CAE : Financial Report for FY24

Financial Report

FISCAL YEAR ENDED MARCH 31, 2024

At CAE, we equip people in critical roles with the expertise and solutions to create a safer world.

As a technology company, we digitalize the physical world, deploying software-based simulation training and critical operations support solutions. Above all else, we empower pilots, cabin crew, maintenance technicians, airlines, business aviation operators, and defence and security forces to perform at their best every day and when the stakes are the highest. Around the globe, we're everywhere customers need us to be with approximately 13,000 employees in more than 240 sites and training locations in over 40 countries. CAE represents more than 75 years of industry firsts-thehighest-fidelity flight and mission simulators as well as training programs powered by digital technologies. We embed sustainability in everything we do. Today and tomorrow, we'll make sure our customers are ready for the moments that matter.

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Read our Global Annual Activity and Sustainability report.

Our Global Annual Activity and Sustainability Report for fiscal year 2024 is available online. This report is a testament to CAE's commitment to transparency and sustainable growth, encapsulating our strategic vision, performance highlights, sustainability practices and achievements. It serves as a single source of information for our stakeholders, emphasizing that sustainability is built in CAE's core business strategy and activities at the outset. Learn more about how our solutions generate benefits across the key pillars of sustainability: environmental, social and governance (ESG).

cae.com/sustainability/

A message from our Chief Executive Officer

Building a stronger CAE for all our stakeholders

Over the past year, CAE has continued to leverage our unparalleled experience to foster innovation and help make the world a safer place. We fixed our gaze on the horizon. We made bold, forward- thinking decisions. We positioned CAE for future success.

We continued our attractive revenue growth trajectory, driven by market-related factors as well as ongoing share expansion. We identified ways to further strengthen our competitive position and demonstrated clear market leadership with the introduction of new technologies and solutions that make our company an unquestioned leader in advancing safety, readiness and operational efficiency.

We also seized the opportunity to de-riskpre-COVID contractual exposures, streamline our portfolio, and extend our position as sustainability leaders. Moreover, we maintained our status as aviation's lead training innovator. We know that our ongoing investments in technology will not only contribute to our future returns, but also make a positive impact on our customers' success and the millions of people they serve.

Today, we enjoy a strong financial position that is bolstered by ongoing deleveraging efforts, providing us the optionality to invest in our future and return cash to shareholders. With this foundation firmly in place, we have shaped an exciting future for our company, our customers, our employees, and our shareholders.

Marc Parent, C.M.

President and Chief Executive Officer

Bold actions to secure our future

In a market challenged by high inflation, we moved to reshape our company in meaningful ways to drive greater focus, efficiency, and optimization across the portfolio. The divestiture of our Healthcare business in February 2024 positioned it for future growth under new ownership while enabling us to focus on our core aerospace and defence markets.

At the executive level, in May 2024, we appointed Nick Leontidis to the newly created role of Chief Operating Officer (COO). Nick, a 36-year CAE veteran and former Group President of our Civil Aviation business segment, will drive rigorous program execution, help build our backlog, promote enhanced collaboration across departments, and further entrench our culture of One CAE. This new organizational structure will allow us to continue to capitalize on the powerful synergies between our two business segments, and unlock further value for CAE now and in the future.

We also took necessary steps to re-baseline our Defense & Security business, through changes in leadership and the accelerated recognition of risks on eight specific fixed-price contracts that were awarded before COVID. Although they are a small fraction of our programs, those eight contracts represented a drag on the segment's performance and future risk profile. With this repositioning, CAE is ready to take advantage of the right people, the right technology, and the right opportunities in the pipeline to unlock long-term success.

Civil Aviation reaches new heights

Our Civil Aviation business continues to set the standard for performance in the marketplace. It executed exceptionally well again in FY24, posting strong growth and record profitability. Delivering exceptional value for our customers continues to be our top priority, and we were proud to demonstrate how CAE can rapidly and effectively scale our training and flight operations solutions to meet the needs of our customers as they grow.

