Thales : 2019 full-year results – Slideshow

2019 Full-Year results

26 February 2020

www.thalesgroup.com

Full-Year 2019 highlights

Solid order intake, driven by record Q4

Sales in line with revised expectations

EBIT above target

Strong Free operating cash flow

Integration of Gemalto in line with plan

Unchanged focus: profitable and sustainable growth

2019 Full-Year results - 2

2019 key figures

Order intake and book-to-bill

€m	16,034	+19%	19,142

+4%(a)

1.011.04

20182019

Adjusted net income(b)

€m		+19%	1,405
	1,178

	Sales
€m	+16.1%	18,401
15,855
	+0.8%(a)

20182019

Free operating cash-flow(b)

€m	+69%	1,372
	811

EBIT and EBIT margin(b)

€m and % 1,685	+19%	2,008
	+4%(a)
10.6%	+0.3 pt(a)	10.9%

20182019

Dividend(c)

€	+27%	2.65
	2,08

2018

2019

2018

2019

2018

2019

1. Organic: at constant scope and exchange rates
2. The definition of all non-GAAP measures can be found in appendix
3. Proposed to the 6 May 2020 Annual General Meeting

2019 Full-Year results - 3

2019 order intake

Solid order intake momentum, driven by record Q4

12 large(a) orders booked in Q4 2019 21 large(a) orders booked in 2019

2019 book-to-bill of 1.04

1.05 excluding DIS, whose book-to-bill is structurally equal to 1

Second year in a row of record order intake in mature markets

Emerging market orders recovering in line with expectations

1. With a unit value over €100m
2. Order intake of disposed activities (GP HSM)

Order intake by contract unit value

€m

+19%

		+4%		+15%	19,142
16,034	16,714
		4 522
				Unit value
4 593		Unit value	4 522	> €100m
	> €100m
				€10m <	5 090
		€10m <	4 988	Unit value
4 231		< €100m
	Unit value
		< €100m
7 097		Unit value	7 205	Unit value	9 530
	< €10m
		< €10m
113(b)
2018			2019		2019

before

acquisitions

2019 Full-Year results - 4

2019 organic sales growth

Small positive currency impacts		Organic sales trend
in both Q4 and Full Year 2019	Base 100 in 2014	by region
Q4: +€33m, +0.7% of sales
2019: +€118m, +0.7% of sales					163
	Emerging		153		150	2015-19
Geographically contrasted
	markets
					+8.5%
							CAGR
organic sales growth			138
				Mature
Confirmed acceleration in mature		121			markets		2015-19
markets: +4.7%
					121	CAGR
Negative growth in emerging					116	+3.9%
100
markets (-7.7%) after several			111
		104
years of high growth	100	101
	2014	2015	2016	2017	2018	2019
2019 Full-Year results - 5

Summary adjusted P&L: from sales to EBIT

	2019	2018	Change
	€m	% of sales	€m	% of sales	total	organic
Sales	18,401		15,855		+16.1%	+0.8%
Gross margin	5,051	27.5%	4,088	25.8%	+23.6%	+3.5%
Indirect costs	(3,112)	-16.9%	(2,526)	-15.9%	+23.2%	+1.5%
o/w R&D expenses	(1,097)	-6.0%	(879)	-5.5%	+24.8%	+3.2%
o/w Marketing & Sales expenses
(1,381)	-7.5%	(1,095)	-6.9%	+26.2%	+2.2%
o/w General & Administrative expenses
(634)	-3.4%	(552)	-3.5%	+14.8%	-2.7%
Restructuring costs	(102)		(48)
Share in net result of equity-accounted	106		109
affiliates, excluding Naval Group
EBIT, excluding Naval Group	1,943	10.6%	1,623	10.2%	+19.8%	+4.0%
Share in net result of Naval Group	65		63
EBIT	2,008	10.9%	1,685	10.6%	+19.2%	+4.0%

2019 Full-Year results - 6

2018 to 2019 EBIT bridge

€m

	Operational	Restructuring	Marketing	Reinvestment
Scope,	performance	expenses	& sales	in R&D	Naval	2,008
currency and					Group
pensions		-35	-23	-29	+2
	+156

