Universal Registration Document 2019

29 LISI 2019 UNIVERSAL REGISTRATION DOCUMENT Consolidated financial statements 2 In 2018, the Division took a record number of new product orders, which accounted for 14.6% or approximately €85 million of the annualized sales revenue (compared with 15.7% in 2018). In linewith the strategy implemented in recent years, the equipment manufacturers segment is the most dynamic. Results LISI AUTOMOTIVE’s operating margin stood at 3.7% of sales revenue, down 2.2 points on 2018 (5.9%). The cost adjustment measures implemented in the fourth quarter of 2018 were effective throughout 2019. The operating margin for the second half of 2019 also recorded a steady 1.6-point improvement (4.6%) in relation to the first half (3.0%). However, the following factors put pressure on the Division’s operational profitability: ■ The fall in volumes within the traditional business scope, ■ The low contribution of Hi-Vol, ■ Increase in German salaries. For the fourth year running, the Division has maintained a positive Free Cash Flow, which in 2019 reached the record amount of €19.5 million (3.3% of sales revenue). This performance is down to major production adjustments, the strict management of working capital requirements, and a CAPEX limit of €37.3 million (€43.6 million in 2018). The CAPEX budget was used to finance a number of multi-year projects, including: ■ Robotic automation and manufacturing plans for new products (including the launch of parking brake systems in Mexico), ■ The financing of projects to improve factory operating conditions (“Delle of the Future” project) and increase production capacity (extension of the Czech site in Čejč, specializing in the manufacture of Safety Mechanical Components, and the newMexicanMonterrey site dedicated to the manufacture of Clipped Solutions and Safety Mechanical Components). On November 29, 2019 LISI AUTOMOTIVE finalized the sale of the entire business and property complex for the screws, chassis studs and joints business belonging to its subsidiary LISI AUTOMOTIVE Former to AFF ST FLO, held by the family- owned AFF GROUP. This transaction, which did not have a material impact on the financial statements for the year ended December 31, 2019, highlights LISI AUTOMOTIVE’s desire to manage its portfolio of activities in a dynamic manner, within the context of its strategy of transitioning the product mix toward products with significant added value. Headcountwasdowncompared to2018with3,634employees at December 31, 2019 compared to 3,931 in 2018, a drop of 7.6%. Following restatement of the removal from the scope of consolidation of the screws, chassis studs and joints business, the registered headcount at end November 2019 was down by 167 to 3.3%. Outlook 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 which move towards multi-material assembly should enable the Group to streamline its business and adapt to a still complex market. LISI MEDICAL ■ Sales revenue up 11.9% on 2018; ■ Current operating profit up 28.5% on 2018, buoyed by the recovery of LISI MEDICAL Remmele and the strong performance of LISI MEDICAL Orthopaedics; ■ Free Cash Flow up €3.7 million on 2018. Market Driven by long-term demographic and economic factors, the global orthopedic market continues to grow at between 4% and 5% a year. The minimally invasive surgery segment is growing at a higher annual rate, around 6% per year, and many new projects are being developed in general surgery or specialty surgeries. It should be noted that there is volatility present in certain markets and business segments, and worldwide competition in all CMO (Contract Manufacturing Operations) segments. Activity In millions of euros 2019 2018 Changes Sales revenue 146.2 130.7 +11.9% Current operating profit (EBIT) 7.2 5.6 +28.5% Operating cash flow 16.2 12.0 +35.0% Net CAPEX -10.8 -10.9 -0.9% Free cash flow* 3.0 -0.7 +3.7 M€ Registered employees at period end 919 959 -4.2% Average full-time equivalent headcount** 983 1,000 -1.7% * Free Cash Flow: operating cash flow minus net capital expenditure and changes in working capital requirements. ** including temporary workers