Qioptiq logo Raytheon Global MilSatCom

THALES SHARES DROP 4% ON RESULTS

14 Mar 02. Stock Markets reacted badly to Thales announcement of a write down of its Racal acquisition with a thumping €366m loss (2000: profit €200m). Having said this, Thales confirmed its revenue growth pattern in 2001 as well as the improvement in its operating performance, both overall and on a like-for-like basis.
* Consolidated revenues were up 20 per cent overall (6 per cent on a like-for-like basis), with especially satisfactory growth in Defence and Aerospace. In Information Technology & Services (IT & S), growth in other activities more than offset the decline in revenues from communications components for civilian telecommunications.
* New orders increased by 19.3 per cent overall, and by 15 per cent in Defence and 24 per cent in Aerospace. The book-to-bill ratio was greater than 1 for the fifth consecutive year, for the Group as a whole and in Defence and Aerospace in particular. Year-end order books in these two business areas were at a very high level, amounting to €15,01m in Defence (+6 per cent relative to 2000) and €3,056m in Aerospace (+27 per cent), respectively representing 31 and 20 months of billings
* The increase in operating income (19% overall, of which more than half (+10%) on a like-for-like basis), stems from the very sharp rises in Defence (37 per cent overall and 24 per cent organic growth) and Aerospace (+50 per cent and + 33 per cent). These more than offset the 42 per cent decline in earnings in IT & S, due entirely to the impact of the telecoms crisis, and in particular to losses in microelectronic components.
* Operating margin on revenues advanced significantly in Defence (from 6.8 per cent to 8 per cent) and Aerospace (from 5.4 per cent to 6.9 per cent). Overall, the operating margin was unchanged from its 2000 level of 6.5 per cent.
* Ordinary pre-tax income rose 42.4 per cent amounting to €343m, despite increased provisions for restructuring and interest expense, thanks to a higher contribution from companies accounted for under the equity method.
These developments reflect the strength and the long term nature of the Group’s growth prospects. Those in turn stem largely from its strategic position in leading-edge technologies with applications in defence and security markets, and from active pursuit of its unique multi-domestic expansion strategy in recent years. These strengths have been further bolstered by progress achieved in its non- telecom linked information technology and services.
* Net income before amortisation of goodwill increased by 18,7 per cent amounting to €405m.
* Consolidated net income after amortisation of goodwill and minority interests registered a loss for the year of €366m, (2000:profit of €201m).
Extraordinary amortisation of goodwill
* In accordance with accounting principles applied by Thales, the value of goodwill recorded on the balance sheet has been adjusted on the basis of the outlook for certain businesses, notably those originating from the Racal acquisition in the UK and in some U.S. activities affected by the downturn in commercial aviation. The Company has consequently booked an extraordinary goodwill amortisation charge of €530m, applying IAS valuation principles. Within the former Racal business scope, these write-downs reflect the decline of valuations in telecom-related businesses (i.e. telecom services, positioning and call centres) since 2000. The accounting principles applied limit valuations solely to the cash flow of the actual activities purchased. In the context of the ex-Racal defence business, it should be noted that, while mandatory, this method cannot fully reflect the actual business position: the Racal acquisition has made Thales a major defence contractor in the UK, which has the highest military spending in Europe. New defence orders booked by Thales in the UK, making no distinction between former Racal companies and the rest, increased by 128 per cent to €1.8

Back to article list