haulotte.com
1 SUMMARY
04-05 14-15 28-31
06-07 16-17 32-33 08-09
18-19 34-35 10-11
12-13 20-27
2019 Annual report 3 SUMMARY
7 PRODUCT RANGES OF 3 TELEHANDLER PEOPLE LIFTING EQUIPMENT PRODUCT RANGES
Haulotte is a global leader of people and material lifting equipment. The group designs, manufactures and markets a wide range of products focused on mobile elevating work platforms and telehandlers.
CUSTOMIZED FINANCING INTEGRATED SERVICES SOLUTIONS to facilitate to optimize equipment lifecycles investments in these products and residual values for resale
1986 2005 2014 2018 H46N - First aerial The group name and logo Launch of the RTJ Launch of the PULSEO work platforms change. “Pinguely- Haulotte” and RJT PRO ranges, GENERATION range with the designed and marketed become “Haulotte Group” with the 16m first electric rough-terrain under the brand name articulating boom articulating boom: HA20LE PRO “Haulotte”
1985 1998 2007 2015 Pierre Saubot takes IPO on the stock Haulotte expands its Haulotte celebrates control of Pinguely- exchange product offer, with a range its 30 years old Haulotte owned by the of telehandler called HTL Group Creusot-Loire
2019 Annual report 5 SUMMARY HAULOTTE IN SUMMARY
PEOPLE LIFTING EQUIPMENT PRODUCT RANGES TELEHANLDER3 7 RANGES
NEW HEAD OFFICE IN 2020 610.8M€ 2019 REVENUE A GLOBAL OFFER
21 2000 6 PRODUCTION SUBSIDIARIES EMPLOYEES UNITS
2019 Annual report 7 OUR SUMMARY AMBITION
TO BECOME THE MOST VALUABLE AND SAFEST WORKING AT HEIGHT SOLUTION MAKER IN CREATING THE SERENEST CUSTOMER EXPERIENCE.
OUR STRATEGY
We are developing a “GloCal” strategy that will make it possible to deploy the Group’s global strategy locally, by including the necessary adaptations. We rely on defined and shared human, professional and managerial values to guide our actions and give meaning to our performance.
In this context, our objective is to offer our customers solutions that are ever more secure, ever more respectful of the environment, and ever more adapted to our partners’ needs. We have defined three major strategic axes to transform this objective into a concrete action plan:
BECOME A BLUE COMPANY
BECOME A FULL SOLUTIONS PROVIDER
BECOME THE BEST-IN-CLASS Service Level Agreement provider
OUR CROSS-COMAPNY GUIDELINE TO ACHIEVE THIS AMBITION: A DIGITAL TRANSFORMATION, A KEY FACTOR IN OUR FUTURE SUCCESS.
2019 Annual report 9 SUMMARY
OUR
VALUES EXCELLENCE PERFORMANCE We are convinced that each employee plays a key role in the Group’s success, and a sustainable “Change” program has been implemented ENGAGEMENT to put employees at the heart of performance. This results in projects RESPONSABILITY related to the working environment, the sharing and appropriation of values, the support of managers but also the harmonization of good RESPECT Human Resources practices deployed from 2017. TRUST
2019 Annual report 11 SUMMARY PHILIPPE NOBLET CARLOS HERNANDEZ PATRICK MURRIS Corporate Secretary M.D. Zone Americas M.D. Zone Europe & Africa SEBASTIEN MARTINEAU C.F.O. (Finance)
DAMIEN GAUTIER STÉPHANE HUBERT PATRICE MÉTAIRIE M.D. Zone Asia-Pacific C.S.O. (Sales, Marketing & Services) C.O.O. (Industry)
ALEXANDRE SAUBOT C.E.O.
GOVERNANCE OF HAULOTTE GROUP
ADMINISTRATORS: STATUTORY AUDITORS:
PricewaterhouseCoppers Audit Represented by Elisabeth L’HERMITE PIERRE SAUBOT 20 Rue de Garibaldi - 69451 Lyon cedex 06 Chairman BM & A Represented by Alexis THURA 11 Rue de Laborde - 75008 Paris ALEXANDRE SAUBOT ELISA SAUBOT JOSÉ MONFRONT HADRIEN SAUBOT MICHEL BOUTON ELODIE GALKO ANNE DANIS FATÔME
2019 Annual report 13 SUMMARY KEY FIGURES
SALES EVOLUTION IN € MILLION SALES BREAKDOWN PER ACTIVITY continuing activities excluding IAS29 and excluding 2014 412.6 REVENUE IFRS16 2015 445.3 55.0 3.5% 21.6 51.0 3% 16.7 2016 457.8 % % 8 +29% 9.1 2017 499.4* 610.8 +8% M€ 2018 558.0* +9% 2019 610.8* 2019 2018 * Continuing activities (restated for the rental business in Italy, sold on June 2018) and excluding IAS 29
OPERATING INCOME 87.5% 87.9% excluding exchange gain loss +9% and GROSS CASH FLOW FROM OPERATIONS IN € MILLION 534.2 490.3 continuing activities excluding IAS29 and excluding IFRS16 Equipment sales Service Rental 60
50 45.1 42.1 42.4 37.4 37.1 37.2 40 32.4 31.7 36.5 36.1 30 28.4 27.7 Gross cash flow SALES BREAKDOWN from operations 20 PER GEOGRAPHICAL AREA IN € MILLION 10 Operating
0 income continuing activities excluding IAS29 and ecluding IFRS16
- 10
- 20 57.7% 2014 2015 2016 2017 2018 2019 352.3 M€ 19.0% 115.8 M€ 2018 INCOME STATEMENT HIGHLIGHTS 15.7% IN € MILLION 2019 96.0 M€ continuing activities excluding IAS29 and excluding IFRS16 7.6% 46.7 M€ GLOBAL IN € MILLION 2019 2018 60% 334.7 M€ REVENUE 610.8 558.0 CURRENT OPERATING INCOME excl. 18.0% 100.4 M€ 36.1 37.1 EXCHANGE GAINS & LOSSES 14.1% 2018 78.6 M€ OPÉRATING INCOME 29.0 30.1
ACTIVITIES INCOME BEFORE TAX 25.1 22.0 7.9% 44.3 M€ CONTINUING CONTINUING CONSOLIDATED NET INCOME 17.2 15.0 Europe Asia-Pacific North America Latin America
2019 Annual report 15 SUMMARY
OUR BUSINESSES
DESIGN AND ASSEMBLY DISTRIBUTION RENTAL BUSINESS Our key success factors: A sales & services network An additional business activity based in 21 subsidiaries and which contributes to INNOVATION offices in strategic markets, established our brand in R&D supported by a dealer network selected geographical MARKETING giving coverage in more than markets, and to better Dedicated teams on the design phase anticipate 150 countries. understand end-users needs. the needs and requirements to design products, accessories and services to meet demand.
2019 Annual report 17 SUMMARY
OUR MARKETS
RENTAL COMPANIES They are partners of our development thanks to their product expertise, the in-depth knowledge of their clients’ needs and their network of branches.
SPECIAL EQUIPMENT &MILITARY SOLUTIONS Haulotte offers tailor-made solutions designed to meet the specific requirements of civil and military applications. INDUSTRIAL END-USERS Customers operating in a wide range of industry sectors (logistics, manufacturing, airport operations, maintenance, retail). Haulotte provides customized solutions based on product lines that address the specific needs of each activity.
2019 Annual report 19 SUMMARY
A GLOBAL OFFER
PEOPLE LIFTING EQUIPMENT MATERIAL LIFTING EQUIPMENT
PUSH- VERTICAL SCISSOR HEAVY LOAD COMPACT HIGH LIFT AROUND MASTS LIFTS CAPACITY from 7 to 14 m from 6 to 10 m rough-terrain lifting capacity lifting capacity from lifting capacity or electric from 3.2 t to 4 t 3.6 t to 4 t 5.2 t from 6 to 18 m up to 10 m up to 17 m up to 10 m
ARTICULATING TELESCOPIC LIGHTWEIGHT BOOMS BOOMS BOOMS rough-terrain from 14 to 43 m Trailers from 10 to 19 m or electric Lightweight from 13 to 16 m from 12 to 41 m
2019 Annual report 21 SUMMARY
We design financing solutions that match our customers’ needs, and offer flexible and tailor-made solutions when necessary. Thanks to our many years of experience in the Construction and Industry sector, we can implement new solutions to structure financing offers.
2019 Annual report 23 SUMMARY
1 3 TECHNICAL SUPPORT SERVICE CONTRACTS Designed to responsively provide the most efficient Total Cost of Ownership (TCO) is monitored all support, the Haulotte technical network operates along the operating lifetime of the machines on the phone, on site or within our technical thanks to the expertise of our technical support centers. Our on-line solutions also enable you to team. Our portfolio of contracts enables a perfect minimize your downtime! match with customers expectations: PREVENTIVE MAINTENANCE WARRANTY EXTENSION PERIODIC LEGAL INSPECTIONS
2 4 TRAINING GENUINE SPARE PARTS
Haulotte training courses can easily be customized The Haulotte supply chain organization is to the practical needs and language of our clients. fully dedicated to meet your demands of It is also possible to monitor the skills and plan their quality spare parts and to optimize the spare advanced training on-line. parts’ supply chain process, from the quotation to the deliveries. Online orders are processed 24h!
2019 Annual report 25 SUMMARY
REFURBISHMENT SECOND HAND EQUIPMENT
OFFER MACHINES A SECOND LIFE THE RIGHT PRE-OWNED EQUIPMENT AT THE RIGHT PRICE
Financially attractive, our reconditioning solutions meet the needs Pre-owned equipment is the perfect way to establish or grow a fleet at lower cost and increase machines’ lifespan significantly. For minimal investment, for a better return on investment. Customer would find machines among a wide range equipment can be reconditioned to operate at its full potential. of pre-owned equipment. From scissor lifts, boom lifts, telehandlers, vertical masts and many more, a quick and easy way to meet customers’ needs and budget!
REFRESH, FACELIFT OF YOUR MACHINE! EXPERTISE REFURB, REBUILD THE FUNCTIONS! GOOD VALUE FOR THE MONEY UPGRADE, BOOST THE PERFORMANCE! ASSISTANCE
2019 Annual report 27 SUMMARY
2019 HIGHLIGHTS
May 2019 Haulotte Australia is 20 years old March 2019 Opening of a new subsidiary in Osaka: Haulotte Japan
May 2019 Haulotte lays the foundation stone of its new premises for Haulotte Australia
April 2019 Haulotte lays the foundation stone of June 2019 its future head office Inauguration of a new building in Wolverhampton, for Haulotte UK subsidiary
2019 Annual report 29 SUMMARY
2019 HIGHLIGHTS
October 2019 Haulotte and Linde achieved a cooperation to jointly open up MEWP China July 2019 Haulotte Changzhou factory celebrates 10 years
October 2019 Haulotte introduces its blog « Haulotte Community » providing all aerial lift market players with valuable content to better understand the access equipment marketplace and upcoming challenges
October 2019 Haulotte North America inaugurates its Californian Branch November 2019 Hackathon Haulotte: a challenge to younger generations
2019 Annual report 31 SUMMARY
2019 AWARDS HAULOTTE AWARDED « SUPPLIER OF THE YEAR » HIRE INDUSTRY - AUSTRALIA HA20 LE – « PRODUCT OF THE YEAR » AWARDS
Construction The China Construction Industry’s award – Machinery Annual Product of the year Product TOP50
HAULOTTE ENTERS GAÏA* INDEX FOR THE FIRST TIME
European Rental CMIIC 2019* – China – Association - Product Engineering Machinery *Companies ranking on their Social and Environmental of the year Star Product Award responsability practices *China Construction Machinery Industry Internet and Branding Conference
2019 Annual report 33 SUMMARY HAULOTTE AND
ITS SHAREHOLDERS TRADING ACTIVITY SHARE AND SHARE PRICE TRENDS 10 SHARE TRADITION INFORMATION 2 250 000
2 000 000 1 5 847 1 8 523 EURONEXT PARIS COMPARTIMENT B 8.72 1 765 4 4 8.53 ISIN FR0000066755 1 750 000 8.38 8 MNÉMO PIG 1 500 000 REUTERS PYHE.PA 7.1 1 250 000 7.31 7. 1 146 287 BLOOMBERG PIG FP 1 4 8 7 7. 6 CACS 1 000 000 6 6.27 5. 3 83 8 750 000 68 872 517 143 5.3 433 236 672 188 5.17 500 000 524 5 NET EARNINGS EVOLUTION 5 6 614 4. 250 000
PER SHARE IN € OF NET DIVIDEND 4 0 PER SHARE IN € anuary Fe ruary March April May une uly August Sept Oct Nov Dec Share price in € Trading activity share 3 0.25 0.22 0.22 0.22 0.22 0.22 0.22 2 BREAKDOWN OF CAPITAL 0.99 0.95 0.77 0.81 0.66 0.20 0.30 ON 31/12/2019 0 0.15 -1 54.40% SOLEM -2 0.10
-3 0.05 PUBLIC -4 38.83%
0 0.00 2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019 5.91% TREASURY SHARES
0.86% HOLDERS OF REGISTERED SHARES
BREAKDOWN OF VOTING RIGHTS ON 31/12/2018
72.85% SOLEM
25.99% PUBLIC
1.16% HOLDERS OF REGISTERED SHARES
2019 Annual report 35
SUMMARY MANAGEMENT REPORT ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED 31 DECEMBER 2019
GENERAL COMMENTS
Definitions In this annual financial report, except where otherwise indicated: - The terms the ”Company” or ”HAULOTTE GROUP” refer to HAULOTTE GROUP a French public limited company (Société Anonyme) with capital of €4,078,265.62 whose registered office is located at La Péronnière 42152 l’Horme, France, registered in Saint-Etienne (France) (RCS No. 332 822 485. - The term “Groupe” refers to the Company and all companies consolidated by the latter.
Forward-looking statements This annual financial report also includes forward-looking information about the Group’s objectives and development priorities. These forward-looking statements are sometimes identified by the use of the future or conditional tense or forward- looking terminology, including the terms “believes,” “estimates,” “anticipates,” “expects,” “intends,” “may,” “will” or “should” or variations thereof or other comparable terminology. It should be noted that the realization of these objectives and development forecasts do not represent historical data and as such should not be interpreted as providing assurance that the facts and data presented will occur, that the assumptions will be confirmed and the objectives reached. These represent objectives that by nature might not be achieved and the information presented in this annual financial report may prove to be erroneous without the Group being subject, in any manner whatsoever, to an obligation to update these statements, subject to the applicable regulation at notably, the AMF (Autorité des Marchés Financiers) General Regulation.
COVID-19 health crisis – Situation as of 30/04/20
The COVID-19 health crisis has affected the Group’s activities in several regions of the world, first in China and then in the Europe region. The Group has already taken all the necessary measures to best manage the first consequences of this unprecedented crisis and enable Haulotte to calmly address its next steps. It has been decided: ▪ The temporary shutdown of production sites to comply with health regulations in the countries concerned: in France between 19 March and 20 April 2020, reduction of production rates in the United States. ▪ The continuation of Distribution and Service activities in strict compliance with the health measures required locally to allow operational continuity for as long as necessary: - Rigorous Telework on French territory for all activities that allow for it. - Maintain communication with all our customers and partners. - Active and supportive contribution to prevent and contain the spread of the virus. In the first quarter of 2020, Group sales were €132.9 million, down -19% (at constant exchange rates and excluding IAS 29) compared to 2019 and were already negatively impacted by COVID-19. Given the uncertainties regarding the duration and extent of the health crisis related to COVID-19, Haulotte has decided to suspend, at this stage, its financial guidance for the year 2020 and will communicate new elements as soon as conditions allow.
2 SUMMARY MANAGEMENT REPORT ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED 31 DECEMBER 2019
RESPONSIBILITY FOR THE FRENCH VERSION OF ANNUAL FINANCIAL REPORT
Person making the responsibility statement In accordance with article L.451-1-2 of the French monetary and financial code, we inform you that the person responsible for the annual financial report is Mr. Alexandre Saubot, Deputy Chief Executive Officer of Haulotte Group. Responsibility statement L’Horme, 30 April 2020 “I furthermore declare that, to the best of my knowledge, the financial statements have been prepared in accordance with the applicable financial reporting standards and give a true and fair view of the assets and liabilities, financial position and results of the operations of the Company and the group formed by the companies included in the consolidated financial statements, and that the management report for the period, included herewith presents business trends, the results and financial position of the company and consolidated operations and the description of the main risks and uncertainties”.
Alexandre Saubot Deputy Chief Executive
3 haulotte.com | MANAGEMENT REPORT 2019 MANAGEMENT REPORT ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED 31 DECEMBER 2019
TABLE OF CONTENTS
PART 1: ECONOMIC INFORMATION 5 1 - Review of operations and results for the year under review 6 2 - Progress made or difficulties encountered 6 3 - Presentation of parent company financial statements and significant accounting policies – Results of operations the Company 6 4 - Comprehensive analysis of the Company's revenue, earnings and financial position, and notably debt with respect to the volume and complexity of business activity. 7 5 - Analysis of key indicators of a financial and non-financial nature relating to the company's specific business, and in particular information relating to environmental questions and personnel 7 6 - Key risks and uncertainties - The company’s exposure to risks concerning price, credit, liquidity and capital resources - Information on market risks 7 7 - Use of financial instruments - Company financial risk management objectives and policy 8 8 - Foreseeable changes in the company's situation and outlook 8 9 - Important post-closing events between the end of the financial period and the date of the management report 9 10 - Research and development of the Company 9 11 - Breakdown of trade payables and receivables of the Company by maturity 9 12 - The internal control and risk management procedures adopted by the company and in particular those relating to the preparation and processing of financial and accounting information. 9 13 - Summary of dealings in the period ended in own shares by executives and parties mentioned in Article L.621-18-2 of the French monetary and financial code 15 14 - Presentation of the Board of Directors' annual review on regulated agreements remaining in force and its findings 15 15 - Information on dealings by the Company in its own shares 14 PART 2: INFORMATION ON SUBSIDIARIES AND ASSOCIATES 15 1 - Operations of subsidiaries and controlled companies 17 2 - Acquisitions of shareholdings or controlling interests 18 3 - Disposals of shareholdings related to adjustments of cross-shareholdings 18 4 - Own shares held through controlled companies 18 5 - List of existing branch offices 18 PART 3: INFORMATION ON HOLDINGS IN THE CAPITAL 17 1 - Changes in the Company's share capital during the period 19 2 - Identity of holders of significant shareholdings 19 3 - Employee stock ownership 18 4 - Stock options to subscribe for new shares or purchase existing shares 20 5 - Information on the Company's share 20 PART 4: TAX INFORMATION 21 1 - Sumptuary expenses and disallowed deductions 21 2 - Dividends distributed by the Company in the last three fiscal years 21 PART 5: GROUP MANAGEMENT REPORT 20 1 - Presentation of the consolidated financial statements and significant accounting policies 22 2 - Changes in the presentation of the annual accounts or methods of valuation applied in prior years 22 3 - Review of operations and results of the Group for the year under review: 22 4 - Comprehensive analysis of revenue, earnings and financial position of consolidated operations, and notably debt with respect to the volume and complexity of their business activity. 21 5 - Description of the main risks and uncertainties for the company’s subsidiaries 22 6 - The exposure of subsidiaries to risks concerning price, credit, liquidity and capital resources 24
4 MANAGEMENT REPORT ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED 31 DECEMBER 2019
7 - Information about the use of financial instruments by the company when this is relevant for the measurement of its assets, liabilities, financial position and profits or losses. 25 8 - Foreseeable changes in the Group's situation and outlook 25 9 - Significant events between the closing date and the date of publication of the consolidated financial statements 25 10 - Research and development of the Group 25 APPENDIX 1: FIVE-YEAR FINANCIAL SUMMARY 26 APPENDIX 2: BOARD OF DIRECTORS' REPORT ON CORPORATE GOVERNANCE 25 1 - Corporate governance 27 2 - List of offices and functions exercised by each corporate officer for the period ended 31 December 2019 33 3 - Compensation policy established by the Board of Directors (Article L. 225-37-2 of the French commercial code) 34 4 - Compensation of officers paid in the period ended 31 December 2019 (article L. 225-37-3 of the French commercial code) 37 5 - Agreements covered by article L.225-37-4 2° of the French commercial code 43 6 - Procedures implemented by the Board of Directors in application of Article L. 225-39, subsection 2 of the French commercial code 44 7 - Items having a potential impact in the event of public offerings 44 8 - Summary of delegations of authority in force granted by the general meeting of the shareholders to the Board of Directors for capital increases in compliance with articles L. 225-129-1 L. 225-129-2 and L.225-129-2: 44 APPENDIX 3: SPECIAL REPORT ON THE RESTRICTED STOCK UNIT AWARDS PRESENTED TO THE ORDINARY AND EXTRAORDINARY GENERAL MEETING OF 26 MAY 2020 (ARTICLE L. 225-197-4 OF THE FRENCH COMMERCIAL CODE) 50
5 haulotte.com | MANAGEMENT REPORT 2019 SUMMARY MANAGEMENT REPORT ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED 31 DECEMBER 2019
PART 2: ECONOMIC INFORMATION
1 - REVIEW OF OPERATIONS AND RESULTS FOR THE YEAR UNDER REVIEW
HAULOTTE GROUP is among the worldwide leaders in the market for self-propelled aerial work platforms both as a manufacturer of the main equipment categories (telescopic booms, articulating booms, scissor lifts, vertical masts) and as a global distributor. In a worldwide market for aerial work platforms that remained largely stable over the year, Haulotte Group SA’s sales grew by €7 million or 2% in 2019 in relation to the prior year. The slowdown of the European market was confirmed, after reaching the peak of its cycle in the 2019 first half to end the year down in relation to 2018. Despite this, Haulotte reinforced its position as the market leader. In the Asia-Pacific region, the aerial platform market registered strong growth in 2019, driven largely by China and Australia. In North America, Haulotte continued to register growth in sales. With the exception of the Brazilian market which experienced a sharp rebound, the other markets in Latin America declined significantly. The fiscal year ended 31 December 2019 submitted for approval to the ordinary general meeting is the company’s thirty-fifth year of operations since the Company's creation.
2 - PROGRESS MADE OR DIFFICULTIES ENCOUNTERED
Growth in revenue in 2019 and the improvement in the margin was not enough for the Company to break even at the level of operating results, notably in light of the level of fixed costs. The increase of the fixed costs is explained by the implementation of the strategic plan, in particular in Research & Development and Digital.
3 - PRESENTATION OF PARENT COMPANY FINANCIAL STATEMENTS AND SIGNIFICANT ACCOUNTING POLICIES – RESULTS OF OPERATIONS THE COMPANY
3.1 Presentation of statutory accounts:
Highlights of the statutory accounts of HAULOTTE GROUP SA for the financial year ended 31 December 2019 are presented below: (€ thousands)
FINANCIAL HIGHLIGHTS In € thousands FISCAL 2019 FISCAL 2018 CHANGE (%) REVENUE 286,256 279,519 + 2.41% OPERATING PROFIT (3,812) (10,363) + 63.22% NET FINANCIAL INCOME (EXPENSE) (2,910) 2,556 -213.85% EXTRAORDINARY PROFIT (LOSS) (298) (1,464) +79.64% NET PROFIT (LOSS) (3,229) (6,362) +49.25%
Please refer to the notes to the annual financial statements for all additional explanations.
6 SUMMARY MANAGEMENT REPORT ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED 31 DECEMBER 2019
3.2 Changes in the presentation of the annual accounts or methods of valuation applied in prior years We inform you that the annual financial statements were prepared according to the same presentation and methods were used in prior periods. Changes in accounting methods are presented in the summary of significant accounting policies in Note 2 to the separate annual financial statements.
3.3 Analysis of statutory results Boosted by higher volumes, the net margin increased by €5 million or 12% in 2019 compared to 2018. At the same time, committed fixed costs rose by €3 million or 5% in 2019, driven by the increase of research and development expenditures (+ €2 million) due to the implementation of our new strategic plan The level of fees received by our foreign plants registered a significant increase of €5 million due to the growth of activity in these areas. At the end, these different elements have not enabled Haulotte Group SA to reach operating breakeven which still registering an improvement by ending the year with an operating loss of €3 million in 2019 compared to a loss of €10 million in 2018. The financial loss reflects the impairment of our treasury shares linked to the significant decline in the share price. In light of the above, 2019 ended the year with a loss of slightly more than €3 million. As required by article R.225-102 of the French commercial code, this report includes a table summarising the results of the Company over the last five years.
4 - COMPREHENSIVE ANALYSIS OF THE COMPANY'S REVENUE, EARNINGS AND FINANCIAL POSITION, AND NOTABLY DEBT WITH RESPECT TO THE VOLUME AND COMPLEXITY OF BUSINESS ACTIVITY
Readers are invited to refer to paragraphs 1, 2 and 3 above and 6.2 and 7 below.
5 - ANALYSIS OF KEY INDICATORS OF A FINANCIAL AND NON-FINANCIAL NATURE RELATING TO THE COMPANY'S SPECIFIC BUSINESS, AND IN PARTICULAR INFORMATION RELATING TO ENVIRONMENTAL QUESTIONS AND PERSONNEL Readers are invited to refer above to paragraphs 1, 2 and 3, section 5 below in this report as well as the Company’s Non- Financial Statement.
7 haulotte.com | MANAGEMENT REPORT 2019 SUMMARY MANAGEMENT REPORT ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED 31 DECEMBER 2019
6 - KEY RISKS AND UNCERTAINTIES - THE COMPANY’S EXPOSURE TO RISKS CONCERNING PRICE, CREDIT, LIQUIDITY AND CAPITAL RESOURCES - INFORMATION ON MARKET RISKS In accordance with the provisions of article L225-100-1 of the French commercial code, a description of key risks and uncertainties facing the Company is presented below.
6.1 Key risks and uncertainties Because the company outsources a significant share of its production, the sourcing capacities of its suppliers constitute a primary risk. To prevent risks of supply chain disruptions, the strategy widely adopted for a number of years for diversifying suppliers must be pursued. For several years the credit situation of suppliers considered to represent a higher risk has been monitored and specific measures have been taken to ensure that the industrial model remains constantly in sync with market demand. The market risk is the second significant risk factor. On that basis, visibility has improved though caution continues to be necessary, against the backdrop of a global environment marked by continuing uncertainties.
Another significant risk is the sensitivity of sales to credit restrictions in financial markets. Haulotte Group proposes financing solutions to its customers either through a financing entity or, for a non-significant percentage of sales, direct financing, by maintaining receivable risks at a reasonable level.
6.2 The company’s exposure to risks concerning price, credit, liquidity and capital resources The major share of the company’s sales is generated through its distribution subsidiaries. Despite fierce competition, these subsidiaries have successfully maintained the level of sale prices for new products. With the existing syndicated credit facility maturing on 30 September 2019, the Group finalised its negotiations with the banking syndicate to obtain a new facility. This was obtained on 17 July 2019 with a term of 5 years, with the possibility of being extended for one year (not more than twice in the first and second year of the agreement).
7 - USE OF FINANCIAL INSTRUMENTS - COMPANY FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICY The company has recourse to forward currency sales (mainly in USD and GBP). The Company does not systematically hedge interest rate and foreign exchange risk. However, transactions are carried out according to market opportunities. In such cases, they are destined to cover existing assets or liabilities rather than for speculative purposes.
8 SUMMARY MANAGEMENT REPORT ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED 31 DECEMBER 2019
8 - FORESEEABLE CHANGES IN THE COMPANY'S SITUATION AND OUTLOOK Within the context of lower sales in Europe and North America, Haulotte Group SA is expecting a decline in sales in 2020 of approximately 7%.
Boosted by an expected decrease of the components’ costs (decrease stared since the 2nd semester of 2019), a significant improvement in the margin is expected in 2020 to contribute to a positive operating result. Net financial income is expected to be balanced, the cost of the debt being offset by the expected improvement of the financial situation of our subsidiaries. In light of the above, and a research tax credit of approximately €2.5 million, a net profit is expected in 2020.
9 - IMPORTANT POST-CLOSING EVENTS BETWEEN THE END OF THE FINANCIAL PERIOD AND THE DATE OF THE MANAGEMENT REPORT No material event with a potential significant impact on the assessment of the situation of the company has occurred or was known to exist after the end of the reporting period.
10 - RESEARCH AND DEVELOPMENT OF THE COMPANY
The Company's research and development efforts continued in the period. Among the noteworthy events in 2019 was the launch of the STAR 8S vertical mast. Another highlight of the period was the commencement of deliveries of the HTL3207 telehandler presented at INTERMAT 2018. At the same time, the Group has expanded its research focusing on optimising operator safety. The medium-term objective of these efforts in R&D is to accelerate the roll-out of new machines or renew our existing product ranges in the years ahead. Research and development expenditures amounted to €13,989,000 in 2019.
9 haulotte.com | MANAGEMENT REPORT 2019 SUMMARY MANAGEMENT REPORT ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED 31 DECEMBER 2019
11 - BREAKDOWN OF TRADE PAYABLES AND RECEIVABLES OF THE COMPANY BY MATURITY In compliance with the provisions of articles L.441-6-1 paragraph 1 of the French commercial code, an aged trial breakdown of trade receivables and payables is provided below for the fiscal year ended 31 December 2019.
Trade payable Statutory information on receivables and payables (Article D.441 I.-1 of the French commercial code*): Invoices received unpaid at the end of the reporting period in arrears 1 to 30 days 31 to 60 days > 60 days Total (A) PORTION IN ARREARS 271 Number of invoices concerned 90 268 629 271 Total amount of invoices concerned including VAT 875 657 327 231 710 760 1 913 648 % of total amount of purchases ex-VAT of the period 0,30 % 0,11% 0,25 % 289 610 643 (B) INVOICES EXCLUDED FROM (A) RELATING TO DISPUTED PAYABLES Number of supplier invoices payed at the beginning of january 1 341 Number of disputed supplier invoices 1 263 Total number of subsidiary invoices involving a current account- 111 related payables Amount of the supplier invoices payed at the beginning of january 4 652 195 Amount of disputed invoices 2 014 219 Amount of subsidiary invoices involving a current account-related 1 052 820 payable
Accounts receivable Statutory information on receivables and payables (Article D.441 I.-1 of the French commercial code*): Invoices issued and unpaid at the end of the reporting period in arrears 1 to 30 jours 31 to 60 days > 60 days Total (A) PORTION IN ARREARS 68 Number of invoices concerned 113 315 452 24 Total amount of invoices concerned including VAT 776 298 516 182 3 145 007 4 437 486 % of revenue ex-VAT of the period 0,27 % 0,18 % 1,10 % 286 256 557 (B) INVOICES EXCLUDED FROM (A) RELATING TO DISPUTED RECEIVABLES AND SUBSIDIARIES Number of disputed customer invoices 350 Total number of subsidiary invoices involving a current account- 4573 related receivable Amount of disputed customer invoices 4 123 251 Amount of subsidiary invoices involving a current account-related 68 643 772 receivable
10 SUMMARY MANAGEMENT REPORT ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED 31 DECEMBER 2019
12 - THE INTERNAL CONTROL AND RISK MANAGEMENT PROCEDURES ADOPTED BY THE COMPANY AND IN PARTICULAR THOSE RELATING TO THE PREPARATION AND PROCESSING OF FINANCIAL AND ACCOUNTING INFORMATION
A. Objectives of the Company in the areas of internal control and risk management procedures
The purpose of the internal control procedures in force in the company is to ensure that management and operating practices, and also employee behaviour, adhere to the framework defined by the guidelines given to the businesses of the company by the governing bodies, applicable laws and regulations, and the values, standards and internal rules of the company, to verify that the accounting, financial and management information provided to corporate governance bodies of the Company fairly reflect the operation and situation of the Company and its subsidiaries. One of the objectives of internal control is to prevent and manage the risks resulting from the business operations of the company and its subsidiaries and the risk of error or fraud, in particular in the accounting and financial areas (operating, financial, compliance or other risks).f As with any control system, it is not possible to provide an absolute guarantee that these risks have been completely eliminated.
B. Summary of procedures in place
a) General organisation for the internal control and risk management procedures at the Company level
Each department at the headquarters and in the subsidiaries is responsible for implementing and monitoring internal control procedures. These internal control procedures are placed under the responsibility of the Group's Finance Department and Secretariat General who draws up the procedures, promotes their application and ensures their consistency and proper functioning. A core body of written internal procedures is available for consultation on the Company's intranet. Accordingly, the different participants in the internal control process within the Company include: - the finance and information systems division (with Consolidation and Reporting, Management Control, Credit Management, Internal Audit and Information Systems), - the Secretariat General (with the legal department and the human resources department), - the Industrial Division (with the Quality and Operational Excellence department).
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b) Presentation of summarised internal control and risk management procedures adopted by the Company
The Finance Division: The Finance Division draws up written procedures covering the main subjects and financial flows within the Group. These procedures are disseminated to all financial contacts of the headquarters and subsidiaries and updated on a regular basis. The Finance Division includes the following departments
• Internal audit After completing a risk mapping initiative, the Group's executive committee created an internal audit department tasked with the following missions: - reducing business-related risks, - implementing procedures for reporting incidents recorded to Management, - raising awareness of Haulotte entities and departments about the importance of respecting procedures, - obtaining action plans from entities audited to comply with procedures, - ensuring the implementation of the action plans proposed by the audited entities and the achievement of the expected outcome, - improving and adapting procedures by taking into account observations made during audit assignments.
• The Financial Control department : This department includes two units : - an industrial financial control unit represented at each production site and for R&D, purchasing and quality functions by a dedicated team at the headquarters, - a management control unit for the distribution subsidiaries, spearheaded from the headquarters, ensuring financial oversight for the Group's different distribution and service subsidiaries in coordination with the regional financial controllers. In addition, the regional financial controller is the intermediary between the Group and the controller for each subsidiary of its region. This division ensures the financial control functions for the support and equipment rental business functions. These teams contribute to implementing the internal control procedures by: - ensuring the security of assets, notably through inventory procedures, - ensuring and assisting in the dissemination of the Group's accounting and management rules, - ensuring that expenditures are incurred in accordance with the budget defined at the beginning of each period and within the framework of the rules for incurring expenses and delegations of authority defined by the Group.
• The Cash Management department: It is responsible for the following activities : - cash management, - management of banking relations and bank balancing transactions, management of multi-currency cash positions, - credit management. It ensures that : - the principles defined for managing customer credit risk are correctly applied and controls the exposure of the Group's main customers. To this purpose, it monitors the evolution of accounts receivable for all subsidiaries, controls the levels of outstanding balances and reconciles the cash budget with outstanding trade receivables of subsidiaries, - organises the collection, monitors outstanding financing amounts and consolidates all Group financial commitments.
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• The Consolidation and Reporting department: This department is responsible for producing the consolidated annual and interim financial accounts and the corresponding financial communications as well as monthly reporting. This department assists the local financial managers in the application of the procedures for financial reporting in accordance with IFRS. It also conducts a number of visits to the subsidiaries to ensure these procedures are applied.
• The Group Accounting department: This department is responsible for the accounting for Haulotte Group SA. It is also responsible for coordinating and managing the transfer pricing policy at Group level.
• The Information Systems department: In 2017, this department implemented a Single sign-on (SSO) system for which the first applications included mail, Sharepoint Online, Skype, Foerderis and proxy-web. In addition, it is also continuing to define the security policies largely focusing on protecting access to systems and restricting access to identified named individuals and ensure the security of printing and information exchanges: an IT system security plan will be implemented soon, the IT charter is now applicable et communicated to each new employee and communications to targeting users (“ best practices”) are currently being developed. The Information Systems Department continues to actively participate in the working group for combating fraud and scamming (management of fraudulent emails, "fake president" frauds, etc.). On that basis, many scamming attempts were prevented in 2019. A new ticketing tool has been implemented in 2019 (EasyVista), and now 100% of the users‘ requests (request = change request) are subject to a double approval (an approval of the Manager‘ requester and IT). A system of prioritization of the tickets has been created so that all the important and impacting requests are known to everyone. In the actual context, with the development of the teleworking and tools in Saas mode, the security and control are part of the strategic directions that will be developed in 2020 and 2021 within the Information Systems department.
The Secretariat General:
• The Group Legal Department Given the importance of the issues handled by the legal team, a few years ago the Company has decided to reinforce its role by creating a full-fledged Legal Department in line with the company's other activities. The Legal department continues to participate in "Safety Committees" meetings held on a regular basis (every two months, and more if required). These meetings bring together all parties concerned by the efficient management of technical and legal monitoring of incidents and accidents known to the Group and in which, the presence of one of our products was noted. The Legal department participates in "intellectual property committee" meetings also attended by the industrial division, the secretariat general, the marketing department and the intellectual property manager of the Group. These periodic meetings provide a mechanism for monitoring filings and intellectual property disputes for the entire Group. They also serve as a means to notify different participants of the existence of prior rights. In addition, the Legal Department is directly involved in the process of drafting standard documents with its suppliers and distributors to ensure a legal and commercial base for the relations. Several internal communications actions are implemented by the Legal department, in collaboration with the financial, communications and DID teams, in order to inform and alert staff about the risks of and the measures to combat social engineering fraud. The Legal department collaborates with all departments concerned with legal matters and provides its support to the Internal Audit department.
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In addition, the Legal department regularly participates in meetings organised by Middlenext offering a form for exchange and discussing legislative and regulatory developments concerning listed companies and in consequence new obligations of the Company. It also participates in working meetings organised by the trade associations of its industry sector (FIM, CISMA).
• The Human Resources department with a corporate department and correspondents at each manufacturing site: - The Security charter seeking to improve the safety of employees in their day-to-day activities, introduced in France was then expanded to other countries where the Group operates, in order to strengthen controls in this area. With this objective, the "Safety Challenges" were renewed. - The Recruitment procedure in place continues to be applied. - This department ensures the promotion of the Management Group Procedure, a set of essential Group rules in HR, Finance, Legal Affairs and Insurance areas. - In the area of risk management, country and people review procedures have been implemented. - The purpose of these reviews is to promote exchanges between teams of the headquarters and subsidiaries as well as the production sites and also to provide insight on employee morale and relations between employees and management. - The purpose of the country review is to provide a presentation of each subsidiary covering namely their organisation, operating procedures and key performance indicators for different departments. - The "people review" provides an opportunity for carrying out a review through exchanges with +1 and +2 reporting levels with the Human Resources departments for each of their staff. - To benefit from an even more comprehensive view of available resources, the HR department uses a forward-looking employment and skills management tool covering all Group employees. It was first deployed in France in 2017 followed by English-speaking sites in other countries in 2018 and 2019.
Industrial Division The Quality function of the Group was redesigned in 2019 and the position of “Chief Quality and Operational Excellence Officer” was created with hierarchical or functional responsibility over the following managers: - the plant quality managers. Each production site has its own quality department coordinated by the quality manager of the site with several functions represented: customer quality (aftermarket service), product quality assurance, the quality process for painting and assembling, suppliers and an environmental coordinator, - the project quality managers, - the design quality managers, - the supplier quality managers, and - the systems quality managers. The role of the Chief Quality and Operational Excellence Officer is to define and implement the quality strategy, define the applicable frames of reference (system, ISO, procedures, etc.) and manage a continuous improvement approach at every level of the company. c) Risks associated with producing financial and accounting information
The Reporting & Consolidation department is responsible for producing the interim and annual consolidated financial statements, under the oversight of the Group Finance Department and Executive Management. This Department ensures the quality of the monthly accounting closings for the different Group companies, managed, according to the case, by local accounting departments or chartered accountants for small size subsidiaries, and their restatement according to applicable IFRSs. The consistent application of Group accounting principles is ensured by this same department that is also responsible for monitoring changes in standards. The most important accounting principles, and namely those which may have a material impact on the Group's accounts, are documented and distributed to all subsidiaries. These concern standards for recognising financing transactions, revenue recognition, the impairment or non-collection of trade receivables, provisions for inventories, rules for the depreciation and amortisation of fixed assets. In accordance with local regulations, financial and accounting information is verified by local auditors. The Group's joint- auditors review the consolidated financial statements with the assistance of local auditors or undertake their own audit assignments if necessary.
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In the last phase, financial and accounting information is approved by the Board of Directors for the first six-month period and annually, after being presented to the Board of Directors convened in the capacity of Audit Committee. The Board of Directors also fulfils the functions of the Audit Committee. It ensures the efficacy of the internal control and risk management systems for financial areas, in addition to monitoring the process for producing financial information. It reports on its mission to the Board of Directors. The entire process for producing and processing financial and accounting information described above contributes to managing and limiting risks in this area.
13 - SUMMARY OF DEALINGS IN THE PERIOD ENDED IN OWN SHARES BY EXECUTIVES AND PARTIES MENTIONED IN ARTICLE L.621-18-2 OF THE FRENCH MONETARY AND FINANCIAL CODE In accordance with article L.621-18-2 of the French monetary and financial code and articles 222-23 and 223-26 of the of the General Regulation of the AMF, the French financial market authority (Autorité des Marchés Financiers), the Company was informed of no transactions covered by article 19 of Regulation (EU) No. 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse for the period ended 31 December 2019:
14 - PRESENTATION OF THE BOARD OF DIRECTORS' ANNUAL REVIEW ON REGULATED AGREEMENTS REMAINING IN FORCE AND ITS FINDINGS In accordance with proposition No. 4.8 of AMF recommendation 2012-05, we hereby inform you of the conclusions of the Board of Directors' meeting of 3 March 2020 of its annual review of regulated agreements in accordance with article L. 225-40- 1 of the French commercial code entered into and authorised in prior periods and remaining in force in the period ended 31 December 2019. The Board of Directors reviewed these regulated agreements at its meeting of 3 March 2020. After determining that these agreements continued to meet the criteria providing the basis for their initial authorisation, this authorisation was unanimously maintained by the Board of Directors, while it is specified that all agreements entered into with SAS JM Consulting expired on 31 December 2019 and will not be renewed in subsequent periods. Readers are invited to refer to the Auditors’ special report on agreements and commitments referred to in Article L. 225-38 of the French commercial code. In addition, please refer to Note 16 to the consolidated financial statements for the period ended 31 December 2019 on related-party transactions.
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15 - INFORMATION ON DEALINGS BY THE COMPANY IN ITS OWN SHARES The Company's ordinary and extraordinary meeting of 28 May 2019 granted the authority to the Board of Directors, which it may in turn delegate in accordance with applicable laws, for a period of eighteen months, as from the date of the general meeting, to acquire or have acquired shares of the Company in accordance with the provisions of articles L.225-209 et seq. of the French commercial code. In accordance with article L.225-211, paragraph 2 of the French commercial code, we inform you that in the fiscal year ended 31 December 2019, information on trading by the Company in its shares is provided below:
Number of shares purchased in fiscal 2019 267,321 Average purchase price of own shares in fiscal 2019 7.11 Execution fees N/A Number of shares sold in fiscal 2015 250,246 Average sale price of own shares in fiscal 2015 7.18 Number of shares cancelled in fiscal 2015 0 Number of treasury shares recorded in the name of the Company at 31 December 2019 1,853,642 Percentage of treasury shares held at 31 December 2019 5.91% Net carrying value of treasury shares at 31 December 2019 9,493,427 Nominal value of treasury shares at 31 December 2019 240,973 Market value of treasury shares at 31 December 2019 (share price of €5.30 on the date) 9,824,303
The breakdown according to the purpose for the use of own shares at 31 December 2019 was as follows:
Purposes of share buy-backs Number of shares Ensuring the liquidity of the Company's shares through a liquidity agreement entered into with an investment services provider, that complies with a code of conduct recognised by the French financial market regulator, the 155.237 AMF (Autorité des Marchés Financiers); Meeting the obligations resulting from stock option programs or other share grants to employees or directors or 0 executives of the Company or affiliated companies; Meeting the obligations arising from debt securities exchangeable into ownership interest; 0 Holding the shares for subsequent remittance to be tendered in payment or exchange in connection with possible 1.629.558 acquisitions, spin-offs or contributions in accordance with market practices admitted by the AMF; Cancelling all or part of the shares thus acquired 68.847 TOTAL 1.853.642
No shares of the Company were reallocated for other purposes or objectives.
