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Investor Presentation Q4 FY2013. CAE Inc. Confidential and/or Proprietary Information Forward Looking Statements Certain statements made in this presentation,

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Presentation on theme: "Investor Presentation Q4 FY2013. CAE Inc. Confidential and/or Proprietary Information Forward Looking Statements Certain statements made in this presentation,"— Presentation transcript:

1 Investor Presentation Q4 FY2013

2 CAE Inc. Confidential and/or Proprietary Information Forward Looking Statements Certain statements made in this presentation, including, but not limited to, statements that are not historical facts, are forward-looking and are subject to important risks, uncertainties and assumptions. The results or events predicted in these forward-looking statements may differ materially from actual results or events. These statements do not reflect the potential impact of any non-recurring or other special items or events that are announced or completed after the date of this presentation, including mergers, acquisitions, or other business combinations and divestitures. More information about the risks and uncertainties associated with our business can be located in the MD&A section of our annual report and our fourth quarter fiscal 2013 report, and as well in our annual information form for the year ended March 31, These documents have been filed with the Canadian securities commissions and are available on our website (www.cae.com) and on SEDAR (www.sedar.com). They have also been filed with the US Securities and Exchange Commission under Form 40-F and are available on EDGAR (www.sec.gov). Forward-looking statements in this presentation represent our expectations as of May 16, 2013 and, accordingly, are subject to change after this date. We do not update or revise forward-looking information even if new information becomes available, unless required by law, regulation or statutory authority. You should not place undue reliance on forward-looking statements. 2

3 CAE Inc. Confidential and/or Proprietary Information Our Vision To be the partner of choice for customers operating in complex, mission-critical environments by providing the most innovative modeling- and simulation-based solutions to enhance safety, improve efficiency and help solve challenging problems 3

4 CAE Inc. Confidential and/or Proprietary Information About CAE  Approximately 8,000 employees with ½ international –Emerging markets leader  Critical mass in aviation training –100,000+ crewmembers trained by CAE annually –End-to-end solutions provider –Largest installed base of civil and military aviation simulators supplied to industry  Expanding core into new markets 4 Exciting company with strong growth potential

5 CAE Inc. Confidential and/or Proprietary Information Strong Position Across Segments 5

6 CAE Inc. Confidential and/or Proprietary Information Integrated Go-to-Market Approach 6 CAE offers a broad portfolio of integrated products and services to customers across segments

7 CAE Inc. Confidential and/or Proprietary Information Diversified and Balanced 7 A growing proportion of CAE’s revenue comes from customers in high growth emerging markets

8 CAE Inc. Confidential and/or Proprietary Information ActualPrior year Revenue SOI % Revenue SOI % Revenue SOI % Consolidated operating profit 8 1, %20.7%16.1%24.5%18.3%15.1% %15.8%12.9%14.7%13.9%16.3% 1,992.41,738.21, %18.2%15.2%21.0%15.7%15.9% New Core Market Revenue1.0(34.1) ActualPrior yearActualPrior year CIVIL MILITARY TOTAL Simulation Products Training & ServicesTOTAL (amounts in millions) New Core Market SOI 6.4(13.8) Other– (68.9) YTD Q4 FY2013 Segmented Financial Results

9 Civil 9

10 CAE Inc. Confidential and/or Proprietary Information Civil Strategic Focus Maintaining Core Leadership  Commercial and Business Aviation Training  Simulation Products: Full-Flight Simulators, Training Devices, Updates Expanding Core  Ab-Initio Pilot Training: CAE Oxford Aviation Academy  Pilot and Maintenance crew sourcing: CAE Parc Aviation  Helicopter Training: Offshore operators  Aviation Services: Training Centre Operations, Maintenance Services, Flight Data Analysis 10

