Universal Registration Document 2019

137 LISI 2019 UNIVERSAL REGISTRATION DOCUMENT Risk factors 5 OPERATIONAL Risk Factors Detail of the risk Net impact Probability Residual criticality Financial exposure* Reduction measures Innovation Competitiveness Competitive position Failure of newly developed products Major Possible Significant €[15‑20] million Adapting skills to project teams and project management Increased competitive pressure: • on certain flagship products in the divisions, • due to a lack of customer programs, generating strong pressure on prices, • following the arrival of new competitors, • for the renewal of major contracts, • due to a lack of key competencies, • due to reduced competitiveness through the fixed cost structure. Moderate Possible Moderate €[10‑20] million Internal productivity plans; Excellence in Price-Quality-Lead times Industrial innovation plans Plans to automate the means of production Digitization of support functions Specific attractiveness plans Loss of competitiveness or market share for specific programs: • following failed negotiations with major customers, • during a period of (failed) transition of key managers Recruitment of key competencies Risk to intellectual property rights for new products proposed by the divisions Major Probable Significant €[10‑15] million Reinforcement of internal competencies; Development of “hollow” patents Quality; Quality issues for products manufactured by LISI or delivered by its suppliers Catastrophic Possible Significant €[10‑15] million Strengthening our quality assurance processes, especially for critical parts. Adequate crisis management procedures Industrial footprint Disturbance due to the removal of the installations on the Bologne site (Project F.2022) Catastrophic Unlikely Significant €[5‑10] million “Restore Success” plan deployed prior to the transfer; Specific plan for the attractiveness of the site; Recruitment of specific competencies related to the project; Compliance Internal environmental risks: fire, pollution, noise pollution Moderate Possible Moderate €[5‑10] million Adequate prevention plans; Site audits conducted with our insurers; Negotiations with stakeholders to reduce disturbance (noise, vibration, etc.) Health & Safety in the workplace risk (occupational accidents and / or illnesses) Moderate Probable Moderate €[1‑5] million Reinforced risk prevention policy; Machine compliance plans Purchasing Production Failures by subcontractors (Heat treatment, machining, sterilization) or suppliers (raw materials, components) disrupting our production cycles Major Unlikely Moderate €[5‑10] million Reinforcement of supplier audits; Studies into the internalization of certain processes; Seeking alternative solutions Disturbance due to faulty, unique equipment Minor Unlikely Low €[1‑5] million Adapting CAPEX to the development of new projects