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www.thalesgroup.com 2017 Registration Document Including the Annual Financial Report WorldReginfo - a1a684a9-0f2b-4716-a50e-84ef126d6854 TABLE OF CONTENTS CHAIRMAN’S FOREWORD 2 OVERVIEW OF THE GROUP 3 KEY FIGURES AND HISTORY 4 1. 2017 FINANCIAL INFORMATION 6 1.1 Management report 8 1.2 Consolidated financial statements 35 1.3 Parent company management report and financial statements 84 2. BUSINESS REVIEW 120 2.1 Operating segments 122 2.2 Research and innovation 130 2.3 Relations between Thales and its subsidiaries 133 2.4 Information about major operational subsidiaries and manufacturing sites 135 3. CORPORATE GOVERNANCE 138 3.1 Composition of the Board of Directors at 31 December 2017 140 3.2 Report of the Board of Directors to the General Meeting of 23 May 2018 on corporate governance 148 3.4 Corporate management and Executive comitee 168 3.5 Compensation of directors and senior corporate officers 169 3.6 Incentives and profit-sharing 172 3.7 Statutory auditors 173 4. COMPANY AND SHARE CAPITAL 174 4.1 General information about the Company 176 4.2 Share capital and shareholders 177 4.3 Related-party agreements 189 4.4 Stock market information and financial communication 193 5. CORPORATE RESPONSIBILITY 198 5.1 Human resources information 200 5.2 Environmental information 217 5.3 Social Information 231 5.4 Report by the Independent third party on the consolidated human resources, environmental and social information included in the management report 240 5.5 Table of reconciliation (Articles L. 225-102-1 and R. 225-105-1 of the French Commercial Code) 242 DECLARATION FROM THE PERSON RESPONSIBLE FOR THE REGISTRATION DOCUMENT 245 EUROPEAN CROSS-REFERENCE TABLE (ANNEX 1 OF THE EUROPEAN REGULATION NO. 809/ 2004) 246 CHANGES MADE TO 2017 REGISTRATION DOCUMENT STRUCTURE 250 ANNUAL FINANCIAL REPORT RECONCILIATION TABLE 251 WorldReginfo - a1a684a9-0f2b-4716-a50e-84ef126d6854 2017 REGISTRATION DOCUMENT INCLUDING THE ANNUAL FINANCIAL REPORT This Registration Document was filed with the French financial markets authority (Autorité des marchés financiers, AMF) on 30 March 2018, in accordance with Article 212- 13 of the AMF General Regulations. It may only be used in support of a financial transaction if accompanied by an offering circular authorised by the AMF. It was drawn up by the issuer and its signatories accept liability. The English language version of this report is a free translation from the original, which was prepared and filed with the AMF in French. All possible care has been taken to ensure that the translation is an accurate presentation of the original. However, in all matters of interpretation, views or opinions expressed in the original language version of the document in French take precedence over the translation. In accordance with Article 28 of Commission Regulation (EC) No. 809/ 2004, the following information is incorporated by reference in this Registration Document: • the consolidated financial statements and corresponding audit reports presented on pages 29 to 80 of the 2015 Registration Document filed with the AMF on 31 March 2016; • the Group’s financial information, key figures and management report, presented respectively on pages 5 and 8 to 28 of the 2015 Registration Document filed with the AMF on 31 March 2016; • the consolidated financial statements and corresponding audit reports presented on pages 27 to 71 of the 2016 Registration Document filed with the AMF on 5 April 207; • the Group’s financial information, key figures and management report, presented respectively on pages 4, 5 and 8 to 25 of the 2016 Registration Document filed with the AMF on 5 April 207. The omitted sections of these documents are either irrelevant to the investor, or addressed elsewhere in this Registration Document. 2017 Registration Document — THALES 1 WorldReginfo - a1a684a9-0f2b-4716-a50e-84ef126d6854 CHAIRMAN’S FOREWORD “2017 was another record-breaking year for Thales. The Group exceeded all its annual financial targets. As expected, order intake remained high. It was comparable to the 2016 level if we remove the exceptional Rafale contract for India that was booked in September 2016. The Group enjoyed significant commercial successes. In the transport segment, they include the modernisation of the signalling for one of the main railways in Egypt as well as the signalling of the future regional express train that will link Dakar to its airport. In the defence and security segment, the Group booked several major projects for both the French and UK armed forces. Space was the only activity that experienced a slowdown in order intake reflecting the impact of the telecommunication satellite operators' wait-and-see attitude and a high basis of comparison in the institutional market. For