Groupe Gorge : FY2020 results

Press release

Paris, March 16, 2021, 8:30 p.m.

Annual results for 2020: resilience, transformation of the profile and strong growth prospects

• • Significant improvement in profitability in the second half of 2020

  • - Growth in EBITDA margin year-on-year at 14%: +1 pt compared to the second half of 2019

  • - Despite a decrease in revenue: -8% on an organic basis compared to the second half of 2019

  • - Increase in operating result: +5.5% on an organic basis compared to the second half of 2019

  • - Growing order book reaching €623 million

  • - Increase in available cash to €81 million (+€22 million in one year)

  • - Proposed dividend: €0.32 per share, stable compared to last year

• • Strategic refocusing and operational transformation

  • - Strengthening of the Drones & Systems activity: merger with ECA Group finalized at end-2020

  • - Refocusing of the Engineering & Protection Systems activity: exit from the oil gas, launch of StedY

  • - Operational transformation in 3D printing: reorganization and new innovative offerings

• • Positive momentum despite a challenging environment

  • - New orders in naval robotics worth over €90 million

  • - Commercial successes and partnerships signed in 3D Printing

  • - Important orders in fire protection and nuclear

  • - Ramping up in engineering advisory services

• • Strengthening of the shareholder structure and governance

  • - Increase in free float and improved liquidity of the share

  • - Governance strengthened with the appointment of Hervé Guillou as board member1

• • Acceleration of the ESG strategy: +13 pts in the Gaïa rating

• • Guidance for 2021: c.+15% revenue growth on an organic basis and strong improvement in profitability

• • Solid medium-term outlook: major growth prospects for the three activities

  • - Deep, structurally sound and growing markets

  • - An attractive strategic positioning among the leaders in its specialized activities

  • - Commercial dynamic well engaged and set to accelerate

1

1 Subject to approval by the General Meeting of June 18, 2021.

Gorgé Group: a high-tech specialist with presence in three activities

Groupe Gorgé implements since several years a strategy based on three main pillars:

• 1. Reinforcement on high-tech activities with high added value, in which the Group has control over the entire value creation chain.

• 2. Focus on sectors with strong growth prospects, with deep and structurally sound markets.

• 3. A leading player in its activities with a strong ambition for international development.

This strategy is deployed across three activities, which generated consolidated revenue of €231 million in 2020:

• - 42% of revenues are generated by the Drones & Systems activity, under the ECA Group brand. Developed over 28 years, this division offers integrated systems for naval, ground and air Defense and Security, notably with robotics technologies.

• - In 3D printing (25% of revenues, under the Prodways brand, which is 57% owned), Groupe Gorgé has built since 2013 one of the few players able to offer turnkey solutions for industrial production thanks to its control over the whole value chain: software, printers, materials and manufacturing.

• - The Engineering & Protection System activity represents 34% of revenues and includes the Engineering and Technology Consulting division as well as solutions for the protection of high-risk sites, with fire safety and nuclear doors.

Successful strategic refocusing and operational transformation in 2020

Strengthening in the Drones & Systems activity

Groupe Gorgé has significantly strengthened its Drones & Systems activity through the merger by absorption of its subsidiary ECA, which was previously 65% owned. The transaction, announced at the end of September 2020, was finalized at the end of December. By strengthening its position in this high-tech activity, Groupe Gorgé is furthering its strategy and will be able to take full advantage of significant growth prospects of this activity in coming years.

This transaction also made it possible to unify and simplify the Group's structure by eliminating the double listing of Groupe Gorgé and ECA, to strengthen the free float of Groupe Gorgé, up +180% in one year1, thereby increasing the liquidity of the share.

1 Free float at 16/03/2021 vs 16/03/2020.

Completion of the strategic refocusing of the Engineering & Protection Systems activity

In 2020, Groupe Gorgé continued the strategic refocusing of the Engineering and Protection Systems activity by discontinuing its operations in the oil sector. The equity combination of its subsidiary Van Dam with its competitor InterDam led to the creation of a world leader in this specialized oil services sector. Groupe Gorgé still holds 15% of the newly created entity, which will be sold in the medium-term.

With this transaction, the Group is withdrawing from the oil services market and is continuing to refocus on its strategic activities, initiated in 2018 with the sale of AI Group and pursued in 2019 with the disposal of Cimlec group and a 30% stake in the Fire Protection France activity to its management.

At the same time, the Company stepped up in the field of technology consulting services with the launch of a new offering in September 2020: StedY, a digital service offering that reinvents the engineering and technology consulting business, thereby enhancing the Group's positioning in this activity where it has been operating since 2012(link to the announcement press release).