1,685

+252

2018: 63

2019: 65

Scope: +249

Currency: +7

Pensions: -5

2018	2019
EBIT	EBIT
2019 Full-Year results - 7

Aerospace: 2019 key figures

	2019	2018	Change
€m			total	organic
Order intake	4,829	5,346	-10%	-11%
Sales	5,595	5,780	-3.2%	-4.2%
EBIT	521	580	-10.2%	-10.7%
in % of sales	9.3%	10.0%	-0.7 pt	-0.7 pt

Decrease in order intake driven by Space and In-Flight Entertainment

Strong Q4 performance in commercial telecom satellites: 3 out of 4 RFPs won

Natural cycle in institutional space market

Sales affected by 13% decline in Space sales, in line with expectations

Decline in profitability driven by Space sales decline and restructuring costs, while increasing R&D investments

2019 Full-Year results - 8

Transport: 2019 key figures

	2019	2018	Change
€m			total	organic
Order intake	1,751	1,858	-6%	-7%
Sales	1,910	2,001	-4.5%	-5.8%
EBIT	56	88	-36.5%	-35.2%
in % of sales	2.9%	4.4%	-1.5 pt	-1.4 pt

Order intake impacted by phasing of large contract awards

Sales affected by exceptionally high comps

Sales up 5% organically excluding impact of 4 major contracts (London, Dubai, Doha and Hong Kong) ramping down

Underlying EBIT margin of ~6%, in line with mid-term target

~€60m one-offs recorded in H1 2019 H2 2019 EBIT margin: 9.1%

2019 Full-Year results - 9

Defence & Security: 2019 key figures

	2019	2018	Change
€m			total	organic
Order intake	9,906	8,570	+16%	+17%
Sales	8,265	7,828	+5.6%	+6.4%
EBIT	1,153	992	+16.2%	+20.5%
in % of sales	14.0%	12.7%	+1.3 pt	+1.6 pt

Strong order intake momentum

Record order intake, book-to-bill of 1.2

Booking of several multi-year contracts, underpinning long-term growth

Broad-based sales growth

Exceptional EBIT margin, driven by combination of positive factors

Solid sales growth, competitiveness initiatives, good project execution, very limited restructuring costs, and provision release recorded in H1

2019 Full-Year results - 10

Digital Identity & Security: 2019 key figures

	2019	2018	Change
€m			total organic

Order intake	2,573	205
Sales	2,552	192
EBIT	264	15

Non

meaningful

in % of sales	10.3%	8.0%

Order intake structurally aligned with sales for most businesses

Full Year organic sales growth of ~1%, in line with expectations

Good dynamics of EMV cards, driven by re-issue cycle in the US and new products

Identity management and data protection affected by reorganization

EBIT just above upper range of June guidance (€240-260m)

Lower than expected integration costs (~€30m)

2019 Full-Year results - 11

Summary adjusted P&L: from EBIT to adjusted net income

€m	2019	2018
EBIT	2,008	1,685
Cost of net financial debt and other financial results(a)	(55)	(15)
Finance costs on pensions and other employee benefits	(56)	(52)
Income tax		(387)
(454)
Effective tax rate	26.3%	26.7%
Adjusted net income	1,443	1,232
Minus, Minorities	(38)	(53)
Adjusted net income, Group share	1,405	1,178
EPS: Adjusted net income, Group share, per share (in €)	6.61	5.55

(a) 2019 includes -€27m IFRS 16 impact on the cost of net financial debt

2019 Full-Year results - 12

Cash conversion: from EBIT to free operating cash flow

2019, €m

2,008

Solid free operating cash flow

driven by better than expected change in WCR

Financial	Income
interest	Equity
tax		Change
-37		affiliates	Capex	in WCR	Other
-154
	-60	-6
		items
			Depreciation &	-341	-39
			Amortization: 491
			Net operating		Restructuring,
			investment: -496
				Gemalto,
					lease
					depreciations,

pensions…

98%

1,372 1,405

EBIT	Free	Adjusted
	operating	net
	cash flow	income
		Group share

2019 Full-Year results - 13

Solid cash conversion before one-offs

Reported cash conversion	Cash conversion before one-offs(a)
€m			€m	105%
	98%
107%		86%
			1 472
	1,405	1 372		1,405
					One-offs:~-100
886	948		926	798

				IFRS16 impact: €203m			IFRS16 impact: €203m
2014-18	2019				2014-18	2019
average					average
		Adjusted net income		xx%	Cash conversion ratio: Free operating cash flow /
		Free operating cash flow		adjusted net income

