LISI GROUP - 2016 Financial report

LISI 2016 FINANCIAL REPORT

The net debt increased by +€61.6million and amounted to €218.2million

at December, 2016 i.e. 25.2% of shareholders’ equity (19.7% in 2015).

Thus, LISI’s financial structure enabled the REMMELE MEDICAL

OPERATIONS acquisition in April 2016 and the ambitious investment

plan, while maintaining its solid ratios.

The return on capital employed (before tax) stood at 15.5% at year‑end

compared to 15.9% at December 31, 2015. The capital employed

increased in value to €1,177million (comparedwith €1,039million in 2015).

OUTLOOK

All the divisions in the LISI Group are developing in well-oriented

markets offering solid opportunities for development.

For LISI AEROSPACE, even if the build ups have already been

anticipated, the ambitious industrialization programs undertaken since

2016 have still to succeed. The costs, which are always significant, of

non-quality and industrialization of very complex technical parts, in

the “Structural Components” unit, laid down by the new Airbus and

Safran programs on various sites, should gradually be brought down

during subsequent quarters. Furthermore, confirmation of the recovery

at Boeing will be essential to offset the probable slowdown of the

“Fasteners – Europe” activity.

The division is moreover continuing the modernization of its production

resources. It is also continuing to invest in long-termprojects such as the

development of the “Optiblind

” assembly system, the implementation of

the “robotization” project or again the development of LISI AEROSPACE

Additive Manufacturing. It intends to supply its aeronautical customers

with a response that integrates additive technologies into the design

and production of 3D printed mechanical parts.

On the basis of the progress recorded during the last five financial

years, LISI AUTOMOTIVE has set itself the objective of continuing

to improve its operational profitability in the long term, in particular

thanks to the gains provided by the LEAP (LISI Excellence Achievement

Program) plan and the still high level of industrial investment to

accelerate the robotization and automation program in the industrial

processes. The repositioning towards products with higher added

value undertaken in 2016 should also significantly contribute towards

the continuous improvement of the division’s operating margin. The

greater international presence, particularly on the mechanical safety

components and clipped solutions market, will be another focus for

development.

LISI MEDICAL will benefit from the consolidation for the full year

of LISI MEDICAL Remmele which particularly opens up promising

opportunities for organic growth with new and very dynamic markets

for medical appliances other than orthopedics.

In parallel, ever-increasing customer demands and the many new

long-term 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).

In this context, the LISI Group is aiming at a two-figure operating

margin in 2017 and an always positive Free Cash Flow.

2.2

LISI AEROSPACE

Summary presentation of the LISI AEROSPACE activity:

■■

Increase in the volumes relating to the build-up of the new programs

and new products;

■■

Free Cash Flow

largely positive, after a CAPEX plan up by more

than 19%;

■■

Very satisfactory functioning of the “Fasteners Europe” activity;

■■

Inauguration and qualification of the LISI AEROSPACE Additive

Manufacturing site and a large number of strategic initiatives;

■■

Sale of the “Floor covering – Interior design” activity.

Market

Visibility in the commercial aircraft sector remains very good. The other

market segments served by LISI AEROSPACE had varied fortunes,

in particular helicopters and certain segments such as regional aircraft,

the military in the USA or business aircraft.

While Airbus remains behind Boeing in the number of aircraft deliveries

(688 aircraft compared to 748 for Boeing), it is the leader in the number

of net orders (731 compared to 668 for Boeing), i.e. an order book of

13,000 aircraft.

As expected, the effect of the delivery rates of single-aisles and the

A350 will continue in 2017.

Free Cash Flow:

operating cash flow minus net capital expenditure and changes in working capital requirements.

FINANCIAL SITuaTION