Sogeclair S.A. — Investor Presentation 2020

Sep 9, 2020

SOGECLAIR

Ingénierie de haute technologie

2020 H1 RESULTS

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SOGECLAIR

SOGECLAIR

SOGECLAIR is a leading supplier of technological solutions and products with high added-value in the transportation industry (air and ground)

H1 2020

Covid-19 crisis

2019

Entry into the capital of KEY'S

(6.4% of the capital – 74 « Key people »)

2018

Set up in

Asia Pacific

2001 – 2005

Set up in Europe

2013-2015

Set up in North America

1998

Listed on the

Paris Stock Exchange

1986

SOGECLAIR creation to lead the

companies development

created in 1962

SOGECLAIR is a family company listed on Euronext Paris

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Reminder of the perspectives presented for the 2019 results regarding 2020

Uncertainties relate mainly to:
- In the short term, the consequences of the Coronavirus
- In the medium term the evolution of the exchange rate:
- € / USD
- CAD / USD

In each country, SOGECLAIR takes measures to protect its employees by preserving the continuity of its activities as much as possible.

SOGECLAIR is positioned on markets that are driving sustainable growth.

2020 financial year will see increased investments as a result of:
- Supporting the strengthening of our industrial activities
- R&D to capitalize on our advances in:
- The autonomous vehicle
- Digital technologies and virtual reality
- Artificial intelligence
- Thermoplastic materials
- The new generation of railway simulation software,

SOGECLAIR is confident in its adaptability and its ability to make its model evolve.

Achieved during the H1 2020

→ Health measures by country
→ Adaptation to the new market reality
→ Strengthening the offer
→ Targeting of the commercial action and R&D

→ Consequences:
- Provisions for restructuration costs of €11,1M
- Goodwill impairment of €2,1M
- Cancellation of deferred tax assets of €2M

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H1 2020 HIGHLIGHTS

Consequences of the Covid-19 crisis by market:

• Commercial Aeronautic (41%): IATA forecasts a 50% decrease in airline companies revenues for 2020 and a return to the pre-crisis situation between 2023 and 2025.
  → Aircraft and equipment manufacturers are adapting their production rates, large and turboprop engines aircrafts are those that suffer the most from significant drops in production rates.

• Business aviation (29%): a safer alternative for high-contribution travelers. Competition between manufacturers supports the dynamic of the offer.
  → Forecasts are more favorable for long-range aircrafts.

• Space (3%): the Covid-19 crisis accelerates the needs in terms of telecommunications and the observation is strongly supported by public investment.
  → After the one-off effects of the containment, the activity returned to normal.

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H1 2020 HIGHLIGHTS

• Automotive (17%) : the recovery in sales is very sustained after the freeze period linked to the containment and environmental pressure is strong.
  → Electric and low-emission vehicles are supporting growth.

• Rail (6%) : the sector is little concerned by the effects of the crisis apart from the drop in traffic attendance due to the containment.
  → Long-term public investment is reinforced by the recovery plans in each country.

• Defense (4 %) : a sector strongly supported by public investment.
  → After the one-off effects of the containment, the activity is dynamic.

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UNDERTAKEN MEASURES

From the start of the crisis, SOGECLAIR has undertaken a certain number of actions in the various subsidiaries in the different countries aimed at to :

• Ensure health safety on each of its sites,
• Implement adaptation measures such as partial activity, reduction of subcontracting, mobility, staff reductions, adaptation of organizations,
• Protect the cash flow (loans guaranteed by the State, tax and social deferment, activity and R&D support measures,...),
• Prepare the future by strengthening commercial and international activity, building new offers and strengthening cooperation between subsidiaries.

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International turnover for H1 2020:
54.1% (€37.3M)

Headquarter
Blagnac - FRANCE

Production Sites
(5 with 3 in France)
Design Office

Our international development started in the 2000s and keeps growing
The Group has continued its industrial strengthening with today 5 factories in Toulouse (2), in Ile de France (1), in Montreal (1) and in Savannah (1), focused on the critical phases of manufacturing of our products.

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A UNIQUE OFFER

OUR VISION

To be a reference player and a truly international long-term partner for the mobility industry by providing advanced technological solutions.

