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COMPANY FINANCIAL STATEMENTS

83

LISI 2015 FINANCIAL REPORT

is probable, the amount of the future expense is provisioned

in proportion to the rights acquired since the allocation date.

Where relevant, provisions thus provided for take into account

whether or not treasury shares are allocated to share options or

relevant free allocations.

The impact of the expense relating to the awards of free

performance shares is included in the payroll expenses for

employees of LISI S.A. only.

f) Loans and receivables

Receivables are valued at their face value. A depreciation

provision is recorded when the recoverable value is less than

the book value.

g) Provisions for risks and charges

Provisions for risks and charges are recognized in line with the

CRC regulation 2000-06 on liabilities, dated December 7, 2000.

This regulation stipulates that a liability is recognized when a

company has an obligation to a third party and it is probable

or certain that this obligation will necessitate an outflow

of resources to the third party, with no equivalent or larger

payment in return. The obligation must exist at the closing of

accounts in order to be recognized.

Provisions are calculated with help from the Group’s lawyers

and consultants, based on current protocol and an assessment

of the risks at the date of closing of accounts.

h) Financial instruments

Results relating to financial instruments used in hedging

operations are calculated and recognized in such a way as

to balance the income and expenses relating to the hedged

elements.

i) Taxes on profits

LISI S.A. benefits from the tax integration regime enacted by

the law of December 31, 1987. This regime allows the taxable

results of profit-making companies to be offset by the deficits

of other companies, under certain conditions.

Each company covered by the tax integration regime calculates

and recognizes its tax payable as if it were taxed individually.

LISI S.A. recognizes the savings or additional tax burden

resulting from the difference between the tax owed by the

subsidiaries covered by the regime, and the tax resulting from

the calculation of the joint result.

The tax integration agreement stipulates that tax gains

generated by loss-making subsidiaries should be retained at

the parent company level.