Investor roadshows and conferences - Thales Group · PDF fileand conferences November 2012 (c)...

(c) Thales, Nov 2012

Investor roadshows

and conferencesNovember 2012


Thales at a glance


3 /3 / Thales in a snapshot

FY12e revenues(*) : €13bn+

FY12e EBIT(**) margin: 6%

Balanced defence/civil

business portfolio,sharing technologies

75% of sales from

international markets

€1.3bn efficiency plan

on track and delivering

Resilient top line supported by commercial and EM exposure

EBIT growth potential through 2015

Aerospace

& Transport

45% of

revenues(*)

Defence &

Security

55% of

revenues(*)

Electronic systems, C4ISR,

networks, intelligence for air, naval and land

Urban and critical

infrastructure security,

Cybersecurity

Avionics,

In-flight entertainment

Telecom, observation,

navigation and

exploration satellites

Rail traffic management,

Fare collection

(*) Revenues before the impact of the proportionate consolidation of DCNS at 35%(**) EBIT margin after restructuring and before impact of the proportionate consolidation of DCNS at 35% and purchase price allocation ("PPA").


4 /4 / At the heart of operational priorities

Defence offering

meeting operational priorities

� Electronic systems

� C4ISR, networks, intelligence,

cyber, services

Successful exposure

to growing civil markets

� Civil aeronautics

� Space

� Ground transport

� Security

Mitigating defence cuts, capturing civil growth


5 /5 / Leading global market positions

50% of revenues in the Top 3 worldwide, 75% in the Top 3 in Europe

# Scope: worldwide # Scope: Europe

POSITION

#1 Defence - Air Defence

#3 Defence - Surface radars

#1 Air Traffic Management

#2 Defence - Military tactical radios

#1 Defence - Sonars

#3 Defence - Naval electronics

#3 Defence - Missile Electronics

#2 Cyber security

#3 Space - Civil satellites

#1 Space - Military satellite systems

#1 Aeronautics - Tubes RFM & Microwave

#2 Aeronautics - IFEC

#3 Aeronautics - Avionics

#1ex Ground Transportation - Rail Traffic Control

DEFENCE

&

SECURITY

AEROSPACE

&

TRANSPORT


Business performance


7 /7 / Overview as at 30 September 2012

Balanced portfolio provides business resilience

� Aerospace & Transport order intake up 17% y/y

� Defence & Security orders up y/y excluding exceptional positive

impact of Indian Mirage upgrade contract in Q3 11

� Emerging markets continue to be strong

Defence offering well positioned

as European and US budgets are under constraint

Probasis efficiency plan continued rollout

Portfolio optimisation


8 /8 / Q3 and 9m 12 key financials

Resilient order intake as civil activities offset lower defence orders

(Indian Mirage upgrade booked in Q3 11)

Slightly growing revenues at constant scope, in line with expectations

(*) excluding the impact of the proportionate consolidation of DCNS at 35% vs. consolidation under equity method at 35%

in €m Q3 2012 Q3 2012 Q3 2011

excl. DCNS

impact(*)total

excl. DCNS

impact(*)organic

Order intake 2 939 2 708 3 214 -9% -16% -17%

Revenues 2 887 2 699 2 645 +9% +2% -1%

Book-to bill ratio 1,02 1,00 1,22

in €m 9m 2012 9m 2012 9m 2011

excl. DCNS

impact(*)total

excl. DCNS

impact(*)organic

Order intake 9 040 8 547 8 455 +7% +1% -1%

Revenues 9 300 8 662 8 613 +8% +1% -2%

Book-to bill ratio 0,97 0,99 0,98

change

change


9 /9 / 9m 12 main commercial successes

Strong, well-balanced order intake

Selected orders over €100m

� Main lines signalling – Fjernebanen West (Denmark)

� "Contact" software defined radios (France)

� Exomars programme (ESA)

� In-flight entertainment systems (North America)

� NSEW -"Compass" urban rail line (Singapore)

� Naval radar systems (Netherlands)

� Telecom satellite (Asia)

� Bushmaster vehicles (Australia)

Other key orders

� Optronics (Middle East)

� Naval defence systems (Middle East)

� Naval radar electronic surveillance (UK)

� Eutelsat 8WB satellite (France)

� "Ampang" line –Kuala Lumpur metro (Malaysia)

€4 571m €4 951m €4 951m

€828m€911m €911m

€3 056m€2 685m €2 685m

€493m

9m 2011 9m 2012

excl. DCNS

impact

9m 2012

Europe North America

Emerging countries DCNS impact (*)

