ANNUAL REPORT FOR THE 2019/20 FISCAL YEAR

Record-high order intake in Terma

• Order book, end-February 2020: 3.2 billion DKK
• Order intake: 2.8 billion DKK
• Revenue: 1.9 billion DKK
• Revenue related to international customers: 90%
• Profit before tax: 110 MDKK

Lystrup, 3 June 2020– With a very satisfactory order intake of 2,842 MDKK, Terma ended the 2019/20 fiscal year with a record-high order backlog of 3,222 MDKK, compared to 2,297 MDKK the year before. Revenue for the fiscal year was 1,917 MDKK, compared to 1,803 MDKK in 2018/19. Earnings before tax (EBT) was 110 MDKK in 2019/20, compared to 95 MDKK the year before.

During the year, Terma has increased the staff level, and at the end of the fiscal year, Terma had 1,596 full-time employees.

Significant new contracts

"With a record-high order intake and order backlog, Terma has a very comfortable base for the coming years’ development," says CEO Jes Munk Hansen. He continues:

“During the fiscal year, we have secured several significant contracts. Among other things, we have signed a 10-year support, maintenance, and development contract with the Danish Defence Acquisition and Logistics Organization (DALO), and we have had a breakthrough in the Canadian market with radar systems for their coastguard. We have secured several large contracts with the U.S. Air Force for self-protection equipment and advanced pylons, and we expect further access to contracts with the U.S. Air Force this year. This confirms that the United States remains Terma's most important market, but both Europe and the Far East have also developed positively. We are thus preparing to open an office in Indonesia later this year.”

Court case in Poland

In April 2020, the Polish Court of Appeal delivered its judgment in the dispute which Terma filed in 2014 against the Polish Ministry of National Defence for breach of contract. Despite the fact that Terma has a strong case from a legal perspective, the court ruled in favor of the Polish Ministry of Defence. The judgment is in line with the provision made in 2018/19, hence the event does not have any impact on the result for 2019/20. The case relates to a contract which was entered into in 2010 with the Polish Ministry of National Defence for electronic self-protection equipment for helicopters.

The F-35 program

New contracts for the coming years’ production of aerostructures and electronics for the F-35 program ensure continued growth in the factories in Grenaa and Lystrup. Due to concentrated and targeted efforts to expand the capacity and at the same time increase efficiency, the F-35 program is developing profitably and competitively:

“Our targeted focus on the F-35 program is today a significant part of Terma's overall business, and we receive high recognition from customers and the F-35 program management for our on-time and high-quality deliveries,” says Jes Munk Hansen and continues:

”In the spring of 2020, we reached a total staff of 500 employees in Grenaa, and when the program reaches full-rate production during the following years with production of up to 190 aircraft per year, we will further increase the staff level in Grenaa.

Strategic focus areas

The Arctic region and Artificial Intelligence (AI) and data-oriented technologies are areas of major strategic interest to Terma in the years to come. The continued reinforcement of the Danish Defence with focus on the Arctic carries business opportunities for Terma together with the national defense industry, as well as with international partners.

“Our customers are experiencing increasing complexity in their operations, and we see AI to provide enhanced automation and assisted decision making to help operators cope with more data and a need to make faster and more precise decisions. We have built up significant experience with and expertise in artificial intelligence in several of our products and in connection with a major NATO project, and we have now established Terma AI Center of Excellence as a central hub for AI and data-oriented competencies with a team of specialists who facilitate the use of the technologies in our products and solutions,”says Jes Munk Hansen.

The Board of Directors for Terma A/S

The Annual Report 2019/20 was approved at the Annual General Meeting on Thursday, 28 May 2020. The external members of Terma’s Board of Directors are: Flemming H. Tomdrup (Chairman), Jørgen Huno Rasmussen (Deputy Chairman), Carsten Dilling, and Karen-Marie Katholm. The employee representatives are: Bo Laursen, Martin Anders Hedegaard, and Benny Daugaard Laursen.

The Annual Report covers the period 1 March 2019 – 29 February 2020.

Read our Annual Report and CSR Report 2019/20