LISI S A : 2021 Half-yearly results.

HALF-YEARLY

RESULTS

June 30th,2021

LISI Group results in H1 2021: annual objectives confirmed

• Continuation of the global plan to adapt to market conditions caused by the global health crisis
• Increase of + 33.5 % in EBIT and 1.6 percentage point in comparable current operating margin1 despite the unfavorable impact of the industrialization costs of new products
• Main financial indicators improved compared to H2 2020
• Refocus on high added value activities continued with the sales of Jeropa (LISI MEDICAL, United States) on January 11, 2021 and LACE (LISI AEROSPACE, France) on March 4, 2021

Paris, July 22, 2021 - LISI announces today its results for the first half of the year ended June 30, 2021. These accounts were subject to a limited review by the Statutory Auditors and were presented to the Board of Directors which met on July 22, 2021.

Six months ended June 30,			H1 2021	H1 2020	Change
Key components of the income statement
Sales		€M	593.6	636.7	- 6.8 %
EBITDA		€M	84.0	84.8	- 1.0 %
Published EBIT 2 after IAS 8		€M	40.7	22.5	N.C
Published current operating margin 2 After IAS 8		%	6.9 %	3.5 %	N.C
Published result for the period2 attributable	to equity	€M	29.7	4.7	N.C
holders after IAS 8
Diluted earnings per share		€	0.55	0.09

Key components of the cash flow statement

Operating cash flow Net industrial CAPEX Free Cash Flow3

€M	69.1	70.4	- € 1.3 M
€M	25.4	36.3	- €	10.9 M
€M	55.2	900.0	- €	34.8 M

Key components of the financial situation

		H1 2021	12/31/2020
Net debt	€M	173.3	220.8	- 47.5 M
Ratio of net debt to equity	%	16.9 %	22.3 %	- 5.4 pts
Six months ended June 30,		H1 2021	H1 2020	Change
Comparable data
Comparable EBIT	€M	30.0	22.5	+ 33.5 %
Comparable current operating margin	%	5.1 %	3.5 %	+ 1.6 pt
Income for the period attributable to equity holders	€M	21.7	4.7	+ 17.0 M

1. "comparable" refers throughout this press release to data beforethe extension of depreciation periods (See explanation on page 2)
2. "published" refers throughout this press release to data afterthe extension of depreciation periods
3. Free Cash Flow: net operating cash flow minus net CAPEX and changes in working capital requirements

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Change in estimate of depreciation periods (IAS 8 standard)

The analysis of recent experience and the technological evolution of production processes have highlighted the need for the LISI Group to extend the depreciation periods for certain pieces of equipment, in particular heavy equipment acquired in recent years, in order to align them with their actual lifespan.

The implementation of more ambitious maintenance plans also extends the useful life of the equipment. These changes were also made necessary by comparison with the accounting principles adopted by certain competitors of LISI.

This analysis made it possible to obtain reliable information meeting the criteria of IAS 8 on changes in accounting estimates. These were accounted for prospectively as of January 1, 2021. The changes made to the depreciation periods mainly relate to the "Equipment and Tools" categories which are now depreciated over 15 to 20 years (compared to 10 years previously) and to a lesser extent to "IT equipments" which are depreciated over 5 years (and no longer over 3 years).

		Difference in depreciation at 30/06/2021
			compared to previous estimates
		LISI	LISI	LISI		TOTAL
		AEROSPACE	AUTOMOTIVE	MEDICAL
	in €M
Technical installations		0,0	0,2	0,0		0,3
Industrial equipment		5,5	3,8	0,2		9,5
Industrial tools		0,0	0,1	0,0		0,1
IT equipment		0,0	0,3	0,0		0,3
Other		0,1	0,3	0,2		0,6
TOTAL		5,7	4,7	0,4		10,7
Breakdown of impacts		53%	44%	3%		100%
Gross value of assets concerned		253,8	174,3	28,8		456,9
% difference in depreciation compared to gross value		2,2%	2,7%	1,2%		2,3%

Summaryof the impacts on the Group's key financial aggregates as at June 30, 2021:

	30/06/2021	Impact of change	30/06/2021
in €M	comparable	in estimate	published
Impacts on result
Depreciation	-57,5	10,7	-46,8
Current operating profit (EBIT)	30,0	10,7	40,7
Current operating margin	5,1%	1,8 point	6,9%
Result for the period	21,8	7,9	29,7
Result for the period attributable as company shareholders'	21,7	7,9	29,7
equity
Balance sheet impacts
Net tangible assets	662,6	10,7	673,3
Ratios
ROCE	5,4%	1,8 point	7,1%
ROE	4,2%	1,5 point	5,8%

2

Business review and results for the half year

				On a like-for-like
Sales in €M	2021	2020	2021 / 2020	and constant
exchange rate
				basis
Q1	309.4	397.9	- 22.2 %	- 18.8 %
Q2	284.3	238.8	+ 19.0 %	+ 25.9 %
Six months ended June 30,	593.6	636.7	- 6.8 %	- 2.0 %

