Thales : Interim condensed consolidated financial statements at 30 June 2017

INTERIM CONSOLIDATED PROFIT AND LOSS ACCOUNT 3

INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 4

INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 5

INTERIM CONSOLIDATED BALANCE SHEET 6

INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS 7

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 8

1. ACCOUNTING STANDARDS FRAMEWORK 8

2. BASIS OF PREPARATION FOR THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS 8

3. NEW IFRS STANDARDS MANDATORILY APPLICABLE AFTER 30 JUNE 2017 9

4. SEGMENT INFORMATION 10

5. INFORMATION BY BUSINESS SEGMENT 10

6. INFORMATION BY COUNTRY/REGION OF DESTINATION 12

7. IMPACT OF CHANGES IN SCOPE OF CONSOLIDATION 13

8. MAIN CHANGES IN SCOPE OF CONSOLIDATION 13

9. DISPOSAL OF ASSETS, CHANGES IN SCOPE OF CONSOLIDATION AND OTHER 13

10. PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS 14

11. GOODWILL 14

12. PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS 15

13. INVESTMENTS IN JOINT-VENTURES AND ASSOCIATES 15

14. JOINT- VENTURES 15

15. INVESTMENTS IN ASSOCIATES 16

17. FINANCING AND FINANCIAL INSTRUMENTS 17

18. OTHER FINANCIAL INCOME (EXPENSE) 17

19. NET CASH (NET DEBT) 17

20. SUMMARY OF FINANCIAL ASSETS AND LIABILITIES 18

22. CHANGE IN NET CASH (NET DEBT) 18

23. CHANGES IN WORKING CAPITAL REQUIREMENTS 19

24. RESERVES FOR CONTINGENCIES (EXCLUDING CONSTRUCTION CONTRACTS) 19

25. PENSIONS AND OTHER LONG-TERM EMPLOYEE BENEFITS 20
26. INCOME TAX 21
27. EQUITY AND EARNINGS PER SHARE 21

28. SHAREHOLDERS' EQUITY 21

29. EARNINGS PER SHARE 23

30. LITIGATION 23
31. RELATED PARTY TRANSACTIONS 23
32. EVENTS AFTER REPORTING PERIOD 23

33. INTERIM CONSOLIDATED PROFIT AND LOSS ACCOUNT

    First Half	First Half	Full Year
    Notes	2017	2016	2016

    (in € millions)

    Sales	Note 2	7,241.3	6,845.6	14,884.8
    Cost of sales*	(5,501.2)	(5,222.5)	(11,276.8)
    Research and development expenses	(362.7)	(326.7)	(736.1)
    Marketing and selling expenses*	(523.2)	(517.6)	(1,023.2)
    General and administrative expenses	(277.8)	(270.0)	(543.5)
    Restructuring costs	(23.6)	(34.0)	(100.5)
    Amortisation of intangible assets acquired (PPA)**	(54.4)	(39.7)	(107.3)
    Income from operations	Note 2	498.4	435.1	1,097.4
    Disposal of assets, changes in scope of consolidation and other	Note 3.2	(9.2)	95.3	205.1
    Impairment on non-current assets	Note 4	--	--	--
    Income of operating activities before share in net income of equity affiliates		489.2	530.4	1,302.5
    Share in net income of equity affiliates	61.1	56.0	119.6
    Of which, share in net income of joint-ventures	Note 5.1	39.5	29.9	72.4
    Of which, share in net income of associates	Note 5.2	21.6	26.1	47.2
    Income of operating activities after share in net income of equity affiliates		550.3	586.4	1,422.1
    Interest expense on gross debt	(7.4)	(6.5)	(11.3)
    Interest income on cash and cash equivalents	9.0	7.7	17.6
    Interest income, net	1.6	1.2	6.3
    Other financial income (expenses)	Note 6.1	(62.7)	(49.3)	(80.6)
    Finance costs on pensions and other employee benefits	Note 8	(27.7)	(48.3)	(77.6)
    Income tax	Note 9	(103.6)	(80.4)	(255.6)
    Net income		357.9	409.6	1,014.6
    Attributable to:
    Shareholders of the parent company		335.9	383.8	946.4
    Non-controlling interests		22.0	25.8	68.2
    Basic earnings per share (in euros)	Note 10.2	1.59	1.82	4.49
    Diluted earnings per share (in euros)	Note 10.2	1.58	1.80	4.44

    * Net costs bad debts / receivables impairment have been reclassified from Marketing & selling expenses to cost of sales (negative €10.6 million in first half 2016, and negative €2.2 million in 2016).

    ** This item corresponds to the amortisation of acquired intangible assets (Purchase Price Allocation: PPA) of fully consolidated entities. The amortisation of PPA related to equity affiliates is included in the share in net income (loss) of equity affiliates and detailed in Note 2.1.

    INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

    First half 2017

    Fisrt Half 2016

    Full Year 2016

    (in € millions)	Total attributable to:
    	Shareholders of the parent company	Non- controlling interes ts	Total	Shareholders of the parent company		Non- controlling interes ts	Total	Shareholders of the parent company		Non- controlling interes ts	Total
    Net income	335.9	22.0	357.9	383.8	25.8	409.6	946.4	68.2	1,014.6
    Trans lation adjustment *	(41.1)	(0.7)	(41.8)	1.0	(0.4)	0.6		32.2	(0.3)	31.9
    Deferred tax *	--	--	--	--	--	--		1.3	--	1.3
    Joint-ventures	(4.6)	--	(4.6)	(6.4)	--	(6.4)		(26.9)	--	(26.9)
    Associates	(11.2)	--	(11.2)	(34.9)	--	(34.9)		(30.7)	--	(30.7)
    Net	(56.9)	(0.7)	(57.6)	(40.3)	(0.4)	(40.7)		(24.1)	(0.3)	(24.4)
    Cash flow hedge *	265.2	13.4	278.6	144.1	8.1	152.2		49.5	3.0	52.5
    Deferred tax *	(77.3)	(4.3)	(81.6)	(40.7)	(3.1)	(43.8)		(17.4)	(1.5)	(18.9)
    Joint-ventures	(1.3)	--	(1.3)	(1.2)	--	(1.2)		(0.5)	--	(0.5)
    Associates	(0.9)	--	(0.9)	1.8	--	1.8		0.5	--	0.5
    Net	185.7	9.1	194.8	104.0	5.0	109.0		32.1	1.5	33.6
    Available for sale financial assets *	(1.0)	--	(1.0)	--	--	--		3.5	--	3.5
    Joint-ventures	(6.7)	--	(6.7)	--	--	--		6.7	--	6.7
    Net	(7.7)	--	(7.7)	--	--	--		10.2	--	10.2
    Items that may be reclassified to income	121.1	8.4	129.5	63.7	4.6	68.3		18.2	1.2	19.4
    Actuarial gains (los ses) on pensions *	(119.0)	(1.8)	(120.8)	(455.8)	(0.9)	(456.7)		(658.1)	(2.9)	(661.0)
    Deferred tax *	1.0	0.6	1.6	43.2	0.2	43.4		22.6	(0.3)	22.3
    Joint-ventures	0.8	--	0.8	--	--	0.0		(12.7)	--	(12.7)
    Associates	(0.7)	--	(0.7)	0.5	--	0.5		0.4	--	0.4
    Items that will not be reclassified to income	(117.9)	(1.2)	(119.1)	(412.1)	(0.7)	(412.8)		(647.8)	(3.2)	(651.0)
    Other comprehensive income (loss) for the period net of tax	3.2	7.2	10.4	(348.4)	3.9	(344.5)		(629.6)	(2.0)	(631.6)
    Total comprehensive income for the period	339.1	29.2	368.3	35.4	29.7	65.1	316.8	66.2	383.0

    Total attributable to: Total attributable to:

    * fully consolidated entities

    INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

    (in € millions)

    Number of

    shares outstanding (thousands)

