LISI GROUP - 2018 Financial report

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The award of share purchase options and the award of shares based on
performance do represent a benefit available to such associates, and
thusconstituteasupplementtotheirremuneration.Theoptionsgranted
are recognized as personnel expenses based on the fair value of the
shares or equity derivatives assigned, on the date of implementation of
these plans throughout the vesting period of these options.
In the case of plans for share-purchase options and bonus shares based
on performance, these benefits correspond to the fair market value of
the instruments issued.
As regards bonus commitments, these are recorded as social liabilities
at their fair value at year-end.
This compensation paid in LISI shares is recognized over a 2-year period
as from the allocation date, in accordance with the vesting period of the
rights given in the payment of the plans, as they concern the allocation of
shares based on performance.
A share purchase plan (Group Savings Plan) is also available for Group
employees, inwhichtheymaypurchaseLISIshareswithintheframework
ofacapital increasereservedforemployeesoraspartofasharebuyback
program. Shares acquired by employees within the framework of these
programsaresubjecttocertainsaleandtransferrestrictions.Inthecase
of capital increases reserved for employees as part of the Group Savings
Plan,thebenefitofferedtoemployees isthediscountonthesubscription
price, being the difference between the subscription price of the shares
and the share price at the award date (with a maximum of 20% in
accordancewithFrench law).Thisexpense isrecognized in itsentiretyat
subscription date in the case of the Group Savings Plan.
2.2.15 IDebt
Interest-bearing loansare initiallyrecognizedattheirfairvalue lesscosts
attributable to the transaction. They are then measured at depreciated
cost; the difference between the cost and the repayment value is
recognized in the income statement for the period of the loans, in
accordance with the effective rate of interest method.
2.2.16 ITrade and other accounts payable
Trade and other accounts payable are valued at fair value at first
recognition, and then at depreciated cost. When the maturity of such
financial assets is short, the sums obtained from applying this method
areveryclosetothenominalvalueofthepayables,whichisthenthevalue
employed.
2.2.17 IDefinition of the “current” and “non-current”
concepts in the balance sheet
Assets and liabilities whose maturity is less than the operating cycle,
which is generally 12 months, are classified as current assets and
liabilities. If maturity is later than this, they are classified as non-current
assets and liabilities.
2.2.18 IOverview of the income statement
The Group has opted to continue showing the following totals, which are
not strictly accounting ones, and whose definitions are as follows:
■■current Gross Operating Profit (EBITDA on current transactions)
includes operating income fromwhich consumption, other purchases
andexternalexpenses,taxesandpayrollexpensesarededucted.Itdoes
not include contributions and write-offs from depreciation and
provisions;
■■currentOperatingProfit(EBIToncurrenttransactions)includesCurrent
Gross Operating Profit (EBITDA) aswell as contributions andwrite-offs
fromdepreciation and provisions;
■■operating Profit includes EBIT before non-current transactions and
other non-recurring operating income and expenses. These non-
recurring items are strictly defined as income and expenses resulting
fromeventsortransactionsthatareclearlydistinctfromthecompany’s
ordinary activities and that are not expected to reoccur on a regular
basis, owing to:
−− their unusual nature, and
−− their random occurrence, such as expenses or compensation
receivedfor losses,costsresultingfromshutdowns,restructurings,
or site relocations, goodwill amortization, and capital gains and
losses on the sale of non-operating, tangible and intangible assets.
2.2.18.1 - Sale of goods and provision of services
Income from the sale of goods is recognized in the income statement
when the significant risks and advantages inherent in ownership of the
goods have been transferred to the buyer.
Sales revenues are shown after deduction of discounts. Sums from
royalties,patentfeesanduseoftrademarksarepostedtosalesrevenues.
2.2.18.2 - Payments for operating lease contracts
Payments for operating leases are recognized as expenses on a straight-
line basis over the period of the lease.
2.2.18.3 - Payments for financial leases
The minimum payments for finance leases, as described in
paragraph 2.2.8.2, are broken down into financial charges and debt
repayment.Thefinancialcharge isappliedforeachperiodcoveredbythe
lease so as to have a constant, periodic interest rate to apply to the
declining balance.
2.2.18.4 - Cost of finance and other financial charges and income
The cost of finance includes:
−− interest charges on loans calculated using the effective interest rate
method;
−− interest charges included in payments made for a finance lease and
calculated using the effective interest rate method;
−− interest income generated from current investments;
−− variations in fair value of financial instruments;
−− income from dividends of non-consolidated companies is recognized
in the income statement when the Group becomes entitled to receive
payments, i.e., in the case of quoted securities, on the coupon date.
Otherfinancialincomeandexpensesmainlyincludeexchangeprofitsand
losses.
2.2.18.5 - Income taxes
Corporate income tax (debit or credit) includes the tax to pay (the tax
credit) in respect of each financial year and the amount of deferred
taxation to pay (credit). The tax is recognized as income, except if it
relates to items that are directly recognized as equity, in which case it is
recognized as equity.