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LISI 2011 —
36
— financial report
Consolidated financial statements
and an estimate, if applicable, of costs related to the removal and
dismantling of the asset and the repair of the site at which it is located,
along with an appropriate share of the general production costs.
When the components of tangible fixed assets have different useful
lives, they are recorded as separate tangible fixed assets, as per the
components method.
2.2.8.2 Assets funded through finance leases
Leases which transfer virtually all the risks and benefits relating to
the ownership of an asset to the Group are classed as finance leases.
Assets funded through finance leases are recognized in the assets
side of the balance sheet at the fair value of the goods leased, or the
present value of the minimum lease payments if this is lower. These
assets are depreciated over the same period as goods of the same type
which are owned outright. The corresponding debt is entered on the
liabilities side of the balance sheet.
2.2.8.3 Subsequent expenditure
When calculating the book value of a tangible fixed asset, the Group
recognizes the cost of replacing a component of this tangible fixed
asset at the time when the cost is incurred, if it is likely that future
economic benefits associated with this asset will flow to the Group
and the cost can be reliably estimated. All ongoing servicing and
maintenance costs are recognized as an expense when they are
incurred.
2.2.8.4 Depreciation
Depreciation is recognized as an expense using the straight-line
method over the estimated useful life for each component of a
tangible fixed asset.
Land is not depreciated.
Estimated useful lives are as follows:
– buildings: 20 – 40 years
– plant and machinery: 10 – 15 years
– fixtures and fittings: 5 – 15 years
– transport equipment: 5 years
– equipment and tools: 10 years
– office equipment: 5 years
– office furniture: 10 years
– IT hardware: 3 years
2.2.8.5 Impairment of assets
Goodwill and intangible fixed assets of indefinite life-span are
submitted to a depreciation test at each annual close (see note 2.2.7.2)
and each time events or market-changing modifications indicate a risk
of impairment. Other intangible assets fixed and tangible fixed assets
are also subject to such a test at any time when there is a risk of loss
of value.
The method used involves comparing the recoverable value of each
of the Group’s cash-generating units with the net book value of the
corresponding assets (including the goodwill).
For acquisitions after this date, goodwill is valued at cost, minus
the cumulative loss in value. It is allocated to cash-generating units
or groups of cash-generating units and is not amortized; instead, it
is subject to an impairment test at least once a year following the
method described in paragraph 2.2.8.5.
If the goodwill is negative, it is recognized directly as a profit in the
income statement.
2.2.7.2 Research and Development
Research costs incurred in order to develop scientific knowledge and
understanding, or to learn new techniques, are recognized as an
expense when they are incurred.
Under the IFRS framework, development costs (
i.e.
, costs incurred by
applying the results of research to a plan or model in order to develop
new or substantially improved products and processes) are recorded
as fixed assets if the Group can demonstrate that future economic
benefits are probable. The LISI Group’s development costs primarily
relate mainly to products which are being developed through very
close collaboration with clients, rather than to improvements in
processes.
Due to the nature of the LISI Group’s research and development
costs, most such costs do not meet the criteria for capitalization as
intangible fixed assets; they are therefore recorded as expenses. The
Group carries out regular assessments of major projects in order to
identify any costs which could be capitalized.
2.2.7.3 Other intangible assets
Concessions, trademarks and software programs are recognized at
historic cost and are subject to a depreciation plan. Intangible fixed
assets acquired through a business combination are recognized
at their acquisition-date fair value. Intangible fixed assets with
finite useful lives are subject to depreciation over this period, while
intangible fixed assets with indefinite useful lives are subject to an
impairment test for every new balance sheet.
Subsequent expenditure relating to an intangible fixed asset is only
capitalized if it increases the future economic benefits that are
attributable to the specific asset in question. Other expenditure is
recognized as an expense when incurred.
Depreciation is recognized as an expense using the straight-line
method over the estimated useful life of the intangible fixed assets,
unless the useful life cannot be estimated.
Standard estimated useful lives are as follows:
Trademarks: 10 – 20 years
Software programs: 1 – 5 years
2.2.8 Tangible assets
2.2.8.1 Assets owned by the LISI Group
Tangible fixedassets are recordedat diminished costwithaccumulated
depreciations and impairments. The cost of an asset produced by the
Group for itself includes the costs of raw materials, direct manpower,