STRONG COMMITMENT FOR THE FUTURE…

2. STRONG COMMITMENT FOR THE FUTURE… A MAJOR INDUSTRY INITIATIVE DCN and Thales confirm their commitment to combining their strengths STRONG POLITICAL SUPPORT Today’s announcement by the French government about closer ties between the naval defence businesses of Thales and DCN signals strong support for the consolidation of our French naval businesses... A SPRINGBOARD FOR EUROPE … and it is also a springboard for the consolidation of the naval industry at the European level.

3. COMBINE TO GROW • Asia-Pacific • 2 main players • €5 bn / year • USA • 4 main players • €11.6 bn / year Asia • Daewoo • Hyundai USA • General Dynamics • Northrop Grumman • Lockheed Martin • Raytheon • Europe • 11 main players • € 9.1 bn / year UK • BAES • VT Group • Thales UK Germany • TKMS • Lürssen • Atlas Elektronik France • DCN • THALES Armaris Closer ties between European industry players are crucial to Europe’s ability to sustain an independent industrial capability to meet its needs over the long term. Spain • Navantia Italy • Fincantieri • Finmecanicca Orrizonte

4. A CHANGING MARKET NEW RESPONSE Offer a comprehensive response in terms of complete warships or defence systems • New Navy requirements • Combat systems increasingly integrated with platforms • Requirement expressed in terms of capability • Budget constraints as a trigger for further cooperation • Horizon, F 124/LCF (Frigates Ge/NL), FREMM, PA2/CVF COOPERATION International cooperation can offer better use of available resources (R&D and programme execution) • Stronger, better organised competitors • New players, new products • Fiercer competition CONSOLIDATION Consolidation is vital to maintain our strategic independence in Europe

5. A SHARED EUROPEAN VISION • Objective: • Thales and DCN aim to promote the emergence of a world leader in naval systems by combining their capabilities with those of European partners who share the same vision. • That world leader will emerge progressively, according to a timetable that suits the various partners. • New milestone: combining the French naval assets of DCN and Thales

6. THALES/DCN – SUCCESSFUL COOPERATION • Joint PROGRAMMES Sawari I & II Horizon Fremm Joint COMPANIES • 1990s: Horizon SAS, Eurosysnav, UDSI, SFCS • 2002: creation of the joint venture Armaris, with responsibility for prime contracting and sales for military products in export markets or on cooperative programmes • 2005: MOPA2 joint venture for France’s second aircraft carrier

7. DCN: A STRONGER PLAYER WARSHIP ENGINEERING • Budgeted revenues: approx. €3 bn • Order book: approx. €8 bn • Employees: approx. 13,300* • Shareholders: • French State: majority shareholder with 75% • Thales, industry stakeholder with 25% MANAGEMENT OF ASSEMBLY AND INTEGRATION YARDS TNF Armaris MOPA2 + Eurotorp partnership DESIGN AND INTEGRATION OF SYSTEMS AND EQUIPMENT SERVICES FOR WARSHIPS AND SHORE FACILITIES * : direct employment

8. DCN CAPITAL OPENED TO THALES Thales to finance its 25% interest in DCN • by transferring assets: • Thales Naval Francebusinesses excl. radars (prime contracting, CS/CMS, services) • its 50% interest in Armaris (incl. subsidiaries) • its 35% interest in MOPA2 • its 24% interest in the Eurotorp partnership • by paying an additional cash contribution • SHAREHOLDERS • STATE • 75% • THALES • 25%

9. THALES AND DCN COMBINE THEIR STRENGTHS • The operation makes the combined company stronger: • On its domestic market • stronger positioning as naval systems provider • merging of combat systems activities in France • optimisation of investments • stronger service offering • reciprocal access to know-how • On export markets • access to Thales’ international marketing and sales network • In Europe • greater credibility and legitimacy for subsequent consolidation operations • Internally • Solid industrial partnership

10. A FUTURE-ORIENTED PROJECT • AND INDUSTRY PROJECT THAT MAKES BOTH DCN AND THALES STRONGER • Strategic unity between two major industry players • Move European consolidation forward • Improve positioning in international markets • Industrial and commercial cooperation agreement • Optimise bids and improve competitive performance • Develop unified offering in France • Benefit from complementary R&D • Simplify industrial and contractual aspects of major programmes • Promote adoption of DCN and Thales equipment provided it is competitive • A project aimed to build momentum for Europe-wide consolidation in the naval sector

11. OPERATIONS Long-term future of French facilities Cherbourg Engineering and submarines Paris region Paris region Paris Headquarters Brest Engineering Brest Services Thales Naval France Bagneux – Engineering and systems Lorient Engineering and surface ships UDSI - Sophia Nantes-Indret Propulsion St Tropez Undersea warfare Angoulême - Ruelle Naval equipment Toulon-Le Mourillon CMS, engineering Toulon Services EUROSYSNAV + UDSI + SFCS Toulon – Combat systems prime

