Leclanche : 2020-06-30 – AGM Management Presentation – 2019 Financial Summary

Management Presentation

2019 Financial Summary

Annual General Shareholder Meeting

2019 FINANCIAL SUMMARY

2019 Financial Summary

• Adverse impact of funding delays, the delay in the construction of the St Kitts project and stationary uneven project business lead to disappointing performance in 2019.
• Continuous financial support of FEFAM, Leclanché's majority shareholder

1. On-goingfinancing of Company's growth plan

1. Balance sheet restructuring including
2. 1. Debt conversion (CHF 53 million in 2019 and 51 million in 2020)
   2. Reduction of par value per share in October 2019

2 0 1 9 F I N A N C I A L S U M M A R Y

2019 revenue 67% below 2018

The negative EBITDA margin follows the same trend as Revenue

P & L (in KCHF)

	2019	2018
Total income	16,314	48,745
Raw materials and consumables used	-31,783	-45,698
Other operating expenses	-25,857	-20,660
Depreciation, amortization and Impairment expenses	-7,383	-2,965
Financial Income & Expense	-7,765	-7,952
Income tax	-306	-714

2 0 1 9 F I N A N C I A L S U M M A R Y

2019 Financial Results

2019 Revenue

• The decrease in revenues in 2019 is mainly due to
• 1. Delays in funding of the St. Kitts and Nevis project
  2. Delays in the financing growth capital, which affect
  3. 1. the completion of several projects
     2. the investments in an increase in production capacity at Leclanché's cell facility in Willstätt, Germany
• The above-mentioned reasons had a negative impact on 2019 revenues of approximatively CH 50 millions

2 0 1 9 F I N A N C I A L S U M M A R Y

2019 Revenue by Business Unit

In kCHF

E-transport

Sationary

Specialty

Corporate

TOTAL

2019 2018

Revenue from contracts with customers	2,149	7,803	6,039	3	15,994	48,105
	13%	49%	38%	0%	100%
					319	640
Total Revenue	2,149	7,803	6,039	322	16,314	48,745

• Group revenue still highly dependent upon Stationary Solutions Business Unit. Three projects invoiced in 2019: S4 Energy (NL), Cremzow (DE) and NRStor (CA)
• E-Transportrevenue: Kongsberg and Damen vessels plus prototyping and Non Recurring Engineering (NRE) costs billed to Bombardier, Toyota and Sun Mobility
• Specialty business still highly dependent upon military and medical customers; interesting growth in the material handling equipment segment

2 0 1 9 F I N A N C I A L S U M M A R Y

P & L (in KCHF)

20192018

Raw materials and consumables used	-31,783	-45,698

Other operating expenses	-25,857	-20,660

Depreciation, amortization and Impairment expenses	-7,383	-2,965

Financial Income & Expense	-7,765	-7,952

Income tax	-306	-714

2 0 1 9 F I N A N C I A L S U M M A R Y

Gross Margin rates dependent upon utilization of the full production capacity

Company is focusing on profitable growth only

2019 Raw Material and Consumables Used (in KCHF)

		2019	2019 Cost of	Margin
		Revenue	Material	Amount	%
	Stationary projects	7,833	-8,342	-509	-6.5%
	E-Transport projects	2,149	-2,917	-769	-35.8%
	Total Regular Business	16,314	-18,647	-2,334	-14.3%
	Willstätt Factory Underutilization		-9,597
	Yverdon Factory Underutilization		-3,539
		-
		16,314	-31,783

• Negative Stationary margin stemming from delayed completion of several projects, thus generating additional costs
• Specialty Battery Solutions remains a sustainable business, despite the adverse impact of inventory write-downs in the Distribution segment
• Capacity at Willstätt factory will be rebuilt in 2019 to pre-fire levels

2 0 1 9 F I N A N C I A L S U M M A R Y

P & L (in KCHF)

	2019	2018
Total income	16,314	48,745
Raw materials and consumables used	-31,783	-45,698
Personnel costs	-26,579	-21,473
Other operating expenses	-25,857	-20,660
Earnings Before Interest, Tax, Deprecation and Amortization	-67,905	-39,086
Depreciation, amortization and Impairment expenses	-7,383	-2,965
Operating Loss	-75,287	-42,051
Financial Income & Expense	-7,765	-7,952
Loss before tax for the year	-82,270	-48,556
Income tax	-306	-714
Loss for the year	-83,357	-50,717

2 0 1 9 F I N A N C I A L S U M M A R Y

2019 FTE Evolution

FTE 2019 Evolution

• Transformation of the Procurement function with the hiring of a Vice President and 2 Category buyers
• Strengthening of Project teams with the hiring of a Project Controller, Master Data Manager, Service & Quality Engineers