(a) See details of one-off items in appendix, page 31

2019 Full-Year results - 14

Movement in net cash (debt) over 2019

€m		Free	Deficit
		IFRS 16
		payment
3,181	operating	Acquisitions
impact	on UK
cash-flow
			pensions	& disposals
				-98
			1,673
		-1,507	+1,372
											Net debt
											at 31 Dec 19
	Net cash		Net cash
	at 31 Dec18		at 31 Dec 18
			post IFRS 16
								Dividends	New
								leases
					-5,345
						(IFRS16)	Other
					Gemalto, net of	-463
					GP HSM disposal:		-299	-151	-3,311
					-4,398
					Net debt from
2019 Full-Year results - 15			acquisitions: -729
		Other: -218

Adjusted EPS and dividend

Adjusted EPS and dividend per share

€

6,61

Adjusted EPS up 14%

3,89

4,25

5,55

4,64

2.65(a)

per year since 2015

Proposed 2020 dividend: €2.65 per share(a)

	1,60	1,75	2,08
1,36

2015	2016	2017	2018	2019
35%	38%	38%	38%	40%
Adjusted EPS	Dividend	xx%	Pay-out ratio

(a) Subject to approval by the 6 May 2020 Annual General Meeting

2019 Full-Year results - 16

Pay-out ratio increased to 40%

Dividend up 18% per year since 2015

2019 Full-Year results

Strategy and outlook

Ambition 10: unchanged long-term priorities

Continued focus on

operational performance

1 Reinforce customer-centric organization and culture

2 Relentlessly optimize operational performance

Strong development levers

3	Accelerate R&D investments
	to drive technological
	excellence
4	Lead in digital transformation
	of markets
5	Execute on transformative
	acquisition of Gemalto

2019 Full-Year results - 18

2020 strategic priorities

	Sustainably	Position
Step up	deliver on
Space to
growth	operational
return to
initiatives	performance
growth
	initiatives

2019 Full-Year results - 19

Step up growth initiatives

2019	2020

Record Q4 order intake

30% market share in commercial telecom satellites orders

Major defence wins in both Europe and emerging markets

Already 20+ DIS revenue synergy projects won

Robust pipeline of defence opportunities

Sales transformation project accelerating

Streamlined international development organization

Implementation of strategic account management model

Increased focus on servicing installed base

Further ramp up of DIS revenue synergies

Solid 2019/2020 order intake dynamics paves the way

to sales growth acceleration from 2021

2019 Full-Year results - 20

Sustainably deliver on operational performance initiatives

Significant improvement in gross margin and G&A expenses achieved since 2015

Adjusted gross margin(a) and P&L G&A expenses

as a percentage of salesGross

25,4% 26,1% margin

DIS cost synergies fully on track

€25m achieved in 2019

Performance culture drives constant flow of actions

Worldwide integrated procurement

23,6%	23,8%	24,0%

2.9 point EBIT margin

expansion generated

over 4 years

organization fully operational

Over 30% of spend now concentrated on strategic suppliers

Development of engineering competency

3,8% 3,6% 3,6% 3,5% 3,4% G&A expenses

2015 2016 2017 2018 2019

1. At constant scope: 2015-2018 adjusted for disposal of GP HSM business. 2019 excluding Gemalto.

centers in Romania and India

Deployment of digital engineering best practices across the Group

Platforming and development of shared support services

Launch of CA$H! initiative in 2019

2019 Full-Year results - 21

Position Space to return to growth

Reinforce best-in-class telecom product range

Global VHTS leadership confirmed in 2019

Unique expertise in networked constellations

Investing in "Space Inspire": new generation flexible satellite product line

Cost base significantly adjusted over past 18 months

Worldwide geostationary commercial

# of	telecom satellites orders
satellites	20
	13	Thales
	10
	market

share: ~30%

2011-162017-18 2019

average

ESA budget(a)

Capitalize on growth opportunities across institutional and military markets

Solid growth confirmed in European Space Agency budget

€bn

10.3

CAGR 14.4

~+6%(b)

Multiple domestic and export prospects

2019 Full-Year results - 22

CMIN 16

CMIN 19

1. Forecasts for ESA budget post CMIN Space19+
2. CAGR computed excluding estimated post 2021 commitments

2020 business environment

Aerospace	Transport	Defence & Security
Slowing rate of growth	Robust long-term growth	Unchanged, solid
in Airbus commercial	in mainline signaling	defence budget outlook
aircraft deliveries	market	across most geographies
Strong multi-year funding	Ramping down of 4 large	High order book
of European Space	urban rail contracts	strengthening medium-
Agency	continuing to weigh on	term visibility
Low visibility on phasing	growth (€100m+
headwind in 2020)
of commercial space
orders

