Universal Registration Document 2019

53 LISI 2019 UNIVERSAL REGISTRATION DOCUMENT Consolidated financial statements 2 Pensions and retirement: see 3.4.4.2 Environment-related risks Recognition of liabilities links to requirements to uphold environmental standards in the various countries in which the company operates and more specifically with regard to soil pollution on industrial sites. As of December 31, 2019, this item was impacted in the amount of €+2.1million by the recognition of a provision on the LISI AUTOMOTIVE Hi-Vol Inc. equity interest offsetting the initial consolidation difference. Disputes and other risks: This covers litigation or disputes with partners and service providers. The risk was assessed based on the estimated cost of the likely outcome of disputes or possible transactions. Assessment of expected returns cannot be calculated as of yet. The bulk of the movements relates to various quality, tax and wage risks. Restructuring and industrial reorganization: This covers industrial reorganization based on assessments of the cost of redeploying certain sites or entities. The assessment of the sums recognized takes account of specific local regulatory stipulations. Other risks: Liabilities recognized under this category take into account risks based on various reports (industrial, regulatory, corporate, customer guarantees and products). The amounts of provisions and reversals primarily concern quality, customer lead time, qualification of new products, tax and wage risks. As of December 31, 2019, this item was impacted in the amount of €+3.3 million by the recognition of a provision on the LISI AUTOMOTIVEHi-Vol Inc. equity interest offsetting the initial consolidation difference. 3.4.4.2 - Commitments to the personnel Contributions in defined contributions plans are recognized as expenses for the period in which they are incurred. The LISI Group has no plan opened relating to defined- contribution plans. In respect of defined benefits plans, the Group’s commitments to its staff are determined by independent actuaries or in house using the Projected Unit Credit Method in accordance with IAS 19. This method takes into account in particular the probability of keeping staff within the Group until retirement age, future remuneration developments and a discount rate. Such plans can be financed by investments in various instruments, such as insurance policies, shares or bonds, to the exclusion of debt instruments or shareholders’ equity issued by the Group. The requirements of IFRIC 14 do not fall within the scope of adjustments to be applied by the Group. In accordance with the revised IAS 19, actuarial gains and losses have been recognized as “Other comprehensive income” since January 1, 2012. The excess or shortfall of the fair value of assets over the present value of bonds is recognized as assets or liabilities on the balance sheet. However, excess assets are only recognized on the balance sheet if they represent a future economic advantage for the Group. The LISI Group has no plan opened relating to defined- contribution plans. General description of the plans. Retirement benefits (France): Entitlements to retirement benefits are defined by applicable laws or sectoral agreements when they are more favorable. England: BAI UK operates a defined benefit pension plan to which all employees who joined the company before April 2007 are entitled andwhich has been closed since then. Plan assets are separate from the assets of the Company and managed by a trust administered by a board of trustees. The risks to which the plan exposes the company are as follows: CAPEX, inflation, retirees’ length of service, options, legislation. USA: Hi Shear Corporation operates a defined benefit pension plan to which all employees who joined the company before February 1991 are entitled and which has been closed since then. Plan assets are separate from the assets of the Company and managed by a trust administered by a board of trustees. The risks to which the plan exposes the company are as follows: CAPEX, inflation, retirees’ length of service, options, legislation. The geographic breakdown of the Group’s commitments to staff as at December 31, 2019, for defined benefit plans and the main assumptions employed in their assessment are as follows: In thousands of euros France Germany USA England Other Actuarial debt 35,572 8,880 348 24,880 2,650 Discount rate 0.75% 0.64% 2.75% 2.19% 3.89% Reference used I Boxx euro zone 12 years Extrapolation cased on the ECB 15-year AAA rate curve Citigroup Pension Discount Curve rate I Boxx AA-rated 15 years +0.3% Inflation - Wage increase 2.00% 1.50% N/A 3.20% NA