11 CAE Inc. Confidential and/or Proprietary Information Active Fleet Load Factors Pilot Movement Active Fleet Load Factors Pilot Movement Emerging Markets Emerging Markets New Pilot Demand Pilot Certification Regulations Pilot Certification Regulations New Aircraft Deliveries New Aircraft Deliveries Demand for Aviation Training & Services (TS/C segment) Demand for Aviation Simulation Products (SP/C segment) Civil Market Drivers 11 CAE’s strategy is to increase dependence on the global active aircraft fleet to bolster recurring revenue while maintaining leadership with complete end-to- end solutions

12 CAE Inc. Confidential and/or Proprietary Information Civil Comprehensive Portfolio of Training Services 12 CAE offers the most comprehensive portfolio of services to recruit, train and place aviation professionals with end-to-end solutions RecruitAb-InitioType ratingPlacement

13 CAE Inc. Confidential and/or Proprietary Information Civil Broadest Reach in Global Training 13 >45 locations with >215 full-flight simulators serving >3,500 customers

14 Defence 14

15 CAE Inc. Confidential and/or Proprietary Information Defence Strategic Focus Virtual Air Simulation Products  Technology Leadership  Technology Upgrades and Updates  In-Service Support Aviation Training Services Aviation Training Centers Land Simulation Products & Services Naval Simulation Products & Services Critical Infrastructure Support Integrated Enterprise Solutions  Professional Services  Constructive Simulation  Mission Systems 15 Maintaining Core LeadershipExpanding Core

16 CAE Inc. Confidential and/or Proprietary Information Installed Based Platform Deliveries, Upgrades, Life Extensions Platform Deliveries, Upgrades, Life Extensions Emphasis on Maintaining Readiness Cost Savings Defence Market Drivers  Training and maintenance services sourcing from industry  Mission rehearsal  Lower cost  Modeling and Simulation use across defense lifecycle 16 Our strategy involves positioning on enduring platforms and in key regions to grow our revenue from simulation products and long-term recurring services programs

17 CAE Inc. Confidential and/or Proprietary Information Defence Well Positioned on Enduring Aircraft Platforms 17 United States United Kingdom Germany Canada Italy India MH-60 OFT P-8A OFTC-130J FMS C-5 WSTKC-135 AST AW-101 OFT C-130J DMS CH-47 DMS Hawk 128 FMS SA 330 DMS EC-135 FFS Tornado FMS CH-53 FMS NH-90 FMSUH-1D FFS C-130J FMSCH-47 WSTCP-140 OMSCH-146 FMS Typhoon FMS AW 139 FMS M-346 FMS A-109 FMS DHRUV FMS C-130J FMSBell 412 FMSSA 365 FMS Australia C-130J FFS P-3C OMS MRTT FMSS-70 FMFS Singapore CH-47 FMS S-70 FMS AS 332 CDS

18 CAE Inc. Confidential and/or Proprietary Information Malaysia AlgeriaSouth KoreaTaiwanTurkey Saudi Arabia BelgiumBrazilJapan Spain Egypt Indonesia NigeriaFranceMorocco Israel Oman SwedenThailandNetherlands Poland Denmark Norway UAE AustriaSouth Africa GreecePeruFinlandNew Zealand ArgentinaBolivia Chile KuwaitBotswanaUruguay Defence Global Customer Base 18 CAE serves the defence forces of more than 50 countries

19 CAE Inc. Confidential and/or Proprietary Information 19 Largest Canadian defence company Operations strategically located in 8 geographic markets Supporting customer operations at over 70 sites Sydney Singapore Bangalore Sesto Calende Stolberg Benson Burgess Hill Montréal Tampa Defence Global Operations Ottawa Halifax Orlando

20 New Core Markets 20

21 CAE Inc. Confidential and/or Proprietary Information New Core Markets Common Challenges and Drivers Across CAE’s Markets  Civil Aviation  Defence  Healthcare  Mining 21 Modeling Simulation Training Global Reach Skilled Labour Shortage Demand from Emerging Markets Need for Greater Safety Demand for High-end Professional Services Need for Greater Efficiency Customer Desire for Integrated Solutions Need to Rehearse Critical Missions Leveraging our core capabilities to solve common challenges in all our markets