16 SUMMARY MANAGEMENT REPORT ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED 31 DECEMBER 2019
PART 3: INFORMATION ON SUBSIDIARIES AND ASSOCIATES
1 - OPERATIONS OF SUBSIDIARIES AND CONTROLLED COMPANIES In accordance with the provisions of article L.233-6 paragraph 2 of the French commercial code, we hereby report to you on the operations and results of the Company and the subsidiaries that it controls by business division: At year-end, HAULOTTE GROUP exercised controlling interests in 39 subsidiaries. The results of these subsidiaries are summarised below (€ thousands):
2019 revenue 2018 revenue 2019 net profit 2018 net profit Percentage in € in € / loss in € / loss in € Subsidiary of holding thousands thousands thousands thousands HAULOTTE FRANCE. SARL. 99,99% 97 953 88 590 2 687 2 662 100% par HAULOTTE SERVICES France SARL HAULOTTE - - - - France SARL TELESCOPELLE SAS 100,00% 123 114 66 60 HAULOTTE ACCESS EQUIPMENT 100,00% 53 107 41 713 3 940 3 373 MANUFACTURING (CHANGZHOU) CO. Ltd HAULOTTE ARGENTINA SA 100,00% 8 824 8 296 -1 905 -1 544 HAULOTTE ARGES SRL 100,00% 114 101 134 827 7 439 10 157 HAULOTTE AUSTRALIA Pty Ltd 100,00% 51 697 42 342 -1 019 1 354 HAULOTTE DO BRAZIL Ltda 99,98% 10 015 6 575 -1 826 -5 243 HAULOTTE HUBARBEITSBUHNEN GmbH 100,00% 54 936 65 704 2 009 1 225 HAULOTTE IBERICA S.L 98,71% 35 314 32 652 2 443 5 325 HAULOTTE ITALIA S.r.l. 99,00% 35 520 32 001 1 826 1 387 HAULOTTE MEXICO SA DE CV (2) 99,99% 9 150 10 085 178 -354 HAULOTTE MIDDLE EAST FZE 100,00% 4 597 13 307 1 368 881 HAULOTTE NETHERLANDS B.V 100,00% 20 643 17 601 623 307 HAULOTTE POLSKA SP ZOO 100,00% 24 043 17 766 1 236 1 055 HAULOTTE SCANDINAVIA AB 100,00% 29 305 22 321 1 023 -72 HAULOTTE SINGAPORE Ltd 100,00% 17 861 17 931 374 760 HAULOTTE TRADING (SHANGHAI) CO LTD 100,00% 17 778 15 182 -2 179 -2 963 HAULOTTE UK Ltd 100,00% 15 012 17 967 581 445 HAULOTTE US Inc 100,00% 59 417 56 904 -400 2 794 HAULOTTE VOSTOK OOO 100,00% 30 864 27 115 1 570 -251 HORIZON HIGH REACH LIMITED 100,00% 8 791 6 525 1 440 -2 246 LEVANOR MAQUINARIA DE ELEVACION SA 91,00% - - -17 -12 MUNDIELEVACAO, ALUGER E TRANSPORTE DE 90%par - - -0 -6 PLATAFORMAS LDA LEVANOR 100%par N.D.U MAQUINARIA Y PLATAFORMAS HAULOTTE - - -150 - ELEVADORAS, SL IBERICA SL 100% par EQUIPRO / BIL-JAX (1) HAULOTTE US 68 355 54 793 -2 622 -2 303 Inc. Haulotte North America Manufacturing L.L.C 100%par BIL-JAX HAULOTTE CHILE SPA 100,00% 5 134 - 892 - HORIZON HIGH REACH CHILE SPA 100,00% 6 176 8 710 -1 367 -628 HAULOTTE INDIA PRIVATE LTD 99,99% 9 5 33 22
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2019 revenue 2018 revenue 2019 net profit 2018 net profit Percentage in € in € / loss in € / loss in € Subsidiary of holding thousands thousands thousands thousands ACARLAR DIS TICARET VE MAKINA SANAYI A.S. 100,00% 10 375 4 249 504 849 HAULOTTE DIGITAL SUPPORT CENTER 95,00% 1 282 15 2 -511 HAULOTTE JAPON 100,00% - 8 HAULOTTE CANADA 100,00%
Three new subsidiaries were created in 2019: - Haulotte North America Manufacturing L.L.C, wholly-owned by BilJax Inc., on 1 January 2019, - Haulotte Japan, wholly-owned by Haulotte Group, on 4 January 2019, - Haulotte Canada, wholly-owned by Haulotte Group, on 15 October 2019.
2 - ACQUISITIONS OF SHAREHOLDINGS OR CONTROLLING INTERESTS
In accordance with articles L.233-6 paragraph 1 and L.247-1, I-1° of the French commercial code, we hereby inform you that the Company has not acquired any holdings in the period ended in any other company having its registered office in France representing more than one twentieth, one tenth, one fifth, one third, one half or two thirds of the capital or voting rights of the company or acquiring a controlling interest in such company, must notify the Company.
3 - DISPOSALS OF SHAREHOLDINGS RELATED TO ADJUSTMENTS OF CROSS-SHAREHOLDINGS
In accordance with article R.233-19, paragraph 2 of the French commercial code, we inform you that the Company has not divested any shares for the purpose of eliminating cross-shareholdings prohibited by articles L.233-29 and L.233-30 of the French commercial code.
4 - OWN SHARES HELD THROUGH CONTROLLED COMPANIES
In accordance with article L.233-13 of the French commercial code, we inform you that no company directly or indirectly controlled by the Company holds own shares.
5 - LIST OF EXISTING BRANCH OFFICES In compliance with article L.232-1, II of the French commercial code, the list of branch offices as of today is disclosed below:
Address City Quartier Serve Bourdon Lorette (42) Rue d’Harfleur Le Creusot (71) 104 rue de Courcelles Reims (51)
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PART 4: INFORMATION ON HOLDINGS IN THE CAPITAL
1 - CHANGES IN THE COMPANY'S SHARE CAPITAL DURING THE PERIOD None.
2 - IDENTITY OF HOLDERS OF SIGNIFICANT SHAREHOLDINGS In accordance with the provisions of article L 233-13 of the French commercial code and based on the information and notifications received pursuant to articles 233-7 and L 233-12 of the French Commercial Code, the identity of shareholders directly or indirectly owning over 5%, 10%, 15%, 20%, 25%, 30%, 33%, 50%, 66%, 90% or 95% of the share capital or voting rights on the closing date, i.e. on 31 December 2019, and modifications that might have been made in the period, are disclosed below:
Thresholds Name of the shareholder Percentage of holding Capital Voting rights 5% to 10% 10% to 15% 15% to 20% 20% to 25% 25% to 33% 1/3 33% 1/3 to 50% 50% to 66% 2/3 SOLEM SAS 54.40% 66% 2/3 to 90% 70.08 % 90% to 95% More than 95%
By letter dated 9 April 2019, the Caisse des Dépôts (56 rue de Lille, 75356 Paris 07 SP), indirectly through CDC Entreprises Valeurs Moyennes, reported having crossed above the threshold fixed by the articles of association of 3% of Haulotte Group’s capital and in consequence holding 941,904 shares and voting rights representing 3% of the capital and 1.93% of the voting rights issued. By letter dated 14 June 2019, the Caisse des Dépôts (56 rue de Lille, 75356 Paris 07 SP), indirectly through CDC Entreprises Valeurs Moyennes, reported having crossed above the threshold fixed by the articles of association of é% of Haulotte Group’s voting rights and in consequence holding 987,811 shares and voting rights representing 3.14% of the capital and 2.02% of the voting rights issued. By letter dated 2 September 2019, Quaero Capital SA (Rue de Lausanne 20bis, CH-1201 Geneva), in its capacity as manager of collective investment funds, reported having crossed above the threshold of 1% of Haulotte Group’s capital on 21 August 2019 and in consequence holding 1.02% of its capital and à.65% of its voting rights. By email dated 18 September 2019, Norges Bank Investment Management (Bankplassen 2, Oslo 0151, Norway), reported having crossed below the disclosure thresholds provided for under the Articles of Association of 4% of the capital of Haulotte Group on 17 September 2019, and in consequence holding 1,252,579 shares of the Company, representing 3.99% of its share capital. By letter dated 2 December 2019, Federal Finance Gestion (1, allée Louis Lichou, 29480 Le Relecq-Kerhuon), reported having crossed above the threshold of 1% of Haulotte Group’s capital on 20 November 2019 and in consequence holding 330,000 shares representing 1.05% of its capital and 0.6775% of its voting rights.
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3 - EMPLOYEE STOCK OWNERSHIP In accordance with the provisions of article L.225-102 of the French commercial code, we hereby inform you that no shares making up the Company's share capital were held by employees of the Company or by personnel of affiliated companies within the meaning of article L.225-180 as part of an employee stock ownership plan provided for by articles L.443-1 to L.443-9 of the French labour code, and by employees and former employees in connection with a company savings plan (Plan d’Epargne d’Entreprise) governed by chapter III of the Law 88-1201 of 23 December 1988 on collective investment undertakings and the creation of debt investment funds. Also taken into account are registered shares held directly by employees in accordance with articles L.225-187 and L.225-196 of said Code according to the version previous to the entering into force of Law 2001-152 of 19 February 2001 on employee stock savings plans, article L.225-197-1 of this Code, article L.3324-10 of the French labour code, article 31-2 of Ordinance 2014-948 of 20 August 2014 on governance and equity transactions on companies with public participation and article 11 of the Privatisation Act 86-912 of 6 August 1986 in its version prior to its implementation by the aforementioned Ordinance 2014-948 of 20 August 2014.
4 - STOCK OPTIONS TO SUBSCRIBE FOR NEW SHARES OR PURCHASE EXISTING SHARES We inform you that a restricted stock unit plan for ordinary shares was implemented by the Board of Directors on 13 March 2018 for the benefit of employees of the Company and eligible subsidiaries. This plan concerns 70,000 shares awarded to seven employees, or 10,000 shares per beneficiary which represents 0.22% (rounded) of the share capital. Details of this award are provided in the special report attached hereto.
5 - INFORMATION ON THE COMPANY'S SHARE
At 31 December 2019, the Company's share capital was comprised of 31.371.274 shares. The market capitalisation at 31 December 2019 was €166 million. Information on share price trends and trading activity for the period is provided below:
Trading Average Average volume Trading Number High High Low Low Closing price price (number volume of trading Date (price) (date) (price) (date) price (opening) (closing) of shares) (in €M) sessions Jan.-19 9.65 10/01/2019 8.18 03/01/2019 8.53 8.987 8.963 506,614 4.53 22 Feb.-19 9.08 12/02/2019 8.11 15/02/2019 8.38 8.466 8.462 680,872 5.79 20 Mar.-19 8.66 01/03/2019 7.29 15/03/2019 7.31 7.853 7.795 1,094,897 8.30 21 Apr.-19 9.54 17/04/2019 7.28 12/04/2019 8.72 8.125 8.170 1,146,287 9.51 20 May-19 8.76 02/05/2019 7.06 31/05/2019 7.06 7.865 7.799 524,590 4.09 22 Jun.-19 7.91 18/06/2019 7 03/06/2019 7.1 7.458 7.461 433,236 3.24 20 Jul.-19 7.8 04/07/2019 6.94 31/07/2019 7 7.387 7.374 517,143 3.80 23 Aug.-19 7.18 01/08/2019 6.17 29/08/2019 6.27 6.646 6.608 672,188 4.42 22 Sep. -19 7.4 12/09/2019 5.85 27/09/2019 5.93 6.321 6.281 1,995,847 12.53 21 Oct.-19 5.98 01/10/2019 4.76 23/10/2019 4.9 5.317 5.279 1,809,523 9.44 23 Nov.-19 5.6 27/11/2019 4.805 18/11/2019 5.17 5.043 5.045 1,765,494 8.95 21 Dec.-19 5.42 13/12/2019 4.86 04/12/2019 5.3 5.119 5.124 839,008 4.31 20
In the period ended, the HAULOTTE GROUP share traded between a range of a high of €9.65 (10 January 2019) and a low of € 4.76 (23 October 2019).
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PART 5: TAX INFORMATION
1 - SUMPTUARY EXPENSES AND DISALLOWED DEDUCTIONS
In compliance with the provisions of article 223 quater of the French general tax code, accounts of the period ended include non-deductible expenses of €121,237 according to article 39-4 of the French general tax code and on that basis the corresponding theoretical tax or €33,946 based on a theoretical tax rate of 28%.
2 - DIVIDENDS DISTRIBUTED BY THE COMPANY IN THE LAST THREE FISCAL YEARS
As required by article 243 bis of the French general tax code, information on dividends paid for the last three fiscal years is disclosed below:
Distributed amount eligible for Distributed amount not eligible the 40 % tax basis reduction for the 40 % tax basis reduction provided for under article provided for under article Dividends distributed 158 3 2 of the French general tax 158 3 2 of the French general tax (excl. treasury shares) code code Fiscal year ended €6.495.638,38 €6.495.638,38 None 31 December 2018 Fiscal year ended € 6.507.391,22 € 6.507.391,22 None 31 December 2017 Fiscal year ended € 6.506.408,92 € 6.506.408,92 None 31 December 2016
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PART 6: GROUP MANAGEMENT REPORT
In accordance with the provisions of articles L.233-16 and L.225-100-1 of the French commercial code, we hereby report to you on the management of the Group for the period ended 31 December 2019.
1 - PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS AND SIGNIFICANT ACCOUNTING POLICIES Companies included in the scope of consolidation are listed in paragraph 1 of section 2 of this report. The situation of these companies is described in paragraph 1 of part 1 and in the table contained in paragraph 1 of part 2 of this report. The Group’s financial statements at 31 December 2019 have been prepared in accordance with IFRSs as adopted by the European Union.
2 - CHANGES IN THE PRESENTATION OF THE ANNUAL ACCOUNTS OR METHODS OF VALUATION APPLIED IN PRIOR YEARS
No changes were made in the presentation of the consolidated financial statements or methods of valuation applied in prior years. Changes in accounting methods are presented in the summary of significant accounting policies in Note 3 to the consolidated financial statements.
3 - REVIEW OF OPERATIONS AND RESULTS OF THE GROUP FOR THE YEAR UNDER REVIEW
In a worldwide market for aerial work platforms that remained largely stable over the year, Haulotte registered growth in revenue in 2019 driven by gains in most regions and a significant improvement in the equipment sales mix. The Group’s current operating income (EBIT) remained close to that of 2018, impacted by lower sales in the second half, higher average component costs and an increase in fixed costs linked to the deployment of the strategic plan, “Let’s dare together”.
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4 - COMPREHENSIVE ANALYSIS OF REVENUE, EARNINGS AND FINANCIAL POSITION OF CONSOLIDATED OPERATIONS, AND NOTABLY DEBT WITH RESPECT TO THE VOLUME AND COMPLEXITY OF THEIR BUSINESS ACTIVITY Group results for the period break down as follows
In € millions FY 2019 FY 2018 Revenue 609.8 555.9 Current operating income 33.9 33.6 Operating profit/(loss) from continuing operations 29.2 29.1 Pre-tax profit from continuing operations 26.7 25.3 NET INCOME OF CONSOLIDATED COMPANIES 19.5 23.8 Net profit attributable to owners of the Group 19.5 23.9 Of which income/(loss) from continuing operations 19.5 17.9 Of which income/(loss) from discontinued operations 5.9
Total revenue for 2019 rose to €609.8 million up from €555.9 million in 2018, representing growth of 8% at constant exchange rates from the prior year. Annual sales in Europe grew +5%. The Asia-Pacific region ended the period with +15% growth in sales (at constant exchange rates). The Americas region was up 10% (at constant exchange rate). For the year, equipment sales (+8%),equipment rental sales (+23%) and services (+7%) registered gains at constant exchange rates. Current operating income from continuing operations of the Group amounted to €33.9 million, compared to €33.6 million in 2018. This performance was impacted by lower sales in the second half, an increase in average component costs in relation to 2018 (even if these costs started to decrease in the second half) and higher fixed costs linked to the deployment of the strategic plan, “Let’s dare together”. In 2019, non-current items concerned mainly litigation costs (net of allowances and reversals for litigation contingencies) representing a charge of €4.8 million compared to €4.2 million in 2018. Operating profit from continuing operations amounted to €29.2 million compared to 29.1 million for the previous year. At 31 December 2019, consolidated net income for the period was €19.5 million compared to €23.9 million in 2018. Group net debt (including guarantees) increased in the period from €124.0 million at 31 December 2018 to €150.3 million at 31 December 2019. This debt is primarily carried by Haulotte Group S.A., with in particular the syndicated credit facility of the Group, of which €88.5 million had been drawn at 31 December 2019. 17 July 2019, the Group obtained a new syndicated credit facility or the purpose of refinancing the previous facility expiring on 30 December 2019. Refer to information operating highlights (note 2) of the consolidated financial statements.
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5 - DESCRIPTION OF THE MAIN RISKS AND UNCERTAINTIES FOR THE COMPANY’S SUBSIDIARIES The main material risks and uncertainties that could have a material impact on the Group identified at 31 December 2019 relate on the one hand to market risk and the foreign exchange environment in which the Group operates and, on the other hand, items relating to its liquidity situation. The European market experienced a slowdown in 2019. Despite this, Haulotte registered growth in most of its markets, strengthening its leadership position. The Asia-Pacific region ended the period with strong growth in revenue, driven mainly by China and Australia. In North America, revenue also registered gains, particularly in the scaffolding segment. With the exception of the Brazilian market, the other markets in Latin America declined significantly. In this context, Haulotte’s revenue for the region remained steady. The equipment rental business registered strong growth in the period. The Group maintains its policy of a centralised management of foreign exchange and pays specific attention to the variation of foreign currencies on its main markets, as these could significantly affect its financial performance. Based on the level of cash resources and credit lines open and available at 31 December 2019 compared with cash forecasts for the first few months of 2020, the Group's ability to cover its liquidity requirements remains intact. Information on borrowings and payables is provided in note 20 to the consolidated financial statements.
6 - THE EXPOSURE OF SUBSIDIARIES TO RISKS CONCERNING PRICE, CREDIT, LIQUIDITY AND CAPITAL RESOURCES The Group exposure is largely limited to credit and liquidity risk.
6.1 Credit risk The exchange rate risk is described in note 5b to the consolidated financial statements.
6.2 Liquidity risk The liquidity risk is described in note 5c to the consolidated financial statements
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7 - INFORMATION ABOUT THE USE OF FINANCIAL INSTRUMENTS BY THE COMPANY WHEN THIS IS RELEVANT FOR THE MEASUREMENT OF ITS ASSETS, LIABILITIES, FINANCIAL POSITION AND PROFITS OR LOSSES Financial instruments used by the Group are destined to cover its foreign exchange and interest rate risks.
7.1 Exchange rate risk The exchange rate risk as described in notes 5a et 17 to the consolidated financial statements.
7.2 Interest rate risk The interest rate risk as described in notes 5a to the consolidated financial statements.
8 - FORESEEABLE CHANGES IN THE GROUP'S SITUATION AND OUTLOOK
In the context of lower sales in the European and North American markets, the Group registered a decline in sales of close to 10%, while current operating income (excluding currency gains or losses) remained largely steady in relation to 2019.
9 - SIGNIFICANT EVENTS BETWEEN THE CLOSING DATE AND THE DATE OF PUBLICATION OF THE CONSOLIDATED FINANCIAL STATEMENTS No material event with a potential significant impact on the assessment of the situation of the Group has occurred or was known to exist after the end of the reporting period.
10 - RESEARCH AND DEVELOPMENT OF THE GROUP
Research and development have remained an important focus of Group efforts for several years. Innovation processes have been defined as one of the strategic processes of the Group. The objective of this process is to propose new products or renew existing lines addressing the needs of its customers. Paragraph 10 of section 1 provides detailed information on the most important achievements of the period concerning Haulotte Group S.A.. R&D expenditures were also incurred for the Group’s other plants. Research and development expenditures by the Group in the period amounted to €16,246,000.
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APPENDIX 1 - FIVE-YEAR FINANCIAL SUMMARY
Closing date 31/12/2019 31/12/2018 31/12/2017 31/12/2016 30/12/2015 Length of the fiscal year (months) 12 12 12 12 12 SHARE CAPITAL AT YEAR-END COMMON STOCK 4 078 266 4 078 266 4 078 266 4 078 266 4 063 765 Number of shares - ordinary shares 31 371 277 31 371 274 31 371 274 31 371 274 31 259 734 - TREASURY SHARES 1 853 642 1 836 567 1 777 898 1 812 230 1 814 303 - dividend-right shares 29 517 635 29 534 707 29 593 376 29 559 044 29 445 431 Maximum number of future shares to be created - from the conversion of bonds - from subscription rights
OPERATIONS AND RESULTS SALES EX-VAT 286 256 556 279 519 047 244 466 351 215 588 260 232 272 603 Profit before income tax, profit-sharing, depreciation and provisions 12 275 616 -4 400 505 -23 071 567 -3 993 457 13 371 335 CORPORATE INCOME TAX -3 791 511 -2 908 722 -2 802 161 -2 335 951 -466 047 Employee profit-sharing Allowances and Reversals of depreciation, amortisation and provisions, expense 19 296 382 4 870 294 -29 551 919 1 319 162 12 224 854 reclassifications NET INCOME -3 229 255 -6 362 077 9 282 513 -2 976 667 1 612 528 DISTRIBUTED PROFIT 6 495 638 6 507 391 6 506 409 6 480 761 EARNINGS PER SHARE Profit after income tax, profit-sharing,and before 0,51 -0,05 -0,65 -0,05 0,44 depreciation, amortisation and provisions Profit after income tax, profit-sharing,depreciation, -0,10 -0,20 0,30 -0,09 0,05 amortisation and provisions Distributed dividends 0,22 0,22 0,22 0,22
PERSONNEL AVERAGE NUMBER OF EMPLOYEES 676 643 618 598 578 FOR THE FISCAL YEAR TOTAL PAYROL 31 091 823 27 776 208 25 641 354 25 212 616 23 930 881 TOTAL BENEFITS PAID (SOCIAL SECURITY, WELFARE BENEFITS, 13 145 674 13 247 689 12 335 070 12 005 087 11 389 629 ETC.)
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APPENDIX 2 - BOARD OF DIRECTORS' REPORT ON CORPORATE GOVERNANCE
Dear shareholders, In accordance with the provisions of the last paragraph of article L. 225-37 of the French commercial code, we hereby present in this report on corporate governance, the disclosure required by regulations in force and notably those of article L. 225-37-4 of the French commercial code. The terms of this report were prepared and adopted by the Board of Directors on 3 March 2020.
1 - CORPORATE GOVERNANCE In accordance with the provisions of article L.225-37-4, paragraph 5 to 9, of the French commercial code, we hereby report to you on: - the preparation and organisation of the Board's work; - the reasons justifying the absence of a diversity policy applied to members of the Board of Directors as well as information on how the Company seeks to achieve balanced representation of men and women on the Management Committee implemented by executive management for the purpose of regularly assisting the performance of its general missions and results in terms of gender diversity for the 10% category of senior positions; - limitations on the powers of the Chief Executive Officer (directeur général) that may exist; - in the event that the provisions of the Middlenext Code of corporate governance to which the Company refers would have been set aside, the reasons for this; and - the special procedures the participation of shareholders in general meetings or the provisions of the articles of association providing for such procedures.
1.1 Composition of the Board of Directors and the diversity policy applied to its members
1.1.1 Choice of corporate governance code The Company has decided to refer to the Middlenext Code of December 2009 and revised in September 2016 as its reference for corporate governance in accordance with the provisions of article L.225-37-4, 8° of the French commercial code. The Company considered that this code was best adapted to its size and shareholder structure. This code can be consulted at the Middlenext website (www.middlenext.com). In accordance with the Middlenext Code recommendation 19, the Board of Directors duly noted on 3 March 2020 the specific points to be watched listed therein.
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1.1.2 Composition of the Board of Directors The composition of the Company's Board of Directors includes the following eight directors, of which three are independent:
Last name, first name, Audit title or function of the Year of first Independent Committee directors appointment Expiration date of office in progress director member Pierre Saubot 1989 At the close of the general meeting of shareholders called to approve the financial statements for the Chair of the Board of Directors - year ending on 31 December 2023 Chief Executive Officer No - Director 1985 At the close of the general meeting of shareholders called to approve the financial statements for the year ending on 31 December 2023 Alexandre Saubot 1999 At the close of the general meeting of shareholders called to approve the financial statements for the Deputy Chief Executive Officer year ending on 31 December 2021 No - Director 1999 At the close of the general meeting of shareholders called to approve the financial statements for the year ending on 31 December 2021 Elisa Savary 1998 At the close of the general meeting of shareholders called to approve the financial statements for the No Member Director year ending on 31 December 2021 Hadrien Saubot 2004 At the close of the general meeting of shareholders called to approve the financial statements for the No Member Director year ending on 31 December 2021 José Monfront 2004 At the close of the general meeting of shareholders called to approve the financial statements for the No Member Director year ending on 31 December 2021 Michel Bouton 2001 At the close of the general meeting of shareholders called to approve the financial statements for the Yes Member Director year ending on 31 December 2021 Anne Danis Fatôme 2018 At the close of the general meeting of shareholders Member as of 12 called to approve the financial statements for the Yes March 2019 Director year ending on 31 December 2023 Elodie Galko 2018 At the close of the general meeting of shareholders Member as of 12 called to approve the financial statements for the Yes March 2019 Director year ending on 31 December 2023
On the date of this report, the Board of Directors has not considered it opportune to implement a diversity policy within the meaning of article L.225-37-4, 6° of the French commercial code, in light of the family composition, reduced size and current operations of the Board. However, it is noted that the Board of Directors has been committed over the last years to open up its membership to figures from the outside contributing a different perspective on the Board's decisions, in particular by appointing independent directors within the meaning of the Middlenext Code recommendation 3. With respect to the company’s efforts to achieve a balanced representation of men and women on the company’s management board, the last recruitment concerned a member of the Executive Committee at the end of 2016 (starting in February 2017). This recruitment was in line with the Company’s goal of increasing the executive Committee’s international profile and the membership of women resulting in selection of a specialised firm to that purpose. To date, no woman has applied for this position. If the recruitment of a new member to the committee should be considered in the future, the Company will the same policy with respect to expanding its international profile and the membership of women. With respect to its results in the area of gender diversity for the 10% category of senior positions, women represented 10.94% at 31 December 2019, an increase from 3.5% one year earlier.
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1.1.3 Application of the principl of balanced gender representation on the Board of Directors In compliance with article L.225-18-1 of the French commercial code, we inform you that the breakdown of directors by gender is as follows: -Number of male directors: 5, - Number of female directors: 3.
1.1.4 Independent directors The notion of independent member adopted is that provided by Recommendation 3 of the Middlenext Code, and namely: - they must not have been during the last five years an employee or executive officer of the company or a company in its group; - they must not have had any material business relationship with the company or its group for the last two years (as a client, supplier, competitor, service provider, creditor, banker, etc.); - they must not be a reference shareholder of the company or hold a significant percentage of voting rights; - they must not have a close relationship or close family ties with a corporate officer or a reference shareholder; - they must not have been an auditor of the company in the course of the previous six years. On 3 March 2020, the Board of Directors examined the situation of its membership with respect to these criteria of independence. On that basis, it was determined that three were independent under the definition of the MiddleNext code: Mr. Michel Bouton, Ms. Anne Danis-Fatôme and Ms. Elodie Galko.
1.1.5 Terms of office The term of office of members of the Board of Directors is set at six (6) years. This term was considered by the company to be in compliance with Recommendation 9 of the Middlenext Code. To date, the Company has not considered it useful to propose a modification to the articles of association providing for the staggered renewal of the terms of office of directors, in light of its size and membership.
1.1.6 Conduct of business rules In accordance with Recommendation 1 of the Middlenext Code, each member of the Board of Directors is made aware of the obligations arising from his or her appointment and encouraged to adhere to the rules of conduct relating to his or her appointment. At the beginning of their term of office, each director signs the board's internal rules of procedure and undertakes notably to: - comply with the provisions of statute relating to holding multiple offices, - comply with applicable regulations, - inform the Board in the event of conflict of interest arising after being appointed to the office, - demonstrate diligence in attending meetings of the board and the general meeting, - ensure that they possess all necessary information for the agenda of the meetings of the Board before making any decision, and - respecting professional confidentiality. On the date of this report, the Chair-CEO and the Deputy CEO have not accepted other directorships in listed companies, including foreign companies, outside the Group.
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1.1.7 Review of known conflicts of interest In accordance with article 4.3 of the Company's rules of procedure, each director is required to disclose any situation giving the appearance or which might give the appearance of a conflict of interest between the corporate interest and his or her direct or indirect personal interest or the interest of the shareholder or a group of shareholders he or she represents. In the event of such situation, the director concerned must: - inform the Board of Directors as soon as he or she learns of this, - draw all resulting conclusions regarding the exercise of his or her office. And on this basis, according to the case he or she must: - either refrain from participating in the vote of the corresponding proceedings, - or not attend the meeting of the Board of Directors during which the conflict of interest exists, - or, as an extreme measure, resign from his or her functions as director. On 3 March 2020, in accordance with Middlenext Code Recommendation 2, the Company's Board of Directors reviewed the known conflicts of interests and no situation of a potential or proven conflict of interest was brought to its attention.
1.1.8 Choice of members of the Board of Directors When each member of the Board of Directors is appointed or reappointed, information about their experience, expertise and the list of offices exercised is provided in the report presented by the Board of Directors to the general meeting presenting the draft resolutions submitted for your approval. This information is also made available online on the Company's website. The appointment or renewal of each member of the Board of Directors is subject to a specific resolution, in accordance with Recommendation 8 of the Middlenext Code.
1.1.9 Mission of the Board of Directors In accordance with article 2 of the Board's rules of procedure, the board's missions, in addition to the powers recognised by the law and the articles of association, are as follows: - Representing all shareholders, - Issuing opinions about all decisions relating to the major strategic, economic, social, financial or technological priorities of the Company and ensure they are implemented by executive management, - Considering a proposal calling for an audit or verification by the chairman or the audit committee, - Reviewing the points to be watched of the Middlenext Code.
1.1.10 Evaluating the Board's work and practices The Board of Directors has been studying for several years the interest of adopting an evaluation procedure in line with Recommendation 11 of the Middlenext Code on corporate governance in its version of September 2016. To that purpose, the Board of Directors adopted the following procedure for self-assessment to be carried out at the end of each meeting of the Board called to approve the Company’s annual accounts. - a self-assessment questionnaire prepared by the Company’s legal department will be sent to each director in advance of the Board meeting, - each questionnaire will be returned to the legal department after being completed in order to prepare a summary of the responses on an anonymous basis to be presented to the Board meeting, - on the basis of this summary, the Board will be asked to consider areas for improvement to be adopted in connection with its work for the period in progress.
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1.1.11 Creation of committees In accordance with Recommendation 6 of the Middlenext Code we hereby report to you on the Company's choice with respect to special committees.
1.1.11.1 Audit Committee On 9 March 2011 the Board of Directors decided to create an Audit Committee in accordance with article L.823-20,4° of the French commercial code for a limited period. The functioning and the attributes of the Company's Audit Committee are described in article 6 of the Company's rules of procedures available for consultation on the Company's website.
1.1.11.2 Composition On the date of this report, the Board of Directors, when it meets for the purpose of exercising the missions of Audit Committee, is comprised of the following six members: - Michel Bouton, independent director, audit committee chair, - José Monfront, - Hadrien Saubot, - Elisa Savary, - Anne Danis Fatôme, - Elodie Galko. Anne Danis Fatome and Elodie Galko accepted to be members of the audit committee of the Board of Directors as from 12 March 2019.
1.1.11.3 Number of audit committee meetings in the period ended 31 December 2019 The audit committee met three times(3) with an average attendance rate of 69 %.
1.2 Conditions of preparation and organisation of the Board of Directors' work Meetings are conducted and decisions voted according to the conditions of quorum and majority provided for by statute and the Company's articles of association. In accordance with Recommendation°7 of the Middlenext Code, the Board of Directors has internal rules of procedures divided into the eight areas covered by this recommendation and available for consultation at the Company's website. The internal rules of procedures initially adopted by the Board of Directors on 11 March 2009, and subsequently modified by the Board on 9 March 2011 and 20 January 2017, notably provide that except for transactions covered by articles L. 232-1 and L. 233-16 of the French commercial code, and as applicable, by the Company's articles of association, directors who take part in a meeting of the Board through videoconferencing or electronic methods that allow their identification and effective participation are deemed present for determining the quorum and majority. The means adopted must be capable of permitting the identification of participants and guaranteeing their effective participation.
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1.2.1 Meeting convening procedures Directors are called to meetings according to the procedures authorised by article 13 of the Company's articles of association. In accordance with article L.823-17 of the French commercial code, the statutory auditors were called to the Board meetings that reviewed and adopted the interim and also the annual accounts.
1.2.2 Procedures for remitting documents and information required to make decisions Board members have received in advance of each meeting, all documents and information that are useful for making informed decisions and the performance of their duties.
1.2.3 Report on the Board of Directors' activities in the period ended 31 December 2019 The minutes of each meeting are drawn up under the responsibility of the Chair of the Board of Directors and the Deputy CEO. These minutes are transcribed into the record after being signed by the chair of the meeting and one director. During the period ended 31 December 2019, the Company's Board of Directors met three (3) times on the dates indicated below.
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Number of directors present or Rate of Meeting dates represented participation Main items of business on the agenda 12 March 2019 4 50.00% Examination of the conclusions of the audit committee meeting of 4 March 2019 – Update on the audit committee composition
Review and approval of the separate parent company and consolidated financial statements for the period ended 31 December 2018
Proposal for the appropriation of net profit for the year to the annual ordinary general meeting
Annual review of agreements covered by article L.225-38 et seq. of the French commercial code entered into an authorised in prior periods and remaining in force in the year ended
Adoption of the principles and criteria for setting, allocating and granting fixed, variable and exceptional compensation making up the total compensation and benefits of any kind attributable to the Chair-CEO and the Deputy CEO
Review of the elements of compensation paid to or granted for the period ended 31 December 2018 to Messrs. Pierre Saubot and Alexandre Saubot on the basis of their offices
Annual meeting on the company' policy on workplace and wage equality in compliance with the provisions of article L.225-37-1 of the French commercial code
Review of the independence of directors (R3 Middlenext)
As applicable, review of conflicts of interest known by the company (R2 Middlenext)
Review of the Middlenext "points to be watched" (R19 Middlenext)
Proposal to grant authority to the Board of Directors for the purchase by the Company of its own shares
Adoption of the management report and the report on the management of the Board of Directors for the period ended 31 December 2018
Adoption of the report of the Board of Directors on corporate governance drawn up in accordance with the provisions of Article L. 225-37, subsection 6 of the French commercial code
Preparation and convening of an ordinary and extraordinary general meeting – Review and adoption of the Board of Directors’ report and draft resolutions to be presented to the ordinary and extraordinary general meeting of 28 May 2019 28 May 2019 7 87.50% Implementation of the authorisation to be granted by the general meeting of 28 May 2019 to deal in the Company's shares in accordance with the provisions of article L.225-209 of the French commercial code 11 September 2019 7 87.50% Review and approval of the interim consolidated accounts established on 30 June 2019
Preparation of the interim report in compliance with article L.451-1-2 III of the French monetary and financial code;
Production of forward-planning documents in accordance with articles L. 232-2, R. 232-2 and R. 232-3 of the French commercial code
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1.3 Restrictions imposed by the Board of Directors on the powers of the Chief Executive Officer The powers of the chair and chief executive officer of the Company are not subject to any limits other than those imposed by law. As such, he is vested with the broadest powers to act in all circumstances in the name of the Company. He exercises his powers within the limits of the corporate purpose and subject to the powers expressly granted to shareholders' meetings and the Board of Directors. He represents the Company in its dealings with third parties.
1.4 Shareholders’ participation in the shareholders’ meetings In accordance with article L. 225-37-4, 9° of the French commercial code, article 16 of the Company's articles of association provides special procedures for the participation of shareholders in general meetings (copies of the articles of association are available at the Company's registered office and the registrar of the commercial court).
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2 - LIST OF OFFICES AND FUNCTIONS EXERCISED BY EACH CORPORATE OFFICER FOR THE PERIOD ENDED 31 DECEMBER 2019 To comply with the provisions of article L.225-37-4, 1° of the French commercial code, a list of the offices and functions exercised in any company during the period ended 31 December 2019 by each corporate officer is provided below.
Corporate Offices and functions offices exercised in the concerned: Company Offices and functions exercised outside the Company - Chairman of the Board of -General Manager of Solem SAS Directors Pierre Saubot - Managing Partner of Société Commerciale du Cinquau, - Chief Executive Officer - Co-Manager of SCI Lancelot. - Director - Chair of the Board of Solem SAS, - Representative of Haulotte Group, Chair of Telescopelle SAS, - Managing Partner of Haulotte France SARL, - Managing Partner of Haulotte Services France SARL, - Co-Manager of SCI Lancelot. - Director of Haulotte Netherlands BV, - Director of Haulotte Iberica, - Director of Haulotte Scandinavia, - Director of Haulotte Italia, - Manager of Haulotte GmbH, - Director of Haulotte Polska, - Director of Haulotte UK, - Director of Haulotte Australia, - Deputy CEO - Chair of Haulotte US, Alexandre Saubot - Director - Director of Haulotte Singapore, - Director of Haulotte Arges, - Chair of Haulotte Trading (Shangaï) Co. Ltd, - Director of Haulotte Mexico, - Director of Haulotte Middle East, - Representative of Haulotte Group, sole director of Horizon High Reach Limited, - Director of Haulotte India, - Director of Levanor, - Director of MundiElevacao, - Chair of the Board of Directors of Haulotte Access Equipment Manufacturing (Changzhou), - Chair of the Board of Directors of Acarlar, - Chairman-CEO of Haulotte Canada, - Director of Haulotte Japan Elisa Savary - Director - None Hadrien Saubot - Director - None - Director of Haulotte Access Equipment Manufacturing (Changzhou), José Monfront - Director - Chair of JM Consulting. Michel Bouton - Director - None - Participation in research groups under the auspices of the Legal High Committee for Anne Danis Fatôme - Director Financial Markets of Paris (Haut Comité Juridique de la Place Financière de Paris or HCJP) Elodie Galko - Director - Regional director of Duval group in Toulouse
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3 - COMPENSATION POLICY ESTABLISHED BY THE BOARD OF DIRECTORS (ARTICLE L. 225-37-2 OF THE FRENCH COMMERCIAL CODE) In accordance with articles L. 225-37-2 et R.225-29-1 of the French commercial code as amended by Order 2019-1234 of 27 November 2019 and Decree 2019-1235 of 27 November 2019, a description is provided in this section of the compensation policy of the Company applicable to all officers for the period ending 31 December 2020. As a reminder, Mr. Pierre Saubot and Mr. Alexandre Saubot received compensation solely for their respective offices of Chairman and Chief Executive Officer of Solem, a simplified French joint stock company (société par actions simplifiée) with share capital of €476,735.25 having its registered office at 187, route de Saint Leu in Epinay-sur-Seine (93806) and registered in Bobigny (RCS No. 332 978 162) (hereafter “Solem”). Solem is the controlling company within the meaning of article L.233-16 of the French commercial code. Concerning the administrators, the Company’s historic compensation policy has been to not provide compensation to the latter as board members. In particular, directors do not receive the compensation referred to in Article L.225-45 of the French commercial code. In consequence, officers of the Company do not receive any compensation, in any form whatsoever (fixed, variable, exceptional or in shares) for the offices they hold within the Company. The officers of the Company do not benefit from any commitments made by the latter or by any company controlling or controlled companies within the meaning of II and III of Article L. 233-16 of the French commercial code, and the corresponding components of compensation or benefits in connection with the termination or a change in function or subsequent thereto, or contingent rights granted pursuant to defined retirement benefit obligations meeting the characteristics of the plans mentioned in Articles L. 137-11 and L. 137-11-2of the French social security code. In light of the above, the information referred to in 4° à 6° and 8° of Article R.225-29-1, I and 1° to 4° and 7° of Article R.225- 29-1, II of the French commercial code are not applicable. This officer compensation policy is set in strict compliance with the Company’s corporate interests and in reference to its commercial strategy. The Board of Directors considers that compensation determined and set exclusively at the level of Solem makes it possible to provide fair compensation to the officers opposite concerned based on a larger consolidation scope at the level of the parent company, taking into account notably the performance of not only the Company but also its sister companies and subsidiaries. This compensation policy of the Company is determined by the Board of Directors, acting on a proposal by executive management. This compensation policy is revised at least once a year at the time of the review of the annual accounts and, at any time during the financial year, at the initiative of the Board of Directors, should circumstances require. The proposal of executive management takes into account in particular the conditions of compensation and employment of the Company’s employees. The implementation of the compensation policy is verified at least once a year by the Board of Directors at the time of the review of the annual accounts. The compensation policy applies by operation of the law under the supervision of the Board of Directors to newly appointed corporate officers or those whose appointment has been renewed. In order to prevent conflicts of interest in connection with the determination, revision and implementation of the compensation policy, the Board of Directors has appointed three independent directors as defined by the Middlenext corporate governance code. In addition, the Board of Directors’ charter includes a procedure for preventing conflicts of interest. The length of directors’ terms of office is presented in section 1.1.5 of this report. In addition, it is noted that on the date of this special report, there exists no employment contract or service agreement contract has been entered into directly between an officer and the Company. With respect to intragroup service agreements entered into between Solem and the Company, please refer to the Auditors’ special report on regulated agreements prepared in accordance with Article L. 225-40 of the French commercial code. This compensation policy is defined in a draft resolution submitted to the approval of the shareholders’ general meeting to be held on 26 May 2020 in accordance with Article L. 225-37-2, II of the French commercial code.
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4 - COMPENSATION OF OFFICERS PAID IN THE PERIOD ENDED 31 DECEMBER 2019 (ARTICLE L. 225-37-3 OF THE FRENCH COMMERCIAL CODE)
For the purpose of complying with the provisions of Article L.225-37-3, I of the French commercial code (as amended pursuant to Order 2019-1234 of 27 November 2019 and Decree 2019-1235 of 27 November 2019), information required thereunder is presented in this section for each officer. In application of Article L. 225-100, II and III of the French commercial code (as amended pursuant to Order 2019-1234 of 27 November 2019 and Decree 2019-1235 of 27 November 2019), it is hereby requested that you vote on a draft resolution concerning the information referred to in Article L. 225-37-3 of the French commercial code and, on the other hand, to vote by means of distinct resolutions, on the fixed, variable or exceptional components making up the total compensation and benefits of any nature paid in or granted for the period ended for the Chairman-CEO and Deputy CEO. The tables presented below were prepared in reference to the Middlenext code of corporate governance issued in September 2016 Any heading not included in the following tables in relation to the table templates proposed by the MiddleNext Code corporate governance is considered as not applicable.
