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If the Company has not transferred or retained substantially all of the risks and rewards, the fnancial asset is derecognized if control over the asset has not been retained. The situation is determined in accordance with the transferee’s capacity to transfer the asset. If control over the asset is retained, the Company continues to recognize it to the extent to which it is exposed to the changes in the value of the transferred asset, i.e., due to its continuing involvement, and the associated liability is also derecognized.

When the fnancial asset is derecognized, the diference between the consideration received, net of attributable transaction costs, including any new fnancial asset obtained less any liability assumed, and any cumulative gain or loss directly recognized in equity, determines the gain or loss generated upon derecognition and is included in the income statement in the year to which it relates.

The Company does not derecognize fnancial assets and it recognizes a fnancial liability for an amount equal to the compensation received in the transfers of fnancial assets in which it has retained substantially the risks and rewards incidental to ownership, such as discounted bills, recourse factoring, disposals of fnancial assets under repurchase agreements at fxed prices or sale price plus interest, and securitizations of fnancial assets in which the company, as transferor, retains subordinated debt or other types of guarantees that substantially absorb estimated losses.

Financial liabilities

A) Recognition and measurement

The Company classifes its fnancial liabilities into the following categories:

1. Trade and other payables.

2. Financial liabilities held for trading.r

3. Other fnancial liabilities at fair value through proft or loss.

Financial liabilities are initially measured at fair value, which, unless there is evidence to the contrary, is equivalent to the fair value of the consideration received. For fnancial liabilities included in trade and other payables, directly attributable transaction costs are part of the initial recognition; for other fnancial liabilities, these costs are recognized in the income statement. Liabilities maturing in less than twelve months as of the balance sheet date are classifed as current, and those maturing at over twelve months as non-current.

a.1) Trade and other payables

Trade and other payables comprises fnancial liabilities arising from the purchase of goods and services in the ordinary course of the Company’s business. The category also includes non-trade payables, which are defned as fnancial liabilities that, in addition to not being derivative instruments, have not commercial substance.

Upon initial recognition in the balance sheet, they are recognized at fair value, which, unless there is evidence to the contrary, is the transaction price, which is equivalent to the fair value of the consideration received, adjusted by directly attributable transaction costs.

Following initial recognition, fnancial assets included in this category are measured at amortized cost. Interest is recognized in the income statement using the efective interest rate method.

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Financial Statements, Management and Corporate Governance Report. 2010