LISI GROUP - Financial report 2012 - page 55

LISI 2012 FINANCIAL REPORT
55
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Consolidated financial statements
The main provisions are in respect of:
- Pensions and retirement:
Legally-imposed obligations in respect of staff salaries, pension
payments or retirement indemnities. Taken into account were
assumptions regarding the level of the discount rate, the
turnover, and themortality tables. Some of these commitments
are backed with external funds.
The Group has opted for early adoption of the revised IAS 19
standard from1 January 2012. Therefore, all actuarial gains and
losses are recognized in "Other comprehensive income" against
provisions for pensions.
- Environment:
Recognition of liabilities links to requirements to uphold
environmental standards in the various countries in which
the company operates and more specifically with regard to
soil pollution on industrial sites. The cost of monitoring and
compliance in concert with local authorities makes up a large
part of these provisions. Due to environmental awareness of
the legislator, the Group has set aside a number of provisions
for environmental risks of upgrading and pockets of "historical
pollution" for almost €5 million in the Automotive division and
€3 million in the Aerospace division.
- Disputes and other risks:
This covers litigation or disputes with partners and service
providers. Risk assessment has been calculated based on the
estimated cost of the outcome of any dispute or possible
transactions. Assessment of expected returns cannot be
calculated as of yet.
- Industrial reorganization:
This covers industrial reorganization based on assessments
of the cost of redeploying certain sites or entities. The
assessment of the sums recognized takes account of specific
local regulatory stipulations.
- Other risks:
Liabilities recognized under this category take into account risks
based on various reports (industrial, regulatory, corporate, etc.)
and concern both of the Group’s main divisions.
This section covers the risks and expenses clearly specified as
to their purpose whose maturity remains likely and which will
cause an outflow of resources without consideration. Themost
significant amounts reflect the unfavorable application for the
Group of contractual terms, the impact of the streamlining of
production structures and litigations with third party partners.
2.5.4.2 PERSONNEL COMMITMENTS
Application of revised IAS 19 as at January 1, 2012
As indicated in Note 2.2 Accounting rules and methods, the LISI
Group has opted for early adoption of the revised IAS 19 from
1 January 2012.
Therefore the financial statements for 2011 have been restated
retrospectively inaccordancewith thenewrules for comparison
purposes.
The entire unfunded commitments at December 31, 2010 for
employee benefits (actuarial gains and losses and past service
costs) were recorded at January 1, 2011 against consolidated
reserves for their amount net of tax.
The financial statements for 2011 have been subject to the
following changes affecting operating income, taxes and other
comprehensive income:
- Cancellation of amortization of actuarial gains and losses and
past service costs recognized in the operating result,
- Immediate recognition in operating profit of past service
costs incurred during the year, their spread being banned by
the IAS 19 R standard,
- Evaluation of the expected return on assets using the same
rate as the discount rate for liabilities,
- Recognition of actuarial gains and losses arising during the
year in "other comprehensive income"
- Accounting of the impact of taxes on above-mentioned items.
Characteristics
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 contribution plans or
defined benefit plans.
Defined benefit plans
General description of the plans
Retirement allowance (France):
Entitlements to retirement benefits are defined by applicable
laws or sectoral agreements when they are more favorable.
UK
BAI UK operates a defined benefit pension plan to which
all employees who joined the company before April 2007
are entitled. Plan assets are separate from the assets of the
company and managed by a trust administered by a board of
trustees.
The risks to which the plan exposes the company include:
investment risk, inflation, longevity of pensioners, options,
legislative.
USA
Hi Shear Corporation operates a defined benefit pension
plan to which all employees who joined the company before
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