ANNUAL REPORT ‘12
NOTES TO THE FINANCIAL STATEMENTS
193
value of the instruments are initially shown as a counterpart to equity and are later reclassified under the heading
of financial costs.
If the coverage operations are ineffective, this is directly shown in the results. Thus, in net terms, the flows
associated with covered operations are accrued at the rate inherent to the contracted coverage operation.
When a coverage instrument expires or is sold, or when the coverage ceases to comply with the criteria required
for coverage accounting, the variations of the fair value of the derivative accumulated in reserves are shown under
results when the covered operation also shows results.
2.21_FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
While determining the fair value of a financial asset or liability, if there is an active market, the market quotation is
used. This constitutes level 1 of the fair value hierarchy.
In case there is no active market, which is the case for some financial assets and liabilities, valuation techniques
that are generally accepted by the market are used, based on market assumptions. This constitutes level 2 of the
fair value hierarchy.
The Group uses valuation techniques for non-quoted financial instruments, such as derivatives, fair value financial
instruments by means of results and for financial assets available for sale. The valuation models that are used most
frequently are discounted cash flow (DCF) models and options evaluation models that incorporate, for example,
interest rate curves and market volatility.
For financial assets and liabilities for which there is no market data or equivalent, more advanced valuation models
are used containing assumptions and data that are not directly observable in the market, for which the Group uses
internal estimates and assumptions. This constitutes level 3 of the fair value hierarchy.
2.22_INCOME TAX
With effect from 1 January 2008, ANA, S.A. has opted for the Special Taxation Regime for Company Groups with
regard to its subsidiary Portway, S.A.. The results of this measure are as follows:
a) The losses for tax purposes of Portway, S.A. generated after 1 January 2008 are deducted from the Group
results;
b) Renouncement to a tax benefit in Azores (reduction of tax rate).
ANAM, S.A. is not covered by the Special Taxation Regime for Company Groups, due to which the current tax
reflected in the consolidated income statement is the tax resulting from estimate of income tax ascertained
individually by the company, based on their result for tax purpose.
The income tax includes the current tax and deferred tax. The estimate of income tax is accounted for on the basis
of the year and result for tax purpose, according to applicable legislation. The deferred tax is calculated on the basis
of the effect of the temporary differences between assets and liabilities, on a financial and accounting basis.
