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Interne

SNCF.COM

31 December 2021

SNCF GROUP

ANNUAL

FINANCIAL

REPORT

Interne

SNCF GROUP BOARD OF DIRECTORS' MEETING OF 24 FEBRUARY 2022 S - EDITORIAL FROM

THE SNCF GROUP CHAIRMAN

AND CEO

- STATEMENT OF THE PERSONS

RESPONSIBLE FOR THE SNCF

GROUP ANNUAL FINANCIAL

REPORT

Interne

EDITORIAL

JEAN-PIERRE FARANDOU

SNCF GROUP CHAIRMAN AND CEO

" 2021 saw a sharp rebound from 2020, particularly in the second half, with passenger travel bouncing back over the summer and again at the end of the year. Our 2021 results put us on track to meet our financial commitment to the French State, our sole shareholder, to reach positive free cash flow by 2022.
We did just that in the second half of 2021, thanks to our highly adaptable teams, proactive management of our businesses, and continued structural cost-cutting to bring free cash flow back into the black. This rigorous management and support from the French State enabled us to push ahead with projects essential to the rail system's overall performance: adapting transport plans, improving service fundamentals (safety, reliability and passenger information¬), and carrying out works to regenerate and upgrade the rail network and infrastructure. These results also show that our diversification strategy was the right choice. GEODIS reported record revenues, driven by robust growth worldwide in freight transport and e-commerce. Growth at KEOLIS strengthened SNCF Group's global leadership in integrated solutions for sustainable mobility. Fret SNCF broke even - a very encouraging sign for the future of rail freight in Europe. And in 2021, we saw the first concrete effects of opening the passenger market up to competition. SNCF RÉSEAU and SNCF GARES & CONNEXIONS are now working with new players in a spirit of fair and impartial treatment, and SNCF VOYAGEURS has made its products and services even more competitive. SNCF Group is present throughout France and in 120 countries around the world, and we've adopted an ambitious CSR roadmap for lasting gains in our overall performance. We must press ahead in transforming our business and innovating to make SNCF Group the world leader in sustainable mobility. I would like to extend my warmest thanks to all SNCF Group teams in France and worldwide. I salute their outstanding engagement throughout the pandemic »

Interne

LA PLAINE SAINT-DENIS, 24 FEBRUARY 2022

We attest that, to the best of our knowledge, the consolidated financial statements have been prepared in accordance

with the applicable accounting principles and give a true and fair view of the assets and liabilities and the financial

position of the issuer as at 31 December 2021 and of the results of its operations for the year then ended, and that the

accompanying management report fairly presents the changes in operations, results and financial position of the issuer

and a description of its main risks and uncertainties.

