Thales – brochure corporate – 2005 The world is safer with Thales Intelligence on-board Thales 45 rue de Villiers 92526 Neuilly-sur-Seine Cedex France Tel.: +33 (0) 1 57 77 80 00 www.thalesgroup.com 4877_TH LES_R _GB 23/06/05 13:38 Page 1 THALES 2005 01 PROFILE World leader in aerospace, • A large-scale multidomestic presence: defence and security systems, With industrial operations in nearly thirty coun- tries, Thales maintains a local presence close to Thales, with revenues of more than its customers in order to anticipate their needs 10 billion euros, develops advanced tech- and propose the technical and economical solu- nologies and services for its customers, tions that meet them best. Multidomestic opera- leveraging a global network of 60,000 tions throughout the world bring Thales access to experts and the highly complementary a greater number of domestic markets, as well nature of its businesses. as additional opportunities to export from those markets. The company has successfully pursued To achieve its objectives and satisfy its cus- its multidomestic strategy to emerge as the tomers, Thales is pursuing a strategy based on largest defence contractor in Australia, Korea three major strengths: and the Netherlands, and has achieved an excep- tionally strong position in the United Kingdom, • Strategic positioning: Covering the entire where it is the second-largest supplier to the value chain, Thales provides all the capabi- Ministry of Defence. lities its customers require, from equipment and systems to comprehensive support serv- • Unparalleled technological capability: ices, and including prime contracting on large- Thales solutions draw on an exceptional plat- scale programmes: air defence systems, joint form of technologies with applications across systems, major naval programmes, military the company's whole range of businesses. With aerospace equipment, avionics, training and more than 20,000 high-level researchers, simulation services, air traffic management Thales offers a capability unmatched in Europe and large-scale security solutions. Thales to develop and deploy critical information sys- is a key player on flagship programmes tems for defence and security markets. Thales including the A380 and A400M, the French maintains a portfolio of 12,000 patents and its and British aircraft carriers, UAV systems, research and technological development efforts future soldier systems and the Tiger and are focused on future-oriented topics such as NH90 helicopters. The company is also network-centric warfare, dual technologies and supporting the process of armed forces trans- new-generation avionics – all crucial to success formation through its integrated C4ISR solu- in the company's markets. tions (Command, Control, Communications, Computers, Intelligence, Surveillance, The company's civil and military businesses Reconnaissance), and provides sensitive data develop in parallel to serve a single objective: and site security solutions. the security of people, property and nations. 4877_TH LES_R _GB 24/06/05 14:30 Page 2 MESSAGE FROM TH As our financial performance and commercial successes continue to demonstrate, Thales is progressively consolidating its position as one of the major world leaders in aerospace, defence and security systems. Financial performance. For the past five years, our busi- “ness has grown substantially, with revenues increasing by 70%. The pattern of growth in new orders was slightly affected last year by the rescheduling of two major pro- grammes – Watchkeeper in the United Kingdom and the FREMM multimission frigates – for which the contracts awarded to Thales in 2004 will be reflected in our 2005 figures. But order intake will be stronger from 2005. Today's defence markets are tough, but Thales is fortu- nate to be positioned in growth segments with promising outlooks. Outside the defence sector, Thales is also well positioned to benefit from favourable developments in aerospace and security markets. Operating income rose again in 2004, reaching 729 million euros, an increase of 4.4%. Our operating margin exceed- ed 7% for the first time ever, and our aerospace and defence businesses returned the best operating margin in Europe, with 8.5%. Denis Ranque We are firmly committed to further improvement in our Chairman and Chief Executive financial performance and continued growth in our busi- Officer nesses. With our debt well under control, we have the financial room for manoeuvre to explore external growth “The highly complementary opportunities. nature of our businesses We realigned our organisation with the changing market- place last year when we formed our six new divisions, and and our exceptional techno- we are continuing to leverage technical and operational synergies within the Group in pursuit of the same objec- logical potential are the tive – to continually "do better" in satisfying our cus- basis of our capability tomers today and keeping them satisfied tomorrow. to deliver.” Proud of our successes This commitment to continuous improvement is bearing fruit, as recent successes show – in France, for