Annual Report - EDP

notes to the consolidated EDP and - Energias company de Portugal, financial S.A. statementsfor the years Notes to ended the Consolidated 31 december and Company 2012 Financial and Statements 2011for the years ended 31 December 2012 and 2011t) Share based paymentsThe stock options remuneration program enables the Group's employees to acquire EDP, S.A. shares. The exercise price of the options is calculated based on thelisted price of the shares at the grant date.The fair value of the options granted, determined at the grant date, is recognised in the income statement against equity during the vesting period, based on theirmarket value calculated at the grant date.If the option is exercised, the Group acquires shares in the market to grant them to employees.u) Non-current assets held for sale and discontinued operationsNon-current assets or groups of non-current assets held for sale (groups of assets and related liabilities that include at least one non-current asset) are classified asheld for sale when their carrying amounts will be recovered mainly through sale, the assets or groups of assets are available for immediate sale and the sale is highlyprobable.The Group also classifies as non-current assets held for sale, non-current assets or groups of assets acquired exclusively for its subsequent resale, that are availablefor immediate sale and the sale is highly probable.Immediately before classification as held for sale, the measurement of all non-current assets and all assets and liabilities included in a disposal group, is adjusted inaccordance with the applicable IFRS standards. Subsequently, these assets or disposal groups are measured at the lower of their carrying amount and fair value lesscosts to sell.v) Cash and cash equivalentsCash and cash equivalents include balances with maturity of less than three months from the balance sheet date, including cash and deposits in banks. This captionalso includes other short-term, highly liquid investments that are readily convertible to known amounts of cash and wich are subject to an insignificant risk of changesin value, and specific demand deposits in relation to institutional partnerships that are funds required to be held in escrow sufficient to pay the remaining constructionrelated costs of projects in institutional equity partnerships in U.S.A., in the next twelve months.w) Segment reportingThe Group presents the operational segments based on internal management information.In accordance with IFRS 8, an operating segment is a Group component:(i) that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with othercomponents of the same entity);(ii) whose operating results are reviewed regularly by the entity's chief operating decision maker in order to make decisions about resources to be allocated to thesegment and assess its performance; and,(iii) for which discrete financial information is available.x) Tariff adjustmentsIn regulated activities, the regulator establishes through the tariff adjustment mechanism, the criteria to recognise gains or losses of one period in future periods. Thetariff adjustments accounted for in the EDP Group financial statements represent the difference between the amounts invoiced by portuguese regulated companies(based on the applicable tariffs published by ERSE in December of the previous year) and the regulated revenue calculated based on actual costs. The assets orliabilities resulting from the tariff adjustments are recovered or returned through the electricity and gas tariffs charged to customers in subsequent periods.Decree-Law 165/2008 of 21 August recognised the unconditional right of the regulated operators of the electric sector to recover the tariff adjustments under a regimeidentical to the one used for the tariff deficits. Consequently, EDP Group booked under the income statement caption Turnover of Electricity and network accesses theeffects resulting from the recognition of tariff adjustments, against Debtors and other assets. According to the referred Decree-Law, the tariff adjustments determinedannually, will be recovered by the regulated operators even in case of insolvency or cease of operations. ERSE is the entity responsible to establish the method toensure that the entity entitled to these rights continues to recover the tariff adjustments until its complete payment. The Decree-Law also allows the transfer of the rightto receive the tariff adjustment to third parties, in whole or in part, through future electricity tariffs.Decree-Law 87/2011 approved on 14 April and published in Diário da República on 17 July, confirmed the unconditional right of the regulated operators of the naturalgas sector to recover the tariff adjustments. Consequently, EDP Group booked under the income statement caption Turnover of Gas and network accesses the effectsresulting from the recognition of tariff adjustments against "Debtors and other assets" and "Trade and other payables", in the same terms defined for the electric sectoras mentioned above.186A World Full Of Energy