THALES (EPA:HO) - Thales enhances its resilience to lower the impact of the Covid-19 crisis - Press release - 7 April 2020

Transparency directive : regulatory news

07/04/2020 07:00

PRESS RELEASE

7 April 2020

Paris La Défense, France

Thales strengthens its resilience to lower the impact of the Covid-19 crisis

* Implementation of a global crisis adaptation plan
* Completion of an additional EUR2 billion syndicated credit facility
* Withdrawal of final dividend proposal, with cash value of EUR430 million
* Withdrawal of 2020 financial outlook

Thales (Euronext Paris: HO) announces the implementation of a global adaptation
plan in response to the Covid-19 pandemic.
"Today we are announcing a series of exceptional measures to deal with the
scale of the Covid- 19 crisis.
Our first priority is and will remain the implementation of all the measures
necessary to preserve the health of our employees, their relatives, our
customers and the population at large, in all the countries where we operate.
Our direct exposure to the most affected markets is limited. Our civil
aeronautics businesses represent only around 12% of the Group's turnover.
However, like all industrial companies, this crisis is currently seriously
disrupting production chains and project execution.
This is why we are implementing a global adaptation plan in order to limit the
impacts of this crisis and strengthen our resilience.
The remarkable mobilization of our teams, combined with our unique positioning,
built on a portfolio of key technologies in critical domains, a diversified
customer base and a strengthened balance sheet, will be structural assets to
mitigate the effects of this unprecedented crisis." Patrice Caine, Chairman and
Chief Executive Officer

The global environment in the first half of 2020 is profoundly changed by this
unprecedented health crisis, which affects Thales like all companies.

The measures implemented to limit the spread of Covid-19 have a significant
impact on the Group's production, project execution, supply chain and
customers' ability to take delivery of products and systems.

In addition, this crisis affects demand across the Group's markets. The
greatest impact is expected to be on civil aeronautics businesses, which
generated sales of approximately EUR2.15 billion in 2019.

In this context, and while keeping as number one priority the health and safety
of its employees, Thales is implementing a global adaptation plan in order to
(1) maintain its productive capacities at the service of its customers, (2)
limit the financial impact of this crisis and (3) strengthen its funding
capacity in the event that the crisis persists or worsens.

The main levers of this plan are as follows:

* implementation of sanitary guidelines ensuring health protection for
  employees: organization in separate shifts, adaptation of workstations to
  facilitate physical distancing measures, deep cleaning and disinfection, work
  from home, etc.;

* maintaining the continuity of critical and strategic client services,
  followed by a gradual resumption of operations;

* coordination of actions within every supply chain, in particular to avoid
  supply disruptions, for example within the framework of GIFAS in France;

* paid leave during the lockdown period, sharp reduction of temporary work,
  implementation of exceptional government-supported temporary furlough in the
  countries which provide for them, hiring freeze in support functions;

* Deferral of non-critical investments (R&D, IT, real estate, etc.);

* Significant reduction in discretionary spending (marketing, travel, external
  consultants, etc.);

* Strengthening of actions to control working capital requirements, in
  particular to take into account the impact of the crisis on demand and supply
  chains.

Completion of an additional EUR2 billion syndicated credit facility
The Group enjoys a very robust financial position. At 31 December 2019, it held
EUR2.9 billion in cash and cash equivalents and an undrawn committed credit
facility amounting to EUR1.5 billion, maturing in December 2021.

In order to bolster its liquidity, Thales has signed a further EUR2 billion
syndicated credit facility. This new facility has no covenant and can be
utilized in the next 12 months, with a 6-month extension option.

At 31 March 2020, the amount of outstanding commercial paper is comparable to
the level at 31 December 2019 (EUR746 million).
Furthermore, in January 2020, the Group refinanced the EUR500 million bond
maturing on 19 April 2020. The next bond maturity is in March 2021 and amounts
to EUR300 million.

Withdrawal of final dividend proposal, with cash value of EUR430 million
In a spirit of responsibility vis-à-vis all Group stakeholders, and in order
to preserve funding capacity if the crisis were to last, the Board of Directors
decided, during its meeting of 6 April 2020, to modify its 2019 dividend
proposal.

In consequence, the dividend proposal submitted to the Annual General Meeting
scheduled for 6 May 2020 will be limited to the interim dividend of EUR0.60 per
share already paid in December 2019, allowing the Group to avoid a cash outflow
of around EUR430 million.

The Annual General Meeting will take place on 6 May 2020 as planned, but will
be held behind closed doors at the Group's head office.

Withdrawal of 2020 financial outlook

The scale of the Covid-19 outbreak invalidates the financial outlook that was
announced when the Full Year 2019 results were disclosed on 26 February 2020,
which was assuming a limited impact of the Covid-19 crisis based on the
situation to date.

At this stage, it is impossible to quantify the financial impact of this crisis
on the  Group's financial statements. The impact will depend in particular on
the scope, duration and depth of the crisis, as well as the potential catch-up
effects at the end of the year.

As soon as it is able to do so, Thales will provide an update on the financial
impact of this crisis on its financial statements and adjust its financial
outlook.

                                 ****

This press release may contain forward-looking statements. Such forward-looking
statements represent trends or objectives, and cannot be construed as
constituting forecasts regarding the Company's results or any other performance
indicator. Actual results may differ significantly from the forward-looking
statements due to various risks and uncertainties, as described in the
Company's Registration Document, which has been filed with the French financial
markets authority (Autorité des marchés financiers - AMF).

About Thales Thales (Euronext  Paris: HO) is a global technology leader
shaping the world of tomorrow today. The Group provides solutions, services and
products to customers in the aeronautics, space, transport, digital identity
and security, and defence markets. With 83,000 employees in 68 countries,
Thales generated sales of 19 billion in 2019(on a pro forma basis
including Gemalto over 12 months).
Thales is investing in particular in digital innovations connectivity, Big
Data, artificial intelligence and cybersecurity technologies that support
businesses, organisations and governments in their decisive moments

CONTACTS

Thales, Media Relations
Cédric Leurquin
+33 (0)1 57 77 90 93
cedric.leurquin@thalesgroup.com

Thales, Analysts/Investors
Bertrand Delcaire
+33 (0)1 57 77 89 02
ir@thalesgroup.com

FIND OUT MORE

Thales Group

Twitter: @ Thalesgroup

COMMUNICATIONS DEPARTMENT - Thales - Tour Carpe Diem - 31 place des Corolles -
92098 Paris La Défense Cedex - France - Tel.: +33 (0)1 57 77 86 26 -
www.thalesgroup.com

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THALES (EPA:HO) - Thales enhances its resilience to lower the impact of the Covid-19 crisis - Press release - 7 April 2020

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