Q3 orders

M2000India

€4 422m €4 889m €4 889m

€2 368m €2 368m

€2 016m€1 296m €1 296m

€493m

€2 017m

9m 2011 9m 2012

excl. DCNS

impact

9m 2012

Unit value < €10m €10m < Unit value < €100m

Unit value > €100m DCNS impact(*)

(*) impact of the proportionate consolidation of DCNS at 35% vs. consolidation under equity method at 35%

Total: €8,455m

Total: €8,547m

Total: €9,040m


10 /10 / Probasis efficiency plan: on track

Non-quality costs

� Increased rigour in bid evaluation and

project execution

� Simplified and clearer processes

� Tighter organisation and governance

� Skills management

Supply chain

� More pooled procurement

� Product policy:

streamlining product lines

SG&A/Support functions

� IT/IS and site rationalisation

� Delayering the organisation

� Shared services

€250m of additional net P&L benefits expected between 2012 and 2014

Probasis - Expected net P&L benefits

< 2012 2012e 2013e 2014e

+€50m

+€100m

+€100m


11 /11 / Portfolio optimisation

IT services

– Switzerland, Spain,Argentina, Austria

Completed – 2011

Civil fixed-wing

aircraft simulation – UKCompleted – Aug. 2012

Business solutions

IT services – FranceCompleted – Oct. 2012

Diehl Aircabin

49% interest – GermanyOngoing project

Elettronica

33% interest – ItalyOngoing project

Pursuing the implementation of our divestments programme


12 /12 / France: update on current situation

Defence draft budget

White Book on defence expected in Q1 2013

Proposed tax measures: a moderate EPS headwind

� Cap on debt interest deductibility

� Tax on dividends

� Increased social charges

on employee profit-sharing schemes

� R&D tax credit left untouched

A defence budget pending White Book release


13 /13 / 2012 objectivesexcluding DCNS impact (*)

Book-to-bill ratio slightly below 1

Revenues slight increase

EBIT margin (**) 6%

Confirmed objective of underlying performance improvement

despite economic uncertainties in Europe

(**) after restructuring and before impact of purchase price allocation ("PPA")



14 /14 / Investment drivers

Resilient top line

� Defence offering at the core of network-centric warfare

operational priorities

� Civil activities growth potential

� 75% of international sales, 30% of emerging markets sales

Significant profitability uplift potential

� €1.3bn Probasis efficiency plan well underway, on track

� Delivering €250m net P&L benefits between 2012 and 2014

Resilient top line supported by commercial and EM exposure

EBIT growth potential through 2015


Annexes


16 /16 / Upcoming events

FY 2012 results 28 February 2013

Q1 13 revenues 25 April 2013

AGM 24 May 2013


17 /17 / H1 12 EBIT

(*) excluding the impact of the consolidation under the proportionate method of DCNS at 35% vs. consolidation under equity method at 35%(**) After restructuring and before purchase price allocation (PPA) impact

Improved underlying EBIT margin

in €m H1 2012 H1 2012 H1 2011

excl.

DCNS impact (*) total organic

Order intake 6 102 5 839 5 241 +16% +9%

Revenues 6 413 5 963 5 968 +7% -2%

Gross margin 1 454 1 356 1 383 +5% -4%

in % of revenues 22,7% 22,7% 23,2%

Indirect costs (1 076) (1 015) (1 002) +7% +0%

in % of revenues 16,8% 17,0% 16,8%

o/w R&D expenses (304) (292) (291) +4% +2%in % of revenues 4,7% 4,9% 4,9%

o/w SG&A expenses (772) (723) (711) +9% 0%in % of revenues 12,0% 12,1% 11,9%

Restructuring costs (40) (40) (78) -49%

in % of revenues 0,6% 0,7% 1,3%

EBIT (**) 338 301 303 +11% +1%

in % of revenues 5,3% 5,0% 5,1%

change


18 /18 / H1 12 net result

(*) excluding the impact of the consolidation under the proportionate method of DCNS at 35% vs. consolidation under equity method at 35%(**) After restructuring and before purchase price allocation (PPA) impact

Resilient EPS despite increased pension charge

in €m H1 2012H1 2012

excl. DCNS impact (*)H1 2011

EBIT (**) 338 301 303

Impairment of non-current operating assets 0 0 (4)

Net capital gains (losses) and others (3) (3) 8

335 298 307

Cost of net financial debt (8) (13) (25)

Other financial results (16) (21) (32)

Other components of pension charges (75) (74) (37)

Income tax (**) (73) (58) (65)

Equity in unconsolidated affiliates (**) 11 42 24

Net income, Group share (**) 175 175 173

Net income per share (in €) (**) 0,88 0,88 0,88

Income of operating activities (**)


