (compared with €91,924 thousand as at 31 December 2018).

20	2019 HALF-YEARLY FINANCIAL REPORT

03

CONSOLIDATED FINANCIAL STATEMENTS

3.8 Share capital and share premium

As at 30 June 2019, the share capital of AKKA Technologies comprised 20,291,990 shares with a par value of €1.53 each, or a total of €31,047 thousand, and the share premium stood at €656 thousand. These items varied as follows in the first half of 2019:

	Number of	Carrying	Amount	Share	Comment
	shares	value	of share capital	premium
31 December 2017	20,291,990	1.53	31,047	-
Increase in capital	-	1.53	-	656	Contribution premium
31 December 2018	20,291,990	1.53	31,047	656
Capital increase	-	1.53	-	-
30 June 2019	20,291,990	1.53	31,047	656

Potentially dilutive instruments:

As part of the performance share plan introduced by the Combined Shareholders' Meeting of 16 June 2016, and put in place by AKKA Technologies SE's Board of Directors in 2016 and 2017, 392,898 shares were transferred to 248 beneficiaries in April 2019. This volume corresponds to an allocation of 117% of the initial objectives, based on performance criteria (operational profitability and cash generation).

Moreover, on 20 March 2018, the Board of Directors approved the allocation of 2 tranches of 10,000 shares to former shareholders of recently acquired companies in order to streamline integration into the Group. This allocation is subject to the condition of continued presence within the Group until 31 December 2019 for the 2nd tranche.

On 6 December 2018, the Board of Directors also approved the allocation of 20,000 shares to an employee, to be allocated in 2022 subject to cumulative conditions of continued presence in the workforce and the achievement of performance criteria, with a cap set at 200%.

Issuer	AKKA Technologies	AKKA Technologies
Decision of the Board of Directors	20/03/2018	06/12/2018
Type of plan	Allocation of free shares	Allocation of performance shares
Maximum number of shares that can be allocated	10,000	40,000
Number of shares to be allocated in the event of objectives being fully reached	2,975	20,000
Estimated number of shares to be allocated	2,975	20,000
Means of settlement	Issuance of securities	Issuance of shares
End of the vesting period	31/12/2019	31/03/2022
Conditions for beneficiaries leaving the Group's service	loss	loss
Share price on allocation (EUR)	46.30	49.10
Shares lost as at 30/06/2019	-	-
Lock-up period	None	None

On 15 June 2017, the Shareholders' Meeting approved the principle of stock option plans in a decision confirmed by the Shareholders' Meeting held on 22 February 2018; as such, two plans are being drawn up as at 30 June 2019:

Date allocated by the Board	19/11/2018	Stock options
07/12/2018
Number of remaining options	20,000	6,000
Potential number of corresponding shares	20,000	6,000
First date it can be exercised	01/01/2022	01/01/2022
Last date it can be exercised	30/06/23	30/06/23
First possible disposal date	01/01/22	01/01/22
Strike price in euros (per option)	62.40	58.70

2019 HALF-YEARLY FINANCIAL REPORT

21

03

CONSOLIDATED FINANCIAL STATEMENTS

The company is not subject to any specific regulatory or contractual obligations in respect of its share capital. The Group has no specific management policy in respect of share capital. The choice between funding through debt or capital increase is made depending on the prospective transaction. Shareholders' equity monitored by the Group contains the same components as consolidated equity.

Dilutive instruments represented 0.24% of share capital as at 30 June 2019.

3.9 Current and non-current provisions

Amounts in thousands of euros	Current			Non-Current
Maturity	30 June 2019	31 Dec. 2018	30 June 2019	31 Dec. 2018
Provisions for litigations and risks	2,228	3,264	7,365	7,471
Provisions for pensions	-	-	19,409	17,268
Provisions for taxes	-	-	1,099	1,099
Provisions for other expenses	677	1,043	858	851
Total	2,905	4,307	28,731	26,689

