LISI GROUP - 2016 Financial report

LISI 2016 FINANCIAL REPORT

COMPANY ACTIVITY FOR THE FINANCIAL YEAR

AND OUTLOOK FOR THE COMING YEAR

The key role of LISI S.A., the parent company of the LISI Group, is

to oversee projects of general interest and co-ordinate Company

activity. More specifically, LISI manages the following services for its

subsidiaries:

–

strategic plan validation, external growth procedure, action plans,

resource allocation;

–

outlining strategy in an annual budget plan;

–

financial control and internal audit (stemming from the COS

program);

–

financial and fiscal consolidation;

–

financial optimization, centralized cash management for the Group,

management of investments and financial liabilities, hedging of

foreign currencies and interest rates;

–

insurance coordination, procurement, quality, research and

development;

–

general policy and audit on health, safety and environment; (E-HSE),

human resources and CAPEX as well as industrial progress plans

(LEAP);

–

management of strategic projects and implementation of the

“LISI SYSTEM” (LEAP, COS, E-HSE).

Earnings at December 31, 2016

The remarks below relate to the income statement for 2016.

■■

In 2016, operating income amounted to €10.6 million, compared

with €10.5 million in 2015 and was broken down as follows:

■■

The sales revenues of

LISI S.A. amounted to €9.4 million

compared with €8.5 million in 2015, an increase of 10.7%. They

are essentially made up of services invoiced to the subsidiaries

of LISI S.A. in respect of assistance, control and coordination

of activities. These invoices pass on the operating expenses of

LISI S.A. to the subsidiaries in 2016, with a 10% margin.

■■

The other operating income

amounted to €1.3 million in 2016,

compared with €2.1 million in 2015. This item mainly consists of:

–

a provision reversal of €0.8 million on the performance share

allocation plans for 2013, for which the shares were vested by

the employees in 2016;

–

a provision reversal for expenses of €0.1 million;

–

specific charge-backs to subsidiaries in the amount of

€0.3 million.

■■

Operating expenses

amounted to €10.1 million in 2016, an

increase of 24.4% compared to 2015. This mainly stems from:

–

operating expenses in 2015 reduced following unused

reversals of bills receivable;

–

additional expenses in 2016 concerning group projects in the

areas of human resources, legal, E-HSE, COS (Controlling

COS: Controlling Operating System.

Operating System) and LEAP (LISI Excellence Achievement

Program);

–

payment of contractual compensation on retirement to

the Group Industrial Director and the Chairman and Chief

Executive Officer in 2016;

–

a provision set up with respect to financial year 2016 for the

future relocation of the LISI S.A. head office.

■■

Furthermore, following verification of the rebillings and the

increase in expenses,

the operating profit fell

from €2.4 million

in 2015 to +€0.5 million in 2016, i.e. a drop of €1.9 million.

■■

The financial result

(income) is positive at €33.4 million,

compared to €16.0 million in 2015. It is explained by:

–

Revenues consisting primarily

of dividends received from

LISI AEROSPACE for €22.0 million, interest on Group current

accounts for €4.3 million and net capital gains on investments

for €0.7 million.

–

Interest expenses

made up of interest on borrowings and

group current accounts in the amount of –€6.8 million.

–

The foreign exchange gain

was €13.8 million in 2016 against

a loss of €3 million in 2015. This is due to the currency

fluctuations on an investment and on the current accounts of

foreign subsidiaries.

■■

Non operating profit

(loss) amounted to –€0.1 million for the

year 2016.

■■

Corporate income tax

comprises a tax expense of –€0.8 million,

including a gain from the Group taxation regime of €3.5 million

for 2016.

■■

Consequently, LISI S

.A.’s net profit was €33.0 million, as

compared with €30.0 million in 2015, i.e. up 9.9%.

■■

Shareholders’ equity increased

from €208.8 million in 2015

to €221.2 million at the end of 2016. It was reduced by the

distribution of the dividends paid in May 2016, for an amount of

–€20,6 million in respect of the 2015 profit and increased by the

year’s net earnings of €33 million.

■■

Cash and cash equivalents, excluding current accounts, at year

end

amounted to €101.3 million compared with €75.9 million in

2015: this balance sheet item is made up of monetary SICAV

instruments and guaranteed-capital investments denominated

in EUR and USD.

■■

Net financial debt stood at

–€16.8 million at year-end 2016, as

compared with –€43.8 million at year-end 2015.

COMPANY FINANCIAL STATEMENTS