LISI GROUP - 2018 Financial report

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1.4 IRelations between the company
and its subsidiaries
LISI S.A. operates as a holding and support company for its subsidiaries.
It manages its portfolio of interests, the funding of its operations and
those of its subsidiaries, as well as exchange rate, interest rate and
liquidity risks. If necessary, it can also grant loans to its subsidiaries and
centralize the Group’s cash flow surpluses, within the scope of a cash
management agreement. These operations are charged at the market
price plus a margin.
In France, LISI S.A. is the parent company of a Group consolidated for
fiscal purposes. In accordancewith the express provisions of the French
Fiscal Consolidation Agreement, tax credit is retained by the parent
company, and companies are not entitled to compensation should they
leave the consolidation perimeter.
LISI S.A. offers its subsidiaries a number of services and skills relating to
central functions, such as legal and fiscal support, financial support,
management controls, procedures and audits, insurance management
and assistancewithhuman resources, health, safety, andenvironmental
matters. The three divisions pay LISI S.A. a normal level of compensation
for these services, based on the operating expenses incurred for the
period, multiplied by a coefficient; these charge-backs are broken down
proportionally to each division’s added value.
Data with related companies are as follows:
(in thousands of euros)
Amount concerning related companies
companies.
with which the company
has equity interests
ASSETS:
Receivables related to equity holdings 70,250 -
Debtors and apportioned accounts 2,317 -
Cash advances to subsidiaries 481,950 -
Tax integration current account 0 -
LIABILITIES:
Receivables related to equity holdings 0 -
Subsidiaries’ financial assistance 249,880 -
Tax integration current account 18,642 -
Suppliers 220 -
INCOME STATEMENT:
IT maintenance 41 -
Reserves for equity interests 2,309 -
Service and management fees invoices 9,669 -
Rental invoices 20 -
Miscellaneous chargebacks 1,149 -
Revenues from subsidiaries’ loans and current accounts 5,896 -
Revenues from equity interest 31,738 -
Significant intra-group items include:
■■on the assets side:
−− receivables related to equity holdings:
−− LISI S.A. advanced, as a medium-term loan, USD 60 million to its
subsidiary Hi Shear Corporation due for repayment on May 2, 2026,
toenableittofundpartoftheacquisitioninMay2016ofthesubsidiary
LISIMEDICALRemmele:thecapitaloutstandingatDecember31,2018
was USD 21.6 million, i.e. €18.9 million. Hi Shear Corporation repaid
part of the loan early during 2018;
−− LISIS.A.advanced,asamedium-term loan,thesumofUSD58million
to its subsidiary LISI Holding North America due for repayment on
October 27, 2030, which enabled it to fund part of the acquisition in
October 2018 of the TERMAX Group: the capital outstanding at
December 31, 2017 was USD 58 million, i.e. €50.7 million. The share
capital will begin to be repaid on October 27, 2021;
−− cash advances to Group subsidiaries as part of the Group’s cash
agreement.
■■on the liabilities side:
−− cash granted to Group subsidiaries within the Group cash
management agreement;
−− the current accounts for the fiscal integration of tax receivables of
the companies integrated within the Group.
■■on the income statement:
−− invoices for services and management fees from LISI S.A. to its
various subsidiaries;
−− therentsfromthebuildingsleasedtooursubsidiaryLISIAUTOMOTIVE
Former;
−− dividends received by LISI S.A. for the financial year 2018.
These transactions are entered into under normal market conditions; in
particular, they take into account costs that were actually incurred and
are billed back.