• Table 1: Summary of compensation for each executive officer
Fiscal year ended Fiscal year ended Pierre Saubot 31 December 2018 31 December 2019 Chair and chief executive officer Amounts paid (Gross Percentage relative to Amounts paid (Gross Percentage relative to base compensation the fixed and variable base compensation the fixed and variable before tax) compensation before tax) compensation Fixed annual compensation paid by Solem for the office of € 88,374 97% € 90.506 99% chief executive officer exercised within this company Variable annual compensation paid by Solem for the office € 3.000 3% € 500 1% of chief executive officer exercised within this company TOTAL € 91.374 100% € 91.006 100%
Fiscal year ended Fiscal year ended 31 Alexandre Saubot 31 December 2018 December 2019 Deputy chief executive officer Amounts paid (Gross Percentage relative to Amounts paid (Gross Percentage relative to base compensation the fixed and variable base compensation the fixed and variable before tax) compensation before tax) compensation Fixed annual compensation paid by Solem for the office of € 333.060 78% € 341.055 78% chair exercised within this company
2 Variable annual compensation paid by Solem for the € 95.000 22% € 95.000 22% office of chair exercised within this company TOTAL € 428.060 100% € 436.055 100%
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• Table 2: Other compensation received by non-executive officers
Fiscal year ended Fiscal year ended Elisa Savary 31 December 2018 31 December 2019 Director Amounts paid (Gross Percentage relative to Amounts paid (Gross Percentage relative to base compensation before the fixed and variable base compensation before the fixed and variable tax) compensation tax) compensation Fixed annual compensation paid by Solem for the office of chief executive officer € 55,978 97% None N/A exercised within this company € 500 (variable compensation owed in Variable annual compensation paid by connection with the Solem2 for the office of chief executive officer € 2,000 3% functions of chief N/A exercised within this company executive officer terminated at the end of 31/12/2018) TOTAL € 57,978 100% NONE N/A
Fiscal year ended Fiscal year ended Hadrien Saubot 31 December 2018 31 December 2019 Director Amounts paid (Gross Percentage relative to Amounts paid (Gross Percentage relative to base compensation before the fixed and variable base compensation before the fixed and variable tax) compensation tax) compensation Fixed annual compensation paid by Solem for the office of chief executive officer € 55,978 98% None N/A exercised within this company € 500 (variable compensation owed in Variable annual compensation2 paid by connection with the Solem for the office of chief executive officer € 1,000 2% functions of chief N/A exercised within this company executive officer terminated at the end of 31/12/2018) TOTAL € 56.978 100% NONE N/A
Fiscal year ended Fiscal year ended José Monfront 31 December 2018 31 December 2019 Director Amounts paid (Gross base compensation before tax) Amounts paid (Gross base compensation before tax) None None None TOTAL None None
Fiscal year ended 31 December Fiscal year ended 31 December Michel Bouton 2018 2019 Director Amounts paid (Gross base compensation before tax) Amounts paid (Gross base compensation before tax) None None None TOTAL None None
38 SUMMARY MANAGEMENT REPORT ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED 31 DECEMBER 2019
Fiscal year ended Fiscal year ended Anne Danis Fatôme 31 December 2018 31 December 2019 Director Amounts paid (Gross base compensation before tax) Amounts paid (Gross base compensation before tax) None None None TOTAL None None
Fiscal year ended Fiscal year ended Elodie Galko 31 December 2018 31 December 2019 Director Amounts paid (Gross base compensation before tax) Amounts paid (Gross base compensation before tax) None None None TOTAL None None
39 haulotte.com | MANAGEMENT REPORT 2019 SUMMARY MANAGEMENT REPORT ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED 31 DECEMBER 2019
• Table 3: Other indemnities or benefits granted to corporate officers The following table provides details on the compensation and benefits of company officers:
Compensation or benefits owed or potentially due upon termination or Payments relating Employment Supplemental a change in to a non- Corporate officers contract retirement scheme function competition clause Yes No Yes No Yes No Yes No Pierre Saubot
Chair and Chief Executive Officer
Beginning of the renewed term of office: 13/03/ 2018 End of appointment: At the close of the general meeting of shareholders called to approve the financial statements for the year ending on 31 December 2023 X X X X
Director
Beginning of the renewed term of office: 29/05/ 2018 End of appointment: At the close of the general meeting of shareholders called to approve the financial statements for the year ending on 31 December 2023 Alexandre Saubot
Deputy Chief Executive Officer
Beginning of the renewed term of office: 13/03/ 2018 End of appointment: At the close of the general meeting of shareholders called to approve the financial statements for the year ending on 31 December 2021 X X X X
Drector
Beginning of the renewed term of office: 24/05/ 2016 End of appointment: At the close of the general meeting of shareholders called to approve the financial statements for the year ending on 31 December 2021 Elisa Savary
Director
Beginning of the renewed term of office: 24/05/ X X X X 2016 End of appointment: At the close of the general meeting of shareholders called to approve the financial statements for the year ending on 31 December 2021 Hadrien Saubot
Director
Beginning of the renewed term of office: 24/05/ 2016 X X X X
End of appointment: At the close of the general meeting of shareholders called to approve the financial statements for the year ending on 31 December 2021
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Compensation or benefits owed or potentially due upon termination or Payments relating Employment Supplemental a change in to a non- Corporate officers contract retirement scheme function competition clause José Monfront
Director
Beginning of the renewed term of office: 24/05/ X X X X 2016 End of appointment: At the close of the general meeting of shareholders called to approve the financial statements for the year ending on 31 December 2021 Michel Bouton
Director
Beginning of the renewed term of office: 24/05/ X X X X 2016 End of appointment: At the close of the general meeting of shareholders called to approve the financial statements for the year ending on 31 December 2021 Anne Danis Fatôme
Beginning of term of office: 29/05/2018 End of appointment: X X X X At the close of the general meeting of shareholders called to approve the financial statements for the year ending on 31 December 2023 Elodie Galko
Beginning of term of office: 29/05/2018 End of appointment: X X X X At the close of the general meeting of shareholders called to approve the financial statements for the year ending on 31 December 2023
• Ratio between the level of compensation of the Chairman-CEO and Deputy CEO and, on the one hand, the average compensation on a full-time equivalent basis of employees of the Company other than the corporate officers, and the other hand, the median compensation on a full-time equivalent basis of employees of the company other than corporate officers (French commercial code, art. L.225-37-3, 6°)
Fiscal year ended 31 December 2019 Pierre Saubot Alexandre Saubot Chair-CEO Deputy Chief Executive Officer Ratio between the compensation of the officer concerned and the average compensation of employees 2.12 10.16 on a full-time equivalent basis Ratio between the compensation of the officer concerned and the median compensation of employees 2.69 12.89 on a full-time equivalent basis Ratio between the compensation of the corporate officer 4.99 23.89 concerned and the minimum wage
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• Changes in annual compensation, performances of the Company, average compensation of employees of the company on a full-time equivalent basis, other than executive officers, and the above ratios, for the last five years (French commercial code, art. L.225-37-3, 7°)
Fiscal year 31/12/2014 31/12/2015 31/12/2016 31/12/2017 31/12/2018 31/12/2019 Corporate Pierre Alexandre Pierre Alexandre Pierre Alexandre Pierre Alexandre Pierre Alexandre Pierre Alexandre offices Saubot Saubot Saubot Saubot Saubot Saubot Saubot Saubot Saubot Saubot Saubot Saubot concerned: Total gross compensation € 87,500.00 € 350,500.00 € 88,274.00 € 387,284.00 € 88,132.00 € 408,521.00 € 88,132.00 € 408,521.00 € 91,374.00 € 428,060.00 € 91,006.00 € 436,055.00 received within Solem Change in revenue N/A N/A 0.88% 10.49% -0.16% 5.48% 0.00% 0.00% 3.68% 4.78% -0.40% 1.87% between N-1 and N Average compensation of HGSA employees (full- € 40,396.00 € 41,392.00 € 41,801.00 € 41,060.00 € 42,551.00 € 42,932.00 time, excluding senior executives, gross amount) Change in the average compensation of N/A 2.47% 0.99% -1.77% 3.63% 0.90% employees between N-1 and N Median compensation of HGSA employees (full- € 31,603.00 € 33,023.00 € 32,986.00 € 32,888.00 € 33,785.00 € 33,822.00 time, excluding senior executives, gross amount) Change in the median compensation of N/A 4.49% -0.11% -0.30% 2.73% 0.11% employees between N-1 and N Amount of the € 17,344.56 € 17,490.24 € 17,599.44 € 17,763.24 € 17,981.64 € 18,254.64 minimum wage Change in the minimum wage N/A 0.84% 0.62% 0.93% 1.23% 1.52% between N-1 and N Ratio between the compensation and the average 2.17 8.68 2.13 9.36 2.11 9.77 2.15 9.95 2.15 10.06 2.12 10.16 compensation paid to HGSA employees Change in ratio between N-1 N/A -1.54% 7.84% -1.14% 4.45% 1.80% 1.80% 0.05% 1.11% -1.29% 0.96% and N Ratio between the compensation and the median 2.77 11.09 2.67 11.73 2.67 12.38 2.68 12.42 2.70 12.67 2.69 12.89 compensation paid to HGSA employees Change in ratio between N-1 N/A -3.45% 5.74% -0.05% 5.60% 0.30% 0.30% 0.93% 2.00% -0.51% 1.76% and N 5.04 20.21 5.05 22.14 5.01 23.21 4.96 23.00 5.08 23.81 4.99 23.89
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Fiscal year 31/12/2014 31/12/2015 31/12/2016 31/12/2017 31/12/2018 31/12/2019 Ratio between the compensation and the minimum wage Change in ratio between N-1 N/A 0.04% 9.57% -0.78% 4.83% -0.92% -0.92% 2.42% 3.51% -1.81% 0.34% and N Indicators of the Company’s performance (on a consolidated basis) EBIT (current operating € 31,700,000.00 € 32,400,000.00 € 27,700,000.00 € 42,400,000.00 € 35,600,000.00 € 35,900,000.00 income) Change in EBIT between N-1 N/A 2.21% -14.51% 53.07% -16.04% 0.84% and N Revenue excl. € 412,600,000.00 € 445,300,000.00 € 457,800,000.00 € 499,400,000.00 € 555,900,000.00 € 609,800,000.00 VAT Change in revenue excl. N/A 7.93% 2.81% 9.09% 11.31% 9.70% VAT between N- 1 and N
Methodology note 1. Procedures for the calculation of ratios referred to in article L.225-37-3 6° of the French commercial code: • For the numerator: total compensation based on the gross compensation before tax, received by the Chairman-CEO (or the Deputy CEO) within Solem in the absence of compensation received within the Company. • For the denominator. For average compensation, the Company has calculated the average compensation of employees of the Company on an equivalent full-time basis. for median compensation, the Company has calculated the median compensation of employees of the Company on an equivalent full-time basis. 2. Scope of employees concerned: Within the being of Article L.225-37-3 6° of the French commercial code, only employees of the Company, on a non-consolidated basis, or on 31 December 2019, 729 employees (or 43.34% of Group employees based on the consolidated accounts at 31 December 2019). 3. Performance indicators selected in accordance with Article L.225-37-3 7° of the French commercial code. As indicators of performance, the Company has selected revenue and current operating income (EBIT) as these aggregates are presented in the consolidated financial statements of the Company for the last five years.
5 - AGREEMENTS COVERED BY ARTICLE L.225-37-4 2° OF THE FRENCH COMMERCIAL CODE For the purpose of complying with the provisions of article L.225-37-4 2° of the French commercial code, we remind you that this report is required to mention, except for ordinary agreements entered into under normal conditions, those agreements entered into either directly or through a third party, between: - on the one hand, one of the directors or shareholders possessing more than 10% of the voting rights of a company, - and, on the other hand, another company controlled by the first within the meaning of article L. 233-3 of the French commercial code, possessing more than 40% of the voting rights and that no other partner or shareholder of our company holds, directly or indirectly a percentage exceeding the percentage it holds. No agreements of this type were entered into in the period ended 31 December 2019.
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6 - PROCEDURES IMPLEMENTED BY THE BOARD OF DIRECTORS IN APPLICATION OF ARTICLE L. 225-39, SUBSECTION 2 OF THE FRENCH COMMERCIAL CODE To comply with article L.225-37-4, 10°of the French commercial code, the Board of Directors implemented a procedure in order to regularly assess if the ordinary agreements entered into under normal conditions properly fulfil these conditions. A method for identifying financial flows between Group companies has already been adopted by the Finance Division, notably in connection with the transfer pricing policy. To supplement this method, the Finance Department and Legal Department developed the following procedure to be applied once a year when the annual financial statements are reviewed. Identification of all ordinary agreements entered into under normal agreements remaining in force or entered into in the period ended. A summary of their main terms and conditions and features. A presentation of all agreements to the Board of Directors to be convened in order to approve the annual financial statements in order to determine if these agreements continue to meet the criteria of ordinary agreements entered into under normal conditions. Persons directly or indirectly concerned by an agreement do not participate in its evaluation.
7 - ITEMS HAVING A POTENTIAL IMPACT IN THE EVENT OF PUBLIC OFFERINGS
In application of article L.225-37-5 of the French commercial code, we report to you on those items which we consider likely to have an impact in the case of a takeover bid or public exchange offer.
7.1 Shareholder structure On 31 December 2019, the share capital and voting rights of the Company were majority-held by Solem that is itself held by the Saubot family. We invite you to refer to part 3 of the Board of Directors' management report to which this report is attached.
7.2 Restrictions under the Articles of Association on the exercise of voting rights and the transfer of shares or the provisions of agreements reported to the company in compliance with article L. 233-11 of the French commercial code Article 9 (Transfer and transmission of shares) of the Company's articles of association, provides that legal entities or natural persons that acquire or cease to hold a fraction equal to 1% of the share capital or the voting rights or any multiple thereof, must notify the company within fifteen days of crossing such thresholds. Under its Articles of Association, if the company has not been thus notified, shares that exceed the fraction to be reported under this disclosure requirement shall be deprived of voting rights at the request of one or more shareholders holding 5% of the share capital (with such request recorded in the minutes of the General Meeting).
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7.3 List of direct or indirect shareholdings in the Company's capital of which it has knowledge by virtue of articles L.233-7 and L.233-12 of the French commercial code We invite you to refer to part 3 of the Board of Directors' management report to which this report is attached.
7.4 157.4 - Holders of shares conferring special control rights and a description thereof All shares of the Company confer upon shareholders a right to participate in shareholders' meetings under the conditions and subject to the provision provided for by law and regulations. Shares shall confer a right to a percentage of the company’s assets, the distribution of earnings and proceeds after liquidation, equal to the proportion of the share capital they represent. In accordance with article 16 of the bylaws, a double voting right is granted to all fully paid-up shares in proportion to the capital they represent subject to proof that they have been registered for at least four (4) years in the name of the same shareholder. This right is also granted pursuant to the capitalisation of reserves, earnings or additional paid-in capital to free registered shares granted on the basis of existing shares entitled to the same right.
7.5 Powers of the Board of Directors, in particular for the issuance or repurchase of shares We invite you to refer to part 3 of the Board of Directors' management report to which this report is attached as well as the table summarising the delegations of authority and powers granted to the Board of Directors by the shareholders' general meeting.
7.6 Agreements entered into by the Company which are modified or terminated in the event of a change of control of the Company Agreements have been entered into by the Company containing clauses in the event of a change in control, and notably in the case of contracts entered into with certain service providers or financial institutions.
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8 - SUMMARY OF DELEGATIONS OF AUTHORITY IN FORCE GRANTED BY THE GENERAL MEETING OF THE SHAREHOLDERS TO THE BOARD OF DIRECTORS FOR CAPITAL INCREASES IN COMPLIANCE WITH ARTICLES L. 225-129-1 L. 225-129-2 AND L.225-129-2 To this report is attached, in accordance with the provisions of article L.225-37-4, 3° of the French commercial code, a table of delegations of authority in force granted by the general meeting of the shareholders relating to capital increases, in application of articles L.225-129-1 and L.225-129-2, and indicating the uses made thereof in the period.
Nature of the delegation of authority or powers granted to the Board of Directors by the Maximum nominal amount of Capital Company in accordance with capital increases which may be increase(s) Residual article L.225-129-1 and L.225-129- General Length carried out immediately and/or carried out in the amounts at 2 of the French commercial meeting of in the future (excluding period ended 31 December code date validity issuances of debt securities) 31 December 2019 2019 €1,223,479.69 (or the equivalent amount in the event of an issue in another currency), whereby it is specified that : - the maximum nominal amount of capital increases that may be carried out, immediately or in the future, under this delegation of authority Grant of authority to the Board of Directors to shall be included under the overall increase the share capital by issuing ordinary 28/05/2019 ceiling set forth below in the Identical to the shares or any securities giving access to the 26 months seventeenth resolution of the None maximum nominal combined general meeting of 28 May capital while maintaining the preferential 12th resolution value subscription right. 2019, - this amount will be increased, as necessary, by the nominal amount of shares to be issued, to preserve, in accordance with the law, and, as necessary, applicable contractual provisions, the rights of holders of securities giving access to the company's capital, €815,653.12 (or the equivalent amount in the event of an issue in another currency), whereby it is specified that : - the maximum nominal amount of capital increases that may be carried out, immediately or in the future, under this delegation of authority Grant of authority to the Board of Directors to shall be included under the overall increase the share capital by issuing ordinary ceiling set forth below in the 28/05/2019 Identical to the shares or any securities giving access to the seventeenth resolution of the 26 months None maximum nominal capital while cancelling the preferential combined general meeting of 28 May th value subscription right and through a public 13 resolution 2019, offering. - these amounts may be increased, as necessary, by the nominal amount of ordinary shares to be issued, to preserve, in accordance with the law, and, as necessary, applicable contractual provisions providing for other cases for adjustments, the rights of holders of securities giving access to the company's capital;
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Nature of the delegation of authority or powers granted to the Board of Directors by the Maximum nominal amount of Capital Company in accordance with capital increases which may be increase(s) Residual article L.225-129-1 and L.225-129- General Length carried out immediately and/or carried out in the amounts at 2 of the French commercial meeting of in the future (excluding period ended 31 December code date validity issuances of debt securities) 31 December 2019 2019 €815,653.12, nor in any case, exceed the limits provided for by applicable regulations on the issue date (by way of indication, on the date of the combined general meeting of 28 May 2019, the issue of equity securities carried out by an offering covered by article L.411-2 II of the French monetary and finance code is limited to 20 % of the share capital of the Company per Delegation of authority granted to the Board 12-month period, where said capital is of Directors to increase the share capital determined on the date of the decision by the through the issuance of ordinary shares or all Board of Directors to use this delegation of securities giving access to the share capital, authority), whereby it is specified that: cancelling the pre-emptive subscription rights 28/05/2019 Identical to the of shareholders, in connection with an offering 26 months - these amounts may be increased, as None maximum nominal necessary, by the additional amount of for the benefit qualified investors or a 14th resolution value restricted circle of investors as provided for in shares to be issued, to preserve, in section II of Article L.411-2 of the French accordance with the law, and, as financial and monetary code (code monétaire necessary, applicable contractual et financier) provisions providing for other cases for adjustments, the rights of holders of securities giving access to shares; - the nominal amount of all capital increases that may be carried out shall be included under the overall ceiling set forth below in the seventeenth resolution of the combined general meeting of 28 May 2019. In accordance with Article L. 225-136 of the Authorisation granted to the Board of French commercial code, within the limit of Directors in connection with issues entailing 10% of the Company’s share capital (as waiver of preferential subscription rights determined on the date of the decision to make through a public offer or a private placement 28/05/2019 Identical to the use of this authorisation by the Board of referred to in Article L. 411-2-II of the French 26 months None maximum nominal Directors) per 12 month period and under the monetary and financial code in order to set the th value 15 resolution conditions notably of payment, provided for by issue price according to the procedures the thirteenth and fourteenth resolutions of the established by the general meeting within the combined general meeting of 28 May 2019 limit of 10%of the share capital per year. above In accordance with Article L.225-135-1 and R.225-118 of the French commercial code, within the limit of 15% of the initial issue.
Delegation of authority granted to the board The nominal amount of all capital increases of directors to increase the number of shares 28/05/2019 decided by virtue of this delegation of authority to be issued in the event of a capital increase, 26 months in connection with capital increases of the with or without shareholders’ preferential 16th resolution Company, with or without preferential subscription rights subscription rights granted by virtue of the twelfth to fourteenth resolutions, will be included under the total ceiling provided for below in the seventeenth resolution of the combined general meeting of 28 May 2019.
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Nature of the delegation of authority or powers granted to the Board of Directors by the Maximum nominal amount of Capital Company in accordance with capital increases which may be increase(s) Residual article L.225-129-1 and L.225-129- General Length carried out immediately and/or carried out in the amounts at 2 of the French commercial meeting of in the future (excluding period ended 31 December code date validity issuances of debt securities) 31 December 2019 2019 The total aggregate amount of capital increases that may be carried out by virtue of these delegations of authority granted under (i) resolution sixteen adopted by the combined general meeting of 30 May 2017 and (ii) resolutions sixteen and seventeen adopted by the combined general meeting of 29 May 2019 and (iii) resolutions twelve to fourteen, sixteen and eighteen of the combined general meeting of 28 May 2019 is set at €3,900,000 (or the equivalent thereof in another currency or monetary unit calculated in reference to multiple currencies on the issue date), whereby to this maximum amount will be added, as Limitation of the total nominal amount of applicable, the additional amount of shares to capital increases that may be made by virtue be issued in order to preserve, in compliance of the delegations of authority granted under with the law and, where appropriate, applicable the (i) resolution sixteen adopted by the 28/05/2019 contractual provisions, the rights of holders of Identical to the combined general meeting of 30 May 2017, (ii) - securities and other rights giving access to None maximum nominal resolution sixteen and seventeen adopted by th shares value the combined general meeting of 29 May 2018 17 resolution (iii) and resolutions twelve to fourteen, sixteen and eighteen adopted by the combined general Total aggregate amount of debt securities that meeting of 28 May 2019 may be issued by virtue of the delegations granted above under the terms of (i) resolutions sixteen and seventeen adopted by the general meeting of 29 May 2018 and by virtue of (ii) resolutions eleven to fifteen adopted by the combined general meeting of 28 May 2019 is set at €2,855,000 (or the equivalent thereof in another currency or monetary unit calculated by reference to multiple currencies on the issue date), whereby this maximum amount will not apply to the amount of debt securities to be issued pursuant to a decision or authorisation by the board of directors in compliance with Article L. 228-40 of the French commercial code. The total nominal amount of capital increases that may be carried immediately or in the future, may not exceed €1,500,000, to which may be added, as necessary, an additional Delegation of powers to be granted to the amount to preserve, in accordance with statute board of directors to increase the share capital 29/05/2018 Identical to the or regulations and, as necessary, applicable of the company through the capitalisation of 26 months None maximum nominal contractual provisions, the rights of holders of reserves, retained earnings and additional th value 20 resolution securities or other rights conferring entitlement paid-in capital to shares, whereby it is specified that this maximum amount is set independently and separately from the maximum amount set forth above. Authority given to the Board of Directors in accordance with article L. 225-197-1 to L. 225- The total number of shares that may be See the special report drawn up by Board of 197-6 of the French commercial code to award 30/05/2017 awarded by the Board may not exceed 0.5% of Directors in accordance with the provisions of restricted stock (bonus shares) from existing 38 months the share capital existing on the date of the Article L. 225-197-6 of the French commercial or future shares for the benefit of employees th 16 resolution grant decision. code and/or officers covered by article L. 225-197-1, II of the French commercial code.
48 SUMMARY MANAGEMENT REPORT ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED 31 DECEMBER 2019
Nature of the delegation of authority or powers granted to the Board of Directors by the Maximum nominal amount of Capital Company in accordance with capital increases which may be increase(s) Residual article L.225-129-1 and L.225-129- General Length carried out immediately and/or carried out in the amounts at 2 of the French commercial meeting of in the future (excluding period ended 31 December code date validity issuances of debt securities) 31 December 2019 2019 resolve that the maximum nominal amount of capital increases which may be carried out immediately or in the future, may not exceed €150,000 (or the equivalent amount in the event of an issue in another currency), to which will be added, if applicable, the additional amount of shares to be issued, for the purpose of preserving, in accordance with applicable legislative or regulatory provisions and, where appropriate, applicable contractual provisions, the rights of holders of securities and other rights giving access to shares
Authority granted to the Board of Directors to The nominal amount of all capital increases issue ordinary shares or securities conferring that may be carried out shall be included under rights to the share capital of the Company in 29/05/2018 the overall ceiling set forth below in the Identical to the connection with public exchange offers 26 months nineteenth resolution adopted by the combined None maximum nominal initiated by the company, entailing the 16th resolution general meeting of 28 May 2019. value cancellation of shareholders' preferential subscription rights The maximum nominal amount of the debt securities that may be issued is set at €150,000 (or the equivalent amount in the event of an issue in another currency), whereby it is specified that: - this amount shall be increased, as applicable, by any redemption premium above par, - it shall be included under the overall ceiling set forth below in the seventeenth resolution adopted by the combined general meeting of 28 May 2019. resolve that the maximum nominal amount of capital increases which may be carried out immediately or in the future, may not exceed €150,000 (or the equivalent amount in the event of an issue in another currency), to which will be added, if applicable, the additional amount of shares to be issued, for the purpose of preserving, in accordance with applicable legislative or regulatory provisions and, where Delegation of authority to be granted to the appropriate, applicable contractual provisions, Board of Directors to increase the share capital the rights of holders of securities and other of the Company within the limit of 10% of the rights giving access to shares capital as consideration for contributions in- 29/05/2018 Identical to the kind of equity securities or other securities 26 months The nominal amount of all capital increases None maximum nominal giving access to the share capital of third- 17th resolution that may be carried out shall be included under value party companies outside of a public exchange the overall ceiling set forth below in the offer entailing the cancellation of nineteenth resolution adopted by the combined shareholders' preferential subscription rights general meeting of 28 May 2019.
The maximum nominal amount of the debt securities that may be issued is set at €150,000 (or the equivalent amount in the event of an issue in another currency), whereby it is specified that: - this nominal amount shall be increased, as applicable, by any redemption premium above par,
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APPENDIX 3 - SPECIAL REPORT ON THE RESTRICTED STOCK UNIT AWARDS PRESENTED TO THE ORDINARY AND EXTRAORDINARY GENERAL MEETING OF 26 May 2020 (ARTICLE L. 225-197-4 OF THE FRENCH COMMERCIAL CODE)
To the shareholders: In accordance with the provisions of article L.225-197-4 of the French commercial code, we hereby present you the special report on the use made by your Board of Directors during the year of the authorization granted by resolution sixteen of the extraordinary general meeting of 30 May 2017, for a period of thirty-eight (38) months, to award without consideration, on one or more occasions, restricted stock units (RSUs) to employees of the Company, or selected categories thereof, and/or corporate officers meeting the conditions set by article L. 225-197-1, II of the French commercial code, as well as employees of French or foreign companies or economic interest groups in which the Company directly or indirectly holds at least 10% of the existing capital or voting rights or issue new shares a nominal amount within the limit of 0.5% of the Company's share capital on the date of the grant decision.
The different information required by regulation is reproduced below and was approved by the Board of Directors on 3 March 2020. The Board of Directors decided on 13 March 2018 to use the delegation of authority granted to it by resolution sixteen of the extraordinary general meeting of 30 May 2017 to award shares (restricted stock units or RSUs) of the Company in accordance with the provisions of article L.225-197-1 et seq. of the French commercial code.
Shareholders meeting date 30 May 2017 – 16th resolution Date of grant by the Board of Directors of conditional rights to receive existing or future shares of 13 March 2018 the Company Number of shares able to be awarded 70.000 Percentage of the capital (rounded) on the date of grant by the Board of Directors 0.24% Number of RSUs awarded to corporate officers on the basis of their offices and functions exercised 0 in the Company Number granted to the ten employees of the Company or companies covered by article L.225- 70.000 197-2 of the French commercial code who are not officers having received the highest number Unit value of RSUs awarded based on the closing price of the Company's share on the grant date, €19.12 i.e. 13 March 2018 Date when the shares are fully vested (1) 14 March 2021 End of the holding period (2) N/A Number of shares fully vested on the date of this report 0 Number of shares cancelled or lapsed on the date of this report 0 Number of shares able to be awarded on the date of this report 0
50 SUMMARY MANAGEMENT REPORT ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED 31 DECEMBER 2019
The grant of contingent rights to receive existing shares or shares to be issued on the Company will become fully vested, for each of the beneficiaries, only on condition that on the vesting date, they fulfil the conditions imposed by the plan rules, and namely: - that each beneficiary continues to be an employee of the Company or a company covered by article L.225-197-2 of the French commercial code; - that Haulotte group has met certain performance targets according to which the number of RSUs fully vested may be subject to adjustments. As an exception to the above, the following is provided: - in the case where a beneficiary is affected during the vesting period by a situation of disability corresponding to the second or third categories provided for in Article L. 341-4 of the French Social Security Code, such beneficiary may request to receive delivery in advance of the restricted stock units awarded at any time from the date of disability. The RSUs will thereupon become freely transferable subject to certain provisions provided for in the plan rules; - in the case where a beneficiary dies before the end of the vesting period, his or her heirs or beneficiaries may be entitled to receive the restricted stock units by requesting their grant in advance from the Company by registered letter with acknowledgement of receipt within a period of six (6) months from the date of the beneficiary's death. In accordance with the powers granted to it by the decision of the general meeting of 30 May 2017 as well as the provisions of article L.225-197-1 of the French commercial code, and in light of the vesting period set for three (3) years, the Board of Directors of the Company has decided to cancel the holding period. The RSUs will thereupon become freely transferable, assignable and transmissible upon the end of the vesting period in accordance with, and subject to compliance with the provisions of the plan rules, of the Company's articles of association and applicable laws and regulations whose various provisions are destined to ensure the transparency and security of financial markets and notably those relating to insider misconduct or trading.
51 haulotte.com | MANAGEMENT REPORT 2019 Conception & réalisation :
SUMMARY CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
CONSOLIDATED BALANCE SHEET - ASSETS
In thousands of euros Note 31/12/2019 31/12/2018 Goodwill 8 28 487 32 728 Intangible assets 9 34 213 30 161 Property, plant and equipment 10 63 883 53 993 Right-of-use-assets 11 19 614 - Financial assets 12 4 381 2 908 Deferred tax assets 26 18 889 18 013 Trade receivables from financing activities > 1 year 14 37 920 21 710 Other non current assets 15 5 574 4 572 NON CURRENT ASSETS (A) 212 961 164 085 Inventory 13 191 577 178 949 Trade receivables 14 93 587 123 573 Trade receivables from financing activities < 1 year 14 21 615 12 844 Other assets 15 35 538 33 372 Cash and cash equivalents 18 28 740 24 110 CURRENT ASSETS (B) 371 057 372 848 TOTAL ASSETS (A+B) 584 018 536 933
Notes 1 to 48 constitute an integral part of these consolidated financial statements
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CONSOLIDATED BALANCE SHEET - LIABILITIES
In thousands of euros Note 31/12/2019 31/12/2018 Share capital 19 4 078 4 078 Share premiums 19 81 627 91 720 Consolidated reserves and income 179 013 161 539 SHAREHOLDERS’EQUITY BEFORE MINORITY INTERESTS 264 718 257 337 (A) Minority interests (B) (372) (347) TOTAL EQUITY 264 346 256 990 Long-term borrowings 20 132 834 46 084 Non current lease liabilities 11 14 780 Deferred tax liabilities 26 7 266 6 068 Provisions 22 6 828 5 055 NON-CURRENT LIABILITIES (C) 161 708 57 207 Trade payables 24 70 748 86 284 Other current liabilities 25 26 251 24 846 Current borrowings 20 46 269 102 053 Current lease liabilities 11 5 147 Provisions 22 9 549 9 553 CURRENT LIABILITIES (D) 157 964 222 736 LIABILITIES AND SHAREHOLDERS’ EQUITY (A+B+C+D) 584 018 536 933
Notes 1 to 48 constitute an integral part of these consolidated financial statements
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CONSOLIDATED INCOME STATEMENT
In thousands of euros Note 31/12/2019 31/12/2018 CONTINUING OPERATIONS Sales and revenue 28 609 828 100,0% 555 905 100,0% Cost of sales 29 (468 760) -76,9% (424 155) -76,3% Selling expenses (34 502) -5,7% (32 653) -5,9% General and administrative expenses 30 (60 667) -9,9% (54 745) -9,8% Research and development expenditures 31 (10 000) -1,6% (8 747) -1,6% Exchange gains and losses 32 (2 022) -0,3% (2 000) -0,4% CURRENT OPERATING INCOME 33 877 5,6% 33 605 6,0% Other operating income and expenses 35 (4 637) -0,8% (4 485) -0,8% OPERATING INCOME FROM CONTINUING 29 240 4,8% 29 121 5,2% OPERATIONS Share of profit of affiliates - 0,0% (147) 0,0% OPERATING INCOME AFTER SHARE OF 29 240 4,8% 28 974 5,2% PROFIT OF AFFILIATES Cost of net financial debt 36 (3 587) -0,6% (1 580) -0,3% Exchange gains and losses 32 (58) 0,0% (290) -0,1% Other financial income and expenses 36 1 149 0,2% (1 825) -0,3% PROFIT BEFORE TAXES FROM 26 744 4,4% 25 279 4,5% CONTINUING OPERATIONS Income tax 37 (7 287) -1,2% (7 350) -1,3% NET PROFIT FROM CONTINUING 19 457 3,2% 17 929 3,2% OPERATIONS
DISCONTINUED OPERATIONS NET PROFIT FROM DISCONTINUED 27 - 5 944 OPERATIONS
NET PROFIT 19 457 3,2% 23 873 4,3% attributable to equity holders of the parent 19 417 23 803 attributable to minority interests 40 70
NET EARNINGS PER SHARE 39 0,66 0,81 NET DILUTED EARNINGS PER SHARE 39 0,66 0,81
Notes 1 to 48 constitute an integral part of these consolidated financial statements
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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
In thousands of euros Note 31/12/2019 31/12/2018 PROFIT / (LOSS) FOR THE YEAR (A) 19 457 23 873 ITEMS THAT MAY BE SUBSEQUENTLY RECLASSIFIED TO PROFIT AND LOSS Currency translation differences for cash items relating to net investments (1 007) (5 175) in foreign operations Currency translation differences from financial statements of subsidiaries (5 279) 5 343 ITEMS THAT WILL NOT BE RECLASSIFIED TO PROFIT AND LOSS Actuarial gains and losses on employee benefits 23 (1 398) (131) Income tax 26 (183) (330) NET INCOME / (EXPENSE) RECOGNISED DIRECTLY (7 867) (293) IN EQUITY (B)
TOTAL CONSOLIDATED COMPREHENSIVE INCOME 11 590 23 580 (A+B) attributable to equity holders of the parent 11 550 23 510 attributable to minority interest 40 70
Notes 1 to 48 constitute an integral part of these consolidated financial statements
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CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousand of euros Note 31/12/2019 31/12/2018 NET INCOME FOR CONTINUING OPERATIONS 19 457 17 929 Depreciation and amortization 20 284 15 853 Change in provisions (except for current assets) 342 5 278 Unrealised foreign exchange gains and losses 914 (1 560) Change in deferred taxes (288) (1 803) Gains and losses from disposals of fixed assets (609) (946) Interests on bank borrowings 3 587 1 593 Share of profit in affiliates - 147 GROSS CASH FLOWS FROM OPERATIONS 43 687 36 491 Change in operating working capital 41 (3 904) (71 038) Change in receivables from financing activities 42 (19 375) (2 714) Total of operating cash flows from continued operations 20 408 (37 261) Operating cash flows from discontinued activities - 201 CASH FLOWS FROM OPERATING ACTIVITIES 20 408 (37 060) Purchases of fixed assets (31 149) (22 177) Proceeds from the sales of fixed assets, net of tax 4 442 2 988 Dividends received - 849 Impact of changes in scope of consolidation - (14 913) Total of investing cash flows from continued operations (26 707) (33 253) Investing cash flows from discontinued activities - 16 130 CASH FLOWS FROM INVESTING ACTIVITIES (26 707) (17 123) Dividends paid to shareholders (6 495) (6 507) Loans issues 94 513 51 948 Borrowings repayments (78 155) (7 776) Lease liabilities repayments (6 857) Treasury shares (104) (709) Total of financing cash flows from continued operations 2 902 36 956 CASH FLOWS FROM FINANCING ACTIVITIES 2 902 36 956
NET CHANGE IN CASH AND CASH EQUIVALENTS (3 397) (17 227) Opening cash and cash equivalents 43 4 885 22 809 Effect of exchange rate changes from continued operations 624 (697) Closing cash and cash equivalents 43 2 112 4 885 NET CHANGE IN CASH AND CASH EQUIVALENTS (3 397) (17 227)
Notes 1 to 48 constitute an integral part of these consolidated financial statements
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STATEMENT OF CHANGES IN EQUITY
Actuarial Trans- gains and Share Conso- Profit Treasury Free lation losses on In thousands of pre- lidated for the shares shares diffe- employee Group Minority euros Capital miums reserves* period ** *** rences benefits share Interests Total BALANCE AT 31 4 078 91 720 171 270 17 610 (13 611) - (31 026) (1 316) 238 725 (398) 238 326 DECEMBER 2017 Change in capital of the parent company - - Appropriation of 2017 net 17 610 (17 610) income - - Dividends paid by the parent (6 511) company (6 511) (6 511) Net income for the period 23 803 23 803 70 23 873 Net income / (expense) (162) (131) 0 recognised directly in equity (293) (293) Total consolidated 23 803 (162) (131) 70 comprehensive income 23 510 23 580 Treasury shares (708) 392 (316) (316) Other changes 1 929 1 929 (19) 1 910 BALANCE AT 31 4 078 91 720 184 298 23 803 (14 319) 392 (31 188) (1 447) 257 337 (347) 256 990 DECEMBER 2018 Change in capital of the parent company - - Appropriation of 2018 net (3 192) 26 995 (23 803) income - - Dividends paid by the parent (6 901) 406 company (6 495) (6 495) Net income for the period 19 417 19 417 40 19 457 Net income / (expense) (6 873) (994) recognised directly in equity (7 867) (7 867) Total consolidated 19 417 (6 873) (994) 40 comprehensive income 11 550 11 590 Treasury shares (105) 461 356 356 Other changes**** 1 970 1 970 (65) 1 905 BALANCE AT 31 4 078 81 627 211 699 21 387 (14 424) 853 (38 061) (2 441) 264 718 (372) 264 346 DECEMBER 2019 *: Consolidated reserves primarily consist of retained earnings **: For the three periods, the amount of treasury shares has been disclosed at the book value, and the correction in consolidated reserves ***: See Note 19 ****: Other changes include hyperinflation effects in Argentina
Notes 1 to 48 constitute an integral part of these consolidated financial statements
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET - ASSETS 2 CONSOLIDATED BALANCE SHEET - LIABILITIES 3 CONSOLIDATED INCOME STATEMENT 4 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 5 CONSOLIDATED STATEMENTS OF CASH FLOWS 6 STATEMENT OF CHANGES IN EQUITY 7 NOTE 1 - General information 9 NOTE 2 - Major events of the fiscal year 10 2.1 Signature of the new syndicated loan 10 2.2 New headquarters 10 NOTE 3 - Summary of significant accounting policies 11 3.1 Statements of compliance 11 3.2 Critical accounting estimates and judgements 12 3.3 Consolidation 14 3.4 Intercompany balances and transactions 13 3.5 Foreign currency translation of foreign subsidiaries financial statement 14 3.6 Translation of transactions in foreign currency 15 3.7 Business combinations 14 3.8 Segment reporting 15 NOTE 4 - Principles and methods for the valuation of key balance sheet aggregates 16 4.1 Goodwill 16 4.2 Intangible assets 17 4.3 Property, plant and equipment 17 4.4 Lease contracts 18 4.5 Other financial assets 19 4.6 Inventories and work in progress 19 4.7 Trade receivables 19 4.8 Cash and cash equivalents 20 4.9 Treasury shares 22 4.10 Employees benefits 22 4.11 Provisions and contingent liability 22 4.12 Borrowings 23 4.13 Deferred taxes 23 NOTE 5 - Management of financial risk 23 NOTE 6 - Principles and methods of measurement for the income statement 25 6.1 Revenue recognition 25 6.2 Cost of sales 25 6.3 Selling expenses 25 6.4 General and administrative expenses 26 6.5 Research and development expenditures 26 6.6 Other operating income and expenses 26 6.7 Operating income 26 6.8 Cost of net financial debt 26 6.9 Other financial income and expenses 26 6.10 Earnings per share 26 NOTE 7 - Scope of consolidation 27 NOTE 8 - Goodwill 29 NOTE 9 - Intangible assets 31 NOTE 10 - Tangible assets 33 NOTE 11 - IFRS 16 34 NOTE 12 - Other financial assets 35 NOTE 13 - Inventory 35 NOTE 14 - Trade receivables 36
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NOTE 15 - Other assets 37 NOTE 16 - Receivables by maturity 38 NOTE 17 - Foreign exchange risk management 38 NOTE 18 - Cash and cash equivalents 39 NOTE 19 - Share capital and premiums 39 NOTE 20 - Borrowings and financial liabilities 41 NOTE 21 - Management of interest-rate risks 42 NOTE 22 - Provisions 42 NOTE 23 - Pension and related benefits 43 23.1 Main assumptions used for the valuation of liabilities 44 23.2 Change in accumulated benefit obligations 45 NOTE 24 - Payables by maturity 47 NOTE 25 - Other current liabilities 46 NOTE 26 - Deferred taxes 48 NOTE 27 - Income statements of discontinued operations 48 NOTE 28 - Sales and revenue for continuing operations 48 NOTE 29 - Cost of sales for continuing operations 48 NOTE 30 - General and administrative expenses for continuing operations 48 NOTE 31 - Research and development expenditures for continuing operations 45 NOTE 32 - Exchange gains and losses for continuing operations 49 NOTE 33 - Expenses by nature of current operating income for continuing operations 49 NOTE 34 - Staff costs for continuing operations 50 NOTE 35 - Other operating income and expenses for continuing operations 50 NOTE 36 - Cost of net financial debt, other financial income and expenses for continuing operations 51 NOTE 37 - Corporate income tax for continuing operations 51 NOTE 38 - Effective income tax reconciliation for continuing operations 51 NOTE 39 - Earnings per share 52 NOTE 40 - Segment reporting 55 40.1 Sales breakdown 53 40.2 Main indicators by business segment 53 40.3 Main indicators by geographic segment 54 NOTE 41 - Analysis of change in working capital 55 NOTE 42 - Analysis of change in receivables from financing activities 55 NOTE 43 - Cash components 56 NOTE 44 - Information on related parties 56 44.1 Related parties transactions 56 44.2 Fees allocated to directors and officers 56 NOTE 45 - Off-balance sheet commitments 57 NOTE 46 - Average number of employees 57 NOTE 47 - Auditors’ fees 57 NOTE 48 - Subsequent events 57 Statutory auditors' report 62
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NOTE 1 - GENERAL INFORMATION
Haulotte Group S.A. manufactures and distributes through its subsidiaries (forming the “Group”) people and material lifting equipment. Haulotte Group also operates in the rental market for these equipments. Haulotte Group S.A. is a “société anonyme” (a French limited liability company) incorporated in Saint-Etienne (France) with its registered office in L’Horme. The company is listed on Euronext Paris – Eurolist Compartment B (Mid Caps). The annual consolidated financial statements for the period ended 31 December 2019 and the notes thereto were approved by the Board of Directors of Haulotte Group SA on March 3rd 2020. Figures are expressed as thousands of euros.
NOTE 2 - MAJOR EVENTS OF THE FISCAL YEAR
2.1 Signature of the new syndicated loan On July 17, 2019, the Group has signed a new syndicated loan, in the purpose of refinancing the previous contract which expires on September 30, 2019. Therefore, the Group has repaid (debt extinction), at this date, all balances of its syndicated loan, for a total amount of 66.659 K€ (excluding overdraft, including interests). The new syndicated loan provides to Haulotte Group 2 separates lines: - A revolving line of credit for an amount of 90.000 K€; - An overdraft line for an amount of 40.000 K€. This contract has been conclude for a duration of 5 years, with a deadline as at July 17, 2024 and the possibility to be extended for an additional duration of 12 months at the end of the year 1 and at the end of the year 2, bringing its deadline to July 17, 2026 in case of agreement of the 2 extensions. This new syndicated loan has been granted without any guarantee or security. It plans some classic obligations that have to respected including the calculation of bi-annual ratios on the basis of consolidated financial statements captions, as EBITDA, equity and Group net debt excluding IFRS 16 lease liabilities. These elements are disclosed in the note 20.
2.2 New headquarters The construction of the new headquarters, in the city of Lorette, located in the Loire department in France, has started in April 2019 for an installation planned at the beginning of 2020 summer. This building has been acquired through a finance lease signed in January 2019. This operation has been considered as an in-substance purchase. These elements are disclosed in the note 20.
