Growth for Thales in Satellites & Security activities ... · in Satellites & Security activities Strengthened cooperation with Alcatel. 2 ... Optimising "Go-to-market together "4
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Denis Denis RanqueRanque, , Chairman Chairman & CEO of Thales & CEO of Thales 5th April 2006
Growth Growth for Thalesfor Thalesin Satellites & in Satellites & Security activitiesSecurity activities
Strengthened cooperation with AlcatelStrengthened cooperation with Alcatel
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A major step in Thales’ development
Accelerates growth
� Acquisition of activities worth 2 billion euros in the Security/Transport and Space domains
Strengthens Thales in its capacity as a major critical information systems integrator
� Leadership positions in assets brought
� Widening of the institutional customer base
� Dual technologies
Broadens its multi-domestic presencein Europe & North America
Strengthened position at the heart of the consolidatio n of European Defence & Security industry
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A strengthened industrial partnership with Alcatel
� Rationalisation of the scope of activities
� Specialisation in respective areas of expertise
� Strengthening of industrial and technological coopera tion
� Sharing of R&D & patents
� Benefiting from a wide base of common technologies
� Sharing joint centres of excellence in network cent ric architecture
� Boosting the marketing & sales momentum
� Access to the respective commercial networks of bot h groups
� Optimising "Go-to-market together "
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Evolution of shareholding
� Increase of Alcatel’s stake in Thales’ capital
� Shareholders’ pact provisions upheld
� Government’s strategic interests preserved through specific provisions
Post operation shareholding Current shareholding structure
Float48,9%
Public sector31,3%
GIMD (1)
5,7%Employees
4,6%
Alcatel9,5%
Public sector27.1%
Alcatel21.6%
GIMD (1)
4.9%
Employees4.0%
Float42.4%
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New leadership positions in key capabilities
(1) Proforma figures(2) On a proportional basis (3) Remaining stake in JVs held by Finmeccanica
Transport Systems Division
(TSD)
Integration & Services Division
(ISD)
67% in Alcatel Alenia Space
(AAS) (3)
33% inTelespazio (3)
Security /Transport
Space
Worldwide N°2 of signalling solutions for railway and metro transport
Specialist systems integrator in the transport & energy domains
European leader in satellites, Worldwide N°2 in commercial satellites and N°1 for payloads
Worldwide leader in satellite services
Total revenues of perimeter contributed: € 2bnCurrent income from operations: ~ € 135m
2005 Revenuesin €m
900
1,100
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TSD per market
2005 revenues
Security of Transport & Energy infrastructures
Urbannetworks
18%
Railway transport
(main lines)82%
ISD per market
Public sector/
Security~35%
Transports ~ 35%
Energy~ 30%
~ 4 100Employees (100%)
~ 900Revenues
~ 2 000Order book at end 2005
2005 in €m
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Transport Systems Division (TSD)
Integrated signalling systems for rail transport and urban networks
A strong growth market
� € 5bn / year� Annual growth +5 / +6 %� Products with ever increasing technological content
Remarkable operational track record� + 15% / year over the last 10 years� Operational margin up to 2 digit figure� Order book of more than 2 years
Strategic positioning
� Within strong growth segments
� trans-European control systems for trains (ETCS),
� radio control for metro systems (CBTC)
� On a world-wide scale � 3,100 employees, 11 operational sites
� With a strong technological culture� 1,150 engineers, for the past 5 years R&D represent s 10% of revenues
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Transport Systems Division (TSD)
Integrated signalling systems for rail transport and urban networks
Main Lines� TGV Links Spain
4 out of 5 lines in service
� Ankara – Istanbul� DB Berlin (ETCS)� Lötschberg Tunnel (Switzerland )
Urban networks� New-York – JFK Airport� London – Jubilee & Northern Lines� Paris – Line 13� Hong-Kong – Disneyland Resort Line� Shanghaï – Line M8� Dubai – Metro
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Integration Services Division (ISD)
Integrated systems for management of critical infrastr uctures(not including telecoms operators )
High potential for growth sustained by:
� Recognised expertise in « low current cabling » system s
� Major customers within the transport sector
� RATP, London Metro, German Railways
� Major customers within the energy sector
� Total, ENI, RTE,…
� Recent successes in airport systems
� Dubai, Orlando,…
� Established in France, Italy, Germany, Portugal, Spa in, Austria and Mexico
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Integration Services Division (ISD)
Transport
� Dubaï Metro:
� Control & communications systems
� Passenger information in real time
� Dubaï Airport
� Communications & security systems
� RATP� Tetra radio network integration
� TGV Lines in Spain
� Detection in real time of operational anomalies
Energy
� Total (Nigeria) / Agip (Kazakhstan)
� Integrated off-shore communication & control systems
� RTE: Fibre optic network
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Leader in the security of critical infrastructures
Control centres
Telecoms
Sensors
Thales
� Expert in homeland security applications
� Expert in the securityof critical infrastructures:
• Control centres
• Applications
• Sensors
� Expertise in major systems
Alcatel contributions
� Expertise in telecomms for critical infrastructures by a world leader
� Attractive customer portfolio in the transport and energy sectors
� Top quality telecomsprime contracting & engineering teams
Revenues of ~ € 2bn in infrastructure security systems
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Alcatel Alenia Space (AAS)
European leader by merging Alcatel & Finmeccanica acti vities
7,200Employees (100%)
1,000Revenues
1,700 Order book at end 2005
2005 in €mAt 67%
Distribution of 2005 revenues by activity
3/4 Observation& Science
1/4 Navigation
Civilcommunications
35%Civil
Institutions 45%
Defence20%
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Alcatel Alenia Space (AAS)
A complete range of civil and military satellite sy stems:� Communications� Navigation� Observation� Scientific Missions
Unique technological expertise and innovation:� Complete prime contractorship
� 8 civil and military programmes underway� Satellites
� 45 “spacebus” satellites (mainly communications): 40 already launched (25 still operational), 12 unde r development
� 11 Meteosat (weather)� 11 scientific� 8 monitoring
� Payloads
� 150 communication
� 36 environmental/ observation
� 20 scientific A
A first class industrial capability� 7,200 employees across 4 European countries
European leader grouping together Alcatel and Finmec canica activities
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Telespazio
2005 in €mUp to 33%
Large range of service offering
� Control & management operations for satellites
� Satellite capacity distributor
� Earth observation services
� Navigation
A diverse customer base
� Public and private satellite operators
� Broadcasters of media programmes
1,330 employees
� 6 sites in Italy, 4 sites in France
Order book at end 2005 ~ 240
Revenues 100
Employees (100%) 1,330
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Completing Thales’ expertise in large-scale defence s ystems
� Expertise in all aspects from integrated defence syst ems to space components
� Strengthening of relationships with significant ins titutional customers
� Strategic contracts� Symbol X (F)
� Syracuse (F)
� Helios (F)
� Sicral (It)
� Cosmo (It)
� Experience in all military use of space � Optical Observation
� Communications
� Observation radar
Contributed assets
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Thales, leader in high tech civil systems
� Major institutional contracts
� Galileo
� GMES, Cosmo
� Weather satellite
� Commercial capacities at the
service of major customers
� Space Communications
� Pay loads
� Integrated Systems for transport
Assets contributed
Benefiting from technological links
with a world leader in telecommunications
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Multi-domestic expansion
� A strengthened multi-domestic industrial presence i n Europe (Germany, Italy,…) and North America
* Excluding Telespazio : 1 330 employees mainly in F rance and Italy
+ 4,409
Total : 36,159
France
+ 1,464
Total : 4,450
Germany
+ 2,429
Total : 2,783
Italy
+ 856
Total : 1,113
Canada
… Employees of contributed companies*… Proforma Thales employees *
(with 100% of JV personnel, incl for AAS)
+ 670
Total : 2,091
Spain
+ 575
Total : 1,028
Belgium
+ 11,348
Total : 69,158
World
+ 9,907
Total : 58,990
Europe
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Capabilities with strong growth perspectives
Space
Security / Transport
� Renewed investment cycles in satellites :
� Implementation of triple-play
� Advantages of Galileo programme
� Increase in military budgets
� Outsourcing of telemetric operations,
� Satellite command & control,
� Strategic franco-italian positioning
� Strong market dynamics in the Transport and Energy sectors:
� Growing Security needs
� Increased infrastructure requirements
� Increasing technological content
GROWTH FACTORS
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A significant potential for operational synergies
� Objectives of operational synergies (for 2008) � approx 50m € for a full year
� Low start up costs
� Significant mid term potential� resulting from the cooperation agreement
� Strengthening of competitive position
� ISD access to Thales content
� Access to ISD platform by Thales
� Optimisation of marketing & sales policy
Security/Transport � Access to defence export
markets
� Development of applications for Telecom / Navigation / Observation
� Optimisation of R&D policy
Space
� Purchasing
� R&D
� Telecom networks
� Commercial network
Cooperation agreement
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Financial data
2006
� Contribution of :� Transport / Security : 100% of TSD & ISD
� Space : 67% of AAS & 33% of Telespazio
� Issuance of 26.67 million Thales shares in favour o f Alcatel� € 1,067m for a reference price of € 40 / Thales sha re
� Cash payment to Alcatel of € 673m*
2009
� Potential price complement on AAS on the basis of a n evaluation by a mandated expert (with share of upside above an eval uation of € 760 m)
Valuation of contributed assets : € 1,740mSecurity and Transport activities: ~60%
Space activities: ~40%
* not-including balance sheet adjustments
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An operation designed to create value
Acceleration of growth
� Revenue increase of more than €2bn
� In high-growth areas
Positive impact on margins
Financial stability and flexibility upheld
� Reduced debt of Thales at end 2005: €398m
� Cash payment of €673m
Accretive on Thales adjusted earning per sharefrom the first year onwards
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Next steps
Key steps before closing
� Agreement finalised with Finmeccanica
� Consultation of the Working Councils
� Opinion of the financial market authority (AMF)
� Approval of the Commission des Participations et des Transferts
� Finalisation of contribution agreements
� Clearance from the competent competition/ regulator y authorities
� Approval by Thales’ Extraordinary General Sharehold ers Meeting
Closing of transaction expected in 2nd half 2006
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Thales at the heart of European Industry consolidation
� Leadership positions in Thales’ key areas of expert ise
� Potential for growth acceleration
� Privileged access to major civil and institutional c ustomers
� Strengthening of Thales’ multi-domestic strategy
� Significant development potential of dual technologie s
A growth driven transaction designed to create value
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