2016 Annual Report For Web 7.3MB

AGI uses primarily forward currency contracts as hedges of its exposure
to foreign currency risk in forecast transactions and firm commitments.
OFFSETTING OF FINANCIAL INSTRUMENTS
Financial assets and financial liabilities are offset and the net amount
reported in the consolidated statements of financial position if, and only
if, there is a currently enforceable legal right to offset the recognized
amounts and there is an intention to settle on a net basis, or to realize
the assets and settle the liabilities simultaneously.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value is the estimated amount that AGI would pay or receive to
dispose of these contracts in an arm’s length transaction between
knowledgeable, willing parties who are under no compulsion to act. The
fair value of financial instruments that are traded in active markets at
each reporting date is determined by reference to quoted market prices,
without any deduction for transaction costs.
For financial instruments not traded in an active market, the fair
value is determined using appropriate valuation techniques that are
recognized by market participants. Such techniques may include using
recent arm’s length market transactions, reference to the current fair
value of another instrument that is substantially the same, discounted
cash flow analysis or other valuation models.
PROVISIONS
Provisions are recognized when AGI has a present obligation, legal
or constructive, as a result of a past event, it is probable that an
outflow of resources embodying economic benefits will be required
to settle the obligation and a reliable estimate can be made of the
amount of the obligation. Where AGI expects some or all of a provision
to be reimbursed, for example under an insurance contract, the
reimbursement is recognized as a separate asset but only when
the reimbursement is virtually certain. The expense relating to any
provision is presented in the consolidated statements of income, net of
any reimbursement. If the effect of the time value of money is material,
provisions are discounted using a current pre-tax rate that reflects,
where appropriate, the risks specific to the liability. Where discounting
is used, the increase in the provision due to the passage of time is
recognized as a finance cost.
Warranty provisions
Provisions for warranty-related costs are recognized when the product
is sold or service provided. Initial recognition is based on historical
experience.
PROFIT (LOSS) PER SHARE
The computation of profit (loss) per share is based on the weighted
average number of shares outstanding during the period. Diluted
profit (loss) per share is computed in a similar way to basic profit
(loss) per share except that the weighted average shares outstanding
are increased to include additional shares assuming the exercise of
share options, share appreciation rights and convertible debt options, if
dilutive.
REVENUE RECOGNITION
Revenue is recognized to the extent that it is probable that the economic
benefits will flow to AGI and the revenue can be reliably measured,
regardless of when the payment is being made. Revenue is measured
at the fair value of the consideration received or receivable, taking
into account contractually defined terms of payment and excluding
taxes or duty. AGI assesses its revenue arrangements against specific
criteria in order to determine if it is acting as principal or agent. With
the exception of third-party services, AGI has concluded that it is acting
as a principal in all of its revenue arrangements. The following specific
recognition criteria must also be met before revenue is recognized:
Sale of goods
Revenue from the sale of goods is in general recognized when
significant risks and rewards of ownership are transferred to the
customer. AGI generally recognizes revenue when products are
shipped, free on board shipping point; the customer takes ownership
and assumes risk of loss; collection of the related receivable is
probable; persuasive evidence of an arrangement exists; and the sales
price is fixed or determinable. Customer deposits are recorded
as a current liability when cash is received from the customer and
recognized as revenue at the time product is shipped, as noted above.
AGI applies layaway sales or bill and hold sales accounting in specific
situations provided all appropriate conditions are met as of the
reporting date.
Third-party services
AGI from time to time enters into arrangements with third-party
providers to provide services for AGI’s customers. Where AGI acts
as agent, the revenue and costs associated with these services are
recorded on a net basis and disclosed under other operating income.
INCOME TAXES
AGI and its subsidiaries are generally taxable under the statutes of their
country of incorporation.
Current income tax assets and liabilities for the current and prior period
are measured at the amount expected to be recovered from or paid to
the taxation authorities. The tax rates and tax laws used to compute
the amount are those that are enacted or substantively enacted at
the reporting date in the countries where AGI operates and generates
taxable income. Current income tax relating to items recognized directly
in equity is recognized in equity and not in the consolidated statements
of income (loss). Management periodically evaluates positions taken
in the tax returns with respect to situations in which applicable tax
regulations are subject to interpretation and establishes provisions
where appropriate.
AGI follows the liability method of accounting for deferred taxes. Under
this method, income tax liabilities and assets are recognized for the
estimated tax consequences attributable to the temporary differences
between the carrying value of the assets and liabilities on the
consolidated financial statements and their respective tax bases.
Deferred tax liabilities are recognized for all taxable temporary
differences, except:
87 CONSOLIDATED FINANCIAL STATEMENTS
FIELD TO CONSUMER
2016 ANNUAL REPORT
CONSOLIDATED FINANCIAL STATEMENTS 88