Change in provisions

Amounts in thousands of euros	Litigations and risks	Pensions	Taxes	Other provisions	Total
1 January 2018	11,540	16,849	1,099	1,968	31,457
Changes in the scope of consolidation	-	-	-	-	-
Allowances	1,628	1,291	-	251	3,170
Reversals of used provisions	(2,275)	(167)	-	(313)	(2,755)
Reversals of unused provisions	(169)	(143)	-	(11)	(323)
Translation adjustments	(1)	-	-	(1)	(3)
Actuarial gains (losses)	-	(563)	-	-	(563)
Reclassifications and other	12	-	-	-	12
31 December 2018	10,735	17,268	1,099	1,894	30,996
Changes in the scope of consolidation	-	-	-	-	-
Allowances	543	713	-	337	1,593
Reversals of used provisions	(1,638)	(230)	-	(696)	(2,564)
Reversals of unused provisions	(50)	-	-	-	(50)
Translation adjustments	4	-	-	-	4
Actuarial gains (losses)	-	1,687	-	-	1,687
Reclassifications and other	-	(29)	-	-	(29)
30 June 2019	9,592	19,410	1,099	1,535	31,636

3.10 Financial liabilities

The financial liabilities shown below exclude the debt resulting from external growth described in 3.11.

Amounts in thousands of	Borrowings and	Leases	IFRS 16 lease liabilities	Total financial liabilities*
euros	other financial liabilities
Maturity	30 June 2019	31 Dec. 2018	30 June 2019	31 Dec. 2018	30 June 2019	31 Dec. 2018	30 June 2019	31 Dec. 2018
Current (less than one year)	82,833	70,299	646	856	28,769	-	112,248	71,155
1 to 5 years	336,553	343,493	1,478	1,490	76,070	-	414,101	344,983
More than 5 years	132,500	132,500	2,173	2,377	52,630	-	187,303	134,877
Total	551,886	546,292	4,297	4,723	157,469	-	713,652	551,015

*Including the IFRS 16 lease liability

The portion of financial liabilities due within one year appears on the balance sheet under "current financial liabilities". The portion due in more than a year appears under "non-current financial liabilities".

22	2019 HALF-YEARLY FINANCIAL REPORT

03

CONSOLIDATED FINANCIAL STATEMENTS

Change in financial liabilities between 31 December 2018 and 30 June 2019 breaks down as follows:

Amounts in thousands of euros	1 January	Cash variations		Translation	Non-cash variations	Other non-	30 June
Incr.	Decr.		Change in	Change of
	2019		adjustments	fair value	method	cash var.	2019
Loans from credit institutions	545,624	10,000	(6,449)	166	(208)	-	2,082	551,215
Restatement of leasing contracts	4,723	-	(426)	-	-	-	-	4,297
Bonds	-	-	-	-	-	-	-	-
Other borrowings	668	-	(19)	2	-	-	20	671
Financial liabilities	551,015	10,000	(6,894)	168	(208)	-	2,102	556,183
Cash equivalents	(243)	-	148	-	-	-	-	(95)
Cash	(271,542)	-	84,317	-	-	-	-	(187,225)
Cash and cash equivalents	(271,785)	-	84,465	-	-	-	-	(187,320)
Net debt excluding IFRS 16 lease liability	279,230	10,000	77,571	168	(208)	-	2,102	368,863
IFRS 16 lease liabilities	-	-	(13,848)	(22)	141	166,113	5,086	157,470
Net debt	279,230	10,000	63,723	146	(67)	166,113	7,188	526,333

Note that on 30 October 2014, the Group further restructured its medium-term financing by placing a Schuldscheindarlehen- type loan (placement subject to German law). The €140 million placement matures in five to seven years. It includes a fixed tranche and a variable tranche, fully hedged by a swap contract. At the end of December 2017, partial payments were made for all variable parts, i.e. €67.0 million for the 5-year tranche and €13.5 million for the 7-year tranche.

On 31 October 2017, the Group issued a further Schuldscheindarlehen-type loan for an amount of €450 million, comprising 5 fixed and variable tranches of 5-, 7- and 10-year maturities, with an average cost of financing slightly below 1.5%.

With regard to short-term financing:

• on 30 June 2016, AKKA Technologies signed a new five-year €200 million revolving credit facility, replacing the 2012 contract;
• AKKA Technologies also implemented a €300 million NEU CP (Negotiable European Commercial Paper) in the first quarter of 2017.

As at 30 June 2019, €25 million were drawn against this NEU CP facility.