Digital Identity & Security

High demand for data protection, IoT connectivity and security, biometrics, and eSIM

Decline in EMV card sales

after strong growth in 2019

Identity management and data protection: organization in place to

deliver on growth

Uncertainties affecting global environment: impact of Coronavirus on markets and supply chains, US aeronautics tariffs, resumption of B737 MAX operations…

2019 Full-Year results - 23

2020 financial objectives

Order intake

Sales

EBIT margin(b)

Book-to-bill above 1, supporting sales growth acceleration from 2021

€19.0 to 19.5 billion(a)

10.8% to 11%(a),

corresponding to a 20 to 40 bps margin expansion(c)

1. Based on February 2020 scope and foreign exchange rates
2. Non-GAAPmeasure: see definition in appendix
3. Compared to Thales reported 2019 + Gemalto Q1. See computation in appendix

2019 Full-Year results - 24

Appendix

www.thalesgroup.com

Upcoming events

Q1 2020 sales	28 April 2020
	(before market)
Annual General Meeting	6 May 2020
Dividend payment(a)	14 May 2020
H1 2020 results	24 July 2020
	(before market)
Q3 and 9m 2020 sales	22 October 2020
	(before market)

(a) Subject to approval by the 6 May 2020 Annual General Meeting. Ex-dividend date: 12 May 2020.

2019 Full-Year results - 26

2019 order intake by destination

€m	2019	2018	Change
Total	organic
France	5,372	5,183	+4%	+1%
United Kingdom	1,730	746	+132%	+119%
Other European	4,266	3,872	+10%	-1%
countries
Europe	11,368	9,802	+16%	+9%
North America	2,040	1,501	+36%	-9%
Australia/NZ	850	1,494	-43%	-46%
Mature markets	14,258	12,797	+11%	+1%

Middle RoW

6%

East

7%

Asia 13%

Australia/

NZ

4%

North

America

France

28%

UK 9%

Asia

2,452

1,764

+39%

+12%

11%

Other

Middle East	1,293	952	+36%	+22%
Rest of the world	1,139	521	+119%	+38%
Emerging markets	4,883	3,237	+51%	+19%
Total	19,142	16,034	+19%	+4%

2019 Full-Year results - 27

European countries 22%

2019 sales by destination

€m	2019	2018	change
total	organic
France	4,461	3,985	+12.0%	+8.8%
United Kingdom	1,297	1,253	+3.5%	-6.1%
Other European	4,040	3,498	+15.5%	+2.3%
countries
Europe	9,798	8,736	+12.2%	+4.1%
North America	2,102	1,367	+53.7%	+6.9%
Australia/NZ	958	858	+11.6%	+7.2%
Mature markets	12,858	10,960	+17.3%	+4.7%
Asia	2,642	2,297	+15.0%	-5.3%
Middle East	1,601	1,647	-2.8%	-11.1%
Rest of the world	1,301	950	+36.8%	-7.5%
Emerging markets	5,543	4,894	+13.3%	-7.7%
Total	18,401	15,855	+16.1%	+0.8%

2019 Full-Year results - 28

RoW
Middle 6%	France
East
24%
9%

Asia 14%

UK 7%

Australia/
NZ
5%	Other
North
European
America
countries
12%
22%

2019 adjusted net result

Consolidated

P&L	Amortization	Expenses	Disposal of
€m	of acquired	related to	assets and
2019	assets (PPA)	acquistions	others

Change in fair	Actuarial
value of	gains/losses
derivative FX	on other long
instruments	term benefits

Adjusted

P&L

2019

Sales	18,401						18,401
Cost of sales	-13,877	528					-13,350
R&D	-1,099		1				-1,097
Selling costs	-1,383		2				-1,381
G&A costs	-637		3				-634
Restructuring costs	-122		21				-102
Income from operations	1,284	528	27				1,837
Share in net income (loss) of equity affiliates	142	29					171
Income of operating activities
incl. share in net income of equity affiliates	1,481						N/A
EBIT	N/A	556	27				2,008
Result of disposal of assets, change in scope and others	219			-219			0
Cost of net financial debt	-43						-43
Other financial income (expense)	-84				73		-12
Finance costs on pensions and other employee benefits	-69					13	-56
Income tax	-301	-145	-1	21	-24	-4	-454
Net income (loss)	1,146	411	26	-198	49	10	1,443
Minorities	-25	-13	0				-38
Net income (loss), Group share	1,122	398	25	-198	49	10	1,405

