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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.
As from financial year 2016, to carry out impairment tests on goodwill,
the Group has selected a strategic combination of Business Units
(B.U) that correspond to the segmentation and reporting structure
of the LISI Group, namely, the three divisions LISI AEROSPACE,
LISI AUTOMOTIVE and LISI MEDICAL.
To carry out impairment tests on other intangible and tangible fixed
assets, the allocation to the CGUs remains unchanged:
The LISI AEROSPACE division is split into 8 CGUs:
–
–
Europe B.U;
–
–
USA B.U;
–
–
Special products 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 relating to US
retirement investments 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
I
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
I
Trade and other receivables
Trade receivables, loans and advances are recorded to the balance
sheet at their nominal 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
I
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
I
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:
–
–
to increase the activity of the stock on the market by an Investment
Services Provider via a liquidity contract in accordance with
the AFEI professional code of ethics recognized by the AMF (the
French financial market authority);
–
–
to grant stock options or free shares to employees and corporate
officers of the company and/or its Group;
–
–
to retain and use shares as consideration or payment for potential
acquisitions;
–
–
to cancel shares purchased, subject to the approval of the
Extraordinary General Meeting to be called at a later date.
39
LISI 2017 FINANCIAL REPORT
CONSOLIDATED FINANCIAL STATEMENTS
3