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CONSOLIDATED FINANCIAL STATEMENTS
53
LISI 2015 FINANCIAL REPORT
Derivatives and hedging activities that meet the cash flow
hedge criteria are accounted for in accordance with the
provisions of IAS 39. Hedging instruments are measured at
fair value. Changes in value, are recognized in recyclable
equity (other comprehensive income — OCI) for the effective
portion of the hedge and in income for the ineffective portion.
In particular, the hedging activities accounted for as such are
subject to formal documentation justifying in particular the
hedging relationship, its effectiveness and the objective of the
Group's risk management and hedging strategy. Effectiveness
tests were carried out as at December 31, 2015 and have
demonstrated the effectiveness of the hedging relationship.
The changes in the fair value of hedging instruments that do
not meet the hedge criteria are recognized directly in income.
The sensitivity of financial instruments to a +/- 10% change in
the EUR / USD exchange rate is as follows:
Impact in €'000
12/31/2015
USD
Closing price
1.0887
Euro / dollar exchange rate
development assumptions
-10%
+10%
Euro / dollar exchange rate used
for the sensitivity analysis
0.9798
1.1976
Impact (before tax)
(82.4)
55.1
2.5.4 Risk related to the impairment of intangible assets
The net amount of goodwill at December 31, 2015 amounted
to €260 million. The results of the impairment tests confirm
the soundness of the Fasteners CGUs of the LISI AEROSPACE
Division, and show that the activities of LISI AUTOMOTIVE and
LISI MEDICAL divisions strengthened. The Extrusion Forming
and Sheet Metal CGU (goodwill of €39 million as at December
31, 2015) has some sensitivity related to a context of strong
industrial development over the coming years which generates
some tension on the operating cash flows.
2.6
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DETAIL OF BALANCE SHEET ITEMS
2.6.1 Non-current assets
2.6.1.1 Intangible assets
a) Goodwill
(in €'000)
Goodwill
Gross goodwill at December 31, 2014
258,812
Impairment over financial year 2014
(2,300)
Net goodwill at December 31, 2014
256,512
Increase
0
Decrease
0
Changes in foreign exchange rates
3,823
Gross goodwill at December 31, 2015
260,335
Impairment over financial year 2015
0
Net goodwill at December 31, 2015
260,334
Changes in currency exchange rate only concern LISI
AEROSPACE and result from translation differentials on the
dollar.
As at December 31, 2015, the net value of goodwill broke down as follows:
LISI AEROSPACE
(in millions of euros)
Europe B.U.
Engines and
critical parts
Europe B.U.
USA B.U.
Engines
and critical
parts North
America
B.U.
Special
products
B.U.
Extrusion
Forming and
Sheet Metal
B.U.
Forging &
Casting B.U.
Total
Net goodwill
0.8
4.5
16.4
NA
9.1
38.9
80.2
149.9
Intangible fixed assets
with an indefinite useful life
None
None
None
None
None
None
None
Result of the impairment test
No sign of
impairment
No sign of
impairment
No sign of
impairment
NA
No sign of
impairment
No sign of
impairment
No sign of
impairment
Key assumptions
Cash flow within one year
Forecasts Forecasts Forecasts
Forecasts Forecasts Forecasts
Cash flow within four years
4-year
strategic
plan
4-year
strategic
plan
4-year
strategic
plan
4-year
strategic
plan
4-year
strategic
plan
4-year
strategic
plan
Discount rate after tax
6.74% 6.74% 6.74%
6.74% 6.74% 6.74%
Growth rate of flows not
covered by the budget and
strategic assumptions
2.00% 2.00% 2.00%
2.00% 2.00% 2.00%