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NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The main accounting policies applied to prepare the consolidated financial statements are described below. Except where specifically stated otherwise, these policies are consistently applied to all financial periods presented herein.
3.1 Statements of compliance
As a publicly traded company listed in the European Union and in accordance with EC regulation 1606/2002 of 19 July 2002, the Group's consolidated financial statements for fiscal year ended 31 December 2019 have been prepared according to IFRS (International Financial Reporting Standards) as adopted by the European Union on 31 December 2019. These standards can be consulted at the website of the European commission (http://ec.europa.eu/internal_market/ accounting/ias/index_en.htm). They include standards approved by the International Accounting Standards Board (IASB), i.e. IFRS, International Accounting Standards (IAS) and interpretations of the International Financial Reporting Interpretations Committee (IFRIC). The consolidated financial statements have been prepared according to the historical cost convention, with the exception of certain items, notably assets and liabilities measured at fair value.
Amendments and interpretations of standards in issue taking effect in 2019 The following standards have been adopted by the Group for the first time for the financial year beginning on or after 1 January 2019:
IFRS 16 “Leases” issued in January 2016 and adopted by the European Union in November 2017 is applicable no later than for periods starting on or after 1 January 2019. This standard presents a detailed model for identifying leases and defines the treatment to be adopted by lessors and lessees in their respective financial statements. It replaces IAS 17 and its interpretations. The new standard applies a control model for the definition of leases, distinguishing between leases and service contracts on the basis of whether there is an identified asset controlled by the customer. Significant modifications were introduced for the recognition of a lease by the lessee as the current distinction between finance leases and operating leases is eliminated. The lessee is required to recognize a "right-of- use" asset and the related lease liability in the statement of financial position. Limited exceptions are allowed when the lease term is 12 months or less or the underlying asset has a low value. This standard will be applied by the Group as of the period starting on January 1, 2019 without restatement of the comparative information by using the simplified retrospective method. The Group will also apply the exceptions provided by the standard: short-term leases (less than 12 months) and low-value leases (less than € 4,500) are excluded. The Group has implemented a tool for recording lease contracts. This tool calculates the amounts to be recognized under the right of use, financial debt, amortization expense and interest expense. The majority of leases are operating leases in which the Group is a lessee. The assets under lease are mainly buildings, vehicles and industrial equipment. The key assumptions that the Group uses for the implementation of the standard are: - Durations: The Group has decided to retain the contractual terms of the contracts. The duration chosen is the first expiry date; unless specific information leads to choose a longer period. - Discount rate: The Group wished to use the simplification measures recommended by the standard and thus use the marginal borrowing rate of the contract taking into account the asset class, the duration of the contract and the economic environment. When the Group is a lessor, the accounting remains the same as with the previous standard IAS 17, ie lessors continue to classify leases as finance leases or as operating leases. Impacts are disclosed in note 11.
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Others
Nature of expected change on accounting principles and Impact of first-time application Standard or interpretation methods for Haulotte Group Amendments to IFRS 9 – Financial This amendment defines anticipated reimbursement characteristics with negative This new pronouncement is not applicable to instruments remuneration. the Group’s financial statements. Amendments to IAS 28 – Investments in This amendment defines long term interest’s treatment for investments in associates This new pronouncement is not applicable to associates and joint ventures and joint ventures. the Group’s financial statements. Amendments to IAS 19 – Employee This amendment concerns pension costs calculation in the event of modification, This new pronouncement is not applicable to benefits diminution or liquidation of a defined benefit pension plan. the Group’s financial statements. IFRIC 23 – Uncertainty over Income Tax This interpretation clarifies IAS 12 regarding the treatment to be used in order to take The application of this interpretation does not treatment into account the uncertainty that can occur regarding the fiscal position of a have a significant impact on the Group’s company in the assessment and recognition of tax and deferred tax. financial statements or the comparative financial statements for the period ending 31 December 2018. 2015 – 2017 annual improvement cycle These amendments concern the following standards: IFRS 3 and 11, IAS 23 and IAS These new pronouncements are not applicable 12. to the Group’s financial statements.
New standards, amendments or interpretations applicable in advance The Group did not anticipate and does not expect to anticipate for the text adopted by the European Union at the closing date but applicable for the following exercises.
New standards and interpretations not yet adopted by the European Union The Group does not anticipate or plan at this stage early adoption of other new standards or interpretations published by IASB or IFRIC but not yet adopted by the European Union at the closing date.
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3.2 Critical accounting estimates and judgements
3.2.1 Critical accounting estimates and assumptions
In preparing financial statements, the Group will resort to estimates and assumptions about future events. Such estimates are based on past experience and other factors considered reasonable in view of current circumstances. Actual results may differ from these estimates. The main sources of uncertainty concerning key assumptions and assessments are: - estimated impairment of goodwill (cf. note 4.1), - evaluation of customer counterparty risk: evaluation of the recoverable value of trade receivables (see note 4.7) is based on credit rating procedures (see note 5 b) and, when applicable, analysis based on the Group's ability to recover the equipment in the case of customer default and proceed with their sale for a specified value. This resale value is estimated on the basis of data for the sale of used machines previously carried out by the Group over a period of several years. The consistency of these values with quoted prices for second hand assets generally accepted on the market is also verified. Today, there are no factors which might call into question the valuation of this recoverable value and notably the validity of quoted prices of second-hand equipment. Nevertheless, deterioration in the future of the market values of second-hand equipment could result in the recognition of additional impairment charges for trade receivables, - net realizable value of inventory (cf. note 4.6): the net realizable value of work in progress and finished goods at 31 December 2019 determined on the basis of actual recorded transactions depending on each equipment’s production year, remains significantly higher than the cost price, - the assessment of the preferential nature of guarantees for residual amounts: the accounting treatment associated with transactions accompanied by such guarantees (cf. note 4.7.2) is based on the assumption that has been almost systematically verified to date of the attractiveness of the option to repurchase equipment offered to customers when compared to the current sales prices in the second-hand equipment market. If this assumption ceases to be confirmed, the accounting treatment of such future transactions should be adapted in consequence. Use of estimates and assumptions also had an impact on the following items: - revenue recognition, notably in the context of tripartite agreements described in notes 4.7.2 to 4.7.4 - amortization and depreciation periods for fixed assets (cf. note 4.3), - the evaluation of provisions, notably for manufacturer warranties (cf. note 4.11) and for pension liabilities (cf. note 4.10), - the recognition of deferred tax assets (cf. note 4.13). The financial statements reflect the best estimates according to information available at time of finalizing production of accounts.
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3.2.2 Evaluation of risks and significant uncertainties having a potential material impact on Haulotte Group
The main material risks and uncertainties that could have a material impact on the Group identified at 31 December 2019 relate on one hand to the market risk, to the monetary environment of the Group and, on the other hand, on items relating to its liquidity. Regarding the market (following variations are at constant exchange rates & excluding IAS 29 application), fiscal year 2019 was marked by revenue growth of +8%. Over the year, sales of equipment increased by +8%, rental sales are increasing by +23% and services by +7%. The Group maintains its policy of a centralised management of foreign exchange as described in note 5.a) and pays specific attention to the evolution of foreign currencies on its main markets, as these could significantly affect its financial performance. During the year, the Group continues to diversify its financing (see note 20). The liquidity risk is described in detail in note 5.c). Based on the level of available cash resources and opened credit lines at 31 December 2019, compared with cash forecasts for the first few months of 2020, there are no reasons that would call into question the Group's ability to ensure its liquidity. As mentioned in note 20, the syndicated is used for an amount of 88 M€. Concerning other borrowings, amounts due in 2019 total to € 15 million.
3.3 Consolidation
Subsidiaries over which Haulotte Group S.A. directly or indirectly exercises exclusive control are fully consolidated. They are deconsolidated from the date that control ceases. Equity method is used for all associated companies in which the Group exerts significant influence. According to this method, Haulotte Group records in a specific caption of the consolidated income statement its share in the net income of the company consolidated using equity method. As of 31 December 2019, Haulotte Group does not have any company consolidated using the equity method. The list of subsidiaries included in the consolidation scope is shown in note 7.
3.4 Intercompany balances and transactions All intercompany balances and transactions between fully consolidated companies are eliminated.
3.5 Foreign currency translation of foreign subsidiaries financial statement The consolidated financial statements are presented in euro (€), which is the parent company’s, Haulotte Group S.A., functional and the Group’s presentation currency. Financial statements of foreign subsidiaries are measured using the functional currency, their local currency. The results and financial position of foreign entities that have a functional currency different from the presentation currency (euro) are translated into the presentation currency as follows: - Assets and liabilities are translated at the closing rate at the date of balance sheet; - Income statement items are translated at the average exchange rate for the period (average for 12 monthly rates) except if exchange rates experience significant fluctuations. In the latter case, applying an average exchange rate for a period would not be appropriate. Thus, to apply IAS 29, the income statement of the entities Haulotte Argentina S.A. and Horizon High Reach Limited were converted using the closing rate. Exchange differences resulting from the translation of the subsidiaries’ financial statements are recognized as a separate component of equity and broken down between the parent company share and minority interests.
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In the case of the disposal of an entity, translation differences that were recognized under components of comprehensive income items are reclassified from equity to income of the period (as a reclassification adjustment) when a gain or loss resulting from the disposal is recognized. These amounts are then included in the disposal result in the ‘other income and expenses’ line. Goodwill is accounted for in the currency of the subsidiary concerned. It must consequently be stated in the functional currency of the subsidiary and translated at year-end.
3.6 Translation of transactions in foreign currency
Foreign currency transactions are translated by the subsidiary into its functional currency using the exchange rates prevailing at the date of the transaction. At year-end, monetary items of the balance sheet denominated in foreign currencies are translated at closing exchange rates. Gains and losses on translation are recorded directly in the income statement under operating income as “exchange gains and losses” except net foreign investments as defined under IAS 21 for which exchange differences are recognized as other comprehensive income items. In the event of the prepayment of a current account balance considered equivalent to a net investment in a foreign operation, the reduction of the associated investment is assessed on the basis of relative value.
3.7 Business combinations Business combinations occurring after 1 January 2010 are accounted for using the acquisition method, in accordance with IFRS 3 (Revised) – Business Combinations: - The acquired identifiable assets and assumed liabilities and contingent liabilities are measured at acquisition-date fair value, provided that they meet the accounting criteria in IFRS 3 (Revised). An acquired non-current asset (or disposal group) that is classified as held for sale at the acquisition date is measured at fair value less costs to sell. Only the liabilities recognized in the acquirees’s balance sheet at the acquisition date are taken into account. Restructuring provisions are therefore not accounted for as a liability of the acquiree unless it has an obligation to undertake such restructuring at the acquisition date. Acquisition-related costs are recognized as expenses in the period in which the costs are incurred. - The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the Group’s share in the fair value of the acquired identifiable net assets exceeds the cost of acquisition, that difference is recognized directly in the income statement (see note 4.1). - For each acquisition, the Group has the option of using the full goodwill method, where goodwill is calculated by taking into account the acquisition-date fair value of minority interests, rather than their share of the fair value of the assets and liabilities of the acquiree. - Contingent consideration is measured at its acquisition-date fair value and is subsequently adjusted through goodwill only when additional information is obtained after the acquisition date about facts and circumstances that existed at that date. Such adjustments are made only during the 12-month measurement period that follows the acquisition date. All other subsequent adjustments are recorded as a receivable or payable through profit or loss (line “Other operating income and expenses”). - In a business combination achieved in stages, the previously held equity interest in the acquiree is remeasured at its acquisition-date fair value and the resulting gain or loss, if material, is recognized as “Other operating income and expenses”.
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3.8 Segment reporting
The Group has determined that the primary operating decision-making body of the entity is the Executive Committee. The Committee reviews internal reporting of the Group, evaluating its performance and making decisions for the allocation of resources. The operating segments have been adopted by management on the basis of this reporting The Executive Committee analyses activity both according to geographic markets and the Group's businesses. These businesses are: - the manufacture and sale of lifting equipment, - the rental of lifting equipment, - services (spare parts, repairs and financing). The column « Others » includes items not allocated to the Group’s four geographic segments as well as inter-segment items. In addition, these activities overall are subject to analysis according to geographic region (Europe, North America, Latin America, Asia Pacific). Internal reporting used by the Executive Committee is based on a presentation of the accounts according to IFRS principles, including all Group activities. The main indicators for performance reviewed by the Executive Committee are revenue, operating income and depreciation expenses. In addition, the Executive Committee monitors the main balance sheet captions: tangible assets (including right of use assets) trade receivables, receivables from financing activities, inventories, trade payables, borrowings and lease liabilities. Items relating to net financial income or expense and in general non-operating items, as well as items relating specifically to consolidation (tax…) are tracked on a global basis without applying a breakdown by activity or geographic sector. As such they are not included in this segment information. The Group has not identified any customer accounting for more than 10% of revenue.
NOTE 4 - PRINCIPLES AND METHODS FOR THE VALUATION OF KEY BALANCE SHEET AGGREGATES
4.1 Goodwill
Goodwill related to consolidated companies is booked to balance sheet assets under “Goodwill”. They result from the application of the principles of business combinations described in note 3.7 above. Negative Goodwill (or badwill) is recognized immediately under other operating income and expenses during the year of acquisition and no later than 12 months after the acquisition, after the correct identification and valuation of acquired assets and liabilities has been verified. Goodwill is not depreciated but is instead subject to impairment testing whenever there exists an indicator of impairment and at least once a year. For the purpose of impairment testing, goodwill is allocated to Cash Generating Units (CGU) or groups of CGU that may benefit from business combinations. The Group has defined different CGUs: - The North America CGU including the subsidiaries Haulotte US and BilJax, - Group rental company subsidiaries each representing an independent CGU, NDU (without any activity since 2008) and Horizon Argentina - Manufacturing and distribution subsidiaries (Excluding North America and Turkey) of the Group included within a single CGU. - CGU for Acarlar Makine, related to the distribution in Turkey An impairment loss is recognized when the carrying value is higher than the recoverable value, defined as the higher of value in use and fair value. Value in use is determined in reference to five-year business plans for which future flows are extrapolated and discounted to present value, or for some rental subsidiaires, using the market value of the rental assets.
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Goodwill impairment charges are irreversible. Income and expense arising respectively from the recognition of negative goodwill (badwill) and the impairment of positive goodwill are recognized under the “other operating income and expenses”.
4.2 Intangible assets a) Development expenditures
Research expenditure is expensed as incurred. Development expenditure in connection with projects (for the design of new products or improvement of existing products) is recognized as intangible asset when the following criteria are met: - the technical feasibility of completing the project, - the intention of management to complete the project, - the ability to use or sell the intangible asset, - the intangible asset will generate probable future economic benefits for the group, - the availability of adequate technical, financial and other resources to complete the project, - the ability to measure reliably the costs. Other development expenditures that do not meet these criteria are expensed in the period incurred. Development expenditure previously expensed is not recorded as an asset in subsequent periods. Development expenditure is amortized from the date the asset is commissioned using the straight-line method over the estimated useful life of 2 to 5 years. In compliance with IAS 36, development expenditure recognized under assets not yet fully amortized is tested for impairment annually or as soon as any impairment indicator is identified (when the inflow of economic benefits is less than initially anticipated). The carrying value of capitalised development expenditure is compared with expected cash flows projected over 2 to 5 years to determine the impairment loss to be recorded. b) Customer Portfolio
The customer portfolio had been determined at the purchase price allocation of Acarlar. The price paid for this acquisition includes customer relationship of the company. Only the relationship existing at the date of acquisition were evaluated. The fair value of the customer portfolio had been determined using the excess earnings method. Usefull life of the portfolio was set at 10 years. c) Other intangible assets
Other intangible assets (software, patents, etc.) are recognized at purchase cost excluding incidental expenses and financial charges. Software is amortized using a straight-line method over 3 to 7 years.
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4.3 Property, plant and equipment
Property, plant and equipment is recognized on the balance sheet at purchase cost (less discounts and all costs necessary to bring the asset to working condition for its intended use) or production cost. Finance costs are not included in the cost of fixed assets. The basis for depreciation of fixed assets is their gross value (cost less residual value). Depreciation starts from the date the asset is ready to be commissioned. Depreciation is recorded over the useful life that reflects the consumption of future economic benefits associated with the asset that will flow to the Group. When the asset’s carrying value is greater than the estimated recoverable amount, an impairment is immediately recorded for the difference. Component parts are recognized as separate assets and subject to different depreciation rates if the related assets have different useful lives. The renewal or replacement costs of components are recognized as distinct assets and the replaced asset is written off. Land is not depreciated. Other depreciation on assets is calculated using the straight-line method over their estimated useful lives as follows:
Depreciation period Plant buildings: Main component 30 to 40 years Other components 10 to 30 years Buildings fixtures and improvements: Main component 10 to 40 years Other components 5 to 20 years Plant equipment 5 to 20 years Other installations and equipment 3 to 20 years Transportation equipment 5 years Computer and office equipment 3 to 10 years Office furniture 3 to 10 years
The assets’ residual value and useful lives are reviewed and adjusted, if appropriate, at each balance-sheet date. Gains and losses arising from the disposal of fixed assets are recognized under other operating income and expenses.
4.4 Lease contracts
Lease contracts, as defined by IFRS 16 “Leases”, are recorded in the balance sheet, which leads to the recognition of: - An asset representing a right of use of the asset leased during the lease term of the contracts; - A liability related to the payment obligation; At the commencement date, the right of use asset is measured at cost (and can comprise, when applicable, any lease payments made at or before the commencement date, any initial direct costs incurred for the conclusion of the contracts and estimated costs for restoration and dismantling of the leased asset according to the terms of the contract). The right of use asset is depreciated over the useful life of the underlying assets (the duration chosen is the first expiry date; unless specific information leads to choose a longer period). At the commencement date, the lease liability is recognized for an amount equal to the present value of the lease payments over the lease term. The right of use asset and the lease liability may be remeasured in the following situations: - Change in the lease term; - Modification related to the assessment of the reasonably certain nature (or not) of the exercise of an option; - Adjustment to the rates and indices when according to which the rents are calculated when rent adjustments occur. Calculation method is disclosed in the note 3.1.
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4.5 Other financial assets
In the IFRS 9 standard, financial assets are classified in three different categories according to their nature and the intended investment period: - Held-to- maturity investments; - Financial assets measured at fair value through profit and loss; - Financial assets measured at fair value through other comprehensive income. The “other financial assets” of the Group are essentially loans. They are recognized at the fair value of the price paid less transaction costs at initial recognition and subsequently at amortized cost at each balance sheet date. All impairment losses on these assets (excluding account receivables, see Note 4.7) are immediately recognized in the income statement through “other financial income and expenses”. The fair value of these financial assets corresponds to its accounting value. This caption also includes deposits and sureties.
4.6 Inventories and work in progress
Inventories are stated at the lower of cost or net realizable value: - Materials and supplies cost is determined using the average cost method based on the weighted average cost per unit; - The cost of finished goods and work in progress includes direct production costs and factory overhead (based on normal operating capacity); - Traded goods inventories are recorded at purchase price (spare parts) or at their trade-in value (second-hand machines). The net realizable value is the estimated selling price in the ordinary course of business less applicable expenses to sell or recondition the goods. Impairment is recognized when the net realizable value is less than the carrying value of inventories defined above.
4.7 Trade receivables
There are four categories of trade receivables: - Receivables resulting from transactions with customers obtaining financing directly (4.7.1) with no guarantee given by the Group to the financial institution providing the financing; - Receivables resulting from transactions for which Haulotte Group grants guarantees to the financial institution providing financing to the customer (4.7.2); - Receivables resulting from finance leases with financing or credit sales provided by Haulotte Group (4.7.3); - Receivables resulting from back-to-back arrangements (4.7.4). The accounting treatment for each transaction category is described below.
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4.7.1 Sales without Group financing or guarantees
These receivables are recognized at fair value of the compensation received or to be received. They are subsequently recognized at amortized cost according to the effective interest rate method, less provisions for impairment. When there exists serious and objective evidence of collection risks, a provision for impairment loss is recorded. The provision represents the difference between the asset’s carrying amount and the estimated resale value of the equipment representing the receivable on the date the risk of non-collection is determined. This policy is based on the following factors: - assets representing receivables may be repossessed by Haulotte Group in the event of customer default, when provided for by contractual terms and conditions, - a precise knowledge of the equipment’s market value. These market values are estimated on the basis of second-hand equipment sales realized by the Group over several years and corroborated by listed values for second-hand equipment.
4.7.2 Sales including guarantees granted by the Group
In line with industry practice, Haulotte Group grants guarantees to financial institutions offering financing to Group customers. Under such arrangements, Haulotte Group sells equipment to the financial institution that in turn contracts with the end user customer through one of two options: - the credit sale of the equipment, or - the conclusion of a finance lease. Haulotte Group may grant several types of guarantees depending on the framework of agreements concluded with financial institutions and the level of risk assigned to the customer by this institution. Those guarantees are:
Guarantee in the form of a commitment to continue lease payments: Haulotte Group guarantees the financial institution payment if the debtor defaults and pays said institution in the event of default, the entire outstanding capital balance owed by the defaulting client. Haulotte Group has a right to repossess the equipment in exchange for its substitution in the place of the defaulting customer.
Guarantee in the form of a contribution to a risk pool: in this case, a portion of the amount of the sale to the financial institution is contributed to a guarantee fund that will cover potential risk of future customer default. The pool’s maximum amount is fixed but makes it possible in the event of default of a customer qualifying for the pool to ensure the financial institution recovers the total amount of its debt.
Specific guarantee covering a determined amount for a given receivable: In this case, the recourse of the financial institution is defined receivable by receivable. The financial institution confirms at each accounting closing the amount of its specific recourse for each receivable having been the object of this specific guarantee.
Guarantee in the form of commitments to repurchase the equipment: equipment’s residual value is determined on the date the contract is concluded between the financial institution and the end-customer. At the end of the lease agreement, Haulotte Group undertakes to repurchase the equipment at this predetermined amount. Linked with this operation, Haulotte Group systematically proposes to the customers to acquire the equipment at a price corresponding to this residual value. The accounting treatment of the first three types of guarantees associated with the different lease agreements concluded between the financial institution and the end-user customer are determined based on the analysis of the substance of the transaction as follows: - as a loan granted to the end customer by Haulotte Group, the contract being transferred to the financial institution in order for the sale to be financed (case of a credit sale); - as a finance lease between Haulotte Group and the end-customer, the contract being transferred to the financial institution in order for the sale to be financed (case of a finance lease). The analysis of the guarantees granted by Haulotte Group within the above agreements in accordance with the provisions of IFRS 9 indicates that most of the risks and rewards associated with the receivable assigned to financial institutions (notably credit risk and deferred due dates) have not been transferred in the case of guarantees in the form of a commitment to continue the lease payments or in the form of a contribution to a risk pool.
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Accordingly, for such contracts, the following accounting treatment is applied: recognition of a receivable (under “receivables from financing activities” in the balance sheet) and a financial liability (under “Guarantees”) for an amount equal to the outstanding capital balance payable by the end customer to the financial institution. These receivables and payables are discharged as the customer makes the lease payments to the financial institution. However, in the case of a guarantee with a contribution to a risk pool covering a fixed amount per receivable, the amount recognized under receivables and payables is capped to the financial institution amount of recourse vis-à-vis Haulotte Group and not expanded to the full amount of the “assigned” receivable. Haulotte Group measures at each closing the risk of the guarantees granted being activated by reviewing payment default that would have been reported by financial institutions. In this case a provision for impairment loss is recorded, determined as described in note 4.7.1. Concerning the fourth type of guarantee, commitments to repurchase equipment, an analysis of the equipment repurchase price granted demonstrates that most of the risks and rewards have been transferred. Indeed, the end customer exercises in virtually all cases the option granted to repurchase the equipment for the amount of the residual value at the end of its lease agreement with the financial institution. Haulotte Group’s commitments contracted are recorded as off-balance sheet commitments for the amount of the residual value. Guarantees given by Haulotte Group are disclosed in off-balance sheet commitments in note 45.
4.7.3 Financial leases and credit sales
Haulotte Group concludes credit sales or leasing contracts directly with its customers with no intermediary financial institutions. Credit sales are analyzed according to the standard IFRS 15 (see note 6.1). Analysis of these financial leases contracts according to provisions of IFRS 16, these agreements are classified as finance leases, as a significant portion of the risks and rewards of ownership are transferred to the lessees. The accounting treatment for these agreements is as follows: - equipment sales are recognized under “sales and revenue” in the income statement on the date the parties sign the lease agreement, - a trade receivable (under “receivables from financing activities” in the balance sheet) is recognized vis-a-vis the end customer broken down between current assets for the portion of lease payments due within one year and non-current assets for the balance, - for the following periods, payment received from the customer as per the lease agreement or the credit sale is allocated between financial income and repayment of the receivable and finance charge.
4.7.4 Back-to-back lease arrangements Haulotte Group can sometimes use that type of financing. The Back to back leasing consists for the manufacturer in selling the equipment to a financial institution that will lease the equipment to him, along with a sub-lease contract signed between the manufacturer and his customer. Based on the analysis of these transactions, both upstream and downstream structures, they have been considered as Finance leases. The analysis in substance of upstream and downstream operations leads to recognize: - the sale of the good to a customer, recorded in return for a receivable on financing operations, - a financial debt with the financial institution.
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4.8 Cash and cash equivalents
“Cash and cash equivalents” includes cash at hand and other short-term investments. The latter consists primarily of money market funds and term deposits. Cash equivalents consist of short-term high liquidity investments that are readily convertible to known amounts of cash and present insignificant risk of change in value. Accrued interest has been calculated for term deposits for the period between the subscription and closing date.
4.9 Treasury shares
Shares of Haulotte Group S.A. acquired in connection with the Group share buyback programs (liquidity contract allocated to ensure an orderly market in the company’s shares and buyback program) are recorded as a deduction from consolidated shareholders’ equity at acquisition cost. No gain or loss is recognized in the income statement from purchases, sales or impairment of treasury shares.
4.10 Employees benefits
The Group records provisions for employee benefits and other post-employment obligations as well as long service awards. The Haulotte Group has only defined benefit plans. The corresponding obligation is measured using the projected unit credit method with end-of-career wages. The calculation of this obligation takes into account the provisions of the laws and collective bargaining agreements and actuarial assumptions concerning notably staff turnover, mortality tables, salary increases and inflation. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized among equity items in other comprehensive income for the period in which these gains or losses are incurred. Previously, these actuarial gains and losses were recognized in the income statement of the period in which they were generated.
4.11 Provisions and contingent liability In general, a provision is recorded when: - the Group has a present legal or constructive obligation as a result of a past event, - it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and, - the obligation has been reliably estimated. Warranty provision
The Group grants clients a manufacturer’s warranty. The estimated cost of warranties on products already sold is covered by a provision statistically calculated on the basis of historical data. The warranty period is usually one to two years. When necessary, a provision is recognized on a case-by-case basis to cover specific warranty risks identified.
Litigations Other provisions are also recorded in accordance with the above principles to cover risks related to litigations, site closures (when applicable) or any other event meeting the definition of a liability. The amount recognized as a provision represents the best estimate of the expenditure required to settle the obligation. All material lawsuits involving the company were reviewed at year-end, and based on the advice of legal counsel, the appropriate provisions were recorded, when necessary, to cover the estimated risks.
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Contingent liability The Group can, in some cases, identify the existence of a contingent liability defined as follows: - a potential obligation resulting from past events and that will be confirmed by the occurrence of (or not) of one or several future and uncertain events that are not under the total control of the entity or, - a current obligation resulting from past events but not accounted for because: - it is not probable that a resources output representing an economic benefit will be necessary to settle the obligation or, - the amount of the obligation cannot be evaluated with sufficient accuracy
4.12 Borrowings
Borrowings are initially recognized at fair value of the amount received less transaction costs. Borrowings are subsequently stated at amortized cost calculated according to the effective interest rate method.
4.13 Deferred taxes
Deferred income tax is recognized on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements as well as on tax losses carried forward. They are calculated using the liability method, for each of the Group’s entity, using tax rates that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled. Deferred tax assets from temporary differences or tax loss carryforwards are recognized only to the extent it is probable that future taxable profit will be available against which the temporary differences can be utilized. Deferred tax assets and liabilities are offset if the entities of the same tax group are entitled to do so under enforceable provisions.
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NOTE 5 - MANAGEMENT OF FINANCIAL RISK
a) Foreign exchange risk and Interest rate risk
A significant portion of Haulotte Group sales are in currencies other than the euro including notably the US dollar, Australian Dollar, Renminbi and British pound sterling. Because sales of Group subsidiaries are primarily in their functional currency, transactions do not generate foreign exchange risks at their level. The primary source of foreign exchange risks for Haulotte Group consequently results from intercompany invoicing flows when Group companies purchase products or services in a currency different from their functional currency (exports of manufacturing subsidiaries located in the euro area and exporting in the local currency of a sale subsidiary). The Group favours floating-rate debt which provides it greater flexibility. To hedge against interest rate risks, the Group seeks to take advantage of market opportunities according to interest rate trends. There is no recourse to systematic interest rate hedging. Such exposures are managed by Haulotte Group SA. For the main currencies, foreign exchange trading positions in the balance sheet are partially hedged using basic financial instruments (forward exchange sales and purchases against the euro). To cover market risks (interest rate and foreign exchange exposures), Haulotte Group has recourse to financial instrument derivatives. These derivatives are designed to cover the fair value of assets or liabilities (fair value hedges) or future cash flows (cash flow hedges). In compliance with the provisions of IAS 32 and IFRS 9, derivatives are recorded at fair value. The fair value of those contracts is determined based on valuation models given by the banks with which the instruments were traded, and can be considered as level 2 valuations as defined in IFRS 7 (level 2: quoted prices in active markets for similar assets or liabilities or other valuation techniques for which all significant inputs are based on observable market data). There is also a translational risk due to the geographic diversification of the Group's activities. Haulotte Group is exposed to the risk of conversion of the financial statements of its subsidiaries outside the Euro zone. Thus, an unfavorable change in exchange rates could deteriorate the balance sheet, the income statement and consequently the Group's financial structure ratios, when the accounts of foreign subsidiaries outside the Euro zone are converted into euros in the Group's consolidated accounts.
b) Credit risk
Credit risk results primarily from exposure to customer credit and notably outstanding trade receivables and transactions. To limit this risk, the Group has implemented rating procedures (internal or independent) to evaluate credit risk for new and existing customers on the basis of their financial situation, payment history and any other relevant information. Credit risk is also limited by Haulotte Group’s ability in the event of default by one of its customers to repossess the equipment representing the receivable. The provisions for impairment loss on trade receivables are determined based on this principle (cf note 4.7).
c) Liquidity risk
Haulotte Group cash management is centralized. The corporate team manages current and forecasted financing needs for the parent company and subsidiaries. All cash surpluses are invested in risk-free products at market conditions by the parent company comprised of money market funds and time deposit accounts.
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Status of the syndicated credit facility: A a new syndicated credit facility contract has been closed on 17 July 2019 (see major events in note 2). At 31 December 2019, all ratios are respected by the Group.
Other financings: In 2019, Haulotte Group obtained, from a bank outside the banking syndicate loan, a new loan amounting to 5 M€ (reimbursement on 5 years). Two other credit lines has been obtained for a total amount of 10 M€ (reimbursement on 10 years), also from a bank outside the banking syndicate loan. Haulotte Group also obtained in 2018, from banks outside the banking syndicate loan, loans for an amount of 8 M€ (reimbursement on 5 years) and 5 M€ (reimbursement on 7 years).
NOTE 6 - PRINCIPLES AND METHODS OF MEASUREMENT FOR THE INCOME STATEMENT
6.1 Revenue recognition
« Sales and Revenue » includes the goods and services sales comprising notably: - sales self-financed by the customer, - sales funded through back-to-back arrangements and the corresponding financial income (cf note 4.6), - sales including financial guarantees given by Haulotte Group S.A. to allow the customer to obtain financing (cf. note 4.6), - sales within remarketing agreements with financial institution after they had taken back equipment from defaulting clients, - equipment rental, - services offers. Revenue from the sale of goods reflect the transfer to the customer of the control of a good or service, in an amount that reflects the consideration to which the seller expects to be entitled when the contractual obligations are fulfilled. Sales of goods are recorded without VAT. Accounting treatments applied in function of the type of contracts and according to IFRS 15 standard are the followings:
Contract type Accounting treatment IFRS 15 Sale of machines Recognition of revenue upon delivery of the good Machine rental Not covered by IFRS 15. Recognition of revenue upon the rental of the good Service agreement involving the provision of a service – basic Recognition of revenueupon performance of the service sale / service Services – Long-term contracts Recognition of revenue on a straight-line basis over the term of the contract
6.2 Cost of sales The cost of sales includes direct production costs, factory overhead, changes in inventory, provisions for inventory losses, warranty costs, fair value adjustments of currency hedges and interest expense paid in connection with back-to-back arrangements.
6.3 Selling expenses This item includes notably costs related to sales and commercial activity.
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6.4 General and administrative expenses
This item includes indirect leasing costs, administrative and management expenses, changes in the provision on trade receivables and the write-off of bad debts.
6.5 Research and development expenditures
Research expenditures are expensed in the period they are incurred. Development expenditures are expensed in the period except when they meet the criteria defined under IAS 38 (cf. 4.2.a) for recognition as intangible assets. This concerns expenditures incurred in connection with development projects for new categories of machines or components considered technically viable with a probability of generating future economic benefits.
6.6 Other operating income and expenses
This heading includes: - gains or losses from disposals (excluding those by rental companies treated as sales of second-hand equipment and recognized consequently under revenue), - amortization of capitalized development expenditures, - income or expenses related to litigations of an unusual, abnormal or infrequent nature, - impairment losses on goodwill.
6.7 Operating income Operating income covers all income and expenses directly relating to Group activities, whether representing recurring items of the normal operating cycle or events or decisions of an occasional or unusual nature.
6.8 Cost of net financial debt
Cost of net financial debt includes total finance costs consisting primarily of interest expense (according to the effective interest rate) as well as the fair value adjustments of interest rate hedges.
6.9 Other financial income and expenses This item includes income from cash and cash equivalents (interest income, gains and losses from the disposal of short-term securities, etc.) and the exchange gains and losses on the financial current accounts. This caption also includes the depreciation of financial assets (allocation / reversal) and the updating.
6.10 Earnings per share Earnings per share presented at the bottom of the income statement is determined by dividing the net income of Haulotte Group S.A. for the period by the weighted average number of ordinary shares outstanding during the period excluding treasury shares. Diluted earnings per share are calculated on the basis of the average number of shares outstanding during the year adjusted for the dilutive effects of equity instruments issued by the company such as stock options.
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NOTE 7 - SCOPE OF CONSOLIDATION
Companies consolidated at 31 December 2019 are:
Consolidation method as at Entity Country Interest % 31 December 2019 31 December 2018 L'Horme Haulotte Group S.A. Mother company (France) Istanbul Acarlar Dis Ticaret Ve Makina Sanayi A. s. 100% Full consolidation Full consolidation (Turquie) Archbold Bil Jax Service, Inc. 100% Full consolidation Full consolidation (Etats-Unis) Archbold Bil Jax, Inc. 100% Full consolidation Full consolidation (Etats-Unis) Archbold Equipro, Inc. 100% Full consolidation Full consolidation (Etats-Unis) Haulotte Access Equipment Manufacturing Changzhou 100% Full consolidation Full consolidation (Changzhou) Co., Ltd. (Chine) Buenos Aires Haulotte Argentina S.A. 100% Full consolidation Full consolidation (Argentine) Arges Haulotte Arges S.R.L. 100% Full consolidation Full consolidation (Roumanie) Dandenong Haulotte Australia Pty. Ltd. 100% Full consolidation Full consolidation (Australie) Vancouver Haulotte Canada 100% Full consolidation (Canada) Santiago Haulotte Chile SPA 100% Full consolidation Full consolidation (Chili) Sao Paulo Haulotte Do Brazil LTDA 99,98% Full consolidation Full consolidation (Brésil) Pitesti Haulotte DSC 100% Full consolidation Full consolidation (Roumanie) St Priest Haulotte France Sarl 99,99% Full consolidation Full consolidation (France) Eschbach Haulotte Hubarbeitsbühnen GmbH 100% Full consolidation Full consolidation (Allemagne) Madrid Haulotte Iberica S.L. 98,71% Full consolidation Full consolidation (Espagne) Mumbai Haulotte India Private Ltd. 100% Full consolidation Full consolidation (Inde) Milan Haulotte Italia S.R.L. 99% Full consolidation Full consolidation (Italie) Osaka Haulotte Japan 100% Full consolidation (Japon) Mexico Haulotte Mexico SA de CV 99,99% Full consolidation Full consolidation (Mexique) Dubaï Haulotte Middle East FZE (Emirats Arabes 100% Full consolidation Full consolidation Unis) Oosterhout Haulotte Netherlands B.V. 100% Full consolidation Full consolidation (Pays-Bas) Archbold Haulotte North America Manufacturing 100% Full consolidation (Etats-Unis) Janki Haulotte Polska SP Z.O.O. 100% Full consolidation Full consolidation (Pologne) Mölndal Haulotte Scandinavia AB 100% Full consolidation Full consolidation (Suède)
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Consolidation method as at Entity Country Interest % 31 December 2019 31 December 2018 St Priest Haulotte Services France 99,99% Full consolidation Full consolidation (France) Mexico Haulotte Services SA de CV 99,99% Full consolidation Full consolidation (Mexique) Singapour Haulotte Singapore Ltd. 100% Full consolidation Full consolidation (Singapour) Shanghai Haulotte Trading (Shanghai) co. Ltd. 100% Full consolidation Full consolidation (Chine) Virginia Beach Haulotte U.S., INC. 100% Full consolidation Full consolidation (Etats-Unis) Wolverhampton Haulotte UK Limited 100% Full consolidation Full consolidation (Angleterre) Moscou Haulotte Vostok 100% Full consolidation Full consolidation (Russie) Santiago Horizon High Reach Chile SPA 100% Full consolidation Full consolidation (Chili) Buenos Aires Horizon High Reach Limited 100% Full consolidation Full consolidation (Argentine) Madrid Levanor Maquinaria de Elevacion S.A. 91,00% Full consolidation Full consolidation (Espagne) Mundilevaçao, Aluger e Transporte de Paio Pires 81,90% Full consolidation Full consolidation Plataformas LDA (Portugal) N.D.U Maquinaria y Plataformas Elevadoras, Madrid 98,71% Full consolidation Full consolidation S.L. (Espagne) Rome NO.VE. S.R.L. 0% Sold (Italie) Archbold Scaffold Design & Erection 100% Full consolidation Full consolidation (Etats-Unis) Archbold Seaway Scaffold & Equipment 100% Full consolidation Full consolidation (Etats-Unis) L'Horme Telescopelle S.A.S 100% Full consolidation Full consolidation (France) The closing date for financial statements of consolidated companies for each period presented is 31 December except for Haulotte India Private Ltd. which closes books on 31 March of each year. In January 2019, the Group created the distribution subsidiary Haulotte Japan. This subsidiary is wholly owned. In January 2019, Haulotte North America Manufacturing was created in the United States. It was created by the spin-off of the company Biljax and is 100% owned by this entity. This subsidiary manufactures aerial working platform. In October 2019, the Group created a legal entity Haulotte Canada, fully owned and without transaction as of December 31, 2019.
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NOTE 8 - GOODWILL
Reclassification Translation 31/12/2018 Increase Decrease and other changes adjustment 31/12/2019 North America CGU 17 405 335 17 740 Acarlar CGU 23 695 (2 167) (2 111) 19 418 Horizon CGU 362 (128) 234 N.D.U CGU 772 772 Manufacturing and Distribution CGU (excluding North America 54 54 and Turkey) Haulotte France 54 54 GROSS VALUE 42 288 - - (2 167) (1 904) 38 218 North America CGU (8 734) (171) (8 905) N.D.U CGU (772) (772) Manufacturing and Distribution CGU (excluding North America (54) (54) and Turkey) Haulotte France (54) (54) DEPRECIATION (9 560) - - - (171) (9 731) NET VALUE 32 728 - - (2 167) (2 075) 28 487 *The amount disclosed in the column "Reclassification and other changes" corresponds to the updte of Acarlar PPA.
Change in consoli- Translation Change in consoli- 31/12/2017 dation scope: In Increase Decrease adjustment dation scope: Out 31/12/2018 North America CGU 16 617 788 17 405 Acarlar CGU - 20 613 3 083 23 695 Nove CGU 2 580 (2 580) - Horizon CGU 694 (332) 362 N.D.U CGU 772 772 Manufacturing and Distribution CGU 54 54 (excluding North America and Turkey) Haulotte France 54 54 GROSS VALUE 20 717 20 613 - - 3 539 (2 580) 42 288 North America CGU (4 169) (4 232) (333) (8 734) N.D.U CGU (772) (772) Manufacturing and Distribution CGU (54) (54) (excluding North America and Turkey) Haulotte France (54) (54) DEPRECIATION (4 995) - (4 232) - (333) - (9 560) NET VALUE 15 722 20 613 (4 232) - 3 206 (2 580) 32 728
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« North America » CGU The last impairment test for the "North America" region considered as a cash generating unit (CGU) was performed on 30 June 2019. A new impairment test was performed on 31 December 2019 on the CGU that includes the US entities of the Group. The recoverable value of the « North America » CGU was based on calculations of value in use. These calculations were carried out using forecast future cash flows for a five-year period based on budgets approved by management. The main assumptions used to perform this impairment test were as follows: - significant growth in market share in the sector of the sale of aerial work platforms in the “North American” market, on a 5 years horizon; - improvement of levels of profitability found on the different activities operated on the North American market; - an assumption of long-term growth of 1,6% and a discount rate (WACC) of 11.2%. As a reminder, the following impairments has been accounted: - 5 000 KUSD as at 31 December 2013 on the basis of the impairment test performed at that date; - 5 000 KUSD as at 31 December 2018 on the basis of the impairment test performed at that date. Based on the new impairment test performed, as at 31 December 2019, the value in use of this UGT is higher than its accounting value leading to the conclusion that no further depreciation is needed; therefore, depreciation is maintained at that amount. Sensitivity analysis have been carried out on the following key assumptions: - Assumptions sales forecast in the business plan: a decrease by 8,9% would not result an obligation to record a goodwill impairment change for this CGU. - Discount rate: increase of this rate by 1 point would not result an obligation to record a goodwill impairment change for this CGU. - Long-term growth rate: a deterioration in the long-term growth rate would not result an obligation to record a goodwill impairment change for this CGU.
Acarlar CGU Purchase price allocation has been made on a temporary basis as at December 31, 2018. Indeed, the valuation of the customer portfolio has not been carried out. This valuation has been finalized during 2019. Consequently, the adjustment of this asset has been booked, with adjustment of the corresponding goodwill. The reclassification done is the following:
MTRY MEUR Goodwill (13,8) (2,2) Intangible assets 17,7 2,8 Deferred tax liabilities (3,9) (0,6)
An impairment test for "Acarlar" considered as a cash generating unit (CGU) was performed on 31 December 2019. The recoverable value of the « Acarlar » CGU was based on calculations of value in use. These calculations were carried out using forecast future cash flows for a five-year period based on budgets approved by management. The main assumptions used to perform this impairment test were as follows: - Recovery of an active market at medium term; - An assumption of long-term growth of 3,5% and a discount rate (WACC) of 16,5%.
30 haulotte.com | CONSOLIDATED FINANCIAL STATEMENTS 2019 CONSOLIDATED FINANCIAL SUMMARY STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
Based on the new impairment test performed, as at 31 December 2019, the value in use of this UGT is higher than its accounting value leading to the conclusion that no further depreciation is needed; therefore, depreciation is maintained at that amount. Sensitivity analysis have been carried out on the following key assumptions: - Assumptions sales forecast in the business plan: a decrease by 16,6% would not result an obligation to record a goodwill impairment change for this CGU. - Discount rate: increase of this rate by 2,4 points would not result an obligation to record a goodwill impairment change for this CGU. - Long-term growth rate: a deterioration in the long-term growth rate would not result an obligation to record a goodwill impairment change for this CGU.
