EXEL industries - 2019 Universal Registration Document

Management report 3 Annual highlights

Amounts are expressed in ƭ millions of euros or ƭ thousands of euros and the values presented are rounded to the nearest whole fi gure. There may therefore be a non-material di ff erence between the sum of these rounded-up values and the total amounts presented in this section.

Annual highlights

3.1

lower absorption of fi xed expenditure explains most of the decline in ROC, which was 4.2% on sales vs. 7.4%. Non-recurring items include €20.5 c million of provisions for restructuring our Sugar Beet Harvesters and Agricultural Spraying businesses and a €1.5 c million additional provision for pensions in the United Kingdom following a change in legislation. Given these items, net income was €4.1 c million compared with €39.2 c million last year. The operating WCR (excluding tax assets and liabilities) declined nearly €19 c million due to lower inventories and improved average customer payment times. Net fi nancial debt (NFD) at September c 30, 2019 was €61.1 c million, down €23.4 c million to the same level as at September c 30, 2017. Gearing (net fi nancial debt/shareholders’ equity) fell from 23.4% to 17.0%. capacities and workforce have been adjusted accordingly. The cost savings will be apparent in the current fi scal year. In addition, in Western European markets, particularly in France, policy decisions are targeting a dramatic reduction in the use of phytosanitary products. Thanks to new technologies, the accuracy of our agricultural sprayers makes it possible to reduce the amounts of products applied. We are adding to our capabilities for innovation and the expertise we o ff er farmers in the centers of excellence being established by the end of 2020. The creation of EXXACT Robotics will provide an innovative manufacturing response to the acceleration now seen in the farming transition. The Industrial Spraying activitywill continue its strategy of partnering with our integrators and developing sales through our dealer networks and of standard equipment. The year will see the renewal of a number of product ranges, which should boost sales and o ff set the slowdown seen in Asia. With regards to the Garden Watering and Spraying activity, the drivers of growth continue to be developing the dealer network, new geographic markets and innovation. We anticipate modest growth in fi scal year 2019/2020. The steps taken to reduce our fi xed costs and repair our margins should place us back on the path of sustainable and pro fi table growth.

Sales in 2018/2019 were €776.7 c million, down €62.4 c million from the preceding year, mainly because of: „ repercussions from the European sugar industry crisis on our Sugar Beet Harvesters business; and „ uncertain market conditions for Agricultural Spraying due to regulatory and environmental issues and unfavorable conditions in Ukraine and Australia. Garden Watering and Spraying had a satisfactory year compared to fi scal year 2017/2018, which saw extraordinary weather conditions. In Industrial Spraying, sales of standard equipment were stable, with strong growth in the USA o ff setting a decline in China. The Group’s margin on direct costs remained fairly stable. Stringent management enabled us to maintain fi xed expenditure at the same level as last year and to o ff set in fl ation. Given the drop in sales, the Events after the reporting period On November c 4, 2019, EXEL Industries announced the creation of EXXACT Robotics, a company specializing in precision agricultural technologies using arti fi cial intelligence, robotics, electronics and agronomy. Its mission is to provide an innovative manufacturing response to the acceleration we now see in the farming transition. On December c 23, 2019 EXEL Industries announced the acquisition of 100% of the German company Intec GmbH & Co. KG. This agreement is subject to the approval by the competition authorities in Germany and Austria. Intec is a major manufacturer of bonding equipment for the automobile industry, mainly in the bodywork factories (body assembly). A pro fi table company, in 2019 Intech had sales of almost €40 c million, and employs approximately 120 c people. Pro fi t forecasts or estimates The sugar industry is in the midst of a major crisis. The price of sugar is only recovering slowly. Several sugar mills were closed in Europe at the end of 2019, and the amount of land devoted to sugar beet will therefore be less in 2020. We are forecasting di ffi cult conditions for at least two years in our Sugar Beet Harvesters business. Our production 3.2

Events after the reporting period and outlook

EXEL Industries Group I 2019 Universal Registration Document 22