thales_2011 annual results_slide show v3
TRANSCRIPT
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2011 Full Year ResultsLuc Vigneron, Chairman & CEO6 March 2012
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2011 highlights
This presentation may contain forward-looking statements. Such forward-looking statements are trends or objectives, as the case maybe, and shall not be construed as constituting forecasts regarding the Companys results or any other performance indicator. Thesestatements are by nature subject to risks and uncertainties as described in the Companys registration document ("Document derfrence") filed with Autorit des Marchs Financiers. These statements do not therefore reflect future performance of the Company,which may be materially different.
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3 /
3 /
271m
379m
2010 2011-0.7%
5.7%
2010 2011
7,515 7,253
5,539 5,682
1 2
Aerospace & Transport
Defence & Security
10,072 8,853
3,0094,361
2010 2011
Europe & N Am Emerging mkts
2011: objectives met in a difficult environment
Increased order intake
EBIT (**) upturn Improved Free Operating Cash Flow
Resilient revenues
(*) Total including "other and unallocated" revenues
(**) EBIT margin after restructuring and before impact of the purchase price allocation ("PPA")
Total: 13,214mTotal: 13,081m Total: 13,028m(*)Total: 13,125m(*)
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6,666m 6,713m
4,182m3,440m
2,233m3,061m
2010 2011
Unit v alue > 100m10m < Unit v alue < 100mUnit v alue < 10m
Book-to-bill 2011 = 1.01
Selected orders over 100m
Mirage 2000 upgrade (India)
Secure communications network for the futureheadquarters of the French Ministry of Defence(France)
Ecomouv heavy goods vehicle eco-tax collectionand control system (France)
In-flight entertainment (Qatar)
Maintenance in operational condition for the Rafaleaircraft (France)
Galileo (ESA)
8x8 vehicles (Malaysia)
Other orders
London Underground (UK), Main lines (Poland),Sao Paolo urban rail (Brazil)
Mistral-class force projection and command vessel(Russia)
Bushmaster (Australia)
Air traffic control "4-flight" (France)
Munitions (USA)
Increase in orders driven by civil avionics and emerging markets
+ 1%
Total: 13,214mTotal: 13,081m
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5 /5 / Difficult programs: back under control
A400MFlight Management System (FMS)
Global agreement signed with Airbuson technical, operational andcommercial issues July 2011
MeltemMaritime patrol aircraft Turkey Amendment agreement signed withTurkish MoD March 2011
TicketingDenmark
Amendment agreement signed withRejsekort December 2010
Avionics developmentsMilestones met, in line with 2010 revisedschedule and cost estimates
Lorads III
Air traffic management Singapore
Progressing in line with 2010 revised
schedule and cost estimates
No new overruns on these contracts in 2011
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6 /6 / Probasis: delivering results
Non-quality costs
lower than 2008 level
Supply chain
60% of the actions implemented
SG&A
Decreasing vs. 2009excluding roll-out costs related to IT/IS and real estate
2011: the objective of 50% of actions implemented achieved
2012: two thirds of actions implemented
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Financial results
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9 /9 / Key figures
Strong upturn of the results
(*) Excluding the impact of the consolidation under the proportionate method of DCNS at 35%. Including this impact, at the end of 2011, the order bookamounted to 30,697m and the net cash to 906m.
(**) Before impact of purchase price allocation (PPA). Including this impact, the EBIT amounted to 679m and the Net result, Group share, to 512m
(***) Subject to the Annual General Meeting approval on 15 May 2012
in m 2011 2010total organic
Order intake 13,214 13,081 +1% +1%
Order book at 31 December (*) 25,841 25,418+2% +1%
Revenues 13,028 13,125 -1% -0%
EBIT (**) 749 (92)
in % of revenues 5.7% -0.7%
Net income, Group share (**) 566 (45)
per share in 2.88 (0.23)
Net cash at 31 December 192 191
Dividend (per share in ) (***) 0.78 0.50
change
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10 /10 / EBIT
in m 2011 2010total organic
Order intake 13,214 13,081 +1% +1%
Revenues 13,028 13,125 -1% -0%
Gross margin 2,961 2,096 +41% +43%
in % of revenues 22.7% 16.0%
Indirect costs (2,052) (2,058) -0%in % of revenues 15.7% 15.7%
o/w R&D expenses (619) (612) +1%in % of revenues 4.8% 4.7%
o/w M&S expenses (889) (916) -3%in % of revenues 6.8% 7.0%
o/w G&A expenses (543) (530) +3%
in % of revenues 4.2% 4.0%
Restructuring costs (161) (130) +23%
in % of revenues 1.2% 1.0%
EBIT (*) 749 (92)
in % of revenues 5.7% -0.7%
change
(*) After restructuring and before impact of purchase price allocation (PPA).
