HENSOLDT AG — Investor Presentation 2021

Apr 1, 2021

HENSOLDT AG Company Presentation

This document and its content is the property of HENSOLDT AG. It shall not be communicated to any third party without the owner's written consent. © Copyright HENSOLDT 2021. All rights reserved.

HENSOLDT AG – company presentation

Disclaimer

To the extent that statements in this presentation do not relate to historical or current facts, they constitute forward-looking statements. Forward-looking statements can be identified by words such as "anticipates," "intends," "plans," "seeks," "believes," "estimates," "expects" and similar references to future periods. All forward-looking statements reflect the current knowledge of HENSOLDT AG (the "Company", and together with its subsidiaries, the "Group") and its expectations and projections about future events at the time of publication of this presentation and there can be no assurance that these estimates, expectations and assumptions are or will prove to be accurate. By their nature, forward-looking statements are subject to a number of risks and uncertainties that could cause actual results, performance or financial position to differ materially from any future results, performance or financial position expressed or implied in this presentation. Many of these risks and uncertainties relate to factors that are beyond the Group's ability to control or estimate precisely.

The risks and uncertainties which these forward-looking statements may be subject to include (without limitation) future market developments and the impact of global and European social, political and economic events and developments, including the COVID-19 pandemic, as well as defense and security spending by governments, legal restrictions and controls applicable to sales of the Group's products, including government approval requirements and moratoriums, international conflicts and political developments affecting the Group, including by way of new export restrictions, trade barriers, or political support for competitors, the Group's inclusion and participation in major defense projects and platforms and the Group's competitive situation. Readers are cautioned not to place reliance on these forward-looking statements. The Company does not undertake any obligation to publicly update, review or revise any forward-looking statements or to conform them to events or circumstances after the date of this presentation.

This presentation is intended for information only and should not be treated as investment advice or recommendation. It is not, and nothing in it should be construed as an offer for sale, or as a solicitation of an offer to purchase or subscribe to, any securities in any jurisdiction. Neither this presentation nor anything contained therein shall form the basis of, or be relied upon in connection with, any commitment or contract whatsoever. This presentation may not, at any time, be reproduced, distributed or published (in whole or in part) without prior written consent of the Company.

Not all figures included in this presentation have been audited and certain figures may also deviate substantially from information in the Company's consolidated financial statements, thus, may not be fully comparable to such financial statements. In particular, this presentation includes certain supplemental measures of operating and financial performance that are not calculated in accordance with the International Financial Reporting Standards as adopted by the European Union ("IFRS") or any other generally accepted accounting principles, and are therefore considered non-IFRS measures. The Group believes that such non-IFRS measures, when considered in conjunction with (but not in lieu of) other measures that are computed in accordance with IFRS, may enhance the understanding of its financial performance by excluding certain items that are not classified as part of its ongoing operations. However, these measures have important limitations as analytical tools and should not be considered in isolation or as alternatives to financial measures presented in accordance with IFRS. In addition, other companies that disclose similarly titled measures to the Group's non-IFRS measures may calculate them differently.

All amounts are stated in million euros (€ million) unless otherwise indicated. Amounts are commercially rounded and rounding differences may occur.

At a glance

This document and its content is the property of HENSOLDT AG. It shall not be communicated to any third party without the owner's written consent. © Copyright HENSOLDT 2021. All rights reserved.

HENSOLDT AG – company presentation

About HENSOLDT

Pure-play and platform independent provider of sensor solutions for defence and security applications

Innovations for a safer world

Addressing multiple attractive markets with state-of-the-art technology in the fields of radar, electronic warfare, avionics, optronics and cyber

European roots, international footprint with production facilities in Germany, France, UK and South Africa as well as sales offices on six continents

Mission and Vision

Our Motto "Detect & Protect" drives our Vision and Mission We exist to pioneer technologies and human potential that promote the protection of all kind of species worldwide.

Our activities shall serve the higher purpose of securing the freedom and future of our planet, our nature, and our lives.

We strive to become Europe's leading, platform-independent provider of defence and security sensor solutions with global reach.

HENSOLDT AG – company presentation

Key Figures Based on the fiscal year 2021

6,400	151	1,474
Employees worldwide	Years of heritage	Revenues in € m
5,092	3,171	261
Order backlog in €m	Order intake in €m	Adjusted EBITDA in €m

Global Footprint

Capabilities

Our core capability is to detect threats and protect against them

• Optical communication in space
• Planet and space observation
• Protection in space
• Testing and consultancy
• Air traffic control
• Identification friend-or-foe
• Platform protection
• Air defence
• ISTAR
• Situational awareness
• Air mission management
• Electronic support and attack
• Observation and targeting
• Situational awareness
• Reconnaissance and surveillance
• Platform and force protection
• Electronic support and attack
• Hydrogen-based energy supply
• Coastal surveillance
• Platform protection
• Situational Awareness
• Navigation

• ISTAR

• Electronic support and attack

• Homeland security
• CNI Protection
• Military Base protection
• Wildlife protection
• Embedded secure IT

• Cryptology and

• Tactical cyber security

information space

• AI-based OSINT analytics

secure communication

Radar & Naval Solutions

Division Highlights

Portfolio

• Most advanced wide field of regard AESA Radar for Typhoon (HENSOLDT responsible for system design MK1)
• Paving the way for autonomous air vehicles to fly in commercial airspace with Detect & Avoid Radar technology
• New PrecISR family with unique simple interface to the aircraft
• Innovative first Passive Radar product on the market
• COBRA best-in-class Counter-Battery Radar
• Radars from the 60's still in operation

Spectrum Dominance & Airborne Solutions

Division Highlights

Kalaetron Integral Air SIGINT Solution

Portfolio

Spectrum Dominance

• Electronic Attack
• Electronic Support and SIGINT
• Self Protection Systems
• Strategic and Tactical Intelligence
• Spectrum Management and Monitoring
• Cyber Resilience

MissionGrid Airborne Sensors Network

Argosia ISR mission system

Airborne Solutions / Avionics

• Mission Management
• Vision Systems / Situational Awareness
• Cyber Secure Connectivity
• Airborne Computing
• Flight Data Recording
• Ground Stations

Optronics & Land Solutions Division Highlights

SensorSuite for land vehicles

AMPS Airborne Missile Protection System

• Portfolio
• Military vehicle optronics and land solutions
• Telescopic sights, targeting optics and night vision attachments
• Submarine periscopes and optronic mast systems
• Maritime electro-optical sensor systems
• Electro-optical self-protection and counter measures systems
• Airborne optronic sensors and observation systems
• High performance optronics for space and scientific applications
• Securiy solutions for CNI, border and force protection
• Counter-UAS system for drone detection and defence

HENSOLDT AG – company presentation

Services & Aerospace Solutions Division Highlights

Exceed customer expectations with our innovative services and pioneering solutions

• Over 450 service specialists, with decades of comprehensive, practical experience are operating around the globe.
• More than 150 types of products, supported through customized and tailored services.
• Over 750 customers worldwide trust in our services network and infrastructure.
• Full simulation and integration solutions for validation of complex systems and for training
• Active participation in the energy transition and part of the green Hydrogen ecosystem with international deployment actions
• On board and certified equipment for aerospace applications

Strategy Update

This document and its content is the property of HENSOLDT AG. It shall not be communicated to any third party without the owner's written consent. © Copyright HENSOLDT 2021. All rights reserved.

HENSOLDT AG – company presentation

Strategy for 2031 HENSOLDT's vision for growth

Sensor House	Sensor Solutions House	Provide integrated customer solutions building beyond component and sub-system heritage
Defence	Defence and Security	Champion core markets and increasingly access adjacent markets including civil applications
State-of-the-art	Innovation Champion	Strive to develop cutting edge new solutions and exploit new technology trends
Mainly European	More and Expanded International (European-based)	Strengthen international and export reach building on strong European developed capabilities
HENSOLDT Post Airbus		HENSOLDT today and tomorrow
	Drive Digital and Convince Customers Innovative Portfolio with our Capabilities	Become ESG Sector Live Strong Improve Benchmark Company Culture Operational Efficiency

HENSOLDT AG – company presentation

We want to become ESG sector benchmark!

Group Key Targets 2026 to fully embed ESG within business

Business Integrity	• Demonstrate Business Integrity by ensuring zero breaches of compliance laws (e.g. corruption / bribery, competition, export control). • Protect the data of our employees, customers and all other stakeholders and prevent any cases of data leaks. • Make digitalization a core contributor to sustainability at HENSOLDT. • Leverage sustainable financing and participate in ESG ratings.
Product Responsibility	• Foster innovation and continuous improvement; further implement guidance for the responsible use of artificial intelligence and other relevant aspects related to HENSOLDT products and services. • Develop solutions that protect our society and our planet and enhance wildlife protection and climate observation projects.
Health and Safety	• Maintain a LTIFR of under 0.75 to keep employees healthy and safe. • Foster our employees' mental and physical well-being.
Human Potential	• Be employer of choice and maintain employee satisfaction above the German government benchmark. • Secure equal opportunities and promote a diverse workplace, among others by increasing women in leadership positions to 35 %.
Community Relations	• Be a good corporate citizen by increasing corporate volunteering hours per employee to 8 per year. • Maintain dialogue with stakeholders through 1 stakeholder dialogue at each site per year.
Responsible Sourcing	• Manage supply chain responsibly by identifying and mitigating supplier ESG risks.
Planet and Resources	• Reduce carbon footprint to achieve CO neutrality by 2035. 2 • Foster operational environmental protection by certifying 100 % of sites for ISO 14001.

HENSOLDT takes action to foster sustainability

People	• Support of local communities, education and development of our society • Diversity and equal opportunities at all levels of the organization (Elevate, Initiative Chefsache) • Personal and career development to leverage our human potential (iLead, Women's bursary program South Africa) • Activities at universities and on social media to attract the pioneers of tomorrow
Planet	• 100% Green electricity at German sites • Mobility Concept promoting hybrid and electric vehicles • Alternative energies from solar power or hydrogen • Protection Wildlife
Performance	• Comprehensive compliance program implemented • Strong export control processes in place to ensure HENSOLDT products are not used for abuse of human rights • Identification of non-financial risks and opportunities integrated into ERM • Around 16% of revenues are non-defence related

ESG Risk Rating

HENSOLDT AG ranks #1 in Aerospace and Defense!

HENSOLDT as first company within industry to be categorized as "Low Risk"

HENSOLDT Financials

This document and its content is the property of HENSOLDT AG. It shall not be communicated to any third party without the owner's written consent. © Copyright HENSOLDT 2021. All rights reserved.

HENSOLDT AG – company presentation

HENSOLDT AG – company presentation

Growth in top line sustains in €m

(1) Order intake is defined as orders where the corresponding selling contract becomes effective and enforceable in accordance with the terms and conditions of the contract. (2) Order backlog is defined as the value of the order book at the respective reporting date by keeping record of customer orders starting from the opening stock and taking into account revenue and adjustments for the respective reporting period, and ending with the final stock.

Bottom line follows top line development in €m

Adj. EBITDA and adj. EBIT further increase Pass-through business and major projects in early stage develop as expected

Investments in bid budget and self-funded R&D ensure future growth

Leverage position further improved

(1) Adjusted EBITDA is defined as EBIT adjusted for depreciation and amortization (including non-recurring effects on earnings from purchase price allocations), as well as certain non-recurring effects relating to transaction costs, separation costs, IPO related costs and other non-recurring effects.(2) Adjusted EBIT is defined as EBIT adjusted for certain non-recurring effects relating to effects on earnings from purchase price allocations, transaction costs, separation costs, IPO related costs and other non-recurring effects. ((3) Adjusted Pre-Tax Unlevered Free Cash Flow is defined as free cash flow adjusted for non-recurring operating effects as well as interest, tax and M&A activities. The free cash flow is defined as sum of the cash flows from operating and investing activities as reported in the consolidated cash flow statement.

Further deleveraging in €m

(1) Net leverage including lease liabilities, excluding pensions.

Guidance 2022 and medium term targets specified

	2022 target	2023 target	Medium term target
Book-to-bill ratio(1)	>1x	>1x	>1x
Revenue / revenue growth	~€1.7bn (mid-teens growth)	Mid to high single digit	Mid single digit
Adj. EBITDA / Adj. EBITDA margin(2)	€285m – €300m	excl. pass-through ~19% revenues (~€150m)	excl. pass-through >19% revenues (~€100m)
Adj. pre-tax unlevered FCF(3)	~70% conversion on adjusted EBITDA	NWC: stable, falling slightly as % of revenue Cash tax rate: 28.3%
Net leverage(4)	<1.4x	<1.25x	<1.0x
Dividend	Up to 20% of adj. net income	30-40% of adj. net income
Capex and intangible investment	Capex: 2.0-2.5% of revenue Cap. R&D: 2.0-3.0% of revenue
D&A (% of revenues)	~5% (t/o 50% IAS38) of revenue

(1) Book-to-Bill ratio is defined as order intake / reported revenue for the relevant period. (2) Adjusted EBITDA is defined as EBIT adjusted for depreciation and amortization (including non-recurring effects on earnings from purchase price allocations), as well as certain non-recurring effects relating to transaction costs, separation costs, IPO related costs and other non-recurring effects / / reported revenue for the relevant period. (3) Adjusted Pre-Tax Unlevered Free Cash Flow is defined as free cash flow adjusted for non-recurring operating effects as well as interest, tax and M&A activities. The free cash flow is defined as sum of the cash flows from operating and investing activities as reported in the consolidated cash flow statement.(4) Net financial leverage including lease liabilities, excluding pensions.

Key financial takeaways

Visibility	• Key orders achieved, further topics highly visible • High revenue coverage from firm order backlog	Order backlog(1) / LTM revenues 3.5x FY 2021(2)
Top-line growth	• Step change in growth momentum	Revenue growth +22% FY 2020 – FY 2021
Profitability	• Relative margins on high level • High positive Net Income • Further investments in bid budgets and R&D covered	Adj. EBITDA excl. 19.4% FY 2021 pass-through
Liquidity	• Strong operating cash generation • Deleveraging ahead of plan	Net leverage(4) 1.6x FY 2021
Outlook	• Short- and medium term guidance confirmed for all KPIs • Dividend policy confirmed	Proposal for €0.25 per share/ 2% dividend yield

(1) Order backlog is defined as the value of the order book at a respective reporting date by keeping record of customer orders starting from the opening stock and taking into account revenue and adjustments for the respective reporting period, and ending with the final stock. (2) Calculated as 9M2021 order backlog divided by LTM revenue. (3) Adjusted EBITDA is defined as EBIT adjusted for depreciation and amortization (including non-recurring effects on earnings from purchase price allocations), as well as certain non-recurring effects relating to transaction costs, separation costs, IPO related costs and other non-recurring effects / / reported revenue for the relevant period. (4) Targeted net financial leverage including lease liabilities, excluding pensions.

HENSOLDT Financial Section

This document and its content is the property of HENSOLDT AG. It shall not be communicated to any third party without the owner's written consent. © Copyright HENSOLDT 2021. All rights reserved.

HENSOLDT AG – company presentation

Consolidated Income Statement

		Fiscal Year
€m	2021	2020
Revenue	1,474.3	1,206.9
Cost of sales	(1,144.5)	(936.1)
Gross profit	329.8	270.8
Selling and distribution expenses	(98.7)	(90.2)
General administrative expenses	(83.1)	(87.2)
Research and development costs	(31.4)	(25.1)
Other operating income	29.3	18.9
Other operating expenses	(18.2)	(16.1)
Share of profit/loss from investments accounting for using the equity method	(2.0)	(2.6)
Earnings before finance result and income taxes (EBIT)	125.7	68.5
Interest income	4.0	4.0
Interest expense	(41.8)	(137.7)
Other finance income/costs	(3.0)	(10.0)
Finance result	(40.8)	(143.7)
Earnings before income taxes	84.9	(75.2)
Income taxes	(22.2)	10.7
Group result	62.7	(64.5)
thereof attributable to the owners of HENSOLDT AG	62.7	(65.2)
thereof attributable to non-controlling interests	(0.0)	0.7

Consolidated Statement of Financial Position – Assets

	As at
€m	2021	2020
Non-current assets	1,320.2	1,313.4
Goodwill	651.3	637.2
Intangible assets	385.0	386.2
Property, plant and equipment	108.2	103.1
Right-of-use assets	140.7	143.5
Investments and other financial assets(1)	21.5	12.3
Other non-current assets	2.7	4.8
Deferred tax assets	10.8	26.3
Current assets	1,629.5	1,634.2
Other(2)	10.1	19.9
Inventories	444.2	403.7
Contract assets	170.0	204.4
Trade receivables	309.2	282.0
Other currents assets	166.7	78.7
Cash and cash equivalents	529.3	645.5
Total assets	2,949.7	2,947.6

(1) Includes Investments accounted for using the equity method, Other investments and non-current other financial assets, Non-current other financial assets. (2) Includes Other non-current financial assets, due on short-notice, Other current financial assets and Income tax receivables.

Consolidated Statement of Financial Position - Equity and Liabilities

	As at
€m	2021	2020
Share capital	105.0	105.0
Capital reserve and other reserves(1)	512.7	510.5
Retained earnings	(218.4)	(281.6)
Equity held by shareholders of HENSOLDT AG	399.3	333.9
Non-controlling interests	11.1	12.9
Equity, total	410.4	346.8
Non-current liabilities	1,284.5	1,257.1
Non-current provisions	496.7	482.6
Non-current financing liabilities(2)	622.0	601.6
Non-current contract liabilities	12.1	16.0
Non-current lease liabilities	139.5	140.3
Other non-current liabilities	10.1	8.9
Deferred tax liabilities	4.1	7.7
Current liabilities	1,254.8	1,343.7
Current provisions	188.1	193.6
Current financing liabilities(3)	176.3	461.1
Current contract liabilities	500.0	416.8
Current lease liabilities	16.1	13.7
Trade payables	269.1	164.0
Other current liabilities	94.1	86.9
Tax liabilities	11.1	7.6
Total equity and liabilities	2,949.7	2,947.6

(1) Includes Capital reserve, Other reserves. (2) Includes Non-current financing liabilities, Other non-current financial liabilities. (3) Includes Current financing liabilities, Other current financial liabilities.

Consolidated Statement of Cash Flows (1/2)

		Fiscal Year
€m	2021	2020
Group result	62.7	(64.5)
Depreciation and amortization	126.0	120.8
Financial expenses (net)	33.2	128.2
Change in
Provisions	30.8	46.4
Inventories	(44.2)	5.3
Contract balances	111.2	61.4
Trade receivables	(22.1)	5.3
Trade payables	107.2	(8.6)
Other assets and liabilities	(82.8)	(17.8)
Interest paid	(35.6)	(43.6)
Income tax paid	(9.3)	(5.5)
Other(1)	22.1	(30.5)
Cash flows from operating activities	299.2	196.9
Acquisition/addition of intangible assets and property, plant and equipment	(102.0)	(97.4)
Acquisition of associates, other investments and other non-current investments	(6.6)	(6.6)
Acquisition of businesses net of cash acquired	(12.1)	6.4
Other(2)	3.6	2.6
Cash flows from investing activities	(117.1)	(95.0)

(1) Includes Allowances on inventories, trade receivables and contract assets, Profit/loss from disposals of non-current assets, Share of profit in entities accounting for using the equity method, Other non-cash expenses/income and Income tax expense/income.. (2) Proceeds from sale of intangible assets and property, plant and equipment and Other cash flows from investing activities.

Consolidated Statement of Cash Flows (2/2)

	Fiscal Year
€m	2021	2020
Cash flows from operating activities	299.2	196.9
Cash flows from investing activities	(117.1)	(95.0)
Proceeds/repayment of financial liabilities(1)	(263.4)	127.1
Payment of lease liabilities	(16.5)	(14.3)
Dividends paid to shareholders of HENSOLDT AG	(13.7)	-
Dividend payments to non controlling interests	(0.2)	(0.2)
Issue of shares	-	300.0
Transaction cost on issue of equity	(3.4)	(1.6)
Cash flows from financing activities	(297.2)	411.0
Effects of movements in exchange rates on cash and cash equivalents	(1.1)	(2.5)
Other adjustments	-	(2.3)
Net changes in cash and cash equivalents	(116.2)	508.1
Cash and cash equivalents
Cash and cash equivalents at beginning of period	645.5	137.4
Cash and cash equivalents at end of period	529.3	645.5

(1) Proceeds / repayment from financial liabilities, Change in other financial liabilities

