CARMAT : 2021 interim financial report

French joint-stock corporation (société anonyme) with share capital of €615,395.68

Registered office: 36, avenue de l'Europe

Immeuble l'Etendard Energy III 78140 Vélizy Villacoublay, France

Registered in the Versailles Trade and Companies Register under no. 504 937 905

2021 INTERIM FINANCIAL REPORT

SIX MONTHS ENDED JUNE 30, 2021

CONTENTS

1. STATEMENT FROM THE PERSON RESPONSIBLE FOR THE INTERIM FINANCIAL REPORT AT JUNE 30, 2021____________ 3
2. REVIEW OF OPERATIONS _________________________________ 4

2.1	SUMMARY OF THE INTERIM FINANCIAL STATEMENTS AT JUNE 30, 2021	...................................4
2.2	SIGNIFICANT EVENTS OF FIRST-HALF 2021...............................................................................	5
2.2.1	Composition of the Company's administrative and management bodies ...................................................	5
2.2.2	Industrialization and production ...................................................................................................................	5
2.2.3	Clinical development and market access .....................................................................................................	6
2.2.4	Impact of Covid-19........................................................................................................................................	7
2.3	SUBSEQUENT EVENTS ..............................................................................................................	7
2.4	NEXT STEPS ..............................................................................................................................	7
2.5	MAIN RISK FACTORS .................................................................................................................	8
3	2021 INTERIM FINANCIAL STATEMENTS ___________________ 9
3.1	BALANCE SHEET .......................................................................................................................	9
3.2	INCOME STATEMENT...............................................................................................................	11
4	NOTES TO THE 2021 INTERIM FINANCIAL STATEMENTS __ 13
4.1	HIGHLIGHTS OF THE PERIOD ..................................................................................................	13
4.2	SIGNIFICANT EVENTS AFTER THE REPORTING DATE ...............................................................	14
4.3	SIGNIFICANT ACCOUNTING POLICIES ......................................................................................	14
4.3.1	General principles and conventions ...........................................................................................................	14
4.3.2	Additional information ................................................................................................................................	15
4.4	ADDITIONAL INFORMATION ON THE BALANCE SHEET.............................................................	18
4.4.1	Movements in non-current assets ..............................................................................................................	18
4.4.2	Movements in depreciation and amortization ............................................................................................	19
4.4.3	Movements in inventories...........................................................................................................................	19
4.4.4	Movements in provisions ............................................................................................................................	19
4.4.5	Receivables and payables by maturity.......................................................................................................	20
4.4.6	Capital .........................................................................................................................................................	21
4.4.7	Other balance sheet details........................................................................................................................	26
4.5	ADDITIONAL INFORMATION ON THE INCOME STATEMENT ......................................................	27
4.5.1	Applied research and development costs ..................................................................................................	27
4.5.2	Research tax credit.....................................................................................................................................	27
4.5.3	Non-recurring income and expenses..........................................................................................................	27
4.5.4	Information on related companies..............................................................................................................	27
4.6	FINANCIAL COMMITMENTS AND OTHER INFORMATION ...........................................................	28
4.6.1	Financial commitments...............................................................................................................................	28
4.6.2	Other information .......................................................................................................................................	29

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1 STATEMENT FROM THE PERSON RESPONSIBLE FOR THE INTERIM FINANCIAL REPORT AT JUNE 30, 2021

I hereby declare that, to the best of my knowledge, the financial statements presented for the six months ended June 30, 2021 were prepared in accordance with applicable accounting standards, and give a true and fair view of the assets, liabilities, financial position and results of the Company, and that the interim review of operations on pages 4 to 7 presents a true and fair view of the significant events that took place during the first half of the year, their impact on the financial statements and the main transactions between related parties, along with a description of the principal risks and uncertainties for the remaining six months of the year.

