MEMSCAP FIRST HALF 2020 EARNINGS: HALF-YEAR REVENUE OF 6.1 MILLION EUROS

MEMSCAP - FIRST HALF 2020 EARNINGS:

HALF-YEAR REVENUE OF 6.1 MILLION EUROS

Impact of the Covid-19 pandemic on the Group's avionics business fully offset by the significant growth of the medical business

Optical communications business impacted by the Covid-19 pandemic and the related closure of the US production site for more than two weeks

Half-year operating loss limited to 0.1 million euros

Half-year EBITDA at 0.5 million euros despite an unprecedented macroeconomic environment Increase of available liquidities up to 4.2 million euros at 30 June 2020

Grenoble (France) - 31 August 2020 - 06:30 PM.

MEMSCAP (NYSE Euronext: MEMS), the leading provider of innovative solutions based on MEMS (micro-electro-mechanical systems) technology, today announced its earnings for the first half of 2020 ending 30 June 2020.

Revenue and consolidated earnings for the first half of 2020

In accordance with the previous quarterly press releases, consolidated revenue for the first half of 2020 amounted to 6.1 million euros (6.7 million US dollars) compared to 6.6 million euros (7.4 million US dollars) for the first half of 2019.

Consolidated revenue distribution by market segment, over the first half of 2020, is as follows:

Market segments / Revenue (M€)		For the 6 months		%				For the 6 months	%				Var. H1 2020 / 2019
	ended 30 June 2020					ended 30 June 2019				(M€)	(%)
Aerospace		3.1	51%				3.5	53%				-0.4	-12%
Optical communications / Adaptive optics		1.6	26%			2.1	31%			-0.5	-22%
Medical / Biomedical		1.2	20%				0.7	11%				+0.5	+66%
Others		0.2		3%			0.3	4%			-0.1	-41%
Total		6.1	100%				6.6	100%				-0.5	-8%

(Any apparent discrepancies in totals are due to rounding.)

The significant increase in the Group's sales dedicated to the medical and biomedical markets (+0.5 million euros / Sales up +66% compared to the first half of 2019) fully offset the impact of the Covid-19 pandemic on the Group's avionics business (-0.4 million euros

• Sales down -12% compared to the first half of 2019). The Standard products division (Norwegian subsidiary and dermo-cosmetics segment) thus maintained a revenue of 4.3 million euros in the first half of 2020, identical to the first half of 2019.

During the second quarter of 2020, the Covid-19 pandemic affected the Group's optical communications business. Half-year sales of the optical communications business fell by -22%(-0.5 million euros) compared to the first half of 2019, in particular due to the closure of the US production site for more than 2 weeks during the second quarter of 2020.

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MEMSCAP's consolidated earnings for the first half of 2020 are given within the following table:

In million euros		Q1		Q2		H1			Q1	Q2	H1
	2020		2020		2020			2019	2019		2019
Revenue		3.4		2.7		6.1			3.1	3.5		6.6
Standard products*		2.2		2.1		4.3			2.1	2.1		4.3
Custom products		1.2		0.6		1.8			1.0	1.4		2.3
Cost of revenue		(2.4)		(1.9)		(4.3)			(2.2)	(2.3)		(4.5)
Gross margin		1.0		0.8		1.8			0.9	1.2		2.1
% of revenue		29%		29%		29%			30%	33%		32%
Operating expenses**		(1.0)		(0.9)		(1.9)			(1.0)	(1.0)		(2.0)
Operating profit / (loss)		(0.0)		(0.1)		(0.1)			(0.1)	0.2		0.1
Financial profit / (loss)		0.0		(0.0)		0.0			(0.0)	(0.0)		(0.1)
Income tax expense		(0.0)		(0.0)		(0.1)			(0.0)	(0.0)		(0.1)
Net profit / (loss)		(0.0)		(0.1)		(0.2)			(0.1)	0.1		(0.1)

(Financial data were subject to a limited review by the Group's statutory auditors. On August 31, 2020, MEMSCAP's board of directors authorized the release of the interim condensed consolidated financial statements at 30 June 2020. Any apparent discrepancies in totals are due to rounding.)

• Including the dermo-cosmetic segment.
• Net of research & development grants.

The change in the Group's sales volumes led to a consolidated gross margin of 1.8 million euros for the first half of 2020 (29% of consolidated sales) compared to 2.1 million euros for the first half of 2019 (32% of consolidated sales).

The amount of operating expenses of 0.9 million euros in the first half of 2020 is down 0.1 million euros compared to the amount reported over the first half of 2019.

For the first half of 2020, the Group posted an operating loss of 0.1 million euros compared to an operating profit of 0.1 million euros for the first half of 2019.

The net financial profit is not significant compared to a net financial loss of 0.1 million euros for the first half of 2019. The tax expense of 0.1 million euros for the first half of 2020 and for the first half of 2019 corresponded to the change in deferred tax over the period with no impact on the Group's cash position.

