Thales : 2021 Half-yearly Financial Report

Half-yearly financial report 2021

Report on business activity

Consolidated financial statements

HALF-YEARLY FINANCIAL REPORT 2021

TABLE OF CONTENTS

Declaration from the person responsible for the half-yearly financial	1
report
Report on 2021 first-half business activity and results	2
o	Key figures	2
o Presentation of financial information	3
o	Order intake	7
o	Sales	8
o	Adjusted results	10
o	Consolidated results	11
o Financial situation at 30 June 2021	13
o	Related party transactions	14
o Main risks and uncertainties in the second half of 2021 fiscal year	14
o Outlook for the current year	14
o	Appendix	15
Consolidated financial statements at 30 June 2021	17
o Consolidated profit and loss account	18
o Consolidated statement of comprehensive income	19
o Consolidated statement of changes in equity	20
o	Consolidated balance sheet	22
o Consolidated statement of cash flows	23
o Notes to the consolidated financial statements	24
Statutory auditors' report	38

The English language version of this report is a free translation from the original, which was prepared and filed with the AMF in French language. 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 opinion expressed in the original language version of the report in French take precedence over the translation.

Declaration by person responsible for the half-

yearly financial report

I certify that, to the best of my knowledge, the condensed financial statements at 30th June 2021 have been prepared in accordance with applicable accounting standards and give a fair view of the assets, liabilities, financial position and results of the company and of all the entities taken as a whole included in the consolidation, and that the attached half-yearly business report presents a fair view of the significant events that occurred during the first six months of the financial year, their impact on the financial statements, the main related party transactions as well as a description of the main risks and uncertainties for the remaining six months of the financial year.

Paris La Défense, 23rd July 2021

Patrice Caine

Chairman & Chief Executive Officer

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Report on 2021 first half

business activity and results

Key figures1

In € millions,	H1 2021		H1 2020		Total	Organic
		change	change
except earnings and dividend per share (in €)
Order intake	8,244		6,092		+35%	+37%
Order book at end of period	34,629		31,662		+9%
Sales	8,423		7,751		+8.7%	+9.8%
EBIT2	768	348	+121%	+119%
as a % of sales	9.1%	4.5%		+4.6 pts	+4.6 pts
Adjusted net income, Group share2	591		232		+155%
Adjusted net income, Group share, per share2	2.78		1.09		+155%
Consolidated net income, Group share	433		65		+566%
Free operating cash flow2	420		-471		+891
Net cash (debt) at end of period2	-2,496		-3,9283		+1,432

1. In order to enable better monitoring and benchmarking of its financial and operating performance, Thales presents adjusted data, including EBIT and adjusted net income, non-GAAP measures, which exclude non-operating and non- recurring items. Details of the adjustments are given in the "Presentation of financial information" in this report
2. Non-GAAPfinancial indicators, see definitions in the appendices, page 3.
3. Net debt at 30 June 2020.

2

Presentation of financial information

Accounting policies

Thales's condensed interim consolidated financial statements for the six months ended 30 June 2021 have been prepared in accordance with the provisions of IAS 34 (Interim Financial Reporting) and with the International financial Reporting Standards (IFRS) approved by the European Union at 30 June 20204.

The condensed interim consolidated financial statements are consistent with the accounting policies applied by the Group for the full-year financial statements at 31 December 2020 (as described in the notes 1 and 13 to the consolidated financial statements).

Adjusted income statement

In order to facilitate the monitoring and benchmarking of its financial and operating performance, the Group presents three key non-GAAP indicators, which exclude non-operating and/or non- recurring items. They are determined as follows:

• EBIT, an adjusted operating indicator, corresponds to income from operations plus the share in the net income of equity-accounted companies, before the impact of entries recorded as part of business combinations (amortisation of assets valued when determining the purchase price allocation, other expenses directly related to acquisitions).
• Adjusted net income corresponds to net income, excluding the following items and net of the corresponding tax effects:
• • amortisation of assets valued when determining the purchase price allocation (business combinations);
  • expenses recognised in income from operations or in finance costs that are directly related to business combinations;
  • gains and losses on disposals of assets, changes in scope of consolidation and other;
  • impairment of non-current assets;
  • changes in the fair value of derivative foreign exchange instruments (recognised under
    "Other financial income and expenses" in the consolidated financial statements);
  • actuarial gains (losses) on long-term benefits (recognised under "Finance costs on pensions and other long-term employee benefits" in the consolidated financial statements).
• Free operating cash flow corresponds to the net cash flow from operating activities before contributions to reduce the pension deficit in the United Kingdom, and after deducting net operating investments.

Defining EBIT and adjusted net income involves defining other operating indicators in the adjusted income statement, specifically, adjusted cost of sales, adjusted gross margin (corresponding to the difference between sales and the adjusted cost of sales), adjusted indirect costs, other adjusted financial income, adjusted financial income on pensions and long-term benefits, adjusted income tax, adjusted net income, Group share, per share, calculated as described on pages 5 and 6.

4 Available at https://ec.europa.eu/info/law/international-accounting-standards-regulation-ec-no-1606-2002

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