Stéphane Piat

Chief Executive Officer, Carmat

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2 REVIEW OF OPERATIONS

2.1 SUMMARY OF THE INTERIM FINANCIAL STATEMENTS AT JUNE 30, 2021

Selected financial information

INCOME STATEMENT			6 months	12 months		6 months
(in millions of euros)			June 30, 2021	Dec. 31, 2020		June 30, 2020
Net revenue				0	0		0
Net operating income (expense)	(25.5)	(36.4)		(20.6)
Net financial income (expense)	(1.5)	(2.5)		(1.0)
Net	non-recurring	income	0.0	0.2		0.0
(expense)
Research	and	innovation	tax	0.7	1.7		0.8
credits
Net profit (loss)				(26.4)	(37.0)		(20.8)
BALANCE SHEET
(in millions of euros)			June 30, 2021	Dec. 31, 2020		June 30, 2020
Total assets				87.1	59.8		57.2
Total equity				19.3	(6.7)		3.6
(Net cash) Net debt*			(17.6)	3.0		(17.8)
CASH FLOW STATEMENT		6 months	12 months		6 months
(in millions of euros)			June 30, 2021	Dec. 31, 2020		June 30, 2020
Cash	and	cash	equivalents	at	36.0	55.5		55.5
beginning of period
Net cash from (used in) operating	(29.4)	(43.0)		(19.8)
activities
Net cash from (used in) investing	(1.0)	(2.3)		(0.4)
activities
Net cash from (used in) financing	52.3	25.8		10.0
activities
Cash and cash equivalents at end	57.9	36.0		45.3
of period

* Long-term financial liabilities plus short-term financial liabilities less cash and cash equivalents.

First-half 2021 earnings

Carmat did not report any revenue in first-half 2021. It recorded its first sales at the start of the third quarter.

In the first six months of the year, Carmat's efforts and resources were predominantly focused on:

- ramping up production, which reached between 8 and 10 prostheses per month by the end of the period;

- further actions to secure the production supply chain;

- preparing for the commercial launch of its Aeson®1 artificial heart in Europe, notably by training "client" centers and conducting contractual negotiations with them;

- preparing for the launch of early feasibility studies (EFS) in the United States and an EFICAS study in France, with a view to enrolling the first patients in the third and fourth quarters of 2021, respectively; and preparing for post-market surveillance (PMS).

1 The Aeson® artificial heart consists of an implantable prosthesis permanently attached to a portable external power pack.

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In this context of intense activity, the operating loss for the first six months of 2021 was €25.5 million, a €4.9 million increase on the same period in 2020.

After taking into account the €1.5 million net financial expense and €0.7 million in income from non-recurring items and the research tax credit, the Company reported a net loss of €26.4 million for first-half 2021, versus a net loss of €20.8 million for first-half 2020.

Cash and financial position

At June 30, 2021, the Company's cash position stood at €57.9 million compared to €36.0 million at December 31, 2020 and €45.3 million at June 30, 2020.

Net cash used in operating activities increased period-on-period to €29.4 million due to efforts to ramp up production and build up inventories ahead of the marketing and sales phase, and to preparations for the start of the EFS and EFICAS clinical trials.

In the first half of 2021, the Company obtained the following funds:

• it carried out a capital increase in March for a gross amount of €55.7 million by means of a public offering with a priority subscription period for its existing shareholders, accompanied by a global offering;
• it received the first €0.3 million tranche of its €1.4 million subsidy2 awarded for its winning bid within the scope of France's "Industrial Recovery Plan - Strategic Sectors" call for projects;
• drew down €0.3 million on the equity financing line set up with Kepler-Cheuvreux.

Based on its current business plan, and even if no additional financing were obtained or no further amounts were drawn down on its Kepler-Cheuvreux equity line (whose remaining balance stands at €15.9 million and which expires on September 27, 2021), the confirmed financial resources3 available to Carmat should enable it to fund its operations through to mid-2022.

In light of its progress to date, including the CE marking obtained at the end of 2020, its first sales in Europe in July 2021, and the effective launch of its EFS trial in the United States, Carmat is confident that it will be able to source the funding that it needs to continue its development going forward.

2.2 SIGNIFICANT EVENTS OF FIRST-HALF 2021

2.2.1 COMPOSITION OF THE COMPANY'S ADMINISTRATIVE AND MANAGEMENT BODIES

Three new directors were appointed at the Combined Shareholders' Meeting of May 12, 2021: Florent Battistella, David Coti and John B. Hernandez, who will provide Carmat with added industrialization and market-access expertise.

Elsewhere, Professor Christian Latremouille joined Carmat's management team as Director of Surgical Affairs on February 1, 2021.

2.2.2 INDUSTRIALIZATION AND PRODUCTION

During the first six months of 2021, Carmat continued with its plan to ramp up production and build up inventories, as well as to improve the reliability of its production processes at its Bois d'Arcy facility. It also stepped up efforts to secure its production supply chain.

It increased its production staff during the period, from 61 at end-2020 to 81 at June 30, 2021.

1. The remaining €1.1 million will be paid to the Company in two installments by the end of 2023, based on the progress of the industrial projects for which it was awarded.
2. Including available cash and cash equivalents at June 30, 2021, €13 million in funding from the French government intended to partially finance the EFICAS study (to be received by Carmat as and when patients are enrolled in the study), and the final €10 million tranche of the EIB loan, which the Company expects to draw down in the fourth quarter of 2021 since the corresponding drawdown conditions have already been met.

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