Chargeurs — Management Reports 2022

Jul 26, 2022

Chargeurs creates the strategic Technology, Luxury and Diversification Activities to reflect the acceleration of its value creation strategy

The Group's activities will now be presented within three Activities to highlight the growth models and transformation of business lines

• The "Technologies" Activities will include Chargeurs Protective Films and Chargeurs PCC Fashion Technologies, world leaders in niche technologies and services, which will continue to report their own performances within their own business lines
• ◆ Chargeurs Protective Films is accelerating its development, focused on more eco-responsible manufacturing facilities and a more sustainable product and service offering and on geographical expansion into new territories
• ◆ Chargeurs PCC Fashion Technologies continues to benefit from growth in the fashion industry and strong customer demand for sustainable products
• ◆ Senfa Technologies, the champion specialized in technical textiles will now be consolidated within Chargeurs PCC Fashion Technologies, to extend its range of end markets and strengthen the expertise of this business line
• The "Luxury" Activities will include Chargeurs Luxury Materials, Chargeurs Museum Solutions, Chargeurs Healthcare Solutions and Swaine, a benchmark player in new luxury categories
• ◆ Chargeurs Luxury Materials is renamed Chargeurs Luxury Fibers (CLF), to reflect the extension of the service offering of the Nativa™ label to other natural fibers
• ◆ Chargeurs Museum Solutions becomes Chargeurs Museum Studio (CMS), the leading global brand for services to museums, foundations and companies
• ◆ Chargeurs Healthcare Solutions is renamed Chargeurs Personal Care (CPC), to reflect the diversification of its activities to cover personal care and wellness
• ◆ Swaine accelerates its development as a highly desirable luxury accessories brand
• The Diversification Activities will bring together the Group's future non-controlling interests, financial or strategic
• Current business line general managers unchanged and to remain in place
• Development of synergies in terms of innovation, ecoresponsibility and supply chain management within the Technologies Activities
• Implementation of synergies in marketing, e-commerce and traceability within the Luxury Activities

Confirmation of the targets of the Leap Forward 2025 program

• 2025 like-for-like revenue (€1bn) and recurring operating profit (€100m) targets maintained
• Acceleration of acquisition strategy, notably in the CMS and CPS business lines

• Financial leverage maintained under control

"Thanks to this enriched presentation¹ , Chargeurs confirms its expansion and affirms its ambitions, its transformation and its strategic potential of value creation in its Technologies and Luxury activities, while capitalizing on opportunities for diversification with high asset value. Optimized, successful and highperforming since the start of the pandemic, and responsive and ambitious, the Group today has an enhanced portfolio of business which will continue to grow and prepares the future and a robust balance sheet at the service of its Leap Forward 2025 plan. ", declared Chairman and CEO, Michaël Fribourg.

Technologies Activities: established and recurring B2B niche activities which combine industry and high value-added services

In six years, Chargeurs has modernized, strengthened, internationalized and premiumized its niche B2B technology businesses Chargeurs Protective Films and Chargeurs PCC Fashion Technologies.

These two businesses have many similar features. They are both world number one in their respective business lines, innovate for the benefit of their customers with products essential for production processes and benefit from high pricing power. They serve sectors – building, furnishings, domestic appliances, fashion, luxury, etc. – built on strong long-term growth trends, with an extremely diversified customer base and a global geographical footprint.

With a view to strengthening their respective leadership positions, the two businesses invest to develop their innovative capacity and make their product ranges more sustainable, to extend their distribution networks and improve the industrial and energy efficiency of their production base. Their business models are also based on the development of complementary services for their products in innovation, logistics, digital and traceability. These services increase the recurring component of their revenues and earnings, strengthen the asset-light nature of the business lines and enable them to be positioned as long-term partners for their customers. They benefit strongly from the expansion of the "product as a service" model.

In line with the nature of these activities, Senfa, which designs, develops and distributes high performance textiles for various industries, and which, furthermore, addresses innovation and logistics issues similar to both of the Technology Activities business lines, has been removed from the Chargeurs Museum Solutions scope and will be transferred, with retroactive effect as of January 1, 2022 to Chargeurs PCC Fashion Technologies.

The cumulated revenue of these two business lines is close to €510 million (pro forma 2021).

¹ The creation of these three strategic activities does not change the presentation of the sector information in the Group's consolidated financial statements.

Luxury Activities: B2B2C and B2C business lines with accelerated development which increase the Group's value creation potential

Similarly, the Group has expanded existing activities, developed new activities and made acquisitions to make Chargeurs a new reference in the new luxury categories. The second Group Activity, therefore, brings together all of the activities in luxury services and is very close to end customers: Chargeurs Luxury Fibers (formerly Luxury Materials), Chargeurs Museum Studio (formerly Museum Solutions), Chargeurs Personal Care (formerly Healthcare Solutions) and Swaine. The businesses which are consolidated will continue to present their own performances separately within the Activity.

By creating the Nativa label, which guarantees fashion and luxury players the traceability of the most premium merino wools, Chargeurs Luxury Materials has significantly updated its business model. Renamed Chargeurs Luxury Fibers, to reflect the potential of the Nativa™ label to cover other premium fibers, the business line will now directly address the needs of major sportswear, fashion and luxury brands, enabling them to meet the aspirations of their customers in terms of noble, traceable and desirable fibers. The conclusion of longterm partnerships linked to the regenerative agriculture programs of Nativa™ (www.nativapreciousfiber.com) increases the visibility of the business and reflects the progress made with its business model.

For close to three years, and after seven acquisitions, Chargeurs has built Chargeurs Museum Solutions, the world leader in museum scenography, at the service of the luxury experience of enjoying culture and knowledge, and the related emotions it inspires. Backed by multi-year contracts with cultural institutions and companies in an acyclical market, this new business line offers the Group strong visibility. Its unique offering will be rounded out with further acquisitions, like that of the luxury publishing house Skira Editoriale. With the exit of Senfa from the scope of consolidation of Chargeurs Museum Solutions, the Activity becomes Chargeurs Museum Studio, which reflects its status as a benchmark art and culture studio at the service of cultural institutions and companies.

Bolstered by the success achieved with Chargeurs Healthcare Solutions in personal protective equipment, Chargeurs is developing a conquest strategy in high-end premium personal care and wellness, based on a niche approach with high profitability. The Group aims to build a benchmark player with distinctive and selective distribution channels such as pharmacies and travel retail, via targeted acquisitions of upscale brands such as the high-end hair accessory brand, Altesse, which joined Chargeurs in 2021. To reflect this diversification, the business has been renamed Chargeurs Personal Care.

Lastly, the activities of the Swaine Adeney Brigg company, renamed Swaine, positioned in the ultra-luxury British segment, are naturally destined to be part of the Luxury Activities. Since the acquisition of the asset in 2021, numerous initiatives in terms of product development, supply chain management, marketing and distribution have given the company an accelerated boost. Growth in sales since the opening of a new sales office in London's Burlington Arcade a few weeks ago clearly illustrate the very significant growth potential of the iconic brands Swaine Adeney, Briggs and Herbert Johnson. Swaine will open its new flagship store in New Bond Street during the Fall/Winter 2022 season.

Numerous marketing, sales digitalization and merchandising synergies are already kicking in and will accelerate within this Activity, with activities which are close to or in direct contact with end customers. Together, they represented revenue of more than €230 million in 2021 (on a pro forma basis).

The Diversification Activities will bring together the Group's non-controlling interests in assets contributing to the complementary development of its asset value

Within this Activity, Chargeurs will group together interests which are exclusively non-controlling, which it is required to represent in profitable assets, mainly listed, offering additional, complimentary value potential to its other assets.

As an example, the Group does not exclude the development of interests, financial or strategic, in listed audiovisual assets presenting attractive valuations and recurring profitabilities, positionings established in a context of sector consolidation providing new opportunities.

CHARGEURS CONFIRMS ITS VALUE CREATION TARGETS FOR 2025

Chargeurs reiterates its value creation targets for 2025.

Excluding acquisitions, the Technology Activities should generate around two-thirds of the Group's recurring operating profit, set at €100 million, with the remaining third to be generated by the Luxury Activities.

Based on the completion of planned acquisitions, mainly focused in the Luxury Activities, and in line with the like-for-like growth targets of the different Activities, the contributions from the Technology and Luxury Activities to Group recurring operating profit should be more or less equivalent by 2025.

The performance of investments made in the Diversification Activities in the form of minority stakes is set to be reflected in the Group's financial result and net profit.

2022 financial calendar

Thursday September 8, 2022 (before market) First-half 2022 results Wednesday, November 9, 2022 (before market) Third-quarter 2022 financial information

ABOUT CHARGEURS

CHARGEURS is a world leader of niche technologies and services, offering integrated, high value-added solutions to its B2B and B2C customers. Active in 90 countries with nearly 2,500 employees, the Group, whose global signature is High Emotion Technology®, develops its manufacturing and technological expertise across a range of sectors including premium materials protection, fashion and luxury goods, museography, health and well-being.

In 2022, the Group celebrates its 150th year of entrepreneurial boldness. With its Leap Forward 2025 strategic plan, the Group aims to step up the game by seizing market opportunities linked to developments in production, distribution and consumption methods and widespread demand for sustainable manufacturing solutions. Recognized for their highly agile manufacturing and their global footprint, Chargeurs' many areas of expertise are intended to support its profitable and sustainable growth. In 2021, the Group generated revenue of €736.6m.