In Commercial Aviation, we maintained our attractive market share through organic network expansion and outsourcing agreements with major airlines. In Business Aviation, we deployed several new simulators to meet growing customer demand and to serve new geographies. Furthermore, we leveraged our strong airline relationships and innovative new software solutions in our Flight Operation Solutions segment, which further augmented our addressable markets.

This year was one of remarkable momentum in orders from both new and existing customers, with a full-yearbook-to-sales ratio(1) of 1.24x and a record year-end adjusted backlog(1) of $6.4 billion, including orders for 64 full- flight simulators (FFS). During the year, we signed multiple key training agreements with airline partners including Akasa Air, Air France KLM Group, Air Europa, ITA Airways, and Delta Airlines among many others. Furthermore, we expanded our training centre footprint with the opening of CAE's Savannah training centre and began work on the opening of new CAE training centres in Athens, Greece and Vienna, Austria. Finally, we continued to develop and roll out CAE Flight Operations Solutions' modernized software portfolio, which aims to deliver incremental value to our customers and capture additional share.

As a company, our vision is to be the partner of choice across all of our end markets, including original equipment manufacturers and regulatory partners. In this spirit, this year we took our longstanding partnership with Boeing to the next level, officially becoming a Boeing Authorized Training Provider. CAE is proud to be the first to offer Boeing's Competency-Based Training and Assessment curriculum. Working together, we aim to enhance training efficacy and aviation safety through collaborative data sharing and complementary digital capabilities.

Defense & Security focused on profitable new growth

The re-baselining of our Defense & Security business segment has created a firm base from which to thrive. We see a clear path to improving profitability in the coming quarters through the efforts taken to accelerate the recognition of contractual risks.

Defense continues to demonstrate its ability to capture new business in a year marked by large strategic program wins, with strong order intake resulting in a full-yearbook-to-sales ratio(1) of 1.04x. Additionally, subsequent to year-end, SkyAlyne - our joint venture with KF Aerospace for defence aviation training - was awarded an $11.2 billion, 25-year contract from the Government of Canada to train the next generation of Royal Canadian Air Force pilots and aircrew. The impending ramp-up on these successes and several additional large strategic wins anticipated in FY25 point to a strong growth outlook and further improvement in our margin rates.

Our unique combination of digital capabilities and expertise has proven invaluable in providing new opportunities and expanding the addressable market across five domains: air, land, sea, space and cyber. During the year, we were proud to be selected on Canada's Remotely Piloted Aircraft System (RPAS) program, and we were excited to secure synergistic cross-CAE opportunities with the award of a Bombardier Global 6500 full-flight simulator to support the High Accuracy Detection and Exploitation System (HADES) program. Strong underlying tailwinds across the defence market remain intact, and we are poised to capture an increasing share of our markets.

Positioning CAE at the forefront of innovation

Over the past year, we made remarkable advances in accelerating the development of next-generation technologies under our consolidated Global Technology and Product (GTP) organization, which brought groundbreaking innovations to market and streamlined processes to drive efficiencies across our company. GTP has been a catalyst for cross-business-unit technology collaboration, yielding transformative results and paving the way for future tech development across our entire company.

By integrating our Civil Aviation and Defense & Security technological ecosystems, we leveraged our capabilities to enhance human performance, elevate safety in our industry and further increase our business value, giving rise to unique products like CAE Rise and CAE Prodigy. Our One CAE approach allowed us to invest efficiently in our core technologies, generating value across our business lines.

Exemplifying the power of our technology collaboration in action, CAE Prodigy became the first full-flight simulator with a gaming engine-powered image generator to achieve Level D qualification

- the highest level of qualification available.

This same technology will soon power our most advanced simulation products in defence, and offers an unmatched capability for our defence customers. Alongside Prodigy, further advancement of our newly launched CAE Connect platform delivers an unparalleled digitally connected customer experience to our Commercial and Business aviation customers.