Horizon CGU Regarding the entity Horizon, on the basis of this test, no impairment was recorded for this CGU and sensibility analysis are sufficient.
31 haulotte.com | CONSOLIDATED FINANCIAL STATEMENTS 2019 SUMMARY CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTE 9 - INTANGIBLE ASSETS
Change in Reclassifica- Change in consolidation tions and other Translation consolidation 31/12/2017 scope: In Increase Decrease changes adjustment scope: Out 31/12/2018 Development expenditure 19 816 - 4 987 - (0) 65 - 24 869 Customers portfolio 6 019 - - - 900 - 6 920 Concessions, patents, 20 111 - 1 152 (89) 681 (25) - 21 830 licenses Other intangible and in 1 702 0 1 219 (33) (649) 27 47 2 314 progress GROSS VALUE 41 629 6 019 7 359 (122) 32 968 47 55 932 Depreciation / impairment of 7 857 - 2 093 - 1 0 - 9 951 development expenditure Depreciation of customers - - 263 - - (16) - 247 portfolio Depreciation of concessions, patents, 13 254 - 2 053 0 38 (8) - 15 336 licenses Depreciation of other intangibles and in 120 0 66 - 13 5 33 237 progress ACCUMULATED DEPRECIATION 21 231 0 4 475 0 51 (18) 33 25 771 AND IMPAIRMENT NET VALUE 20 398 6 019 2 884 (122) (19) 986 14 30 161
Reclassifica- tions and other Translation 31/12/2018 Increase Decrease changes adjustment 31/12/2019 Development expenditure 24 869 6 334 - (3) 32 31 232 Customers portfolio 6 920 - - 2 777 (783) 8 914 Concessions, patents, licenses 21 830 539 (5 950) 540 2 16 961 Other intangible and in progress 2 313 824 (35) (448) 20 2 674 GROSS VALUE 55 932 7 697 (5 985) 2 866 (729) 59 781 Depreciation / impairment of development 9 951 2 613 - (1) - 12 563 expenditure Depreciation of customers portfolio 247 937 - - (69) 1 115 Depreciation of concessions, patents, 15 336 2 147 (5 950) 33 (2) 11 564 licenses Depreciation of other intangibles and in 237 85 - 1 4 327 progress ACCUMULATED DEPRECIATION AND 25 771 5 782 (5 950) 33 (67) 25 569 IMPAIRMENT NET VALUE 30 161 1 915 (35) 2 833 (662) 34 213 *: Amounts indicated under « Reclassifications and other changes » mainly concern the transfer of “Fixed assets in progress” into the other Assets captions, as well as presentation reclassifications.
Acquisitions recorded in 2019 are mainly linked to the capitalization of development costs for 6 334 K€ (cf note 31). Decrease amounting to 5 950 K€ is linked to the scrapping of concessions, patents and licenses totally depreciated. Reclassification amounts for 2 777 K€ for the finalization of the Acarlar purchase price allocation (cf note 8). Amortization on developments costs for 2 613 K€ are included in “research and development expenditures” in the P&L.
32 haulotte.com | CONSOLIDATED FINANCIAL STATEMENTS 2019 CONSOLIDATED FINANCIAL SUMMARY STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTE 10 - TANGIBLE ASSETS
Change in Reclassi- Change in conso- fications conso- lidation In- De- and other Translation lidation 31/12/2017 scope: In crease crease changes adjustment scope: Out 31/12/2018 Land 6 169 1 - - - 38 - 6 209 Building 46 216 - 499 (336) 92 426 - 46 897 Plant machinery 35 148 4 1 945 (435) 861 284 - 37 808 Equipment for rental 34 113 - 7 175 (6 466) (71) 721 (14 170) 21 302 Other PPE 13 633 373 1 432 (986) 410 98 (1 437) 13 522 Fixed assets in progress 2 530 - 3 927 (700) (1 729) (171) - 3 857 GROSS VALUE 137 809 378 14 978 (8 922) (437) 1 396 (15 607) 129 594 Depreciation/impairment of building 25 263 1 1 495 (197) 0 291 - 26 853 Depreciation/impairment of plant machinery 28 227 2 2 426 (396) 41 245 - 30 544 Depreciation/impairment of equipment for rental 15 516 - 2 466 (3 417) (0) 1 384 (8 779) 7 170 Depreciation/impairment of other PPE 11 622 339 1 419 (919) (410) 103 (1 120) 11 033 ACCUMULATED DEPRECIATION 80 628 342 7 805 (4 929) (369) 2 023 (9 898) 75 601 AND IMPAIRMENT NET VALUE 57 181 36 7 174 (3 993) (68) (627) (5 709) 53 993
Reclassifica- tions and other Translation 31/12/2018 Increase Decrease changes adjustment 31/12/2019 Land 6 208 1 167 - 4 (6) 7 373 Building 46 897 1 017 (13) 869 (104) 48 666 Plant machinery 37 808 2 318 (329) 713 (13) 40 497 Equipment for rental 21 302 4 122 (3 030) 102 (149) 22 347 Other PPE 13 522 2 503 (1 160) (155) 82 14 792 Fixed assets in progress 3 857 11 017 (1 072) (1 751) (88) 11 963 GROSS VALUE 129 594 22 144 (5 604) (218) (278) 145 638 Depreciation/impairment of building 26 853 1 661 (154) 708 77 29 145 Depreciation/impairment of plant machinery 30 544 2 175 (284) (701) (14) 31 720 Depreciation/impairment of equipment for rental 7 170 2 498 (782) (151) 388 9 123 Depreciation/impairment of other PPE 11 034 1 621 (918) (20) 51 11 768 ACCUMULATED DEPRECIATION AND 75 601 7 955 (2 138) (164) 502 81 756 IMPAIRMENT NET VALUE 53 993 14 189 (3 466) (54) (780) 63 883 *: Amounts indicated under « Reclassifications and other changes » mainly concern the transfer of “Fixed assets in progress” into the other Assets captions, as well as presentation reclassifications.
The increase in “Equipment for rental” for 4 122 K€ is mainly linked to the acquisition of aerial working platforms by the rental subsidiaries, Horizon Argentine for 2 086 K€, Horizon Chile for 676 K€, and for the scaffolding renting activity for 1 063 K€. Fitful need of rental need in distribution entities amounts to 298 K€. In 2019, decrease on this caption are linked to the sale for 2 177 K€ (gross value) of rental machines in distribution entities (related to the fitful needs in the past) and of scaffolding renting machines for 617 K€. Increase of the caption Fixed assets in progress is mainly linked to the construction of the Group headquarters for 9 077 K€ (see major events of the year). The amortization accruals of rental equipments are booked in costs of sales in the P&L. The amortization accruals of Land, building and other PPE are booked in cost of sales and/or commercial and administrative costs in the P&L. A provision for impairment is recorded when the carrying value of an intangible asset falls below its recoverable value. The recoverable value of rental equipment is based on the estimated realizable inventory value on the market.
33 haulotte.com | CONSOLIDATED FINANCIAL STATEMENTS 2019 SUMMARY CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTE 11 - IFRS 16
Balance sheets impacts of the application of IFRS 16 standard are the following: - Right of use assets:
Opening impacts Translation 31/12/2018 (01.01.2019) Increase Decrease adjustment 31/12/2019 Building - 15 789 4 611 - (0) 20 400 Machinery equipment - 1 007 596 (38) 12 1 577 Other tangible fixed assets - 2 456 1 192 (207) (48) 3 392 GROSS VALUE - 19 252 6 399 (245) (37) 25 369 Depreciation of building - - 3 917 - (16) 3 901 Depreciation of machinery - - 499 (24) 2 478 equipment Depreciation of other tangible - - 1 545 (141) (28) 1 375 fixed assets DEPRECIATION AND - - 5 961 (165) (41) 5 754 PROVISIONS NET VALUE - 20 277 (601) (66) 5 19 614
- Lease liabilities
Opening impact (01.01.2019) 31/12/2019 Non-current lease liabilities 14 388 14 780 Current lease liabilities 4 670 5 147 LEASE LIABILITIES 19 058 19 927
- The variation of lease liabilities is disclosed in the following table, according to IAS 7:
cash flow non cash flow 31/12/2018 31/12/2019 K€ Issue/Refund interests overdrafts conv. other Current and non-current lease liabilities - (7 455) 916 26 466 19 927
P&L impacts are the following:
31/12/2019 Lease liabilities' financial expenses (923) Right-of-use assets amortization (5 922) Impact on consolidted net result (335)
The Group is using the exception for the short-term contracts or low value assets. Impacts are the following:
31/12/2019 Short terms contracts lease expenses (329) Lease expenses linked to low value assets contracts (159)
The weighted average marginal debt rate amounts to 3.6% for 2019.
34 haulotte.com | CONSOLIDATED FINANCIAL STATEMENTS 2019 CONSOLIDATED FINANCIAL SUMMARY STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTE 12 - OTHER FINANCIAL ASSETS
Financial assets include loans, deposits and guarantees to non-Group entities. Their changes over the period are as follows:
Translation 31/12/2018 Increase Decrease Reclassification adjustment 31/12/2019 Financial assets 2 908 2 754 (726) (569) 14 4 381
The assets held by the Group towards a client in a litigation situation (see note 22- Contingent liabilities a /) have been totally impaired during the period and generating an additional depreciation of 0.7 M€. The increase of the year is mainly explained by a loan granted by the group.
NOTE 13 - INVENTORY
31/12/2019 Gross value Provision Net value Raw materials 46 134 (1 099) 45 035 Work in progress 3 638 (3) 3 635 Semi finished and finished goods 126 953 (1 089) 125 864 Trade goods 19 514 (2 471) 17 043 TOTAL 196 239 (4 662) 191 577
31/12/2018 Gross value Provision Net value Raw materials 54 083 (1 252) 52 831 Work in progress 3 588 (1) 3 587 Semi finished and finished goods 105 721 (1 384) 104 337 Trade goods 20 547 (2 353) 18 194 TOTAL 183 939 (4 990) 178 949
The increase in inventory of 12 628 K€ on 31 December 2019 versus an increase of 70 217 K€ at 31 December 2018 is recognized under the cost of sales in the income statement. Provisions for inventory impairment losses break down as follows:
Translation 31/12/2018 Increase Decrease adjustment 31/12/2019 Provision for inventory impairment losses 4 990 1 990 (2 330) 12 4 662
35 haulotte.com | CONSOLIDATED FINANCIAL STATEMENTS 2019 SUMMARY CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTE 14 - TRADE RECEIVABLES
31/12/2019 Gross value Provision Net value NON-CURRENT ASSETS Receivables from financing activities exceeding one year 37 920 37 920 of which finance lease receivables 17 322 17 322 of which guarantees given 20 598 20 598 SUB-TOTAL 37 920 37 920 CURRENT ASSETS Trade receivables 113 698 (20 111) 93 587 Receivables from financing activities less than one year 22 232 (617) 21 615 of which finance lease receivables 13 838 (617) 13 221 of which guarantees given 8 394 8 394 SUB-TOTAL 135 930 (20 728) 115 202 TOTAL 173 850 (20 728) 153 123
31/12/2018 Gross value Provision Net value NON-CURRENT ASSETS Receivables from financing activities exceeding one year 23 122 (1 412) 21 710 of which finance lease receivables 6 497 (1 412) 5 085 of which guarantees given 16 625 16 625 Sub-total 23 122 (1 412) 21 710 CURRENT ASSETS Trade receivables 136 190 (12 617) 123 573 Receivables from financing activities less than one year 14 063 (1 219) 12 844 of which finance lease receivables 4 545 (1 219) 3 326 of which guarantees given 9 518 9 518 SUB-TOTAL 150 253 (13 836) 136 417 TOTAL 173 375 (15 248) 158 127
As at At 31 December 2019, receivables assigned, for the balance factoring contract, amounted 7.6 M€ compared to 8.9 M€ as at 31 December 2018. The fair value of “Trade receivables” recorded under current assets equals the carrying value given their short maturity (less than one year). Fair value of receivables from back-to-back equipment leases and finance leases represents the lower of the fair value of the item at the inception (cash sales price net of rebates) or the discounted value of lease payments at the lease’s implicit interest rate. As described in note 4.7, the fair value of receivables guarantees granted by Haulotte Group to the lending institution of the customer, represents: - either the amount of capital remaining due by the customer of Haulotte Group to the financial institution - or the maximum amount of the risk incurred by Haulotte Group, The corresponding receivables and payables are discharged as customers make lease payments to the financial institution.
36 haulotte.com | CONSOLIDATED FINANCIAL STATEMENTS 2019 CONSOLIDATED FINANCIAL SUMMARY STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
Trade receivables that are due are analysed notably on the basis of the customer rating established by the Group (cf. note 5.b). Considering this rating and the resulting risk assessment, the Group determines the necessity of recording a provision. When applicable, provisions are recorded for the difference between the carrying value of the receivable and the estimated resale value of the equipment determined in reference to historical sales’ prices. Provisions for trade receivables break down as follows:
Change in Change in Translation consolidation consolidation 31/12/2018 Increase Decrease adjustment scope: in scope: out 31/12/2019 Provisions for trade 15 248 6 371 (854) (37) - - 20 728 receivables
Increase in provision is mainly linked to the evolution of a situation of late payment towards a contentious situation which led to the reclassification of the discounting of the receivable recognized in previous periods in depreciation (see note 22 - Contingent liabilities at/). The trade receivables net amount split as follows by maturity date:
Due Not due or less than Total 30 days less than 60 more than 120 days 60 to 120 days days Net trade receivables 2019 153 123 143 446 2 956 2 215 4 506 Net trade receivables 2018 158 127 134 456 4 998 4 322 14 351
NOTE 15 - OTHER ASSETS
31/12/2019 31/12/2018 Other current assets 31 299 30 555 Advances and instalments paid on orders 1 285 1 203 Prepaid expenses 3 174 1 834 Depreciation of other current assets (220) (220) TOTAL OTHER CURRENT ASSETS 35 538 33 372 Other non-current assets 5 574 4 572 TOTAL OTHER ASSETS 41 112 37 944
The caption « Other current assets » includes mainly: - VAT receivables for 14 294 K€, - tax credits for 7 995 K€, - various debtors for 7 546 K€ (of which an accrued income from an insurance policy of 2 659 K€ for the payment (virtually certain) of a claim and 1 196 remaining to be recovered on a positive income booked in 2018 linked to a previous litigation of a total amount of K€ 3 100 K€ (1 904 K€ has been recovered during 2019 first semester). Other non-current assets are corresponding to tax credits non usable at short term for 5 565 K€.
37 haulotte.com | CONSOLIDATED FINANCIAL STATEMENTS 2019 SUMMARY CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTE 16 - RECEIVABLES BY MATURITY
31/12/2019 Total less than 1 year 1 to 5 years Trade receivables* 93 587 93 587 - Trade receivables from financing activities 59 535 21 615 37 920 Other assets 41 112 35 538 5 574 TOTAL 194 234 150 740 43 494 *Including receivables overdue or less than 30 days for € 9 677 thousand (cf. note 14)
31/12/2018 Total less than 1 year 1 to 5 years Trade receivables* 123 573 123 573 - Trade receivables from financing activities 34 554 12 844 21 710 Other assets 37 944 33 372 4 572 TOTAL 196 071 169 789 26 282 *Including receivables overdue or less than 30 days for € 23 671 thousand (cf. note 13)
NOTE 17 - FOREIGN EXCHANGE RISK MANAGEMENT
The following table presents the foreign currency exposures of trade receivables and payables:
At 31/12/19 - in thousands of Euros EUR AUD GBP USD Others TOTAL Trade receivables 68 276 17 786 3 547 46 184 38 057 173 850 Trade payables (47 633) (1 704) (593) (9 986) (10 832) (70 748) NET AMOUNT 20 643 16 082 2 954 36 198 27 225 103 102
At 31/12/18 - in thousands of Euros EUR AUD GBP USD Others TOTAL Trade receivables 81 807 15 068 3 886 48 110 24 504 173 375 Trade payables (63 067) (996) (365) (10 518) (11 338) (86 284) NET AMOUNT 18 740 14 072 3 521 37 592 13 166 87 091
A 10 % increase in the value of the euro against the pound sterling would represent, excluding the impact of hedges, an additional charge in the consolidated financial statements of 528 K€. A 10 % increase in the value of the euro against the US dollar would represent, excluding the impact of hedges, an additional charge in the consolidated financial statements of 3 005 K€. A 10 % increase in the value of the euro against the Australian dollar would represent, excluding the impact of hedges, an additional charge in the consolidated financial statements of 1 289 K€.
38 haulotte.com | CONSOLIDATED FINANCIAL STATEMENTS 2019 CONSOLIDATED FINANCIAL SUMMARY STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTE 18 - CASH AND CASH EQUIVALENTS
31/12/2019 31/12/2018 Cash at bank and in hand 28 394 23 694 Money market funds 346 416 TOTAL 28 740 24 110
NOTE 19 - SHARE CAPITAL AND PREMIUMS
31/12/2019 31/12/2018 Number of shares 31 371 274 31 371 274 Nominal value in euros 0,13 0,13 SHARE CAPITAL IN EUROS 4 078 266 4 078 266 SHARE PREMIUMS IN EUROS 81 626 759 91 720 123
By decision of the Board of Directors of 13 March 2018, a restricted stock unit plan (plan d’attribution d’actions gratuites) was adopted for the benefit of a selected category of employees. The plan highlights are as follows:
Board of Director’ meeting date 13/03/2018 Beneficiaries Employees (excluding directors and officers) Total number of restricted stock units granted: 70 000 Of which granted to corporate officers 0 Vesting date of the shares(1) 14/03/2021 End of the holding period n/a Number of shares subscribed at 31/12/19 0 Total number of shares cancelled or lapsed 0 Restricted stock units remaining at the end of the period 70 000 (1)The vesting of shares is subject to the condition whereby the benefciary remains an employee of the company and achievement of non-market performance conditions. The share price on the grant date was €19.12.+
Treasury shares are as follows:
31/12/2019 31/12/2018 Number of treasury shares 1 853 642 1 836 567 Treasury shares as a percentage of capital 5,91% 5,85% Market value of treasury shares in K€ 9 824 16 217 *based on quoted value of the last business day of the year
Since 14 April 2015, Haulotte Group S.A appointed Exane BNP Paribas for the implementation of a liquidity contract on its shares. This liquidity contract complies with the Charter of Ethics established by the AMAFI and approved by the “Autorité des Marchés Financiers”. This contract is yearly renewable by tacit agreement. For the implementation of this contract, the following resources have been allocated to the liquidity account: - 102 171.80 Euros in cash, - the equivalent of 11 524.85 Euros in money market funds, - 139 418 Haulotte Group S.A. shares.
39 haulotte.com | CONSOLIDATED FINANCIAL STATEMENTS 2019 SUMMARY CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
Change in treasury shares during the years 2019 and 2018 was as follows:
Type 2019 2018 Liquidity Number of shares purchased 267 321 334 048 agreement Purchase price of shares (*) 1 901 829 4 786 486 Average price per share 7,1 14,3 Number of shares sold 250 246 275 379 Original value of shares sold 2 380 213 4 518 027 Sale price of shares sold (*) 1 797 381 4 077 629 Net gain/(loss) (582 833) (440 397) Number of shares cancelled - - Number of shares at December 31 155 237 138 162 Original value of shares at December 31 1 028 423 1 506 809 Buyback Number of shares purchased - autorisation Purchase price of shares - Average price per share - Number of shares sold - Original value of shares sold - Selling price of shares sold - Net gain/(loss) - Number of shares cancelled - Number of shares at December 31 1 698 405 1 698 405 Initial value of shares at December 31 13 183 551 13 183 551 Global Number of shares at December 31 1 853 642 1 836 567 Original value of shares at December 31 14 211 974 14 690 360 Provision for treasury shares at December 31 - - Closing quoted value of shares at 31 December 5,30 8,83
(*)Cash flows generated from treasury shares correspond to the sale price of the shares less the purchase price of shares purchased. This amounted to (104) K€ for the year ended 31 December 2019.
40 haulotte.com | CONSOLIDATED FINANCIAL STATEMENTS 2019 CONSOLIDATED FINANCIAL SUMMARY STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTE 20 - BORROWINGS AND FINANCIAL LIABILITIES
31/12/2019 31/12/2018 Syndicated loan 69 310 - Biljax's credit line - - Other borrowings 34 288 29 146 Other advances 8 638 314 Leasing contracts - - Guarantees 20 598 16 624 NON-CURRENT FINANCIAL LIABILITIES 132 834 46 084 Syndicated loan - 66 423 Other borrowings 10 130 6 674 Other advances 1 013 182 Leasings - - Guarantees 8 394 9 518 Others 104 31 Syndicated loan - overdrafts 19 159 13 978 Other overdrafts 7 469 5 247 CURRENT FINANCIAL LIABILITIES 46 269 102 053 TOTAL BORROWINGS AND FINANCIAL LIABILITIES 179 103 148 137
As mentioned in the major events, a new syndicated loan has been signed on July 17, 2019. Movements in the syndicated credit facilities in the 2019 financial period may be summarized as follows:
Net change Balance of the Net change available for 31 December Repayment revolving of the bank Amortization 31 December future 2018 schedule credit line overdraft of fees 2019 drowing on Refinancing 14 589 (14 589) - - - - - Revolving credit limit 52 000 - 18 000 - - 70 000 20 000 TOTAL EXCLUDING 66 589 (14 589) 18 000 - - 70 000 20 000 OVERDRAFTS Overdrafts 13 978 - - 5 181 - 19 159 20 841 Commissions and fees (166) - - - (524) (690) TOTAL 80 401 (14 589) 18 000 5 181 (524) 88 469 40 841
In the new contract, no commitment has been granted to the banking syndicate. This syndicated credit facility provides for compliance by the company with a certain number of standard obligations during the term of the facility. A certain number of ratios will be measured every six months based on the selected ratios derived from the consolidated financial statements for the half-year periods ended 30 June and 31 December of each year (notably Group EBITDA, shareholders' equity, net debt). On 31 December 2019, the bank ratios were respected. Otherwise, in 2019, Haulotte Group obtained, from a bank outside the banking syndicate loan, a new loan amounting to 5 M€ (reimbursement on 5 years). Two other credit lines has been obtained for a total amount of 10 M€ (reimbursement on 10 years), also from a bank outside the banking syndicate loan. Regarding the purchase in substance of the new Group headquarters, the corresponding liability amounts to 10 MEUR as at December 31, 2019 and is disclosed in the caption other borrowings.
41 haulotte.com | CONSOLIDATED FINANCIAL STATEMENTS 2019 SUMMARY CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
Group debt is denominated in the following currencies (excluding guarantees given):
Translated value in thousands of euros 31/12/2019 31/12/2018 Euros 144 032 121 364 GBP - - USD - - Others 6 079 631 TOTAL 150 111 121 995
The variation of financial debts is disclosed in the following table, according to IAS 7:
Cash Flows Non-cash Flows 31/12/2018 31/12/2019 Issue/ Refund* Interests Overdraft Conversion Other
Short Term 102 053 (65 828) 7 468 (208) 2 784 46 269 Long Term 46 084 84 074 2 671 (62) 67 132 834 TOTAL 148 137 18 246 2 671 7 468 (270) 2 851 179 103 *The difference between the amount of issues and refunds of borrowings disclosed in the table above and the amount disclosed in the consolidated statement of cash flow comes from flows on financial assets (deposits or loans).
The flows issue/refund are mainly impacted by the signature of the new syndicated loan which has resulted in the reimbursement of 66 659 K€ of the syndicated loan maturities disclosed as short term as at December 31,2018. Non-cash flows are mainly impacted by the change in guarantees on financing operations (disclosed as “other”).
NOTE 21 - MANAGEMENT OF INTEREST-RATE RISKS
Borrowings, excluding guarantees given, break down as follows:
31/12/2019 31/12/2018 Fixed rate borrowings 58 041 36 402 Variable rate borrowings 92 070 85 594 TOTAL 150 111 121 996
A 1 % rate increase would result in a maximum additional interest expense, excluding hedges, of 921K€.
42 haulotte.com | CONSOLIDATED FINANCIAL STATEMENTS 2019 CONSOLIDATED FINANCIAL SUMMARY STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTE 22 - PROVISIONS
Reversal of Provision used unused Translation 31/12/2018 Allowance in the period provision adjustment 31/12/2019 Provisions for product warranty 7 553 1 682 (1 778) (513) (25) 6 919 Provisions for litigation 1 982 1 315 (527) (178) 20 2 612 Short-term portion of pensions provisions 18 18 CURRENT PROVISIONS 9 553 2 997 (2 305) (691) (5) 9 549 Long-term portion of pensions provisions 5 055 1 937 (39) (114) (11) 6 828 NON-CURRENT PROVISIONS 5 055 1 937 (39) (114) (11) 6 828 TOTAL PROVISIONS 14 608 4 934 (2 344) (805) (16) 16 377
Customer warranties Change in customer warrantees are mainly impacted by the improvement of equipment quality indicators.
Other provisions a) During 2019 first semester, a company in charge of the liquidation of a Group’s customer has asked for an indemnity to Haulotte that lead to the booking of a provision for 0,4 M€. b) In October 2018, a liquidation plan for N.D.U. Maquinarias y Plataformas Elevedaros SL, a company that ceased operations in 2010, was reopened by the Barcelona Courts which could result in the payment of compensation to some of its former creditors. The company has filed an appeal and the current proceedings could result with a compensation of 0,2 M€ which has been booked as at December 31,2019.
Contingent liabilities In the purpose of its current activities, the Group is involved in various procedures inherent to its activities. The Group considers that the provisions made for these risks, disputes or contentious situations known or in progress at the balance sheet date, are of a sufficient amount so that the consolidated financial situation is not significantly affected in the event of an unfavorable outcome. a) Since 2017 closing, the Group has identified financial assets relating to a customer for who a reimbursement would not take place according to the original schedules. During the second half of 2018, a litigation situation has been identified and resulted in a summons in May 2019. As of today, the progress of the legal litigation leads the Group to consider it as a contingent liability, in connection with the notes 12, 14, 35 and 36. b) The distribution subsidiary of Haulotte Group in Brazil, Haulotte do Brazil is currently being the subject of a proceeding concerning the settlement of import tax duties prior to 2010. The Group is currently studying with its counsel the actual risk of this proceeding. At 31 December 2019, it was not possible to reliably measure this risk (notably as the amounts cited were considered as very excessive) and this litigation is in consequence classified as a contingent liability.
43 haulotte.com | CONSOLIDATED FINANCIAL STATEMENTS 2019 SUMMARY CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTE 23 - PENSION AND RELATED BENEFITS
Main assumptions used for the valuation of liabilities The only post-employment benefits of Group employees correspond to retirement severance benefits and long-service awards, mainly in the French entities. Provisions are recorded for retirement liabilities according to the principles described in paragraph 4.9, taking into account the following assumptions:
31 December 2019 31 December 2018 based on historical data available to the Group with Turnover rate no changes between the two periods Rate of wage increases (according to seniority, the based on seniority, expected career profile, collective labor agreements and long-term inflation rate projected career profile, collective bargaining calculated on a historical basis agreements, and long-term inflation rate) Discount rate 0,80% 1,65% Employees born before 1 January 1950 Management: 62 years old Supervisors / office employees and workers: 60 years old Retirement age Employees born after 1 January 1950 Management: 65 years old Supervisors / office employees and workers: 63 years old
With respect to retirement severance payments, the scenario adopted is voluntary departure of employees whereby social charges are taken into account (45 %). This calculation method complies with the framework of the Fillon Law (enacted on 21 August 2003, and amended by Law 2010-1330 of 9 November 2010 for the reform of retirement systems published in the French official journal on 10 November 2010). The Group does not hold any plan assets. Sensitivity of accumulated benefit obligations to changes in the discount rate
A general decline in the discount rate of 0.25 points would result in a 4.0 % increase in benefit obligations.
44 haulotte.com | CONSOLIDATED FINANCIAL STATEMENTS 2019 CONSOLIDATED FINANCIAL SUMMARY STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
Change in accumulated benefit obligations
31/12/2019 31/12/2018 PRESENT VALUE OF THE COMMITMENT AT THE BEGINNING OF THE 5 073 5 601 PERIOD Service costs of the year 332 253 Discount costs 74 62 SUBTOTAL OF AMOUNTS RECOGNISED IN PROFIT OR LOSS 406 315 Benefits paid in the period (23) (98) SUBTOTAL OF OUTFLOWS (BENEFITS AND CONTRIBUTIONS PAID BY (23) (98) THE EMPLOYER) Changes in assumptions 1 347 (104) Actuarial (gains) and losses arising from experience adjustments 51 235 Translation adjustments - - SUBTOTAL AMOUNTS RECOGNISED IN OTHER COMPREHENSIVE 1 398 131 INCOME Change in consolidation scope - (888) Currency translation (9) 12 Present value of the commitment at the end of the period 6 845 5 073
Total amounts recognized in Other Comprehensive Income (excluding deferred taxes)
31/12/2019 31/12/2018 TOTAL AMOUNTS RECOGNISED IN OCI AT THE BEGINNING OF THE 2 075 1 944 PERIOD Revaluation of net liabilities / assets of the period 1 398 131 TOTAL AMOUNTS RECOGNISED IN OCI AT THE END OF THE PERIOD 3 473 2 075
45 haulotte.com | CONSOLIDATED FINANCIAL STATEMENTS 2019 SUMMARY CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTE 24 - PAYABLES BY MATURITY
31/12/2019 Amount Less than 1 year 1 to 5 years More than 5 years Bank borrowings 152 475 19 641 123 178 9 656 Including guarantees given 28 992 8 394 20 598 Bank overdrafts 26 628 26 628 - - Trade payables 70 748 70 748 - - Lease liabilities 19 927 5 147 11 274 3 506 Other current liabilities 26 251 26 251 - - TOTAL 296 029 148 415 134 452 13 162
31/12/2018 Amount Less than 1 year 1 to 5 years More than 5 years Bank borrowings 128 912 82 828 42 434 3 650 Including guarantees given 26 142 9 518 16 624 Bank overdrafts 19 225 19 225 - - Trade payables 86 284 86 284 - - Other current liabilities 24 846 24 846 - - TOTAL 259 267 213 183 42 434 3 650
NOTE 25 - OTHER CURRENT LIABILITIES
31/12/2019 31/12/2018 Down payments received 2 440 3 487 Tax and employee-related liabilities 21 988 18 876 Prepaid income 1 076 1 099 Others 747 1 384 TOTAL 26 251 24 846
46 haulotte.com | CONSOLIDATED FINANCIAL STATEMENTS 2019 CONSOLIDATED FINANCIAL SUMMARY STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTE 26 - DEFERRED TAXES
Deferred tax assets are offset by deferred tax liabilities generated in the same tax jurisdiction. Deferred tax assets resulting from temporary differences or tax losses carried forward are recognized only to the extent that is really probable that future taxable profit will be available against which the temporary differences can be utilized. When this probability cannot be demonstrated, deferred tax assets are capped to the amount of deferred tax liabilities recognized on the same tax jurisdiction and deferred tax assets on tax losses carried forward are not recognized. The global amount of tax losses carried forward for which no deferred tax assets were recorded amount to 78 961 K€ for the Group at 31 December 2019 (76 201 K€ at 31 December 2018).
The amount of deferred tax assets that were not recognized due to the capping of deferred tax assets up to the amount of deferred tax liabilities with the same maturity at 31 December 2019 is 2 139 K€ (2 256 K€ at 31 December 2018). The change in net deferred tax breaks down as follows:
31/12/2019 31/12/2018 Deferred taxes from adjustments of the fair value of rental equipment 193 (200) Deferred taxes from adjustments on finance leases and back-to-back leases 35 1 Deferred taxes from provisions of pensions 1 913 1 362 Deferred taxes from adjustments of internal margin on inventory and fixed assets 4 693 5 203 Deferred taxes from non-deductible provisions 4 806 4 821 Deferred taxes from differences in depreciation periods and R&D costs (5 705) (5 213) Deferred taxes on Acarlar customers portfolio (1 843) (1 468) Deferred taxes from tax losses 8 024 8 869 Deferred taxes from other consolidation adjustments (1 645) (1 211) Deferred taxes from other temporary differences 3 289 2 038 Impact of the capping of deferred tax assets (2 139) (2 256) TOTAL 11 623 11 945
The change in net deferred tax breaks down as follows:
31/12/2019 31/12/2018 Opening net balance 11 945 12 542 Income / (loss) from deferred taxes from continued activities 361 1 321 Income / (loss) from deferred taxes from discontinued activities - (702) Deferred taxes recognised in other comprehensive income (183) (330) Change in consolidation scope (610) (1 324) Translation adjustment 110 438 CLOSING NET BALANCE 11 623 11 945
Deferred taxes recognized in other comprehensive income concerned mainly the net impact of unrealized foreign exchange losses and gains on current accounts classified as net investments.
47 haulotte.com | CONSOLIDATED FINANCIAL STATEMENTS 2019 SUMMARY CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTE 27 - INCOME STATEMENTS OF DISCONTINUED OPERATIONS
31/12/2019 31/12/2018 Sales and revenue - 4 512 100% Cost of sales - (2 883) -64% Selling expenses - (523) -12% General and administrative expenses - (1 017) -23% CURRENT OPERATING INCOME - 89 2% Other operating income and expenses - 6 663 148% OPERATING INCOME - 6 752 150% Cost of net financial debt - (13) 0% Other financial income and expenses - (101) -2% PROFIT BEFORE TAXES - 6 638 147% Income tax - (693) NET PROFIT - 5 945 132%
As at 31 December 2018, other operating income and expenses were mainly including the profit recorded on the disposal.
NOTE 28 - SALES AND REVENUE FOR CONTINUING OPERATIONS
Note 40 on segment reporting provides with details on sales and revenue.
NOTE 29 - COST OF SALES FOR CONTINUING OPERATIONS
31/12/2019 31/12/2018 Production cost of sales (461 946) (415 714) Change in inventory provisions 434 604 Warranty costs (7 248) (9 045) TOTAL (468 760) (424 155)
NOTE 30 - GENERAL AND ADMINISTRATIVE EXPENSES FOR CONTINUING OPERATIONS
31/12/2019 31/12/2018 Administrative expenses (45 118) (42 924) Provision for depreciation of trade receivables (3 089) (275) Management expenses (12 460) (11 546) TOTAL (60 667) (54 745)
48 haulotte.com | CONSOLIDATED FINANCIAL STATEMENTS 2019 CONSOLIDATED FINANCIAL SUMMARY STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTE 31 - RESEARCH AND DEVELOPMENT EXPENDITURES FOR CONTINUING OPERATIONS
31/12/2019 31/12/2018 Development expenditures recognised as intangible assets 6 355 4 768 Amortisation of development expenditures (2 613) (2 093) Research tax credit 2 504 2 310 Development expenditures (16 246) (13 732) TOTAL (10 000) (8 747)
NOTE 32 - EXCHANGE GAINS AND LOSSES FOR CONTINUING OPERATIONS
In current operating income 31/12/2019 31/12/2018 Realised exchange gains and losses (1 305) (2 533) Unrealised exchange gains and losses (717) 533 TOTAL (2 022) (2 000)
In financial income 31/12/2019 31/12/2018 Realised exchange gains and losses 196 (1 317) Unrealised exchange gains and losses (254) 1 027 TOTAL (58) (290)
TOTAL (2 080) (2 290)
Foreign exchange gains and losses related to underlying considered as financing items (mainly of our subsidiaries) are presented within the financial result. For the year ended 31 December 2019, the application of IAS 29 for Argentinian entities (reevaluation of the accounts in pesos and conversion of the income statement at closing rate) generated a profit of 1,5 M€ in foreign exchange gains and losses and recognized as a financial income.
49 haulotte.com | CONSOLIDATED FINANCIAL STATEMENTS 2019 SUMMARY CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTE 33 - EXPENSES BY NATURE OF CURRENT OPERATING INCOME FOR CONTINUING OPERATIONS
31/12/2019 31/12/2018 Purchases of raw materials and other consumables and changes in finished products (348 884) (311 835) inventory External charges (97 130) (101 382) Taxes and related items (7 273) (6 106) Staff costs (101 119) (91 439) Net depreciation, impairment and provisions (20 448) (13 737) Currency gains and losses (2 022) (2 000) Other operating income and expenses 926 4 198 TOTAL (575 951) (522 300)
NOTE 34 - STAFF COSTS FOR CONTINUING OPERATIONS
31/12/2019 31/12/2018 Salaries and wages (75 415) (68 066) Social security and related expenses (24 313) (22 752) Employee profit-sharing (1 159) (837) Pensions costs (232) 216 TOTAL (101 118) (91 439)
Staff costs are allocated to the appropriate captions of the income statement by function.
NOTE 35 - OTHER OPERATING INCOME AND EXPENSES FOR CONTINUING OPERATIONS
31/12/2019 31/12/2018 Cost of litigation net of increases/ decreases in provisions (4 836) (4 192) Miscellaneous adjustments for prior periods 116 - Revaluation at fair value of investments in affiliates - 4 689 Goodwill depreciation - (4 232) Others 83 (750) TOTAL (4 637) (4 485)
As described in note the 22, in the paragraph Other provisions - a /, it was recorded during the year: - booking of a provision of 0.4 M€ for the future settlement of the liquidation, - legal fees relating to this transaction for 0.8 M€. As described in this same note in the paragraph Contingent liabilities - a /, the deterioration of a customer dispute identified at the end of 2018 led the group: - to reclassify the amounts previously booked for the updating of financial assets into operating profit, for an amount of 2.4 M€, - to complete the provision previously booked for 0.9 M€, - to book the legal fees related to this litigation for an amount of 0.6 M€.
50 haulotte.com | CONSOLIDATED FINANCIAL STATEMENTS 2019 CONSOLIDATED FINANCIAL SUMMARY STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTE 36 - COST OF NET FINANCIAL DEBT, OTHER FINANCIAL INCOME AND EXPENSES FOR CONTINUING OPERATIONS
31/12/2019 31/12/2018 Interest expenses and fees on loans and bank overdrafts (2 374) (1 406) COST OF TRANSFERS OF FINANCIAL ASSETS (261) (162) Interests on leasing contracts (952) (12) Cost of net financial debt (3 587) (1 580) Gains and losses on realization of financial instruments - (309) Others 1 149 (1 516) OTHER FINANCIAL INCOME AND EXPENSES 1 149 (1 825) TOTAL (2 438) (3 405)
The variation observed on the caption “others” contains the information given in notes 12 and 35.
NOTE 37 - CORPORATE INCOME TAX FOR CONTINUING OPERATIONS
31/12/2019 31/12/2018 Current tax (7 648) (8 671) Deferred tax 361 1 321 TOTAL (7 287) (7 350)
Haulotte Group SA is the head of a French tax consolidation that included on 31 December 2019, Haulotte France S.A.R.L, Haulotte Services and Telescopelle S.A.S. Haulotte US Inc is the head of a US tax consolidation that included on 31 December 2019, Equipro Inc. and its subsidiaries. Under these tax sharing agreements, the income tax of entities are incurred by subsidiaries as if they were not included in a tax group.
51 haulotte.com | CONSOLIDATED FINANCIAL STATEMENTS 2019 SUMMARY CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTE 38 - EFFECTIVE INCOME TAX RECONCILIATION FOR CONTINUING OPERATIONS
The difference between the effective tax rate of 27.25 % (29.08 % in December 2018) and the standard rate applicable in France of 28,92 % breaks down as follows:
31/12/2019 31/12/2018 Consolidated income before tax 26 744 25 279 TAX (INCOME)/ EXPENSE CALCULATED AT THE TAX RATE 7 734 28,92% 8 704 34,43% APPLICABLE TO THE PARENT COMPANY'S PROFIT Effect of differential in tax rates (723) (1 657) Effect of permanently non-deductible expenses or non-taxable income (897) (333) Effect of use of loss carry forwards previously not recognised (845) (178) Effect of tax assets not recognised 402 2 032 Effect of loss carry forwards not recognised 3 263 1 000 Effect of tax consolidation and income tax credits (1 288) (1 510) Effect of the reversal of unused deferred tax assets - - Tax relating to previous years (166) (296) Others (192) (410) EFFECTIVE TAX (INCOME)/ EXPENSE 7 287 27,25% 7 350 29,08%
NOTE 39 - EARNINGS PER SHARE
Earnings per share are calculated by dividing net profit or loss of the Group for the period by the weighted average number of shares outstanding during the period, excluding treasury shares acquired. Diluted earnings per share are calculated by adjusting the weighted number of shares outstanding in order to take into account all shares issued on conversion of potentially dilutive securities, and notably stock options. A calculation is made to determine the number of shares acquired at fair value (the annual average for traded shares) according to the monetary value of rights attached to outstanding stock options. The resulting number of shares is then compared with the number of shares that would have been issued if the options have been exercised.
In Euros 31/12/2019 31/12/2018 NET INCOME FOR THE GROUP IN THOUSANDS OF EUROS 19 417 23 803 Total number of shares 31 371 274 31 371 274 Number of treasury shares 1 853 642 1 836 567 NUMBER OF SHARES USED FOR THE EARNINGS PER SHARE 29 517 632 29 534 707 AND THE DILUTED EARNINGS PER SHARE CALCULATION Earnings per share attributable to shareholders - basic 0,66 0,81 - diluted 0,66 0,81
52 haulotte.com | CONSOLIDATED FINANCIAL STATEMENTS 2019 CONSOLIDATED FINANCIAL SUMMARY STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTE 40 - SEGMENT REPORTING
40.1 Sales breakdown
Sales by business segment 31/12/2019 % 31/12/2018 % Sales of handling and lifting equipment 533 538 87 488 949 88 Rental of handling and lifting equipment 21 348 4 16 067 3 Services (1) 54 942 9 50 889 9 CONSOLIDATED SALES 609 828 100 555 905 100 (1) mainly spare parts, repairs and financing
Sales by geographic segment 31/12/2019 % 31/12/2018 % Europe 352 324 58 334 732 60 North America 96 003 16 78 594 14 Latin America 45 738 8 42 222 8 Asia Pacific 115 763 19 100 357 18 CONSOLIDATED SALES 609 828 100 555 905 100
40.2 Main indicators by business segment The column « Others » includes items not allocated to the Group's three business segments as well as inter-segment items.
31 December 2019 31 December 2018 Manufacturing Manufacturing Equipment Services and Equipment Services and In K€ (continuing operations) and Sale of Others and Sale of Others rental financing Total rental financing Total equipment equipment INCOME STATEMENT HIGHLIGHTS Sales and revenues to external 533 538 21 348 54 942 - 488 949 16 067 50 889 - customers 609 828 555 905 Operating profit 40 494 4 784 3 286 (19 323) 29 240 45 801 2 845 2 598 (22 123) 29 121 ASSETS Fixed assets 90 823 17 559 1 909 20 675 130 964 87 726 17 012 2 014 13 038 119 790 including goodwill 28 253 234 - - 28 487 32 366 362 - - 32 728 including intangible assets 27 785 23 6 404 34 213 22 979 - 45 7 137 30 161 including tangible assets 32 333 17 302 1 886 12 362 63 883 31 979 16 625 1 969 3 420 53 993 including financial assets 2 451 23 - 1 908 4 381 402 25 - 2 481 2 908 Right-of-use-assets 18 960 654 - - 19 614 - - - - - Inventories 176 615 - 14 962 - 191 577 164 415 - 14 534 - 178 949 Trade receivables and linked 78 858 5 177 9 552 - 110 711 5 302 7 560 - accounts 93 587 123 573 LIABILITIES Trade payables 68 004 436 2 308 - 70 747 83 791 795 1 698 - 86 284 Lease liabilities 19 238 690 - - 19 928 - - - - - Bank borrowings (excl. 9 550 257 - 140 304 4 679 579 - 116 737 warranties) 150 111 121 995 OTHER INFORMATION Depreciation and impairment 16 376 3 676 232 - 12 922 2 764 167 - charge in the period 20 284 15 853 (*): Information for prior periods has been updated to facilitate the comparability for the tables.
53 haulotte.com | CONSOLIDATED FINANCIAL STATEMENTS 2019 SUMMARY CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
40.3 Main indicators by geographic segment
The column « Others » includes items not allocated to the Group’s four geographic segments as well as inter-segment items.
31 décembre 2019 31 décembre 2018 North Latin Asia North Latin Asia In K€ (continuing operations) Europe Total Europe Total America America Pacific America America Pacific INCOME STATEMENT HIGHLIGHTS Sales and revenues to external customers 352 324 96 003 45 738 115 763 609 828 334 732 78 594 42 222 100 357 555 905 Operating profit 32 139 (4 518) 3 279 (1 660) 29 240 27 372 (2 038) 3 099 688 29 ASSETS Fixed assets 66 660 23 422 10 846 30 036 130 964 56 764 20 193 9 958 32 875 119 790 including goodwill - 8 838 234 19 415 28 487 - 8 671 362 23 695 32 728 including intangible assets 22 969 2 920 192 8 131 34 213 20 771 2 246 19 7 125 30 161 including tangible assets 42 327 9 804 10 377 1 374 63 883 34 097 9 273 9 541 1 082 53 993 including financial assets 1 364 1 860 43 1 115 4 381 1 896 3 36 973 2 908 Right-of-use-assets 11 844 3 483 745 3 543 19 614 - - - - - Inventories 110 657 36 604 12 118 32 198 191 577 103 148 28 511 10 352 36 938 178 949 Trade receivables and linked accounts 31 306 14 748 12 234 35 299 93 587 47 601 14 299 14 848 46 826 123 573 LIABILITIES Trade payables 52 089 6 401 738 11 519 70 747 69 735 4 908 585 11 056 86 284 Lease liabilities 11 997 3 565 790 3 577 19 928 - - - - - Bank borrowings (excl. warranties) 144 096 - 257 5 758 150 111 121 417 - 578 - 121 995 OTHER INFORMATION Depreciation and impairment charge 374 in the period 11 222 2 494 3 992 2 577 20 284 7 191 5 310 2 979 15 853 (*): L'information des exercices précédents a été mise à jour pour faciliter la comparabilit des tableaux
Notes 41 to 43 provide with information regarding the cash flow statement.
54 haulotte.com | CONSOLIDATED FINANCIAL STATEMENTS 2019 CONSOLIDATED FINANCIAL SUMMARY STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTE 41 - ANALYSIS OF CHANGE IN WORKING CAPITAL
31/12/2019 31/12/2018 Change in inventories (13 428) (62 775) Change in provision for inventories (343) (299) Change in trade receivables 23 007 (15 642) Change in provision for trade receivables 3 294 (1 273) Charge in trade payables (15 757) 20 472 Change in other assets and liabilities (677) (11 521) CHANGE IN OPERATING WORKING CAPITAL CONTINUED (3 904) (71 038) OPERATIONS
31/12/2019 31/12/2018 Change in inventories - 29 Change in provision for inventories - - Change in trade receivables - 286 Change in provision for trade receivables - 146 Charge in trade payables - (5) Change in other assets and liabilities - (1 111) CHANGE IN OPERATING WORKING CAPITAL DISCONTINUED - (655) OPERATIONS
NOTE 42 - ANALYSIS OF CHANGE IN RECEIVABLES FROM FINANCING ACTIVITIES
31/12/2019 31/12/2018 Change in gross value (19 375) (2 714) Change in provisions CHANGE IN RECEIVABLES FROM FINANCING ACTIVITIES (19 375) (2 714)
Revenue from financing activities includes back-to-back arrangements, direct financing leases, lease payment obligations and risk pool commitments. Transactions involving risk pool commitments and lease payment obligations by Haulotte Group SA represent transactions for which receivables and payables are fully offset. In consequence, they do not generate cash flow. The receivables and payables (for the same amount) are discharged as customers make lease payments to their financial institution. In consequence, these transactions are eliminated in the cash flow statement because they have no impact on net cash. Changes in back-to-back lease arrangements and finance leases are presented as a cash component of the above business. In contrast, changes in the corresponding payable (fully matched by the receivable or resulting from a comprehensive financing arrangement after the back-to-back lease agreements were repurchased through a syndicated loan) are presented under cash flows from financing activities.
55 haulotte.com | CONSOLIDATED FINANCIAL STATEMENTS 2019 SUMMARY CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTE 43 - CASH COMPONENTS
31/12/2019 31/12/2018 Cash on hand and deposit accounts 28 394 23 694 Money market funds and negotiable instruments 346 416 CASH AND CASH EQUIVALENT - BALANCE SHEET 28 740 24 110 Bank overdrafts (refer to note 20) (26 628) (19 227) CASH AND CASH EQUIVALENT - CASH FLOW STATEMENT 2 112 4 885 including cash from cash flow statement - continued activities 2 112 4 885 including cash from cash flow statement - discontinued activities - -
NOTE 44 - INFORMATION ON RELATED PARTIES
44.1 Related parties transactions
Solem S.A.S. is the majority shareholder of Haulotte Group S.A., with 54,40 % of the share capital at 31 December 2019. Solem paid to Haulotte Group S.A. income of 30 K€ in 2019 and 30 K€ in 2018, and invoiced charges of 1 174 K€ in 2018 and 1 027 K€ in 2018 corresponding to the expenses incurred for the Group by two Directors as described in the note below. In 2019, Telescopelle paid 54 K€ to Solem (49 K€ in 2018) under the terms of a financial recovery clause following a debt waiver granted on 31 December 2001 for 1 220 K€. The debt waiver balance for which the payment is expected amounted to 494 K€ at 31 December 2019.
44.2 Fees allocated to directors and officers Amounts allocated to Board members paid by the Group amounts to 892 K€ for 2019 and 806 K€ for 2018. This whole amount corresponds to short term advantages (fix and variable wages). This amount originates from funds invoiced by Solem S.A.S for the services rendered on behalf of the Group by two executives. It includes expenses incurred by those executives on behalf of the Group. In compliance with the agreement to provide general administrative and commercial assistance signed by Solem S.A.S. the cost of the services is subject to a 10% mark-up. No loans or advances have been granted to directors and officers. There are no other pension obligations or related commitments in favor of current or former executives. In addition, a portion of the amount allocated concerns the chargeback for a consulting service performed by one of the members of the board of directors.
56 haulotte.com | CONSOLIDATED FINANCIAL STATEMENTS 2019 CONSOLIDATED FINANCIAL SUMMARY STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTE 45 - OFF-BALANCE SHEET COMMITMENTS
Commitments given 31/12/2019 31/12/2018 Repurchase commitments* 56 60 Portion of balance sheet debt secured by collateral** 0 66 589 Commitments given by Haulotte Group SA to GE Capital for the benefit of Haulotte US*** 4 466 4 232 Bank guarantees**** 0 2 601 Guarantees on export financing***** 1 458 1 869 (*): Repurchase commitments cover guarantees for the residual values granted by the Group in connection with customer financing agreements (**): Reminder of the commitments provided regarding the previous syndicated loan contract as at 31.12.2018: pledge of the Haulotte Group S.A. business and of Haulotte France securities, pledge of the current account balance between Haulotte Group S.A. and Haulotte US in the amount of 50 000 KUSD and pledge of the current account balance between Haulotte Group S.A. and Haulotte Australia in the amount of 10 000 KAUD. XXX This commitment ended during 2019 following the signature of a new syndicated loan (see major events). (***): In connection with product financing agreements executed in 2014, Haulotte Group SA is the first call guarantor in the event of default by Haulotte US Inc., for up to 5 000 KUSD, in favour of different GE Group companies (General Electric Capital Corporation US, GE Commercial Distribution Finance Corporation US, GE Canada Equipment Financing G.P.). This commitment will expire on 19 December 2021. (****): In connection with the so-called Macron law, the Group received customer down payments for deliveries scheduled until 2019. The customers requested remittance of a bank security guaranteeing the down payment's refund in the event the equipment is not delivered. (*****): Financing export agreements are put in place for some customers. Specialized financial institutions guarantee these agreements to the banks for a certain percentage. Then, the Group gives an additional guarantee to the financial institution for the percentage not covered.
Classification by maturity of the off-balance sheet commitments is as follows:
More than 5 31/12/2019 Gross Less than 1 year 1 to 5 years years Repurchase commitments 56 9 46 0 Portion of balance sheet debt secured by collateral - - - -
More than 5 31/12/2018 Gross Less than 1 year 1 to 5 years years Repurchase commitments 60 4 56 0 Portion of balance sheet debt secured by collateral 66 589 66 589 -
NOTE 46 - AVERAGE NUMBER OF EMPLOYEES
31/12/2019 31/12/2018 Average headcount for the year 2 032 1 927
NOTE 47 - AUDITORS’ FEES
Pricewaterhouse In euros (excluding VAT) Coopers Audit SAS BM&A Reports on financial statemns 185 640 72% 108 000 100% Other services 70 575 28% 0% TOTAL 256 215 100% 108 000 100%
Other services are related to the independent report on corporate social responsibility information and diligences on information technology.
NOTE 48 - SUBSEQUENT EVENTS
At the accounts closing date by the Board of Directors, the 3rd of March 2020, no subsequent events have occured.
57 haulotte.com | CONSOLIDATED FINANCIAL STATEMENTS 2019 SUMMARY STATUTORY AUDITORS' REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
PricewaterhouseCoopers Audit Grand Hôtel Dieu BM&A
3 Cour du Midi, CS 30259 11, rue de Laborde 75008 Paris France 69287 Lyon Cedex 02
Haulotte Group SA La Péronnière BP9 42152'Horme France
This is a free translation into English of the Statutory Auditors' report issued in French and is provided solely for the convenience of English speaking readers. This report includes information specifically required by European regulations or French Law, such as information about the appointment of Statutory Auditors. This report should be read in conjunction with, and construed in accordance with, French Law and professional auditing standards applicable in France.
To the annual general meeting of Haulotte Group SA OPINION In compliance with the engagement entrusted to us by your annual general meeting, we have audited the accompanying consolidated financial statements of Haulotte Group SA (“the Group”) for the year ended December 31, 2019. These consolidated financial statements have been approved by the board of directors on March 03, 2020 based on information available at that date regarding the evolving context of Covid-19 health crisis. In our opinion, the consolidated financial statements give a true and fair view of the assets and liabilities and of the financial position of the Group as at December 31, 2019 and of the results of its operations for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union. The audit opinion expressed above is consistent with our report to the Audit Committee. BASIS FOR OPINION
Audit framework We conducted our audit in accordance with professional standards applicable in France. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Our responsibilities under those standards are further described in the Statutory Auditors' Responsibilities for the Audit of the Financial Statements section of our report.
lndependence We conducted our audit engagement in compliance with the independence rules applicable to us, for the period from 1 January 2019 to the date of our report, and specificaly we did not provide any prohibited non-audit services referred to in Article 5(1) of Regulation (EU) No 537/2014 or in the French Code of Ethics (Code de déontologie) for Statutory Auditors. EMPHASIS OF MATTER We draw attention to the matter described in the section “Amendments and interpretations of standards in issue taking effect in 2019“ of the Note 3 “Summary of significant accounting policies” and to the Note 11 “IFRS 16” to the consolidated financial that describe the impacts of the first application of IFRS16 “Leases” and IFRIC 23 “Uncertainty over Income Tax Treatments” as of January 1, 2019. Our opinion is not modified in respect of this matter.
58 haulotte.com | CONSOLIDATED FINANCIAL STATEMENTS 2019 SUMMARY STATUTORY AUDITORS' REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
JUSTIFICATION OF ASSESSMENTS - KEY AUDIT MATTERS ln accordance with the requirements of Articles L.823-9 and R.823-7 of the French Commercial Code (code de commerce) relating to the justification of our assessments, we inform you of the key audit matters relating to risks of material misstatement that, in our professional judgement, were of most significance in our audit of the financial statements of the current period, as well as how we addressed those risks. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on specific items of the financial statements. ASSESSMENT OF CUSTOMER CREDIT RISK
Description of risk The Group has a diverse portfolio of customers whose financial positions may be impacted by the cyclical nature of the markets and changing geopolitical environments, which could, in the short term, result in limited liquidity and ultimately affect their ability to make payments. At 31 December 2019, trade receivables, including receivables from financing activities, represented a gross value of €173.8 million and a net value of €153.1 million. As indicated in Notes 4.7, 5.b) and 14 to the consolidated financial statements, the assessment of customer risk, and consequently the measurement of potential impairment, relies on (i) an analysis of customers’ individual financial situations based primarily on past relationships with those customers and the outlook of the markets in which they operate, and (ii) the likelihood that the Group would recover underlying assets in the event of customer default. Given the materiality of receivables with varying maturities depending on the type of financing and the judgements and assumptions made by management to measure impairment of trade receivables, we deemed the measurement of customer credit risk to be a key audit matter.
How our audit addressed this risk Our work consisted primarily in: - Gaining an understanding of the internal control procedures put in place by management applicable to the measurement of customer credit risk; - Assessing the merits of the assumptions made by management in its measurement of potential customer credit risks including, where applicable, the ability to repossess equipment; - Verifying the basic data used to measure provisions related to trade receivables when payment deadlines are exceeded by more than one year. MEASUREMENT OF THE GOODWILL ALLOCATED TO THE “NORTH AMERICA” & “ACARLAR” CGU
Description of risk At 31 December 2019, goodwill for the “North America” & “Acarlar” CGU (cash-generating unit) came to €17,740 thousand gross and € 8,835 thousand net, and € 19 418 thousand net, respectively. The procedures for the impairment tests used are described in Notes 4.1 and 8 to the consolidated financial statements. The recoverable amounts of the “North America” & “Acarlar” CGU are determined based on their value in use, which are calculated using the discounted value of cash flows expected over a period of five years from the group of assets allocated to the “North America” & “Acarlar” CGU. Forecast data includes assumptions in terms of volume, sale price and production costs and the use of a discount rate and a long-term growth rate. Given the use of assumptions and estimates to assess the recoverable value, we deemed the measurement of goodwill to be a key audit matter.
59 haulotte.com | CONSOLIDATED FINANCIAL STATEMENTS 2019 SUMMARY STATUTORY AUDITORS' REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
How our audit addressed this risk We examined the methodology used by the Group for performing impairment tests. Our work consisted primarily in: - Reconciling the data underlying the “North America” & “Acarlar” CGU carrying amount with the consolidated financial statements; - Verifying the mathematical accuracy of the data and reconciling forecast data with the budget approved by management; - Assessing the consistency of the operational assumptions made by management to establish cash flow projections, including by comparing them to past performances and market outlook; - Assessing the discount rate calculations and corroborating certain inputs of this rate with available market data; - Assessing the sensitivity of the recoverable amount to inputs such as discount rate and the assumptions used. We also examined the appropriateness of the disclosures provided in Note 8, “Goodwill”, to the consolidated financial statements. SPECIFIC VERIFICATIONS We have also performed, in accordance with professional standards applicable in France, the specific verification required by laws and regulations of the Group’s information given in the management report of the Board of Directors approved on March 03,2020. With regards to Covid-19 pandemic related events occurred and information known since the date the financial statements were approved, management has confirmed that this will be subject to a specific communication at the Annual General Meeting called to decide on these financial statements. We have no matters to report as to their fair presentation and their consistency with the consolidated financial statements. We attest that the consolidated non-financial statement required by Article L.225-102-1 of the French commercial code (code de commerce) is included in the Group’s information given in the management report, it being specified that, in accordance with article L. 823-10 of this Code, we have verified neither the fair presentation nor the consistency with the consolidated financial statements of the information contained therein. This information should be reported on by an independent third party. REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
Appointment of the Statutory Auditors We were appointed Statutory Auditors of Haulotte Group SA by the General Meetings held on 28 May 2015 for BM&A and on 2 October 1998 for PricewaterhouseCoopers Audit. As at 31 December 2019, BM&A and PricewaterhouseCoopers Audit were in the fifth year and the twenty-second year of total uninterrupted engagement, which are the fifth year and the twenty-second year since securities of the Company were admitted to trading on a regulated market, respectively. RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE CONSOLIDATED FINANCIAL STATEMENTS Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the European Union and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting, unless it is expected to liquidate the company or to cease operations. The Audit Committee is responsible for monitoring the financial reporting process and the effectiveness of internal control and risk management systems and where applicable, its internal audit, regarding the accounting and financial reporting procedures. The consolidated financial statements were approved by the Board of Directors.
60 haulotte.com | CONSOLIDATED FINANCIAL STATEMENTS 2019 SUMMARY STATUTORY AUDITORS' REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
STATUTORY AUDITORS' RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
Objectives and audit approach Our role is to issue a report on the ftnancial statements. Our objective is to obtain reasonable assurance about whether the ftnancial statements as a whole are free of material misstatement. Reasonable assurance is a high Level of assurance, but is not a guarantee that an audit conducted in accordance with professional standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of theseftnancial statements. As specified in Article L.823-10-1 of the French Commercial Code (code de commerce), our statutory audit does not include assurance on the viability of the Company or quality of management of the affairs of the Company. As part of an audit conducted in accordance with professional standards applicable in France, the statutory auditor exercises professionaljudgement throughout the audit and furthermore: - Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, designs and performs audit procedures responsive to those risks, and obtains audit evidence considered to be sufficient and appropriate to provide a basis for his opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. - Obtains an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control. - Evaluates the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management in the financial statements. - Assesses the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company's ability to continue as a going concern. This assessment is based on the audit evidence obtained up to the date of his audit report. However, future events or conditions may cause the company to cease to continue as a going concern. If the statutory auditor concludes that a material uncertainty exists, there is a requirement to draw attention in the audit report to the related disclosures in the financial statements or, if such disclosures are not provided or inadequate, to modify the opinion expressed therein. - Evaluates the overall presentation of the financial statements and assesses whether these statements represent the underlying transactions and events in a manner that achieves fair presentation. - Obtains sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. The statutory auditor is responsible for the direction, supervision and performance of the audit of the consolidated financial statements and for the opinion expressed on these consolidated financial statements.
61 haulotte.com | CONSOLIDATED FINANCIAL STATEMENTS 2019 SUMMARY STATUTORY AUDITORS' REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
Report to the Audit Committee We submit the Audit Committee a report, which includes in particular a description of the scope of the audit and the audit program implemented, as well as the results of our audit. We also report, if any, significant deficiencies in internal control regarding the accounting and financial reporting procedures that we have identified. Our report to the AuditCommittee includes the risks of material misstatement that, in our professional judgement, were of most significance in the audit of the consolidated financial statements of the current period and which are therefore the key audit matters that we are required to describe in this report.
We also provide the Audit Committee with the declaration provided for in article 6 of Regulation (EU) N° 537/2014, confirming our independence within the meaning of the rules applicable in France such as they are set in particular by Articles L .822-10 to L .822-14 of the French Commercial Code (code de commerce) and in the French Code of Ethics (code de déontologie) for statutory auditors. Where appropriate, we discuss with the Audit Committee the risks that may reasonably thought to bear on our independence, and the related safeguard.
Lyon, 30 April 2019 The Statutory Auditors
PricewaterhouseCoopers Audit BM&A
Elisabeth L'hermite Alexis Thura
62 haulotte.com | CONSOLIDATED FINANCIAL STATEMENTS 2019 Conception & réalisation :
SUMMARY STATUTORY ACCOUNTS FISCAL YEAR ENDED 31 DECEMBER 2019
BALANCE SHEET – ASSETS
Amort. In thousands of Euros Note Gross Dépréc. 31/12/2019 31/12/2018 INTANGIBLE ASSETS 4.1 Software, patents 15 586 10 898 4 688 5 919 Goodwill 168 - 168 168 Other intangible assets 1 572 - 1 572 1 095 PROPERTY, PLANT AND EQUIPMENT 4.1 Land 882 - 882 882 Buildings 17 266 12 240 5 026 4 607 Machinery and equipment 29 983 24 036 5 947 5 510 Other PPE 5 207 4 533 675 692 Fixed assets in progress 509 - 509 1 946 FINANCIAL ASSETS 4.2 Long-term investments 39 855 5 258 34 597 34 530 Receivables from investments 153 851 15 479 138 372 113 977 Other investments 4.3 14 212 4 719 9 493 14 690 Other financial assets 4 509 2 902 1 608 2 221 NON-CURRENT ASSETS 283 599 80 064 203 535 186 236 INVENTORIES AND WORK IN PROGRESS 5 Raw materials 21 582 649 20 933 27 294 Work in progress 1 622 - 1 622 2 070 Finished goods 41 913 865 41 048 25 096 Trade goods 9 528 948 8 580 8 558 Advances paid to suppliers 715 - 715 938 ACCOUNTS RECEIVABLE Accounts receivable 6 126 309 39 390 86 919 97 398 Other receivables 7 20 923 220 20 703 21 862 CASH AND CASH EQUIVALENT Marketable securities 346 - 346 416 Cash at hand 12 291 - 12 291 7 785
ACCRUALS Prepaid expenses 8 1 090 - 1 090 656 CURRENT ASSETS 236 320 42 072 194 248 192 073 Unrealised foreign exchange losses 8 1 902 - 1 902 2 668 TOTAL 521 821 122 136 399 686 380 977
2 SUMMARY STATUTORY ACCOUNTS FISCAL YEAR ENDED 31 DECEMBER 2019
BALANCE SHEET - LIABILITIES AND EQUITY
In thousands of Euros Note 31/12/2019 31/12/2018 Share capital 10 4 078 4 078 Additional paid-in-capital 81 627 91 720 Legal reserves 448 448 Other reserves - 2 776 Retained earnings 406 394 PROFIT (LOSS) FOR THE YEAR (3 229) (6 362) Investment grants 4 4 Regulated reserves 1 648 1 715 SHAREHOLDERS’ EQUITY 10 84 981 94 773 Provisions for contingencies 8 898 8 497 Provisions for charges 6 425 4 732 COMMITMENTS AND CONTINGENCIES 12 15 323 13 230 LONG-TERM DEBT Bank borrowings 13.1 132 516 118 295 Miscellaneous loans and borrowings 13.2 - 25 Down payments received 2 568 711 TRADE PAYABLES AND OTHER CURRENT LIABILITIES 14 Trade payables 51 475 64 050 Tax and employee-related liabilities 8 221 8 732 Fixed asset creditors 0 Other payables 86 023 63 984 ACCRUALS Deferred revenue 8 1 335 2 334 TOTAL LIABILITIES 282 139 258 131 Unrealised foreign exchange gains 8 17 243 14 844 TOTAL 399 686 380 977
3 haulotte.com | STATUTORY ACCOUNTS 2019 SUMMARY STATUTORY ACCOUNTS FISCAL YEAR ENDED 31 DECEMBER 2019
INCOME STATEMENT
In thousands of Euros Note 31/12/2019 31/12/2018 NET SALES 15 286 257 279 519 Change in inventories of finished goods and work in progress 15 188 12 438 Capitalised production 264 397 Operating grants 18 11 Reversal of depreciation and provisions, expenses reclassifications 3 352 3 690 Other income 17 20 229 15 796 OPERATING INCOME 325 307 311 850 Purchase of trade goods 23 482 29 209 Change in inventories (trade goods) 30 (1 260) Purchase of raw materials and other supplies 180 291 186 446 Change in inventories (raw materials and other supplies) 6 572 (7 213) Other purchases and external charges 54 577 55 406 Taxes other than on corporate income 3 627 3 419 Wages and salaries 31 092 27 776 Social charges 13 146 13 248 Depreciation and amortisation of fixed assets 4 602 4 253 Increase in provisions for current assets 6 729 6 076 Provisions for contingencies and commitments 2 700 2 366 Other expenses 17 2 272 2 488 OPERATING EXPENSES 329 120 322 213 OPERATING PROFIT (LOSS) (3 812) (10 363) Dividends received from subsidiaries 6 106 845 Interest income 2 167 1 298 Reversals of provisions 3 634 6 193 Currency gains 1 179 3 477 Net proceeds from the disposal of marketable securities FINANCIAL INCOME 13 084 11 813 Allowances for depreciation and reserves 10 253 3 360 Interest expenses 4 578 2 859 Currency losses 1 163 3 035 Net expenses from the disposal of marketable securities 1 3 FINANCIAL EXPENSES 15 995 9 257 NET FINANCIAL PROFIT (LOSS) 18.1 (2 910) 2 556 PRE-TAX PROFIT BEFORE EXTRAORDINARY ITEMS (6 723) (7 807) Extraordinary income sundry business operations 1 384 3 Extraordinary income on transactions 625 2 726 Reversal of provisions, expenses reclassifications 1 871 5 576 EXTRAORDINARY INCOME 3 880 8 305 Extraordinary expenses sundry business operations 1 719 4 202 Extraordinary expenses on transactions 1 301 3 738 Depreciation and provisions 1 158 1 829 EXTRAORDINARY EXPENSES 4 178 9 769 EXTRAORDINARY PROFIT (LOSS) 18.2 (298) (1 464) Corporate income tax 19 (3 792) (2 909) NET PROFIT (LOSS) (3 229) (6 362)
4 STATUTORY ACCOUNTS FISCAL YEAR ENDED 31 DECEMBER 2019
TABLE OF CONTENTS
BALANCE SHEET – ASSETS 2 BALANCE SHEET - LIABILITIES AND EQUITY 3 INCOME STATEMENT 4 NOTE 1 - SIGNIFICANT EVENTS 6 NOTE 2 - ACCOUNTING POLICIES 6 2.1 Intangible fixed assets 6 2.2 Property, plant and equipment 7 2.3 Financial assets 7 2.4 Inventories and work in progress 8 2.5 Receivables and payables 8 2.6 Translation of transactions in foreign currency 9 2.7 Marketable securities 9 2.8 Provisions 9 2.9 Operating profit 9 2.10 Financial income 10 2.11 Extraordinary income 10 NOTE 3 - POST-CLOSING EVENTS 10 NOTE 4 - FIXED ASSETS 11 4.1 Property, plant and equipment & intangible assets 11 4.2 Financial assets 11 4.3 Changes in treasury shares 12 4.4 List of subsidiaries and affiliates 13 NOTE 5 - INVENTORIES 14 NOTE 6 - TRADE RECEIVABLES 15 NOTE 7 - MATURITY OF RECEIVABLES AND PAYABLES 15 NOTE 8 - ACCRUALS 15 NOTE 9 - OTHER ACCRUED ASSETS AND LIABILITIES 16 9.1 Accrued liabilities 16 9.2 Accrued assets 16 NOTE 10 - SHAREHOLDERS’S EQUITY 16 NOTE 11 - IDENTITY OF THE PARENT COMPANY CONSOLIDATING THE FINANCIAL STATEMENTS 17 NOTE 12 - COMMITMENTS AND CONTINGENCIES 17 NOTE 13 - BORROWINGS 18 13.1 Bank borrowings 18 13.2 Other loans and borrowings 19 13.3 Maturity of loans and borrowings 19 NOTE 14 - MATURITY OF CREDITORS 21 NOTE 15 - SALES 20 NOTE 16 - RELATED PARTIES STATEMENT TRANSACTIONS 20 NOTE 17 - FINANCIAL AND EXTRAORDINARY INCOME AND EXPENSE 22 17.1 Financial profit (loss) 21 17.2 Extraordinary profit (loss) 21 NOTE 18 - BREAKDOWN OF TAX INCOME BETWEEN CURRENT INCOME AND EXTRAORDINARY PROFIT (LOSS) 22 NOTE 19 - DEFERRED TAXES 22 NOTE 20 - TAX CONSOLIDATION 22 NOTE 21 - FEES ALLOCATED TO DIRECTORS AND OFFICERS 23 NOTE 22 - OFF-BALANCE SHEET COMMITMENTS 23 22.1 Finance lease commitments 23 22.2 Other commitments given 25 NOTE 23 - RECEIVED COMMITMENTS 25 NOTE 24 - AVERAGE HEADCOUNTS 25 NOTE 25 - INDIVIDUAL TRAINING BENEFITS 25 NOTE 26 - FOREIGN EXCHANGE RISKS EXPOSURE 27
5 haulotte.com | STATUTORY ACCOUNTS 2019 SUMMARY STATUTORY ACCOUNTS FISCAL YEAR ENDED 31 DECEMBER 2019
Figures are expressed as thousands of euros.
NOTE 1 - SIGNIFICANT EVENTS
Signature of the new syndicated loan On July 17, 2019, the Group has signed a new syndicated loan, in the purpose of refinancing the previous contract which expires on September 30, 2019. Therefore, the Group has repaid (debt extinction), at this date, all balances of its syndicated loan, for a total amount of 66.659 K€ (excluding overdraft, including interests). The new syndicated loan provides to Haulotte Group 2 separates lines: - A revolving line of credit for an amount of 90.000 K€; - An overdraft line for an amount of 40.000 K€. This contract has been conclude for a duration of 5 years, with a deadline as at July 17, 2024 and the possibility to be extended for an additional duration of 12 months at the end of the year 1 and at the end of the year 2, bringing its deadline to July 17, 2026 in case of agreement of the 2 extensions.
This new syndicated loan has been granted without any guarantee or security. It plans some classic obligations that have to respected including the calculation of bi-annual ratios on the basis of consolidated financial statements captions, as EBITDA, equity and Group net debt excluding IFRS 16 lease liabilities. These elements are disclosed in the note 13.1.
New headquarters The construction of the new headquarters, in the city of Lorette, located in the Loire department in France, has started in April 2019 for an installation planned at the beginning of 2020 summer. This building has been acquired through a finance lease signed in January 2019. These elements are disclosed in the note 23.1.
NOTE 2 - ACCOUNTING POLICIES
The company’s annual financial statements have been prepared in accordance with the laws and regulations applicable in France and with regulation 2014-03 of France's national Accounting Standards Body (Autorité des Normes Comptables). The accounting principles applied include: - the conservatism principle, - the going concern concept, - the time period concept, - the consistency principle.
2.1 Intangible fixed assets Intangible assets are recognised at their purchase price, excluding financial charges. Software is depreciated on a straight-line basis over 3 to 7 years according to its useful life. Models and designs are depreciated over 5 years. Goodwill is not subject to depreciation. An impairment is recorded when its value in use is less than the amount initially recognised. Under regulation 2015-06 of ANC, it was considered that this goodwill had an indefinite useful life. Research and development expenditure is expensed in the period incurred.
6 SUMMARY STATUTORY ACCOUNTS FISCAL YEAR ENDED 31 DECEMBER 2019
2.2 Property, plant and equipment
Property, plant and equipment are recognised in the balance sheet at purchase cost (less discounts and all costs necessary to bring the asset to working condition for its intended use) or production cost. Finance costs are not included in the cost of fixed assets. Basis for depreciation of fixed assets is their gross value (cost less residual value). Depreciation starts from the date the asset is ready to be commissioned. Depreciation is recorded over the useful life that reflects the consumption of future economic benefits associated with the asset that will flow to Haulotte Group SA. When the asset’s carrying value is greater than its estimated recoverable amount, an impairment is recorded for the difference. Subsequent costs are recognised as separate assets and subject to different depreciation rates if the related assets have different useful lives. The carrying amount of the renewed or replaced part is derecognised, the new costs incurred being separately capitalised. Land is not depreciated. Depreciation on other assets is calculated using the straight-line method over their estimated useful lives as follows:
Depreciation period
Plant buildings : 40 years - main component - other components 10 to 30 years Building fixtures and improvements: 10 to 40 years - main component - other components 5 to 20 years Plant equipment 5 to 20 years Other installations and equipment 3 to 20 years Transportation equipment 5 years Computer and office equipment 3 to 10 years Office furniture 3 to 10 years
The assets’ residual value and useful lives are reviewed and adjusted, if appropriate, at each balance-sheet date. The gains or losses on disposals of fixed assets are recognised within ‘Extraordinary income/expenses on transactions’.
• Regulated tax reserves
Regulated reserves include in particular additional tax depreciation allowances calculated by utilising the most favourable tax option. This mainly concerns depreciation on residual values of equipment recorded as fixed assets.
7 haulotte.com | STATUTORY ACCOUNTS 2019 SUMMARY STATUTORY ACCOUNTS FISCAL YEAR ENDED 31 DECEMBER 2019
2.3 Financial assets
• Equity Investments
Investments are recognised in the balance sheet at historical cost, including transaction costs such as transfer rights, commissions and fees directly attributable to the acquisition of the securities. These expenses are included in the cost of securities and are subject to special accelerated depreciation over five years. At year-end their balance sheet value is compared with their going concern value, determined with reference to the share in net equity owned and the earnings prospects. When applicable, a provision for impairment is recorded. When necessary (notably for subsidiaries with negative net equity), additional provisions are recognised first against intra-group assets (receivables, current accounts) and further as a provision for charges if necessary.
• Receivables from investments
Receivables from investments relate to current account advances and loans granted to subsidiaries. These items are recognised at face value. Current account balances in foreign currencies are translated into Euros at the year- end exchange rate. Gains arising on translation are recognised as ‘unrealised foreign exchange gains’ and recorded in the balance sheet. Losses arising on translation result in the recognition of a provision for foreign exchange losses and go therefore through the income statement. Current accounts are subject to impairment in the cases described in the preceding paragraph. There is no translation adjustment recorded for the impaired portion of foreign currency current accounts.
• Treasury shares
Treasury shares acquired in connection with the Group's share buy-back program are recorded as financial assets. They are recognised at purchase price. At the end of the year, their carrying value is determined on the basis of the average quoted price of the shares for the last month of the year. If the carrying value is lower than the purchase price, an impairment loss is recorded for the difference.
2.4 Inventories and work in progress
Inventories are stated at the lower of cost or net realisable value: - Materials and supplies cost is determined using the average cost method based on the weighted average cost per unit, - The cost of finished products and work in progress includes direct production costs and factory overhead (based on normal operating capacity), - Traded goods inventories are recorded at purchase price (spare parts) or at their trade-in value (second-hand machines), - The net realisable value is the estimated selling price in the ordinary course of business less applicable expenses to recondition or sell the goods. Impairment is recognised when the net realisable value corresponding to the estimated selling price in the ordinary course of business less applicable expenses to recondition or sell the goods, is less than the carrying value of inventories defined above. The materials and spare parts inventories are eventually impaired following the last buying date and the turnover rate.
8 SUMMARY STATUTORY ACCOUNTS FISCAL YEAR ENDED 31 DECEMBER 2019
2.5 Receivables and payables
Receivables and payables are recognised at their face value. A provision for impairment is recorded when their collection value, determined on a case-by-case basis, is estimated to be lower than the carrying value. As soon as there are indications of a real and serious collection risk, a provision for impairment is recorded.
2.6 Translation of transactions in foreign currency
Transactions in foreign currencies are translated at the exchange rate on the transaction date. At the end of the period, receivables and payables balances are translated at the closing rate. The resulting translation differences for payables and receivables in foreign currency at the end of the period are recognised in the balance sheet under the cumulative translation adjustment. For unrealised foreign exchange losses a provision for contingencies is recorded. For receivables for which impairment has been recorded, only the remaining balance is translated at the year-end exchange rate.
Following the ANC regulation No.°2015-05 of 2 July and applicable as from 1 January 2017, allowances for and reversals of provisions for foreign exchange losses on trade receivables and payables are recognized under operating income and expenses.
2.7 Marketable securities
Marketable securities are initially recognised at their purchase price excluding incidentals. Carrying value of the securities is measured based on quoted values at the closing date. An impairment is recorded when this quoted value is lower than purchase price.
2.8 Provisions When a contingent liability is identified, for which no reliable estimation can be determined, there is no provision recognized. If applicable, a description of the identified risk is included in a dedicated paragraph within the notes relating to provisions for contingencies and charges (Note 12) or contingent liabilities. In general a provision is recorded when: - the Group has a present legal or constructive obligation as a result of a past event, - it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, - the obligation has been reliably estimated.
• Warranty provision
Accordingly, Haulotte Group grants clients a manufacturer’s warranty. The estimated cost of warranties on products already sold is covered by a provision statistically calculated on the basis of historical data. The warranty period is generally two years. When necessary, a provision is recognised on a case-by-case basis to cover specific warranty risks identified.
• Litigations
Other provisions are also recorded in accordance with the above principles to cover risks related to litigations, site closures (when applicable) or any other event meeting the definition of a liability. The amount recognised as a provision represents the best estimate of the expenditure required to settle the obligation.
9 haulotte.com | STATUTORY ACCOUNTS 2019 SUMMARY STATUTORY ACCOUNTS FISCAL YEAR ENDED 31 DECEMBER 2019
All material lawsuits involving the company were reviewed at year-end, and based on the advice of legal counsel, the appropriate provisions were recorded, when necessary, to cover the estimated risks corresponding to a net out flow of resources.
• Pension
Haulotte Group SA records provisions for retirement severance payment and other post-employment obligations as well as long-service awards. Haulotte Group SA only had defined benefit plans. The corresponding obligation is measured using the projected unit credit method with end-of-career wages. The calculation of this obligation takes into account the provisions of the laws and collective bargaining agreements and actuarial assumptions concerning notably staff turnover, mortality tables, salary increases and inflation. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recorded in the income statement in the period incurred.
2.9 Operating profit
• Revenue recognition
“Net sales” includes the goods and services sales comprising notably: - Equipment sales to the distribution and renting subsidiaries of the group, - Direct sales to certain customers, - Spare parts sales, - Services. Sales of goods are recorded net of value added tax at the date of transfer of risks and benefits of ownership. Revenues related to services are recognised over the period during which the services are rendered.
• Operating expenses
Operating expenses include notably material costs, production costs and overheads.
2.10 Financial income
Financial income consists primarily of changes in provisions on investments and on intercompany current accounts, exchange gains and losses (except those relating to commercial receivable and debt), interest income and expenses on current accounts, dividends, and financial costs associated with borrowing.
2.11 Extraordinary income Items that are exceptional in nature or that do not occur in the normal course of business are recognised under extraordinary profit or loss. In accordance with the French National Accounting Code (Plan Comptable Général), extraordinary profit or loss also includes allowances and reversals of special tax depreciation provisions.
NOTE 3 - POST-CLOSING EVENTS
At the accounts closing date by the Board of Directors, the 3rd of March 2020, no subsequent events have occurred.
10 SUMMARY STATUTORY ACCOUNTS FISCAL YEAR ENDED 31 DECEMBER 2019
NOTE 4 - FIXED ASSETS
4.1 Property, plant and equipment & intangible assets
Gross amounts
In thousands of Euros 31/12/2018 Increase Decrease 31/12/2019 Intangible assets(1) 21 000 703 5 950 15 753 Intangible assets in progress 1 095 841 364 1 572
Land 882 - - 882 Building 2 848 - - 2 848 General installations 13 374 1 051 6 14 418 Machinery and equipment 28 053 1 996 67 29 983 Other PPE 4 768 477 38 5 207 Fixed assets in progress 1 946 546 1 982 509 TOTAL 73 966 5 614 8 408 71 171 (1)The intangible assets concern primarily software. They also include goodwill of 168 thousand €. The goodwill originated from the creation of Haulotte S.A. in 1995. No depreciation or impairment has been recorded.
Accumulated depreciation and impairment
In thousands of Euros 31/12/2018 Increase Decrease 31/12/2019 Intangible assets 14 914 1 934 5 950 10 898
Building 1 302 67 1 369 General installations 10 313 565 6 10 871 Machinery and equipment 22 543 1 545 52 24 036 Other PPE 4 077 491 36 4 533 TOTAL 53 149 4 602 6 044 51 707
Research and development expenditure, recorded in operating expenses, totalled 13,989 thousand € for the fiscal year.
11 haulotte.com | STATUTORY ACCOUNTS 2019 SUMMARY STATUTORY ACCOUNTS FISCAL YEAR ENDED 31 DECEMBER 2019
4.2 Financial assets
Financial assets break down as follows on a cost basis :
In thousands of Euros 31/12/2018 Increase Decrease 31/12/2019 Equity investments(1) 38 348 1 507 - 39 855 Current accounts & loans to subsidiaries(2) 129 729 34 628 10 506 153 851 Treasury shares(3) 14 690 1 902 2 380 14 212 Other financial assets 3 968 569 27 4 509 TOTAL GROSS VALUE 186 735 38 605 12 913 212 427 (1)The increase in equity investments is mainly due to the additional acquisition of securities from our subsidiary Haulotte Argentina following a capital increase. (2)The increase mainly concerns the granting of a loan to our subsidiary Haulotte Changzhou and the increase in current accounts of Haulotte US and Haulotte Mexico. (3)The number of treasury shares owned at year end 2019 is 1 853.642. (See §4.3)
In thousands of Euros 31/12/2018 Allowances Reversals 31/12/2019 Provisions on Equity investments(4) 3 817 1 461 20 5 258 Provisions on Current accounts & loans(5) 15 752 1 396 1 669 15 479 Provisions on Treasury shares - 4 719 - 4 719 Provisions on Other financial assets 1 747 1 155 - 2 902 TOTAL PROVISIONS 21 316 8 731 1 689 28 358
TOTAL NET VALUE 165 419 184 069 (4)Haulotte Group has recorded additional provisions on Equity investments for Haulotte Argentina following the capital increase. (5)The increase in the provisions for receivables attached to holdings is explained by provision on Haulotte US, partially offset by allocations to Haulotte Mexico, Haulotte UK.
4.3 Changes in treasury shares
Type 2019 2018 Number of shares purchased 267 321 334 048 Purchase price of shares (€) 1 901 829 4 786 486 Average price per share (€) 7,11 14,33 Number of shares sold 250 246 275 379 Original value of shares sold (€) 2 380 213 4 518 027 Liquidity agreement Sale price of shares sold (€) 1 797 381 4 077 629 Net gain / (loss) (€) (582 833) (440 397) Number of shares cancelled Number of shares at December 31 155 237 138 162 ORIGINAL VALUE OF SHARES AT DECEMBER 31 (€) 1 028 423 1 506 808 Number of shares purchased Purchase price of shares (€) Average price per share (€) Buyback authorisation Number of shares sold Number of shares cancelled Number of shares at December 31 1 698 405 1 698 405 ORIGINAL VALUE OF SHARES AT DECEMBER 31(€) 13 183 551 13 183 551 Number of shares at December 31 1 853 642 1 836 567 Initial value of shares at December 31(€) 14 211 974 14 690 359 Global Provision for treasury shares at December 31* (€) (4 718 547) - Closing price of shares at December 31 (€) 5,30 8,83 *On the basis of the average price of shares for the last month
12 SUMMARY STATUTORY ACCOUNTS FISCAL YEAR ENDED 31 DECEMBER 2019
4.4 List of subsidiaries and affiliates
Share Reserves Company capital and Gross value/ Registered office Shareholder Ownership retained Net value of Dividends Revenue In thousands of Euros s’ equity(1) interest (%) earnings shares Advances received Net income Haulotte France Sarl 1 046 99,99% 9 923 3 804 (17 586) 97 953 69 ST PRIEST - FRANCE 13 676 3 804 2 687 Telescopelle SAS 37 100% 886 37 (907) 123 L'HORME - FRANCE 989 37 66 Haulotte Access Equipment 2 304 100% 10 166 2 000 53 107 Manufacturing (Changzhou) CHINA 16 366 2 000 3 940 Haulotte Argentina SA 133 100% 3 085 462 8 824 ARGENTINA (1 771) (0) (1 905) Haulotte Arges SRL 816 100% 57 963 1 100 (14 244) 114 101 ROMANIA 66 161 1 100 7 439 Haulotte Australia Pty Ltd 0 100% 1 791 0 25 303 51 697 AUSTRALIA 766 0 (1 019) Haulotte Canada 0 99,98% CANADA 0 Haulotte Do Brazil Ltda 111 100% (24 783) 201 1 977 10 015 BRASIL (26 456) (1 826) Haulotte Digital Support Center 0 95% (509) 2 100 1 282 ROMANIA (507) 0 2 Haulotte Hubarbeitsbuhnen GmbH 30 100% 19 625 30 (20 761) 54 936 GERMANY 21 664 30 2 009 Haulotte Iberica SL 310 98,71% 10 559 3 (5 358) 35 314 SPAIN 13 313 3 2 443 Haulotte India 63 99,99% 116 62 9 INDIA 212 62 33 Haulotte Japon 41 100% 46 JAPAN 49 46 8 Haulotte Italia Srl 100 99,00% 11 706 10 (6 827) 35 520 ITALY 13 631 10 1 826 Haulotte Mexico SA de CV 945 99,99% (1 259) 1 113 9 996 9 150 MEXICO (133) 178 Haulotte Middle East FZE 0 100% 9 879 199 6 872 4 597 UNITED ARAB EMIRATES 11 488 199 1 368 Haulotte Netherlands BV 20 100% (222) 20 49 20 643 NETHERLANDS 420 20 623 Haulotte Polska SP Z.O.O. 94 100% 80 105 (2 269) 6 106 24 043 POLAND 1 422 105 1 236 Haulotte Scandinavia AB 10 100% 16 850 11 (16 636) 29 305 SWEDEN 17 969 11 1 023 Haulotte Singapore Ltd. 0 100% 4 599 0 1 520 17 861 SINGAPORE 4 972 374 Haulotte Trading (Shanghai) co. Ltd. 0 100% (7 368) 550 17 778 CHINA (8 797) (2 179)
13 haulotte.com | STATUTORY ACCOUNTS 2019 SUMMARY STATUTORY ACCOUNTS FISCAL YEAR ENDED 31 DECEMBER 2019
Share Reserves Company capital and Gross value/ Registered office Shareholder Ownership retained Net value of Dividends Revenue In thousands of Euros s’ equity(1) interest (%) earnings shares Advances received Net income Haulotte UK Ltd 1 100% (3 277) 2 6 977 15 012 UNITED KINGDOM (2 677) 581 Haulotte US Inc 3 100% (42 320) 3 80 694 59 417 UNITED STATES (8 890) (400) Haulotte Vostok 41 100% 1 885 80 30 864 RUSSIA 3 552 80 1 570 Horizon High Reach Limited 569 100% 4 512 5 065 8 791 ARGENTINA 6 521 5 065 1 440 Levanor Maquinaria de Elevacion S.A. 100 91% 653 300 1 291 SPAIN 736 (17) Haulotte Chile 0 100% 0 5 134 CHILE 832 0 892 Horizon Chile 0 100% (861) 5 6 176 CHILE (2 135) (1 367) Acarlar 555 100% 2 158 22 024 10 375 TURKEY 3 193 22 024 504 (1)Including Capital and Net income (2)The Turnover shown for each subsidiary includes interest revenue on finance leases. For foreign subsidiaries, figures presented are translated at the year-end closing exchange rate except for revenue and net income which are translated at the average exchange rate of the period.
