Figeac Aero : Half-year report 30 September 2023

The leading partner for major aerospace manufacturers

2023/24 HALF-YEAR FINANCIAL REPORT

www.figeac-aero.com

FIGEAC AERO S.A.

Statutory auditors' report on 2023 interim financial information

Period from 1 April 2023 to 30 September 2023

FIGEAC AERO S.A.

Zone Industrielle de L'Aiguille - 46100 Figeac

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FIGEAC AERO S.A.

Zone Industrielle de L'Aiguille - 46100 Figeac

Statutory auditors' report on 2023 interim financial information

Period from 1 April 2023 to 30 September 2023

Dear Shareholders,

In compliance with the audit assignment entrusted to us by your Shareholders' General Meeting and with article L.451-1-2 III of the French Monetary and Financial Code, we performed the following:

• a limited review of the company's interim financial statements for the period from 1 April 2023 to 30 September 2023, as attached to this report;
• a verification of the information provided in the interim business report.

These interim financial statements were prepared under the responsibility of the Board of Directors. Our role is to issue our conclusion on these financial statements based on our limited review.

I - Conclusion on the financial statements

We performed our limited review in accordance with professional standards applicable in France.

A limited review consists mainly in holding discussions with senior accounting and finance managers and in carrying out analytical procedures. This work is less extensive than that required for an audit performed according to professional standards applicable in France. Consequently, the degree of assurance that the financial statements taken as a whole do not include any material misstatements obtained from a limited review is moderate, lower than that obtained from an audit.

Our limited review revealed no material misstatements that might cause us to doubt whether the interim financial statements were compliant with IAS 34, the interim financial reporting standard forming part of the IFRS framework as adopted in the European Union.

II - Specific verification

We also verified the information provided in the interim business report commenting on the interim financial statements that were covered by our limited review.

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We have no observations to make regarding the fair presentation of this information or its consistency with the interim financial statements.

	The Statutory Auditors
Labège, 18 December 2023	Labège, 18 December 2023
KPMG S.A.	Mazars
sign1.signature/]	[sc_sign2.signature/]

Mathieu Leruste	Hervé Kerneis
Partner	Partner

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RESPONSIBILITY STATEMENT FOR THE HALF-YEAR FINANCIAL REPORT

I hereby confirm that, to the best of the my knowledge, the financial statements have been prepared in compliance with applicable accounting standards and give a true and fair view of the assets, financial position and results of the company and of all its consolidated entities, and that the management report attached provides a true and fair view of the business trends, results and financial position of the company and of all its consolidated entities, together with a description of the main risks and uncertainties they face.

Figeac,

20 December 2023

Jean-Claude Maillard

Chairman of the Board of Directors

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TABLE OF CONTENTS
BUSINESS REPORT FOR THE 1ST HALF OF 2023:	8
CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD ENDED 30 SEPTEMBER 2023	11
1.1	STATEMENT OF CONSOLIDATED FINANCIAL POSITION	12
1.2	CONSOLIDATED STATEMENT OF INCOME	13
1.3	STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME	14
1.4	STATEMENT OF CHANGE IN CONSOLIDATED SHAREHOLDERS' EQUITY	15
1.5	STATEMENT OF CONSOLIDATED CASH FLOWS	16
NOTES TO THE GROUP'S CONSOLIDATED FINANCIAL STATEMENTS	17
NOTE 1		ACCOUNTING PRINCIPLES	18
NOTE 2		HIGHLIGHTS	21
NOTE 3 SCOPE OF CONSOLIDATION	24
NOTE 4		INTANGIBLE ASSETS	26
NOTE 5 PROPERTY, PLANT AND EQUIPMENT	28
NOTE 6		LEASES	31
NOTE 7		FINANCIAL ASSETS	32
NOTE 8		EQUITY-ACCOUNTEDINVESTMENTS	33
NOTE 9		CONTRACT ASSETS	34
NOTE 10 INVENTORY AND WORK IN PROGRESS	35
NOTE 11	TRADE RECEIVABLES AND OTHER ASSETS	36
NOTE 12	CASH AND CASH EQUIVALENTS	37
NOTE 13	FAIR VALUE OF FINANCIAL ASSETS	38
NOTE 14	DERIVATIVE INSTRUMENTS	40
NOTE 15	SHAREHOLDERS' EQUITY	43
NOTE 16	PROVISIONS	44
NOTE 17	EMPLOYEE BENEFITS	45
NOTE 18	INTEREST-BEARING AND NON-INTEREST-BEARING FINANCIAL LIABILITIES	47
NOTE 19	CONTRACT LIABILITIES	50
NOTE 20	TRADE AND OTHER PAYABLES	50
NOTE 21	OVERVIEW OF FINANCIAL LIABILITIES	51
NOTE 22	REVENUE	52
NOTE 23	SEGMENT INFORMATION	53
NOTE 24	BREAKDOWN OF OTHER COMPONENTS OF OPERATING INCOME (LOSS)	56
NOTE 25	COST OF NET DEBT	58
NOTE 26	TAX	59
NOTE 27	EARNINGS PER SHARE	60
NOTE 28	RELATED PARTIES	61
NOTE 29	WORKFORCE	61
NOTE 30	OFF-BALANCESHEET COMMITMENTS AND CONTINGENT LIABILITIES	62
NOTE 31	EVENTS AFTER THE CLOSING DATE	62

