Universal Registration Document 2019

27 LISI 2019 UNIVERSAL REGISTRATION DOCUMENT Consolidated financial statements 2 Market 2019 saw moderate air traffic growth (up 4.5% (1) ) due to geopolitical tensions and various external factors which created a more difficult environment than anticipated for airlines. Nevertheless, visibility in the commercial aircraft segment remained solid, and aircraft manufacturers remain confident in the long-term outlook for market development. Change in global air traffic (1) : 5.1% 8.0% 6.5% 4.5% 4.3% 4.6% Last 20Y 2017 2018 2019 YTD Next 20Y Airbus Next 20Y Boeing (1) Source: IATA – Airbus - Boeing In the short term, the lack of visibility on the Boeing B737MAX return to service date is fueling uncertainty. The other market segments served by LISI AEROSPACE, notablymilitary aircraft, helicopters and business and regional aircraft, have maintained good momentum over the financial year. Although the B777X program launch has been deferred, there are still plenty of requirements which aremoving into the manufacturing stage. Boeing, one of the two major global aircraft manufacturers, was heavily impacted by the B737 MAX aircraft delivery suspension from April 2019. Consequently, it only delivered 380 planes in 2019 compared to 806 in 2018. The other, Airbus, ramped up new programs to deliver 863 planes in 2019 (compared with 800 the previous year). Engine manufacturers continued to benefit from the ramp-up of new LEAP generation of engines (1,746 engines delivered compared with 1,118 in 2018). The suspension of B737 MAX deliveries did, however, cap their performance. Activity In millions of euros 2019 2018 Changes Sales revenue 996.6 934.0 +6.7% Current operating profit (EBIT) 123.6 96.8 +27.7% Operating cash flow 145.0 116.8 +24.1% Net CAPEX -68.5 -75.6 -9.4% Free cash flow* 85.7 29.6 +56.1 M€ Registered employees at period end 6,590 7,214 -8.6% Average full-time equivalent headcount** 7,524 7,979 -5.7% * Free Cash Flow: operating cash flow minus net capital expenditure and changes in working capital requirements. ** including temporary workers LISI AEROSPACE sales revenue totaled €996.6million in 2019 (+6.7% compared to 2018). The impact of stronger currencies (primarily the American dollar against the euro) inflated growth by a further €30.0 million. In Europe, the Fasteners activity boosted this positive trend with a rise in delivery rates of single-aisles (up 22.4% in Q4). In North America (up 18.4% in Q4), business remained strong in non-commercial aviation markets (business, military and helicopters), which offset the effects of a fall in production for the Boeing B737 MAX program. However, the Structural Components activity (down 17.6% in Q4) was hit both by the deconsolidation of Indraero Siren and LISI AEROSPACE Creuzet Maroc from July 1, 2019, andby the fall in production for theBoeingB737MAXLEAP-1B engine. This fall was only partially offset by the increase in production of the LEAP-1A engine. At constant scope and exchange rate, sales revenue for the LISI AEROSPACE Division was up 8.3% in Q4 compared with 2018, and up 6.7% on a full-year basis. Results The current operating profit reached €123.6 million, representing a rise of €26.8 million (+27.7%) on 2018. At 12.4%, the LISI AEROSPACE Division operating margin increased by 2.0 points on 2018. The recovery of volumes in Europe and the USA (non-commercial aviation) and the full impact of cost reduction measures have both had a positive effect on the Fasteners activity. The Structural Components activitywas boosted by the continued ramp-up of its LEAP-1A engine programs throughout the year. The financial structure remains solidwith operating cash flow of €145.0million (14.5%of sales revenues), which is more than sufficient to finance a CAPEX plan of €68.5 million. The aim of the new equipment is to improve performance and bring production methods up to date.