Consolidated Financial Statements of the F.I.L.A. Group
Separate Financial Statements of F.I.L.A. S.p.A.
79
Losses in value are restated if subsequently the increase in value can be objectively associated to an
event which occurred after the reduction in value. For financial assets measured
at amortised cost and
financial assets available-for-sale corresponding to debt securities, the restated amount is recognised
in the income statement. For financial assets available-for-sale corresponding to equity securities, the
restated amount is recognised directly to equity.
Cash and cash equivalents
Cash and cash equivalents principally include cash, bank deposits on demand and other highly liquid
short-term investments (converted into liquidity within ninety days). They are measured at fair value
and the relative changes are recorded in the income statement. Bank overdrafts are classified under
“Current Financial Liabilities”.
Trade and other receivables
Trade receivables and other receivables are initially recognised at fair value and subsequently
measured at amortised cost, using the effective interest rate method. They are reduced by an
appropriate write-down to reflect the estimate of impairments, which are recognised to the income
statement. When, in subsequent periods, the reasons for the write-down no longer exist, the value of
the assets is restated up to the value deriving from the application of the amortised cost where no
write-down had been applied.
The doubtful debt provision is recognised to state receivables at realisable value, including write-
downs for any indicators of a reduction in value of trade receivables. The write-downs, which are
based on the most recent information and on the best estimates of the Directors, are made so that the
assets are reduced to the present value of the expected future revenue streams.
The doubtful debt provision is recorded as a direct reduction of trade and other receivables. These
provisions are classified in the income statement account “Write-downs”; the same classification was
used for any utilisations.
Consolidated Financial Statements of the F.I.L.A. Group
Separate Financial Statements of F.I.L.A. S.p.A.
80
Inventories
Inventories of raw materials, semi-finished and finished products are measured at the lower of
purchase or production price, including accessory charges, determined in accordance with the
weighted average cost method, and the net realisable value. Net realisable value is the estimated
selling price in the ordinary course of business, less the estimated costs of completion and the
estimated selling costs.
Obsolete and slow-moving inventories are written down in relation to their possible utilisation or
realisable value.
The purchase cost is utilised for direct and indirect materials, purchased and utilised in the production
cycle. The production cost is however used for the finished products or in work-in-progress.
For the determination of the purchase price, consideration is taken of the actual costs sustained net of
commercial discounts.
Production costs include, in addition to the costs of the materials used, as defined above, the direct
and indirect industrial costs allocated. The indirect costs were allocated based on the normal
production capacity of the plant.
Distribution costs were excluded from purchase cost and production cost.
Provisions for risks and charges (current and non-current)
Provisions for risks and charges are recognised where the Group has a current obligation, legal or
implied, deriving from a past event and it is probable that compliance with the obligation
will result in
a charge and the amount of the obligation can be reasonably estimated.
Provisions are recorded at the value representing the best estimate of the amount that the company
would pay to discharge the obligation or to transfer it to a third party. When the financial effect of
time is significant and the payment dates of the obligations can be reliably estimated, the provision is
discounted. The rate used in the determination of the present value of the liability reflects the current
market values and includes the further effects relating to the specific risk associated to each liability.
The increase of the provision due to the passage of time is recognised in
the income statement account
“Financial income/(charges)”.
The provisions are periodically updated to reflect the changes in the estimate of the costs, of the time
period and of the discount rate; the revision of estimates are recorded in the same income statement
accounts in which the provision was recorded, or when the liability relates to an asset, against the
asset account to which it refers.
The notes illustrate the potential liabilities represented by: (i) possible obligations (but not probable)
deriving from past events, whose existence will be confirmed only on the occurrence or otherwise of