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-33-16
50
98
721
-9
749
-3060
-92
2010 EBIT (* ) Scope & FX 2010 negativ e
cost v ariances
on complex
projects (**)
Contract mix &
other
Probasis (*** ) Impact of R&D
capitalisation
(capitalisation
minus
depreciation)
Impact of
research tax
credit reform
Add'l restruct.
charges
2011 EBIT (* )
EBIT bridge
EBIT improvement
(*) Before impact of purchase price allocation ( PPA )
(**) A400M, Meltem, ticketing Denmark, Avionics, naval electronic warfare, other ticketing/security, Lorads III
(***) see details in annexes
in m
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Net P&L impact of capitalised R&D costs (m)
7362
-34-18
-50
-25
0
25
50
75
2008 2009 2010 2011
R&D
Sustaining the self funded R&D effort, support innovation
Reducing R&D capitalisation
2011 vs 200882 bp of negative impact
Self funded R&D costs (m)
569
664 655629
129 113 43 10
0
150
300
450
600
2008 2009 2010 2011
Total self funded R&D o/w capitalised
Capitalised R&D costs (m)
129113
43
10
0
40
80
120
160
2008 2009 2010 2011
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13 /13 / Net Result
(*) After restructuring and before impact of purchase price allocation (PPA).
in m 2011 2010
EBIT (*) 749 (92)Impairment of non-current operating assets (7) (10)
Net capital gains (losses) and others 55 (22)
797 (124)
Cost of net financial debt (48) (57)Other financial results (10) (15)
Other components of pension charges (63) (105)
Income tax (*) (172) 193
Equity in unconsolidated affiliates (*) 62 63
Net income, Group share (*) 566 (45)Net income per share (in ) (*) 2.88 (0.23)
Income of operating activities (*)
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14 /14 / Defence & Security: key figures
Orders driven by the Mirage 2000 upgrade contract in India
Solid resilience of revenues and better project execution
(*) Excluding the impact of the consolidation under the proportionate method of DCNS at 35%. Including this impact the order bookamounted to 19,252m at the end of 2011.
(**) Before impact of purchase price allocation (PPA).
in m 2011 2010
total organic
Order intake 7,210 6,173 +17% +17%
Order book at 31 December (*) 14,397 14,310 +1% -1%
Revenues 7,253 7,515 -3% -3%
Restructuring costs (97) (71) +37%
EBIT (**) 504 152 x 3.3 x3.2
in % of revenues 6.9% 2.0%
change
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15 /15 / Aerospace & Transport: key figures
Growth of revenues
Better project execution and positive impact of the A400M agreement
(*) After restructuring and before impact of purchase price allocation (PPA).
in m 2011 2010
total organic
Order intake 5,953 6,845 -13% -13%
Order book at 31 December 11,372 11,022 +3% +2%
Revenues 5,682 5,539 +3% +3%
Restructuring costs (37) (40) -8%
EBIT (*) 294 (221)
in % of revenues 5.2% -4.0%
change
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16 /16 / Net Cash Flow
A strong generation of operating cash flow
in m 2011 2010
Operating cash flow 1,242 389
Change in WCR & contingency reserves (390) 471
Payment of contributions / pension benefits (104) (106)
Financial interest paid (53) (67)
Income tax paid (60) (107)
Net operating cash flow 635 580
Net operating investments (256) (309)
o/w capitalised R&D (10) (43)
Free operating cash flow 379 271
Net (acquisitions) / disposals (289) 87
Deficit payments on pensions in the UK (59) (57)
Dividends (64) (98)
FX and others 34 79
Net cash flow 1 282
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17 /17 / Movement in net cash
Keeping a net cash position
635
256
59
24
265
64 34
714
906
192191
Net cash
31.12.2010
Net operating
cash flow
Capital
expenditure
Deficit payment
on pensions
in the UK
Acq. /
disposals
(excl. DCNS)
DCNS
Acquisition
(10%)
Div idends Other Net cash
31.12.2011
(excl. DCNS)
DCNS net
cash (35%)
Net cash
31.12.2011
(incl. DCNS)
in m
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Outlook
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19 /19 / 2012 objectivesexcluding DCNS and any exceptional export contract
Book-to-bill ratio slightly below 1
Revenues increasing
EBIT margin (*) 6% in 2012after restructuring charges of about 1%
Confirmed objective of performance improvementdespite economic uncertainties in Europe
(*) After restructuring and before impact of purchase price allocation (PPA).