2019 Full-Year results - 29

2018 adjusted net result

	Consolidated				Change in fair	Actuarial	Adjusted
	P&L	Amortization	Expenses	Disposal of	P&L
€m		of acquired	related to	assets and	value of	gains/losses
	derivative FX	on other long
	2018	assets (PPA)	acquistions	others	2018
	instruments	term benefits
Sales	15,855						15,855
Cost of sales	-11,870	103	1				-11,767
R&D	-881		2				-879
Selling costs	-1,098		3				-1,095
G&A costs	-554		2				-552
Restructuring costs	-48						-48
Income from operations	1,403	103	8				1,514
Share in net income (loss) of equity affiliates	145	27					172
Income of operating activities
incl. share in net income of equity affiliates	1,548						N/A
EBIT	N/A	130	8				1,685
Result of disposal of assets, change in scope and others	-73			73			0
Cost of net financial debt	-7						-7
Other financial income (expense)	-78				71		-8
Finance costs on pensions and other employee benefits	-47					-5	-52
Income tax	-314	-29	-2	-20	-24	2	-387
Net income (loss)	1,028	101	6	53	46	-3	1,231
Minorities	-46	-7			0		-53
Net income (loss), Group share	982	94	6	53	46	-3	1,178

2019 Full-Year results - 30

Cash conversion before one-offs

€m		2014	2015	2016	2017	2018	2014-18	2019(a)
	average
Free operating cash flow, before one-offs	(A)	501	660	854	965	1,011	798	1,472
+ Exceptional down-payments received			+450	+100
- Exceptional cut-off effects at 31 December					+400		+150	+300
- Gemalto acquisition one-offs							-50-100
- Reversal of down-payments and cut-off effects						-200		-350
= Free operating cash flow, reported		501	1,110	954	1,365	811	948	1,372
Year-end balance of one-off items to reverse in			+450	+550	+950	+750		+700
subsequent years
Adjusted net income, Group share, reported		562	809	897	982	1,178	886	1,405
- One-offs		-	-117	-18	-67	-	-29	-
= Adjusted net income, Group share,	(B)	562	926	915	1,049	1,178	903	1,405
before one-offs
Cash conversion before one-offs	(A)/(B)	89%	71%	93%	92%	86%	88%	105%

1. IFRS16 impact on 2019 free operating cash flow: €+203m. IFRS16 impact on 2019 adjusted net income, Group share: €-11m. 2019 cash conversion before one-offs and IFRS16 impact: 90%

2019 Full-Year results - 31

Gemalto Q1 2019 impact

Sales

EBIT and EBIT margin

€m

	Gemalto	19,053	2,008
18,401	Q1 2019(a)
		652			10.9%

Gemalto

Q1 2019(a)

10

2,018

10.6%

Thales reported	Thales reported	Thales reported	Thales reported
2019	2019 + Gemalto	2019	2019 + Gemalto
	Q1 2019		Q1 2019

(a) See note 3.1 of the consolidated financial statements at 31 December 2019 2019 Full-Yearresults - 32

EBIT by operating segment

	2019		2018		Change
€m / % of sales			total	organic
Aerospace	521	9.3%	580	10.0%	-10%	-11%
Transport	56	2.9%	88	4.4%	-37%	-35%
Defence & Security	1,153	14.0%	992	12.7%	+16%	+21%
Digital Identity & Security	264	10.3%	15	8.0%	nm	nm
EBIT - operating segments
1,994	10.9%	1,675	10.6%	+19%	+4%
Other	(50)		(53)
EBIT - excluding Naval Group
1,943	10.6%	1,623	10.3%	+20%	+4%
Naval Group	65		63
EBIT - total	2,008	10.9%	1,685	10.6%	+19%	+4%