OUR MISSION

To supply innovative technological products and services that increase the performance of mobility resources (aeronautics, space, automotive, rail, etc.) to OEMs, equipment manufacturers and operators.

RESEARCH & DEVELOPMENT

Materials

Process

Systems

Software

DESIGN & ENGINEERING

Aerostructures

Interiors

Digital and virtual

applications

Vehicles Platforms

PRODUCTS & MANUFACTURING

Aerostructures and interiors

Equipment

Software & Simulators

Vehicles Platforms

Advanced test

Additive Manufacturing

SUPPORT

Repairs

Liaison engineering

MRO

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COMPLEX SYSTEMS AND PRODUCTS

The product activity of SOGECLAIR Group represents near 50% of the turnover of which almost 2/3 are delivered, installed and/or maintained internationally.

HUTP – fast attack vehicle

Driving simulator - Roads

Subway simulator

Vehicle simulator

Full tank access cover (thermoplastic)

Baro Setting Control Box (cockpit equipment)

Aircraft interior

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SOGEECLAIR

AEROSPACE DIVISION

Engineering & Products

SIMULATION DIVISION

Simulators and simulation software

VEHICULE DIVISION

Engineering & manufacturing of mission vehicles

Mechanical engineering

Virtual reality

Deep learning

Systems integration

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AEROSPACE

74% of turnover

Serie: 45%

Products: 30%

Development: 25%

SIMULATION

25% of turnover

Products: 100%

VEHICLE

1% of turnover

Products: 100%

Canada

Germany

France

Spain

Tunisia

United-Kingdom

United-States

Australia

France

India

United-Kingdom

United-States

France

Cross-cutting R&D and know-how for mobility

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H1 2020 RESULTS

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H1 2020: CUSTOMER

H1 2019

Turnover: €90.6M

H1 2020

Turnover: €68.9M

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KEY FIGURES

TURNOVER

ACTIVITIES

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KEY FIGURES

EBITDA at -1.6% of TURNOVER

OPERATING INCOME AT -24.9% of TURNOVER

• *of which provisions for restructuration costs: (€11.1M)
• *of which goodwill impairment (€2.1M)

NET RESULT at -23.7% of TURNOVER

• *of which reversal of deferred tax assets (€2M)

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KEY FIGURES

GEARING (including qualified pre-payment)

of which 17.6% related to the application of IFRS 16
of which 9.3% related to deferral of fiscal and social deadlines treated like financial liabilities

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IN SYNTHESIS

H1 2020 ACCOUNTS (€K)

	H1 2019	H1 2020
Turnover	90,625	68,892
EBITDA	5,381	-1,077
Operational Result	1,170	-17,121
Net Result	-530	-16,310
Net Debt* (including qualified pre-payments)	31,140	20,868**
*of which IFRS 16	8,943	8,117
**of which deferral of fiscal and social deadlines	0	4,293

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SOGECLAIR

AEROSPACE DIVISION

Engineering & Products

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AEROSPACE

Our products are installed on more than 11 commercial and business aircraft programs from 4 manufacturers.

With our engineering services, we support 8 manufacturers on 3 continents to design, improve, manufacture, support and service their aircrafts.

We master innovative technologies and materials as well as our customers' processes, methods and tools.

Our qualifications enable us to create certification files and we have our own manufacturing certification.

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AEROSPACE

In €M	H1 2019	H1 2020	Variation H1 2020-H1 2019
Turnover	74.9*	51.2**	-31.6%
EBITDA	2.9	-0.6	NS
As % of turnover	3.9%	-1.1%

of which €21.1M for the products activity so that 28%
*of which €15.4M for the products activity so that 30%

• Closure of customer sites in business aviation and space
• Decrease of rates production in commercial aviation
• Social and mobility measures
• Reorientation of R&D projects

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AEROSPACE

MARKET DRIVERS

Innovation

Ecological performance of aircrafts

Value engineering

KEY FACTORS OF SUCCESS

• Engineers mobility and training towards new technologies / processes
• Winning of new customers, of new programs
• Strengthening the international presence
• Digitalization

Business aircraft interiors

A350 Center Wing Box

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Aerospace appendixe

New generation of crystal china and flatware cabinets

Motorized conference table

Full tank access cover
(A350, A220)

Baro Setting Control Box

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SOGECLAIR

SIMULATION DIVISION

Simulators and simulation software

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SIMULATION

Our more than 700 simulators, that have been installed in more than 20 countries and used by more than 100 organizations and customers, comply with local regulatory requirements and are guaranteed and maintained by our mobile intervention teams.