JEAN-PIERRE FARANDOU

SNCF GROUP CHAIRMAN AND CEO

LAURENT TRÉVISANI

DEPUTY CHIEF EXECUTIVE OFFICER

FINANCE STRATEGY

STATEMENT OF THE

PERSONS RESPONSIBLE FOR

THE SNCF GROUP ANNUAL

FINANCIAL REPORT

Interne

SNCF GROUP BOARD OF DIRECTORS' MEETING OF 24 FEBRUARY 2022 S

SNCF GROUP

01 - MANAGEMENT REPORT PAGE 001

02 - REPORT ON CORPORATE GOVERNANCE PAGE 145

03 - SNCF GROUP ANNUAL CONSOLIDATED

FINANCIAL STATEMENTS

PAGE 156

04 - STATUTORY AUDITORS' REPORT ON THE

CONSOLIDATED FINANCIAL STATEMENTS

PAGE 241

SNCF GROUP - FINANCIAL REPORT 31 DECEMBER 2021

1

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THE SNCF GROUP IN 2021 3

1. SNCF GROUP PROFILE 3

2. MAJOR ACHIEVEMENTS BY ACTIVITIES IN 2021 11

3. OTHER MAJOR EVENTS OF 2021 13

4. SNCF GROUP KEY FIGURES 14

5. SUBSEQUENT EVENTS 15

GROUP ACTIVITIES AND FINANCIAL RESULTS 16

1. ANALYSIS OF GROUP RESULTS 16

2. ACTIVITY RESULTS 19

3. INVESTMENTS AND NET DEBT 29

4. ACQUISITIONS OF EQUITY INVESTMENTS 30

5. FINANCIAL RELATIONS WITH THE STATE AND

LOCAL AUTHORITIES 30

6. EMPLOYEE MATTERS 31

RISK MANAGEMENT AND CONTROL SYSTEMS 32

1. SNCF GROUP RISK MANAGEMENT 32

2. INTERNAL CONTROL 36

3. THE GROUP INTERNAL AUDIT DEPARTMENT 37

4. INSURANCE 37

5. INSTITUTIONAL CONTROLS 37

NON-FINANCIAL PERFORMANCE STATEMENT 39

1. INTRODUCTION 39

2. CSR GOVERNANCE 42

3. MATERIALITY OF CSR ISSUES 52

4. DEVELOP THE SHARE OF RAIL AND SUSTAINABLE

MOBILITY 60

5. REDUCE THE ENVIRONMENTAL FOOTPRINT OF

OUR ACTIVITIES 72

6. IMPROVE THE ADAPTATION AND RESILIENCE OF

ACTIVITIES TO CLIMATE CHANGE 85

7. ACT FOR SOCIAL COHESION AND THE

ECOLOGICAL AND SOLIDARITY ECONOMY IN THE

REGIONS 87

8. MAKE EMPLOYEES THE MAIN ACTORS AND

BENEFICIARIES OF ECOLOGICAL AND SOCIAL

TRANSITION 94

9. REPORTING FRAMEWORK 103

SNCF GROUP VIGILANCE PLAN 123

1. PREAMBLE 123

2. CONSULTATION WITH STAKEHOLDERS 125

3. MAPPING OF RISKS RELATED TO THE DUTY OF

CARE 126

4. HUMAN RIGHTS AND FUNDAMENTAL FREEDOMS 127

5. HEALTH AND SAFETY OF INDIVIDUALS 130

6. ENVIRONMENT 134

7. SUPPLIERS 137

8. MONITORING OF THE MEASURES IMPLEMENTED

AND EVALUATION OF THEIR EFFECTIVENESS 140

9. WHISTLEBLOWING MECHANISM 141

INTERNAL CONTROL RELATING TO THE

PREPARATION AND PROCESSING OF

FINANCIAL AND ACCOUNTING INFORMATION 142

1. DEFINITION, OBJECTIVES AND SCOPE 142

2. STEERING PROCESS FOR THE ACCOUNTING AND

FINANCIAL ORGANISATION 142

3. REPORTING OF FINANCIAL AND ACCOUNTING

INFORMATION 144

SNCF GROUP - FINANCIAL REPORT 31 DECEMBER 2021 THE SNCF GROUP IN 2021 03 3 01 - SNCF GROUP MANAGEMENT REPORT

THE SNCF GROUP IN

2021

1. SNCF GROUP PROFILE

1.1 PURPOSE

Together we can rise to the challenge of ecological transition if, at the same time, we make the necessary economic and social transitions. In this context, the role of businesses is changing and their responsibilities are being extended to all impacts of their activities on society, regions and the environment. This major change in how the economy is perceived in society is reflected and promoted in the PACTE Law (Action Plan for Business Growth and Transformation), which enables businesses to adopt a Purpose, record it in their Articles of Association and thus give long-term commitments to their main stakeholders. Fully aware of this major development in the role and responsibilities of businesses in society, the SNCF Group created its "Tous SNCF" strategic project based on the belief that only global performance is sustainable. This means making CSR central to its strategy and opening up fully to the company's stakeholders and component entities. The work on the corporate project was completed with the adoption on 16 December 2021 by the Board of Directors of a new purpose for the Group as a whole, marking a new phase in the governance and management of its activities. The SNCF Group's new purpose "The role of the SNCF Group is to contribute to the vitality of society and its regions. We offer transport services that are vital to economic growth and social cohesion, vital to the development of regions and the daily well-being of their inhabitants and vital to ensuring the ecological transition. The public service role that SNCF adopted upon its creation in 1938 carries on to this day in the commitment of the company's employees to serving the common good. While guaranteeing safety, we design and implement for our customers, with professionalism and a sense of togetherness, innovative mobility and logistics solutions for the 21st century that are key to developing low-carbon transport. Our aim is to optimise the cost and overall impact of transport for customers, taxpayers and citizens based on the performance and integration of all our business lines in the rail industry. Our infrastructures and services, which will stand the test of time, represent shared resources used to overcome social, ecological and economic challenges, and therefore act for a changing, united and sustainable society." THE SNCF GROUP IN 2021 SNCF GROUP - FINANCIAL REPORT 31 DECEMBER 2021 03

