Hexagon Annual Report 2019

The statement of profit or loss reflects the Group’s share of the results of operations of the associate or joint venture. Any change in OCI of those investees is presented as part of the Group’s OCI. In addition, when there has been a change recognized directly in the equity of the associate or joint venture, the Group recognizes its share of any changes, when applicable, in the statement of changes in equity. Unrealized gains and losses resulting from transactions between the Group and the associate or joint venture are eliminated to the extent of the interest in the associate or joint venture and is recognized against profit/loss from investment in associates and joint ventures. If there is an indication that the investment in the associate or joint venture is impaired, the Group will perform an impairment test of the carrying amount of the investment. Any impairment losses are recognized as share of profit of an associate and a joint venture in the statement of profit or loss. If the Group's share of the loss equals or exceeds the carrying amount of the associate or joint venture, the carrying amount is set to zero and further loss is not recognized unless the Group has incurred a legal or constructive obligation on behalf of the associate or joint venture. Upon loss of significant influence over the associate or joint control over the joint venture, and as such the equity method ceases, the Group measures and recognizes any retained investment at its fair value. A new measurement of remaining ownership interests will not be performed if the equity method is still applicable, for example by transition from an associate to a joint venture. The Group presents assets and liabilities in the consolidated statement of financial position as either current or non- current. 2.5 CURRENT VERSUS NON-CURRENT CLASSIFICATION The Group classifies an asset as current when it: • Expects to realize the asset, or intends to sell or consume it, in its normal operating cycle • Holds the asset primarily for the purpose of trading • Expects to realize the asset within twelve months after the reporting period Or • The asset is cash or a cash equivalent, unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period. All other assets are classified as non-current, including deferred tax assets. The Group classifies a liability as current when it: • Expects to settle the liability in its normal operating cycle • Holds the liability primarily for the purpose of trading • Is due to be settled within twelve months after the reporting period Or • It does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. All other liabilities are classified as non-current, including deferred tax liabilities. Cash & cash equivalents consist of cash in hand and at bank. Any positive balances against bank overdrafts are included as a component of cash and cash equivalents in the cash flow statement. The cash flow statement has been prepared using the indirect method. Bank overdrafts are reported under short-term loans in the balance sheet. Received interest income is classified as investment activities and interest payments is classified as investment activities in the cash flow statement. 2.6 CASH AND CASH EQUIVALENTS Trade receivables are recognized at fair value less impairment losses. Nominal value does not normally differ significantly from amortized cost. 2.7 TRADE RECEIVABLES Inventories are valued at the lower of historical cost and net realizable value. Net realizable value is the estimated selling price (in the normal course of business) less the estimated costs of completion and the estimated cost necessary to make the sale. Cost is based on the average cost price, and includes the costs incurred in acquiring the goods and the costs of bringing the goods to their current state and location. Goods produced by the Group itself include variable and fixed costs that can be allocated based on normal capacity utilization. 2.8 INVENTORIES 10 96 2019 AT A GLANCE FROM THE BOARD ROOM FINANCIAL STATEMENTS