They are sold in public or private markets by our sales representatives, agents or distributors.

Our softwares are implemented with more than 2,000 licenses at more than 150 customers, manufacturers, equipment manufacturers, research centers or ministries in about 15 countries.

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SIMULATION

In €M	HI 2019	HI 2020	Variation HI 2020-HI 2019
Turnover	14.2*	17.2*	+21.0%
EBITDA	1.3	-1.4	NS
As a % of turnover	9.1%	-7.9%

*100% products activity

→ The EBITDA for the 1er half 2020 endures the impact of losses to completion provisioned during the exercise Y-1.

> Turnover: +12.5% over the 2nd quarter thanks to large simulators and despite the mobility constraints that slow down the installation of simulators
> R&D activities strengthened
> Inter-subsidiary cooperations accelerated

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SIMULATION

MARKET DRIVERS

Needs for design and validation of complex systems incorporating multiple technologies and environments (vehicles, systems, ...)

Training needs for operators & traceability

Acceleration of technologies

Railway Simulator in virtual reality

DoF 6 Simulator and virtual reality headset

KEY FACTORS OF SUCCESS

• Control of the complexity of systems,
• Keep strengthening resources,
• Deployment of a direct and indirect commercial network on all continents.

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Simulation appendix

Autonomous vehicle: the futur of land mobility

Large simulators for RENAULT and BMW: architecture and realization of reception structures

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SOGECLAIR

VEHICLE DIVISION

Engineering & manufacturing of mission vehicles (military and industrial)

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VEHICULE

With our knowledge of operational requirements and our expertise in architecture and dynamic behavior, we are designers and manufacturers of defense vehicles.

We are the privileged partner for the design and manufacture of sub-systems (domes, gateways, etc.) intended for SOGECLAIR's large simulators.

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VEHICLE

In €M	H1 2019	H1 2020	Variation H1 2020-H1 2019
Turnover	1.5*	0.4*	-70,2%
EBITDA	0.1	-0.4	NS
As a % of turnover	8.5%	-94.2%

*100% products activity

• H1 2020 turnover excluding intragroup neutralization decreased by 42.3%
• Investments in preparation for international markets

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VEHICULE

MARKET DRIVERS

Increasing needs for protection and support of the military in operation

Mined route opening System [SOUVIM]

Transformation and adaptation needs for mission vehicles

Multi-mission terrestrial drone

KEY FACTORS OF SUCCESS

• Develop the international offer
• Adapt the organization to cope with significant size markets

to boost growth

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Vehicle appendixe

Design, manufacture and adaptation of special counter-mining vehicles

SOUVIM: 8 systems in the French Army. AFGHANISTAN and MALI

BUFFALO: 4 copies « Land Forces » - Barkhane 2019

SOUVIM: Integration of a ground penetration radar on 4 of the 8 copies of the Army. Barkhane 2020

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SOGECLAIR

Perspectives

The commercial aerospace market is undergoing a sharp and lasting decline for the coming semesters, but it remains favorable in the medium term (3 to 5 years).

The business aviation, space and more generally transport investment markets, which experienced a significant decline in the second quarter, are expecting a faster recovery.

On the basis of those analysis, SOGECLAIR took the necessary adaptation measures from the 2nd quarter 2020 in order to recover as soon as possible its levels of long-term growth and profitability.

