Nordic Unmanned ASA

Share Issue/Capital Change • Oct 23, 2024

Q3 Trading update and contemplated equity raise

Q3 Trading update and contemplated equity raise

23.10.2024 08:00:01 CEST | Nordic Unmanned | Inside information

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JAPAN, AUSTRALIA OR THE UNITED STATES, OR ANY OTHER JURISDICTION IN WHICH SUCH

RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL. THIS ANNOUNCEMENT DOES

NOT CONSTITUTE AN OFFER OF ANY OF THE SECURITIES DESCRIBED HEREIN.

Nordic Unmanned ASA (the "Company" or "NU Group") is contemplating an equity

raise to support the ongoing redirection and transition of the NU Group towards

a focused and high growth OEM (original equipment manufacturer) business.

REVISED CORPORATE STRUCTURE

2024 is defined as a transition year for the NU Group focusing on continued

growth in the OEM business (Defense and Security) while pursuing structural

options for Flight Services. In Q1 and Q2 2024 significant efforts were made to

cut cost and reduce debt, thus paving the way forward with an aim to become

profitable by second half of 2025 via organic and potentially inorganic actions.

Into Q3 2024 the Company continued to operationalize on this new strategy.

Further, initiatives are ongoing to prepare for a legal drop-down of assets

within the NU Group, ultimately creating a holding company structure with two

separate legal business units; one pureplay drone-as-a-service business unit

(Flight Services) and one pureplay OEM business focused on the defense and

security sector (AirRobot and DroneMatrix). Such a division and drop-down of

assets resolved by the Company's board of directors (the "Board") and the

implementation is subject to certain regulatory approvals. The process is also

supported by the lenders, although certain approvals related to asset and debt

allocation is to be finally agreed. This will enable a more focused and

pure-play market strategy for the two businesses which has different operating

models, value propositions and client bases, and thus also streamline each of

the unit's investor profiles to engage in consolidation opportunities and

attract growth capital according to investors' risk/reward preferences.

The OEM business will going forward focus on key niches within the defense &

security sectors with an asset light business model, and this should lead to

higher scalability and return on equity over time. There exists an opportunity

to build on the NATO certification, commercial position with the German Airforce

and with other key clients and further unlock and build on synergies between

AirRobot and DroneMatrix by combining the companies' strengths.

The Flight Services segment is now well positioned with a strong track record in

an emerging drone-as-a-service niche and is anticipated to constitute an

attractive consolidation target in an industry where scale matters. The business

is in a transition from an asset heavy to an asset light profitable business

model and a European market leader in an emerging industry with long term growth

prospects.

STRATEGIC REVIEW OF FLIGHT SERVICES

Based on the above, the Board believes that a new industrial platform will

provide the basis for a broader reach and scalability for Flight Services.

Pareto Securities AS has been engaged to advise on and explore the structural

options for Flight Services which could lead to a merger, partial sale or sale

of the entire business unit. NU Group is currently in early dialogues with

potential investors for Flight Services, but no assurance can be made if or when

a transaction may occur. The Company's aim is to conclude on the strategic

review by the end of Q4 2024.

TURNARAOUND OF THE OEM BUSINESS

The ongoing turnaround of the OEM businesses aims to streamline the supply chain

and manufacturing process, improve technology offering, sales capacity and

technology development partly through partnerships. In short, to be in position

for:

* Strengthen the technology offering of state-of-the art surveillance drones

for the defense market as well as port- and infrastructure security

* Focus on securing new orders and opportunities via sales- and manufacturing

partners for growth

* Strong emphasis on gross margin expansion and profitability

Q3 2024 PRELIMINARY TRADING UPDATE

After a preliminary review, NU Group achieved an overall positive Q3 compared to

Q2 2024 with estimated revenue of approx. EUR 4.9 million, a growth of ~20% from

Q2 2024, and with an estimated positive adjusted EBITDA (adjusted for

refinancing cost), an improvement from Q2 2024 where EBITDA was a negative EUR

0.6 million.

Flight Services experienced a positive catch-up of activity after a slow Q2 2024

characterized by operational delays and late ramp-up of EMSA contracts. Flight

Services identified impairment triggers related to some operational assets,

primarily due to lower-than-expected activity levels. While the Company is

certain that an impairment will occur, the amount and impact remain under

review. An update will follow once the review is completed and the non-cash

impacts on our financial result is confirmed, anticipated in Q4 2024. In the OEM

segment, AirRobot is anticipating a flat development in Q3 2024, due to supply

chain and working capital constraints. It is anticipated that the mentioned

turnaround efforts will improve performance from Q2 2025. In addition, it is

anticipated that the "stop work order" under a key AirRobot / NU UK project

announced earlier is likely to resume from Q1 2025. DroneMatrix continued with

low activity but has promising prospects including the recent EUR 350.000 letter

of award for development funding from the Defense-related Research Action

(DEFRA), a research program initiated by Belgian MoD.

NU Group achieved a positive cashflow from underlying operating activities,

which was outweighed by a negative free cash-flow of EUR approx. -0.6 million,

leaving the Company's available liquidity reserve of EUR approx. 0.9 million at

the end of Q3 2024. The negative free cash-flow and liquidity development are

mainly a consequence of significant extraordinary costs related to the necessary

legal restructuring and financial restructuring from Q2 and Q3 2024 and into Q4

2024, the abovementioned delays in certain Flight Services operations as well as

a series of previous announced disruptions at AirRobot with regards to both the

Mikado project and another larger project. In addition, attempts to sell idle

assets have not been successful to date. Total process costs from the financial

restructuring through Q2 and Q3 2024 were approx. EUR 1.5 million.

The Q3 2024 report is anticipated to be published on 19 November 2024.

NEAR-TERM CAPITAL NEED AND COMPEMPLATED EQUITY ISSUE

The combination of extraordinary refinancing cost in Q2 and Q3 2024, ongoing

turnaround activities and transition into an asset light business model,

unsuccessful sale of assets as well as contractual and regulatory delays

throughout Q2 and Q3 2024 coupled with forecasted working capital requirement in

the OEM business, has put the Company in need of additional equity to support

the ongoing redirection and transition of the Company. Against this background,

the Board has engaged Pareto Securities AS to initiate a process to raise new

equity of NOK 45 million. The size of the offering is based on the Board's best

understanding of the financial development and liquidity projections going

forward and is deemed sufficient to finalize the ongoing turnaround, working

capital requirement, improve manufacturing capabilities and obtain expected

contract awards, while executing the Strategic Review of Flight Services,

ultimately securing a positive cash-flow from second half of 2025. Of the total

NOK 45m capital raise approx. NOK 30 million will be channeled to the OEM

business and approx. NOK 15m to Flight Service. The required capital need does

not require a sale of Flight Services or drone assets. A potential launch of the

equity raise is expected as soon as a sufficient commitment to support the

equity raise has been identified.

The Company's largest shareholder, Tjelta Eiendom AS, holding 42% of the

outstanding shares, has pre-committed to subscribe for, and will be allocated

NOK 25 million in the contemplated equity raise (55.6% of the potential

transaction), signaling strong support for the Company's restructuring and

future growth plans. The Company's board will consider to propose for the EGM a

subsequent repair issue towards shareholders who have not participated in the

Private Placement.

OUTLOOK

Flight Services has delivered three bids with a potential, unrisked value

exceeding EUR 100 million and with potential effect from 2025, compared to

limited bidding activity in 2023. With an asset light and partner-based strategy

going forward, the Company only foresees minor capex required to grow the Flight

Services business stand-alone.

The issues and delays for AirRobot are anticipated to be resolved over the next

few months with a positive effect from Q2 2025. The Company anticipates positive

effects for DroneMatrix and AirRobot from the ongoing turnaround project in the

OEM segment. NU Group is growing the pipeline of leads for both AirRobot and

DroneMatrix, including new leads outside Germany and Belgium, with specific

indications of further demand for AR-100s from well-known clients from 2025. The

combined and risked pipeline is large and growing, together with ongoing

strategic initiatives provides a good basis for long term positioning and

development.

The contemplated equity raise will support this process beyond 2025, allowing to

pursue strategic opportunities for the purpose of driving long-term value

creation building a leading European supplier of drone and drone solutions to

the defense and security industries in NATO member countries.

UPDATED INVESTOR PRESENTATION

For further information about NU Group, please refer to the enclosed updated

investor presentation.

DISCLOSURE REGULATION

This information is considered to be inside information pursuant to the EU

Market Abuse Regulation (MAR) and is subject to the disclosure requirements

pursuant to MAR article 17 and section 5-12 of the Norwegian Securities Trading

Act. This stock exchange announcement was published by Tarjei Lode, CFO of the

Company on 23 October 2024, at 08:00 CEST.

CONTACTS

* Stig H. Christiansen, CEO, Nordic Unmanned ASA, +47 478 07 813,

shc@nordicunmanned.com

* Tarjei Lode, CFO, Nordic Unmanned ASA, +47 469 37 008, tl@nordicunmanned.com

Important notice

This announcement is not, and does not form a part of, any offer to sell, or a

solicitation of an offer to purchase, any securities of the Company. The

distribution of this announcement and other information may be restricted by law

in certain jurisdictions. Copies of this announcement are not being made and may

not be distributed or sent into any jurisdiction in which such distribution

would be unlawful or would require registration or other measures. Persons into

whose possession this announcement or such other information should come are

required to inform themselves about and to observe any such restrictions.

The securities referred to in this announcement have not been and will not be

registered under the Securities Act, and accordingly may not be offered or sold

in the United States absent registration or an applicable exemption from the

registration requirements of the Securities Act and in accordance with

applicable U.S. state securities laws. The Company does not intend to register

any part of the potential equity raise or their securities in the United States

or to conduct a public offering of securities in the United States. Any sale in

the United States of the securities mentioned in this announcement will be made

solely to "qualified institutional buyers" as defined in Rule 144A under the

Securities Act.

In any EEA Member State, this communication is only addressed to and is only

directed at qualified investors in that EEA Member State within the meaning of

the Prospectus Regulation, i.e., only to investors who can receive a on offer to

participate in a potential equity raise without an approved prospectus in such

EEA Member State. The expression "Prospectus Regulation" means Regulation

2017/1129 as amended together with any applicable implementing measures in any

EEA Member State. This communication is only being distributed to and is only

directed at persons in the United Kingdom that are (i) investment professionals

falling within Article 19(5) of the Financial Services and Markets Act 2000

(Financial Promotion) Order 2005, as amended (the "Order") or (ii) high net

worth entities, and other persons to whom this announcement may lawfully be

communicated, falling within Article 49(2)(a) to (d) of the Order (all such

persons together being referred to as "relevant persons"). This communication

must not be acted on or relied on by persons who are not relevant persons. Any

investment or investment activity to which this communication relates is

available only for relevant persons and will be engaged in only with relevant

persons. Persons distributing this communication must satisfy themselves that it

is lawful to do so.

Matters discussed in this announcement may constitute forward-looking

statements. Forward-looking statements are statements that are not historical

facts and may be identified by words such as "believe", "expect", "anticipate",

"strategy", "intends", "estimate", "will", "may", "continue", "should" and

similar expressions. The forward-looking statements in this release are based

upon various assumptions, many of which are based, in turn, upon further

assumptions. Although the Company believes that these assumptions were

reasonable when made, the assumptions are inherently subject to significant

known and unknown risks, uncertainties, contingencies and other important

factors which are difficult or impossible to predict and are beyond the

Company's control.

