1. Thales and SC21 IAQG/SC21General Assembly Meeting, 22 October, York

2. 1 This document is property of Thales Group and may not be copied or communicated without the written consent of Thales Thales serves three markets DEFENCE (50%) Air ● Land ● Naval ● Joint AEROSPACE & SPACE (25%)SECURITY (25%) Thales around the world  68,000 employees in 50 countries  Serving the defence, aerospace and security markets  More than £11bn revenue

3. 2 This document is property of Thales Group and may not be copied or communicated without the written consent of Thales  Thales UK participates in all three market segments  In top five leading suppliers to UK MoD  4,000 engineers & technicians  90% qualified to degree level or above  Invested more than £3bn in UK over last 10 years  90% of sales to the MoD are UK sourced  2009 sales: £1.5bn  Backlog of orders circa £4bn  60% turnover from defence: 40% from civil  2008 was 120th anniversary of Thales in the UK Thales UK

4. 3 This document is property of Thales Group and may not be copied or communicated without the written consent of Thales Thales UK

5. 4 This document is property of Thales Group and may not be copied or communicated without the written consent of Thales SC21 Activities  One of the 19 founder signatories in 2006  Actively involved in the original design of the SC21 tools and techniques  Hold seats on both SC21 steering committees (ADS/Scotland)  Thales led Tranche I implementations, 7 suppliers  Active Electronics, ACW, Aeroflex, Astute, Kenard, Paramount Precision, Paramount Panels  Four awards secured to date; ACW – Silver, Astute Electronics – Bronze; Active Electronics – Bronze; Paramount Precision - Bronze  Seven further Thales led Tranche II companies being taken through programme, all have published CSIPs  Chess Dynamics, ITT ICS UK, Di-Spark; Labtech Microwave, Merlin Flexible Circuits, New Chapel Electronics, Ilford Engineering

6. 5 This document is property of Thales Group and may not be copied or communicated without the written consent of Thales SC21 Activities  Regional cluster approach in conjunction with RDA’s adopted as Thales preferred approach to widen deployment throughout Thales UK supplier base  Thales led Tranche III South West Cluster, 4 suppliers  Westminster Engineering, NFF Precision Ltd, J+S Ltd, AB Precision (Poole),  All companies working towards publishing CSIP  Thales led Tranche IV South East Cluster launched 4 th October, 7 suppliers  Thales Optronics actively involved in Scottish SC21 programme

7. 6 This document is property of Thales Group and may not be copied or communicated without the written consent of Thales SC21 Activities  Six SC21 awareness seminars/workshops held throughout Thales UK businesses  Workshop feedback used to help re-design Thales UK supplier management/performance processes  These processes reflect SC21 principles, and contain all SC21 tools and techniques  Redesigned processes being embedded throughout Thales UK  Whilst SC21 engagement will not be mandatory for our suppliers, it will be seen as a ‘ virtue ’ !

8. 7 This document is property of Thales Group and may not be copied or communicated without the written consent of Thales Purchasing Strategy – Supplier Base

9. 8 This document is property of Thales Group and may not be copied or communicated without the written consent of Thales Purchasing Strategy – Supplier Base

10. 9 This document is property of Thales Group and may not be copied or communicated without the written consent of Thales Purchasing Strategy – Supplier Base

11. 10 This document is property of Thales Group and may not be copied or communicated without the written consent of Thales Purchasing Strategy – Supplier Base

12. 11 This document is property of Thales Group and may not be copied or communicated without the written consent of Thales Purchasing Strategy – Supplier Base

13. 12 This document is property of Thales Group and may not be copied or communicated without the written consent of Thales Purchasing Strategy – Supplier Performance

14. 13 This document is property of Thales Group and may not be copied or communicated without the written consent of Thales Purchasing Strategy – Supplier Performance

15. 14 This document is property of Thales Group and may not be copied or communicated without the written consent of Thales Purchasing Strategy and SC21  Strong need to rationalise and consolidate; Target – reduce by 60% by 2014  3,593 suppliers; ‘exaggerated’ Pareto, 5% of spend with 95% of supplier count  Only 11% of suppliers used by more than one business  Strategy is to outsource at a higher level  Sub-assembly/assembly level, to focus on core systems integrator capability  Tier/‘C’ Class service solutions  Performance improvement critical  UK average OTIF 82% - target >95%  UK average supplier quality 92% - target >99%  SC21 engagement will play a key role: selectable 40%  Competitive (typically lean, customer focused, adaptive)  Demonstrable, sustainable high performance