    Share capital

    Additional

    paid-in capital

    Retained earnings

    Cash flow

    hedge

    AFS

    invest- ments

    Cumulative translation adjustment

    Treasury shares

    Total attributable to shareholders of

    At 1 January 2017	211,445	636.6	4,036.9	376.5	(250.7)	12.4	(110.0)	(61.6)	4,640.1	225.9	4,866.0
    Net income	--	--	--	335.9	--	--	--	--	335.9	22.0	357.9
    Other comprehensive income	--	--	--	(117.9)	185.7	(7.7)	(56.9)	--	3.2	7.2	10.4
    Total comprehensive income for first half 2017	--	--	--	218.0	185.7	(7.7)	(56.9)	--	339.1	29.2	368.3
    Employee share issues	384	1.1	13.9	--	--	--	--	--	15.0	--	15.0
    Parent company dividend distribution	--	--	--	(253.7)	--	--	--	--	(253.7)	--	(253.7)
    Third-party share in dividend distribution of subsidiaries	--	--	--	--	--	--	--	--	--	(11.7)	(11.7)
    Share-based payments	--	--	--	8.0	--	--	--	--	8.0	--	8.0
    Acquisitions/disposals of treasury shares	(85)	--	--	(0.9)	--	--	--	(8.6)	(9.5)	--	(9.5)
    Other	--	--	--	21.3	--	--	--	--	21.3	(0.6)	20.7
    At 30 June 2017	211,744	637.7	4,050.8	369.2	(65.0)	4.7	(166.9)	(70.2)	4,760.2	242.8	5,003.0

    the parent company

    Non- controlling interests

    Total equity

    (in € millions)

    Number of

    shares outstanding (thousands)

    Share capital

    Additional

    paid-in capital

    Retained earnings

    Cash flow

    hedge

    AFS

    invest- ments

    Cumulative translation adjustment

    Treasury shares

    Total attributable to shareholders of

    At 1 January 2016	210,122	632.9	3,995.4	404.6	(276.8)	2.2	(87.2)	(25.2)	4,645.9	295.9	4,941.8
    Net income	--	--	--	383.8	--	--	--	--	383.8	25.8	409.6
    Other comprehensive income	--	--	--	(412.1)	104.0	--	(40.3)	--	(348.4)	3.9	(344.5)
    Total comprehensive income for first half 2016	--	--	--	(28.3)	104.0	--	(40.3)	--	35.4	29.7	65.1
    Employee share issues	747	2.2	24.9	--	--	--	--	--	27.1	--	27.1
    Parent company dividend distribution	--	--	--	(212.3)	--	--	--	--	(212.3)	--	(212.3)
    Third-party share in dividend distribution of subsidiaries	--	--	--	--	--	--	--	--	--	(47.5)	(47.5)
    Share-based payments	--	--	--	7.9	--	--	--	--	7.9	--	7.9
    Acquisitions/disposals of treasury shares	41	--	--	1.4	--	--	--	0.8	2.2	--	2.2
    Purchase of Raytheon's stake in TRS SAS	--	--	--	(52.8)	--	--	--	--	(52.8)	(85.8)	(138.6)
    Changes in scope of consolidation	--	--	--	3.8	--	--	1.1	--	4.9	(1.5)	3.4
    At 30 June 2016	210,910	635.1	4,020.3	124.3	(172.8)	2.2	(126.4)	(24.4)	4,458.3	190.8	4,649.1

    the parent company

    Non- controlling interests

    Total equity

    INTERIM CONSOLIDATED BALANCE SHEET

    (in € millions)

    ASSETS Notes 30/06/2017 31/12/2016

    Goodwill, net	Note 4.1	3,400.5	3,424.4
    Other intangible assets, net	Note 4.2	869.8	958.8
    Property, plant and equipment, net	Note 4.2	1,778.6	1,798.9
    Total non-current operating assets	6,048.9	6,182.1
    Investments in joint-ventures	Note 5.1	1,009.6	997.5
    Investments in associates	Note 5.2	203.0	219.5
    Non-consolidated investments	57.1	82.3
    Other non-current financial assets	143.7	138.3
    Total non-current financial assets	1,413.4	1,437.6
    Non-current derivatives - assets	Note 6.2	20.0	27.9
    Deferred tax assets	904.5	975.8
    Non-current assets		8,386.8	8,623.4
    Inventories and work in progress	2,995.5	2,734.6
    Construction contracts: assets	2,840.8	2,331.5
    Advances to suppliers	367.9	348.3
    Accounts, notes and other current receivables	4,097.1	4,547.5
    Current derivatives - assets	Note 7.1	255.0	161.7
    Total current operating assets	10,556.3	10,123.6
    Current tax receivable	62.7	59.8
    Current financial assets	262.4	265.9
    Cash and cash equivalents	3,564.9	3,616.9
    Total current financial assets	Note 6.2	3,827.3	3,882.8
    Current assets		14,446.3	14,066.2
    Total assets		22,833.1	22,689.6