Actual events may differ significantly from any anticipated development due to a

number of factors, including without limitation, changes in investment levels

and need for the Company's services, changes in the general economic, political

and market conditions in the markets in which the Company operates, the

Company's ability to attract, retain and motivate qualified personnel, changes

in the Company's ability to engage in commercially acceptable acquisitions and

strategic investments, and changes in laws and regulation and the potential

impact of legal proceedings and actions. Such risks, uncertainties,

contingencies and other important factors could cause actual events to differ

materially from the expectations expressed or implied in this release by

forward-looking statements. The Company does not provide any guarantees that the

assumptions underlying the forward-looking statements in this announcement are

free from errors nor does it accept any responsibility for the future accuracy

of the opinions expressed in this announcement or any obligation to update or

revise the statements in this announcement to reflect subsequent events. You

should not place undue reliance on any forward-looking statements in this

announcement.

The information, opinions and forward-looking statements contained in this

announcement speak only as at its date, and are subject to change without

notice. The Company does not undertake any obligation to review, update,

confirm, or to release publicly any revisions to any forward-looking statements

to reflect events that occur or circumstances that arise in relation to the

content of this announcement.

This announcement is for information purposes only and is not to be relied upon

in substitution for the exercise of independent judgment. It is not intended as

investment advice and under no circumstances is it to be used or considered as

an offer to sell, or a solicitation of an offer to buy any securities or a

recommendation to buy or sell any securities in the Company.

This announcement is an advertisement and is not a prospectus for the purposes

of Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14

June 2017 on prospectuses to be published when securities are offered to the

public or admitted to trading on a regulated market, and repealing Directive

2003/71/EC (as amended) as implemented in any Member State.

DISCLOSURE REGULATION

This information is subject to the disclosure requirements pursuant to section

5-12 of the Norwegian Securities Trading Act.

CONTACTS

* Stig H. Christiansen, CEO, Nordic Unmanned ASA, +47 478 07 813,

shc@nordicunmanned.com

* Tarjei Lode, CFO, Nordic Unmanned ASA, +47 46937008, tl@nordicunmanned.com

ABOUT NORDIC UNMANNED

Nordic Unmanned is a leading European manufacturer (OEM) and certified operator

of unmanned aircraft systems ("UAS").

We are serving large corporations, government agencies and security customers by

offering systems, solutions and flight services for environmentally friendly

delivery of productivity improvements and time critical, actionable data

insights and logistics services.

Our solutions and services are organized in the three business segments as

follows:

Flight Services: is a technology-agnostic flight services operator providing

time-critical actionable data to large corporate and governmental customers. The

segment also includes NUAer AS and Resale.

AirRobot: is an Equipment Manufacturer (OEM) with a leading product platform in

lightweight drones and sensors (payloads) tailored for defense and security.

DroneMatrix: is an Equipment Manufacturer (OEM) offering a fully integrated and

autonomous drone system with proprietary software for surveillance and security.

Nordic Unmanned is ISO 9001:2015 and ISO 14001:2015 certified for the operation,

maintenance, and sales of unmanned systems and sensor technology. AirRobot is

ISO 9001:2015 and EN 9100:2018 certified for its development and production

capabilities of unmanned systems.

Founded in Norway in 2014, Nordic Unmanned has offices in Sandnes (NO),

Cranfield (UK), Hasselt (BE) and Arnsberg (GER). Nordic Unmanned also comprise

joint venture - Omni Unmanned SA with OHI Group SA (registered in Luxemburg) and

joint venture - NUAer AS with Aeromon OY (registered in Norway).

For more information visit - https://nordicunmanned.com/

ATTACHMENTS

Download announcement as PDF.pdf -

https://kommunikasjon.ntb.no/ir-files/17847587/18293440/5149/Download%20announce

ment%20as%20PDF.pdf

241023_NUGroup_InvestorPresentation.pdf -

https://kommunikasjon.ntb.no/ir-files/17847587/18293440/5148/241023_NUGroup_Inve

storPresentation.pdf