At CAE, we are tireless innovators. Driven by curiosity, we have been proactive in identifying more than 100 potential use cases throughout the organization for artificial intelligence. These efforts will create value and optimize operations for both our customers and our own organization.

Day in and day out, our pursuit of excellence through technological innovation continues to position us at the forefront of our industry. From training solutions for future platforms to integrated software as a service (SaaS) for flight operations and optimization, our technologies helped to move the world forward safer, faster and more sustainably.

Forging a more sustainable world

Our mission is to make the world a safer place, and that extends to safeguarding a sustainable future in all that we do. As part of our sustainability journey, CAE is committed to decarbonizing our entire value chain, including our operations, training centres, products, services and supply chain.

This year, we honoured our commitment to further integrate sustainability into our business model and strategic decision-making by submitting near-termscience-based targets to the Science Based Targets initiative. With this step, CAE has set clear objectives across our business lines to reduce our carbon footprint and promote sustainable practices.

Our persistent efforts on sustainability have been recognized through our improved performance across various sustainability scores, including those from S&P and the Carbon Disclosure Project. Inclusion in the S&P 2024 Global Sustainability Index placed CAE in the top 15% of our industry, a testament to the hard work of our employees, partners and stakeholders who are helping us build a more sustainable future.

Diversity, equity and inclusion, another cornerstone of our sustainability strategy, remains vital for fostering fairness, innovation and resilience, and ensuring long-term success for our organization and the communities in which we operate. For the first time in 2024, we were recognized as one of Canada's Best Diversity Employers and among America's Greatest Workplaces for Women, a testament to our commitment to creating a workplace where all employees feel valued.

This year, we also took strides in our commitment to build enduring, meaningful and mutually beneficial relationships with Indigenous communities. We started this journey by convening our first Indigenous Advisory Board meeting and attaining Committed status in Progressive Aboriginal Relations Certification.

Defining the future of our industry in FY25 and beyond

As we reflect on a transformative year, where we took bold action to position ourselves for future success, we are seeing proof that our strategy is working. We are capitalizing on exciting opportunities across Civil and Defense. We have set the stage for enduring profitable growth and value creation in excess of market rates, with strong cash generation.

Innovation is what makes us different, and we will continue to harness its power to expand our market-leading position. Our approach, based on common solutions and scalable technology, will allow us to leverage our core strengths across

our company and drive our growth to new heights. Working as a team, we are developing technologies that will shape the future state of our industry and help our customers advance their safety, readiness, and operational efficiency goals.

Technology alone does not drive innovation - people do. CAE's team of 13,000 people around the world work together every day to develop and deploy the solutions of tomorrow. On behalf of CAE management, I would like to close by acknowledging the important role of our people in our achievements, and thanking them for their hard work and dedication.

I am truly grateful for all the opportunities I had this year to engage, listen and understand the evolving needs of our customers and partners.

Thank you for continuing to choose CAE.

1. This report includes non-IFRS financial measures, non-IFRS ratios, capital management measures and supplementary financial measures. These measures are not standardized financial measures prescribed under IFRS and therefore should not be confused with, or used as an alternative for, performance measures calculated according to IFRS. Furthermore, these measures should not be compared with similarly titled measures provided or used by other issuers. Refer to Section 12.1 "Non-IFRSand other financial measure definitions" and Section 12.3 "Non-IFRSmeasure reconciliations" of CAE's MD&A for the year ended March 31, 2024 (which sections are incorporated by reference into this report) for the definitions and reconciliations of these measures to the most directly comparable measure under IFRS.

