41 / 164
CONSOLIDATED FINANCIAL STATEMENTS
41
LISI 2015 FINANCIAL REPORT
inflows independently of the cash inflows generated by other
assets or groups of assets. In some cases, the recoverable value
is calculated for a group of assets.
Recoverable value is defined as: whichever is the higher out of
the realizable value (less the costs of disposal) and the value in
use. The latter is calculated by discounting future cash flows,
using predicted cash flows which are consistent with the most
recent budget and business plan approved by the Executive
Committee and presented to the Board of Directors. The
discount rate applied reflects the market's current assessment
of the time value of money and the risks specific to the asset or
the group of assets.
The realizable value is defined as the sum which could be
obtained by selling the asset or group of assets in conditions
of normal competition where all parties are fully informed
and consenting, less the costs of disposal. These figures are
calculated from market values (comparison with similar listed
companies, value of recent deals and stock prices) or failing
that, from discounted future cash flows.
If the recoverable value is lower than the net book value for the
asset or group of assets tested, the discrepancy is recognized
as a loss of value. In the case of a group of assets, it should
preferably be classified as a reduction in goodwill.
Losses of value recognized under Goodwill are irreversible.
For the definition of Cash-Generating Units (CGU), the Group
has retained the strategic combination of Business Units (B.U.)
corresponding to the strategic segmenting and the reporting
structure of the LISI Group.
The LISI AEROSPACE division is split into 8 CGUs:
■■
Europe B.U.;
■■
USA B.U.;
■■
Specialty Fasteners B.U.;
■■
Engines and critical parts Europe B.U.;
■■
Engines and critical parts North America B.U.;
■■
Aerostructure and Aviation equipment B.U.;
■■
Technical components B.U. - Extrusion, Forming and Sheet
Metal;
■■
Technical components B.U. - Forging and casting.
The LISI AUTOMOTIVE division is split into 3 CGUs:
■■
Threaded fasteners B.U.;
■■
Safety and Mechanical Components B.U.;
■■
Clipped solutions B.U.
The LISI MEDICAL division is composed of a single CGU.
2.2.8.6 Non-current financial assets
This item mainly includes capitalization contracts and equity
method investments. It also includes non-consolidated
holdings. These are investments in unlisted companies, for
which fair value cannot be reliably estimated. As a last resort,
the Group values financial assets at their historic cost less any
potential loss of value, when no reliable fair value estimate is
possible through an evaluation technique, in the absence of an
active market.
2.2.9 Inventories
Stock is valued at whichever is the lower out of cost and net
realizable value.
The cost of materials and merchandise is calculated from their
acquisition cost plus the costs incurred to bring them to their
current location in their current condition. Finished products
and work in progress are valued at actual production cost over
the period, including an appropriate portion of general costs
based on normal production capacity.
The net realizable value equates to the estimated sales price
in the normal course of business, less the estimated cost of
completion and estimated costs necessary to make the sale.
Inventories are impaired when their net realization value is
less than their cost of production, when they are damaged,
obsolete, as well as each time there is a risk that they might not
be disposed of under normal conditions, or when there is a risk
that they will be disposed of over a period that is longer than
what is generally accepted.
2.2.10 Trade and other receivables
Trade receivables, loans and advances are recorded to the
balance sheet at their initial value. In the event of risk of non-
recovery, impairment is fixed on a case-by-case basis using
the probable collection flows; this risk takes the age of the
transaction into consideration.
2.2.11 Cash and cash equivalents
Cash and cash equivalents include current bank accounts,
cash in hand, on-call deposits, securities and negotiable
certificates of deposit held by the Group. Adjustments of value
are recognized in the income statement.
2.2.12 Share capital
2.2.12.1 Treasury shares
The Group implements a policy of buying back its own shares, in
accordance with authorizations provided by the Shareholders’
General Meeting to the Board of Directors. The main purposes
of the share buyback program are: