Universal Registration Document 2019

36 LISI 2019 UNIVERSAL REGISTRATION DOCUMENT Consolidated financial statements 2 3  /  Notes 3.1  /  Group information and highlights of the year LISI S.A. (hereinafter referred to as “the Company”) is a Société Anonyme (public limited company) under French law, listed on the Paris Stock Exchange, whose head office is at the following address: “6 rue Juvénal Viellard, CS 70431Grandvillars, 90008 Belfort cedex”. The consolidated financial statements of the Group for the financial year endingDecember 31, 2019 include theCompany, its subsidiaries and affiliates (which are together referred to as “the Group”). The LISI Group’s main business activity is the manufacturing of multifunctional fasteners and assembly components for three business sectors: aerospace, automotive, and medical. Highlights of the year Sale of INDRAERO SIREN and LISI AEROSPACE Creuzet Maroc On July 3, 2019, the LISI Group sold all shares in its subsidiaries INDRAERO SIREN and LISI AEROSPACE Creuzet Maroc to a fund managed by QUANTUM CAPITAL PARTNERS. The main activities of these entities are sheet metal and the assembly of aerostructures. The two companies generated €61 million in sales revenue in 2018 and €28.2 million in the first half of 2019. Sale of the chassis screw and steering swivel pin business (Saint‑Florent‑sur‑Cher site) On November 30, 2019, the LISI Group 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 screws, chassis studs and joints business is located in the municipality of Saint-Florent‑sur‑Cher, France. It employs 159 people and in 2018 generated sales revenue of €36.1 million, based on its significant market positions with PSA, Renault and JTEKT. 3.2  /  Accounting principles and policies The financial statements drawn up as at December 31, 2019 were approved by the Board of Directors on February 19, 2020 and will be submitted to the Combined General Meeting on April 24, 2020. Background to the preparation of the consolidated financial statements for the 2019 financial year For the 2019 financial year In accordance with EU regulation 1606/2002 dated July 19, 2002, the LISI Group’s consolidated financial statements have been prepared in linewith IAS/IFRS international accounting standards as adopted by the European Union on December 31, 2019. The various rules and accounting methods are detailed in the overview for each Note. Standards, amendments and interpretations adopted by the EU and mandatory for reporting periods beginning on or after January 1, 2019 IFRS 16 In January 2016, the IASB published standard IFRS 16: Leases. This standard will lead companies leasing significant assets as part of their activity to recognize an asset and a financial debt corresponding to the lease commitment. IFRS 16 came into force on January 1, 2019. The LISI Group has chosen to apply the modified retrospective model. The Group identified a number of lease types which have been restated pursuant to IFRS 16 in the accounts for the year ended December 31, 2019. Leases were identified in the same way as in previous years under IAS 17 and IFRIC 4. Capitalization of real estate assets: Based on the analysis completed, the Group identified leases within the meaning of the standard for buildings leased for production activity and buildings leased for offices. The lease term selected corresponds to the period which cannot be terminated, along with any renewal options which the group is reasonably certain will be exercised. Recognition of leases for other assets: The main leases identified are for vehicles and other rolling stock. The period of capitalization of rent on leases corresponds to the period initially envisaged in the agreement. The LISI Group has chosen not to separate the components of services within the lease (for example, the part for maintenance of vehicle lease agreements will not be restated). Both capitalization exemptions proposed by the standard, i.e., agreements lasting under 12months and the leasing of goods with a low new value (below $5,000) have been used. The Group has also opted not to restate leases for intangible assets. The discount rate used to value the rental debts is the incremental borrowing rate of the parent company adjusted based on a variablemargin necessary to obtain finance on the financial markets, according to the country in question. The rate determined in this way makes it possible to take account of the economic environment, the currency and the termof the leases of the Group’s entities.