Universal Registration Document 2019

23 LISI 2019 UNIVERSAL REGISTRATION DOCUMENT Consolidated financial statements 2 1.2  /  Group activity and future outlook LISI Consolidated ■ The reported sales revenue totaled €1,729.5 million up by 5.1% compared with 2018, renewing with positive organic growth (3.3%); ■ Current operating profit grew by 14.4%, particularly in the second half-year; ■ Net earnings were down 24.2% to €69.8 million, reflecting the impact of the non-recurring expenses for disposals in the LISI AEROSPACE and LISI AUTOMOTIVE divisions. Excluding this scope effect, they increased by 6.3% on 2018; ■ Free Cash Flow 1 reached the record level of €101.5 million; ■ Outlook: • The LISI Group is awaiting further information on the schedule and return to service conditions for the B737 MAX, to shore up its positive organic growth objective and improve its current operating profit for 2020. • Good Free Cash Flow visibility, given the Group’s proven ability to adapt. Initial application of IFRS 16 which increased debt by €76.8 million. The Group opted to apply IFRS 16, which came into force on January 1, 2019, based on the simplified retrospective approach. The IFRS 16 standard aligns the way in which operating leases are recognized with financial leases (with certain exceptions). The primary IFRS 16 impact on the Group’s consolidated financial statements originates from property leases. IFRS 16 implementation produced the following impacts on the Financial Statements published on December 31, 2019: ■ On the balance sheet: recognition of €76.8 million in debt for future rents, and a right-of-use asset, ■ On the income statement: the rental expense of €13.7million previously recognized under operating profitwas reclassified, part of which was allocated to a reduction of other external expenses (profit up by €13.7 million) and part of which was allocated to an increase of the depreciation allowance (profit down by €12.3 million). The net impact on the current operating profit was a €1.4 million rise. ■ The financial result (income) was down by €2.1 million. ■ The impact on the net earnings is therefore a fall of €0.7 million. Comments regarding business At €1,729.5 million consolidated sales for the 2019 financial year were up 5.1% and include the following items: ■ a positive foreign exchange effect of €38.2 million, up 2.2%. ■ a scope effect of €3.6 million corresponding to: • +€28.9 million from the consolidation of the US company Hi-Vol within LISI AUTOMOTIVE effective from October 1, 2018; • -€4.3 million reflecting the disposal of German company Beteo (from the LISI AUTOMOTIVE division) on December 31, 2018; • -€28.2 M due to the deconsolidation of Indraero Siren and LISI AEROSPACE Creuzet Maroc on June 30, 2019. Accordingly, at constant scope and exchange rates 2 , sales revenue increased by €52.6 million, up 3.3% compared to 2018. Change in reported sales revenue by quarter (€ million) T1 T2 T3 T4 Total 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 LISI AEROSPACE 235.6 252.6 230.1 254.4 221.4 234.8 246.9 254.8 934.0 996.6 LISI AUTOMOTIVE 153.9 156.0 152.1 151.2 131.1 141.1 144.0 139.6 581.1 587.9 LISI MEDICAL 30.2 36.6 33.6 36.0 34.0 36.2 32.9 37.4 130.7 146.2 LISI Consolidated 419.5 445.0 415.6 441.3 386.3 411.9 423.7 431.4 1,645.1 1,729.5 T1 2019 T2 2019 T3 2019 T4 2019 Total 2019 ∆ reported ∆ organic ∆ reported ∆ organic ∆ reported ∆ organic ∆ reported ∆ organic ∆ reported ∆ organic LISI AEROSPACE 7.2% 3.0% 10.6% 6.7% 6.1% 9.3% 3.2% 8.3% 6.7% 6.7% LISI AUTOMOTIVE 1.4% ‑ 5.1% ‑0.6% ‑6.7% 7.7% 0.6% ‑3.1% -1.2% 1.2% ‑3.3% LISI MEDICAL 21.2% 16.6% 7.1% -4.2% 6.7% 3.3% 13.6% 11.9% 11.9% 8.8% LISI Consolidated 6.1% 1.0% 6.2% 1.6% 6.6% 5.7% 1.8% 5.0% 5.1% 3.3% 1 Free Cash Flow: operating cash flow minus net capital expenditure and changes in working capital requirements. 2 The change at constant scope and exchange rates where organic growth is calculated: ■ by converting into euros the sales revenue of the companies whose financial statements are denominated in foreign currencies at the average rate of the year N-1 or the month M-1; ■ by converting into euros the sales revenue invoiced in currencies other than the local currencies at the average rate of the year N-1 or the month M-1; ■ by restating the entries into or exits from the scope in order to once again find a comparable basis.