Pledges and guarantees amounted to €0 as of 30 June 2019, compared with €110,002 as of 31 December 2018.

• In the context of acquisitions, no vendor guarantee nor any collateral clause covering assets and liabilities through sureties is in force as of 30 June 2019;
• With the application of IFRS 16, off-balance sheet commitments related to real estate lease guarantees are no longer required, since these commitments are included in liabilities on the balance sheet.

As of 30 June 2019, the covenants negotiated with the Group's banks were as follows:

Leverage Ratio: Consolidated Net Debt/Consolidated EBITDA < 3.5x as of 30 June and 31 December each year;

Gearing Ratio: Consolidated Net Debt/Equity < 1.5 x as at 30 June and 31 December each year.

These two covenants are defined according to the IFRS standards applicable at the date of signature of the bank contracts, therefore excluding the impact of IFRS 16. The Group was in compliance with both covenants as at 30 June 2019.

Hedging instruments

On 30 October 2014, the Group signed an interest rate hedging contract on the Schuldschein loan to protect itself against a possible increase in 6-month Euribor. The derivative financial instrument is a SWAP contract with the following characteristics:

SWAP at a fixed rate of 0.465% (matures on 30 October 2019) for an amount of €67.0 million;

SWAP at a fixed rate of 0.710% (matures on 30 October 2021) for an amount of €13.5 million;

2019 HALF-YEARLY FINANCIAL REPORT

23

03

CONSOLIDATED FINANCIAL STATEMENTS

This hedging instrument meets the definition of a cash flow hedge; the hedging qualification was maintained given that the variable rate tranches of the new Schuldschein loan have the same underlying characteristics and the same interest payment dates as the previous one, with higher notional amounts. The change in its fair value was recorded in the amount of €208 thousand in other comprehensive income as at 30 June 2019.

3.11 Other liabilities

Amounts in thousands of euros	30 June 2019	31 Dec. 2018
Other liabilities related to external growth	3,327	17,510
Deferred income	17,576	31,698
Dividends payable	14,026	-
Other items	12,410	14,047
Total other liabilities	47,338	63,255

24	2019 HALF-YEARLY FINANCIAL REPORT

04

CONSOLIDATED FINANCIAL STATEMENTS

4. NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS

4.1 Change in net working capital

Amounts in thousands of euros	30 June 2019	30 June 2018
Inventories	3,358	(1,934)
Trade receivables	(39,686)	(21,277)
Other receivables	(36,088)	(9,656)
Trade payables	(15,998)	12,453
Tax and social security liabilities	(17,697)	(20,609)
Other liabilities (excluding debt related to acquisitions of fixed assets)	4,019	716
Change in net working capital	(102,092)	(40,308)

4.2 Impact of changes in the scope of consolidation

The impact of changes in the scope of consolidation corresponds to earn-out and purchase price payments net of cash contributed by the acquired companies.

4.3 Dividends

Dividends in respect of 2018 due in July 2019 amounted to €14,026 thousand or €0.70 per share, compared with €13,768 thousand or €0.70 per share paid in 2018.

2019 HALF-YEARLY FINANCIAL REPORT

25

05

CONSOLIDATED FINANCIAL STATEMENTS

5. SUBSEQUENT EVENTS

On 1 August 2019, AKKA Technologies took out a new €300 million syndicated loan with 4 participating banks. This new syndicated loan matures in 5 years with two possible one-year extensions and will be used primarily to finance the Group's acquisitions.

26	2019 HALF-YEARLY FINANCIAL REPORT

06

CONSOLIDATED FINANCIAL STATEMENTS

6. OTHER INFORMATION

6.1 Financial instruments

As at 30 June 2019, there was no reclassification between the various categories of financial instruments.

6.2 Information on related parties

The following companies meet the definition of related parties within the meaning of IAS 24:

• Idéactive Events (event organisation);
• Saône Valley, Andromède Valley, Ralosa (property leasing);
• BMC Management & Investment, HR Management & Investment, Valvest Management (professional assistance and consulting services).

As transactions with these three companies are not considered material, they are not disclosed in these notes.

