Basic HTML Version
LISI 2011 —
38
— financial report
Consolidated financial statements
– to keep and use shares as consideration or payment for potential
future acquisitions,
– to cancel shares purchased, subject to the approval of the
Shareholders’ Extraordinary Meeting to be called at a later date.
Repurchased shares are classified as treasury shares and deducted
from shareholders’ equity.
2.2.13.2 Remunerations in shares (stocks options and conditional
award of so-called performance shares)
Refer to note 2.2.15 “Personnel benefits”.
2.2.14 Provisions
A provision is recognized on the balance sheet if the Group has a
current, legal commitment or an implicit one arising from a past event
and for which it is probable that there will need to be an outflow of
resources that represent economic advantages in order to eliminate
the commitment. They are measured at the estimated payment
amount. If the effect of capitalizing provisions is not significant,
capitalization is not carried out.
2.2.14.1 Long-term provisions
Long-term provisions are provisions not directly related to the
operating cycle, whose due date is generally within more than one
year. They also comprise provisions for environmental risks and
provisions for retirement.
2.2.14.2 Short-term provisions
Short-term provisions cover the provisions directly related to the
operating cycle of each division, regardless of their estimated due
dates. Provisions for legal disputes concern mainly disputes with
customers, subcontractors, and suppliers. Provisions for other current
risks are mainly comprised of provisions for late penalties, provisions
for layoffs, and other operating risks.
2.2.15 Personnel benefits
2.2.15.1 Personnel commitments
In accordance with the laws and practices of each country in which
the Group operates, it offers its employees and former employees,
subject to certain conditions of service, the payment of pensions or
compensation on retirement. Such benefits can be paid as part of
defined contributions plans or defined benefits plans.
Contributions in defined contributions plans are recognized as
expenses for the period in which they are incurred.
In respect of defined benefits plans, the Group’s commitments to its
staff are determined by independent actuaries using the Projected Unit
CreditMethod in accordancewith IAS 19. Thismethod takes into account
in particular the probability of keeping staff within the Group until
retirement age, future remuneration developments and a discount rate.
Such plans can be financed by investments in various instruments,
such as insurance policies, shares or bonds, to the exclusion of debt
instruments or shareholders’ equity issued by the Group.
The requirements of IFRIC 14 do not fall within the scope of
adjustments to be applied by the Group.
Actuarial profits and losses are posted to the income statement in
accordance with the “corridor” method: the amount recognized in
expenses (income) for the period is equal to the deferred, actuarial
losses (profits) on the balance sheet that exceed 10% of the value
of the commitment or the fair value of the plan’s assets, if it is
higher, divided by the average, remaining length of service of current
employees.
The excess or shortfall of the fair value of the assets
vis-à-vis
the
discounted value of the commitments is recognized as an asset or
liability to the balance sheet, following deduction of deferred actuarial
differences to the balance sheet as well as the cost of past services
that have not yet been recognized. However, excess assets are only
recognized on the balance sheet if they represent a future economic
advantage for the Group.
The LISI Group has no plan opened relating to defined-contribution
schemes.
2.2.15.2 Share-based payments
The Group has implemented plans for the share-purchase options and
a plan for awarding shares as a bonus conditional on performance,
for certain employees and directors, whose objective is to create
additional incentive to improve the performance of the Group. As
part of this scheme, certain employees and managers of foreign
subsidiaries will benefit from these same advantages, but will receive
their remuneration in the form of a bonus payment.
The award of share purchase options and the award of shares based
on performance do represent a benefit available to such associates,
and thus constitute a supplement to their remuneration. The options
granted are recognized as personnel expenses based on the fair
value of the shares or equity derivatives assigned, on the date of
implementation of these plans throughout the vesting period of these
options.
In the case of plans for share-purchase options and bonus shares
based on performance, these benefits correspond to the fair market
value of the instruments awarded, and are valued using a binomial
model.
As regards bonus commitments, these are recorded as social liabilities
at their fair value at year-end.
This remuneration paid in LISI shares or stock options is recognized:
– over a period of 4 years from award date, in accordance with the
regulation governing stock option plans;
– over a period of 2 years from the date of award, in accordance with
the regulations governing performance stock schemes.
A share purchase plan (Group Savings Plan) is also available for
Group employees, in which they may purchase LISI shares within the
framework of a capital increase reserved for employees or as part of
a share buyback program. Shares acquired by employees within the