LISI GROUP - 2016 Financial report

LISI 2016 FINANCIAL REPORT

2.1

GROUP ACTIVITY AND HIGHLIGHTS

OF THE YEAR

The company LISI S.A. (hereinafter referred to as “the Company”)

is a

Société Anonyme

(public limited company) under French law,

listed on the Paris Stock Exchange, whose head office is at the

following address: “Le Millenium, 18 rue Albert Camus, CS 70431,

90008 BELFORT cedex”.

The consolidated financial statements of the Group for the financial

year ending December 31, 2016 include the Company, its subsidiaries

and affiliates (which are together referred to as “the Group”).

The LISI Group’s main business activity is the manufacturing of

multifunctional fasteners and assembly components for three

business sectors: aerospace, automotive, and medical.

Highlights of the year

Consolidation of LISI Medical Remmele

On April 11, 2016, the LISI Group acquired 100% of the Remmele

Medical Opérations securities. This company was acquired through

Hi Shear Corporation, a wholly owned subsidiary of LISI AEROSPACE.

Effective on April 30, the transaction led the LISI Group to consolidate

LISI MEDICAL Remmele as of May 1, 2016.

2.2

ACCOUNTING RULES AND METHODS

The financial statements drawn up as at December 31, 2016 were

approved by the Board of Directors on February 21, 2017 and will be

submitted to the Combined General Meeting on April 25, 2017.

2.2.1

Background to the preparation of the consolidated

financial statements for the 2015 financial year

In accordance with EU regulation 1606/2002 dated July 19, 2002,

the LISI Group’s consolidated financial statements have been

prepared in line with IAS/IFRS international accounting standards as

adopted by the European Union on December 31, 2016.

2.2.1.1 Standards, amendments and interpretations adopted by

the EU and mandatory for reporting periods beginning on or after

January 1, 2016

Amendments IAS 16 and IAS 38 (clarification of acceptable methods

of depreciation and amortization), IAS 19 (employee contributions),

IFRS 11 (accounting for acquisitions of interests in joint operations),

IAS 27 (equity method in separate financial statements) had no effect

on the Group’s consolidated financial statements at December 31, 2016.

2.2.1.2 New standards and interpretation for later application

approved by the European Union

No standard, interpretation or amendment to existing standards was

applied in anticipation in the financial statements at December 31,

2016.

The standards and interpretations published and approved by the

European Union, but whose application is not yet mandatory, are the

following:

a) At the end of May 2014, the IASB published standard IFRS 15,

Revenue from contracts with customers. This standard concerns

the recognition and valuation of the revenue from ordinary

activities from contracts with customers. This standard will replace

standards IAS 18, Revenue from ordinary activities and IAS 101,

Construction contracts. This standard should come into force

for financial years starting from January 1, 2018. This standard

introduces a single analysis grid regardless of the transactions

(sale of goods, sale of services, granting of licenses, etc.) with five

successive stages:

–

identification of the contract or contracts;

–

identification of the seller’s various contractual obligations

(performance obligations);

–

determination of the price of the transaction;

–

allocation of the price of the transaction to the various obligations

identified;

–

the initial analyses show how the impacts of this standard are

not particularly material.

The analysis of the impacts of this standard is in progress.

b) InJuly 2014, the IASBpublished standard IFRS9, Financial Instruments,

intended to replace IAS 32 and IAS 39, the standards currently in

force for the presentation, recognition and evaluation of financial

instruments. This standard groups the three phases which make up

the project: classification and evaluation, impairment and hedging

accounting. The modifications made by IFRS 9 concern:

–

the rules for classifying and evaluating the financial assets which

reflect the economic model in the context in which they are

managed as well as their contractual cash flows;

–

the rules for impairment of receivables, henceforth based on

“expected losses” and not on “realized losses”;

–

the treatment of the hedging accounting;

–

this standard is expected to come into force for financial years

starting from January 1, 2018. The analysis of the impacts is in

progress.

c) In January 2016, the IASB published standard IFRS 16, Lease contracts.

This standard will lead companies leasing significant assets as

part of their activity to recognize an asset and a financial debt

corresponding to the lease commitment.

This standard, not yet adopted by the European Union, should come

into force for the financial years starting from January 1, 2019. The

analysis of the impacts is in progress.

NOTES

CONSOLIDATED FINANCIAL STATEMENTS