22 CAE Inc. Confidential and/or Proprietary Information CAE Healthcare Solutions Offering 22

23 CAE Inc. Confidential and/or Proprietary Information CAE Mining Solutions Offering 23 Leverage centralized command and control technologies for efficient decision making and operations  Personnel collaboration for greater efficiency  Reduces risk and redundancies Integrated Operation Centre Integrate CAE simulation and training expertise in mining  Increase safety and productivity  Reduce maintenance CAE Terra simulator  Shovel  Haul-truck Simulation Training delivery across a number of disciplines  Induction, safety and general training  Software  Professional Services  Simulation Training Software Mine planning and operations optimization  Resources modeling  Reserve evaluation  Open pit and underground mine design  Long and short term operation scheduler Improve business outcomes  Resources operational improvement  Mining studies  Research and development  Process reviews and audits Consulting

24 CAE Inc. Confidential and/or Proprietary Information CAE Investment Thesis Upside Potential  Leveraged to civil aviation installed base and expansion  Strong long term industry dynamics and trends –Global pilot shortage –Training outsourcing –Record aircraft backlog with high delivery rates to airlines –Increasing demand for business jets internationally –Solutions for defence to maintain readiness at a lower cost  Global reach with leading presence in emerging markets  Healthcare and Mining 24

25 CAE Inc. Confidential and/or Proprietary Information CAE Investment Thesis Downside Protection  Well diversified revenue mix  Good platform exposure and country diversity in Defence  Solid financial position  Healthy backlog with long contracts and recurring revenue  Market leadership supported by strong relationships with key OEMs and airlines  Strong and experienced management team  Good market differentiation –Content/technology leadership –Customer intimacy –Global infrastructure 25

26 CAE Inc. Confidential and/or Proprietary Information Capital Allocation Priorities 1.Invest in growth –Where demand has been secured and we have a clear view to target returns 2.Balance current and long term shareholder returns –Increased quarterly dividend twice in two years 3.De-leverage balance sheet –Optimize capital structure vis-à-vis low cost of debt and higher recurring cash flows –Maintain investment grade profile –Remain fiscally prudent 26

27 CAE Inc. and/or Proprietary Information Confidential Appendix 27

28 CAE Inc. Confidential and/or Proprietary Information Main Competitors 28 SIMULATION PRODUCTS TRAINING & SERVICES MILITARY CIVIL

29 CAE Inc. Confidential and/or Proprietary Information First Mover in Emerging Markets 29 LEGEND: FFS – full-flight simulator; JV – joint venture 1 – Expected annual growth in passenger air travel (Source: Boeing Forecast ). 2 – Includes CAE-built FFSs sold to third parties as well as those located in CAE training centres.

30 CAE Inc. Confidential and/or Proprietary Information YTD Q4 FY2013 Consolidated Financial Results 30

31 CAE Inc. Confidential and/or Proprietary Information Q4 FY2013 Consolidated Financial Results 31

32 CAE Inc. Confidential and/or Proprietary Information ActualPrior year Revenue SOI % Revenue SOI % Revenue SOI % Consolidated operating profit %20.6%15.8%22.9%17.2%16.8% %17.1%14.1%15.4%12.4%17.7% %18.6%15.3%20.3%14.6%17.4% New Core Market Revenue1.0(34.1) ActualPrior yearActualPrior year CIVIL MILITARY TOTAL Simulation Products Training & ServicesTOTAL (amounts in millions) New Core Market SOI 1.8(1.2) Other Q4 FY2013 Segmented Financial Results (13.7)

33 CAE Inc. Confidential and/or Proprietary Information Cash Movements 33

34 CAE Inc. Confidential and/or Proprietary Information Cash Movements 34

35 CAE Inc. Confidential and/or Proprietary Information Foreign Exchange Sensitivity The approximate annual impact of a one cent change in the Canadian dollar against each of our other three main operating currencies 35

36 36


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