LISI GROUP - 2018 Financial report

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2.1 IGroup activity and highlights of the year
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: “6 rue Juvénal
Viellard, CS 70431 GRANDVILLARS, 90008 Belfort cedex”.
The consolidated financial statements of the Group for the financial year
ending December 31, 2018 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, andmedical.
Highlights of the year
Purchase of minority stake in the subsidiary LISI AEROSPACE ADDITIVE
MANUFACTURING
July 24, 2018, the LISI Group purchased the 40% minority stake in
LISI AEROSPACE ADDITIVE MANUFACTURING. The purchase of the
minority stake in this company was carried out via LISI AEROSPACE
STRUCTURALCOMPONENTS,awhollyownedsubsidiaryoftheLISIGroup.
Hi-Vol consolidation
On September 21, 2018, the LISI Group purchased 100% of the assets of
Hi-Vol Products LLC. The acquisition of this company, which comprises
135 people and has sales revenue of around $40 million took place via
LISI AUTOMOTIVE Hi-Vol Inc and LISI Holding North America, wholly
owned LISI subsidiaries.
Disposal of LISI AUTOMOTIVE BETEO GmbH
December31,2018,theGroupsolditssubsidiaryLISIAUTOMOTIVEBETEO
GmbH. This company generated sales revenue of €6.9 million in 2018.
2.2 IAccounting principles and policies
ThefinancialstatementsdrawnupasatDecember31,2018wereapproved
by the Board of Directors on February 20, 2019 and will be submitted to
the Combined General Meeting on April 26, 2019.
2.2.1 IBackground to the preparation
of the consolidated financial statements
for the 2018 financial year
In accordance with EU regulation 1606/2002 dated July 19, 2002, the
LISIGroup’sconsolidatedfinancialstatementshavebeenprepared in line
with IAS/IFRS international accounting standards as adopted by the
European Union on December 31, 2018.
2.2.1.1 - Standards, amendments and interpretations adopted by
the EU and mandatory for reporting periods beginning on or after
January 1, 2018
■■The company took into account the IFRIC recommendations on the
classification of bank overdrafts as components of “net cash” when
producing the cash flow statement. In accordance with section 8 of
IAS 7, the company’s bank overdrafts are components of net cash as
they are not subject to authorization agreements preventing the bank
fromdemanding “repayment on sight” of the overdrafts.
■■IFRS 9 “Financial instruments”
IFRS 9 “Financial instruments” adopted by the European Union on
November 22, 2016, replaces IAS 39 “Financial instruments” as of
January 1, 2018. This standard defines new principles on the
classification and valuation of financial instruments, on depreciation
for financial asset credit risk and hedge accounting.
In 2018, the Group analyzed the accounting treatment of its financial
instruments according to IFRS9procedures. The analysis provided the
following conclusions:
−−Classification and valuation
On the assets side, debtors and apportioned accounts, negotiable
certificatesofdeposit,andonthe liabilitiessidebank loansandother
borrowings, accounts payable and apportioned accounts were
valued at amortized cost under IAS 39. Their accounting treatment
remains unchanged under IFRS 9.
The accounting treatment of monetary SICAV instruments remains
unchanged under IFRS 9.
−−Impairment
IFRS 9 introduces a newmodel called ECL (Expected Credit Loss) for
recognizing the impairment of financial assets based on expected
credit losses. This new model applies to the assets valued at
depreciated cost or financial assets which meet the SPPI (Solely
Payments of Principal and Interest) criterion and recognized at fair
valuebyOCI.ThismodelrepresentsachangecomparedtotheIAS39
model based on actual credit losses.
For trade receivables, the Group has opted for the simplified IFRS 9
impairment model. The Group uses the information on overdue
accounts to determine whether there have been major increases in
the credit risk since the initial reporting. Following the analyses, the
estimated ECL at December 31, 2018 is not significant.
−−Hedge accounting
ThenewIFRS9modelaimstosimplifyhedgeaccounting,betteralign
thereportingofhedgingrelationshipsonriskmanagementactivities
and enable hedge accounting to be applied to a wider range of
hedging instruments and to the elements that can be considered as
hedged elements.
The Group has reviewed the hedge accounting applicability criteria
according to the new IFRS 9 model. The analyses conducted do not
show any major impact as at December 31, 2018.
■■IFRS 15 “Revenue from ordinary activities from contracts with
customers”
At the end of May 2014, the IASB published standard IFRS 15, Revenue
fromcontractswithcustomers.Thisstandardconcernstherecognition
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 11, Construction contracts. This
standardintroducesasingleanalysisgridregardlessofthetransactions
(sale of goods, sale of services, granting of licenses, etc.) with five
successive stages: