LISI GROUP - 2015 Financial report

FINANCIAL SITUATION

LISI 2015 FINANCIAL REPORT

acquisition in June 2014 and the ambitious investment plan of

over €200 million to be financed over the last two years, while

maintaining its solid ratios.

The return on capital employed (before tax) stood at 15.9% at

year-end compared to 16.6% at December 31, 2014. The capital

employed increased in value to €1,039 million (compared with

€996 million in 2014).

OUTLOOK

LISI is positioned in growth markets. The Aerospace division

could benefit from the increased production only from the

end of 2016. In this outlook, it will continue to modernize

its production equipments, as well as industrializing new

products. It is also investing in long-term projects such as

the development of the "Optiblind®" automatic assembly

system, the implementation of a robotization project, and the

creation of LISI AEROSPACE Additive Manufacturing with the

POLY-SHAPE company, European leader in additive production

with whom the Group signed an agreement on December 17,

2015 to create a common company: LISI AEROSPACE Additive

Manufacturing. 60% held by LISI AEROSPACE and 40% by

POLY-SHAPE, its aim is to provide aerospace customers with a

response that integrates additive technologies into the design

and production of 3D printed mechanical parts.

All these initiatives aim to position LISI AEROSPACE over

the long term as a development partner for all major global

aerospace projects.

The automotive markets were healthy, at least for the first part

of the financial year in Europe and the USA. Consolidated by

the regular growth in volumes of new products, this growth

trend should benefit LISI AUTOMOTIVE. The logistics situation,

stabilized at the end of 2015, should enable an operational

start-up without major difficulties in 2016. The objective

remains to continue the progress recorded over the last two

years and to sustainably improve the operational profitability

of the division.

The LISI MEDICAL division should follow a similar path based

on consolidated fundamentals.

In parallel, ever-increasing customer demands and the many

new projects under development or industrialization make

even more necessary the implementation of the Group's

major transversal projects, such as LEAP (LISI Excellence

Achievement Program), E-HSE (Excellence HSE) and COS

(Controlling Operating System).

Thus, by alternating organic growth and targeted acquisitions,

LISI Group's economic model should enable it to continue to

generate a two-digit level of operating margin and a free cash

flow

that is still positive.

2.2

LISI AEROSPACE

■■

Volumes stable before the strong build-up of the new

programs expected for 2017

■■

Sales revenue sustained by the very positive contribution

of the strengthening of the dollar against the euro (+€38.1

million)

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Free cash flow

largely positive, despite a record investment

plan (+€69 million). Very satisfactory functioning of the

Fasteners activity

■■

Creation of LISI AEROSPACE Additive Manufacturing, 60%

held by LISI AEROSPACE and 40% by POLY-SHAPE, dedicated

to the design and production of mechanical parts using 3D

printing

Market

Visibility in the commercial aircraft sector remains excellent,

with orders recorded for the year again exceeding production

rates, which increased in 2015. The other market segments

served by LISI AEROSPACE had varied fortunes, in particular

helicopterswhere thedistribution intheUSAshowedsignificant

decline. While Airbus remains behind Boeing in the number of

aircraft deliveries (635 aircraft compared to 762 for Boeing), it

is leader in the number of net orders (1,036 compared to 768

for Boeing). Airbus deliveries increased by +8% between 2012

and 2015 but by +27% for Boeing. The effect of the increase in

production (to 50 aircraft per month, then 60) for single-aisles

and the A350 is expected for 2017.

1 Free Cash Flow: operating cash flow minus net industrial CAPEX and changes in working capital requirements.