Annual Report 2010 - AdP

The goal of capital risk management is to safeguard the continuity of group operations with adequate shareholder earnings and
generating benefits for all interested third parties.
AdP Group policy is to obtain loans from financial entities via parent company AdP, SGPS, S.A. (with the exception of EPAL and
investment loans), which will then offer loans to its affiliates. This policy seeks to optimize the capital structure in view of greater tax
efficiency and reduction of the average cost of capital.
31.12.2010 31.12.2009
Non-current loans 2,416,057,836 2,030,125,828
Current loans 509,375,118 551,802,186
Deposits (478,840,367) (299,236,062)
Debt 2,446,592,587 2,282,691,952
Investment grants 1,842,471,849 1,761,573,162
Total equity 928,470,145 860,010,152
Capital 5,217,534,581 4,904,275,266
Debt/total capital 0.47 0.47
3.7 Regulatory risk
As a provider of a public service, AdP Group operates within a highly regulated environment. The Regulator - ERSAR - mandated by the
Government regulates, among other aspects, the tariff to be collected for the services provided. In an attempt to balance public interest
as regards adequate access to the services provided and the interest in generating results that satisfy and remunerate our shareholders’
invested capital, the Regulator can take measures that can negatively impact cash flow, with all the ensuing adverse consequences.
4. Estimates and judgements
Estimates and judgements that have an impact on the financial statements of AdP Group are continually assessed, representing the
Administration’s best estimate at the date of each report, taking into account historical performance, accumulated experience and
expectations regarding future events that, under the circumstances in question, are believed to be reasonable. The intrinsic nature of
the estimates can cause the real effect of the situations that had been the target of the estimate to differ from the estimated amounts
for the purpose of the financial report. Estimates and judgments that pose a significant risk of causing material adjustment in the
book value of assets and liabilities over the course of the financial year are as follows:
4.1 Provisions and adjustments
AdP Group periodically analyzes all obligations that result from past events and which should be recognized or disclosed. The group
is a party to various court cases currently underway and on the basis of its lawyers’ opinions conducts a judgment regarding whether
a provision should be established for these contingencies (note 41). Adjustments to accounts receivable are calculated essentially on
the basis of the age of the accounts receivable, the risk profile of the customers and their financial situation. Estimates related to
adjustments to accounts receivable differ from business to business.
The subjectivity involved in determining the probability and amount of outflow of internal resources necessary to fulfil obligations
may lead to significant adjustments, whether by changes in these criteria or by future recognition of provisions previously disclosed
as contingent liabilities.
4.2 Tangible and intangible assets
Determination of useful lives of the assets and the depreciation method are essential to ascertain the amount of depreciation and
amortization to be recognized in the consolidated income statement.
These two parameters were defined in accordance with the Administration’s best estimate for the assets and businesses in question;
however, they may be changed if international practice in the sector for identical situations points to a different benchmark.
The group conducts annual tests to determine whether goodwill suffered any losses due to impairment. The recoverable value of
cash generating units is determined on the basis of the use value, which requires using estimates.
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