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Defence -
US/CanadaDefence -
Emerging
markets
Civil
Defence -
France
Defence - UK
Defence -
Other Europe
Balanced portfolio increased business resilience
Aeronautics DefenceSecurityGroundTransportation
Space
Civil/military dual markets
Shared technologies
Well positioned to capture growth
Strong and long-standing
international footprint
Exposure to growing civil
markets
Defence offering meetingoperational priorities
Revenues 2011
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21 /21 / Innovation at the heart of the strategy
Boost innovation
Transverse technologies
4 Key Technological Domains"
Streamline our product portfolio
A systematic action plan through the entire group
Developing common building blocks
Reducing development risks
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22 /22 / A performance plan largely underway
Probasis: 50% of the actions implemented
Non-quality costs
Increased rigour in bid evaluationand project execution
Supply chain
More pooled procurement
Product policy
SG&A Restructuring underway
Shared services
Chorus 2.0: a common language
Already rolled-out to 60% of employees
Improve our performance in an uncertain environment
Progress of Probasis
0 % 25% 50% 75% 100%
2010
2011
2012(e)
2013(e)
2014(e)
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July 2011
Improve our performance
Harmonisethe way we work
Develop more rigorousmanagement
Foster team spirit
CompetitivenessGrowth
Develop our position on
growing markets
Increase local valueadded
A consistent, customer-
centric commercialorganisation
Grow internationally Strengthen our offering
A value-creating strategy
An integrated Group, creating value for shareholders
Accelerate innovation,
develop transversetechnological synergies
Streamlineour product portfolio
Keep the civil / militarybalance
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Annexes
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25 /25 / Upcoming events
Q1 2012 revenues 10 May 2012
Annual General Meeting 15 May 2012
H1 2012 results 25 July 2012
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Order intake by destination
France
27%
Rest of
Europe
23%
North
America
9%
Middle
East
6%
RoW
5%
Asia-Pacific
22%
UK
8%
Order intake by destination
total organic
France 3,470 3,083 +13% +13%
UK 1,094 1,301 -16% -15%
Rest of Europe 3,074 3,462 -11% -11%
Europe 7,638 7,846 -3% -2%
North America 1,204 2,226-46% -46%
Asia-Pacific 2,884 1,478 +95% +92%
Middle East 857 870 -1% +1%
Rest of the world 631 661 -5% -3%
Emerging countries 4,372 3,009 +45% +45%
Total 13,214 13,081 +1% +1%
in m 2011 2010change
i i
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Revenues by destination
France
26%
Rest of Europe
27%
Middle
East
7%
North America
10%
Asia-Pacific
14%
RoW
5%
UK
11%
Revenues by destination
total organicFrance 3,407 2,931 +16% +16%
UK 1,492 1,500 -1% +1%
Rest of Europe 3,457 3,419 +1% +1%
Europe 8,356 7,850 +6% +7%
North America 1,269 1,315 -3% -3%
Asia-Pacific 1,849 1,888 -2% -4%
Middle East 947 1,257 -25% -24%
Rest of the world 607 815 -26% -25%
Emerging countries 3,403 3,960 -14% -14%
Total 13,028 13,125 -1% -0%
in m 2011 2010change
A A k fi
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28 /28 / Area A: key figures
(*) After restructuring and before impact of purchase price allocation (PPA).
in m 2011 2010
total organic
Order intake 3,694 3,637 +2% +2%
Order book at 31 December 7,957 8,325 -4% -7%
Revenues 4,230 4,370 -3% -3%
Restructuring costs (37) (40) -8%
EBIT (*) 215 92 x2,3 x2,3
in % of revenues 5.1% 2.1%
change
A B k fi
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29 /29 / Area B: key figures
(*) After restructuring and before impact of purchase price allocation (PPA).
in m 2011 2010
total organic
Order intake 2,353 2,561 -8% -8%
Order book at 31 December 3,989 4,250 -6% -6%
Revenues 2,633 2,764 -5% -4%
Restructuring costs (14) (29) -52%
EBIT (*) 115 111 +4% +2%
in % of revenues 4.3% 4.0%
change
30 /
30 / France: ke fig res
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30 /30 / France: key figures
(*) Excluding the impact of the consolidation under the proportionate method of DCNS at 35%. Including this impact the order book amounted to 18,750mat the end of 2011.
