Notes to the consolidated financial statements - Efacec

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1.2 Tangible Fixed Assets separate, as deemed appropriate, only when it is likely that economic benefi ts fl ow to the company and the cost can be reliably measured. Other expenditure for repairs and maintenance are recognised as costs within the period in which they are incurred. Increases resulting from revaluations are shown in Reserves in Shareholders’ Funds. Each year, the difference between depreciation based on the re-valued amount of the asset taken to profi t and loss in the period, and depreciation based on the original cost of the asset, is transferred from fair value Reserves to Retained Profi ts. Land is not depreciated. Depreciation on other assets is calculated using the straight line method using the cost value or the revalued amount, in order to apportion their cost or re-valued amount over the useful life of the asset down to their residual value, as follows: Depreciation begins in the month following that in which the asset entered service, in accordance with its useful life, as follows: Line Years Land - Buildings and Other Constructions 25 - 50 Plant and Equipment 8 - 12 Vehicles 4 - 5 Tools and Utensils 4 - 8 Offi ce Equipment 4 - 6 Asset residual values and respective useful lives are revised and adjusted, if deemed necessary, at the balance sheet date. If the amount booked is greater than the recoverable value of the asset, it is immediately adjusted to its estimated recoverable value (Note 1.4). Gains and/or losses on disposal or write offs are determined by calculating the difference between the net accounting value of the asset, and its disposal or write off value, being in the latter case zero, and included in the Profi t or Loss for the period. 1.3 Intangible Assets a) Software The acquisition cost of software licences is capitalised and includes all costs incurred for its acquisition and those required to put the available software into use. These costs are depreciated over the estimated useful life (not exceeding 5 years). Costs related to the development or maintenance of the software are recognised as costs of the period in which they are incurred. Costs directly associated with the production of identifi able and unique software controlled by the company, and which is probably going to generate future economic benefi ts that are superior to costs involved beyond one year, are recognised as intangible assets. Direct costs include staff costs to develop the software and a share of relevant fi xed costs. Software development costs recognised as assets are amortised over its estimated useful life (not exceeding 5 years). 1.4 Asset impairment Assets that do not have a defi ned useful life are not subject to amortisation, but are the object of annual impairment tests. Assets subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the value at which they were booked may not be recoverable. An impairment loss is recognised by the amount by which the booked value of the asset exceeds its recoverable value. The recoverable value is the highest of the fair value of the asset, less expenses required for sale, and its use value. To carry out impairment tests, assets are grouped together at the lowest level at which cash fl ows can be identifi ed separately (cash fl ow generating units or UGCs). The amount recoverable from a UGC is calculated based on calculations of useful value. These calculations use cash fl ow projections based on fi nancial budgets approved by the management entity, covering a period of at least 5 years. Assumptions have been used for the analysis of each UGC of the business segment. The management entity works out the budgeted gross margin based on prior performance and its expectations for market development. The average weighted growth rate used is consistent with the forecasts included in sector reports. The discount rates used are before tax, and refl ect the specifi c risks related to the relevant sectors. 1.5 Financial investments Financial investments in group, associate and other companies are shown at acquisition cost. The Group checks at each balance sheet date whether there is objective evidence of impairment of any investment. If there is such proof, the accumulated loss, calculated as the difference between the balance sheet value and the current fair value, is recognised 54
in the profi t and loss account of the period in which the impairment occurred (Note 1.4). The company only recognises income to the extent that it receives distributions from cumulative net profi ts of the shareholding held, following the date of its acquisition. Distributions received in excess from these profi ts are considered as a recovery of the investment, and as such are booked as a reduction in the cost of the investment. 1.6 Stocks Stocks are presented at the lowest value between cost and net realisable value. The cost is calculated using the standard cost (which does not vary signifi cantly from actual production cost). The cost of fi nished products and manufacturing work in progress includes raw material costs, direct labour, other direct costs and manufacturing overheads (based on normal production capacity). The costs of loans obtained are excluded. Net realisable value is equal to the estimated selling price under normal business conditions, less variable selling costs. The cost of stocks includes the transfer from shareholders’ funds of any loss or gain classifi ed as cash fl ow hedging related to the purchase of raw materials. 1.7 Recognition of income and costs in contracts over several years Profi t on contracts which continue for more than one year are accounted for in accordance with the percentage of work completed by reference to partial delivery, segment identifi cation, assessment procedures or other means which allow reliable estimation of costs for completion of the work or the invoices which are to be sent to the customer. When it is not possible to estimate profi ts and the costs with reasonable reliability, then they are recognised only when the product is delivered to the customer, applying the completed work criteria. In this case, the costs incurred until delivery are recorded in Stocks – Products and work in progress. Costs of contracts include raw materials and direct materials, direct labour and also allocated indirect costs, distributed as specifi ed in the contract. Sales and administration expenses are charged as costs as they occur. Provisions are set up for any foreseen losses on completing a contract within the period in which they are determined, and are immediately refl ected in the results. Changes to contracts or estimates and forecast costs and/or profi ts and margins, arising from renegotiating of the conditions with customers or from internal productivity, are recognised in the results from the period in which they occur and taking into account the stages of completion. When there are materials which have not yet been used on the job or the installation, there will be a balance on the account “Products and work in progress”.If this relates to receivables from customers not yet invoiced, the resulting margin is not recognised. When the opposite situation occurs and the amount invoiced to the customer is greater than the level of work completed, a deferred liability is set up representing a liability to a customer for the work still to be completed. 1.8 Accounts receivable from customers and other debtors Accounts receivable from customers and other debtors are initially recognised at their nominal or fair value, when different, less any impairment loss. The provision for debtor impairment is set up when there is objective evidence that the Group will not receive the entire amount outstanding, as per the original conditions established for the debt. The amount of the provision is the difference between the amount presented and the estimated present value of future cash fl ows, discounted at the effective interest rate. The amount of the provision is recognised in the profi t and loss account. 1.9 Cash and cash equivalents The line Cash and cash equivalents includes cash, bank deposits, other short-term high liquidity investments and with initial maturities up to three months. Bank overdrafts are shown in the Balance Sheet under current liabilities in the line Loans. 1.10 Share capital Ordinary shares are shown in shareholders’ funds. The incremental costs directly attributable to the issue of new shares or options are shown in shareholders’ funds as a reduction, net of taxes, of cash from increases in share capital. The incremental costs directly attributable to the issue of new shares or options or the acquisition of a new business are included in the cost of acquisition as part of the purchase price. 55 2008 Consolidated and Individual Financial Statements
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1 2 Index Consolidated Financial St
Page 5 and 6: Non-current assets EFACEC Capital,
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Page 11 and 12: In view of the fact that applying t
Page 13 and 14: 1.5 Tangible Fixed Assets Land and
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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
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Page 27 and 28: 9. Customers and accrued income The
Page 29 and 30: 14. Suppliers, other creditors and
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
Page 39 and 40: 27.1 Transactions in 2008 and 2007
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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 49 and 50: Efacec Capital, SGPS, S.A. Consolid
Page 51 and 52: Merger Reserve Other Reserves Retai
Page 53: A. General information Notes to the
Page 57 and 58: 1.16 Subsidies Subsidies received a
Page 59 and 60: C. Notes on the Balance Sheets as a
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Page 71 and 72: 2008 2007 Current transactions Grou
Page 73 and 74: To the Shareholders, Report and Opi
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Notes to the consolidated financial statements - Efacec

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