The Group therefore reported a consolidated net loss of 0.2 million euros for the first half of 2020 compared to a consolidated net loss of 0.1 million euros in the first half of 2019.

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Evolution of the Group's cash / Consolidated shareholders' equity

For the first half of 2020, the Group posted a positive EBITDA of 0.5 million euros compared to a positive EBITDA of 0.7 million euros for the first half of 2019. Cash flow from operating activities in the first half of 2020, +1.3 million euros vs +0.7 million euros for the first half of 2019, significantly increased by 0.6 million euros resulting in particular from the reduction of the working capital requirement over the period. Taking into account the cash flow consumed by investing activities (0.6 million euros) and the positive net cash flow from financing activities (0.2 million euros), the Group's net cash position increased by 0.9 million euros in the first half of 2020 compared to an increase of 0.2 million euros in the first half of 2019.

At 30 June 2020, the Group reported available liquidities at 4.2 million euros (31 December 2019: 3.4 million euros) including cash investments for 1.3 million euros (Corporate bonds) recorded under non-current financial assets and cash and short-term deposits for 2.9 million euros.

Current financial debt, including lease liabilities under IFRS 16, was 0.8 million euros at 30 June 2020 compared to 0.9 million euros at 31 December 2019.

MEMSCAP shareholders' equity totalled 15.6 million euros at 30 June 2020 compared to 16.7 million euros at 31 December 2019, particularly due to currency translation adjustments.

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Analysis and perspectives

Following the spread of the Covid-19 pandemic in the United States, the Group's US site (Custom products division) experienced a temporary closure of 2 weeks at the beginning of April 2020. MEMSCAP's business being qualified as "Essential Businesses and Operations" by the State of North Carolina, the US Group's operations have resumed gradually from April 16, 2020. Production at the Group's Norwegian site (Standard products division) has faced no significant impact resulting from the Covid-19 pandemic at June 30, 2020.

The deterioration of the macroeconomic environment in the second quarter of 2020 mainly impacted the Custom products division of the Group (MEMSCAP's US subsidiary) and its optical communications business dedicated to Asian markets. This business reported a decrease in sales of -22% over the first half of 2020 compared to the first half of 2019. Sales of the Standard products division remained stable over this same period since the increase in medical / biomedical business offset the decrease in the avionics business.

The potential impact of the pandemic remains very uncertain based on the current available information. MEMSCAP will continue to regularly assess the impact of the Covid-19 pandemic on its business.

MEMSCAP pursues its strategy focused on avionics, medical and optical communications segments as well as increasing the flexibility of its production capabilities.

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Q3 2020 Earnings: October 26, 2020

About MEMSCAP

MEMSCAP is the leading provider of innovative micro- electro-mechanical systems (MEMS)-based solutions.

MEMSCAP's products and solutions include components, component designs (IP), manufacturing and related services.

Contacts

Yann Cousinet

Chief Financial Officer Ph.: [phone] [e-mail]

For more information, visit our website at:

www.memscap.com.

MEMSCAP is listed on Euronext Paris ™ - Segment C - ISIN: FR0010298620 - MEMS.

MEMS

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Interim condensed consolidated financial statements at 30 June 2020

	30 June		31 December
	2020	2019
	€000		€000
Assets
Non-current assets
Property, plant and equipment......................................................................................	1 879	1 757
Goodwill and intangible assets.......................................................................................	7 264	7 804
Right-of-use assets .........................................................................................................	5 494	5 934
Other non-current financial assets.................................................................................	1 260	1 254
Deferred tax asset ..........................................................................................................	328		412
	16 225	17 161
Current assets
Inventories .....................................................................................................................	2 645	3 111
Trade and other receivables...........................................................................................	2 228	2 938
Prepayments ..................................................................................................................	344	186
Other current financial assets ........................................................................................	53	47
Cash and short-term deposits ........................................................................................	2 916		2 204
	8 186	8 486
Total assets
24 411	25 647
Equity and liabilities
Equity
Issued capital..................................................................................................................	1 869	1 867
Share premium...............................................................................................................	18 783	18 775
Treasury shares ..............................................................................................................	(141)	(131)
Retained earnings ..........................................................................................................	(1 567)	(1 204)
Foreign currency translation ..........................................................................................	(3 327)		(2 601)
	15 617	16 706
Non-current liabilities
Lease liabilities ...............................................................................................................	5 198	5 685
Interest-bearing loans and borrowings ..........................................................................	449	127
Employee benefit liability...............................................................................................	53		56
	5 700	5 868
Current liabilities
Trade and other payables ..............................................................................................	2 288	2 083
Lease liabilities ...............................................................................................................	555	588
Interest-bearing loans and borrowings ..........................................................................	233	324
Provisions .......................................................................................................................	18		78
	3 094	3 073
Total liabilities	8 794	8 941
Total equity and liabilities
24 411		25 647

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