Notes to the Financial Statements - Efacec

a) Sales
The income recognised, in the case of multi-year contracts, in which the percentage of completion method is used, is in accordance
with the policy defi ned for the recognition of income and costs related to multi-year contracts (Note 1.10).
The sale of other goods is recognised when the products are delivered to and accepted by the customer, and when payment of the
related trade debts is reasonably assured.
b) Services
The rendering of services is recognised in the accounting period in which they are rendered, with reference to the phase of
completion of the transaction at the balance sheet date.
1.18 Leases
Leases are classifi ed as operational leases if a signifi cant part of the inherent risks and benefi ts at the time the lease is taken on
is retained by the lessee. Payments made for operational leases are booked in the profi t and loss account on settlement.
Leases of tangible assets where the Group holds substantially all the risks and benefi ts associated with the asset are classifi ed
as fi nancial leases. Financial leases are capitalised at the beginning of the lease for the lower of the fair value of the asset leased
and the present value of the minimum payments of the lease. Each payment made is split between the capital sum due and the
fi nancial costs, in order to obtain a constant rate on the debt outstanding. Lease obligations net of fi nancial charges are shown in
Other Creditors. The interest is booked to fi nancial costs in the lease period to a constant periodic interest rate on the remaining
debt of each period. Tangible assets acquired through fi nancial leases are depreciated over the lesser of the useful life of the asset
or the lease period.
1.19 Dividend distribution
Dividend distributions to shareholders are recognised as a liability in the Group fi nancial statements in the period in which the
dividends are approved in the Shareholders’ General Meeting.
1.20 Subsidies
Subsidies received are booked at their fair value when a reasonable level of comfort exists that the subsidy will be received and
the Group will comply with its obligations.
Subsidies relating to the purchase of tangible assets are included in long term liabilities as deferred subsidies and are credited to
the profi t and loss account in proportion to the useful life of the corresponding assets.
1.21 Discontinued operations
A discontinued operation is one component part of an entity that was either written off or was classifi ed for sale or liquidation and:
(a) represents a signifi cant line of business or geographical area of operation; (b) is part of a restructuring of an area of business
or geographical area of operations; or (c) is a subsidiary acquired for sale.
2. Financial risk management
2.1 Factors of financial risk
The Group operates internationally and thus has exposure to the market, in particular to changes in interest rates, exchange rates
and the price of raw materials. Thus Group activities are exposed to a variety of fi nancial risks: market risk (including exchange
rate risk, fair value risk relating to interest rates and price risk), liquidity risk and cash fl ow risk associated with interest rates. The
Group has no signifi cant concentrations of credit risk. Various fi nancial instruments are used to minimise the potential adverse
effects on the fi nancial performance of the Group. However, the Group only uses such fi nancial instruments to cover risks arising
from its business and activities (“hedging purposes”).
a) Exchange rate risk
The Group operates internationally, and as a result, is exposed to risks from exchange rates. This risk arises from commercial
transactions, recognition of assets and liabilities and net investments in operations outside the Euro zone.
15
2007 Consolidated and
Individual Financial Statments