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SNCF GROUP - FINANCIAL REPORT 31 DECEMBER 2021 THE SNCF GROUP IN 2021 03 5 01 - SNCF GROUP MANAGEMENT REPORT THE SNCF GROUP IN 2021 SNCF GROUP - FINANCIAL REPORT 31 DECEMBER 2021 03

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SNCF GROUP - FINANCIAL REPORT 31 DECEMBER 2021 THE SNCF GROUP IN 2021 03 7 01 - SNCF GROUP MANAGEMENT REPORT THE SNCF GROUP IN 2021 SNCF GROUP - FINANCIAL REPORT 31 DECEMBER 2021 03

Management report

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01 - SNCF

GROUP

MANAGEMENT

REPORT

1.2 AN AMBITION: BE THE WORLD CHAMPION OF SUSTAINABLE MOBILITY BY 2030 IN DRAWING ON 4 CORE STRENGTHS

In the medium and long-term, the crisis will not undermine the fundamentals of the mobility market which is set to expand. SNCF supports this approach and in 2020 adopted its corporate project " Tous SNCF ", which has set a clear goal: become a world-class champion of sustainable mobility for passengers and freight by 2030.
To achieve our goal, the Group is committed to its four customer-centric thrusts: people, ecological transition, the regions and digital innovation.

1.2.1 People

SNCF wishes to put people at the centre of its operations and focus to become one of the most attractive Groups in

France. The company's ambitious transformations

(particularly the opening up of the domestic passenger rail market) requires it to strengthen social dialogue and support its changes while attracting and retaining employees. The people aspect is also reflected in the solidarity within the Group in terms of jobs. As a labour-intensive company, its employees' skills are the Group's main asset. One of SNCF's strengths therefore lies in the ability to change jobs, change activities and develop its own expertise by maintaining the links between each company and activity. These issues underline the need for strategic workforce planning in all regions across the entire Group and the development of mobilities between entities. This should ensure long-term and fulfilling positions for each employee within the company.

1.2.2 Ecological transition

SNCF is proactive and exemplary in its environmental policy, and considers ecological transition as: - an imperative, which must be met at all levels of the company; - an opportunity: as a low-carbon means of transport, rail is an adapted response in the fight against climate change, which sets itself apart from other competitors. SNCF has adopted a plan to extensively reduce its carbon footprint: -30% in 2030 in its rail activities and -50% in real estate. It focuses on all levers: decarbonisation of traction energy, business actions, purchasing policy, etc.

1.2.3 Regions

SNCF wishes to expand its coverage in the regions and become a leader in sustainable mobility. Today, the regions are hubs of creativity, innovation and economic, industrial, non-profit and social initiatives. This regional vitality is an asset to which the Group contributes through its diversified offer of minor historical routes, mass transit and high-speed lines. Through its ability to cover the whole of France, the central positioning of its stations and its local mobility solutions, SNCF thus remains a key player contributing to the economic, environmental, social and cultural development of the regions.

1.2.4 Innovation and digital technology

Innovation, and in particular digital technology, are at the heart of SNCF's customer services, production processes and business lines to ensure the Group's competitiveness in the face of future challenges. SNCF is seeking to become one of the digital leaders in Europe. This is reflected in: - the Group's positioning in MaaS (mobility as a service) to meet its customers' need for an individualised, efficient and integrated end-to-end offering. Based on current technologies, SNCF has undeniable assets to reach this target that is coveted by numerous players. - the increase in the digitalisation of track slot management for greater robustness and flexibility while maintaining complete neutrality; - increased data enhancement in all areas, particularly asset management and maintenance (real estate, rolling stock, etc.), where this enhancement contributes to developing predictive models to ensure maintenance before breakdowns or emergencies.

1.3 AN AMBITIOUS STRATEGIC PLAN ADOPTED

BY THE BOARD OF DIRECTORS

1.3.1 The impact of the crisis on the Group

Since March 2020, the Group and all rail activities have been impacted by the health crisis relating to the pandemic. It has mainly affected the domestic and international long- distance passenger rail transport of TGV - Intercités. However, all freight transport and logistics activities have demonstrated strong business momentum. Regulated transport (Keolis, TER and Transilien) suffered limited impacts by complying with contractual clauses to share the risks with the organising authorities. In 2021, the crisis had an impact of -€4.1 billion on revenue, including more than 80% for TGV activity (including subsidiaries), and -€3.7 billion on gross profit, including 80% for TGV activity. Cash flow totalled -€0.7 billion, including the recovery plan, and net debt amounted to €36.3 billion (before taking into account the 2nd phase of the State's debt assumption plan for €10 billion as at 1 January 2022).

