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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, 2017 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:
12/31/2017
IMPACT
(in €’000)
USD
Exchange rate at the closing date
1.1993
Euro/dollar exchange rate
development assumptions
–10%
+10%
Euro/dollar exchange rate used
for the sensitivity analysis
1.0794
1.3192
Impact (before tax)
(33.1)
14.5
2.4.4
I
Risk related to the impairment of intangible assets
The net amount of goodwill at December 31, 2017 amounted to
€321 million. At December 31, 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. This
combination was identical as of December 31, 2017.
The results of the impairment tests confirm the soundness of
the LISI AEROSPACE Division, and show that the activities of
LISI AUTOMOTIVE and LISI MEDICAL divisions have strengthened.
2.5
I
DETAIL OF THE BALANCE SHEET ITEMS
2.5.1
I
Non-current assets
2.5.1.1 Intangible assets
a) Goodwill
(in €’000)
Goodwill
GROSS GOODWILL AS OF DECEMBER 31, 2016
300,426
Impairment over financial year 2016
0
NET GOODWILL AS OF DECEMBER 31, 2016
300,426
Increase
40,882
Decrease
(5,000)
Changes in foreign exchange rates
(14,933)
GROSS GOODWILL AS OF DECEMBER 31, 2017
321,377
Impairment over financial year 2017
0
NET GOODWILL AS OF DECEMBER 31, 2017
321,377
The increase is attributable to the Termax Group’s entry into the
Group’s scope (€40.9 million).
The decrease is for the deconsolidation of Precimetal Fonderie
Precision (€5 million).
Changes in currency exchange rate only concern LISI AEROSPACE
and result from translation differences on the dollar.
The portfolio of foreign exchange derivatives is broken down as follows:
12/31/2017
12/31/2016
Fair
value
(1)
Notional
amount
(2)
< 1 year
from 1
to 5 years
more
than
5 years
Fair
value
(1)
Notional
amount
(2)
< 1 year
from 1
to 5 years
more
than
5 years
Long position of GBP
against USD
0.1
32.4
25.2
7.2
0.0
(7.2)
35.0
21.8
13.2
0.0
Long position of CAD
against USD
1.7
57.6
33.6
24.0
0.0
(1.5)
39.6
33.6
6.0
0.0
Long position of TRY
against EUR
(0.6)
32.8
32.8
0.0
0.0
(0.2)
18.7
18.7
0.0
0.0
Long position of PLN
against USD
0.1
16.8
16.8
0.0
0.0
(0.3)
20.4
20.4
0.0
0.0
Long position EUR
against USD
13.5
214.9
116.0
98.9
0.0
(14.1)
335.2
0.0 335.2
0.0
TOTAL
14.7
(23.3)
(1) Fair value amounts are expressed in millions of euros.
(2) Maximum notional amounts are expressed in millions of currencies.
48
LISI 2017 FINANCIAL REPORT
CONSOLIDATED FINANCIAL STATEMENTS
3