paris air show - thalesgroup.comd = ca. 20% of revenues 300 inventions/yr, ... 50% of staff based...

June 2011 © Thales

ThalesParis Air Show

June 2011

June 2011 © Thales

2 /2 / Foreword

Global environment remains volatile

� Pressures on defence budgets in mature markets

� Confirmed upturn of commercial aeronautics

� Weakening US$ vs. €

� Unrest in Middle East

Ongoing transformation of Thales

� Continued focus on project execution

� Probasis on track

� Start of new, unified reference system

� Portfolio optimization

June 2011 © Thales

3 /3 / Leveraging our position on dual markets

Aeronautics DefenceSecurityGroundTransportation

Space

Civil/military dual markets

Shared technologies

One mission: Enable our clients to rapidly make the right decisionin critical and complex environments

June 2011 © Thales

4 /4 / Strong assets

A premier technological portfolio

� R&D = ca. 20% of revenues

� 300 inventions/yr, 11,000 patents

� An open innovation policy

Leading positions on civil and defence markets

� #1 ww: ATM, sonars, telecom satellite constellations

� #2 ww: rail traffic control, IFE, tactical comms

� #3 ww: avionics, surface radars

A strong and long standing international presence

� Going back over 30 years

� 50% of staff based outside France

� Emerging countries = 30% of FY10 revenues

Source: Thales estimates

June 2011 © Thales

5 /5 /

Improve our performance

Harmonisethe way we work

Develop more rigorous management

Foster team spirit

CompetitivenessGrowth

Develop our position on growing markets

Increase local value added

A consistent, customer-centric commercial

organisation

Grow internationally Strengthen our offering

Accelerate innovation, develop transverse

technological synergies

Streamlineour product portfolio

Keep the civil / military balance

The 3 pillars of our strategy

June 2011 © Thales

6 /6 / International environment: growth markets

Southeast AsiaGDP 2012: + 5,7%

Defence budget: +10%

India GDP 2012: +7,8%

Defence budget: +9%

Middle East GDP 2012 : +5%

Defence budget : +5%

ChinaGDP 2012 : +9,5%

Brazil GDP 2012: +4,1%

Defence budget: +11%

Strong growth in emerging countries (civil / defence)

Pressure on defence budgets in Europe and USA

MexicoGDP 2012: +4%

Defence budget: +4%

Sources: IMF (April 2011), Jane’s, Thales estimates

June 2011 © Thales

7 /7 /

Empower local management

Develop Key Account Management

Develop existing subsidiaries through the expansionof the product and services offering

Set up partnerships (JVs) with local companies

� Brazil

� UAE

� China

� India

Our approach: increase local value added

A strategy supported by the implemented organisation

June 2011 © Thales

8 /8 / Strengthen our core positions in Europe

Defence

� Strong and lasting budget pressures

� Solid assets

� A transverse presence in numerous programmes

� A good positioning on growing segments

� A product portfolio being renewed

Civil

� A positive market momentum

� Strong market positions

� Avionics: a long standing presence alongside Airbus

� Space: key role on institutional programmes, supplier to Europeansatellite operators

� Ground Transport: premier position with large rail operators (Germany, Spain, UK, Austria, Switzerland, etc.)

June 2011 © Thales

9 /9 /




Foster team spirit





organisation







June 2011 © Thales

10 /10 / Accelerate innovation

Transverse technologies

4 Key Technological Domains

� Hardware

� Software

� Processing

� Systems

Implementation ofshared innovation actions

June 2011 © Thales

11 /11 / Streamline our product portfolio

Accelerating / Rationalisingglobal product policies

� Ongoing work in progress across the company

� Developing common "building blocks"

� Increased importance of upstream studies

June 2011 © Thales

12 /12 / Keep the civil/military balance

An essential asset of Thales

� Cross-fertilisation of technologies

� From defence to civil

� From civil to defence

� Keeping competencies

Economic balance

� Complementary business cycles

Defence

& Security

57 %Aerospace

& Transport

43 %

June 2011 © Thales

13 /13 /



Develop more rigorousmanagement

Foster team spirit





organisation







June 2011 © Thales

14 /14 / Harmonise the way we work

"Chorus 2.0": a referential of common processes

� In line with international best practices

� Being rolled out at main subsidiaries in 2011

Implementation of transverse collaborative tools

� Project management

� Document management

Towards a more integrated, more homogeneousand more efficient company

June 2011 © Thales

15 /15 / Develop a more rigorous management

Strengthening control and accountability

� More stringent procedures

� Internal audit

Probasis

� Sustain efficiency

� Offsetting competitive pressure through recurring cost savings

� Offer affordable solutions to our governmental customers

� Bridge the profitability gap with European peers

� Through structural measures

� Progressive impact in line with implementation of our contracts

� 25% of actions already implemented in 2010, 70% by 2012

� Confirmation of a €1.3bn gross savings target by 2014

Probasis: enhance efficiency and profitability – on track

June 2011 © Thales

16 /16 / Foster team spirit

A growing need for increased cooperation across the company

� Increased demand for complex systems

� Pooling competences

� Exchanges of experiences

Towards a network-based company

June 2011 © Thales

17 /17 /




Foster team spirit





organisation






A value-creating strategy

An integrated Group, creating value for shareholders

June 2011 © Thales

Annexes

June 2011 © Thales

20 /20 / 2010 Key figures

(*) Before purchase price allocation impact (PPA)

in €m 2010 2009

reported organic

Order intake 13,081 13,927 -6% -9%

Order book at 31 December 25,418 24,731 +3% +0%

Revenues 13,125 12,881 +2% -1%

EBIT (*) (92) 151in % of revenues -0.7% 1.2%

Net income, Group share (*) (45) (128)

per share in € (0.23) (0.65)

Dividend per share in € 0.50 0.50

Net cash (net debt)at 31 December

191 (91)

change

Order intake, revenues and cash flow above expectationsProfitability impacted by difficult contracts

June 2011 © Thales

21 /21 / 2010 Main orders

Unit value > €100m:

� Iridium satellite constellation (US)

�CSO military observation satellite (France)

�Secured communication network (NATO)

�O3b satellite constellation (UK)

�Yamal satellite payloads (Russia)

�Göktürk satellite (Turkey)

� IFE systems (Qatar)

�Watchkeeper UAV support (UK)

Several orders > €100m unit valueGrowth of the order base below €100m unit value

€11,932m €11,886m

€10,414m€10,848m

€1,092m

€2,412m

€3,513m €2,233m

2007 (restated) 2008 2009 2010

Unit value < €100m Unit v alue > €100m

2007

(restated)2008 2009 2010

1.04 1.13 1.08 1.00

Book-to-bill rat io

June 2011 © Thales

22 /22 / 2010: Key figures by sector

in €mDefence &

Security

Aerospace &

TransportOther Total

Order intake 6,173 6,845 63 13,081

Order book at 31 December 14,310 11,022 86 25,418

Revenues 7,515 5,539 71 13,125

EBIT(*) 153 (221) (24) (92)in % of revenues 2.0% -4.0% -0.7%


Order intake: Defence & Security lower but with a sound order book, Aerospace & Transport driven by Space

EBIT: impact of provisions on complex programmes (A400M, Meltem, ticketing, avionics and Lorads III)

June 2011 © Thales

23 /23 / 2010 Net Result


in €m 2010 2009

EBIT (*) (92) 151

Impairment of non-current operating assets (10) (260)

Net capital gains (losses) and others (22) (1)

(124) (110)Cost of net financial debt (57) (66)

Other financial results (15) (45)

Other components of pension charges (105) (105)

Income tax (*) 193 142

Equity in unconsolidated affiliates (*) 63 56

Net income (*) (45) (128)o/w minority interests 0 (0)

Net income, Group share (*) (45) (128)

Income of operating activities (*)

June 2011 © Thales

24 /24 / 2010 Cash flow – Net debt

A strong cash generation (2008-2010: €1.4bn)

Free operating cash flow (in €m) (*)

377

800

271

0

250

500

750

2008 2009 2010

Net cash position (in €m)

-91

191

-456

31/12/08 31/12/09 31/12/10

(*) FOCF = Operating cash flow plus changes in working capital requirement (WCR) and reserves for contingencies, less payment of pension benefits (excluding deficit payments on pensions in the UK), less tax, less net operating investments

June 2011 © Thales

25 /25 / Q1 11 key figures

in €m Q1 2011 Q1 2010

reported organic

Order intake 1 943 2 366 -18% -19%

Revenues 2 519 2 479 +2% +0%

Book-to bill ratio 0,77 0,95

change

No large orders, growth of orders of less than €10m

Slightly increasing revenues

June 2011 © Thales

26 /26 / Details of reporting structure

Aerospace/Space

Space

Avionics (commercial and military)In Flight EntertainmentElectronic warfareMission airborne systems

Defence

Land systemsCommunications and C4I systems

Naval systems

Air defenceMissile systemsATM

Security

Rail signallingSupervision & communication for railRevenue collection ("Ticketing")IT securityProtection systemsCritical information systemsTraining & SimulationTWT & Imaging

Defence & Security

Communications and C4I systemsIT securityProtection systemsCritical information systems

Naval systemsMission airborne systemsElectronic warfare

Air defenceATM

Land systemsMissile systems

Aerospace & Transport

Space

Avionics (commercial and military)In Flight EntertainmentTraining & SimulationTWT & Imaging

Rail signallingSupervision & communication for railRevenue Collection ("Ticketing")

Reporting structure since 2010*

* This simplified presentation does not necessarily reflect internal business lines

FY2009 reporting structure*

Defence &

Security C4I

Systems

Defence Mission

Systems

Air Operations

Land Defence

Space

Avionics

Transportation

Systems

Space

Aerospace

Land & Joint

Systems

Naval

Air Systems

Security

paris air show - thalesgroup.comd = ca. 20% of revenues 300 inventions/yr, ... 50% of staff based...

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