Consolidated sales for H1 2021 amounted to € 593.6 million, down 6.8 % compared to last year and taking into account the following elements:

• an unfavorable currency effect of - € 19.6 million (i.e. - 3.3 % of sales), mainly tied to the weakening of the US dollar against the euro,
• a scope effect of - € 10.8 million (i.e. - 1.8 % of sales) reflecting the deconsolidation of LISI AUTOMOTIVE Mohr+Friedrich GmbH on June 26, 2020, LISI MEDICAL Jeropa in the United States on January 11, 2021, and LACE (LISI AEROSPACE) on March 4, 2021,
• an unfavorable basis of comparison compared to Q1 2020, which had benefited from a sustained level of activity in the aeronautical "Fasteners" sector.

On a like-for-like and constant exchange rate basis, sales are down - 2 % compared to H1 2020.

The margin on EBITDA reached 14.1 %, up 0.8 percentage point compared to H1 2020. It benefits from the cost optimization and adaptation efforts launched across all divisions at the start of the COVID-19 crisis as part of the NEW DEAL plan.

Depreciation is down 1.4 percentage points compared to H1 2020 due in particular to the above-mentioned change in estimated depreciation periods and the decline in the level of investments. The effect of depreciation and amortization provisions (mainly on inventories) is favorable compared to H1 2020 at € 3.5 million, but does not improve the earnings. In fact, these provision reversals were mainly applied to operating expenses.

EBIT before change in depreciation periods picked up and reached € 30.0 million. At 5.1 %, the comparable operating margin gained 1.6 percentage points on the same period the previous year. EBIT after change in depreciation periods (€ 10.7 million) reached € 40.7 million. At 6.9 %, the published operating margin gained 3.3 percentage points on the same period the previous year.

Non-current operating income and expenses amounted to - € 1.3 million, a very marked decrease compared to H1 2020 (- € 20.1 million) which reflected the costs of the disposal of Mohr & Friedrich GmbH (LISI AUTOMOTIVE), industrial reorganization costs as well as costs related to the adjustments generated by the reduction in activity over the half-year(COVID-19 crisis).

Financial income amounted to + €1.4 million, ( + €4.7 million in H1 2020), due to the following main factors:

• currency effects related to the revaluation of debts and receivables and the change in the fair value of hedging instruments ( + € 4.5 million vs. + € 7.4million in H1 2020),

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• the financial expenses, which represent the cost of the long-term net debt, amounted to - € 3.3 million (- € 3.4 million in H1 2020), i.e. an average fixed interest rate of 1.5 % (1.4 % in H1 2020). Gains on current cash investments amounted to + € 0.2 million versus + € 0.7 million in H1 2020. Net financial expenses to net debt therefore amount to less than 1.4 %.

The tax expense, calculated on the basis of the corporation tax as a percentage of the net income before taxes, reflects an effective average tax rate of 27.3 %. It compares to a rate of 37.5 % in H1 2020 which would have been 24.1 % after restating the depreciation of a non-current asset in the previous year.

Comparable net income is up to € 21.7 million (or 3.7 % of sales), compared to € 4.7 million (0.7 % of sales) in H1 2020. Net income after the impact of the change in depreciation periods (€ 7.9 million) reached € 29.7 million (or 5.0 % of sales).

At € 69.1 million, cash flow remains at a satisfactory level and represents 11.6 % of sales. It makes it possible to fund the investment program of € 25.4 million (4.3 % of sales) mainly focused on the pursuit of initiatives leading to future growth such as the development of new products, innovation and multi-year industrial programs (Forge 2022, ERP, digitization, robotization, etc.).

The increase in working capital requirements (80 days of sales, compared to 72 days in the same period the previous fiscal year), is explained by the preparation of the expected resumption of business in the coming months.

The Group generated Free Cash Flow of € 55.2 million in the first half of the year, which is excellent performance given the record amount of € 90.0 million recorded in the same period of the previous fiscal year.

Net financial debt fell to € 173.3 million (i.e. 16.9 % of shareholders' equity) compared to € 220.8 million as at December 31, 2020 (i.e. 22.3 % of shareholders' equity). It represents 1.0 x EBITDA lower than that of December 31, 2020 (1.3 x).

LISI AEROSPACE (46 % of total consolidated sales)

• Business level at a low ebb in a context of gradual recovery in global air traffic
• Unfavorable basis of comparison given the strength of the "Fasteners" sector in Q1 2020
• Main management indicators improved compared to H2 2020 despite the numerous new product launches that weigh on the margin

Analysis of sales developments

Sales in €M	2021	2020	2021 / 2020	On a like-for-like
	and constant
				exchange rate basis
Q1	139.4	226.7	- 38.5 %	- 35.8 %
Q2	134.7	154.3	- 12.7 %	- 7.0 %
Six months ended June 30,	274.1	381.0	- 28.0 %	- 24.1 %

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