19 /19 / Defence & Security: H1 12 key figures

Increasing orders, resilient revenues

(*) After restructuring and before purchase price allocation (PPA) impact(**) As of 31 December 2011

in €m H1 2012 H1 2011

total organic

Order intake 3 039 2 499 +22% +18%

Order book at 30 June 14 351 14 375 (**) 0% -1%

Revenues 3 228 3 250 -1% -4%

EBIT (*) 191 195 -2% -5%

in % of revenues 5,9% 6,0%

change


20 /20 / Aerospace & Transport: H1 12 key figures

Continued growth

Profitability improvement through focus on project execution

in €m H1 2012 H1 2011

total organic

Order intake 2 758 2 690 +3% +0%

Order book at 30 June 11 563 11 372 (**) +2% +1%

Revenues 2 691 2 640 +2% 0%

EBIT (*) 140 101 +39% +42%

in % of revenues 5,2% 3,8%

change

(*) After restructuring and before purchase price allocation (PPA) impact(**) As of 31 December 2011


21 /21 / H1 12 cash flow

Improved FOCF, confirmed objective of positive FOCF for FY12

in €m H1 2012H1 2012

excl. DCNS impact(*)H1 2011

Operating cash flow 521 477 524

Change in WCR & contingency reserves (464) (357) (571)

Payment of contributions / pension benefits (48) (48) (50)

Financial interest paid (21) (27) (29)

Income tax paid (54) (35) (32)

(66) 10 (158)

Net operating investments (137) (120) (108)

o/w capitalised R&D (6) (6) (2)

Free operating cash flow (203) (110) (266)

Net (acquisitions) / disposals (8) (4) (18)

Deficit payments on pensions in the UK (31) (31) (29)

Dividends (106) (106) (14)

FX and others 49 45 (39)

Change in net financial debt (299) (206) (366)

Net operating cash flow

(*) excluding the impact of the consolidation under the proportionate method of DCNS at 35% vs. consolidation under equity method at 35%


22 /22 / 9m 12 order intake by sector

Defence & Security down vs. high comparables (Indian Mirage in Q3 11)

Aerospace & Transport higher in all segments

9m 2012 9m 2011

total organic

Defence & Security 4 251 4 737 -10% -13%

Aerospace & Transport 4 235 3 634 +17% +14%

Other and discontinued activities 61 84

Total

excluding DCNS impact(*)8 547 8 455 +1% -1%

DCNS impact (*) 493 -

Total 9 040 8 455 +7% -1%

in €m change



23 /23 / 9m 12 revenues by sector

Revenues slightly up on FX tailwind

9m 2012 9m 2011

total organic

Defence & Security 4 683 4 682 +0% -4%

Aerospace & Transport 3 911 3 818 +2% +0%

Other and discontinued activities 68 113

Total

excluding DCNS impact (*)8 662 8 613 +1% -2%

DCNS impact (*) 638 -

Total 9 300 8 613 +8% -2%

in €m change



24 /24 / 9m 12 order intake by destination


total organic

France 1 982 2 001 -1% -1%

UK 517 563 -8% -14%

Rest of Europe 2 452 2 007 +22% +22%

Europe 4 951 4 571 +8% +8%

North America 911 828 +10% +5%

Asia-Pacific 1 726 2 188 -21% -24%

Middle East 701 610 +15% +9%

Rest of the world 258 258 +0% +1%

Emerging countries 2 685 3 056 -12% -16%

Total - excl. DCNS impact(*) 8 547 8 455 +1% -1%

in €m 9m 2012 9m 2011change


25 /25 / 9m 12 revenues by destination


total organic

France 2 316 2 239 +3% +3%

UK 1 077 1 024 +5% -2%

Rest of Europe 2 192 2 218 -1% -1%

Europe 5 585 5 481 +2% +1%

North America 939 865 +9% +4%

Asia-Pacific 1 352 1 288 +5% -1%

Middle East 446 611 -27% -29%

Rest of the world 340 368 -8% -8%

Emerging countries 2 138 2 267 -6% -10%

Total - excl. DCNS impact 8 662 8 613 +1% -2%

in €m 9m 2012 9m 2011change


THALES – 45, rue de Villiers – 92526 Neuilly-sur-Seine Cedex – Francewww.thalesgroup.com

This presentation may contain forward-looking statements. Such forward-looking statements are trends or objectives, as the case may be, and shall not be construed as constituting forecasts regarding the Company’s results or any other performance indicator. These statements are by nature subject to risks and uncertainties as described in the Company’s registration document ("Document de référence") filed with Autorité des Marchés Financiers. These statements do not therefore reflect future performance of the Company, which may be materially different.

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