310
290				12
270			52		17
250
230
210		51				260
190
170	186
150
	FTE Dec.18	Recruitment	Recruitment	Voluntary	Termination	FTE Dec.19
		Direct	Direct	Resignation

• Creation of a Marine organization in Norway (3 sales engineers)
• Recruitment of 15 project engineers and 2 sales engineers
• Strengthening of the Cell and Module R&D function to accelerate the development of the 60 Ah cell and the new M3 e-Transport module (+ 10 engineers)

2019 Headcount by Leclanché entities

						YTD	Dec.
FTE	LSA	LGmbH	LNA	LCN	LUK	2019	2018
Direct	29.5	77.0	0.0	0.0	0.0	106.5	64.5
Indirect	103.1	25.8	19.0	0.0	5.0	152.9	121.9
Sub-total	132.6	102.8	19.0	0.0	5.0	259.4	186.4
Temporary	19.0	12.0	0.0	0.0	0.0	31.0	12.0
TOTAL	151.6	114.8	19.0

2 0 1 9 F I N A N C I A L S U M M A R Y

2019 Board Compensation

Base cash compensation

				Board
				Meetings/Calls
		Social charges		Attendance Rate
Consulting	Options (kCHF)	(kCHF)	Total	Since last AGM

Name

Stefan Müller

Davig Ishag

Tianyi Fan

Axel Joachim Maschka

Position

Chairman / Member (and chairman of Audit & Risk Committee)

Member

Member (and member of Audit & Risk Committee)

Member (and chairman of Audit & Risk Committee)

(kCHF)

106

50

58

58

fees (kCHF)			(kCHF)
-	-	6	112	98%
		3	53	77%
-	-	-	58	70%
-	-	-	58	98%

	Member
Benedic Fontanet	Member

33

		-	50
-	-	-	33	77%

Member (and member of Audit & Risk Committee and

Chairman of the Appointments and Remuneration Committee)

TOTAL

392

		3	41
-	-	12	404

Of which amount due at year-end

56

Board of Directors annual compensation scheme

• Chairman of the Board: CHF 100k - Board Directors: CHF 50k
• Chairman of the Audit & Risk Committee: CHF 15k - Members: CHF 7.5k
• Travel and out of pocket expenses as per Leclanché Group Travel & Entertainment Policy
• No stock options

• Since the last AGM, the Board held 4 full day meetings and 35 two to three-hour phone calls
• In addition, the Audit & Risks Management Committee held 3 full day meetings

2 0 1 9 F I N A N C I A L S U M M A R Y

P & L (in KCHF)

20192018

Raw materials and consumables used	-31,783	-45,698

Other operating expenses	-25,857	-20,660

Depreciation, amortization and Impairment expenses	-7,383	-2,965

Financial Income & Expense	-7,765	-7,952

Income tax	-306	-714

2 0 1 9 F I N A N C I A L S U M M A R Y

Other Operating Expenses (in KCHF)

	2019	2018
Consulting & IP	3,699	4,706	2018 impacted by a 1m cost of funding
Legal	2,604	2,566
Rental, Storage, Utilities	1,533	3,113	IFRS 16 reclass to dep'n and financial expenses
Travel & Entertainment	2,280	2,036	Impact of additional headcount
IT	631	621
Transport, Duties & Packaging	1,940	2,439	Lower Shipments
Insurances	480	434
Commissions on financing	620	718
Miscellaneous	2,469	2,685
Impairment losses on contract assets	9,601	1,342	Investment of Leclanché in the IESO project SPV *
TOTAL	25,857	20,660

* Project in operation since December 2019. Uncertainties around the valuation of the Battery Energy Storage System, which, under IFRS, has led to a complete write-down of Leclanché's investment in the project SPV (Maple Leaf)

2 0 1 9 F I N A N C I A L S U M M A R Y

P & L (in KCHF)

	2019	2018
Total income	16,314	48,745
Raw materials and consumables used	-31,783	-45,698
Personnel costs	-26,579	-21,473
Other operating expenses	-25,857	-20,660
Earnings Before Interest, Tax, Deprecation and Amortization	-67,905	-39,086
Depreciation, amortization and Impairment expenses	-7,383	-2,965
Operating Loss	-75,287	-42,051
Financial Income & Expense	-7,765	-7,952
Loss before tax for the year	-82,270	-48,556
Income tax	-306	-714
Loss for the year	-83,357	-50,717

2 0 1 9 F I N A N C I A L S U M M A R Y

Leclanché Funding (in million CHF)