the second year in a row, organic sales growth exceeded 5%, powered by all our businesses. This solid performance reflects both our continued strong growth in emerging markets and stepped- up organic growth in mature markets, which reached almost 6% in 2017. At 9.8%, the highest level ever achieved by our Group, operating profitability was at the top end of the range of the targets set in 2014. This financial performance is the result of the momentum in sales, our continued efforts to improve our competitiveness and the strengthening of our technological leadership in our technological innovations. It would not have been possible without the dedication of the Group’s 65,000 employees, all of whom I would like to thank on behalf of the Board of Directors. At the same time, Thales is preparing for the future and stepping up its growth strategy: in 2017, we increased our investments in R&D by 9% and bolstered our expertise in artificial intelligence, with the creation of a new research centre in that field and, in the field of big data, through the acquisition of Guavus, a pioneer in real- time big “ANOTHER RECORD YEAR data analytics. We are investing €150 million over three years to set up a cross- functional ‘digital factory’ in order to capitalise on our FOR THALES” unique portfolio of digital technologies. We are actively preparing for the acquisition of Gemalto, which is expected to close in the second half of 2018. This acquisition marks a key step in the implementation of our strategy. Together with the Gemalto management team, we have big ambitions based on a shared vision of the digital transformation of our businesses and our customers. By bringing together our talents, Thales and Gemalto will create a global leader in digital security. I am confident that this strategy will allow us to further drive profitable and sustainable growth.” Patrice Caine Chairman & Chief Executive Officer THALES — 2017 Registration Document 2 WorldReginfo - a1a684a9-0f2b-4716-a50e-84ef126d6854 OVERVIEW OF THE GROUP In Aeronautics, governments, airports, airlines, pilots, AERONAUTICS crews and passengers rely on Thales to make flight safer, HELPING easier and more efficient. We do this by designing, delivering and supporting the systems that keep our skies CUSTOMERS running. From air traffic management, training and simulation solutions, to nose- to- tail aircraft connectivity and in- flight services, we enable and connect all parts of the MASTERING Aeronautics ecosystem in the air, on the ground, and in between. EVERY DECISIVE In Space, we design, operate and deliver the satellite- SPACE based systems that help our customers to position and MOMENT connect anyone or anything, everywhere. We help them observe our planet, and help them optimize the use of our planet’s – and our solar The companies, governments and institutions that system’s – resources. We believe space is humankind’s new horizon, which will make the world go round – they rely on Thales. enable us to build a better, more sustainable life on Earth. In a world that is increasingly fast moving, In Ground Transportation, countries, cities and transport unpredictable – and full of opportunities, GROUND operators rely on Thales to adapt to rapid urbanisation they have big ambitions: to make life better, TRANSPORTATION and meet new mobility demands – locally, between cities to keep us safer. and across national frontiers. Combining a unique diversity of expertise, Our expertise in signalling, communications, fare collection and cybersecurity gives talents and cultures, Thales’s 65,000 architects people and goods the connected journey to move safely and efficiently. And no design and deliver extraordinary high matter how challenging the project, we stay by our customer’s side until the job is technology solutions. Solutions that make done. tomorrow possible, today. From the bottom of the oceans to the depths of In Defence, we are trusted at the highest levels to help armed space and cyberspace, we help our customers DEFENCE forces prepare for, achieve and maintain tactical superiority across five key markets – Aeronautics, Space, and strategic independence over any form of threat. Ground Transportation, Defence and Security – Governments rely on Thales to protect citizens, and make the world safer. to think smarter and act faster, mastering ever greater complexity and every decisive moment From designing smart sensors and advanced defence systems, to developing along the way. collaborative combat, and connecting and equipping soldiers on the digital battlefield, our systems deliver information superiority and give joint forces mastery of Whatever it takes. action whenever they face their decisive moments. In Security, governments, institutions and large global SECURITY companies rely on Thales