• This report includes forward-looking statements about our activities, events and developments that we expect to or anticipate may occur in the future including, for example, statements about our vision, strategies, market trends and outlook, future revenues, earnings, cash flow growth, profit trends, growth capital spending, expansions and new initiatives, including initiatives that pertain to environmental, social and governance matters, financial obligations, available liquidities, expected sales, general economic and political outlook, inflation trends, prospects and trends of an industry, expected annual recurring cost savings from operational excellence programs, our management of the supply chain, estimated addressable markets, demands for CAE's products and services, our access to capital resources, our financial position, the expected accretion in various financial metrics, the expected capital returns to shareholders, our business outlook, business opportunities, objectives, development, plans, growth strategies and other strategic priorities, and our competitive and leadership position in our markets, the expansion of our market shares, CAE's ability and preparedness to respond to demand for new technologies, the sustainability of our operations, our ability to retire the Legacy Contracts (as defined in Section 6.2 "Defense and Security" of CAE's MD&A for the year ended March 31, 2024) as expected and to manage and mitigate the risks associated therewith, the impact of the retirement of the Legacy Contracts and other statements that are not historical facts. By their nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties associated with our business which may cause actual results in future periods to differ materially from results indicated in forward-looking statements. While these statements are based on management's expectations and assumptions regarding historical trends, current conditions and expected future developments, as well as other factors that we believe are reasonable and appropriate in the circumstances, readers are cautioned not to place undue reliance on these forward-looking statements as there is a risk that they may not be accurate. For more information, readers should refer to the sections "Caution regarding forward-looking statements" and "Material assumptions" under Section 2 of CAE's MD&A for the year ended March 31, 2024, which sections are incorporated by reference into this report.

Table of Contents

Management's Discussion and Analysis

1.	HIGHLIGHTS	1
2.	INTRODUCTION	2
3.	ABOUT CAE	5
	3.1	Who we are	5
	3.2	Our mission	5
	3.3	Our vision	5
	3.4	Our strategy	5
	3.5	Our operations	6
4.	FOREIGN EXCHANGE	10
5.	CONSOLIDATED RESULTS	11
	5.1	Results from operations - fourth quarter of fiscal 2024	11
	5.2	Results from operations - fiscal 2024	13
	5.3	Restructuring, integration and acquisition costs	15
	5.4	Impairment of goodwill	15
	5.5	Consolidated adjusted orders and adjusted backlog	16
6.	RESULTS BY SEGMENT	16
	6.1	Civil Aviation	16
	6.2	Defense and Security	18
7.	CONSOLIDATED CASH MOVEMENTS AND LIQUIDITY	21
	7.1	Consolidated cash movements	21
	7.2	Sources of liquidity	22
	7.3	Government participation	22
	7.4	Contingencies and commitments	23
8.	CONSOLIDATED FINANCIAL POSITION	24
	8.1	Consolidated capital employed	24
	8.2	Off balance sheet arrangements	25
	8.3	Financial instruments	26
9.	DISCONTINUED OPERATIONS	29
10.	BUSINESS RISK AND UNCERTAINTY	31
	10.1	Strategic risks	32
	10.2	Operational risks	36
	10.3	Cybersecurity risks	38
	10.4	Talent risks	39
	10.5	Financial risks	39
	10.6	Legal and regulatory risks	42
	10.7	Environmental, social & governance risks	45
	10.8	Reputational risks	46
	10.9	Technological risks	46
11.	RELATED PARTY TRANSACTIONS	47
12.	NON-IFRS AND OTHER FINANCIAL MEASURES AND SUPPLEMENTARY NON-FINANCIAL INFORMATION	48
	12.1	Non-IFRS and other financial measure definitions	48
	12.2	Supplementary non-financial information definitions	51
	12.3	Non-IFRS measure reconciliations	52
13.	CHANGES IN ACCOUNTING POLICIES	54
	13.1	New and amended standards adopted	54
	13.2	New and amended standards not yet adopted	54
	13.3	Use of judgements, estimates and assumptions	54
14.	INTERNAL CONTROL OVER FINANCIAL REPORTING	56
15.	OVERSIGHT ROLE OF AUDIT COMMITTEE AND BOARD OF DIRECTORS	56
16.	ADDITIONAL INFORMATION	56
17.	SELECTED FINANCIAL INFORMATION	57
Consolidated Financial Statements	58
Board of Directors and Executive Officers	114
Shareholder and Investor Information	115

