Universal Registration Document 2019

138 LISI 2019 UNIVERSAL REGISTRATION DOCUMENT Risk factors 5 EXTERNAL ENVIRONMENT Risk Factors Detail of the risk Net impact Probability Residual criticality Financial exposure* Reduction measures Changing markets Steep decline in the automotive market due to environmental standards in terms of CO 2 emissions Major Definite Significant €[10‑20] million Adjustment of demand with more flexible costs and lower fixed costs, supply to refocus on electric vehicles Decline in backlog of orders for LISI AEROSPACE customers (destocking, plane development programs not certified) Major Definite Significant €[10‑20] million Development of customer relations; Operational flexibility Climate-related geopolitics Tax and foreign exchange Sites located in earthquake zones and/or subject to violent climatic events and exposed to the risk of fire Moderate Unlikely Moderate €[10‑30] million Deployment of Crisis management, Business Continuity and Disaster Recovery Plans as appropriate to any given situation. Foreign exchange and interest rate risks Moderate Definite Moderate €[10‑20] million Financial instrument hedging policy Political instability in Turkey, US taxes Minor Possible Moderate €[1‑5] million Double qualification of sites to be obtained from customers Buffer inventories Finding multiple sources * Financial exposure: valuations net of insurance cover. These can include the cumulation of several risk factors at the same time. In addition, and to facilitate understanding, we present this risk-mapping in the form of a diagram with ‘Impact’ and ‘Probability’. The size of the bubbles varies according to the extent of financial exposure if the risk actually occurs. Financial exposure represents valuations of the risks net of insurance cover. These can include the cumulation of several risk factors at the same time. Financial exposure: Between €10 and 20 million Between €5 and 10 million Between €1 and 5 million In blue: external risks In black: internal risks Unlikely [ > 10 years] Possible [ 5 - 9 years ] Certain [ 0 - 4 years ] Impact Major Moderate Low Quality crises Decline in the Auto market (Co²) Decline in the Aero market New product launches Intellectual property Sites subject to events Industrial competitiveness Forging 2022 Environmental risks Supplier and subcontractor failings Political instability in Turkey, Taxes USA Breakdown of unique equipment Unfavorable exchange rate fluctuations Occupational health and safety Probability