LISI 2012 FINANCIAL REPORT
35
3
Consolidated financial statements
an impact on the amounts of assets or liabilities, income or
expenses, particularly regarding the following elements:
• durations of depreciation of fixed assets (notes 2.2.7.2 et
2.2.8.4),
• evaluations retained for impairment tests (note 2.2.8.5),
• evaluation of pension provisions and obligations (notes 2.2.14
and 2.2.15.1),
• valuation of financial assets at fair market value (notes 2.2.6,
2.2.8.6, 2.2.11 and 2.2.12),
• valuation of payments in equities (note 2.2.15.2),
• recognition of deferred tax assets (note 2.2.19.5).
These judgments and assumptions take into account the
specific risks of the sectors concerned by LISI's activities, as well
as general risks related to the economic context. The current
period being characterized by greater volatility, the visibility is
limited. Consequently, the forecasts used as a basis for such
judgment and assumptions may differ from actual future
achievements.
Management continuously reviews its estimates and
assessments based upon past experience and on factors
considered reasonable that form the basis of its assessment for
the book values of assets and liabilities. The impact of changes
to accounting estimates is recognized during the period of
change only where it affects this period or during the period
of change and successive periods if these are also impacted by
the change.
The decisions made by the management regarding IFRS
standards having a significant impact on the financial
statements and estimates presenting a major risk of variation
over subsequent periods mainly concern provisions (notes
2.2.14and2.5.4), deferredtaxassets (note2.5.7) and impairment
tests on assets (notes 2.2.8.5 and 2.5.1.1). Calculations for
staff retirement provision and valuation tests are based on
valuation assumptions, the sensitivity of which can affect costs
recognized as provisions in the accounts. These assumptions
are broken down by division on the basis of information drawn
from independent experts (actuaries, etc.).
Accounting treatment of the CVAE (Tax on Companies’ Added
Value)
Following the release of the National Accounting Council
of January 14, 2010, the Group decided to qualify the CVAE
(contribution of the Added Value of Businesses) as income
tax that would fall within the scope of IAS 12. This decision is
based on an opinion of the IFRIC issued in 2006 stating that
the term 'taxable profit' implies a notion of net rather than
gross amount without it being necessarily identical to the
accounting result. Moreover, this choice ensures consistency
with the accounting treatment applied to similar taxes in other
foreign countries.
Correlatively, the deferred tax was recorded as at January 1,
2010, for a net amount of €1.4m taken on the shareholders'
equity of the Group. This stock deferred tax is included as
the depreciation of fixed assets included in the calculation is
recorded to the accounts. As at December 31, 2012 the balance
of net deferred tax concerned stood at €0.7 million.
Treatment of the research tax credit
Revenues related to the research tax credit are classified in the
income statement under "other products".
2.2.3 Consolidation principles
A subsidiary is an entity controlled by its parent company.
Control exists when the Group is able to direct the financial
and operating policies of the entity (either directly or
indirectly) in order to obtain benefits from its activities. The
list of consolidated companies is provided in Note 2.3.3. As at
December 31, 2012, ANKIT Fasteners is consolidated via the
proportional integration method. All the other companies are
included in the consolidation scope in accordance with the full
consolidation method.
2.2.4 Transactions excluded from the consolidated financial
statements
Balance sheet balances, unrealized profits and losses, and
income and costs arising from intra-group transactions
have been excluded in preparing the consolidated financial
statements.
Unrealized losses have been excluded in the same way as
unrealized profits, on condition that they do not represent a
loss of value.
2.2.5 Conversion methods for items in foreign currency
2.2.5.1 TRANSACTION IN FOREIGN CURRENCY
Transactions in foreign currencies are recorded in the books
in the operating currency at the rate of exchange at date of
transaction. At year-end, assets and liabilities recorded in
foreign currencies are converted into the operating currency
at the rate of exchange at year-end. Exchange rate differences
arising from conversions are recognized in income or expenses,
with the exception of differences from foreign currency loans
that are a hedge on a net investment in a foreign entity, which
are recognized in the conversion reserve as a distinct element
of shareholders’ equity. They appear on the income statement
upon the exit of that business.
2.2.5.2 TRANSLATING FINANCIAL STATEMENTS OF
CONSOLIDATED SUBSIDIARIES AND JOINT VENTURES
The financial statements of subsidiaries and affiliates whose
operating currency is not the euro have been converted at rates
in effect at the close of the period reported for the balance
sheet and at the mean rate of exchange for the earnings and
cash flow statements. Exchange rate differences arising from
