Universal Registration Document 2019

1  /  Company activity during the financial year and future outlook The key role of LISI S.A., the parent company of the LISI Group, is to oversee projects of general interest and co-ordinate Company activity. More specifically, LISI manages the following services for its subsidiaries: ■ strategic plan validation, external growth procedure, action plans, resource allocation; ■ outlining strategy in an annual budget plan; ■ financial control and internal audit (stemming from the COS program); ■ financial and fiscal consolidation; ■ financial optimization, centralized cash management for the Group, management of investments and financial liabilities, hedging of foreign currencies and interest rates; ■ coordination of insurance, procurement, quality, research and development and information systems; ■ general Health, Safety andEnvironment (HSE) andCorporate Social Responsibility, human resources and investment policies as well as the industrial progress plans (LEAP); ■ management of strategic projects and implementation of the “LISI SYSTEM”; ■ implementation of an overarching communication policy (internal, external, corporate, human resources, financial and marketing) directly linked to the Group’s strategy. Earnings at December 31, 2019 The remarks below relate to the income statement for 2019. ■ In 2019, operating income amounted to €10.7 million, compared with €11.2 million in 2018 and was broken down as follows: • LISI S.A . had €10.0 million in sales in 2019 compared to €9.7 million, an increase of +3.34%. They are essentially made up of services invoiced to the subsidiaries of LISI S.A. in respect of assistance, control and coordination of activities. These invoices pass on the operating expenses of LISI S.A. to the subsidiaries in 2019, with a 10% margin. • Other operating income amounted to €0.7million in 2019, compared with €1.5 million in 2018. This item mainly consists of: − a provision reversal of +€0.3 million on the performance share allocation plans for 2016, which should have been awarded in 2019, − specific charge-backs to subsidiaries in the amount of €0.4 million. The change compared to 2018 is due to a decrease in re-invoicing to the subsidiaries following the non-achievement of the performance allocation plans for 2016. ■ Operating expenses amounted to €9.7 million in 2019, a decrease of €1.5 million compared to 2018 (€11.2 million). The change was primarily due to the expenses incurred in 2018 for the environmental restoration of an industrial site. ■ As a result, the operating profit increased from -€0.1 million in 2018 to +€1.0 million in 2019. ■ Financial income stood at +€33.9 million, compared to +€41.3 million in 2018. It is explained by: • Financial earnings mainly consisting of dividends collected from LISI AEROSPACE, LISI AUTOMOTIVE and LISI MEDICAL for +€32.5million compared to +€31.7million paid in 2018, interest earned on Group current accounts in the amount of +€6.8 million in 2019 compared to €5.9 million in 2018, net capital gains on investments for +€3.0 million in 2019 compared to €3.2 million in 2018 and the reversal of the provision for unrealized exchange losses on Group loans in US dollars recorded in 2018 for €4.1 million. • Interest expenses made up mostly of interest on borrowings and Group current accounts in the amount of -€7.0 million are stable compared to -€6.5 million in 2018. A provision for Group loans in US dollars was also recognized for the amount of €0.6 million compared with €4.1 million in 2018. • Foreign exchange income, which was negative by -€4.7 million, is the result of changes in the price of currencies on USD placements and in current accounts in foreign subsidiaries denominated in that currency. ■ Non -operating profit was not impacted in 2019. ■ Corporate tax consists of tax income of +€12.2 million, including a +€12.9 million tax consolidation gain for 2019 and a corporation tax payment of -€0.7 million. ■ Therefore, LISI S.A.’s net earnings was positive at +€47.2 million in 2019 compared to +€42.3 million in 2018, i.e. an increase of +€4.9 million. ■ Shareholders ’ equity increased from €237.0 million in 2018 to €260.8 million at the end of 2019. It was reduced by the distribution of the dividends paid inMay 2019, for an amount of -€23.4 million in respect of the 2018 profit and increased by the year ’s net earnings of +€47.2 million; ■ Available cash excluding current accounts at year-end amounted to €101.0 million compared to €103.6 million in 2018; this item consists of monetary SICAV instruments and capital-backed investments denominated in euros and USD. ■ Net debt is -€3.1 million at the end of 2019 compared to +€4.2 million at the end of 2018. This decrease partly comes from the repayment of foreign subsidiaries’ current accounts over the period. 78 LISI 2019 UNIVERSAL REGISTRATION DOCUMENT Company financial statements 3