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Business report for the 1st half of 2023:

STRONG GROWTH IN HALF-YEAR REVENUE

FIGEAC AÉRO's revenue reached €181.2 million in H1 2023/24 (ended 30 September 2023), reflecting 24.9% organic growth1 (+20.5% reported growth) relative to the same period last year. The forex impact over the half-year amounted to €(7.0) million.

Business activity was so robust primarily because build rates in the commercial aerospace segment continued to trend upwards, which resulted among other things in 23.7% organic growth1 (+18.6% reported growth) in the Aerostructures & Aeroengines division's revenue during the half- year period.

OPERATING MARGIN GAINS 110 BASIS POINTS

FIGEAC AÉRO's operating profitability improved at a faster pace than its revenue during the first six months of its financial year. Current EBITDA expanded by 33.3% to €19.9 million from €14.9 million in H1 2022/23, reflecting a 110-basis point gain in the margin to 11.0% of revenue.

The operational performance improved largely thanks to increased business activity and effective control over personnel expenses. However, it was held back by the portion of inflationary effects that have not yet been passed on - a portion estimated on a full-year basis at roughly €(2.6) million (versus €(3.8) million the previous year) - and by unfavourable contractual terms and conditions on a contract to purchase parts manufactured at the Group's former Hermosillo site in Mexico. A lasting industrial solution is already in place to manage these sourcing issues, so the €(4.3) million impact is non- recurring and will be significantly smaller in the second half of this financial year and zero next year.

The Aerostructures & Aeroengines division remains the Group's top earnings growth driver, generating €18.7 million in current EBITDA versus €16.2 million a year earlier. The Diversification Activities division turned in positive current EBITDA at €1.2 million versus a €(1.3) million loss a year earlier.

Net depreciation, amortisation and provisions were almost flat at €23.1 million versus €23.8 million a year earlier, which means that the current operating result was able to improve sharply by 58.8% to €(3.9) million.

The operating result came to €(4.9) million, trending broadly in line with the current operating result. It is worth remembering that the operating result in the first half of 2022/23 included a one-off gain generated from the sale of the Hermosillo site in Mexico.

Financial income amounted to €1.0 million, primarily due to higher interest expenses paid in the amount of €6.8 million (versus €3.5 million in H1 2022/23) as well as non-cash effects stemming from the application of IFRS 9 to financial liabilities and currency hedging.

All in all, FIGEAC AÉRO's net result (Group share) improved to €(5.3) million versus €(6.7) million a year earlier.

SHARP IMPROVEMENT IN CASH GENERATION

Thanks to the Group's resilient operating performance, its cash generation also surged during the half

year and its financial structure proved solid despite continued strains in the supply chain.

Cash flow before cost of debt and taxes jumped by €11.4 million to €22.4 million over the half-year.

Cash flow from operating activities increased significantly during the first six months of the year to

€36.2 million (from €(3.4) million a year earlier) after factoring in a positive €13.7m impact generated

1 Growth excluding the USD foreign exchange impact and changes in the consolidation scope.

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by a favourable change in the working capital requirement, thanks to fewer trade receivables, as well as generally in-line trends shown by other items.

Net investments totalled €26.2 million and were mostly allocated to maintenance, R&D and growth support measures, including completion of work to expand production capacity in Morocco dedicated to parts for the LEAP-1A nacelle. Investments included non-recurring items in the amount of about €5 million (commitments made before the crisis, redeployment of production capacity in Mexico and repairs of machines repatriated to France). Capex therefore came out in line with the full-year budget of around €48 million.

All in all, FIGEAC AÉRO reported positive free cash flow of €9.3 million, which is €11.5 million higher than a year earlier despite a complex economic climate (inflation and supply chain strains) and temporary difficulties encountered in Mexico.

So, thanks to stronger cash generation, FIGEAC AÉRO'S net debt held steady at €287.3 million at 30 September 2023 (versus €283.6 million at 31 March 2023). Its cash position remained solid at €91.7 million and its shareholders' equity totalled €60.7 million (versus €70.0 million at 31 March 2023).

LOTS OF PROGRESS ON THE INDUSTRIAL AND COMMERCIAL FRONTS

FIGEAC AÉRO continued to structure itself and develop during the period, making lots of significant headway both on the industrial and commercial fronts.

First of all, the Group's governance structure saw various changes during the first half of the year in a drive to meet the economic challenges it is currently facing - with Thomas Girard appointed Deputy Chief Executive Officer and two new members appointed to the Board of Directors - and also to build on its Executive Committee's corporate responsibility capabilities - with Franck Porier appointed Head of CSR.

The Group's production facilities continue to ramp up and the capacity utilisation rate reached an estimated 75% by the end of the first half of the year. The Group is also pursuing efforts to roll out its Route 25 business plan, some aspects of which have been extended in scope. Two of the three projects geared towards transferring production to the Group's Tunisian and Moroccan sites have already been completed and further transfers are now underway, aimed at making the Group even more competitive. Other operational efficiency projects are also in progress, for instance to automate certain production lines and upgrade the new ERP to the latest version.

FIGEAC AÉRO also continued to adapt to today's market challenges, enabling it to further improve its industrial performance and customer satisfaction:

• Where sourcing is concerned, the Group now enjoys greater visibility on its raw materials supplies as it has diversified its sources in cooperation with its key clients and shortened its production cycles thanks to initiatives taken to re-insource certain surface treatment activities;
• Where human resources are concerned, FIGEAC AÉRO pursued its talent attraction and retention initiatives (1,702 new hires made since April 2021, of which 395 in the first half alone; a lower staff turnover rate) and stepped up the development of its talent pool via its best-cost sites and training institute.

All this positive progress has created powerful drivers that will enable the Group to pursue its business development. Indeed, the half-year period saw the Group awarded new contracts by Safran worth a total of €170 million, and it made positive progress on many other negotiations which should begin to materialise in the form of contracts in the very near future.

AVIATION SECTOR AND WIDEBODY SEGMENT PROVING VERY DYNAMIC

Air traffic improved further, growing by 31.2% in October and by 30.1% in September (relative to the same periods in 2022), and has now reached 98.2% of its 2019 levels so will have wiped out the effects of the crisis by the end of this year or early 2024.

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This recovery initially spurred a very sharp upturn in the single-aisle segment. Now, with international traffic catching up (+29.7% in October, to 94.4% of its pre-crisis level), the widebody segment is benefiting too. Whereas close to 90% of orders placed during the Paris Air Show in June 2023 were for single-aisle aircraft, over 50% of those placed during the Dubai Air Show in November 2023 were for widebodies. Moreover, Airbus recently revised its build rate targets for the A350 upwards to 10 aircraft deliveries per month by 2026 (versus about 5 per month at present).

FIGEAC AÉRO will continue to tap into the strong momentum being created within the industry, and the prominence of the A350 in its portfolio means that its revenue and profitability are also set to benefit greatly from the market's transition to widebodies.

SHORT-TERM TARGETS REITERATED

FIGEAC AÉRO has delivered a particularly solid first half and is perfectly poised to reach all its financial targets for FY 2023/24, i.e. revenue between €375 million and €390 million, current EBITDA between €48 million and €53 million, and free cash flow between €16 million and €20 million. And the free cash flow generated over the full year, net of interest expenses and taxes, should come out positive, which will be a crucial step forward for the Group in speeding up its deleveraging.

The current impetus has also enabled the Group to reiterate its financial targets for FY 2024/25 (to recap, revenue of €420-440 million, current EBITDA of €68-73 million, and free cash flow of €20-28 million) - alongside this guidance, the Group's debt leverage ratio is set to fall below the 4 mark and its net debt below its current level to approximately €270m.

NEW STRATEGIC AMBITIONS FOR 2028 TO BE UNVEILED SOON

In an industry characterised by very long technological and commercial cycles, FIGEAC AÉRO boasts a high degree of visibility thanks to its top-tier clients and its long-term contracts and selling prices, resulting in a backlog worth more than €3.7 billion for the next 10 years. In addition, it operates in a very vibrant aviation sector fuelled by continually rising air traffic and record backlogs which are expanding on the back of a shortage of industrial capacity against very strong demand for new aircraft.

Given such favourable circumstances, FIGEAC AÉRO is already fully and confidently committed to its mid-term development projects and is scheduled to unveil its new strategic course of action out to 2028 on 11 January. The pillars of this bold new business plan, PILOT 28, will be based on the following priorities:

• Consolidation and development of the Group's leadership, mainly by gaining market share in the commercial aerospace segment, where FIGEAC AÉRO operates from a position of strength, and by expanding more intensively in other segments, where the Group is well placed to capture a whole range of growth opportunities;
• Accelerated deleveraging, by further boosting cash generation and taking initiatives to transform and optimise the Group's business model;
• Active participation in the emergence of a zero-carbon aviation industry, by building on the Group's reinforced approach to CSR and innovation.

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