Reconciliation of order intake, segment revenue and adjusted EBITDA to group figures

	Fiscal Year
€m	2021	2020
Order intake	3,171.5	2,541.3
Sensors	2,774.4	2,238.1
Optronics	405.4	308.3
Elimination/Transversal/Others	(8.3)	(5.1)

€m

Revenue	1,474.3	1,206.9
Sensors	1,147.7	923.6
Optronics	331.9	288.1
Elimination/Transversal/Others	(5.3)	(4.8)

€m

Adjusted EBITDA(1)	260.7	219.3
Sensors	194.4	156.2
Optronics	68.2	65.6
Elimination/Transversal/Others	(1.9)	(2.5)

(1) Adjusted EBITDA is defined as EBIT adjusted for depreciation and amortization (including non-recurring effects on earnings from purchase price allocations), as well as certain non-recurring effects relating to transaction costs, separation costs, IPO related costs and other non-recurring effects.

Overview of EBITDA and EBIT adjustments

EBITDA adjustments (€m)
	2021	2020
EBIT	125.7	68.5
(+) Depreciation	44.1	41.2
(+) Amortization	81.9	79.6
EBITDA	251.7	189.3
(+) Transaction costs	0.4	0.9
(+) Separation costs	-	-
(+) IPO related costs	0.7	15.8
(+) Other non-recurring effects	7.9	13.3
Adjusted EBITDA	260.7	219.3

EBIT adjustments (€m)
	2021	2020
EBIT	125.7	68.5
(+) Effect on earnings from purchase price allocations	63.9	68.6
thereof intangible assets	63.2	67.9
thereof property, plant and equipment	0.7	0.7
thereof inventories	-	-
(+) Transaction costs	0.4	0.9
(+) Separation costs	-	-
(+) IPO related costs	0.7	15.8
(+) Other non-recurring effects	7.9	13.4
Adjusted EBIT	198.6	167.2

Reconciliation of reported to adjusted net income

	Fiscal Year
€m	2021	2020
Reported net income	62.7	(64.5)
(+) Effect on earnings from purchase price allocations	63.9	68.6
(+) Transaction costs	0.4	0.9
(+) Seperation costs	-	-
(+) IPO related costs	0.7	15.8
(+) Other non-recurring effects	10.8	13.4
(+) Valuation effects of embedded derivate	-	50.9
(+) Premature repayment of TLB	-	27.9
Adjusted net income pre-tax adjustment	138.5	113.0
(+) Tax adjustments(1)	(21.1)	(45.5)
Adjusted net income	117.4	67.5

(1) Includes tax adjustment effect on earnings from PPA, tax adjustment separation costs, tax adjustment other non-recurring costs, tax adjustment valuation effect of embedded derivate and tax adjustment of premature repayment of TLB

Reconciliation of reported to adjusted pre-tax unlevered FCF

	Fiscal Year
€m	2021	2020
Cash flows from operating activities	299.2	196.9
Cash flows from investing activities	(117.1)	(95.0)
Free cash flow	182.1	101.9
(+) Transaction costs	0.4	1.1
(+) IPO related costs	4.0	37.8
(+) Other non-recurring effects	7.7	11.5
(+) Interest(1), income taxes(2) and M&A-activities(3)	58.1	44.1
Adjusted pre-tax unlevered free cash flow	252.3	196.4
Cash flows from financing activities	(297.2)	411.0

(1) Defined as 'Interest paid' as reported in the consolidated cash flow statement. (2) Defined as 'Income taxes payments / refunds' as reported in the consolidated cash flow statement. (3) Defined as sum of 'Share of profit in entities accounting for using the equity method', 'Proceeds from sale of intangible assets and property, plant and equipment', 'Acquisition of associates, other investments and other non-current investments', 'Acquisition of businesses net of cash required' and 'Other cash flows from investing activities' as reported in the consolidated cash flow statement.

HENSOLDT AG

Investor Relations Veronika Endres

Willy-Messerschmitt-Straße 3 82024 Taufkirchen

T: +49 89 / 51518 2057 E: investorrelations@hensoldt.net

This document and its content is the property of HENSOLDT AG. It shall not be communicated to any third party without the owner's written consent. © Copyright HENSOLDT 2021. All rights reserved.

Status: April 2021