12. HUMAN RESOURCES • A future-oriented project with a place for everyone • HR practices are already similar and will be progressively harmonised • Continuation of individual work contracts • Collective agreements maintained during transition

13. CUSTOMER CONTINUITY • Ongoing programmes • Continuation within DCN of contracts awarded to partners (Thales Naval France, Armaris or MOPA2) • Outlook • Major programmes for French Navy (FREMM, PA2, Barracuda: €10 bn in new orders over the next 10 years) • Export opportunities represent 30% of revenues • Customer benefits • Complementary areas of expertise and know-how • Purchasing policy open to competitors

14. Ongoing programmes France FREMM Horizon frigates SSBN Le Terrible BPC Mistral and Tonnerre Overhaul of SSBN Le Téméraire SSN and BS CLS Comprehensive contracts for regular maintenance on submarines with availability guarantees Export Agosta Pakistan Scorpène Chile Scorpène Malaysia Scorpène India Formidable frigates for Singapore Combat system for SAN PC corvettes for South Africa Skjold patrol boats for Norwegian Navy GOOD VISIBILITY ON WORKLOAD • Future programmes • France • Barracuda SSNs • Future heavy torpedo • Overhaul of CDG aircraft carrier • Cooperative programmes • PA2/CVF • Numerous export programmes

15. BENEFITS OF CONVERGENCE • Fully integrated prime contracting for navies throughout the world • Major ongoing naval programmes • Promising European and world markets • Major player in the future European naval industry • Respect for individuals and corporate cultures A dynamic of value creation

16. PROJECT LAUNCH • AGREEMENT FINALISATION • CLOSING • Approval by Boards of Administration • Due diligence • Shareholders’ agreement • Cooperation agreement • - Integration of companies • Opening of DCN capital Mid-2006 3 to 6 months December 2005 TIMELINE Information / consultation with employee representative bodies • Ultimately… • construction of a European company Continued discussions with European partners

17. EUROPEAN VISION • OBJECTIVE: EUROPEAN NAVAL INDUSTRY CONSOLIDATION • “DCN must take part in the consolidation of the European naval industry.” • “Thales’ role in the capital structure of DCN will help to prepare the future industrial and technological capabilities of the European defence sector.” Michèle Alliot-Marie

18. APPENDICES Companies

19. DCN in brief • The DCN group is Europe’s leading prime contractor for complete warships. The company provides client navies with a broad range of value-added products and services. • DCN is conducting almost all the new construction and through-life support programmes for the French Navy. Rounding out the company’s workload, export contracts account for approximately one-third of revenues. Other DCN businesses include naval equipment, propulsion systems, combat management systems (CMS) and undersea warfare systems. • DCN’s four core areas of expertise are as follows: warship engineering; management of ship assembly and integration yards; development and integration of propulsion systems, combat systems and naval equipment; and through-life support and associated services. • The company has a workforce of 12,700* and generates average annual revenues of some €2.6 bn. * direct employment

20. OPENING OF DCN CAPITAL • LAW OF 30 DECEMBER 2004 • An amendment to the 2001 Finance Law was needed to enable DCN to open its capital to a minority shareholder, or to set up subsidiaries by contributing industrial assets or staff. • The law of 30 December 2004 authorises: • Minority ownership of DCN capital • Creation of subsidiaries to which DCN, as majority shareholder, may contribute industrial assets and transfer staff • The law stipulates conditions for setting up these subsidiaries. • It guarantees the long-term status of staff transferred to these subsidiaries.

21. THALES in brief • The Thales Group has a strong presence in the naval market; its naval businesses have traditionally focused on the supply and integration of equipment and systems  - radars, optronic equipment, weapon systems, etc. The Group also acts as prime contractor on several naval programmes in France and export markets, and intends to expand its involvement in this area. • Thales enjoys an excellent positioning in the world market, particularly through its equity interests and subsidiaries in the Netherlands and the United Kingdom, but also in Australia, Germany, Korea and South Africa. Major Thales operations in the United Kingdom have made the Group a valued partner of the Royal Navy, as is illustrated by its selection for part of the CVF programme to build two new aircraft carriers. • The Group’s naval businesses employ 6,000 people and generate revenues of €2 bn.

22. Armaris in brief • The Armaris group was set up in August 2002. • Today, Armaris is prime contractor on the submarine programmes for India and Malaysia, the Skjold patrol boat programme in Norway (with partners KDA and UMOE), the Franco-Italian Horizon frigate programme and the Franco-Italian multi-mission frigate programme with Italian partner Orizzonte Sistemi Navali. • A joint subsidiary of Thales and DCN, Armaris has responsibility for warship and naval systems sales and overall prime contracting in export markets and on international cooperative programmes in which France is participating. • Armaris employs 200 people and generates revenues of €460 m.