1.3.2 A response commensurate with the gravity of

the situation Given the scale of the crisis, substantial measures have been put in place to overcome financial constraints, while continuing to fulfil the Group's public utility mission.

To absorb some of the losses, the Group set up a

performance and savings plan to boost available cash by €1.9 billion in 2021 by activating all possible levers (control and reduction of external expenses, investments, etc.). In particular, cash management has been a constant area of focus. In addition to this ambitious savings plan, the Ermewa subsidiary, non-strategic asset, was sold and a total of €1.6 billion was paid out by the French State under the rail recovery plan in 2021 (cf. infra); the remainder will be paid in 2022 and 2023. These measures have paved the way for the Group to meet its financial commitments undertaken as part of the

2018 rail reform. The objectives of a balanced free cash

flow as of 2022, a "net debt / EBITDA" ratio lower than or equal to 6.0x in 2023 and a "FFO / net debt" ratio greater than or equal to 10% have been confirmed.

1.3.3 Rail, a recovery plan priority

Considering the extent of the COVID crisis impact on rail transport, state financial aid proved necessary under the government economic recovery plan. For the rail sector, this resulted in 4 government priorities: rail network priority, rail freight recovery, combating regional inequalities and a return to a healthy and long- 03 9 01 - SNCF GROUP MANAGEMENT REPORT lasting financial equilibrium. French rail therefore benefited from: - A €4.7 billion recovery plan with two components: • an SNCF recapitalisation of €4.05 billion to maintain network development and investment capacities, paid out to SNCF Réseau through the support fund for 2021-

2023. In 2021, SNCF Réseau received €1.6 billion from

the recovery plan; • budgetary credit of €650 million earmarked for the renewal of the rail freight network, minor historical regional routes and the resumption of two night train lines. - In addition, a specific recovery plan for the rail sector of around €170 million per year that partly benefited SNCF.

1.3.4 A bolstered strategy adopted by the Group in

July 2021 faced with the crisis

This major crisis has heightened interest in rail transport in France and Europe considering the ecological pressure and opportunities: - it has boosted growth in the demand for medium- and long-term passenger public transport; - it has also revealed the strategic nature in France and Europe of the freight transport and logistics sector, which is steadily growing in a competitive market. This reflects the desire of industrial and economic players to boost the resilience of logistics chains.

Faced with this crisis, the Group confirmed the

orientations of the strategic plan approved by the Board of

Directors in July 2021:

- Reassertion of the strategic positioning: • Be a champion of sustainable mobility in 2030;

• With a focus on the core rail business; • By relying on two strategic assets, Keolis and Geodis,

which are the Group's growth engines. The crisis revealed the importance of this type of asset which help diversify risks and opportunities due to the complementary nature of their markets, customers, geographical exposure and sensitivity to economic cycles. - Retention of the objective to remain the leading and majority operator with regard to the opening of domestic passenger rail activities to competition. To achieve this, the Group must focus on filling the gap in competitiveness, which separates the historical operator from new entrants and which necessarily implies an ongoing "transformation" of the former UPG; - Confirmation of the importance of the thrusts, mainly People and Digital for the future transformation, in particularly from a social perspective; - Recap of the Group's assets and opportunities illustrated by our strong regional presence and greater environmental focus in a growing mobility market. The Group has therefore rolled out an ambitious strategy that is fully in line with these orientations and takes into account the most recent COVID impacts from a strategic, social and financial perspective.

The Group has even gone beyond these commitments

with the aim of boosting profitability and returning to a balanced financial structure with long-term debt reduction.

1.4 A RENEWED AND STABILISED

ORGANISATION AND GOVERNANCE

The 2018 rail reform confirmed the public nature of SNCF, which is deeply rooted in the French rail system where it has a systemic role.

1.4.1 A unified group of public limited companies

To address its challenges, SNCF is made up of a parent company and SNCF Réseau, SNCF Gares & Connexions,quotesdbs_dbs14.pdfusesText_20

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