    EQUITY AND LIABILITIES Notes 30/06/2017 31/12/2016

    Capital, additional paid-in capital and other reserves		4,997.3	4,811.7
    Cumulative translation adjustment		(166.9)	(110.0)
    Treasury shares		(70.2)	(61.6)
    Total attributable to shareholders of the parent company		4,760.2	4,640.1
    Non-controlling interests		242.8	225.9
    Total equity	Note 10.1	5,003.0	4,866.0
    Long-term loans and borrowings	Note 6.2	922.0	1,433.7
    Non-current derivatives - Liabilities	Note 6.2	3.6	--
    Pensions and other long-term employee benefits	Note 8	2,861.1	2,785.8
    Deferred tax liabilities	254.8	294.6
    Non-current liabilities		4,041.5	4,514.1
    Advances received from customers on contracts	4,779.1	4,478.4
    Refundable grants	133.8	133.4
    Construction contracts: liabilities	1,218.0	1,139.4
    Reserves for contingencies	1,050.1	1,037.0
    Accounts, notes and other current payables	5,689.9	5,872.6
    Current derivatives - liabilities	236.6	478.3
    Total current operating liabilities	Note 7.1	13,107.5	13,139.1
    Current tax payable	53.1	59.0
    Short-term loans and borrowings	Note 6.2	628.0	111.4
    Current liabilities		13,788.6	13,309.5
    Total equity and liabilities		22,833.1	22,689.6

    INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS

    (in € millions) Notes

    First Half

    2017

    First Half

    2016

    Full Year

    2016

    Net income		357.9	409.6	1,014.6
    Add (deduct):
    Income tax expense (gain)		103.6	80.4	255.6
    Net interest income		(1.6)	(1.2)	(6.3)
    Share in net income of equity affiliates		(61.1)	(56.0)	(119.6)
    Dividends received from equity accounted: joint-ventures Note 5.1		13.4	26.9	43.6
    Dividends received from equity accounted: associates Note 5.2		21.7	15.1	29.1
    Depreciation and amortisation of property, plant and equipment and intangible Note4.2 assets		242.2	228.2	491.9
    Provisions for pensions and other employee benefits Note 8		101.7	95.4	170.5
    Loss (gain) on disposal of assets, change inscope of consolidation and other		9.2	(95.3)	(205.1)
    Provisions for restructuring, net		(27.4)	(13.3)	(7.4)
    Other items		(12.9)	14.1	31.4
    Operating cash flows before working capital changes, interest and tax		746.7	703.9	1,698.3
    Change in working capital and reserves for contingencies Note 7.1		(227.4)	(337.3)	(63.4)
    Cash contributions to pension plans and other long-term employee benefits		(101.8)	(96.9)	(190.1)
    - UK deficit payment		(40.0)	(45.2)	(88.3)
    - Recurring contributions/benefits		(61.8)	(51.7)	(101.8)
    Interest paid		(12.6)	(11.0)	(21.1)
    Interest received		6.7	6.5	13.6
    Income tax paid		(45.8)	(39.2)	(99.4)
    Net cash flow from operating activities	- I -	365.8	226.0	1,337.9
    Acquisitions of property, plant and equipment and intangible assets	(189.5)	(230.2)	(480.3)
    Disposals of property, plant and equipment and intangible assets	0.1	4.1	8.3
    Net operating investments	Note 4.2	(189.4)	(226.1)	(472.0)
    Acquisitions of subsidiaries and affiliates, net	(1.2)	(367.8)	(391.2)
    Disposals of subsidiaries and affiliates, net	41.0	87.0	296.9
    Decrease (increase) in loans and non-current financial assets	(4.1)	(14.3)	(26.5)
    Decrease (increase) in current financial assets	3.5	12.1	(235.6)
    Net financial investments	39.2	(283.0)	(356.4)
    Net cash flow used in investing activities	- II -	(150.2)	(509.1)	(828.4)
    Parent company dividend distribution	Note 10	(253.7)	(212.3)	(296.8)
    Third party share in dividend distribution of subsidiaries	(11.7)	(47.5)	(48.3)
    Capital increase (options exercised) & (Purchase) sale of treasury shares	2.0	39.0	4.9
    Issuance of debt	36.2	622.8	641.1
    Repayment of debt	(0.8)	(50.2)	(643.7)
    Net cash flow from / used in financing activities	- III -	(228.0)	351.8	(342.8)
    Effect of exchange rate changes and other	- IV -	(39.6)	4.9	--
    Increase (decrease) in cash and cash equivalents	I+II+III+IV	(52.0)	73.6	166.7
    Cash and cash equivalents at beginning of period		3,616.9	3,450.2	3,450.2
    Cash and cash equivalents at end of period		3,564.9	3,523.8	3,616.9