example, with the Syracuse III and Rafale contracts, in Europe with the FREMM Franco-Italian multimission frigates, and in the United Kingdom with major programmes such as the Watchkeeper tactical UAV system, the FSTA air refuelling programme and latest-generation sonars for the Royal Navy. In the United States, our selection on the Joint 4877_TH LES_R _GB 24/06/05 14:30 Page 3 THALES 2005 02 • 03 E CHAIRMAN Tactical Radio System (JTRS) programme is quite an • Our major strength, and the third pillar of our strategy, achievement for a company with such a strong European is our leadership in the most advanced technologies and pedigree. the dual technologies required to propose the best secu- We are similarly proud to be contributing to some of rity solutions to both civil and military customers. With industry's major adventures, beginning with Airbus 20,000 engineers working on dual technologies, we and, in particular, the A380. This is an outstanding represent by far the largest European capability in our technological challenge, and all our energies across domains. Our pivotal role in numerous European research a whole range of capabilities – from avionics to sim- initiatives is a clear illustration of this leadership. ulators, electrical power generation and in-flight entertainment – are focused on stepping up to that A crucial position challenge. Thales has also positioned itself well on the A400M programme. At the same time, Thales is Thales can be proud of its success in an environment that successfully consolidating its partnerships with is anything but easy – competition is increasing, the dollar Boeing and Sukhoi. is weak, and economic and geopolitical uncertainty abounds. Thales is a central player in its markets in Europe. However, we are well aware of the importance of A winning strategy for long-term success the American market. We are satisfied with our joint ven- Good financial performance and commercial successes ture with Raytheon and particularly proud of the achieve- have come as a direct result of the strategy we have pur- ments of our US subsidiary Thales Communications Inc., sued. The three pillars of that strategy are as follows: which is supplying the new generation of radio systems to • Complete coverage of the value chain: We are still a the US armed forces. We want to build our presence in the major equipment supplier, but we have also taken our United States, where most of our business is in civil and offering to another level by designing and delivering aerospace markets. We are also determined to signi- large-scale systems, assuming prime contracting ficantly strengthen our positions in the high-growth responsibilities and providing long-term support to our markets of Asia, where we are developing a growing customers. As we move up the value chain, the role of number of technical and industrial partnerships. prime contracting and services is crucial. Our customers increasingly expect comprehensive support solutions, We will continue to develop our strategy, stepping up rather than just equipment or systems. By combining our efforts to improve our competitive edge, reduce costs defence experience in the United Kingdom and our indus- and leverage synergies between businesses. try experience in France, we are in a position of strength The highly complementary nature of our businesses in the market for services, which already account for 25% and our exceptional technological potential are the of our business. basis of our capability to deliver the most compre- • The multidomestic dimension is the second pillar of hensive and the most efficient our strategy. Revenues from our multidomestic opera- solutions to our customers. tions have tripled in five years. It is now an accepted prin- ciple that the multidomestic approach to defence markets is the only way to anticipate the needs of customers and propose the best technological, financial and industrial solutions. Solid growth in the United Kingdom, Australia ” and Korea illustrates just how successful our approach is. Gone are the days of relying solely on mega-contracts, which were the engine of our growth in decades past. Today, 75% of our sales come from countries where we are established as a local industry player. 4877_TH LES_R _GB 23/06/05 13:38 Page 4 KEY FIGURES A focused portfolio of businesses The slight decline in revenues in 2004 is entire- Revenues (in millions of euros) 11,105 ly attributable to divestments of non-core busi- 10,569 10,288 nesses since 2000 that have refocused Thales on its core capabilities. 2002 2003 2004 Organised by market 2004 revenues by division Added focus called for a new organisation. Six divisions serve clearly defined customer Land and Joint communities within an organisation optimised Systems 23% for sharing across businesses and countries. Air Systems Naval 20% 13% Services 11% Aerospace 21% Security Other 11% 1% Multidomestic success 2004 revenues by destination The geographical breakdown of sales and staff numbers clearly illustrates one of the company's United Kingdom France 13% major strengths: its international dimension.