LISI GROUP - 2018 Financial report

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The major impacts expected at the start of 2019 are on net debt and the
net value of tangible fixed assets. With regard to the assessment of
restated aggregates used in the calculation of covenants, there should
be no breach of covenants.
Reconciliation of data provided under IAS17 and the impacts of the
application of IFRS 16: The information disclosed previously will not be
fully consistent with the IFRS 16 impacts.
The impacts of rents restated under financial leases did not include the
discount rates defined by an actuary.
The amount referred to in paragraph 2.5.1.2 c) – “operating lease
agreements”, made it possible to know the annual real estate lease
expense without taking a discount rate into consideration.
b) IFRIC 23“Uncertainties surrounding tax treatment”: Published by the
IASB on June 7, 2017
This interpretation clarifies the accounting and valuation procedures for
income taxes when there is uncertainty surrounding the tax treatment
applied.Themethodusedmustbetheonethatprovidesthebestforecast
as to the outcome of fiscal uncertainty.
The Group does not anticipate any impact from the 1st application of the
standard in 2019.
2.2.2 IBasis for the preparation
of the financial statements
Financial statements are given in thousands of euros, except where
otherwise indicated.
They are prepared on the basis of historical costs, with the exception of
thefollowingassetsand liabilitieswhichhavebeenmeasuredattheirfair
value: financial derivatives, financial instruments held for trading
purposes and financial instruments classified as held for sale and
liabilities from cash-settled share-based payment transactions.
Non-current assets held for sale are evaluated at the lower of their book
value and the fair value less costs of disposal.
According to IFRS standards, certain accounting options involve taking
positions based on judgment of assumptions that have an impact on the
amounts of assets or liabilities, income or expenses, particularly
regarding the following elements:
−− durations of depreciation of fixed assets (notes 2.2.7.3 and 2.2.8.4);
−− evaluations retained for impairment tests (note 2.2.8.5);
−− evaluation of pension provisions and obligations (notes 2.2.13 and
2.2.14);
−− valuation of financial assets at fair market value (notes 2.2.6, 2.2.8.6,
2.2.11 and 2.2.12);
−− valuation of share-based payments (note 2.2.14.2);
−− recognition of deferred tax assets (note 2.2.18.5).
These judgmentsandassumptionstake intoaccountthespecificrisksof
the sectors concerned by LISI’s activities, aswell as general risks related
to the economic context.
Managementcontinuouslyreviews itsestimatesandassessmentsbased
upon past experience and on factors considered reasonable that form
the basis of its assessment for the book values of assets and liabilities.
The impact of changes to accounting estimates is recognized during the
period of change only where it affects this period or during the period of
change and successiveperiods if these are also impactedby the change.
These assumptions are broken down by division on the basis of
information drawn from independent experts (actuaries, etc.).
Identified sensitivities
Themainsensitivitiesidentifiedandtrackedbymanagementconcernthe
data and assumptions related to the implementation of the impairment
tests. These assumptions are consolidated through a collection process
of forecast information from major players in the sector (market
assumptions) and actuaries (rate assumptions).
Accounting treatment of the CVAE (Tax on Companies’ Added Value)
Following the release of the National Accounting Council of January 14,
2010, the Group decided to qualify the CVAE (contribution of the Added
Value of Businesses) as income tax that would fall within the scope of
IAS 12. This decision is based on an opinion of the IFRIC issued in 2006
stating that the term ‘taxable profit’ implies a notion of net rather than
gross amount without it being necessarily identical to the accounting
result. Moreover, this choice ensures consistency with the accounting
treatment applied to similar taxes in other foreign countries.
Treatment of the research tax credit
Revenues related to the research tax credit are classified in the income
statement under “Other income”.
Treatment of the tax credit for competitiveness and employment
(“CICE”)
The CICE has been presented in application of IFRS as a deduction from
the employment-related expenses for an amount of €10.2million.
2.2.3 IConsolidation principles
A subsidiary is an entity controlled by its parent company.
In accordance with IFRS 10, an investor controls an investee if and only if
all of the following conditions are satisfied:
−− it holds power over the investee;
−− it is exposed or entitled to variable returns because of its relationship
with the investee;
−− it has the ability to exercise its power over the investee in such a way
as to affect the amount of returns that it obtains.
The list of consolidated companies is provided in note 2.3.4. At
December 31, 2018 all the companies are included in the consolidation
scope in accordance with the full consolidationmethod.
2.2.4 ITransactions excluded from the
consolidated financial statements
Balance sheet balances, unrealized profits and losses, and income and
costs arising from intra-group transactions have been excluded in
preparing the consolidated financial statements.
Unrealized losses have been excluded in the same way as unrealized
profits, on condition that they do not represent a loss of value.