Figeac Aero : 2020/21 FULL-YEAR RESULTS

FIGEAC AÉRO CONSOLIDATED

FINANCIAL STATEMENTS

ON 31st MARCH 2021

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Summary

IMPACT OF THE COVID-19 CRISIS	3
STATEMENT OF CONSOLIDATED FINANCIAL POSITION	6
CONSOLIDATED INCOME STATEMENT	7
STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME	8
STATEMENT OF CHANGE IN CONSOLIDATED SHAREHOLDERS' EQUITY	9
CONSOLIDATED CASH-FLOW STATEMENT	10
NOTES TO THE GROUP'S CONSOLIDATED FINANCIAL STATEMENTS	11
Note 1	Accounting principles and accounting methods	11
Note 2	Estimates	21
Note 3	Scope of consolidation	22
Note 4	Intangible assets	23
Note 5	Property, plant and equipment	24
Note 6	Leases	26
Note 7	Financial assets	27
Note 8	Equity-accounted investments	27
Note 9	Contract assets	28
Note 10	Inventory and work in progress	28
Note 11	Trade receivables and other assets	28
Note 12	Cash and cash equivalents	29
Note 13	Fair value of financial assets	29
Note 14	Derivative instruments	31
Note 15	Shareholders' equity	32
Note 16	Provisions	33
Note 17	Employee benefits	33
Note 18	Interest-bearing financial liabilities	34
Note 19	Contract liabilities	36
Note 20	Trade and other payables	37
Note 21	Overview of financial liabilities	37
Note 22	Revenue	38
Note 23	Breakdown of other components of operating income	39
Note 24	Cost of net financial debt	40
Note 25	Tax	40
Note 26	Earnings per share	41
Note 27	Risk management	42
Note 28	Related parties	53
Note 29	Workforce	54
Note 30	Off-balance sheet commitments and contingent liabilities	54
Note 31	Events after the closing date	54
Note 32	Fees paid to statutory auditors	55
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Impact of the Covid-19 crisis

Financial year affected by the public health crisis

Financial year 2020/21 was severely affected by the global Covid-19 pandemic. The crisis took a heavy toll on all sectors of the global economy, particularly the aerospace industry as contractors suddenly ceased or pushed back deliveries.

Global air traffic plummeted during the period, prompting contractors across the board to slash their delivery schedules and focus on drawing down their stocks in the short term.

In these unprecedented circumstances, FIGEAC AERO Group's revenue for financial year 2020/21 came to €204.6 million, which is 54.2% lower year-on-year. At constant scope and exchange rates, the Group's revenue fell by 52.8%. Invoicing bottomed out during the summer of 2020.

The table below shows the impacts for each of the main aircraft programmes in which the Group is involved:

	Annual production rates			Variation vs pre-
			Covid
Programme	Pre-Covid	Post-Covid (1)			production rates
A350	108	60		-44.44%
A320	720	480		-33.33%
A220	80	38		-52.50%
B787	120	63		-47.50%
B777/777X	60	24		-60.00%
B737	0	0
Global 7500	34	21		-38.24%

(1) Post-Covid production rates announced by aircraft manufacturers - impact on financial year

With all the resilience initiatives that were rolled out so rapidly, the Group was able to lower its operating expenses over the financial year, including:

• a reduction in personnel expenses thanks to adjustments made to the payroll (of which a targeted plan to reduce the headcount) and economic support measures granted by the public authorities (including furlough arrangements) (see Note 23),
• savings generated on production costs and overheads (See Note 23).

The Group made use of the following measures in particular to protect its cash position:

• state-guaranteedloans obtained amounting to €79.3m. The Group exercised the option offered to loan subscribers to repay the loans over 5 years with a 12-month grace period on capital repayments;
• a €14.8 million ATOUT loan obtained from BPI France;
• a furlough scheme covering 907,802 hours and corresponding to €9,807k compensation. This furlough scheme was extended to March 2021. The Group applied long-termshort-time working (APLD) arrangements starting from 1st April 2021;
• all precarious work contracts discontinued;
• redundancies in Group entities outside France: FGA Tunisie, FGA Maroc, Casa Aero, the Mexican facility, Figeac Aero North America;
• a scheme to postpone payroll tax payments amounting to €13.2m. These amounts will be settled within timeframes ranging from 24 to 36 months depending on the organisations concerned;
• a scheme to postpone lease payments amounting to €8,065k. These amounts will be paid after the initial repayment schedule.
• a scheme to postpone bank loan repayments amounting to €4,018k. These amounts will be paid after the initial repayment schedule, i.e. 6 months after they were initially due.