(**) After restructuring and before impact of purchase price allocation (PPA).
in m 2011 2010
total organic
Order intake 7,167 6,880 +4% +4%
Order book at 31 December (*) 13,892 12,843 +8% +8%
Revenues 6,163 5,987 +3% +3%
Restructuring costs (96) (56) +71%
EBIT (**) 457 (291)
in % of revenues 7.4% -4.9%
change
31 /
31 / Probasis : net savings flowdown
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31 /31 / Probasis : net savings flowdown
Probasis net cumulated benefits by 2011 : 60m
in m 2010 2011
Savings flowdown 80 250
cumulative (A) 80 330
Competitive pressure (130) (140)
cumulative (B) (130) (270)
Net cumulated benefits (A)-(B) (50) 60
YoY variation of net benefits #N/A 110
Flowdown of gross sav ings (in m)
before impact of the competitiv e pressure
0
200
400
600
800
1000
1200
2010 2011 2012e 2013e 2014e
32 /
32 / R&D
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32 /32 / R&D
(*) After restructuring and before impact of purchase price allocation (PPA).
in m 2011 2010
P&L expense 619 612
Capitalised R&D
10 43
Total self-funded R&D 629 655
Impact of capitalisation on the P&L
in m 2011 2010
Capitalised R&D 10 43Amortisation charge (44) (61)
Net impact on EBIT (*) (34) (18)Net impact on margin -0.3% -0.1%
33 /
33 / Pensions
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33 /33 / Pensions
in m 2011 2010
Externally funded UK (703) (354)Netherlands 40 (23)
Total (663) (377)
Mainly internally funded France (595) (552)
Others (302) (268)Total (897) (820)
Total unfunded status before tax (1,560) (1,197)
Gross obligations UK (2,905) (2,402)
Netherlands (759) (760)
34 /
34 / PPA impact
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34 /34 / PPA impact
in m 2011 PPA 2011before PPA (*) impact reported
Order intake 13,214 0 13,214
Order book at 31 December (**) 25,841 0 25,841
Revenues 13,028 0 13,028
EBIT 749 (71) 678
in % of revenues 5.7% 5.2%
Income tax (172) 24 (147)
Equity in unconsolidated affiliates 62 (8) 53
Net income (Group share) 566 (55) 512
per share in 2.88 (0.20) 2.60
(*) PPA: "Purchase Price Allocation"
(**) Excluding the impact of the proportionate consolidation of the 35% equity participation in DCNS. Including this impact, the order book amounts to 30,697m
35 /
35 / Q4 2011 orders
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35 /35 / Q4 2011 orders
Q4 2011 Q4 2010
total organic
Defence & Security 2,425 2,471 -2% -2%
Aerospace & Transport 2,318 3,199 -28% -28%
Others 15 26
Total 4,758 5,696 -16% -17%
changein m
Q4 2011 Q4 2010
total organic
Area A 1,364 1,196 +14% +13%
Area B 824 935 -12% -12%
France 2,570 3,565 -28% -28%
Others
Total 4,758 5,696 -16% -17%
changein m
36 /
36 / Q4 2011 revenues
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Q4 2011 revenues
Q4 2011 Q4 2010
total organic
Defence & Security 2,516 2,619 -4% -4%
Aerospace & Transport 1,863 1,822 +2% +2%
Others 35 23
Total 4,414 4,464 -1% -1%
change
in m
Q4 2011 Q4 2010
total organic
Area A 1,287 1,347 -4% -5%
Area B 913 1,020 -10% -10%
France 2,212 2,097 +5% +5%
Others 2
Total 4,414 4,464 -1% -1%
change
in m
37 /
37 / DCNS: key financial figures (at 100%)
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DCNS: key financial figures (at 100%)
(*) before impact of purchase price allocation (PPA).
(**) before restructuring and research tax credit
(***) after restructuring and research tax credit
in m 2011
Order intake 3,168
Order book at 31 December 14,791
Revenues 2,624
Gross margin 543
EBIT (*) - DCNS definition (**) 186.4in % of revenues 7.1%
EBIT (*) - Thales definition (***) 184.5
in % of revenues 7.0%
Financial result 70
Net income (*) 198
38 /
38 / Main programmes in backlog
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a p og a es bac og
QE-class aircraft carrier (UK)
Watchkeeper (UK)
Balard Ministry of Defence (France)
Ecomouv (France)
CSO observation satellite (France)
In-flight entertainment systems
Maintenance in operational condition - Rafale
(France)
Between 200m and 400m
London Underground signalling (UK)Between 400m and 600m
Mirage 2000 upgrade (India)
Rafale (France)
Iridium (USA)
FREMM Frigates (France/Italy)
More than 600m
ProgrammeAmount
39 /
39 / Details of reporting structure
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p g
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 systems
Missile 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 MissionSystems
Air Operations
Land Defence
Space
Avionics
TransportationSystems
Space
Aerospace
Land & JointSystems
Naval
Air Systems
Security
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THALES - 45, rue de Villiers 92526 Neuilly-sur-Seine Cedex Francewww.thalesgroup.com