Operational transformation of the 3D Printing division

Groupe Gorgé, through the Prodways brand in 3D printing, implemented a major operational transformation in several areas: new solutions and functionalities were unveiled for industrial production while conducting a reorganization of machine and material production to improve profitability and production capacity.

The Group launched a new activity for the integration of the Dassault Systèmes 3DEXPERIENCE® platform's Cloud solutions, both in Europe and in the United States, to master the creation, modification and simulation of 3D files, which are major assets for customers. In addition, new features have been implemented in the MOVINGLight® ProMaker LD Series compact 3D printer range, including Super-Resolution 3D. This technology, based on new algorithms, makes it possible to achieve a precision beyond the native performance of 42 micrometers while increasing production speed by 30%. These functionalities have already resulted in two commercial successes with a Polish company (Brightalign) and an Italian company (GEO).

To consolidate the ramp-up of the business for several years, with revenues that have more than doubled over the past three years, and to meet future demand in a very buoyant market, Prodways has been gradually setting up a new organization for the production of its machines since the end of 2020. The production of the historic workshops in Paris region is being transferred to existing sites in the United States and Annecy. This transformation will make it possible to achieve synergies between its activities, improve profitability by reducing the fixed cost structure and thus focus on the development of new technologies for high-potential markets.

In addition, in view of the good commercial prospects for medical applications, the Group once again increased its material production capacity in order to meet the growing demand in this industry. The capacity has increased by 50% in eight months and can now reach 100 tons per year. This high-margin business is one of the major growth drivers for the 3D Printing division.

The effects of this transformation will be seen in 2021 with an uptrend in sales and revenue growth.

Good commercial dynamic despite a challenging environment

Drones & Systems activity: new orders totaling around €90 million in 2020, confirming the ability to win international tenders

Groupe Gorgé now benefits from the notoriety acquired in 2019 when it won the contract with the Belgian and Dutch navies, for an amount of €450 million over 8 years, and confirms its ability to win international tenders. Three major contracts of over €20 million were signed for robotics solutions in 2020. The first two relate to the modernization of existing fleets, in order to bring their performance into line with that of the most recent systems, including three conventional vessels for the Latvian navy acquired from the Dutch Navy in 2006. The third contract covers an additional drone system for the Dutch Navy, which wanted to acquire a Toolbox to carry out tests and assess new operational concepts.

With these commercial successes, the Group demonstrates the relevance of its offering in Stand-Off mine hunting2, both for latest-generation integrated systems but also to equip older vessels whose lifespan can be extended, thus addressing a wider market in this activity.

Large orders in fire protection and nuclear

At the end of 2020, Groupe Gorgé won the largest order in its history in the fire protection activity. The

Group was awarded a contract worth nearly €7 million to design and build a fire protection system on the largest site equipped with sprinklers in Europe. This service, which will be carried out over two years, consists of the installation of 20,000 sprinklers across four buildings, with maintenance services, illustrating the significant recurring business in this activity, whose maintenance services accounts for nearly 50% of revenue. This order makes up for the sales lag in the first half and ultimately exceeds the level of order intake in 2019.

In addition, a major contract was signed for more than €6 million over a four-year period for the supply of 500 special doors as part of a project to build a nuclear power plant in West Asia. This order rewards several years of efforts to obtain a first reference in Russian VVER nuclear technology. To the best of the Group's knowledge, Baumert, the subsidiary specializing in this activity, is the only company to have references in all the main nuclear power plant technologies (French, Chinese, American and Russian).

3D Printing activity: commercial successes and partnerships signed

Thanks to its expertise across the entire 3D printing value chain (machines, materials, software and manufacturing), the Group achieved commercial successes in several areas.

In 2020, Groupe Gorgé signed a contract for the sale of liquid resins with several European and global dental specialists, relying on materials specifically developed for this industry, such as PLASTCure Model liquid resin, which allow a very high level of precision for mass production. This positive trend continued in early 2021 with the signature of a four-year agreement with a leading global player in the dental industry, which has a network of distributors and partners in over 100 countries. These industrial customers should consume several dozen tons of materials once their production has stabilized, reflecting the growing use of 3D printing in this industry.

This good commercial dynamic is also tangible in the jewelry industry, with two contracts to equip two customers with a dozen machines each, as well as in 3D modeling software distribution, which won an unprecedented record contract in 2020.

2 Underwater robotic mine disposal operations without entering the minefield.