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FIGEAC AÉRO took on board these unprecedented circumstances by immediately introducing an operational optimisation plan - Transformation 21 - focused on two top priorities:

• It rapidly rolled out a series of measures to achieve structural fixed cost cuts and optimise its production facilities, the aim being to mitigate the impact of sharply lower business volumes on the Group's margins. These measures included:
• • a reduction in personnel expenses and general and administrative expenses,
  • a drive to streamline the Group's production sites, for instance by merging its Moroccan units,
  • selective insourcing of some of the purchases that were previously outsourced,
  • optimised use of raw materials,
  • streamlined general purchases.

The Transformation 21 plan began to pay off in the second half of the year, enabling the Group to report a comfortably positive current EBITDA figure. These effects will continue to generate positive effects in the financial year started 1st April 2021 and in subsequent years.

• It secured long-term financial resources to ensure the Group's business continuity.

The Group launched two PSEs (employment protection plans) to adapt its cost base:

• 220 positions at FIGEAC AÉRO,
• 21 positions at FGA Picardie.

These PSEs were authorised by the relevant State departments in December 2020 and January 2021.

The full costs of the adjustments made to the payroll impacting on this financial year amounted to €11.9 million (€4.4 million paid out, net provisions of €7.5m)

The Group is also keen to maintain its competitive standing and prepare for the economic difficulties lying ahead as well as their repercussions on jobs; it therefore launched safeguard proceedings for its FIGEAC AÉRO Auxerre subsidiary (in the 2nd half of the year) with the aim of looking for a buyer.

In these circumstances, the Group was able to win some new large-scale contracts:

• a 'programme life' contract with Collins Aerospace to produce structural parts for high-precision nacelles and sub-assemblies for the A320, A321 and B787 programmes,
• a Long-Term Agreement with Rolls Royce to supply casings to be fitted on the A350's engines,
• a contract with STELIA to supply a sizeable package of detail machining and sheet metal parts specifically for the Airbus 220 programme.

FIGEAC AÉRO sold some of its raw materials inventory (€10m) to AEROTRADE under an agreement whereby FIGEAC AÉRO would buy back its inventory according to its consumption. An analysis of this transaction led to the sale being derecognised and to the inventory being kept on the balance sheet, with the transaction amount recognised as a current asset. The cash flow is recognised as such in the consolidated statement of cash flows.

Going concern and liquidity

Besides the measures described above, the Company obtained the following additional financing and agreements to postpone repayment deadlines over the course of 2020/21:

• state-guaranteedloans totalling €79.2 million,
• an ATOUT loan from BPI amounting to €14.8 million,
• the postponement of lease and loan repayments totalling €12.6 million,
• a €2.6 million subsidy from BPI to roll out the new ERP across the Group,
• a €3.1 million subsidy from the Occitanie regional authority as financial support for an R&D project,
• a raw materials inventory sales and repurchase agreement with AEROTRADE amounting to €10 million.

The Group's available cash stood at €80.4 million at 31st March 2021, enabling it to meet its near-term cash payment deadlines.

The Company's creditors agreed to waive accelerated repayment clauses following its breach of the financial ratios stipulated in its financing agreements expiring on 30st September 2021 and 31st March 2022.

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The Company had already obtained waivers for its agreements expiring on 31st March 2021 before the end of the 2021 financial year.

The Company has updated its cash flow projections on a 12-month rolling basis. These projections are based on various assumptions including revenue and expenditure schedule for the initiatives adopted under the Transformation 2021 plans, which are uncertain by nature.

Based on these projections, the Company's available cash at 31st March 2021 would enable it to meet its cash payment deadlines for the 12 months ahead.

Cash trends since the start of the financial year are consistent with these projections.

FIGEAC AÉRO has also closely examined its economic and financial situation in order to assess its financing needs between now and the financial year ending March 2025.

Talks are already well underway with several financial partners to adjust existing financing arrangements and also to set up additional financing, including the following options:

• a capital increase,
• recourse to the various institutional economic stimulus mechanisms introduced both in France and in other countries in which the Group operates,
• backing from the Company's long-standing financial partners,
• the arrangement of other alternative types of funding,
• an adjustment to the terms and conditions applicable to the Group's ORNANEs (bonds redeemable into cash and/or new and/or existing shares) of a nominal amount of €91 million and expiring on 18th October 2022.

By the end of this process, the Company's balance sheet will be healthier and better suited to its strategy, thus enabling it to remain securely on the path towards value-creating growth.

Based on the cash projections offering visibility out to 12 months starting from the date on which the Board of Directors reviewed the financial statements, on the initiatives taken in response to the public health crisis, and on the advanced talks underway with the Company's financial partners, the Board of Directors of FIGEAC AÉRO SA approved the full-year financial statements at 31st March 2021 according to the going concern accounting principle.

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