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SOGECLAIR

2020 FORECAST PRESS RELEASE DATES

Q3 2020 Turnover – 2020/11/04

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APPENDIXES

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SOG ECLAIR

Appendix 1: Consolidated income statement

INCOME STATEMENT (in €k)	H1 2019	H1 2020	2019
Turnover	90,625	68,892	184,972
Other operating income	1,040	1,285	6,206
Cost of goods sold	-36,604	-31,845	-77,680
Payroll expenses	-48,359	-38,364	-94,296
Taxes and duties	-712	-656	-1,344
Depreciation and amortisation	-3,795	-2,728	-7,768
Other expenses	-608	-390	-952
Current Operating Income	1,586	-3,805	9,138
Other operating income and charges	-412	-13,315*	-319
Operating income before income from equity method affiliates	1,174	-17,120	8,819
Share of income from equity method affiliates	-4	-1	-6
Operating income	1,170	-17,121	8,813
Income from cash and cash equivalents	-206	-307	-331
Gross finance costs	-390	-359	-745
Net finance costs	-596	-666	-1,076
Other financial income and expenses	29	46	62
Income before taxes	603	-17,741	7,799
Income tax expense	-1,133	1,431	-1,969
Net profit	-530	-16,310	5,830
Part of group	-664	-15,935	4,959
Part of minority	134	-375	870

*Impact of structuration costs <11,074> and goodwill <2,108>

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SOGECLAIR

Appendix 2: Consolidated Balance Sheet - Assets

| ASSETS
(in €k) | H1 2019 | H1 2020 | 2019 |
| --- | --- | --- | --- |
| Goodwill | 14,987 | 12,647* | 15,154 |
| Intangible assets | 7,715 | 6,898 | 7,411 |
| Tangible assets | 15,863 | 14,342 | 15,638 |
| Equity method investments | 79 | 229 | 230 |
| Financial fixed assets | 3,170 | 3,579 | 3,578 |
| Non-current assets | 41,814 | 37,693 | 42,012 |
| Inventory | 12,365 | 13,908 | 12,565 |
| Trade notes, receivables and related accounts | 61,739 | 49,299 | 69,967 |
| Other current debtors | 18,880 | 16,651 | 16,440 |
| Deferred income tax | 5,489 | 7,700 | 5,804 |
| Cash and cash equivalents | 12,500 | 43,806 | 18,960 |
| Current assets | 110,973 | 131,364 | 123,735 |
| TOTAL ASSETS | 152,787 | 169,057 | 165,747 |

*Goodwill <2,108>

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SOGECLAIR

Appendix 3: Consolidated Balance Sheet - Liabilities

| LIABILITIES
(in €k) | H1 2019 | H1 2020 | 2019 |
| --- | --- | --- | --- |
| Capital | 2,900 | 3,098 | 3,098 |
| Share premium | 2,630 | 7,269 | 7,269 |
| Own shares | -712 | -739 | -680 |
| Reserves and accrued profits | 44,126 | 31,072 | 50,662 |
| Equity capital, group share | 48,944 | 40,701 | 60,349 |
| Minority interests | 4,944 | 5,294 | 5,696 |
| Consolidated shareholders' equity | 53,888 | 45,995 | 66,044 |
| Non-current provisions | 6,318 | 4,581 | 5,453 |
| Non-current qualified pre-payments | 1,823 | 1,917 | 1,227 |
| Non-current financial liabilities | 23,351 | 24,530 | 24,349 |
| Other non-current liabilities | 13 | 1 | 1 |
| Non-current liabilities | 31,504 | 31,028 | 31,030 |
| Current qualified pre-payments | 473 | 20 | 614 |
| Current part of non-current financial liabilities | 8,902 | 30,985* | 9,739 |
| Current financial liabilities | 9,092 | 2,929 | 6,827 |
| Current provisions | 592 | 10,995 | 332 |
| Trade creditors, instalments and related accounts | 17,536 | 15,753 | 21,177 |
| Social and tax debts | 23,672 | 25,346 | 23,834 |
| Other current liabilities | 7,128 | 6,006 | 6,149 |
| Current liabilities | 67,394 | 92,035 | 68,672 |
| TOTAL LIABILITIES | 152,787 | 169,057 | 165,747 |

