146
Consolidated Financial Statements
consolidated statement of comprehensive income as
gains or losses in securities investments.
The fair value of listed investments is based on current
market prices.
If there is no active market for a financial asset (and for
non-listed securities), the group determines the fair value
using evaluation techniques, which include using recent
transactions between independent parties, reference
to other instruments that are substantially identical, an
analysis of the discounted cash flow and refined options
price models that reflect the specific emission circum-
stances.
2.8.3 Impairment
On each consolidated statement of financial position, the
group checks for objective evidence showing whether
any group of financial assets is subject to impairment. In
the event of equity securities classified as available for
sale, a significant or lasting decrease in the fair value fall-
ing below the cost value is determinant for knowing if
there is impairment. If there is evidence of impairment
applicable to financial assets available for sale, the ac-
cumulated loss – calculated by the difference between
the acquisition cost and the current fair value, minus any
impairment loss of that financial asset previously recog-
nised in results – is removed from equity and recognised
in the consolidated statement of comprehensive income.
Impairment losses from capital instruments recognised
in results are not reversible.
The group complies with the guidelines of IAS 39 (re-
viewed in 2004) to determine the permanent impairment
of investments. This measure requires that the group val-
uate, among other factors, the duration and the extent to
which the fair value of an investment is less than its cost,
the financial health and business outlook for the subsidi-
ary, including factors such as the industry’s and sector’s
performance, technological alterations and flows of op-
erating cash and financing.
2.9 Stocks
Stocks are presented at the lowest value between their
cost and the net realisation value. The cost is calculated
using the weighted mean cost.
The net realisation value corresponds to the estimated
sale price during normal business operations, minus
variable sale costs.
2.10 Accounts receivable from clients and oth-
er debtors
Accounts receivable from clients and other debtors are
initially recognised at the fair value. Medium and long
term debts are subsequently measured at the amor-
tised cost, using the effective rate method minus the
impairment adjustment. The impairment adjustment of
accounts receivable is determined when there is objec-
tive evidence that the group will not receive all the owed
amounts according to the original conditions of the ac-
counts receivable. The impairment adjustment value
is the difference between the presented value and the
current estimated value of future cash flows, discount-
ed at the effective interest rate. The impairment adjust-
ment value is recognised in the consolidated statement
of comprehensive income.
2.11 Cash and cash equivalents
Cash and cash equivalents include cash amounts, bank
deposits, other short term investments with high liquid-
ity and initial maturities of up to 3 months and bank
overdrafts. Bank overdrafts are presented in the con-