    The Group's net cash position and the changes from period to the next are presented in Notes 6.2 and 7.

    NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

    All monetary amounts included in these notes are expressed in millions of euros.

34. ACCOUNTING STANDARDS FRAMEWORK

    Thales' condensed interim consolidated financial statements for six months ended 30 June 2017 were approved and authorised for issue by its Board of Directors on 25 July 2017.

    Thales (Parent Company) is a French joint-stock company (société anonyme), registered with the Nanterre Trade and Companies' Register under number 552 059 024.

35. BASIS OF PREPARATION FOR THE CONDENSED INTERIM CONSOLIDATED FINANCIAL

    STATEMENTS

    The condensed interim consolidated financial statements for the six months ended 30 June 2017 have been prepared in accordance with IAS 34 "Interim Financial Reporting" and with the International Financial Reporting Standards (IFRS) approved by the European Union at 30 June 20171.

    The condensed interim consolidated financial statements have been prepared using the same accounting policies as those used to prepare the full-year financial statements at 31 December 2016, as detailed in Note 14-a of the consolidated financial statements included in the 2016 Registration Document.

    In particular, the new mandatory standards applicable as from 1 January 2017 (Amendments to IAS 12 Income Tax, Amendments to IAS 7 Statement of cash flows, 2014-2016 Annual Improvements Cycle) have not yet been adopted by the European Union and the Group has therefore not applied them as at 30 June 2017.

    The specific provisions relating to the preparation of interim financial statements are described hereafter.

36. Measurement procedures used for the condensed interim consolidated financial statements Pensions and other long-term employee benefits

    Pension costs for interim periods are recognised based on the actuarial valuations performed at the end of

    the prior year. When appropriate, these valuations are adjusted to take into account curtailments, settlements or other major non-recurring events that occurred during the period. In addition, pensions and other long-term benefits liabilities are updated in order to reflect material changes impacting the yield on investment-grade corporate bonds in the concerned geographic area (the benchmark used to determine the discount rate), the inflation rate and the actual return on plan assets.

    Income taxes

    Current and deferred income tax expense for interim periods is calculated at each tax entity level by applying the average estimated annual effective tax rate for the current year to the income for the period. When required, this amount is adjusted to take into account the tax effects of specific events of the period.

    Goodwill

    Impairment tests are performed for each annual closing, and whenever there is an indication of impairment (note 4.1). Impairment that would be recognised in the first half of the year is not reversible.

    1 Available at the following internet address : https://ec.europa.eu/info/law/international-accounting-standards-regulation-ec-no-1606- 2002.

37. Seasonality of business

    In accordance with accounting policies, revenues are recognised, as at year end, over the period of their realisation. In previous years the level of business has been higher in the last quarter, and particularly in December. Revenues and income from operations have been generally lower in the first half of the year due to the seasonality of business. The company has noted that this phenomenon is of a recurring nature, even though its extent varies from year to year.

38. Conversion rates

39. The main closing and average exchange rates for the periods used are the following:

    30 June 2017		30 June 2016		31 December 2016
    Euro	Closing rate	Average rate	Closing rate	Average rate	Closing rate	Average rate
    Australian Dollar	1.4851	1.4420	1.4929	1.5116	1.4596	1.4852
    Pound Sterling	0.8793	0.8612	0.8265	0.7850	0.8562	0.8227
    U.S. Dollar	1.1412	1.0934	1.1102	1.1142	1.0541	1.1032

40. NEW IFRS STANDARDS MANDATORILY APPLICABLE AFTER 30 JUNE 2017

    New standards and interpretations issued by the IASB, but not yet mandatorily applicable, are described in the Note 1 "Accounting standards framework" note to the consolidated financial statements of the 2016 Registration Document, page 34.

    This note primarily describes the main impacts of IFRS 15 (Revenue from Contracts with Customers) for Thales.

    Thales has opted for the full retrospective approach. This restatement will present historical trends consistently as the consolidated financial information at the end-December 2017 will have been restated on a comparable basis with the consolidated financial information recognised under IFRS 15 at the end- December 2018.

    The 2017 comparative financial statements included in the 2018 financial statements will be restated and opening equity as of 1 January 2017 will be adjusted for the impacts of applying the new standard.

    In 2017, the Group has been working on the implementation of this new standard. The assessment of the impacts on the consolidated balance sheet at the transition date and on the interim consolidated financial statements for the first half of 2017 is still ongoing.

    The Group intends to present its restated financial statements for the first half of 2017, following the Statutory Auditor's review, in the press release on the order intake and sales for the third quarter of 2017.

41. SEGMENT INFORMATION

    The operating segments presented by the Group are as follows :

    • The Aerospace segment, which combines the "Avionics" and "Space" Global Business Units that develop on-board systems, solutions and services mainly for private sector customers (aircraft manufacturers, airlines, satellite operators, etc.), but also to a lesser extent for government/defence customers (states, space agencies and other semi-public organisations).

    • The Transport segment, which comprises the "Ground Transportation Systems" Global Business Unit that develops systems and services for an exclusively civilian customer base of ground transportation infrastructure operators;

    • The Defence and Security segment, which combines the "Secure Communications and Information Systems", "Land and Air Systems" and "Defence Mission Systems" Global Business Units that develop equipments, systems and services for the armed and security forces and for the protection of networks and infrastructures, mainly for a government/defence customer base;.

    In order to monitor the operating and financial performance of the Group entities, the Group's executives regularly consider certain key non-GAAP indicators as defined, in Note 14-a of the consolidated financial statements included in the 2016 Registration Document, which enable them to exclude certain non- operating and non-recurring items.

    In particular, EBIT, presented by business segment below, corresponds to income from operations plus the share in net income of equity affiliates, excluding amortisation of acquisition-related intangible assets (purchase price allocation - PPA) reported under business combinations. From 1 January 2016, it also excludes other expenses booked to income from operations that are directly linked to business combinations, which are unusual by nature.

42. INFORMATION BY BUSINESS SEGMENT

    First half 2017	Aeros pace	Trans port	Defence & Security	Other, elim and unallocated *	Thales
    Order backlog - non-Group	9,141.1	4,417.5	18,213.1	89.1	31,860.8
    Order intake - non-Group	2,237.5	662.0	3,034.5	38.2	5,972.2
    Sales - non-Group	2,871.6	710.9	3,631.4	27.4	7,241.3
    Sales - intersegment	44.3	4.0	126.0	(174.3)	--
    Total sales	2,915.9	714.9	3,757.4	(146.9)	7,241.3
    EBIT	263.2	6.4	374.4	(6.7)	637.3
    Of which, Naval Group (formerly
    DCNS)	--	--	--	26.9	26.9
    Of which, excluding Naval Group	263.2	6.4	374.4	(33.6)	610.4