										Amount Drawn
	Agreement									Down to-date
Facility	date	Lender	Purpose	Convertible	Terms	Amount	Interest	Maturity	Fee
Convertible Loan (CL)	Feb-18	FEFAM	Working Capital	Y	CHF 1.50 until 31-Dec-18	40.5	6%	Converted into			40.5
Then 85% of 60-day VWAP	Equity in 2019
Convertible Loan Extension (CL Extension)	Apr-18	FEFAM	Working Capital	Y	CHF 1.50 until 30-Jun-19	20.0	6%	Converted into			17.6
Then 85% of 60-day VWAP	Equity in 2019
									8% at
Rights of First Offer (RoFo) (USD)		FEFAM	M&A and	Y	85% of 60-day VWAP	50.0	6%	31-Dec-21	17.1
	Performance Bonds	maturity
2019 Working Capital Line	Mar-19	FEFAM	Working Capital	N		35.0	6%	31-Dec-21	7.25% in	35.0
	shares
TOTAL						145.5				110.2

• The loans are secured with the existing security package (which had earlier been granted to Recharge, ACE, Jade, etc.). This is a pledge over assets
• The security package allows the lenders to satisfy the secured claims with priority to other creditors and shareholders

2 0 1 9 F I N A N C I A L S U M M A R Y

Leclanché Funding (Cont'd) (in million CHF)

• Going forward the Company has secured four new credit facilities and one is still in discussion:

Agreement

Facility

date

Lender

Purpose

Convertible

Terms

Amount

Interest

Maturity

Fee

Amount Drawn Down to-date

2020 Working Capital Line	Dec-19	FEFAM	Working Capital	Y	85% of 60-day VWAP
Covid-19 Government Guaranteed Loan	May-20	BCV	Working Capital	Y
Working Capital Loan #1	Jun-19	Eneris	Working Capital	Y
Working Capital Loan #2	To be agreed	Eneris	Working Capital	N
		Yorkville
Convertible Debentures Facility	Feb-20	Working Capital	Y	92% of lowest daily VWAP
Advisors	over the last 10 trading days

TOTAL

25.0 6.00% 31-Dec-21

4.9 0.73% 30-Jun-25

22.0 6.50% 31-Dec-24

22.0

40.007-Feb-23

113.9

7.25% in shares

7% in shares

21.9

4.9

5.2

-

3.7

35.7

2 0 1 9 F I N A N C I A L S U M M A R Y

Financial Income & Expenses (in KCHF)

Financial expenses

2019 2018

Contractual interest expenses on loans	2,255	4,189	Positive impact of debt conversion by FEFAM
Additional finance costs on convertible loans	-612	5,140	IFRS cost of capital adjustment
Financing fees	6,384	-	Golden Partner financing & conversion fees
Bank charges	70	70
	8,098	9,398
Financial expenses
Interests income	322	300
Additional finance income on convertible loans	-	-
Realised and unrealised exchange plans	11	1,146
	332	1,446
TOTAL FINANCIAL INCOME & EXPENSES	7,765	7,952

2 0 1 9 F I N A N C I A L S U M M A R Y

31 December 2019 Balance Sheet (in KCHF)

Assets

31/12/2019 31/12/2018

Non current assets	32,725	25,063
Current assets	40,365	62,224
TOTAL ASSETS	73,090	87,287
Equities and liabilities
Share capital	15,382	175,716
Reserve	3,291	-11,057
Accumulated losses	-31,398	-146,303
TOTAL EQUITY	-12,725	18,355
Loans	7,208	6,359
Other liabilities	21,795	12,547
TOTAL EQUITY AND LIABILITIES	73,090	87,287

2 0 1 9 F I N A N C I A L S U M M A R Y

Non-current Assets (in KCHF)

	31/12/2019	31/12/2018
Property, plant and equipment	15,469	12,430
Intangible assets	5,031	5,585
Right of use assets	5,010	-
Financial assets	4,758	5,775
Trade and other receivables	267	532

Maintenance Capex, IT equipment, Willstätt formation tower, M3 Module Assembly Line in Yverdon - Total additions CHF 5.7m

Development of a new generation of cells - CHF 2.5m

IFRS 16 - Valuation of lease contracts

Investment in projects SPV and performance guarantees for stationary projects (CHF 4.4m)