6.3 Information relating to risk management

In the course of their operations, companies within the Group are subject to audit by tax authorities and social security bodies. The Group is subject to regular audits of all of its accounting, tax (income tax, subsidies, research tax credits, VAT, etc.) and social security (social security contributions and taxes levied on wages) reporting obligations, for subsidiaries operating both in France and internationally.

Ongoing disputes with the tax administration relate chiefly to research tax credits ("CIR") and, in particular, to the manner in which expenses incurred by approved sub-contracting companies for the determination of their own Research Tax Credit are taken into account.

The Group has made provisions to cover all the ongoing checks as explained in note 9.3 of the notes to the 2018 consolidated financial statements.

The Group and its advisers believe that the changes in the various procedures that took place in the first half of 2019 do not call into question the risk analysis performed as of 31 December 2018.

2019 HALF-YEARLY FINANCIAL REPORT

27

B - HALF-YEARLY ACTIVITY REPORT

Significant events over the last six months

The first half of 2019 was marked by the following events:

1. Revenue and margins

The Group recorded revenue of €891.4 million during the first half of the year. Sales rose +25.2% in the first half of 2019, 5.9% of which was organic (+6.6% in Q1 and +5.1% in Q2) thanks to strong growth in the France Business Unit and AKKA North America.

• The France Business Unit recorded strong economic growth of 9.0% in the first half of the year, with revenue of €330.8 million. Demand is strong in all sectors of activity. Growth was sustained in particular by the numerous digital projects won in the automotive, aerospace and rail sectors and this should continue to be the case over the next few quarters. After having significantly improved its staff activity rate (excluding holidays) in H1 and reaching its optimum in May, the BU is once again stepping up its recruitment momentum to foster future growth. The operating margin rose to 7.5% in the first half of 2018 (7.2% in H1 2018). The increase in revenue per employee offset the inherent weakness of the staff activity rate in the first quarter. The rise in the staff activity rate since late May and the strong growth momentum bode well for margins in the second half of the year.
• The Germany Business Unit recorded first-half revenue of €255.4 million, with economic growth of 2.1%. This growth does not reflect the expected growth momentum. The seasonal impact is strong this year due to a low number of working days in H1, and activity has been duly slowed down with the establishment of the new organisation and the adoption of the AKKA one brand strategy. Improved productivity at the centres of excellence and an increased revenue per employee helped offset the negative seasonal impact. In total, the BU's operating margin increased by 40 basis points to reach 7.7% over the half-year. The BU should gradually, over the second half of the year, benefit from its close relations with the main German OEMs and from the expected acceleration in the digital sector.
• Pro forma growth in North America (including PDS Tech) accelerated in the first half to 26.1%. The BU recorded revenue of €152.4 million in the first half of the year. AKKA North America is enjoying strong demand from US and European customers in the United States. Strong growth with Boeing, Honeywell, United Technologies, Daimler and Porsche confirms the relevance of the Group's offer for its US and European customers. The BU's profitability is improving significantly in line with the Group's objectives. It stands at 3.6% for the first half of the year. This improvement is driven by strong organic growth, better renegotiation of certain contracts and the initial effects of the Group's transformation plan. It confirms the Group's objective of achieving an operating margin of 7% in 2020 and 10% in 2022.

•The Group's International activities recorded revenue of €152.8 million the first half of the year, reflecting organic growth of 5.8%. The major hubs that make up the International BU, Northern Europe, Southern Europe and Asia are experiencing strong growth, masked by the specific difficulties faced in Switzerland and in the Energy sector in Italy. With adjustments made for Switzerland and for the Energy business in Italy, international activities posted a 10% growth in revenue, in line with the BU's historic growth. The BU's operating margin continues to bounce back and stands at 11.1% in the first half-year, up from 10.7% in H1 2018 (excluding North America).

2. Operating profit

Operating profit increased by 22.9% to €60 million (€48.8 million in the first half of 2018). The operating profit fell by 20 basis points to 6.7% compared with 6.9% in H1 2018. Excluding PDS Tech, the operating margin from ordinary activities rose by 40 basis points to 7.3%.

3. Cost of net financial debt

The cost of net financial debt stood at €8.0 million as at 30 June 2019, stable compared with 30 June 2018. It includes, in particular, €5.6 million in loan interest (compared with €7.3 million in 2018), a reduction due to repayment of the €100 million bond at the end of June 2018. Interest charges of €1.7 million were recognised as a result of the new IFRS 16 standard.