NOTE 5 - INVENTORIES
Inventories at 31/12/2019 Inventories at 31/12/2018 In thousands of Euros Gross Provisions Net Gross Provisions Net Raw materials 21 582 (649) 20 933 28 154 (860) 27 294 Work in progress 1 622 0 1 622 2 070 0 2 070 Finished goods 41 913 (865) 41 048 26 277 (1 181) 25 096 Trade goods 9 528 (948) 8 580 9 558 (1 000) 8 558 TOTAL 74 645 (2 462) 72 183 66 058 (3 041) 63 017
The increase in inventories relates mainly to the inventory of machines, partially offset by the decrease in the inventory of components.
14 SUMMARY STATUTORY ACCOUNTS FISCAL YEAR ENDED 31 DECEMBER 2019
NOTE 6 - TRADE RECEIVABLES
In thousands of Euros 31/12/2019 31/12/2018 TRADE RECEIVABLES 126 309 130 582 of which Group receivables 114 829 118 471 PROVISIONS (39 390) (33 184) of which Group provisions (35 309) (29 819) NET TRADE RECEIVABLES 86 919 97 398
The increase in depreciation mainly concerns receivables from our subsidiaries Horizon Chile, Haulotte Brazil and Haulotte Shanghai.
NOTE 7 - MATURITY OF RECEIVABLES AND PAYABLES
The receivables are as follows:
> 1 year In thousands of Euros Total < 1 year < 5 years > 5 years Current accounts & loans to subsidiaries 153 851 92 069 0 61 782 Trade receivables 126 309 122 186 0 4 123 Other receivables 20 923 15 358 5 565 0
The other receivables mainly concern income tax, VAT and profit to be received from insurance following a fire into a plant.
NOTE 8 - ACCRUALS
In thousands of Euros 31/12/2019 31/12/2018 Prepaid expenses 1 090 656 Operating expenses 1 090 656 Financial expenses - - Deferred revenue 1 335 2 334 Unrealised foreign exchange losses 1 902 2 668 On receivables 1 721 2 333 On payables 181 335 Unrealised foreign exchange gains 17 243 14 844 On receivables 16 235 13 960 On payables 1 008 883
The main prepaid expenses relate to IT services. The deferred revenue relates to machines and spare parts
15 haulotte.com | STATUTORY ACCOUNTS 2019 SUMMARY STATUTORY ACCOUNTS FISCAL YEAR ENDED 31 DECEMBER 2019
NOTE 9 - OTHER ACCRUED ASSETS AND LIABILITIES
9.1 Accrued liabilities
In thousands of Euros 31/12/2019 31/12/2018 Bank borrowings 149 85 Trade payables 21 643 34 437 Tax and employee-related payables 4 008 4 081 Other payables 407 1 188 TOTAL 26 206 39 791
Other debts mainly concern credit note to be issued on spare parts and machines.
9.2 Accrued assets
In thousands of Euros 31/12/2019 31/12/2018 Customer Accounts receivables 5 572 4 020 Other receivables 2 822 2 028 Accrued interests 5 - TOTAL 8 399 6 048
Other receivables mainly concern profit to be received from insurance following a fire into a plant and on the other hand to calls in bank guarantee following unpaid customers.
NOTE 10 - SHAREHOLDERS’S EQUITY
Detail of share capital
In € 31/12/2018 Increase Decrease 31/12/2019 Number of shares 31 371 274 31 371 274 Nominal value in Euros 0,13 0,13
Share capital in Euros 4 078 265 4 078 265
Statement of changes in shareholders’ equity (in thousands of Euros)
Shareholders’ equity at 31/12/2018 94 773 Dividends distributed (6 495) Change in regulated reserves (67) Profit/(loss) for the period (3 229) investment grants (0) SHAREHOLDERS’ EQUITY AT 31/12/2019 84 981
16 SUMMARY STATUTORY ACCOUNTS FISCAL YEAR ENDED 31 DECEMBER 2019
NOTE 11 - IDENTITY OF THE PARENT COMPANY CONSOLIDATING THE FINANCIAL STATEMENTS
Capital of Haulotte Group Company name - registered office Legal form Capital SA owned SOLEM S.A.S 477 54.40 93 Epinay sur Seine - France
The consolidated financial statements are available at the headquarter of the company Solem.
NOTE 12 - COMMITMENTS AND CONTINGENCIES
Provisions Reversal of used in the unused In thousands of Euros 31/12/2018 Allowances period provisions 31/12/2019 Warranty provisions 3 563 618 473 61 3 646 Provisions for foreign exchange losses 1 944 1 522 1 944 0 1 522 Provision for foreign exchange losses on 723 381 723 0 381 commercial receivables and payables Provision for pensions and other employees cost** 4 732 1 702 1 8 6 425 Other contingencies and commitments* 2 267 1 145 9 54 3 350 TOTAL 13 230 5 367 3 151 123 15 323 *of which provision on negative net equity of 1 972 124 0 4 2 093 subsidiaries **of whitch provision on restricted stock unit plan 400 56 0 0 456
Recognised under operating profit 2 700 1 267 Recognised under financial profit 1 522 1 944 Recognised under extraordinary profit 1 145 62 TOTAL 5 367 3 273
The increase in other provisions is explained by the call-in bank guarantee from one of our defaulting customers.
Provision for a restricted stock unit plan By decision of the Board of Directors of 13 March 2018, a restricted stock unit plan (plan d’attributiond’actions gratuites) was adopted for the benefit of a selected category of employees. The plan highlights are as follows:
Board of Director’ meeting date 13/03/2018 Beneficiaries Employees (excluding directors and officers) Total number of restricted stock units granted : 70 000 Of which granted to corporate officers 0 Vesting date of the shares (1) 14/03/2021 End of the holding period n/a Number of shares subscribed at 31/12/19 0 Total number of shares cancelled or lapsed 0 Restricted stock units remaining at the end of the period 70 000 (1)The vesting of shares is subject to the condition whereby the benefciary remains an employee of the company and achievement of non-market performance conditions. The share price on the grant date was €19.12.
17 haulotte.com | STATUTORY ACCOUNTS 2019 SUMMARY STATUTORY ACCOUNTS FISCAL YEAR ENDED 31 DECEMBER 2019
Provisions for post-employment benefits Retirement commitments are estimated according to the projected unit credit method using end-of-career wages according to the procedures described in paragraph 2.8, on the basis of the following assumptions: - a mortality table INSEE 13-15 (vs 2018 INSEE 12-14), - a staff turnover rate based on available Group historical data, - a salary increase rate based on the expected length of service, career development, the terms of collective bargaining agreements and the rate of long-term inflation calculated on a historical basis, - a 0.80 % discount rate (vs 2018 1.65%), - a retirement age for employees born before 1 January 1950 of 62 for managers, 60 for clerical staff, - a retirement age for employees born after 1 January 1950 of 65 for managers, 63 for clerical staff. Concerning end-of-career severance benefits, the assumption retained is that of voluntary retirement that takes into account social security contributions (45 %). This method of calculation complies with the French Pension Reform Act of 21 August 2003 Loi Fillon, (amended by the law n°2010-1330 dated 9 November 2010 as published in the “Journal Officiel” dated 10 November 2010). At 31 December 2019, the provision was split between - 5 658 thousand € for pensions provisions, - 310 thousand € for long-service award provisions. The increase of other provisions is explainde by the call in guarantee by the bank with a defaulting customer.
NOTE 13 - BORROWINGS
13.1 Bank borrowings
In thousands of Euros 31/12/2018 Increase Decrease 31/12/2019 Syndicated loan 66 589 125 830 122 419 70 000 Other loans 31 034 15 000 6 026 40 008 Overdraft on syndicated loans 13 979 9 033 3 852 19 159 Other overdrafts 6 609 119 3 528 3 200 Accrued interests 85 74 10 149 TOTAL 118 295 150 057 135 835 132 516
• Syndicated credit facility:
In July 2019, the group signed a new syndicated credit agreement to refinance the previous one, which expires in September 2019. The new credit lines is: - the revolving credit facility for €90 million, - the overdraft facility for €40 million. This contract is concluded for a period of 5 years, i.e. a maturity on 07/17/2024 with the possibility of extending until 2026. This contract was taken out at a variable interest rate indexed on the Euribor for the revolving line and on the Eonia for the overdraft line.
18 SUMMARY STATUTORY ACCOUNTS FISCAL YEAR ENDED 31 DECEMBER 2019
Balance Net Change Net Change available at Loan of the of the Net Change Loan 31/12/2019 for In thousands of Balance at refinancing revolving of the bank Balance at further Euros 31/12/2018 facility porting overdraft 31/12/2019 drawing Refinancing 14 589 (14 589) - - - Revolving 52 000 (52 000) - - - Revolving 70 000 - 70 000 20 000 SUB-TOTAL 66 589 (14 589) 18 000 - 70 000 5 411 Bank overdraft 13 979 5 180 19 159 20 841 Accrued interests 29 74 103 TOTAL 80 596 (14 589) 18 000 5 254 89 262 40 841
The 2 first lines are linked to the old syndicated loan. On 31 December 2019, the bank ratios were respected.
• Other loans
Haulotte Group S.A. also subscribed 3 new credit lines in 2019 from lenders outside the banking syndicate for €15 million, with a maturity between 5 and 10 years.
13.2 Other loans and borrowings
In thousands of Euros 31/12/2018 Increase Decrease 31/12/2019 Other loans 25 0 25 0 Deposits 0 0 TOTAL 25 0 25 0
13.3 Maturity of loans and borrowings
The maturity of borrowings and other financial debts at 31 December 2019 is as follows:
> 1 year In thousands of Euros Total < 1 year < 5 years > 5 years Bank borrowings 132 516 31 679 95 621 5 216 Of which syndicated loan 70 000 - 70 000 - Of which other borrowings 40 008 9 171 25 621 5 216 Of which syndicated loan overdraft 19 159 19 159 - - Of which other overdrafts 3 200 3 200 - - Of which accrued interests 149 149 - - Miscellaneous financial liabilities - - - -
19 haulotte.com | STATUTORY ACCOUNTS 2019 SUMMARY STATUTORY ACCOUNTS FISCAL YEAR ENDED 31 DECEMBER 2019
NOTE 14 - MATURITY OF CREDITORS
The maturity of creditors at 31 December 2019 is as follows:
> 1 year In thousands of Euros Total < 1 year < 5 years > 5 years Trade payables 51 475 51 475 Tax and employee related liabilities 8 221 8 221 Payables to fixed assets suppliers 0 0 Other liabilities 86 023 86 023 of which current accounts 0 85 605
NOTE 15 - SALES
In thousands of Euros France Export Total Sales of equipment 66 711 204 668 271 379 Sales of services 2 828 12 049 14 878 TOTAL 69 539 216 717 286 257
NOTE 16 - RELATED PARTIES STATEMENT TRANSACTIONS
Transactions between related companies were concluded under normal market conditions.
NOTE 17 - OTHER INCOME AND OTHER EXPENSE
In thousands of Euros 31/12/2019 31/12/2018 Other income - exchange gains on trading 773 993 Other income 19 456 14 803 TOTAL OTHER INCOME 20 229 15 796
Other expense - exchange losses on trading 1 154 1 496 Other losses 1 118 992 TOTAL OTHER EXPENSE 2 272 2 488
TOTAL 17 957 13 308
Other incomes mainly concern trade mark and techology licenses invoiced to our foreign plants.
20 SUMMARY STATUTORY ACCOUNTS FISCAL YEAR ENDED 31 DECEMBER 2019
NOTE 18 - FINANCIAL AND EXTRAORDINARY INCOME AND EXPENSE
18.1 Financial profit (loss)
In thousands of Euros 31/12/2019 31/12/2018 Change in provisions for impairment of shares and advances to subsidiaries (1 168) 1 625 Change in provisions for other loans (1 155) 0 Dividends received from subsidiaries 6 106 845 Interest on current account 329 (407) Interest on borrowings bank overdraft and bank fees (2 799) (1 214) Foreign exchange : gains, losses, changes in provisions 438 1 958 Details by currency : USD 113 GBP 206 AUD 230 Others (111) 438 Provisions for own share* (4 719) 0 Income from marketable securities (1) (3) Loss on receivables from investments 0 0 Late payment interests and discounts 58 61 Financial charges and incomes on Swaps 0 (309) TOTAL (2 910) 2 556 *See §4.3
18.2 Extraordinary profit (loss)
Expense Income Expense Income In thousands of Euros 31/12/2019 31/12/2019 31/12/2018 31/12/2018 Fines and penalties 3 0 207 0 Provisions for lawsuit contingencies(1) 1 145 62 1 802 3 878 Other extraordinary income (expense)(2) 1 715 1 384 4 702 3 Proceeds from the disposal of PPE 718 623 202 0 Proceeds from the disposal of financial assets 0 0 2 164 2 500 Proceeds from investment securities and treasury shares 583 0 665 225 Exceptional depreciation expenses 0 2 0 1 Excess tax depreciation 13 81 27 82 Transfer of charges(2) 0 1 729 0 1 616 TOTAL 4 178 3 880 9 769 8 305 (1)The expense relating to the provision for litigation mainly corresponds to an allocation linked to a call for bank guarantees on customers. (2)Extroordinary expense mainly linked to a call for a bank guarantee on a customer and a fire into a plant. To link with transfer of charges that concern insurance accrual assets. Extraodinary profit relate tax deductions on previous years as well as a product relating to a supplier dispute.
21 haulotte.com | STATUTORY ACCOUNTS 2019 SUMMARY STATUTORY ACCOUNTS FISCAL YEAR ENDED 31 DECEMBER 2019
NOTE 19 - BREAKDOWN OF TAX INCOME BETWEEN CURRENT INCOME AND EXTRAORDINARY PROFIT (LOSS)
In thousands of Euros Pre-tax income Corporate income tax After tax income Current income (6 723) 3 792 (2 931) Extraordinary profit (loss) (298) 0 (298) TOTAL (7 021) 3 792 (3 229)
The breakdown of tax between current income and extraordinary income has been determined by applying the legal tax rate respectively to a current tax income and an extraordinary tax income. The tax revenue which has been linked to the current result mainly comes from Tax Credit for Research.
NOTE 20 - DEFERRED TAXES
In thousands of Euros Basis Deferred tax Expenses recorded not deductible for tax purposes Employee profit-sharing “Organic” tax 419 117 Provision for inventory losses 1 893 530 Provision for trade receivable losses 3 384 947 Provision for pensions 5 658 1 584 Taxable income not recorded in the accounting income 17 243 4 828 NET DEFERRED TAXES 28 597 8 007
Haulotte Group SA has accumulated losses for tax carry forwards amounting to 51,523 thousand €: - 28,851 thousand € acquired for the overall result 2011, - 24,549 thousand € acquired for the overall result 2012, - 1,792 thousand € acquired for the overall result 2013, - (6,170) thousand € used for the overall result 2014, - (3,654) thousand € used for the overall result 2015, - (363) thousand € used for the overall result 2016, - 1 978 thousand € acquired for the overall result 2017, - 2 020 thousand € acquired for the overall result 2018, - 2 520 thousand € acquired for the overall result 2019.
NOTE 21 - TAX CONSOLIDATION
Haulotte Group SA is the head of a French tax consolidation that included on 31 December 2019 the entities Haulotte France, Télescopelle and Haulotte Services. Under this tax sharing agreement, the income tax of entities is incurred by subsidiaries as if they are not included in a tax group.
22 SUMMARY STATUTORY ACCOUNTS FISCAL YEAR ENDED 31 DECEMBER 2019
NOTE 22 - FEES ALLOCATED TO DIRECTORS AND OFFICERS
Amount allocated to Board members expensed by the Company totalled 892 thousand € in 2019 versus 806 thousand € in 2018. This amount originates from funds invoiced by Solem S.A.S. for the services rendered on behalf of the Group by two executives. It includes expenses incurred by those executives on behalf of the Group. In compliance with the agreement to provide general administrative and commercial assistance signed by Solem S.A.S. the cost of the services is subject to a 10% mark-up. No loans or advances have been granted to directors and officers. There are no other pension obligations or related commitments in favour of former executives. Moreover a part of the amount allocated relates a consulting service carried out by a Board member.
NOTE 23 - OFF-BALANCE SHEET COMMITMENTS
23.1 Finance lease commitments
depreciation allowances(1) accounting In thousands of Euros Cost price period accrued Net value Other tangible fixed assets 15 647 29 70 15 577 TOTAL 15 647 29 70 15 577 (1)Provisions over 5 years that would have been recorded for these assets if they had been acquired.
Commitmens finance lease
Fees paid Fees remaining to be paid Residual accounting 1 - 5 > 5 purchase In thousands of Euros period accrued < 1 year years years Total Due price(1) Other tangible fixed assets 73 132 1 126 5 669 10 262 17 057 1 TOTAL 73 132 1 126 5 669 10 262 17 057 1 (1)According to contract
23 haulotte.com | STATUTORY ACCOUNTS 2019 SUMMARY STATUTORY ACCOUNTS FISCAL YEAR ENDED 31 DECEMBER 2019
23.2 Other commitments given
Guarantees granted to financial institutions offering financing to group customers
In line with industry practice, Haulotte Group grants guarantees to financial institutions offering financing to Group customers. Under such arrangements, Haulotte Group sells equipment to the financial institution that in turn contracts with the end user customer through one of two options: the credit sale of the equipment, or the conclusion of a finance lease. Haulotte Group may grant several types of guarantees depending on the framework of agreements concluded with financial institutions and the level of risk assigned to the customer by this institution. Those guarantees are: - Guarantee in the form of a commitment to continue lease payments, - Guarantee in the form of a contribution to a risk pool, - Specific guarantee covering a determined amount for a given receivable, - Guarantee in the form of commitments to repurchase the equipment.
In thousands of Euros 31/12/2019 31/12/2018 < 1 year 8 394 9 518 > 1 year 20 598 16 625 TOTAL 28 992 26 143
Repurchase commitments given to institutions providing financing to customers This concerns commitments given by the company to financial institutions to substitute for customers who do not exercise their purchase option. Of which 56 thousand € given to Haulotte France.
In thousands of Euros 31/12/2019 31/12/2018 < 1 year 9 4 1 - 5 years 46 57 > 5 years - - TOTAL 56 60
Guarantees for export credit financing
Export credit agreements were arranged for selected customers whereby specialised organisations provide the banks guarantees for a percentage of these agreements and the Group then issues an additional counter-guarantee to the financial institution for the uncovered portion. At the end of December 2019, this commitment amounted to €1,458,000 (compared to €1,869,000 at 31 December 2018).
24 SUMMARY STATUTORY ACCOUNTS FISCAL YEAR ENDED 31 DECEMBER 2019
Other commitments
This concerns commitments given by the company to suppliers.
In thousands of Euros 31/12/2019 31/12/2018 < 1 year 10 10 TOTAL 10 10
This concerned commitments given by the company to customer to guarantee a deposit paid.
In thousands of Euros 31/12/2019 31/12/2018 < 1 year 0 2 601 TOTAL 0 2 601
Commitments given to GE Capital for the benefit of Haulotte US for US$5 million
In connection with product financing agreements executed in 2014, Haulotte Group SA is the first call guarantor in the event of default by Haulotte US INC., for up to US$5 million, in favour of different GE Group companies (General Electric Capital Corporation US, GE Commercial Distribution Finance Corporation US, GE Canada Equipment Financing G.P.). This commitment will expire on 19 December 2021.
NOTE 24 - RECEIVED COMMITMENTS
In thousands of Euros 31/12/2019 31/12/2018 Commitment received from Télescopelle as a beneficiary of a debt waiver with a repayment clause 1450 1 450
NOTE 25 - AVERAGE HEADCOUNTS
31/12/2019 31/12/2018 Managers 275 251 Office employees, technicians 174 173 Workers 228 219 TOTAL 677 643
NOTE 26 - INDIVIDUAL TRAINING BENEFITS
The French law of 5 March 2014 replaced the previous system in France for accumulating individual rights to training (droit individuel à la formation or DIF) by the so-called “personal training account” (compte personnel de formation or CPF) as from 1 January 2015. This new system gives employees with a permanent employment contract in the private sector a right to training, corresponding to 24 hours per year for the first five years, then 12 hours per year for a period of full-time work, capped at 150 hours. To facilitate the transition between these two systems, the balance of hours accumulated up until 31 December 2014 under the previous system may be carried over to the new system and used up until 1 January 2021, representing for Haulotte Group SA a total of 54,158 hours.
25 haulotte.com | STATUTORY ACCOUNTS 2019 SUMMARY STATUTORY ACCOUNTS FISCAL YEAR ENDED 31 DECEMBER 2019
NOTE 27 - FOREIGN EXCHANGE RISKS EXPOSURE
The Company is mainly exposed to foreign exchange risks with receivables in US dollars, Australian dollars and pound sterling. A portion of this exposure is hedged by forward purchases of the relevant currencies and by a specific hedging instrument in US dollars. The Company has used in the period, swaps and forward currency sales accounted for on the basis of isolated open positions. Gains and income from the settlement of positions are recognized under financial income. The Company did not have any financial instruments at the end of the reporting period.
Significant receivables (net of provisions), payables, cash positions and commitments in foreign currency not hedged
Currencies Foreign exchange exposure K€ AUD SEK GBP USD PLN RMB TRY INR Others BALANCE SHEET Receivables(1) 27 464 0 5 568 190 841 0 23 of which Group receivables 27 464 5 568 185 070 of which Non Group receivables 5 771 23 Cash positions(2) 3 791 402 802 5 006 223 Payables(3) 116 14 482 54 5 400 2 334 of which Group payables 67 14 482 54 1 628 2 334 of which Non Group payables 48 3 772 OFF-BALANCE SHEET COMMITMENTS(4) Non Group commitments given 1 423 0 365 0 8 835 7 012 2 743 222 (1)Financial receivables, trade receivables (2)Cash positions (3)Financial payables, trade payables (4)This concerns commitments to cover lease payments and risk pools mentioned in section 23.2
26 SUMMARY STATUTORY AUDITOR'S REPORT ON THE FINCANCIAL STATEMENTS FISCAL YEAR ENDED 31 DECEMBER 2019
PricewaterhouseCoopers Audit BM&A
Grand Hôtel-Dieu 11, rue de Laborde 3 Cour du Midi 75008 Paris CS 30259 - 69287 LYON CEDEX 02
This is a translation into English of the statutory auditors’ report on the financial statements of the Company issued in French and it is provided solely for the convenience of English speaking users. This statutory auditors’ report includes information required by European regulation and French law, such as information about the appointment of the statutory auditors or verification of the management report and other documents provided to shareholders. This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France.
To the annual general meeting of HAULOTTE GROUP SA Company
OPINION In compliance with the engagement entrusted to us by your annual general meeting, we have audited the accompanying financial statements of Haulotte Group SA for the year ended December, 31st 2019. These financial statements have been approved by the board of directors on March 03, 2020 based on information available at that date regarding the evolving context of Covid-19’s health crisis. In our opinion, the financial statements give a true and fair view of the assets and liabilities and of the financial position of the Company as at December, 31st 2019 and of the results of its operations for the year then ended in accordance with French accounting principles. The audit opinion expressed above is consistent with our report to the Audit Committee.
BASIS FOR OPINION Audit Framework We conducted our audit in accordance with professional standards applicable in France. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Statutory Auditors’ Responsibilities for the Audit of the Financial Statements section of our report.
Independence We conducted our audit engagement in compliance with independence rules applicable to us, for the period from January, 1st 2019 to the date of our report and specifically we did not provide any prohibited non-audit services referred to in Article 5(1) of Regulation (EU) No 537/2014 or in the French Code of ethics (code de déontologie) for statutory auditors. JUSTIFICATION OF ASSESSMENTS - KEY AUDIT MATTERS In accordance with the requirements of Articles L.823-9 and R.823-7 of the French Commercial Code (code de commerce) relating to the justification of our assessments, we inform you of the key audit matters relating to risks of material misstatement that, in our professional judgment, were of most significance in our audit of the financial statements of the current period, as well as how we addressed those risks.
27 haulotte.com | STATUTORY ACCOUNTS 2019 SUMMARY STATUTORY AUDITOR'S REPORT ON THE FINCANCIAL STATEMENTS FISCAL YEAR ENDED 31 DECEMBER 2019
These matters were addressed in the context of our audit of the financial statements as a whole, approved in the context described above, and in forming our opinion thereon, and we do not provide a separate opinion on specific items of the financial statements. Measurement of equity investments, receivables from investments and Group trade receivables
Identified risk
Haulotte Group SA holds equity in Group companies and operates a manufacturing business. As part of the development of the Group, it carries out cash advances to finance its subsidiaries. In addition, it sells equipment to its sales subsidiaries and provides services to the Group as a whole. Equity investments, receivables from investments and Group trade receivables recognised at 31 December 2019 represent some of the largest entries on the balance sheet. Equity investments are carried at cost and may be impaired based on their value in use. Receivables from investments and Group trade receivables are recognised at par value and may be written down on the basis of their recoverability. As indicated in Note 2.3 to the financial statements, the value in use of shares in subsidiaries is estimated by management based on equity at the closing date and forecast earnings for the concerned entities. These same inputs are used to evaluate the recoverability of receivables from investments and trade receivables at Group level. In order to estimate the value in use of equity investments, management is required to exercise judgement to decide which inputs to use for each investee. These inputs either correspond to historical data (equity) or forecast data (profitability outlook or the economic environment in the countries in which the investees operate). The geographic location of certain subsidiaries and the competitive and economic environment in which they operate could lead to a drop in their business activity and therefore affect their operating income. Accordingly, due to the significant amounts at stake and the decisive impact of these measurements on the assessment of the financial situation, assets and liabilities of Haulotte Group SA, we deemed the correct measurement of equity investments, receivables from investments, Group trade receivables and provisions for contingencies to be a key audit matter.
How our audit addressed this risk Our audit work consisted primarily in verifying that the estimated values determined by management were based on an appropriate measurement method and underlying data and, depending on the investment: For valuations based on historical data: - verifying that the equity values used were consistent with the financial statements of the entities for which an audit or analytical procedures were performed and that any adjustments to equity were based on documentary evidence. For valuations based on forecast data: - obtaining the cash and operating cash flow projections for the activities of the entities concerned, as prepared by their operational management teams, and assessing their consistency with the forecast data taken from strategic plans drawn up by general management for each of their activities and approved, where applicable, by the Board of Directors, - verifying the consistency of the assumptions used with the economic environment at the closing date and at the date on which the financial statements were prepared. In addition to assessing the values in use of the investees, our work also consisted in: - assessing the recoverability of receivables from investments in light of the analyses conducted of equity investments, - verifying the recognition of provisions for contingencies where the Company is exposed to the losses of a subsidiary with negative equity.
28 SUMMARY STATUTORY AUDITOR'S REPORT ON THE FINCANCIAL STATEMENTS FISCAL YEAR ENDED 31 DECEMBER 2019
SPECIFIC VERIFICATIONS We have also performed, in accordance with professional standards applicable in France, the specific verifications required by laws and regulations.
Information given in the management report and in the other documents with respect to the financial position and the financial statements provided to Shareholders
We have no matters to report as to the fair presentation and the consistency with the financial statements of the information given in the management report of the Board of Directors approved on March, 03 2020 and in the other documents with respect to the financial position and the financial statements provided to Shareholders. Regarding the events that occurred and elements that have been known since the date the financial statements were approved and in relation to the effects of Covid-19’s crisis, management informed us that this would be subject to a specific communication addressed to the shareholders’ meeting called to vote on said financial statements. We attest the fair presentation and the consistency with the financial statements of the information relating to payment deadlines mentioned in Article D. 441-4 of the French Commercial Code (Code de commerce).
Report on corporate governance We attest that the Board of Directors’ report on corporate governance sets out the information required by Articles L. 225-37-3 and L. 225-37-4 of the French Commercial Code. Concerning the information given in accordance with the requirements of Article L. 225-37-3 of the French Commercial Code (code de commerce) relating to remunerations and benefits received or awarded by the directors and any other commitments made in their favour, we have verified its consistency with the financial statements, or with the underlying information used to prepare these financial statements and, where applicable, with the information obtained by your company from controlled companies that are included in the scope of consolidation. Based on this work, we attest the accuracy and fair presentation of this information. With respect to the information relating to items that your company considered likely to have an impact in the event of a takeover bid or exchange offer, provided pursuant to Article L. 225-37-5 of the French Commercial Code (code de commerce), we have verified their compliance with the source documents communicated to us. Based on our work, we have no observation to make on this information.
Other information In accordance with French law, we have verified that the required information concerning the purchase of investments and controlling interests and the identity of the shareholders and holders of the voting rights has been properly disclosed in the management report.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
Appointment of the Statutory Auditors We were appointed Statutory Auditors of Haulotte Group SA by the General Meetings held on 28 May 2015 for BM&A and on 2 October 1998 for PricewaterhouseCoopers Audit.
As at 31 December 2019, BM&A and PricewaterhouseCoopers Audit were in the fifth year and the twenty-second year of total uninterrupted engagement, which are the fifth year and the twenty-second year since securities of the Company were admitted to trading on a regulated market, respectively.
29 haulotte.com | STATUTORY ACCOUNTS 2019 SUMMARY STATUTORY AUDITOR'S REPORT ON THE FINCANCIAL STATEMENTS FISCAL YEAR ENDED 31 DECEMBER 2019
RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE FINANCIAL STATEMENTS Management is responsible for the preparation and fair presentation of the financial statements in accordance with French accounting principles and for such internal control as management determines necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless it is expected to liquidate the Company or to cease operations.
The Audit Committee is responsible for monitoring the financial reporting process and the effectiveness of internal control and risks management systems and where applicable, its internal audit, regarding the accounting and financial reporting procedures.
The financial statements were approved by the Board of Directors.
STATUTORY AUDITORS’ RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
Objectives and audit approach Our role is to issue a report on the financial statements. Our objective is to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with professional standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As specified in Article L.823-10-1 of the French Commercial Code (code de commerce), our statutory audit does not include assurance on the viability of the Company or the quality of management of the affairs of the Company. As part of an audit conducted in accordance with professional standards applicable in France, the statutory auditor exercises professional judgment throughout the audit and furthermore: - Identifies and assesses the risks of material misstatement of the financial statements, whether due to fraud or error, designs and performs audit procedures responsive to those risks, and obtains audit evidence considered to be sufficient and appropriate to provide a basis for his opinion. The risk of not detecting a material misstatement resulting from fraud is higher than one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. - Obtains an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control. - Evaluates the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management in the financial statements. - Assesses the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. This assessment is based on the audit evidence obtained up to the date of his audit report. However, future events or conditions may cause the Company to cease to continue as a going concern. If the statutory auditor concludes that a material uncertainty exists, there is a requirement to draw attention in the audit report to the related disclosures in the financial statements or, if such disclosures are not provided or inadequate, to modify the opinion expressed therein. - Evaluates the overall presentation of the financial statements and assesses whether these statements represent the underlying transactions and events in a manner that achieves fair presentation.
30 SUMMARY STATUTORY AUDITOR'S REPORT ON THE FINCANCIAL STATEMENTS FISCAL YEAR ENDED 31 DECEMBER 2019
Report to the Audit Committee We submit a report to the Audit Committee which includes in particular a description of the scope of the audit and the audit program implemented, as well as the results of our audit. We also report, if any, significant deficiencies in internal control regarding the accounting and financial reporting procedures that we have identified.
Our report to the Audit Committee includes the risks of material misstatement that, in our professional judgment, were of most significance in the audit of the financial statements of the current period and which are therefore the key audit matters that we are required to describe in this report. We also provide the Audit Committee with the declaration provided for in Article 6 of Regulation (EU) N° 537/2014, confirming our independence within the meaning of the rules applicable in France such as they are set in particular by Articles L.822-10 to L.822-14 of the French Commercial Code (code de commerce) and in the French Code of Ethics (code de déontologie) for statutory auditors. Where appropriate, we discuss with the Audit Committee the risks that may reasonably be thought to bear on our independence, and the related safeguards.
The Statutory Auditors PricewaterhouseCoopers AuditBM&A
Elisabeth L’hermite Alexis Thura
31 haulotte.com | STATUTORY ACCOUNTS 2019 Conception & réalisation :
STATEMENT OF NON-FINANCIAL PERFORMANCE REPORT 2019
TABLE OF CONTENTS
NOTE 1 - Non-financial statement 2 1.1 Introduction 3 1.2 The Haulotte Group business model 4 1.3 Identification of the main non-financial issues, risks and opportunities of Haulotte Group 5 1.4 Haulotte Group’s non-financial issues 7 1.4.1 Attracting and retaining talent 7 1.4.2 Skills management 10 1.4.3 Protection of IT systems and personal data (customers and employees) 10 1.4.4 Strengthening our R&D policy and system for protecting rights and respecting 12 intellectual property rights 1.4.5 Relations with suppliers and subcontractors 13 1.4.6 Integrating climate change into processes 14 1.4.7 Managing the environmental impact 15 1.4.8 Respecting human rights 16 1.4.9 Combating corruption and tax evasion 17 1.4.10 Occupational health and safety 18 1.4.11 Cultivating diversity 19 1.4.12 Persons with disabilities: 20 1.5 Methodology note 21 1.5.1 Information collection process 21 1.5.2 Reporting period 21 1.6 Report of the Independent Third-Party assurance on the Non-Financial Statement 21
2 STATEMENT OF NON-FINANCIAL SUMMARY PERFORMANCE REPORT 2019
NOTE 1 - NON-FINANCIAL STATEMENT
1.1 Introduction Within the framework of the application of the European directive on non-financial reporting (French decree°2017-1265 of 9 August 2017 in application of Ordinance No 2017-1180 of 19 July 2017), as a listed company with total assets and net sales of more than €100 million, and an average number of permanent employees of more than 500, Haulotte Group is required to include a non-financial statement (NFS) in its financial report.
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1.2 The Haulotte Group business model
HUMAN CAPITAL: Nearly 1680 employees in 22 countries worldwide. Multiple skills: design/production/distribution/distribution/rental/maintenance. Comex = Managing Director Activity and Area.
FINANCIAL CAPITAL: Shareholders' equity: €265 million. Syndicated loan: €88 million. Investments: €27 million.
RCE S INTELLECTUAL CAPITAL: 1 Engineering Department, 1 test center, R&D expenses: 16,2 M€.
SOCIETAL CAPITAL: Process for appointing suppliers to the panel (product certification, supplier audit).
RESO U Quality department (partnership / quality charter). Customer satisfaction survey.
GEOGRAPHIC PRESENCE: 6 production units, 22 sales subsidiaries.
ENVIRONMENTAL CAPITAL: ISO14001 certification in 83% of our production sites. Quality, Safety and Environment Policy, management commitment 1 2 3 MARKET POSITION PROFITABILITY PRODUCT & TECHNOLOGY Haulotte market leader in Successful and flexible company able to adapt Full range provider, more than 70 Europe ; n° 3 worldwide. to the fluctuations in models (AWP & Telehandlers) demand and specific market Offering a complete range of
CELLENC E conditions. innovative products. EX 4 TIONAL SALES & SERVICES A distribution network through 20 subsidiaries and offices in strategic markets, supported by a ER A distributor network giving coverage in more than 100 countries. Full Services solutions for our products include financing,
OP user training, maintenance, spare parts.
We are developing a “GloCal” strategy that will make it possible to We have defined three major strategic axes to transform this deploy the Group’s global strategy locally, by including the ambition into a concrete action plan: Become a Blue Company, necessary adaptations. We rely on defined and shared human, become a full solutions provider, become the best-in-class Service professional and managerial values to guide our actions and give Level Agreement provider. With a cross-company guideline to meaning to our performance. achieve this ambition:Digital transformation, a key factor in our future success. "Let's Dare" empowerment program to place TR ATEGY In this context, our ambition is to offer our customers solutions S that are ever more secure, ever more respectful of the employees at the heart of performance. environment, and ever more adapted to our partners’ needs.
HUMAN CAPITAL: Value Charter based on 3 pillars: Engagement & Responsibility , Respect & Trust, Excellence & Performance. Employees in 2019 : +53 people. Let's dare program deployed in our subisidiairies.
FINANCIAL CAPITAL: Revenue: €610 million. Cash Flow from operations : €44 million. Taxes paid in France and abroad : €8 million. TIO N INTELLECTUAL CAPITAL: Pulseo, Digital, Innovation. ARE A
C SOCIETAL CAPITAL: Securing supplies to guarantee deliveries to customers. 5-year warranty offered to our customers for the launch of a new machine. Creation of key account managers for our key account customers. UE
GEOGRAPHIC PRESENCE: Geographical expansion project to be present as close as possible to the main markets and that VAL our logic is to produce "locally" at least 50% of our customers' needs.
ENVIRONMENTAL CAPITAL: 2301 Tones of waste recovered. Nearly 200 employees trained in environmental matters.
4 STATEMENT OF NON-FINANCIAL SUMMARY PERFORMANCE REPORT 2019
1.3 Identification of the main non-financial issues, risks and opportunities of Haulotte Group To comply with its new obligations, in 2018 Haulotte Group produced for the first time a non-financial risk map. Supplementing the macro-risk map already produced by the Group, this new tool makes it possible to identify its main non- financial risks. The approach adopted by the Group, reflecting the existing risk management methodology, is organised into three major phases:
1. Definition of the universe of non-financial risks
Identification of 15 risks and issues which could have a material impact on the Group, its stakeholders and its environment in the broad sense. Material and relevant risks are pre-selected in reference to: -An assessment of the situation carried out in the 2018 first half which identified the business line risks; - The major information categories provided for under II of article R. 225-105 of the French commercial code (employment, social and environmental information); - Areas specifically covered by III of article L. 225-102-1 of the French commercial code (as a listed company); - Sectorial benchmark information; - Regulations to which the Group is subject (for example: ILO core conventions, the French Labour Code, the "Sapin 2" law, the French general data protection regulations, etc.); - Recognised international reporting standards (GRI10, SASB11, etc.).
2. Ranking of the issues:
In 2018, each risk identified was ranked by fifteen different Business Departments using an approach aligned with the approach applied by the Group Risk Management Department. All issues were assessed according to two criteria: - The severity of the impact, ranked according to three criteria: financial, going concern and reputational risk according to a scale of 1 to 4; - The probability of occurrence resulting in an impact. The rating scale also includes 4 levels. In 2019, these issues were reviewed and reassessed in order to determine: - if they continue to be relevant within the Group, - if they continue to be relevant with respect to the Group’s activity. The different contributors were also asked if new issues were identified in the period.
3. Ranking of risks:
On the basis of the rankings performed, Haulotte Group confirmed the existence of twelve new priority non-financial risks, in addition to those already being monitored by the Group. All have been validated by the executive committee and policies adopted are presented in this document.
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The twelve major issues are: -Attracting and retaining talent, - Skills management, - Protecting IT systems and personal data (customers and employees), - Strengthening our R&D policy and system for protecting rights and respecting intellectual property rights, - Relations with suppliers and subcontractors, - Integrating climate change into processes, - Managing the environmental impact, - Respecting human rights, - Combating corruption and tax evasion, - Occupational health and safety, - Diversity, - Disabled workers.
Inadequate management of the human Non optimal Breach of ressources, work legislation Deterioration of generating a environment (human rights, the relations lake of for health and Risk of image, intellectual with commitment, safety or not reputational Short-term property, Inaccessibility stakeholders resignations suitable for impact, and relations GDPR, Sapin II, Loss of know- of working due to the and shortage the lake of with protection of how, lake of tools / cyber- contribution to of employees performance transparency suppliers resources etc) competitivity crime climate change Attracting and X retaining talent Skills management X Relations with suppliers and X X subcontractors Strengthening our R&D policy and system for protecting rights X X and respecting intellectual property rights Protecting IT systems and personal data X X (customers and employees) Integrating climate change into X X X X processes Managing the environmental X X impact Respecting human X X X rights Combating corruption and tax X X evasion Occupational X health and safety Diversity X X Disabled workers X X
It has been verified that these issues cover the major areas required for disclosure provided for in II of Article R225-105 of the French commercial code (employment, social and environmental information), as well as those areas specifically provided for in III of Article L225-102-1 of this code for listed companies. Among these specific areas, Haulotte Group does not provide information on the thematics of social engagement in favour of sustainable development, combating food wastage, as well as combating food insecurity, promoting animal welfare and fair and sustainable food practices on the grounds that these are not included in its main risks.
6 STATEMENT OF NON-FINANCIAL SUMMARY PERFORMANCE REPORT 2019
1.4 Haulotte Group’s non-financial issues
1.4.1 Attracting and retaining talent
Issue The expectations of current and future employees are evolving, notably the new generations entering the job market. Without reason, companies must adapt their work environment to increase their attractiveness or risk being unable to attract and retain new talent Haulotte Group has initiated a profound transformation of its corporate culture in order to adapt to these societal changes. Employees seek to improve their performance, communicate more, develop interactions with others in relation to the values, strategy, culture and issues. They share their ideas, advise, represent the company to contribute to customer satisfaction. They know how to think out-of-the-box, innovate and are proud to work for the company. Obtaining the engagement of everyone is possible if one creates the right conditions. Engagement is a key driver of our performance.
Policy Convinced that each employee has a critical role in the Group's success and customer relations, a transformative sustainable programme was implemented to make employees a key driver of performance. This programme is focus on creating a work environment that encourages engagement, both with respect to interest in the missions assigned, the physical work environment, but also the managerial practices and internal and external communications. Introduced in 2017, this programme continues to be applied each year through recurrent and ad hoc initiatives designed to strengthen employee engagement through its values of Respect and Confidence, Engagement and Responsibility, the Quest for Excellence and Performance. Collaborative and bottom-up approaches and breaking down barriers are encouraged accompanied by reinforced managerial practices and communication focussing on meaning, strategy and vision.
