Universal Registration Document 2019

26 LISI 2019 UNIVERSAL REGISTRATION DOCUMENT Consolidated financial statements 2 LISI AEROSPACE Creuzet Maroc and Saint-Florent-sur-Cher (LISI AUTOMOTIVE Division) from the scope of consolidation, it increases to €97.9 million representing a net margin of 5.7% of the sales revenue (5.6% in 2018). This amounts to €1.31 per share (€1.73 in 2018). Based upon the results, the Groupwill seek the approval of the Combined Shareholders’ General Meeting to set the dividend at €0.46 per share for the 2019 financial year. Free Cash Flow reached the record level of €101.5 million, considerably higher than the 2018 figure of €57.3 million. Operating cash flow reached €221.3 million (12.8% of consolidated sales revenues), compared with €194.9 million in 2018. This factors in the €11.6 million IFRS 16 impact. Therefore, the operating cash flow provides more than adequate financing for €116.8million of CAPEX (6.8%of sales revenue). Following the previous financing phase for large infrastructure projects, expenditure has focused on developing new products, industrial productivity and improving working conditions. The automation and robotization of manufacturing processes is ongoing in line with the targets set. Thanks to its long-term action plans, the Group has also continued to reduce its stocks which are down by 7 days on 2018 to 76 days of sales revenue. Working capital requirement now covers 74 days, down 3 days on 2018. Free Cash Flow was up €44.2 million to a record level of €101.5 million. More robust financial structure The net financial expense stands at €331.9 million or 32.5% of shareholders’ equity. Restatement for the IFRS 16 reclassifications (€76.8 million) reduces it to 25.0% of shareholders’ equity (36.0% at December 31, 2018). The net debt ratio improved against EBITDA (1.2 x compared with 1.5 x at December 31, 2018). Investments as a share of net debt returned to the historically low level of €98.1 million. The return on capital employed (ROCE before tax) was up 0.6 points to 11.5%. Outlook The LISI AEROSPACE Division has already implemented measures to adapt its B737MAX dedicated capacity, improve its efforts to develop new products and to acquire market shares, particularly in the USA. LISI AEROSPACE’s status as a leading supplier has been boosted both by the renewal of its current contract to supply fasteners to AIRBUS until 2026, and the new major new 10-year contract that in won with MTU Aero Engines in December 2019 to supply GTF engine compressor blades. Buoyed by the momentum of its various activities, LISI AEROSPACE begins 2020with confidence in its long-term development model, which remains unaffected by current uncertainty regarding the schedule and the potential return to service of the B737 MAX. Despite predicting a global market slowdown of 2.0% in 2020, LISI AUTOMOTIVE will continue to develop its high added value parts and increase its commercial and technical synergies with American subsidiaries Termax and Hi-Vol. The Division’s profitability will be improved by both the cost- cutting action plans launched and the disposal of the chassis screw and steering swivel pin activities. The ramp-up of new products, improved deliveries in certain areas (particularly the NAFTA region) and innovation initiatives whichmove towards multi-material assembly should enable theGroup to streamline its business and adapt to a still complex market. Although LISI MEDICAL’s minimally invasive surgery activity showed signs of improvement in 2019, the Division must continue to adapt the cost structures of its two small production sites. Its current strategic initiatives are boosted by its positive relationships with major customers. The LISI Group is closely monitoring the potential return to service of the B737 MAX, with a view to achieving its positive organic growth target and increasing its current operating profit in 2020. This target will be reviewed periodically based on the market information reported during the financial year. With this particular context in mind, the LISI Group is making cash generation a priority for the forthcoming months. Therefore, Free Cash Flow should remain broadly positive in 2020 due to the Group’s proven ability to adapt. LISI AEROSPACE ■ Sales revenue of €996.6 million, up 6.7% (reported and at constant scope and exchange rates) compared with 2018; ■ The initial effects of the reduction of Boeing B737 MAX production have been offset by strong momentum in other programs; ■ Current operating profit up by 27.7%; ■ Free Cash Flow: record level of €85.7 million; ■ Disposals of Indraero Siren and LISI AEROSPACE Creuzet Maroc (“Structural Components” Business Group) on June 30, 2019.