Management's Discussion and Analysis

for the fourth quarter and year ended March 31, 2024

1. HIGHLIGHTS

RE-BASELINING OF THE DEFENSE AND SECURITY BUSINESS, DEFENSE AND SECURITY IMPAIRMENTS AND ACCELERATED RISK RECOGNITION ON LEGACY CONTRACTS

On May 21, 2024, we announced a re-baselining of our Defense and Security business along with impairments and unfavourable contract adjustments related to eight previously identified fixed-price legacy contracts (the Legacy Contracts, as defined in Section 6.2 "Defense and Security" of this MD&A). In the fourth quarter of fiscal 2024, we recorded a $568.0 million non-cash impairment of Defense and Security goodwill and $90.3 million in unfavourable contract profit adjustments as a result of accelerated risk recognition on the Legacy Contracts. We also recorded a $35.7 million impairment of related technology and other non-financial assets which are principally related to the Legacy Contracts.

DISCONTINUED OPERATIONS AND RECLASSIFICATION OF COMPARATIVE FIGURES

On February 16, 2024, we announced the closing of the sale of our Healthcare business. In accordance with the requirements of IFRS 5, Non-currentAssets Held for Sale and Discontinued Operations, the Healthcare segment is presented as discontinued operations. Consequently, the comparative consolidated income statement and consolidated statement of comprehensive income are reclassified as if the operation had been discontinued from the beginning of the comparative year. Unless otherwise indicated, results are presented on a continuing operations basis.

OTHER HIGHLIGHTS

On May 21, 2024, we announced that our Board of Directors approved, subject to the approval of the Toronto Stock Exchange (TSX), the re-establishment of a normal course issuer bid (NCIB). The NCIB is expected to commence shortly after regulatory approvals are obtained. The common shares that may be repurchased under such program over a period of approximately one year will represent up to 5 percent of the issued and outstanding common shares. The establishment of the program and the timing and amount of any purchases under the program is subject to regulatory approvals.

On May 21, 2024, we announced the appointment of Nick Leontidis to the new position of Chief Operating Officer (COO) as part of a senior leadership reorganization to further strengthen our execution capabilities and drive additional synergies between our Defense and Security business and Civil Aviation business. Mr. Leontidis was previously CAE's Group President, Civil Aviation. As COO, he will have overall responsibility for both of CAE's Civil and Defense business segments.

FINANCIAL

FOURTH QUARTER OF FISCAL 2024

(amounts in millions, except per share amounts, adjusted ROCE and book-to-sales ratio)		Q4-2024		Q4-2023	Variance $	Variance %
Performance
Revenue	$	1,126.3	$	1,197.4	$	(71.1)	(6 %)
Operating (loss) income	$	(533.0)	$	178.3	$	(711.3)	(399 %)
Adjusted segment operating income1	$	125.7	$	193.4	$	(67.7)	(35 %)
Net (loss) income attributable to equity holders of the Company	$	(504.7)	$	93.6	$	(598.3)	(639 %)
Basic and diluted earnings per share (EPS) - continuing operations	$	(1.58)	$	0.29	$	(1.87)	(645 %)
Basic and diluted EPS - discontinued operations	$	0.06	$	0.02	$	0.04	200 %
Adjusted EPS1	$	0.12	$	0.33	$	(0.21)	(64 %)
Net cash provided by operating activities	$	215.2	$	180.6	$	34.6	19 %
Free cash flow1	$	191.1	$	147.6	$	43.5	29 %
Liquidity and Capital Structure
Capital employed1	$	7,216.8	$	7,621.4	$	(404.6)	(5 %)
Adjusted return on capital employed (ROCE)1	%	5.9	%	5.6
Total debt	$	3,074.3	$	3,250.1	$	(175.8)	(5 %)
Net debt1	$	2,914.2	$	3,032.5	$	(118.3)	(4 %)
Growth
Adjusted order intake1	$	1,550.5	$	1,406.2	$	144.3	10 %
Adjusted backlog1	$	12,183.9	$	10,796.4	$	1,387.5	13 %
Book-to-sales ratio1		1.38		1.17
Book-to-sales ratio for the last 12 months		1.15		1.21

