CONSOLIDATED FINANCIAL STATEMENTS >
EXPLANATORY NOTES
144
| 2013 ANNUAL REPORT | PRYSMIAN GROUP
B.14 CASH AND CASH EQUIVALENTS
B.15 ASSETS HELD FOR SALE
B.12 INVENTORIES
B.13 CONSTRUCTION CONTRACTS
Cash and cash equivalents include cash, demand bank
deposits and other short-term investments, with original
maturities of three months or less. Current account overdrafts
Assets held for sale are classified as such if the carrying
amount will be recovered principally through a sale
transaction; for this to be the case, the sale must be highly
probable and the related assets must be available for
Inventories are recorded at the lower of purchase or
production cost and net realisable value, represented by the
amount which the Group expects to obtain from their sale in
the normal course of business, net of selling costs. The cost
of inventories of raw materials, ancillaries and consumables,
as well as finished products and goods is determined using
the FIFO (first-in, first-out) method.
The exception is inventories of non-ferrous metals (copper,
aluminium and lead) and quantities of such metals
Construction contracts (hereafter also “contracts”) are
recognised at the value agreed in the contract, in accordance
with the percentage of completion method, taking into
account the progress of the project and the expected
contractual risks. The progress of a project is measured by
reference to the contract costs incurred at the reporting date in
relation to the total estimated costs for each contract.
When the outcome of a contract cannot be estimated reliably,
the contract revenue is recognised only to the extent that the
costs incurred are likely to be recovered. When the outcome
of a contract can be estimated reliably, and it is probable that
the contract will be profitable, contract revenue is recognised
over the term of the contract. When it is probable that total
contract costs will exceed total contract revenue, the potential
are classified as financial payables under current liabilities in
the statement of financial position.
immediate sale in their present condition. Assets held for sale
are measured at the lower of net carrying amount and fair
value less costs to sell.
contained in semi-finished and finished products, which
are valued using the weighted average cost method.
The cost of finished and semi-finished products includes
design costs, raw materials, direct labour costs and other
production costs (calculated on the basis of normal operating
capacity). Borrowing costs are not included in the valuation
of inventories but are expensed to the income statement
when incurred because inventories are not qualifying assets
that take a substantial period of time to get ready for use
or sale.
loss is immediately recognised in the income statement.
The Group reports as an asset the gross amount due from
customers for construction contracts where the costs incurred,
plus recognised profits (less recognised losses), exceed the
billing of work-in-progress; such assets are reported under
“Other receivables”. Amounts invoiced but not yet paid by
customers are reported under “Trade receivables”.
The Group reports as a liability the gross amount due to
customers for all construction contracts where billing of the
work in progress exceeds the costs incurred plus recognised
profits (less recognised losses). Such liabilities are reported
under “Other liabilities”.
