Thales : 2018 Half-year results

Thales's Board of Directors (Euronext Paris: HO) met on 19 July 2018 to review the financial statements for the first half of 2018 [1].

Patrice Caine, Chairman & Chief Executive Officer, commented,

'In the first half of 2018, Thales again posted a very solid performance. Organic sales growth reached almost 7%, ahead of the full year target. Order intake, up by 5%, was in line with our expectations. The operating margin rose sharply, breaking through the 10% barrier in H1 for the first time. As planned, we significantly increased our R&D investments, up 13% for H1 2018, in order to accelerate the development of the most innovative solutions in every one of our markets and plan for the future. These positive dynamics allows us to confirm our 2018 financial objectives.'

'All Group teams are focused on the implementation of the second phase of our strategic plan Ambition 10, which combines the strengthening of our position as a technology leader in all of our markets with the ramp-up of new operational performance initiatives.'

'The projected acquisition of Gemalto, a booster of this strategy, is proceeding as planned. It should be completed before the end of the year, once we have obtained all the necessary regulatory authorizations.'

'Our ambition is simple: to grow profitably, faster than the market, and in a sustainable way, in order to maximize value creation.'

• Solid order intake: €6.3 billion, up 5% [2] (+8% on an organic basis [3])

• Sales: €7.45 billion, up 4.7% (up 6.9% on an organic basis)

• EBIT [4]: €762 million, up 30% (up 33% on an organic basis)

• Adjusted net income, Group share [4]: €539 million, up 39%

• Consolidated net income, Group share: €457 million, up 53%

• Free operating cash flow [4] : -€272m

• All 2018 financial objectives confirmed

We are pleased to invite you to participate in our conference call in English:

Friday, 20 July 2018at 8:30 am (CET)

Dial-in number from France: + 33(0) 1 72 72 74 03 _ Code PIN: 34677760#

International dial-in number: + 44 (0) 207 194 3759 - Codin PIN: 34677760#

It will be also possible to follow the conference call through a webcast by using the following link:https://edge.media-server.com/m6/p/fvq8mde4

If you are unable to listen to the call live, a digital replay will be available a few hours after the end of the conference call and will remain available for 90 days. To access the replay, please dial+33 (0)1 70 71 01 60 or +44 20 3364 5147 (Access code 41877218#).

Notes

[1] The limited review of the financial statements has been completed and the statutory auditors' report has been issued following the meeting of the Board of Directors

[2] As of 1st January 2018, the Group has been applying IFRS 15 'Revenue from Contracts with Customers'. All changes are calculated compared with the H1 2018 figures restated for the application of this standard, which appear in the H1 2018 consolidated financial statements

[3] 'Organic' means at constant scope and currency. See note on methodology on page 12 and calculation on page 17 of the press release

[4] Non-GAAP financial indicators, see definitions in the appendices, page 12 of the press release

[5] All 'total changes' are calculated compared with the H1 2018 figures restated for the application of the IFRS 15 standard, which appear in the H1 2018 consolidated financial statements

[6] As of 1st January 2018, the Group has been applying IFRS 15 'Revenue from Contracts with Customers', which introduces the concept of accounting order book ('revenue remaining to be recognized'). The definitions of 'order book' and 'order intake' have been adjusted accordingly, without having a material impact at Group level

[7] At 31 December 2017