Investments accounted for using the equity method

2,190

742

25% stake in Nexcharge (Indian JV) share capital

32,72525,063

2 0 1 9 F I N A N C I A L S U M M A R Y

31 December 2019 Balance Sheet (in KCHF)

Assets

31/12/2019 31/12/2018

Non current assets	32,725	25,063
Current assets	40,365	62,224
TOTAL ASSETS	73,090	87,287
Equities and liabilities
Share capital	15,382	175,716
Reserve	3,291	-11,057
Accumulated losses	-31,398	-146,303
TOTAL EQUITY	-12,725	18,355
Convertible loans	31,004	36,572
Loans	7,208	6,359
Trade and other payables	25,808	13,454
Other liabilities	21,795	12,547
TOTAL LIABILITIES	85,815	68,932
TOTAL EQUITY AND LIABILITIES	73,090	87,287

2 0 1 9 F I N A N C I A L S U M M A R Y

Current Assets (in KCHF)

	31/12/2019	31/12/2018
Inventories	19,760	19,890
Trade and other receivables	8,910	16,319
Advance to suppliers	6,965	4,727
Contract assets	3,201	12,849
Cash and cash equivalents	1,529	8,438
	40,365	62,224

Cells (CHF 4.8m), Battery modules (CHF 5.3m),

Raw Materials (CHF 6.3m), Finished Goods and Other (CHF 3.4m) Loans to project SPV (CHF 2.3m), Trade Receivables (CHF 5.3m), Other Receivables (CHF 1.3m)

Supplier prepayments

Goods delivered/services provided not invoiced yet Impact of lower revenue

Cash at bank on 31-Dec-19

2 0 1 9 F I N A N C I A L S U M M A R Y

31 December 2019 Balance Sheet (in KCHF)

Assets

31/12/2019 31/12/2018

Non current assets	32,725	25,063
Current assets	40,365	62,224
TOTAL ASSETS	73,090	87,287
Equities and liabilities
Share capital	15,382	175,716
Reserve	3,291	-11,057
Accumulated losses	-31,398	-146,303
TOTAL EQUITY	-12,725	18,355
Convertible loans	31,004	36,572
Loans	7,208	6,359
Trade and other payables	25,808	13,454
Other liabilities	21,795	12,547
TOTAL LIABILITIES	85,815	68,932
TOTAL EQUITY AND LIABILITIES	73,090	87,287

2 0 1 9 F I N A N C I A L S U M M A R Y

Convertible and Non-Convertible Loans (in KCHF)

		Extended
Facility	Lender	maturity Date	Interest	31/12/2019	31/12/2018
	FEFAM	31-Dec-20	6%	-	1,839
Facility B	FEFAM	31-Dec-20	6%	-	264
	FEFAM	31-Dec-20	6%	-	10,471
Facility C	FEFAM	31-Dec-20	6%	-	1,495
	FEFAM	31-Dec-21	6%	9,500	4,048
Convertible Loan	FEFAM	31-Dec-20	6%	-	8,139
	FEFAM	31-Dec-20	6%	-	7,633
Working Capital Line 2019	FEFAM	31-Dec-21	6%	17,600	-
	FEFAM	31-Dec-21	6%	3,852	-
IFRS adjustments				51	2,683
Total Convertible Loans				31,004	36,572

	UBS	30-Jun-25	1%	225	350
Bridge Loan	FEFAM	31-Dec-21	6%	6,983	2,964
	Golden Partner	31-Mar-20	6%	0	3,045
Total Non-Convertible Loans				7,208	6,359

2 0 1 9 F I N A N C I A L S U M M A R Y

31 December 2019 Balance Sheet (in KCHF)

Assets

31/12/2019 31/12/2018

Non current assets	32,725	25,063
Current assets	40,365	62,224
TOTAL ASSETS	73,090	87,287
Equities and liabilities
Share capital	15,382	175,716
Reserve	3,291	-11,057
Accumulated losses	-31,398	-146,303
TOTAL EQUITY	-12,725	18,355
Convertible loans	31,004	36,572
Loans	7,208	6,359
Trade and other payables	25,808	13,454
Other liabilities	21,795	12,547
TOTAL LIABILITIES	85,815	68,932
TOTAL EQUITY AND LIABILITIES	73,090	87,287

2 0 1 9 F I N A N C I A L S U M M A R Y

Trade and Other Payables (in KCHF)

31/12/2019 31/12/2018

Trade payables	8,200	4,054	Capex + 2020 Raw Materials

Other payables :	16,008	6,808
Accruals	12,011	4,412	Golden Partner fees + other project related accruals
Payroll and social charges	3,984	2,166	proportional to higher headcount
Other payables	13	230
Contract Liabilities	1,601	2,592	Termination of Cremzow Stationary project
TOTAL TRADE & OTHER PAYABLES	25,808	13,454

