LISI GROUP - 2018 Financial report

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3 INotes to the Company financial statements
LISI S.A. is a Société Anonyme (public limited company) with a Board of
Directors,withcapitalof€21,645,726representing54,114,317shareswith
a nominal value of €0.40. It is registered at the Belfort trade registry,
under no. 536,820,269. Its head office is based at 6 rue Juvénal Viellard,
Grandvillars, France.
The final annual balance at December 31, 2018 was €859,172,705.
The annual income statement showed a profit of €42,296,469.
The financial year runs over twelve (12) months, from January 1, 2018
to December 31, 2018.
ThenotesandtablesbelowformanintegralpartoftheCompanyfinancial
statements.
3.1 IAccounting principles and policies
Thefinancialstatementsfor2018aredrawnup in linewithcurrentFrench
accountingregulations.Theaccountingprinciplesandpolicieshavebeen
applied in line with the prudence principle and with underlying
assumptions which aim to provide an accurate picture of the Company:
■■the continuity of operations;
■■the comparability of accounting policies;
■■the independence of financial years.
Items listed on the balance sheet are, depending on the item, valued at
historic cost, transfer value, or net asset value.
The accounting principles on which the Company financial statements
for 2018 were drawn up are identical to those for 2017.
The preparation of financial statements requires LISI tomake estimates
and speculative forecasts which are liable to impact on both its assets
and liabilities as well as those of its subsidiaries and holdings.
The latter are exposed both to specific, industry-related risks as well as
risks relating to the wider international environment.
In LISI S.A.’s financial statements, the estimates and forecasts involved
in implementing accounting policies particularly affect equity
investments, as valuations (see note b, below) are based on affiliates’
forecast data.
a) Tangible fixed assets
Tangible assets are valued at their historical cost (price of purchase and
related expenses), and depreciation is calculated using the straight line
or diminishingbalancemethod, inaccordancewith their expecteduseful
life:
Economic
depreciation Depreciation
Software programs 3 years straight line 3 years straight line
Buildings 33.33 years straight line 20 years straight line
Transport equipment 5 years straight line 3 years diminishing
balance
Office equipment 3‑5 years straight line 3 - 5 years
diminishing balance
Office furniture 5‑10 years straight line 5‑10 years straight line
When fitting out the new offices at the head office, LISI applied the
component-based approach. Eight components have been defined to
reflect the nature of the constituent parts of these fixtures and fittings.
Thestraight-linemethodwasselectedandthetermswereadaptedtothe
nature of the components, depending on whether they are 3 to 10 years.
b) Financial assets
Participating shares and other financial fixed assets are valued at their
purchase price, excluding the costs incurred in their acquisition. If these
values are higher than the value in use, a provision for depreciation is
recorded to account for the discrepancy.
The value in use is calculated fromeach line of investment, based on the
profitability and performance outlook for the companies concerned; on
developmentsintheeconomicsectorsinwhichtheyoperate;andontheir
positions within these sectors.
The inventory value has been brought into line with the value in use
calculated for the impairment tests, which did not showany loss in value.
c) Marketable securities
Marketable securities are valued at their purchase price, excluding the
costs incurred in their acquisition. They may be depreciated in line with
the average price or the year-end price.
d) Treasury shares
Treasury stock is held as marketable securities. These latter are valued
at their lowest acquisition price or market value (average stock market
priceforDecember)fortreasurystockspurchasedunderpriceregulation
or equity not allocated to staff stock option or share allocation plans. For
shares allocated to plans, CNC notice no. 2008‑17 applies.
e) Free shares and options
Where an outflow of resources relating to share purchase options and
free share awards on the basis of performance is probable, the amount
of the future expense is provisioned in proportion to the rights acquired
since the allocation date. Where relevant, provisions thus provided for
take into account whether or not treasury shares are allocated to share
options or relevant free allocations.
The impact of the expenses relating to the awards of free performance
shares is included in the payroll expenses for employees of LISI S.A. only.