Terma A/S – Annual Report for the 2015/16 fiscal year

• Order book, year-end of DKK 2.75 billion
• Revenue was DKK 1.5 billion
• Year-over-year growth of 14% for the second year in a row
• 92% of the revenue was generated outside Denmark
• Earnings before tax increased to MDKK 85
• Final down-selection of new Danish fighter aircraft expected soon
• New radar solutions within renewable energy

With an order book at year-end of MDKK 2,752, Terma has a solid basis for business development in the coming years. A positive development in all Terma business activities in the Aerospace, Defense, and Security markets resulted in an order intake in 2015/16 of MDKK 1,671, which is a 20% increase compared to the year before.

We now witness the results of our establishment in the Asian and Middle East markets. As an example, I can mention India where we with our Indian partner Tata Advanced Systems Ltd. have been selected as supplier of radar systems to the Indian Navy. We also see that Europe and the U.S. continue to increase investments in defense materiel, a development that will continue in the coming years,” says Terma President & CEO Jens Maaløe and continues:

“We are continuously expanding our international sales organization. It is crucial for our business opportunities that we are represented in growth countries and regions. In the year we recently concluded, revenue to international customers increased and now constitutes 92% of our total revenue.”

Terma recently opened an office in Brussels to work more closely with key partners and policy makers within the EU and NATO.

Revenue for the fiscal year was MDKK 1,486 as compared to MDKK 1,308 in the 2014/15 fiscal year, i.e. a year-over-year growth of 14% for the second year in a row. Earnings before tax increased to MDKK 85.4 from MDKK 71.2 in the fiscal year 2014/15. Recent years’ efforts to manage risks and streamline processes and work flows in order to increase efficiency have contributed to a satisfactory overall result for the fiscal year 2015/16.

Avionics and aerostructures for aircraft constitute 49% of Terma’s revenue. Radar systems, naval systems, and command and control systems constitute 34%; space systems 10%; while the service and support business constitutes 7%.

“With the Danish Government’s recommendation of the F-35 as new fighter aircraft, we look forward to the final down-selection within this area, which is very important for Terma and in particular our facility in Grenaa. We have been participating in the F-35 program for a number of years. Production for the aircraft will ramp up significantly in the years to come, and we have initiated an extensive expansion of our production capacity. This is the second major investment which we implement at the Grenaa facility which today is among the most advanced facilities in Europe within production of aerostructures in carbon fiber and composite materials,” Jens Maaløe tells. He expects that the number of employees in Grenaa will increase from the current level of approx. 300 to approx. 500 within a few years.

Terma’s radar solutions for surveillance of wind farms had a breakthrough with several contracts in the British market. The authorities in several countries have been reluctant to approve erection of wind farms close to airports, as aircraft may disappear from the radar screen and thereby pose a safety risk.

Terma has received the DFS Deutsche Flugsicherung GmbH’s approval of an additional radar solution which controls the obstruction lights on large wind turbines in order for the lights only to be switched on when aircraft are in the proximity. Constant lighting bothers residents near tall wind turbines. A similar approval is expected from the U.S. public aviation authorities later this year.

During the 2015/16 fiscal year, the number of full-time employees increased by approx. 40, and at year-end, total staff was 1,189 full-time employees. The Annual Report covers the period 1 March 2015 – 29 February 2016.