LISI GROUP - 2018 Financial report

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Deferred taxation is calculated using the variable carry forwardmethod
for all timing differences at year-end between taxable and accounting
values of assets and liabilities on the consolidated balance sheet.
Fiscally non-deductible goodwill does not give rise to a declaration of
deferred tax.
Deferred tax assets are only recognized if their recovery is probable.
Deferred tax debits and credits aremeasured at the tax rates that will be
applicable when the timing differences are settled.
A deferred tax asset on loss carry-forwards is recognized only insofar as
it is likely that the relevant subsidiary or its tax consolidation scope will
have future taxable profits to which tax loss carryforwards can be
attributed.
RegardingFrenchcompanies,pursuanttotheremovaloftheprofessional
tax and its replacement by the CET and CVAE as of 2010, the Group has
decided to consider the CVAE in the context of the IAS 12 standard. This
decision will thus lead to the posting of this tax as “Taxes” in the income
statement.
2.2.18.6 - Earnings per share
Net earnings per share (before dilution) are calculated on the ratio
between the net profit for the period and the weighted number of shares
in circulation during the period, after deduction of shares held by the
Group (treasury shares). Net diluted earnings per share are calculated by
including financial instruments that provide deferred access to the
Group’s capital (stock options, share warrants, performance shares).
2.2.19 ISegment information
The LISI Group presents its segment information in accordance with the
criteria defined by IFRS 8.
An operating segment is a component of an entity:
−− that engages in business activities from which it may earn revenues
and incur expenses (including revenues and expenses relating to
transactions with other components of the same entity);
−− whose operating results are regularly reviewed by the entity’s chief
operating decision-maker with a view to making decisions about
resources to be allocated to the segment and assess its
performance;
and
−− for which discrete financial information is available.
TheGroup’s activities are spreadover three business segments, inwhich
the three divisions operate:
−− LISI AEROSPACE, which combines all the activities in the aerospace
market;
−− the LISI AUTOMOTIVE division, which covers all activities in the
automotive market;
−− LISI MEDICAL, which covers all activities in themedical market.
“Other” activities mainly include the activities of the Group’s main
company.
2.2.20 IIndicators
The Group uses the indicators defined below.
Free cash flow: Operating cash flow minus net industrial CAPEX and
changes inworkingcapitalrequirements(seechapter3note2.5.2.3Cash
and cash equivalents).
Return on capital employed (ROCE): Ratio of EBIT to average capital
employed (Shareholders’ equity + Net debt for years N and N-1).
Returnonequity(ROE): Ratioofnetearningstototalshareholders’equity.
Gearing: Ratio of Net Debt to the Group share of consolidated equity.
Book to bill: Ratio between the orders taken during the period and the
billing during the same period.
Revalued Net Assets (RNA): Average of [(1.2 x Group Sales Revenue) +
(8 x GroupEBITDA) + (12 x GroupEBIT)] - AverageGroupNet Debt for years
N and N-1.
2.3 IScope of consolidation
2.3.1 IChanges in the consolidation scope
in the financial year 2018
Purchase of minority stake in the subsidiary LISI AEROSPACE ADDITIVE
MANUFACTURING
On 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.
As this subsidiary had been fully consolidated since the beginning, no
impact was recorded on the aggregates of the income statement.
Hi-Vol consolidation
On September 21, 2018, the LISI Group purchased 100% of the assets of
Hi-VolProductsLLC.Thecompany isacquiredthroughLISIAUTOMOTIVE
Hi-Vol Inc, a wholly-owned subsidiary of LISI.
LISI AUTOMOTIVE Beteo GmbH disposal
On December 31, 2018, the Group sold its subsidiary LISI AUTOMOTIVE
BETEO GmbH.
2.3.2 IImpact of the LISI AUTOMOTIVE Hi-Vol Inc.
scope inclusion which took place in 2018
In € million
Impact in % on
the Group
indicators
Sales revenue fromOctober to
December 2018
10.3 0.6%
EBIT fromOctober to December
2018
0.0 NA
Changes in scope are included in the thresholds recommended by the
supervision authorities. We have not established any proforma
statements.
2.3.3 IImpact of the LISI AUTOMOTIVE Beteo GmbH
scope exit which took place in 2018
As the exit took place on 12/31/2018, there was no major impact on the
Group’s income statement.