28	2019 HALF-YEARLY FINANCIAL REPORT

B - HALF-YEARLY ACTIVITY REPORT

4. Net income

The Group's share of consolidated net income was up 40.8%. It amounted to €26.3 million in H1 2019 compared with €18.7 million in H1 2018. The Group's consolidated net profitability stands at 2.9% (2.6% in the first half of 2018).

Main transactions with related parties

See Note 6.2 to the interim condensed financial statements above.

Significant events since 30 June 2019

See Note 5 to the interim condensed financial statements above.

Outlook

2019: the strong momentum in the first half of 2019 affirms the Group's objectives for the 2019 financial year: organic growth above 6%, operating margin from ordinary activities of 8% and free cash flow greater than or equal to 5%.

CLEAR 2022 will enable the company to benefit from the growth offered by the digital revolution and ensure continued improvement in financial performance, reaching the following targets by 2022:

Revenue of €2.5 billion

Current operating profit of €250 million

€150 million in free cash flow

Risks and uncertainties in the second half

See Note 6.3 to the interim condensed financial statements above.

No new risks liable to have a significant impact on the second half of 2019 have been identified since the filing of the 2018 Registration Document.

2019 HALF-YEARLY FINANCIAL REPORT

29

C - STATEMENT BY THE PERSON RESPONSIBLE FOR THE HALF-YEARLY FINANCIAL REPORT

I the undersigned, Mauro RICCI, Chairman and Chief Executive Officer of the AKKA Technologies Group, declare that to the best of my knowledge:

• The consolidated financial statements for the six months to 30 June 2019 were prepared in accordance with IFRS and give a true and fair view of the financial position and consolidated results of the AKKA Technologies Group and its subsidiaries included in the consolidation;

•The management report for the year ending 30 June 2019 gives a true and fair view of the activities, results and position of the AKKA Technologies Group and its subsidiaries included in the consolidation, as well as a description of the main risks and uncertainties facing the AKKA Technologies Group.

Brussels, 4 September 2019

Mauro Ricci

Chairman and CEO

30	2019 HALF-YEARLY FINANCIAL REPORT

D - REPORT OF THE STATUTORY AUDITOR ON THE LIMITED REVIEW OF THE CONDENSED HALF-YEARLY CONSOLIDATED FINANCIAL STATEMENTS OF AKKA TECHNOLOGIES SE FOR THE SIX MONTHS TO 30 JUNE 2019

Introduction

We have reviewed the accompanying consolidated balance sheet of AKKA Technologies SE (the "Company") and its subsidiaries as of 30 June 2019, and the related consolidated statements of income, changes in equity and cash flows for the six- month period ended on that date together with the explanatory notes, commonly referred to as the "condensed half-yearly consolidated financial statements". These financial statements show a consolidated balance sheet total of €1,381,090 thousand and consolidated net income for the period of €26,293 thousand. The company's Board of Directors is responsible for the preparation and presentation of these condensed half-yearly consolidated financial statements in accordance with IAS 34 "Interim Financial Reporting" as adopted by the European Union. Our responsibility is to express a conclusion on these condensed half-yearly consolidated financial statements based on our limited review.

Scope of the limited review

We conducted our limited review in accordance with International Standard on Review Engagements 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A limited review of the interim financial information consists of conducting interviews, primarily with the staff of the company responsible for financial and accounting matters, and applying analytical and other review procedures. The scope of this work is substantially less than that of an audit conducted in accordance with International Standards on Auditing (ISA), and consequently does not provide us with the assurance that we have identified all material matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our limited review, we have not identified any matters causing us to believe that the accompanying condensed half-yearly consolidated financial statements for the six-month period ended 30 June 2019 have not been prepared in all material respects in accordance with IAS 34 "Interim Financial Reporting" as adopted by the European Union.

Brussels, 4 September 2019

Ernst & Young Réviseurs d'Entreprises SCCRL Statutory Auditor

represented by

Eric Van Hoof

Partner*

• Acting for and on behalf of an SPRL [public limited liability company] 20EVH0022

2019 HALF-YEARLY FINANCIAL REPORT

31

AKKA-TECHNOLOGIES.COM