*Of which State Guaranteed Loans 23,659.5

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SOG ECLAIR

Appendix 4: Consolidated sector-by-sector analysis

	AEROSPACE		VEHICULE		SIMULATION		HOLDING
INCOME STATEMENT(in €k)	H12019	H12020	H12019	H12020	H12019	H12020	H12019	H12020
Turnover	74,926	51,222	1,454	434	14,245	17,237
Other operating income	517	764	71	4	422	495	30	22
External expenses	-29,763	-19,943	-687	-526	-5,386	-10,731	-767	-645
Payroll expenses	-39,346	-30,034	-874	-723	-7,221	-6,957	-917	-649
Taxes and duties	-418	-347	-33	-33	-156	-128	-105	-148
Depreciation and amortisation	-1,982	-1,863	-233	-145	-1,180	-200	-400	-521
Other expenses	-521	-177	-21	-1	-13	-149	-53	-64
Intra-Group operations	-2,468	-2,074	214	437	-588	-1,130	2,841	2,767
Current operating result	945	-2,451	-109	-553	122	-1,563	628	763
Other operating profits and expenses	23	-13,178*			-432	-140	-3	3
Operating result before earnings of equity method affiliates	968	-15,629	-110	-553	-310	-1,703	626	766
Share in earnings of equity method affiliates	-4	-1
Operating income	964	-15,630	-110	-553	-310	-1,703	626	766

*Impact of structuration costs <11,074> and goodwill <2,108>

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SOGECLAIR

Appendix 5: Cashflow Statement

CONSOLIDATED CASHFLOW STATEMENT
(in €k)	H1 2019	H1 2020
Consolidated net result (including minority interests)	-530	-16,310
+/- Amortisation and provisions (excluding those linked to current assets)	4,150	15,695
-/+ Latent gains and losses linked to fair value variations	-14	-15
-/+ Transfer capital gains and losses	-22
-/+ Dilution profits and losses	329	-26
+/- Share in the result linked to equity method affiliates	4	1
- Dividends (non consolidated securities)		-37
Self-financing capacity after net finance costs and tax	3,916	-691
+ Net finance costs	348	368
+/- Tax charge (including deferred tax)	1,133	-1,431
Self-financing capacity before net finance costs and tax (A)	5,397	-1,754
- Tax paid (B)	980	2,221
+/- Variation in working capital requirement linked to the activity (including debt related to personnel benefits) (C)	-4,325	12,041
= CASHFLOWS FROM OPERATING ACTIVITIES (D) = (A + B + C)	2,052	12,508
- Outflows linked to the acquisition of tangible and intangible assets	-1,879	-1,610
+ Inflows linked to the sale of tangible and intangible assets	25	3
- Outflows linked to the acquisition of financial assets (non-consolidated securities)	-35
+/- Impact of variations in scope		-83
+ Dividends received (equity method affiliates, non-consolidated securities) * see alternative processing 7.2		37
+/- Variation in loans and advances granted	-120	-13
+ Investments grants received		97
= CASHFLOWS FROM INVESTMENT ACTIVITIES (E)	-2,009	-1,570
Acquisition of non-controlling interests	-1,111
+ Sums received from shareholders at time of capital increases	30
-/+ Buyback and sale of own shares		-59
- Dividends allocated for payment during the year
- Dividends paid to the parent company shareholders	-1,845	-2,662
- Dividends paid to the integrated company minority interests	-25
+ Revenue from loan issues	2,329	24,802
- Loan reimbursements (including leasing contracts)	-4,639	-3,968
- Net finance costs (including leasing contracts)	-342	-280
= NET CASHFLOWS FROM FINANCING ACTIVITIES (F)	-5,602	17,833
+/- Impact of changes in currency exchange rates (G)	-167	-27
= NET CASH VARIATION (D + E + F + G)	-5,726	28,745
2019
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5,830
7,673
-28
-26
458
6
13,913
628
1,969
16,510
2,276
-10,145
8,641
-3,642
142
-35
-511
-4,047
-1,272
4,868
174
-1,845
-239
6,869
-9,251
-713
-1,410
-188
2,997

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SOGECLAIR

EMAIL ADDRESS

PHONE NUMBER
+33 (0)5 61 71 70 33

SOGECLAIR
7 avenue Albert Durand
CS 20069 – 31703 Blagnac Cedex France