    First half 2016	Aeros pace	Trans port	Defence & Security	Other, elim and unallocated *	Thales
    Order backlog - non-Group	9,280.8	4,489.5	16,534.1	69.7	30,374.1
    Order intake - non-Group	2,218.3	507.1	2,669.5	28.4	5,423.3
    Sales - non-Group	2,667.3	717.3	3,424.2	36.8	6,845.6
    Sales - intersegment	43.8	3.4	138.1	(185.3)	--
    Total sales	2,711.1	720.7	3,562.3	(148.5)	6,845.6
    EBIT	238.7	(11.7)	333.9	(9.7)	551.2
    Of which, Naval Group (formerly
    DCNS)	--	--	--	19.6	19.6
    Of which, excluding Naval Group	238.7	(11.7)	333.9	(29.3)	531.6

    2016	Aeros pace	Trans port	Defence & Security	Other, elim and unallocated *	Thales
    Order backlog - non-Group	9,913.6	4,567.1	18,972.7	76.8	33,530.2
    Order intake - non-Group	5,872.3	1,503.5	9,063.1	75.4	16,514.3
    Sales - non-Group	5,812.0	1,602.8	7,390.2	79.8	14,884.8
    Sales - intersegment	93.9	5.6	295.0	(394.5)	--
    Total sales	5,905.9	1,608.4	7,685.2	(314.7)	14,884.8
    EBIT	571.3	11.3	787.4	(15.5)	1,354.5
    Of which, Naval Group (formerly
    DCNS)	--	--	--	33.8	33.8
    Of which, excluding Naval Group	571.3	11.3	787.4	(49.3)	1,320.7

    *Backlog, Order intake and Sales included in the "Other, elim and non unallocated" column relate to corporate activities (Thales parent company, Thales Global Services, Group R&D centers, facilities management), and to the elimination of transactions between the business segments.

    Non-allocated EBIT includes Group's share (35%) in the net income of Naval Group (formerly DCNS), corporate income from operations which not assigned to the segments and the cost of vacant premises. Other costs (mainly the costs of foreign holding companies not invoiced and the expenses related to share-based payments) are reallocated to business segments proportionally to their respective ex-Group sales.

    The reconciliation between income from operations and EBIT is analysed as follow:

    First half 2017	First half 2016	Full Year 2016
    Income from operations	498.4	435.1	1,097.4
    Share in net income of equity affiliates	61.1	56.0	119.6
    Sub-total	559.5	491.1	1,217.0
    PPA amortisation related to fully consolidated entities	54.4	39.7	107.3
    PPA amortisation related to equity affiliates	13.3	13.3	11.2
    Expenses linked directly to business combinations	10.1	7.1	19.0
    EBIT	637.3	551.2	1,354.5

43. INFORMATION BY COUNTRY/REGION OF DESTINATION

44. Consolidated new orders (direct and indirect) by destination	First half 2017	First half 2016	Full year 2016
    France	1,811.1	1,200.7	3,509.2
    United Kingdom	369.5	463.3	1,003.2
    Rest of Europe	1,142.7	1,304.2	3,646.3
    Europe	3,323.3	2,968.2	8,158.7
    North America	696.9	492.0	1,215.6
    Australia and New Zealand	380.9	346.3	763.7
    Asia Near and Middle East *	689.3 551.0	658.6 461.3	3,708.5 1,673.9
    Rest of the world *	330.8	496.9	993.9
    Emerging markets	1,571.1	1,616.8	6,376.3
    Total	5,972.2	5,423.3	16,514.3

    Sales (direct and indirect) by destination	First half 2017	First half 2016	Full year 2016
    France	1,768.1	1,660.7	3,580.6
    United Kingdom	633.0	623.2	1,272.3
    Rest of Europe	1,415.1	1,416.8	3,227.2
    Europe	3,816.2	3,700.7	8,080.1
    North America	698.8	779.7	1,555.9
    Australia and New Zealand	443.2	375.2	759.2
    Asia Near and Middle East *	1,068.0 788.7	952.8 612.8	2,047.9 1,514.9
    Rest of the world *	426.4	424.4	926.8
    Emerging markets	2,283.1	1,990.0	4.489.6
    Total	7,241.3	6,845.6	14,884.8

    *The 2016 figures have been adjusted to reflect the transfer of some countries out to the "Near and Middle East" region into the "Rest of the world" region within the Group's organisation.