2019 Full-Year results - 33

Highly diversified Defence & security customer base

Defence & security sales by region, 2019

7%

Rest of world

11%

Middle East

12%

Asia

35%

France

45% outside Europe

10%
Australia/NZ	8%
6%	United Kingdom
North America	12%
	Rest of Europe

2019 Full-Year results - 34

Organic sales growth per quarter

2016

2017

2018

2019

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

+13%

+15%

+7%

+16%

+1%

+1%

+2%

+9%

+2%

Aerospace -1%

-2%

-0%

-3%

-7%

-7%

-6%

+14%

+40%

+15%

+7%

+8%

+28%

+29%

+17%

+19%

+11%

+1%

+1%

Transport

-13%

-4%

-17%

-9%

+13%

+3%

+14%

+8%

+5%

+22%

+10%

+8%

+8%

+0%

+0%

+12%

+10%

+4%

Defence

-3%

-3%

& Security

+10%

+15%

+11%

+15%

+10%

+7%

+7%

+7%

+3%

+1%

+1%

+3%

Total

+0%

NB: DIS organic sales growth not meaningful

-1%

-2%

-2%

2019 Full-Year results - 35

Q4 2019 order intake by operating segment

Q4 2019	Q4 2018	Change
€m		Total	Organic

Aerospace	2,204	2,301
Transport	883	591
Defence & Security	4,636	3,572
Digital Identity & Security	952	71
Other	21	32

-4%-5%

+49%+46%

+30%+30%

nmnm

nmnm

Total	8,696	6,566	+32%	+19%

2019 Full-Year results - 36

Q4 2019 sales by operating segment

Q4 2019	Q4 2018	Change
€m		Total	Organic

Aerospace	1,808	1,769
Transport	645	628
Defence & Security	2,595	2,508
Digital Identity & Security	921	61
Other	25	15

+2.2%+1.5%

+2.3%+0.7%

+3.5%+3.9%

nmnm

nmnm

Total	5,991	4,981	+20.3%	+2.6%

2019 Full-Year results - 37

Definition of non-GAAP measures and other remarks

Rounding of amounts in euros

In the context of this presentation, the amounts expressed in millions of euros are rounded to the nearest million. As a result, the sums of the rounded amounts may differ very slightly from the reported totals. All ratios and variances are calculated based on underlying amounts, which feature in the consolidated financial statements.

Definitions

Organic: at constant scope and exchange rates;

Book-to-billratio: ratio of orders received to sales;

Mature markets: All countries in Europe excluding Russia and Turkey, North America, Australia and New Zealand;

Emerging markets: All other countries, i.e. Middle East, Asia, Latin America and Africa.

Non-GAAP measures

This presentation contains non-Generally Accepted Accounting Principles (GAAP) financial measures. Thales regards such non-GAAP financial measures as relevant operating and financial performance indicators for the Group, as they allow non-operating and non-recurring items to be excluded. Thales definitions for such measures may differ from similarly titled measures used by other companies or analysts.

EBIT: income from operations; plus the share of net income or loss of equity affiliates less: amortization of acquired assets (PPA), expenses recorded in the income from operations that are directly related to business combinations. See also notes 13-a and 2 of the consolidated financial statements at 31 December 2019.

Adjusted net income: net income, less the following elements, net of the corresponding tax effects: (i) amortization of acquired assets (PPA),

1. expenses recorded in the income from operations or in "financial results" which are directly related to business combinations, which by their nature are unusual, (iii) disposal of assets, change in scope of consolidation and other, (iv) impairment of non-current assets, (v) changes in the fair value of derivative foreign exchange instruments (recognized under "other financial income and expenses" in the consolidated financial statements),

1. actuarial gains or losses on long-term benefits (recognized under "finance costs on pensions and employee benefits" in the consolidated financial statements). See note 13-a of the consolidated financial statements at 31 December 2019. This definition implies the definition of several other adjusted financial measures, such as adjusted gross margin, adjusted tax, adjusted EPS …. See page 14 and 15 of the 2019 results press release for detailed calculation of these other indicators.

Free operating cash flow: net cash flow from operating activities, less: capital expenditures, less: deficit payments on pensions in the United Kingdom. See notes 13-a and 6.3 of the consolidated financial statements at 31 December 2019.

Net cash (debt): difference between the sum of "cash and cash equivalents" and "current financial assets" items and short and long-term borrowings, after deduction of interest rate derivatives. See note 6.2 of the consolidated financial statements at 31 December 2019.

2019 Full-Year results - 38

Tour Carpe Diem - 31 Place des Corolles 92098 Paris La Défense - France www.thalesgroup.com

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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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