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4.5.2 Finance leases
The Group recognises finance leases as assets and liabilities in the consolidated balance sheet at the start of lease term at the market value of the
leased asset or at the present value of the minimum lease instalments, should the latter be lower. The interest rate established in the agreement is
used to calculate the present value of the lease instalments.
The cost of assets acquired through finance leasing agreements is recognised in the consolidated balance sheet according to the nature of the asset
described in the agreement.
The financial expenses are distributed over the period of the lease in accordance with a financial criterion.
4.6 Financial Instruments
4.6.1 Financial assets
Financial assets are recognised in the consolidated balance sheet when they are acquired and initially recognised at their fair value. The financial
assets held by Group companies are classified as follows:
- Negotiable financial assets: these include any assets acquired by the companies with the aim of taking short-term advantage of any changes
their prices may undergo or any existing differences between their purchase and sale price. This item also includes any financial derivatives
that are not considered accounting hedges.
- Held to maturity assets: these are assets subject to a fixed or determinable redemption amount with a fixed maturity date. The Group declares
its intention and its capacity to keep these in its power from the date of acquisition to their maturity date.
- Loans and accounts receivable originating in the company itself: these are financial assets generated by the companies in exchange for
deliveries of cash or the supply of goods or services.
Negotiable financial assets are valued after their acquisition at fair value, any changes in which are recognised through profit or loss for the year.
Fair value of a financial instrument on a given date is construed as the amount for which it could be bought or sold on that same date by two
knowledgeable parties acting freely and prudently under conditions of mutual independence.
Held to maturity financial assets and loans and accounts receivable originated by the Group are valued at their amortised cost and accrued interest
is recognised in the consolidated comprehensive profit and loss statement on the basis of their effective interest rate. Amortised cost is construed as
the initial cost minus any collections or amortisation of the principal, taking into account any potential reductions arising from impairment or default.
As regards valuation corrections made to trade and other accounts receivable in particular, the criterion used by the Group to calculate the
corresponding valuation corrections, if any, generally consists of provisioning for any balances more than 180 days overdue.
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4.6.2 Cash and cash equivalents
“Cash and Cash Equivalents” in the consolidated balance sheet includes cash, demand deposits and other short-term, highly liquid investments that
can be realised in cash quickly and are not subject to a risk of changes in value.
4.6.3 Financial liabilities
ISSUES OF BONDS AND OTHER SECURITIES
Debt issues are initially recognised at the fair value of the consideration received, less the costs directly attributable to the transaction. They are
subsequently valued at their amortised cost using the effective interest rate method. Bonds with a maturity date greater than twelve months are
classified under non-current liabilities; those with a maturity date of less than twelve months are included in current liabilities.
Convertible bond issues are recognised at the time of their issue, distributing the fair value of the consideration received between their equity and
liability components, assigning the residual value obtained after deducting the amount established separately for the liability component, from the
fair value of these instruments as a whole, to the equity instrument. The value of any derivative embedded in the compound financial instrument
other than the equity component will be included in the liability component.
BANK LOANS
Loans received from banking institutions are recognised at the amount received, net of costs incurred in the transaction. They are subsequently
valued at amortised cost. Financial expenses are recognised on an accrual basis in the consolidated comprehensive profit and loss statement
using the effective interest rate method, and their amount is added to liabilities to the extent to which they are not settled in the period they were
produced.
TRADE AND OTHER PAYABLES
Trade accounts payable are initially recognised at fair value and are subsequently valued at amortised cost using the effective interest rate method.
REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS
