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LISI 2016 FINANCIAL REPORT
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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. The bulk of the provisions relates to the
decontamination risk of soils and buildings.
– 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. The bulk of the provisions relates to various
quality, tax and wage risks.
– 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.
– Restructuring
The €1.5 million reversal mainly results from the implications of
the transfer of the Thiant plant’s business to two other French
sites.
– Other risks:
Liabilities recognized under this category take into account
risks based on various reports (industrial, regulatory, corporate,
customer guarantees and products) 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. The most
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.
The amounts of provisions and reversals primarily concern
quality, customer lead time, qualification of new products, tax
and wage risks.
The income from disposals was taken into account in financial
year 2016 by the observation of a provision for income from
disposals amounting to – €2 million as a non-recurring operating
expense.
2.5.4.2 Commitments to the personnel
Application of revised IAS 19 as at January 1, 2012
As stated in note 2.2 Accounting principles and policies, the LISI
Group has been applying revised IAS 19 from January 1, 2012.
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 benefits (France):
Entitlements to retirement benefits are defined by applicable laws or
sectoral agreements when they are more favorable.
England:
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 are the following:
CAPEX, inflation, retirees’ longevity, options, laws risk.
USA
Hi Shear Corporation operates a defined benefit pension plan to
which all employees who joined the company before February 1991
are entitled. The plan has been closed since that date. 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 are the following: CAPEX, inflation, retirees’
longevity, options, laws risk.
The pension plans concerning the majority of the employees was
wound up at the beginning of the financial year.
The geographic breakdown of the Group’s commitments to staff
as at December 31, 2016 for defined benefit plans and the main
assumptions employed in their assessment are as follows:
(in €’000)
France
Germany
USA
England
Other
Actuarial debt
27,461
8,800
350
24,211
2,297
Discount rate
1.48%
1.16%
3.50%
2.92%
3.70%
Inflation - Wage increase
1.10%
1.50%
N/A
3.44%
NA
CONSOLIDATED FINANCIAL STATEMENTS
3