Notes to the consolidated financial statements - Efacec

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A. General information Notes to the consolidated financial statements The EFACEC Group’s business activities cover an extensive range of high technology products and services. Diversity in creative and engineering capability enables us to offer technical solutions to a wide variety of activities and sectors in both internal and external markets.A signifi cant part of our output is in support of operational control tools and management, developed in accordance with the most sophisticated consumer requirements. The variety of services and products which we offer include a wide range of equipment used in the transport and distribution of electricity, in control and control systems, electric traction, industrial electronics, telecommunications, automation and robotics and in engineering projects focused on industrial plants, transport and maintenance. The Group operates in a highly competitive market, and it is necessary to be alert to the constant developments and changes in customer preferences and in new technologies. With this in mind, the Group has adapted its structure to ensure the most appropriate solution. In the 90's it assumed a commitment to internationalise and diversify activities that led to the setting up of branches and agents across more than 60 countries.Since 2000 the focus has been on analyzing and evaluating the strategies followed, developing business areas with greater added value and building up the Group with the adequate competencies for the new market and organisational challenges. EFACEC Capital, holding company of the EFACEC Group, is a publicly quoted company with its headquarters in Arroteia, parish of Leça do Balio, Matosinhos in Portugal. B. Summary of main accounting policies The main accounting polices used to prepare these consolidated fi nancial statements are described below. These policies have been consistently applied over the years unless otherwise stated. 1 Accounting policies 1.1 Basis of preparation The consolidated fi nancial statements of EFACEC Capital, SGPS, SA were prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union, in force on 01 January 2008. The consolidated fi nancial statements were prepared using historical costs with the exception of land, fi nancial assets and liabilities (including derivatives) which have been valued in the accounts at their fair value. The preparation of the fi nancial statements in accordance with the International Financial Reporting Standards requires the use of some important accounting estimates. It also requires that the management entity uses its judgement in the process of applying the accounting policies of the company. The area involving the greatest degree of judgement or complexity, or the area where the assumptions and estimates are signifi cant for the fi nancial statements, relate to the estimate of goodwill impairment (Note 1.6). During this fi nancial year the interpretation IFRIC.11 IFRS.2 was mandatory - Intra group transactions of Own Shares, producing no signifi cant impact of company accounting policies. At the end of this fi nancial year, the following standards were issued but not mandatory as at 31 December 2008: - IFRS 2 Payment based on shares (2008 Update) - IFRS 3 Business combinations (2008 Update) - IFRS 8 Operating Segments; - IAS 1 Presentation of Financial Statements (2007 Update) - IAS 23 Cost of Loans Obtained – (2007 Update) - IAS 27 Consolidated and Separate Financial Statements (2008 update) - IAS 32 Financial instruments: Presentation (2008 Update) - IFRIC 13 Customer Retention Programmes; - IFRIC 14 The Limit on a Defi ned Benefi t Asset, Minimum Financing Requirements and their Interaction - IFRIC 15 Agreements for the construction of real estate - IFRIC 16 Hedges of a net investment in a foreign operation 9 2008 Consolidated and Individual Financial Statments
In view of the fact that applying these standards was not mandatory for the fi nancial year beginning 1 January 2008, the Group decided not to adopt them immediately. It is estimated however that there would be no signifi cant impact from applying them to the consolidated fi nancial statements of the Group for those standards which are applicable to the group. The preparation of the fi nancial statements in accordance with the International Financial Reporting Standards requires the use of some important accounting estimates. It also requires that the management entity uses its judgement in the process of applying the accounting policies of the company. 1.2 Consolidation (a) Subsidiaries Subsidiaries are all those entities (including those Entities with Special Purposes) over which the Group has the power of decision concerning fi nancial and operational policies, generally where it holds over half of the voting rights. The existence and the impact of potential voting rights currently exercisable or convertible is taken into consideration when it is assessed whether the Group has control over another entity. Subsidiaries are consolidated from the date on which control is transferred to the Group, and are excluded from consolidation from the date on which that control ceases. The purchase method is used to account for the acquisition of subsidiaries. The cost of acquisition is measured by the fair value of the goods delivered, the instruments of share capital issued, the liabilities incurred or assumed on the date of acquisition, plus the directly attributable costs of acquisition. The identifi able assets acquired and the contingent liabilities taken on in a business merger are initially measured at their fair value on the date of acquisition, irrespective of the existence of minority interests. The excess of the cost of acquisition compared to the fair value of the Group’s share of the identifi able assets acquired is booked as goodwill (IFRS 3). If the cost of acquisition was less than the fair value of the net assets of the acquired subsidiary, the difference is refl ected directly in the Profi t and Loss Account. The transactions, balances and unrealised gains on operations that took place between group companies are eliminated. Unrealised losses are also eliminated, except if the transaction shows evidence of impairment relating to a transferred asset. The accounting policies of subsidiaries were changed whenever deemed necessary to ensure consistency with the policies used by the Group. The amount of Minority Interests is included in Shareholders’ Funds. The list of subsidiaries included in the consolidation perimeter is shown in Chapter G, as well as the respective impacts. (b) Associates Associates are all those entities over which the Group exercises a signifi cant infl uence but where the Group does not have control, generally shareholdings having between 20% and 50% of voting rights. Investments in associates are accounted for using the equity method and are initially booked at cost. Investment of the Group in associates includes goodwill (from which accumulated impairment losses are deducted) that was identifi ed on acquisition (see Note 1.6). The share of the Group in gains and losses of its associates after acquisition is refl ected in the Profi t and Loss Account and its share of movements in reserves after acquisition is refl ected in reserves and in the accounting value of the investment. When the share of the Group in the losses of the associate is equal to or greater than the investment in the associate, including receivables not covered by guarantees, the Group does not recognize additional losses, unless they have been caused by bonds or if the Group made payments in the name of the associate. If the cost of acquisition was less than the fair value of the net assets of the associates acquired, the difference is booked directly to Profi t and Loss. The goodwill identifi ed on acquisition of associates, less accumulated impairment losses, is shown in a specifi c line in the Balance Sheet. Unrealised gains on transactions with associates are eliminated when Group shareholdings are increased in associates. Unrealised losses are also eliminated, except if the transaction reveals evidence of impairment of a transferred asset. Accounting policies of associates are changed whenever necessary, to ensure consistency with the policies used by the Group. (c) Joint Ventures Interest in jointly controlled entities are booked the proportional consolidation method. The Group adds its share of profi ts/losses, assets, liabilities and cash fl ows of joint ventures on a line by line basis with similar items of the Group Consolidated Financial Statements. The Group recognises the proportion of gains and losses on the sale of Group assets to the Joint Venture that is attributable to other partners. It does not recognize its share in the gains or losses of the joint venture that result from the purchase by the Group of assets belonging to the joint venture until it sells them to an independent entity. The loss on the transaction is immediately recognised if there is evidence of a reduction in the value of the net realisable value of current assets, or of an impairment loss. The accounting policies of joint ventures are changed whenever deemed necessary, to ensure consistency with the policies used by the Group. 10
Page 2: 1 2 Index Consolidated Financial St
Page 5 and 6: Non-current assets EFACEC Capital,
Page 7 and 8: EFACEC Capital, S.G.P.S., S.A. and
Page 9: EFACEC Capital, S.G.P.S., S.A. and
Page 13 and 14: 1.5 Tangible Fixed Assets Land and
Page 15 and 16: 1.11 Accounts receivable from custo
Page 17 and 18: 2. Financial risk management 2.1 Fa
Page 19 and 20: C. Segment Information 3. Reporting
Page 21 and 22: D. Notes to the Balance Sheets as a
Page 23 and 24: 22 31.12.2008 31.12.2007 ATM - Assi
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Page 27 and 28: 9. Customers and accrued income The
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Page 31 and 32: Companies and has period of 5 years
Page 33 and 34: At variable rates 32 31.12.2008 31.
Page 35 and 36: The amount shown as a reduction in
Page 37 and 38: 24. Dividends per share The dividen
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Page 43 and 44: G. List of companies consolidated 3
Page 45 and 46: (f) This company is held by the gro
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Page 55 and 56: in the profi t and loss account of
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a) The last accounts available were
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9. Stocks The company features no s
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The fair value of current and non-c
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Revaluation Options Total As at 1 d
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19. Income Tax The reconciliation o
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2008 2007 Current transactions Grou
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To the Shareholders, Report and Opi
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