• Non-IFRSfinancial measure, non-IFRS ratio, capital management measure, or supplementary financial measure. Refer to Section 12.1 "Non-IFRSand other financial measure definitions" and Section 12.3 "Non-IFRSmeasure reconciliations" of this MD&A for the definitions and reconciliations of these measures to the most directly comparable measure under IFRS.

CAE Financial Report 2024 I 1

Management's Discussion and Analysis

FISCAL 2024

(amounts in millions, except per share amounts)		FY2024		FY2023	Variance $	Variance %
Performance
Revenue	$	4,282.8	$	4,010.6	$	272.2	7 %
Operating (loss) income	$	(185.4)	$	466.0	$	(651.4)	(140 %)
Adjusted segment operating income	$	549.7	$	538.4	$	11.3	2 %
Net (loss) income attributable to equity holders of the Company	$	(325.3)	$	220.6	$	(545.9)	(247 %)
Basic and diluted EPS - continuing operations	$	(1.02)	$	0.69	$	(1.71)	(248 %)
Basic and diluted EPS - discontinued operations	$	0.07	$	0.01	$	0.06	600 %
Adjusted EPS	$	0.87	$	0.87	$	-	- %
Net cash provided by operating activities	$	566.9	$	408.4	$	158.5	39 %
Free cash flow	$	418.2	$	333.1	$	85.1	26 %

2. INTRODUCTION

In this management's discussion and analysis (MD&A), we, us, our, CAE and Company refer to CAE Inc. and its subsidiaries. Unless we have indicated otherwise:

• This year and 2024 mean the fiscal year ending March 31, 2024;
• Last year, prior year and a year ago mean the fiscal year ended March 31, 2023;
• Dollar amounts are in Canadian dollars.

This MD&A was prepared as of May 27, 2024. It is intended to enhance the understanding of our annual consolidated financial statements and notes for the year ended March 31, 2024 and should therefore be read in conjunction with this document. We have prepared it to help you understand our business, performance and financial condition for the year ended March 31, 2024. Except as otherwise indicated, all financial information has been reported in accordance with IFRS Accounting Standards (IFRS), as issued by the International Accounting Standards Board (IASB). All quarterly information disclosed in the MD&A is based on unaudited figures.

The MD&A provides you with a view of CAE as seen through the eyes of management and helps you understand the Company from a variety of perspectives:

• Our mission;
• Our vision;
• Our strategy;
• Our operations;
• Foreign exchange;
• Consolidated results;
• Results by segment;
• Consolidated cash movements and liquidity;
• Consolidated financial position;
• Discontinued operations;
• Business risk and uncertainty;
• Related party transactions;
• Non-IFRSand other financial measures and supplementary non-financial information;
• Changes in accounting policies;
• Internal control over financial reporting;
• Oversight role of Audit Committee and Board of Directors (the Board).

You will find our most recent financial report and Annual Information Form (AIF) on our website (www.cae.com), SEDAR+ (www.sedarplus.ca) and EDGAR (www.sec.gov). Holders of CAE's securities may also request a printed copy of the Company's consolidated financial statements and MD&A free of charge by contacting Investor Relations ([e-mail]).

NON-IFRS AND OTHER FINANCIAL MEASURES

This MD&A includes non-IFRS financial measures, non-IFRS ratios, capital management measures and supplementary financial measures. These measures are not standardized financial measures prescribed under IFRS and therefore should not be confused with, or used as an alternative for, performance measures calculated according to IFRS. Furthermore, these measures should not be compared with similarly titled measures provided or used by other issuers. Management believes that these measures provide additional insight into our operating performance and trends and facilitate comparisons across reporting periods.

2 I CAE Financial Report 2024