I.A. Hedin Bil - Annual Report 2018 1
NOTE 3 ESTIMATES AND ASSESSMENTS Estimates and as
sessments are valued continuously. These are based on historical experience and other factors, including expectations of future events, that under current conditions may be assumed to occur. The Group makes estimates and assumptions about the future. The resulting estimates for accounting purposes will, by definition, seldom match the actual results. The estimates and assumptions that carry a significant risk of essential adjustments in reported values for assets and liabilities during the following financial year that are mentioned below. Impairment testing of goodwill The Group examines the existence of any impairment for goodwill, in accordance with the Group's accounting principles. The recoverable amounts of cash-generating units have been established by calculating the value in use. By necessity, these calculations include certain estimates (Note 13). Repurchase agreements In some car sales, the Group may occasionally commit to repurchase agreements, which entail a commitment to repurchase a sold vehicle at a pre-agreed residual value. This occurs primarily in conjunction with private leasing transactions. The leases are reported as operational leases in accordance with the Group's accounting principles. The agreements entail a residual value risk in that the Group may be forced to sell pre-owned vehicles at a loss in the future, if the value then is weaker than predicted at the time the agreement was entered into. Ongoing assessments of these vehicles' future net realizable value are made along with randomized check of the resale value of the returned cars. The cars are reported as vehicles under Tangible assets and repurchase agreements are reported under Other liabilities. Debts agreement exists in terms of vehicles sold with repurchasing agreements, see note 21. Inventories Valuation of vehicles is made at the lower of acquisition cost and net realizable value. Net realizable value is established based on an estimated realizable value reduced by sales costs. Net realizable value was lower than acquisition cost by kSEK 41,153 (kSEK 38,613). NOTE 4 NET SALES 1/1/201812/31/2018 Net sales distribution Vehicle sales Workshop Spare parts in automotive operations Fee and commission income Elimination Other Net sales per geographic market Sweden Norway Belgium The internal performance monitoring is divided into different operating segments. The following operating segments have been identified, where Hedin Bil, Bavaria and Belgium are regarded as operating segments in accordance with IFRS 8. Hedin Bil refers to the sale of new and pre-owned vehicles and service activities in Sweden under the brand of Hedin Bil for passenger cars, commercial vehicles and trucks. It also includes additional services such as financing, insurance, private leasing, etc. Bavaria refers to the sale of new and pre-owned vehicles and service activities in Norway and Sweden under the brand of Bavaria for passenger vehicles. It also includes additional services such as financing, insurance, private leasing, etc. 19,343,807 1,499,368 2,008,495 320,258 -2,170,399 41,811 21,043,340 16,486,913 3,342,425 1,214,002 21,043,340 1/1/201712/31/2017 11,403,280 863,318 1,083,837 195,606 -915,143 26,148 12,657,046 12,273,172 383,874 0 12,657,046 Belgium refers to the sale of new and pre-owned vehicles and service activities in Belgium under the brand of Hedin Automotive for passenger cars, commercial vehicles and trucks. It also includes additional services such as financing, insurance, etc. Car sales refers to the sale of new and pre-owned vehicles of passenger cars, commercial vehicles and trucks. It also includes additional services such as financing, insurance, private leasing, etc. Service market includes service and repairs, sales of spare parts and accessories and tire hotels. 64 I.A. HEDIN BIL AB / ANNUAL REPORT / 2018