2 Rafale were delivered to France in the 1^st half of 2018, compared to 3 Rafale to Egypt and 1 Rafale to France in the 1^st half of 2017.

Defense net sales for the 1^st first half of 2018 were EUR 522 million, compared to EUR 919 million for the 1^st first half of 2017 (IFRS 15 pro forma).

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The "book to bill" ratio (order intake/net sales) was 1.64 in the first half of 2018.

4.3       Backlog

The consolidated backlog as of June 30, 2018 was EUR 20 532 million, compared to EUR 19,460 million as of December 31, 2017 (IFRS 15 pro forma). The increase is mainly due to the entry into force of the 12 Rafale option of Qatar

The Falcon backlog stood at EUR 2,466 million, compared to EUR 2,457 million as of December 31, 2017 (IFRS 15 pro forma). In particular, it includes 55 Falcon with no more Falcon 5X (compared with 52 as of December 31, 2017, including Falcon 5X not canceled).

The French Defense backlog stood at EUR 2,982 million, compared to EUR 3,039 million as of December 31, 2017 (IFRS 15 pro forma). It includes in particular 29 Rafale (compared to 31 as of December 31, 2017).

The Defense Export backlog stood at EUR 15,084 million, compared to EUR 13,964 million as of December 31, 2017 (IFRS 15 pro forma). It includes, in particular, 10 Rafale Egypt, 36 Rafale Qatar and 36 Rafale India (compared to 10 Rafale Egypt, 24 Rafale Qatar and 36 Rafale India as of December 31, 2017).

4.4       Results

IFRS 15 impacts - Revenue Recognition

The financial statements for the first half of 2017 were restated in accordance with the application of IFRS 15, which sets out standards for revenue recognition.

The most material impact of applying this standard is the inclusion of a financing component when it is significant, to reflect a "cash sale price" for the service provided. The financing component exists when there is, for a given contract, a significant difference between the moment when cash is received and the moment when the revenue is recognized.

Future revenue and therefore the operating income, from the relevant contracts will be increased by this financing component, offset by a financial expense recognized along the duration of the contract.

The IFRS 15 impacts on adjusted net income for the 1^st half of 2017 are as follows:

Operating income

Adjusted operating income for the 1^st half of 2018 was EUR 111 million, compared to EUR 121 million during the 1^st half of 2017 (IFRS 15 pro forma).

The operating margin was 6.5%, compared to 5.9% for the 1^st half of 2017 (IFRS 15 pro forma). This increase is mainly explained by the improvement of the 1^st half hedging rate at 1,19 €/$ compared to 1,23 €/$.

Financial result

Adjusted financial income for the 1^st half of 2018 was EUR -38 million, compared to EUR -18 million in the 1^st half of 2017 (IFRS 15 pro forma) as a result of the financing component booked related to Rafale contracts.

Net income

Adjusted net income in the 1^st half of 2018 was EUR 186 million, compared to EUR 166 million in the 1^st first half of 2017. The contribution of Thales to the Group's net income was EUR 132 million, compared to EUR 95 million during the 1^st half of 2017 (IFRS 15 pro forma).

Adjusted net margin stood at 10.9% in the 1^st half of 2018, compared to 8.0% in the 1^st half of 2017 (IFRS 15 pro forma).

5.   Financial Structure

5.1       Available cash

The Group uses a specific indicator called "Available Cash" defined in appendix.

The Group's available cash stood at EUR 5,029 million as of June 30, 2018, compared to EUR 4,121 million as of December 31, 2017, up by EUR 908 million mainly due to Rafale Export down payments received partly balanced by the increase of the Rafale export inventories and work-in-progress.