2 0 1 9 F I N A N C I A L S U M M A R Y

31 December 2019 Balance Sheet (in KCHF)

Assets

31/12/2019 31/12/2018

Non current assets	32,725	25,063
Current assets	40,365	62,224
TOTAL ASSETS	73,090	87,287
Equities and liabilities
Share capital	15,382	175,716
Reserve	3,291	-11,057
Accumulated losses	-31,398	-146,303
TOTAL EQUITY	-12,725	18,355
Convertible loans	31,004	36,572
Loans	7,208	6,359
Trade and other payables	25,808	13,454
Other liabilities	21,795	12,547
TOTAL LIABILITIES	85,815	68,932
TOTAL EQUITY AND LIABILITIES	73,090	87,287

2 0 1 9 F I N A N C I A L S U M M A R Y

Other Liabilities (in KCHF)

	31/12/2019	31/12/2018
Defined benefit pension liability	10,492	10,783	Difference between the Leclanché pension plan funded obligations
and the plan fair values as of 31 December 2019
Lease liabilities	5,034	-	IFRS 16 - Valuation of lease contracts liabilities
Deferred tax liability	394	388
Provisions	5,876	1,377	Goods delivered/services provided not invoiced yet
	21,795	12,547

2 0 1 9 F I N A N C I A L S U M M A R Y

31 December 2019 Balance Sheet (in KCHF)

Assets

31/12/2019 31/12/2018

Non current assets	32,725	25,063
Current assets	40,365	62,224
TOTAL ASSETS	73,090	87,287
Equities and liabilities
Share capital	15,382	175,716
Reserve	3,291	-11,057
Accumulated losses	-31,398	-146,303
TOTAL EQUITY	-12,725	18,355
Convertible loans	31,004	36,572
Loans	7,208	6,359
Trade and other payables	25,808	13,454
Other liabilities	21,795	12,547
TOTAL LIABILITIES	85,815	68,932
TOTAL EQUITY AND LIABILITIES	73,090	87,287

2 0 1 9 F I N A N C I A L S U M M A R Y

Conversion of CHF 50.9 million of FEFAM's debt into equity will remedy the current breach of CO 725.2

A further CHF 20+ million capital increase would be required to remedy breach of CO 725.1

Leclanché is still searching new equity investors

Proposed Capital Increase

	Statutory shareholder's equity	Results		Pre AGM		Post AGM
	31.12.2019
	(in Million CHF)
31/12/2019	31/05/2020	30/06/2020
	Share capital	15.4	15.9	23.6
	Reserves from capital contribution	16.3	18.5	61.7
	Legal reserves from retained earnings	-
	Accumulated losses	43.1	43.1	-33.8
	Net result for the year (Estimates)	-77.0
	Total shareholders' equity (1)	-2.1		-23.8
	FEFAM Debt Conversion				50.9
	Yorkville Advisors Conversion	-	2.7	-
	Required Capital Increase to remedy breach of CO 725.1				20.4

2 0 1 9 F I N A N C I A L S U M M A R Y

In addition to the positive impact on Leclanché's balance sheet, the conversion of CHF 50.9 million of debt into equity, it will result in a saving of CHF 5.5 million in interest payments to FEFAM

Debt Conversion into Equity (in KCHF)

			Extended
	Facility	Lender	maturity Date	Interest	30/06/2020
	ROFO	FEFAM	31-Dec-21	6%	11,500
	Working Capital Line 2019	FEFAM	31-Dec-21	6%	17,600
	Working Capital Line 2020	FEFAM	31-Dec-21	6%	25,000
	Total Convertible Loans				54,100
	UBS Loan	UBS	30-Jun-22	1%	225
	COVID-19 Loan	BCV	30-Jun-25	1%	4,900
	Bridge Loan	FEFAM	31-Dec-21	6%	6,983
	TOTAL Non-Convertible Loans				12,108
	TOTAL Debt as of 30 June 2020				66,208
	Debt Conversion Into Equity				50,928
	TOTAL Dept post Conversion				15,280

2 0 1 9 F I N A N C I A L S U M M A R Y

2019 Financial Results

• Despite adverse financial conditions, we continued to lay the foundations for a leading company in the field of energy storage
• Solid and sustainable development of the e-Transport business with deliveries in the Marine, Rail and Truck segments
• Willstätt's cell production capacity almost returned to normal after investment in a new formation tower
• Design and ordering of a new M3 module automated assembly line to be delivered by the end of 2020 that will increase the current capacity sixfold
• Framework supply agreements signed in the e-transport sector will lead to an exponential increase in revenues in 2021 and beyond.

2 0 1 9 F I N A N C I A L S U M M A R Y