Actions and results
1. Signature of a QWL (Quality of Working Life) agreement to promote employee engagement
Convinced that diversity and quality of working life are the cornerstone of employee performance and, in consequence, the success of our company, we concluded a three-year QWL agreement in 2018 with our labour partners to promote the goal of achieving a balance between quality of working life, collective performance and the quality of the services delivered to our customers. In this agreement, we reaffirmed our commitment to help employees achieve an optimal balance between their professional life and their family responsibilities and we have undertaken to increased parenthood-related representation within the company, create a supportive environment for employees with children and ensure compliance with the principle of non- discrimination in their career development. Upon the agreement’s signature we implemented the following initiatives which were continued in 2019: - Engagements in favour of the right to disconnect, - Engagements in favour of equal employment opportunities between men and women, - Work schedule accommodations for the beginning of the new school year for parent whose child or spouse has a disability or long-term illness requiring permanent care at fixed hours or planned treatments, - Organisation and promotion or distance learning, - Leave for caregivers for employees who wish to suspend their employment contract to care for a relative with a disability or a particularly serious loss of autonomy, - Implementation and promotion of the French law providing for the donation of the vacation or rest days (Loi Mathis). In this same spirit, an agreement on telework was signed in France giving eligible employees the possibility to work from home 4 days per month.
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2. Application of the Values Charter
Directly building on the “Let’s Dare” initiative, the Values Charter was drafted entirely by Haulotte employees representing different countries, services and categories. In 2019, this charter was implemented in particular through the following practices: - “Transparently sharing important information with other departments, plants and subsidiaries”: Organisation of common management committee meetings between the Changzhou plant and the distribution subsidiary in Shanghai. - “Valuing and promoting ideas and celebrating successes”: Based on the idea of an Australian employee, a Group-wide “big cleaning day” was organised: sorting waste at all workstations, plants and offices, throwing out waste, cleaning, promoting paper-free practices and improving work and safety conditions. - “Sharing Haulotte’s vision and strategy with members of the team and explaining the importance of their work”: Meetings with all managers in each of their regions by members of the Executive Committee in conjunction with a serious game focusing 12 strategic projects. - “Encouraging employees to make suggestions and decisions and take initiatives: Organisation by employees of running teams (30 participants at the SaintéLyon charity race), participation of 5 teams in the “inter-company challenge”, organisation of an inter-company football championship “Soccer Team Haulotte Lifters”, artistic decoration (focussing on values) in the dining room in Singapore, organisation one Friday per month of a lunch with persons interested in meeting new persons, new business and new employees. - “Strengthening cooperation and cohesion through teambuilding initiatives and celebrations: Organizing a number of seminars to build cohesion at every level, particularly between different teams as well as large staff events, for example: The BE seminar- Purchasing and Purchasing projects, 10 years of the Changzhou production plant, awarding employees trophies for their 10 years of service at the Argès plant at the annual Christmas party, inauguration of the new site in California and the United Kingdom, a girls night event and a design contest for the children of employees with gifts to win in Romania.
3. Creation of a work setting designed to enhance the attractiveness and talent retention
More than 200 employee volunteers participated in 2019 in one of 10 commissions launched for the purpose of defining our future headquarters, the aesthetic concept, the future workspaces, the workstation profile, installations of the testing and validation centre, the decoration of the company restaurant, the showroom, the gym facility, the external fixtures, etc. The results is a more a more attractive work environment for the future headquarters providing for a variety of comfortable and connected spaces adapted to the different needs that an employee may require during the course of a workday: areas more or less adapted for a high degree of concentration, areas for reflection and formal or informal exchanges and creativity. To these spaces are added a company restaurant, gym facility, a Fab-lab, an E-lab, etc. The spirit, The furniture and the operating procedures are designed to inspire the future installations and renovations of the Group’s different sites to help foster greater engagement.
4. Reinforcing external and internal communications initiatives
A quarterly newsletter this sent to all employees in both digital and paper format covering all types of news about the Group, including achievements, projects, events, customer relations, and the talent of our employees. This tool is also destined to be distributed to a larger external audience through initiatives targeting the radio, press and social media (Linkedin, Facebook, histogram, etc.). At the Argès and Creusot production sites, open door days were organized for the families of employees with actual events (design competitions, Lego events, the award of diplomas, etc.) to give them an opportunity to learn about the products, there manufacture, the different skills required for these activities and also to provide an initiation to our equipment. Interventions were also organized for outside audiences to promote knowledge about our business lines. In France and Singapore, our employees have organized events with students to present our company and our careers. In Romania, the Human Resources Department participates every year in an employment fair in partnership with universities.
8 STATEMENT OF NON-FINANCIAL SUMMARY PERFORMANCE REPORT 2019
5. Developing collaborative approaches and collective intelligence
- Implementation of IDAY brainstorming events: At a one-day event, the ideas of employees in five specific areas are published at the group level through a dedicated IT platform in all languages through an automated translation tool, allowing leaders to at their comments or click on the ”like” button In 2019, through this initiative, 1859 ideas were collected generating 6391 likes and 498 comments. 5 major winners were picked and many ideas continue to be exploited. - Organization of an Hackathon: Haulotte teams meet and collaborate on a voluntary basis with 40 young developers, coders and creators from IBM in order to work on innovative digital solutions. - Launch of collaborative work projects: Working groups comprised of members of different nationalities describe the processes of the company and ensure they effectively address customer satisfaction and QWL priorities.
6. Assisting art managers, genuine facilitators of change
- Management program & and HR training: The purpose of this program is to provide internal training to new managers either promoted from within or joining the company as a way to promote a common language and the same practices, tools and vision. 120 employees were trained in 2019 in the step 1 management program and a training in the conduct of annual meetings was also provided to new managers as well as the managers of the countries where the tool was deployed in 2019. - Presentation of strategic projects: In every region between April and December 2019, 12 strategic projects were presented to all managers through a giant serious game initiative led by Executive Committee members. - Coordination of a number of seminars: Seminars were led by external consultants or internally focusing mainly on collaboration, communications, cohesion and soft skills.
7. Continuing improvements in promoting employee engagement
The survey conducted in 2017 by Korn Ferry Hay Group identified the main areas for improvement in developing the spirit of employee engagement. Workshops were implemented to identify actions to be adopted at all Group sites. The high 92% participation rate of this survey made it possible to identify the strengths and areas for improvement of the organisation and employee engagement with workshops and associated action plans. On that basis, more than 550 actions were proposed and more than 50% implemented.
Key performance indicators: Turnover rate of permanent employees: 8.35% in 2019 (vs.12.46% in 2018).
Reporting boundary: Haulotte Group S.A. (L’Horme, Reims, Le Creusot, Lorette). Note: the calculation of the turnover rate for permanent employees was modified in 2019 and is now calculated annually instead of monthly. Employee engagement rate for 2017: 57% (2017 was the first year of the survey and the new survey was initiated in January 2020). “I am proud to work for Haulotte”: 71% (2017). “I would recommend Haulotte for the quality of work life”: 49% (2017). “Haulotte offers many opportunities for stimulating and interesting work experiences”: 67% (2017)
Scope: Group.
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1.4.2 Skills management
Issue Within an increasingly competitive labour market, a scarcity of skills and rapid market changes, notably in terms of technologies, business lines and the development of digital solutions, the company’s ability to maintain the employability of its employees, develop their skills and offer career opportunities to enable them to become active stakeholders in their professional project has become critical for ensuring its future.
Policy Haulotte wishes to create a favourable environment designed to give every employee an opportunity to learn about and anticipate the changes in his or her activity, but also to share and receive knowledge coming from within the company and outside, notably through mobility. All challenges must be taken up within the framework of a learning organization.
Actions
1. Strengthening the training offering at the Group level
In 2019, a large-scale project was carried out to prepare for the 2020 launch of our Haulotte Academy. Workshops were organized to identify and assess the content of our internal training programs and integration processes with the goal of proposing a common base for all our employees and instructors that takes into account the expectations both our employees and our customers. The identification of a Group e-learning platform was also initiated to develop a tool designed to chair and bring to life training content for instructors, distribute e-learning modules facilitating distance learning and the sharing of skills, notably by means of international business line communities and making it easier to monitor the expertise of each participant.
2. Offer our employees career development opportunities within the Group through internal mobility
We continue to deploy our HR Foederis tool in 2019 (skills management) within the context of our mobility offering for opportunities in other countries. In addition to conducting annual interviews to evaluate performance and progress, this tool serves to identify needs and historical training programs, mobility goals, and on that basis, identify potential opportunities for mobility. In 2019, this tool was deployed in China, Romania, Sweden and the Netherlands. Deployment is now being prepared in 2020 for Chile, Mexico, Spain, Argentina and Brazil.
Key performance indicators Rate of employees having benefited from internal mobility (functional, hierarchical, geographic) in 2019: 4%.
Scope: all companies of the Group (with the exception of the following 8 companies, representing 10% of the workforce: Haulotte GbhH, Haulotte Polska, Haulotte Vostock, Haulotte Italia, Haulotte Argentina, Haulotte do Brazil, Haulotte Mexico, Haulotte Chile and Haulotte Iberica).
Estimated percentage of employees having received training: (51.7% in 2019)
Scope: all companies of the Group (with the exception of the following 8 companies, representing 10% of the workforce: Haulotte GbhH, Haulotte Polska, Haulotte Vostock, Haulotte Italia, Haulotte Argentina, Haulotte do Brazil, Haulotte Mexico and Haulotte Iberica).
Note: this rate is based on information provided from our Foederis tool where it was observed that a nonmaterial percentage of data was not provided in 2019 (representing a shortfall of less than 5%).
10 STATEMENT OF NON-FINANCIAL SUMMARY PERFORMANCE REPORT 2019
1.4.3 Protection of IT systems and personal data (customers and employees)
Issue With the IT system an integrated component of Haulotte’s operations, IT security has become a genuine concern for the Group. In recent years, and even today, the number of computer threats and fraud attempts is continuing to increase. IT security as well as the protection of our data represent two indispensable tools for reducing the risk of financial loss and/or damage in terms of image and reputation.
Policy For that reason it is vital to secure our IT systems by taking into account the continuous technological and organisational developments as well as new methods being adopted by scammers. On this basis, the Group's IT system must be constantly updated to ensure maximum security. Our objective is to ensure the Group is equipped with an IT system constantly being improved to resist potential cyberattacks and ensure the protection of personal data of our employees, customers as well as any other stakeholders.
Actions and results
1. Promoting staff awareness
The purpose of the IT Charter which is reviewed each year is to raise awareness of users about the proper practices for using IT tools. It is signed by all employees upon joining the company as in enforceable and binding document. As part of their integration process, users also are provided with training on security providing information on the proper responses when receiving a suspicious email. At the l'Horme site, employees are also informed about the risks of fraud through a series of rapid presentations on the main risks and practices to be adopted to limit these risks. And anti-fraud working group was established a few years ago to provide regular information in this area. In addition, a warning message is distributed to all employees in the event of an attack, and a warning platform exists in the event of a breakdown in computer systems as a means of preventing any security lapses. Because the satisfaction of IT systems users is a good indicator of the quality of the service, daily satisfaction surveys are conducted when open cases have been closed. This method makes it possible to monitor user satisfaction in real time. In addition, at the end of 2019, they are sent a global satisfaction survey. 500 employees (representing a participation rate of 35%) shared their opinions on the quality of the services provided. On that basis, the rate of satisfied or very satisfied users was 89%, based on scores between 7.2 and 10. 59% of the users consider that the service has improved (among the 41% remaining, 11% consider that the service has deteriorated). Areas for improvement highlighted in this service will be communicated in 2020.
2. Monitoring the quality of IT services and security
A security audit was conducted in 2019 in the form of a penetration test designed which involves conducting a simulated cyberattack designed to test all entry points to our sites. The results of these tests resulted in the adoption of corrective measures. In 2019, a methodology was defined in order to adopt quality standards in the conduct of IT projects. To monitor the implementation of this methodology, indicators of quality, time and costs, risks and adoption are monitored for each project.
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Key performance indicators In 2019, we adopted two types of performance indicators: - RUN indicators (covering IT support activities), - BUILD indicators (covering project activities).
RUN indicators: In January 2019, the It department had a backlog of 1,600 support tickets (the number of tickets pending resolution whereas in December 2019 this backlog was 928 tickets or a reduction of 42.75% of user requests pending resolution;
Scope: Group. Customer satisfaction for closed support tickets between October and December 2019 80%.
Scope: Group. Total user satisfaction according to the 2019 survey. 90%
Scope: Group.
BUILD indicators: 100% of projects managed by the IT & Solutions department respond to the methodological concerns (methodology defined in early 2019).
Scope: Group.
1.4.4 Strengthening our R&D policy and system for protecting rights and respecting intellectual property rights
Issue In response to market conditions, companies of the sector are redirecting their efforts to adopt more ambitious development projects. Haulotte must innovate to ensure its growth and propose new ranges of equipment and/or services in order to maintain its leadership in the market. Multiple pressures (such as production costs, the growing complexity of competition, notably in new markets, accelerating pace of technological progress) place innovation at the heart of the Haulotte strategy, the key to its competitiveness.
Policy For Haulotte, intellectual property must become an instrument for commercial conquest and communications. The right intellectual property policy can offer a very effective means for acquiring and defending market positions. In addition, the appropriate protection of intellectual property rights and know-how of the Group offers a source of legal security and can offers benefits in terms of both profits and image. Our objective is to maintain an increasingly dynamic R&D policy in order to address the new challenges that the Group will be facing but also to develop products taking into account the rights of third parties in this area while ensuring the protection of our own intellectual property rights.
Actions and results
1. Maintaining the dynamic of the R&D policy
A continuing technological intelligence watch was implemented in order to remain permanently up-to-date of new innovations arriving on the market. The Company has developed an intellectual property risk management plan providing for the adoption of risk management tools by all departments concerned. There also exists of an Intellectual Property Committee to provide a forum for exchanges on subjects in progress and ensure that important information is communicated.
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In addition, the Company recognizes the creators, on a broader basis exceeding the scope of patentable inventions. It recognizes and respects inventors and creators of innovative ideas (a policy for employee inventions). Finally, during the project creation process, an intellectual property recommendation is mandatory for certain steps.
2. Respecting the rights of third parties and our rights
The main actions in this area are carried out by the Intellectual Property (IP) manager which was appointed at the end of 2018 and who succeeded in 2019 to develop a dynamic intellectual property policy. The IP manager monitors on a regular basis competitive and technological developments (freedom of use, technological status (in order to identify the technological developments in the company’s areas of activities and ensure there are no infringements on the rights of third parties. This enables him to also evaluate the availability of intellectual property rights and ensure that third parties respect our rights. In addition, the IP manager contributes to optimizing our intellectual and industrial property policies by increasing Haulotte staff awareness about managing IP risk.
Finally, the IP manager reinforces our intellectual property rights by protecting our innovations through filings. On that basis, all of employees with third parties have been secured through collaboration with third parties by establishing a dialogue based on trust.
Key performance indicators: Percentage of sales devoted to R&D: 2.7% in 2019 (vs. 2.47% in 2018 or an increase of 0.23 points between the two years).
Scope: Group (centralised R&D within Haulotte Group). Number of patents filed: 17 in 2019 (5 patents, 8 “Soleau envelope” filings, 2 models and 2 brands, compared to 7 in 2018, or an increase of 143%).
Scope: Group (centralised R&D within Haulotte Group).
1.4.5 Relations with suppliers and subcontractors
Issue As a specialist in the design and assembly of lifting equipment, suppliers have a critical role for Haulotte This requires quality collaboration in order to optimise the company's added value.
Policy The strategic importance for Haulotte is to devote the necessary time and efforts to maintain quality and lasting relations with its suppliers.
Actions and results
1. Maintaining lasting relations with suppliers
For every new supplier, a procedure is adopted for their inclusion in the panel monitored by audits. The results of the supplier audit are shared with all suppliers for corrective measures if necessary to be included in the panel. Haulotte is currently working on a draft multi-year agreement for all new projects. With new suppliers, we have developed a partnership agreement which it signed before launching series production. These contracts define all operating procedures, the expression of needs, payment terms, the price, warrantees, quality standards, assurance (…) And provide a general framework for lasting relations. The improvement plans agreed are also included in this contract with the same objective of promoting lasting relations.
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For existing suppliers, Haulotte has adopted a procedure for management meetings in order to share our respective expectations, our development strategies and the evolution of projects for new products. The management of both companies participate in these exchanges which helps promote the development of a long-term vision with our suppliers. In addition, projects for improving competitiveness were adopted in 2019. These are in the form of action plans conducted by our suppliers to identify, reduce or eliminate operations without added value, unnecessary quality requirements or potential improvements in the components. Gains identified are validated collectively and shared according to procedures defined and integrated in our partnership agreements. These operations involve the participation of the different functions concerned.
2. Maintaining ethical and responsible relations with our suppliers
The Responsible Purchasing Charter was introduced in 2019. This document was signed by 232 of the suppliers with whom we work in 2019. Its purpose is to create lasting and balanced relations that respect the rights and duties of each party. In parallel, the confidentiality agreement is signed between Haulotte and all suppliers in order to protect the information of each of the parties.
Key performance indicators: Percentage of purchases from suppliers of more than 5 years: 79% in 2019. Percentage of purchases from suppliers covered by a partnership agreement: 30% in 2019. Percentage of purchases from suppliers covered by a responsible purchasing charter: 63 % in 2019.
Scope: Group (centralised purchasing function within Haulotte Group).
1.4.6 Integrating climate change into processes
Issue In the current environment where climate change is a key concern of indisputable importance, it is important to make this subject a priority for the future. On that basis, as a Group operating on different continents subject to various climatic constraints, Haulotte is nevertheless exposed to this challenge which is taken into account in its development processes.
Policy We seek to take into account climate change in our activities, both with respect to our products, our production processes, their production sites and sale However, in light of its role as an assembler, it is important to note that its activity has only a limited environmental impact and in consequence, marginal influence on climate change.
Actions and results When we set up our different subsidiaries, the climatic conditions of the area selected are taken into account in order to anticipate potential climatic events which could impact our business. For the new installations, we take into account, for example, the seismic risks in the areas concerned and are assisted by our insurers for studies linked to the situation of the selected sites. With respect to our products, we have fully integrated climatic factors and, on that basis, energy efficiency has become a key focus of development. On that basis, Haulotte has integrated into its strategy, the "blue dimension" and more environmentally friendly "all electric solutions" into its business model. It was on this basis that we introduced are all electric machine, PULSEO. A new environmental policy was developed and presented to all employees in the 2018 third quarter, helping to focus the efforts of the company, its managers and employees alike around a shared CSR engagement. This policy was translated in 10 languages. Our objective is to raise the awareness of our employees, stakeholders and customers in order to improve their understanding about the importance of protecting the environment and encouraging measures to reduce energy consumption in offices.
Source: Group QSE policy on the Haulotte' main intranet page.
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In addition, Haulotte has initiated a Group process-based management approach to obtain Group 14001 certification for all plants and subsidiaries by 2023 (6 production sites and 22 distribution subsidiaries). In early 2020, the 2015 version of the ISO 14001 certification was available at five of the six production sites throughout the world with a target for certifying 100% of the production sites by early 2021.
Source: Certification on intranet Haulotteway2, certification section.
1.4.7 Managing the environmental impact
Issue In response to the challenges relating to climate change and adapting production processes and procedures, Haulotte wishes, like many companies, to concretely act to protect the environment.
Policy Our objective is to established a line of conduct which is sustainable and respects the environment for those processes where we have levers for action to reduce our environmental footprint. On that basis, we are targeting: - Generate the maximum amount of value from our non-hazardous industrial waste and reducing our tonnage of waste per machine, -A reduction of greenhouse gas emissions (GGE).
Actions and results
1. Waste management
Haulotte also ensures that its production of waste is effectively managed at every stage of its activity, both at production sites and offices. We distinguish between two types of waste: - Non-hazardous Industrial Waste (NHIW) which may be considered by its composition as comparable to household waste (inert and non-hazardous). This represents for example scrap material and packaging, and consists mainly of glass, plastics, metals, rubber, textiles, paper, wood, organic plant and animal waste. - Hazardous Industrial Waste(HIW) which may generate nuisances for people and the environment by presenting one or more dangerous properties defined in appendix I of the French Decree 2002-540 of April 18, 2002 on hazardous waste. These characteristics warrants special precautions and are subject to reinforced administrative controls. Haulotte has implemented a system for monitoring and managing waste which contributes to developing the circular economy, recycling and recovery. On that basis, for production waste, the recovery of our industrial waste is in proportion to the level of our protection to allow for the possibility of reuse in certain cases. For greater reliability the indicator used is the percentage of waste per machine according to its weight (example kg of waste / kg of machines) as there can be a significant difference in weight between one machine model and another. In addition, we apply sorting procedures to recover and recycle certain types of non-hazardous waste. For production sites, waste management is organised in terms of a number of key steps: • identifying waste with instructions that are provided through environmental training programs, • verifying the regulatory compliance of our waste management service providers, • a colour coding system: 1 waste = 1 bin = 1 colour; this method contributes to developing environmentally responsible reflexes and improving on-site sorting, • storage (storage containers for liquid waste, respecting the compatibility between products, identification for facilitating their evacuation, use of a cardboard compactor, etc.), • traceability (hazardous waste tracking forms, registers, declarations), • treatment, with a technical and regulatory knowledge of the waste processing channels, under the site's responsibility, • periodic monitoring through field inspections, • a waste elimination method depending on its composition: material or energy recovery, recycling, landfills or incineration.
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2. Reducing Greenhouse Gas Emissions (GGE)
The current scope used to determine our carbon footprint includes the three production sites in France and our site in Romania, which represents more than two thirds of our total energy bill. For the time being Scopes 1 and 2 are used. Our carbon footprint includes currently more than 80% gas (the painting process line and heating of the production facilities and offices).
Source: BEGES 2017. The objective is to ensure a correlation with increases in production, thus increasing gas consumption and inevitably the carbon footprint, despite measures taken: -A mobility plan to determine the carbon footprint of professional travel and commuting to trigger actions designed to reduce this impact (example: promoting carpooling, 50% of the cost of travel by public transport reimbursed by the company), - Improving the painting process, changing the burners as part of the preventive maintenance process which had a positive impact in several plants, adjusting the furnace doors resulting in energy savings, - Proposal for installing intermediate sub-meters at the production sites to determine actual consumption of the different locations of the plant to reduce energy consumption. On that basis, estimated electricity consumption was 9,025,340 kW in 2019 compared to 9,904,030 kW 2018, or a decrease of 9%. This improvement reflects the adoption of LED lighting at the l'Horme site and furnace settings adjustments. In addition, estimated gas consumption was 33,908,107 kW in 2019 compared to 38,733,409 kW 2018, or a decrease of 12.5%. This improvement reflects the adoption of adjustments to the furnace door settings in Romania.
Scope: Production sites in France and Romania (Reims, Le Creusot, L’Horme, Argès).
Key performance indicators: The rate of a recovered or recycled waste out of total waste was 63.46% in 2019 (compared to 88.4% in 2018) a decrease of 25 points reflecting the impact of the expanded scope which now includes our site in Romania. The rate of a recovered non-hazardous industrial waste (NHIW) was 76% in 2019 (compared to 91% in 2018) a decrease of 15 points reflecting the scope’s addition of the Argès sites in Romania. The average weight of waste for tonnes per machine was 67 kg in 2019 (a new metrics which cancels the indicator per machine).
Mt CO2e: 6,571 Mt CO2 in 2019 (compared to 7,551 Mt CO2e in 2018).
Weight of CO2 per machine: 91 Kg CO2e / tonne per machine.
Scope: Production sites in France (Reims, Le Creusot, L’Horme) and Romania (Haulotte Argès).
1.4.8 Respecting human rights
Issue As multinationals are exposed to diverse cultures and regulations resulting from their locations, the challenge in terms of Human Rights is to ensure they are respected within the Group's activities, regardless of the activity (production, distribution, support services, etc.) and the geographical location of the entities concerned.
Policy It is for that reason important for Haulotte to ensure a uniform compliance with human rights over its entire value chain, both within our internal and external environments.
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Actions and results Through the “Let’s Dare” approach, promoted through a number of communications channels (training programs participative events, etc.), and the associated Values Charter, Haulotte has placed people at the heart of its activities. As mentioned above, the Group values have been determined by the employees themselves through the different workshops in which all categories of staff from every level, country and department contributed. Respect and confidence have thus been defined as core values and underpin practices which apply to all employees and specific practices for managers. In addition to the values applied by the Group to people within the organisation, Haulotte Group also sought to develop a common vision of core fundamental values shared by its commercial partners. Haulotte Group as in consequence adopted a Responsible Purchasing Charter inviting all its suppliers to apply core principles for sound and ethical business practices. Drafted in 2018, this document was deployed in 2019. This charter contains notably a section on Haulotte's social engagements in thematics prohibiting child labour, combating undeclared work or discrimination and harassment. Haulotte Group believes it is crucial that these engagements of the Group are also be adapted by its partners to ensure the application of an efficient and coherent global approach. We believe indeed that sharing these engagements will contribute to a more effective approach to building lasting partnerships.
1.4.9 Combating corruption and tax evasion
Issue All multinational companies are exposed to various tax and related regulations which complicate accounting flows and controls. The Group has six production sites and 22 subsidiaries which allow it to operate in more than 100 countries. This represents in consequence a significant diversity in terms of tax regulations. In addition, multinational companies with operations in different parts of the world subject to different regulations, cultures and customs, face a significant challenge, namely combating corruption.
Policy Following the production of a corruption risk map within the Group, in application of the French anti-corruption law (Sapin 2), the company adopted an anticorruption code of conduct and the necessary tools to prevent tax evasion.
Actions and results
1. Application of a solid business model fully aligned with our expertise and French regulations
Haulotte Group adopted an anti-corruption code of conduct validated by management and the representative bodies of the French scope. This code is included in an appendix to the rules of procedure and was distributed on 12 November 2019. It can also be consulted on the company’s intranet site and the website www.haulotte.com. The adoption of the Anti-Corruption Code of Conduct reconfirms its commitment to applying high level ethical standards and compliance with all legal obligations. In addition, the Company has also adopted an anonymous whistleblowing procedure available to every employee possessing information and suspicions of misconduct that could constitute incidents of corruption. This platform is hosted by a company, WhistleB, that guarantees the anonymity of alerts and the encryption of data collected. Alerts are sent to the Group’s Secretary-General, or in cases potentially involving the latter, to the Group’s Deputy Chief Executive Officer. The risk manager has access to the administrator in order to ensure that the warnings are taken into account within a maximum period of twenty (20) days. This tool also can also be used for conducting anonymous surveys to assist in the decision-making process. In 2020, the alert platform will be accessible through a link available on Haulotte’s intranet site. In order to raise awareness of personnel of the company about those acts constituting corruption, it is planned to deploy an e- learning tool in 2020.
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2. Respecting rules in force and preventing risks relating to tax evasion (or double taxation)
The Group undertakes to ensure compliance with tax regulations: - The group respects and regularly updates its transfer pricing policy with the assistance of its tax attorneys specialized in this area. This policy was developed to ensure that the operating results of each company of the Group are determined on the basis of the arm's-length principle defined through studies of comparables and taking into account the functions, risks and responsibilities of each subsidiary; - most of our subsidiaries file their own tax statements and as such may, as applicable, be subject to audits, and their employees have been accordingly made aware of these issues; - at the Group level a review of current tax liabilities is performed; - in the consolidated financial statements a tax calculation is performed supporting the level of the effective tax rate of the Group. In addition, since 14 March 2019, the Group has entered into a form of partnership with the French tax authorities. This partnership is based on the principle of voluntary participation and is destined for large Group and medium-sized companies. This takes the form of a regular and transparent dialogue between the companies and the tax authorities in order to obtain a firm position from the latter about complex tax questions which could involve in a financial or legal risk. This process will be conducted by ensuring greater transparency on their part. For the tax authorities, this partnership enables them to ensure the tax compliance of companies in a more cost-efficient manner and more efficiently combat fraud, while offering the companies greater legal security. The results of the different tax audits under this system (some resulting in particular attention being given to the transfer pricing policy) have been positive: for example, the last two tax audits of the head of our tax group, Haulotte Group S.A, did not result in any tax adjustments.
Key performance indicators Number of alerts issued: 0. Reducing the processing time for alerts: N/A. % of cases reported concerning solely the thematic of corruption: N/A. Out of this total number, xx % of these cases are dismissed: N/A.
Scope: Haulotte Group S.A. (L’Horme, Reims, Le Creusot, Lorette). The change in the Group's effective tax rate in relation to the theoretical tax rate in force in France (34.43%): effective tax rate of 27.25% in 2019 vs. 29,08% in 2018, or a decrease of 1,8 points.
Scope: Group.
1.4.10 Occupational health and safety
Issue Preventing professional and occupational safety risks represents a major priority of Haulotte Group’s Executive Management. We are very attentive to the importance of occupational health and safety with the goal of preventing and reducing professional risks by offering our employees a safe work environment.
Policy We are maintaining our efforts to significantly reduce our number of occupational accidents at all our sites throughout the world with a target that remains zero lost time injuries. In 2019, we continued our efforts to reduce the accident frequency and severity rates.
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Actions and results All occupational accidents are systematically analysed to identify the causes in order to define targeted action plans, using the 8D problem-solving method or the root cause analysis. All teams in charge of safety receive training on these methods of analysis. While our frequency rate continues to be too high, it nevertheless declined in 2019. In contrast we significantly reduced the severity rate in 2019 from 1.50% to 0.92%. At all industrial sites we are working to improve workstation ergonomics reflecting a continuing improvement approach designed to reduce these risks and improve working conditions. By way of example, on our last assembly line, the ergonomics of the assembly stations was studied in advance of the design phases for the product and processes. Moreover, the assembly of the principal components of the machines will be done high up. Concerning the product, it is no longer necessary for example to slide under the chassis to perform certain operations by raising one’s arms with the potential of generating musculoskeletal disorders and head injuries. This process was designed so that 100% of the interventions on the chassis were carried out within an ergonomic window by suspending the chassis by means of an aerial conveyor. The assembly of the scissor lift arms is thus carried out at a constant ergonomic height by means of a lift table buried and secured with dissent below the floor level as the arms are gradually assembled. We are also working in partnership with the French social security agency on initiatives to reduce musculoskeletal disorders. In 2018 we were engaged in a process of obtaining triple certification for all our sites. The Haulotte industrial site was the first triple certified sites to have obtained in December 2019 ISO 45 001certification: all industrial sites and distribution subsidiaries are also engaged in this approach. We are in discussions with labour partners to renegotiate the terms of a security challenge designed to reinforce individual and collective efforts with the goal of preventing occupational accidents. Occupational health and safety commissions meet on a quarterly basis with the occupational physician to exchange ideas about safety issues and to propose preventive measures. In 2019 we implemented a safety committee with membership included all plant managers of the Group and R&D, in order to share all results from each of the sites through the use of scoreboards, our prevention measures and good practices in terms of security.
Key performance indicators Frequency rate: 24.95 % in 2019 (vs. 28.98% in 2018). Severity rate: 0.92 % in 2019 (vs. 1.50 % in 2018).
Scope: Haulotte Group S.A. (L’Horme, Reims, Le Creusot, Lorette).
1.4.11 Cultivating diversity
Issue Our priority is to support the company's transformation by pursuing the goal of gender diversity across the different workstations.
Policy Convinced that diversity is a social performance driver which contributes to the overall success of the company, Haulotte Group is conducting a proactive strategy to promote gender balance and equal opportunity employment for men and women. Our goal is to increase gender diversity notably for those functions where men or women are underrepresented.
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Actions and results Our QWL (Quality of Working Life) agreement signed in October 2018 includes a provision for promoting professional equality. On that basis, our management program integrates the valuable contribution provided by the diversity of profiles within a team and a company, by notably taking into account factors such as self-knowledge (natural and adapted), our personal characteristics, motivations but also those of others and the fact that they are necessarily different (use of thee AEC® Colour Method). These different strengths constitute genuine assets for the Group and understanding them makes it possible to better interact, communicate and collaborate (for example by allowing us to learn that it is preferable to communicate with someone, not as we would like that they communicate with us, but rather how they need they need us to communicate with them). All managers and a certain number of employees were provided training in this benefits and this diversity which is necessary to form a team. We also apply equal opportunity and neutral recruitment policy (all genders, ages, etc.). Regardless of the type of post proposed, the human resources department ensures that the content of the job announcements are drafted without reference to gender or family situation or any other terminology of a potentially discriminating nature.
Based on a voluntary approach at each site, a correspondent is appointed by the social and economic committee ("comité social et économique” or CSE) and is responsible for combating gender bias. Its role is preventive in nature and consists notably in reporting alerts of inappropriate behaviour. The Group operates in 21 different countries throughout the world with as many nationalities represented.
Key performance indicators: Percentage of women in the total workforce: 24.20% in 2019 (vs. 23.34% in 2018). Gender equality index: 82 points in 2019 (vs. 82 in 2018).
Scope: Group.
1.4.12 Persons with disabilities:
Issue Beyond simply complying with our legal obligations, we must adopt a proactive approach to maintaining disabled persons in the workplace by supportive measures and adjusting workstations and opening up positions more broadly to workers with disabilities.
Policy Our goal is to develop access to our job offers to workers with disabilities and develop employment of disabled workers within the Company.
Actions and results Haulotte has been fulfilling its obligations with respect to the employment of disabled persons for a number of years. The main actions carried out up till now have focused on maintaining persons with disabilities in the workplace. Actions must now be deployed to increase the percentage of recruitment of persons with disabilities. On that basis, initiatives have been undertaken such as with sheltered work facilities, making adjustments to workstations, supporting AGEFIP agency projects, collaboration with the CAP EMPLOI disabled workers agency. A total of 50 " mandatory units" was set by law for Haulotte 2018 (which would represent in theory 6% of the workforce). In 2019, Haulotte totalled 56.10 unit beneficiaries whether employed internally or through a subcontracting arrangement. At the present time, potential new actions are under study such as publishing job offers at sites specifically devoted to workers with disabilities, negotiating an agreement including commitments to promote the employment of disabled workers and appointing a workplace disability project leader.
20 STATEMENT OF NON-FINANCIAL SUMMARY PERFORMANCE REPORT 2019
Key performance indicators Persons with disability account for 3.95% of the total workforce (vs. 4.4% in 2018).
Scope: Haulotte Group S.A. (L’Horme, Reims, le Creusot, Lorette)
Calculation: number of employees with disabilities / total workforce at 31/12.
1.5 Methodology note
1.5.1 Information collection process
Departments involved: The reporting process for non-financial information is placed under the authority of the Legal Department tasked with collecting the requisite data and information from the relevant departments. For 2019, the following departments were involved in this approach: - Quality and Environment, - Human Resources, - Purchasing, - Risk Management, - Finance, - Innovation and R&D, - IT.
The collection and monitoring of indicators: The different indicators mentioned in this Non-Financial Statements originate from the information systems and internal reports maintained by the company's different departments. By way of example, the employment indicators are produced by the Human Resources Department derived from outputs generated by the personnel and payroll management tool. The environmental data or data relating to the purchasing department is monitored by means of internal reporting tools. Each department is responsible for the data and information transmitted. The consistency control are in consequence performed at their levels.
1.5.2 Reporting period Data published covers the period from January 1, 2019 to December 31, 2019. In those cases where physical data is not exhaustive, contributors have recourse to estimates or extrapolations to estimate the missing data.
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1.6 Report of the Independent Third-Party assurance on the Non- Financial Statement
Haulotte Group S.A. Report by one of the Statutory Auditors, appointed as an independent third party, on the non-financial information statement included in the management report For the year ended December 31st, 2019
This is a free translation into English of the Statutory Auditor’s report issued in French and is provided solely for the convenience of English speaking readers. This report should be read in conjunction with, and construed in accordance with, French law and professional standards applicable in France.
To the Haulotte Group S.A. annual general meeting, In our capacity as Statutory Auditor of Haulotte Group S.A. (hereinafter the “entity), appointed as an independent third party and accredited by COFRAC under number 3-1060 rév.2 (whose scope is available at www.cofrac.fr), we hereby report to you on the non-financial information statement for the year ended December 31st 2019 (hereinafter the “Statement”), included in the group management report pursuant to the legal and regulatory requirements of articles L. 225102-1, R. 225-105 and R. 225- 105-1 of the French Commercial Code (Code de commerce).
The entity’s responsibility Pursuant to legal and regulatory requirements, the Board of Directors is responsible for preparing the Statement, including a presentation of the business model, a description of the principal nonfinancial risks, a presentation of the policies implemented considering those risks and the outcomes of said policies, including key performance indicators. The Statement has been prepared in accordance with the entity’s procedures (hereinafter the “Guidelines”), the main elements of which are available on request from the entity’s head office.
Independence and quality control Our independence is defined by the requirements of article L. 822-11-3 of the French Commercial Code and the French Code of Ethics (Code de déontologie) of our profession. In addition, we have implemented a system of quality control including documented policies and procedures regarding compliance with the ethical requirements, French professional guidance and applicable legal and regulatory requirements.
Responsibility of the Statutory Auditor, appointed as an independent third party On the basis of our work, our responsibility is to provide a report expressing a limited assurance conclusion on: - the compliance of the Statement with the requirements of article R. 225-105 of the French Commercial Code; - the fairness of the information provided in accordance with article R. 225105 I, 3 and II of the French Commercial Code, i.e., the outcomes, including key performance indicators, and the measures implemented considering the principal risks (hereinafter the “Information”). However, it is not our responsibility to comment on: - The entity’s compliance with other applicable legal and regulatory requirements, in particular the French duty of care law and anti-corruption and tax evasion legislation; - The compliance of products and services with the applicable regulations. STATEMENT OF NON-FINANCIAL PERFORMANCE REPORT 2019
Nature and scope of our work The work described below was performed in accordance with the provisions of articles A. 225-1 et seq. of the French Commercial Code determining the conditions in which the independent third party performs its engagement and with the professional guidance of the French Institute of Statutory Auditors (“CNCC”) applicable to such engagements, as well as with ISAE 3000 – Assurance engagements other than audits or reviews of historical financial information. Our procedures allowed us to assess the compliance of the Statement with regulatory requirements and the fairness of the Information: - we obtained an understanding of the entity’s activities, the description of the social and environmental risks associated with their activities, and the impact of these activities on compliance with human rights and anticorruption and tax evasion legislation, as well as the resulting policies and their outcomes; - we assessed the suitability of the criteria of the Guidelines with respect to their relevance, completeness, reliability, objectivity and understandability, with due consideration of industry best practices, where appropriate; - we verified that the Statement includes each category of social and environmental information set out in article L. 2251021 III of the French Commercial Code; - we verified that the Statement includes an explanation for the absence of the information required under article L. 225- 102-1 III, 2 of the French Commercial Code; - we verified that the Statement presents the business model and the principal risks associated with the entity’s activities, including where relevant and proportionate, the risks associated with their business relationships and products or services, as well as their policies, measures and the outcomes thereof, including key performance indicators; - we verified, where relevant with respect to the principal risks or the policies presented, that the Statement provides the information required under article R. 225-105 II of the French Commercial Code; - we assessed the process used to identify and confirm the principal risks; - we asked what internal control and risk management procedures the entity has put in place; - we assessed the consistency of the outcomes and the key performance indicators used with respect to the principal risks and the policies presented; - we verified that the Statement covers the scope of consolidation, i.e., all the companies included in the scope of consolidation in accordance with article L. 233-16 of the French Commercial Code within the limitations set out in the Statement; - we assessed the data collection process implemented by the entity to ensure the completeness and fairness of the Information; - for the key performance indicators and other quantitative outcomes that we considered to be the most important, we implemented: - analytical procedures to verify the proper consolidation of the data collected and the consistency of any changes in those data, - substantive tests, using sampling techniques, in order to verify the proper application of the definitions and procedures and reconcile the data with the supporting documents. This work was carried out on a selection of contributing entities, namely L’Horme, Lorette, Reims, and Argès, and covers 47% of the consolidated data relating to the key performance indicators and outcomes selected for these tests; - we referred to documentary sources and conducted interviews to corroborate the qualitative information (measures and outcomes) that we considered to be the most important and which are listed in appendix; - we assessed the overall consistency of the Statement based on our knowledge of all the consolidated entities. We believe that the work carried out, based on our professional judgement, is sufficient to provide a basis for our limited assurance conclusion; a higher level of assurance would have required us to carry out more extensive procedures.
Means and resources Our work was carried out by a team of 5 people between mid-December and beginning of April 2020 and took a total of 3 weeks.
We were assisted in our work by our specialists in sustainable development and corporate social responsibility. We conducted about a fortnight interviews with a fortnight people responsible for preparing the Statement, representing legal, compliance, IT, research and development, human resources, environment, and purchasing departments. STATEMENT OF NON-FINANCIAL PERFORMANCE REPORT 2019
Conclusion Based on the procedures performed, nothing has come to our attention that causes us to believe that the consolidated non- financial information statement is not presented in accordance with the applicable regulatory requirements and that the Information, taken as a whole, is not presented fairly in accordance with the Guidelines, in all material respect.
Comments Without qualifying our conclusion and in accordance with article A. 225-3 of the French Commercial Code, we have the following comments: - For the risks relating to Human Rights policy and climate change consideration in the group strategy, policies presented do neither disclose objectives of improvement, nor key performance indicator; - Key performance indicators relating to turnover, disability, and accident at work, do not cover subsidiaries other than Haulotte Group S.A. and therefore represent only 41% of group total headcount.
Lyon, April the 30th 2020
One of the Statutory Auditors
PricewaterhouseCoopers Audit
French original signed French original signed
Pascal Baranger Elisabeth L’hermite Sustainable Development Director Partner STATEMENT OF NON-FINANCIAL PERFORMANCE REPORT 2019
APPENDIX: LIST OF THE INFORMATION WE CONSIDERED MOST IMPORTANT
Key performance indicators and other quantitative results: - Number of employees trained to management program; - Charter signed by all employees; -Number of disabled people and percentage of disabled collaborators in total headcount; -Turnover rate; - Number of sites covered by ISO 14001 certificate; - Participation rate to engagement survey and collaborators’ engagement rate; - Percentage of collaborators who received a training this year, and those who benefitted from a mobility; - IT Backlog evolution and & percentage of IT projects managed according with methodology expectations; - Share of sales revenue dedicated to research and development and number of patent filings; - Share of supplier sales revenue covered by partnership principle, then covered by responsible purchase charter, then realized with supplier for which relationship dates back more than 5 years; - Supplier charter signed by 232 suppliers; - Percentage of wastes recovered, common industrial wastes recovered, and total tonnage of wastes per machine tonnage; - Tons of CO2 equivalent evolution (scope 1 and 2) per machine tonnage; -Number of ethical alerts and treatment delay; -Percentage of alerts related to corruption and among them, percentage of files closed without pursue; - Group effective tax rate; - Frequency and gravity rates of accidents at work; -Percentage of women in total headcount.
Qualitative information (actions and results): - Big cleaning day & serious game for 12 strategic construction sites; - Trophy presentation for employees with more than 10 years seniority, women afterwork, drawing competition; - Participatory design of new headquarter; - Quarterly newsletter publication; - Identification of needs for e-learning platform that would be implemented in 2020; - IT charter updates, IT services satisfaction survey; - Technological watch and responsible purchase charter; - New electrical machines purchase; - Paint oven changed at Argès; - Waste management and follow-up; - “Let’s Dare” program development and Foederis expansion; - Whistleblowing system implemented to alert on any ethical issues; - Assembly line modification to reduce accidents; - Referent in charge of gender-based discrimination; - Partnership with ESAT; - Absence of any fiscal recovery; - ISO 45 001 certification for Le Creusot; - Engagement survey 2017; - IT satisfaction survey, end-of-the-year satisfaction survey and tickets closed. Conception & réalisation :