LISI GROUP - 2018 Financial report

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1 I Company activity during the financial year and future outlook
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.
Morespecifically,LISImanagesthefollowingservicesforitssubsidiaries:
■■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,
managementof investmentsandfinancial liabilities,hedgingofforeign
currencies and interest rates;
■■insurance coordination, procurement, quality, research and
development and information systems.
■■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”.
■■Implementation of an overarching communication policy (internal,
external,corporate,humanresources,financialandmarketing)directly
linked to the Group’s strategy.
Earnings at December 31, 2018
The remarks below relate to the income statement for 2018.
■■In 2018, operating income amounted to €11.2 million, compared with
€11.3million in 2017 and was broken down as follows:
• • TheLISI S.A. sales revenuewas€9.7million, the same as in2017. 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 2018, with a 10%margin.
• • Other operating income amounted to €1.5 million in 2018, compared
with €1.6 million in 2017. This itemmainly consists of:
− − a provision reversal of €0.7 million on the performance share
allocation plans for 2015, for which the shares were vested by the
employees in 2018,
− − specific charge-backs to subsidiaries in the amount of €0.6million.
■■Operating expenses amounted to €11.2 million in 2018, an increase of
10.4%compared to 2017. This increasemainly comes fromremediation
costs relating to an industrial site sold in December 2017 for which
LISIS.A.committedtocovertheexpensesofenvironmentalremediation
(-€0.8 million).
■■As a result of the increased expenses and the stability of income ,
operating income changed from +€1.1 million in 2017 to -€0.1 million
in 2018, a decrease of €1.2million;
• • Financial income stood at €41.3 million, compared to €6.0 million
in 2017. It is explained by:
• • Financial proceedsmainly consisting of dividends collected from
LISIAEROSPACE,LISIAUTOMOTIVEandLISIMEDICALfor€31.7million
compared to +€28.0 million paid by LISI AEROSPACE and
LISI AUTOMOTIVE in 2017, interest earned on Group current accounts
in the amount of €5.9million in 2018 compared to €4.8million in 2017,
net capital gains on investments for +€3.2 million in 2018 compared
to +€2.6million in2017 and the reversal of theprovision for unrealized
exchange losses on Group loans in US dollars recorded in 2017 for
+€6.4million.
• • Interest expenses made up mostly of interest on borrowings and
group current accounts in the amount of -€6.5 million are stable
compared to -€6.8 million in 2017. A provision for Group loans in US
dollarswas also recognized for the amount of €+4.1 million compared
with €+6.4million in 2017.
• • The foreign exchangegain was €+5.7 million in 2018, compared to a
loss of €16.2 million in 2017, mainly due to the rise in the US dollar at
isessentiallytheresultofchanges incurrency
ratesforinvestmentsinUSdollarsandthecurrentaccountsofforeign
subsidiaries also denominated in that currency.
■■Non operating profit amounted to €0.2million for the year 2018.
■■Corporation tax consists of tax income of €1.3 million, including a
€3.5 million tax consolidation gain for 2018 and a corporation tax
payment of €1.9 million.
■■Therefore, the net earnings of LISI S.A. were €+42.3 million in 2018
compared to €+20.1 million in 2017, an increase of €22.2 million, which
is mainly due to a positive change in the currency result following the
rise in the US dollar.
■■Shareholders ’ equity increased from €217.5 million in 2017 to
€237.0 million at the end of 2018. It was reduced by the distribution of
thedividendspaidinMay2018,foranamountof€–25.5millioninrespect
of the 2017 profit and increased by the year’s net earnings of
€42.3 million;
Acapital increase reserved for employees also had a positive impact of
€2.8 million on shareholders’ equity.
■■Available cash excluding current accounts at year-end amounted to
€103.6 million compared to €133.2 million in 2017; this item consists of
monetary SICAV instruments and capital-backed investments
denominated in euros and USD.
■■Net debt is €+4.2 million at the end of 2018 compared to €+52.0 million
at the end of 2017. This decrease partly comes from the repayment of
foreign subsidiaries’ current accounts over the period.