COMPARACIÓN ENTRE GRUPOS EN ACTITUDES Y HÁBITOS LECTORES Y MOTIVACIÓN LECTORA

The accounting policies set out below have been applied con- sistently to all periods presented in these financial statements.

a) Foreign currency

(i) Foreign currency transactions

Transactions in foreign currencies are translated to EUR (the functional currency of the Company) at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. The foreign currency gain and loss on monetary items is the difference between amortised cost in the func- tional currency at the beginning of the period, adjusted for effective interest and payments during the year, and the am- ortised cost in foreign currency translated at the exchange rate at the end of the year.

Non-monetary assets and liabilities denominated in foreign cur- rencies that are measured at fair value are retranslated to EUR at the exchange rate at the date that the fair value was determined. Non-monetary items in a foreign currency that are measured in terms of historical cost are translated to the functional currency using the exchange rate at the date of transaction.

Foreign currency differences arising on retranslation are rec- ognised in the profit or loss, except for differences arising on the retranslation of:

• available-for-sale equity instruments;

• a financial liability designated as a hedge of the net investment in a foreign operation to the extent that the hedge is effective; or

• qualifying cash flow hedges to the extent that the hedge is effective.

b) Financial instruments (i) Non-derivative financial assets

The Company initially recognises loans, receivables, and deposits on the date that they are originated. All other finan- cial assets (including assets designated at fair value through profit or loss) are recognised initially on the trade date, which is the date that the Company becomes a party to the con- tractual provisions of the instrument.

The Company derecognises a financial asset when the con- tractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Company is recognised as a separate asset or liability.

Financial assets and liabilities are offset and the net amount is presented in the balance sheet when, and only when, the Company has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

The Company classifies non-derivative financial instruments into the following categories: liabilities and receivables, avail- able-for-sale financial assets, cash and cash equivalents. Liabilities and receivables

Liabilities and receivables are financial assets with fixed or de- terminable payments that are not quoted in an active market. Such assets are recognised initially at fair value plus any direct- ly attributable transaction costs. Subsequent to initial recogni- tion, liabilities and receivables are measured at amortised cost using the effective interest method, less any impairment losses. Cash and cash equivalents

Cash and cash equivalents comprise cash balances and an investment (deposit) with maturity (of three months or less). Bank overdrafts that are repayable on demand form an inte- gral part of the Company’s current financial liabilities. Available-for-sale financial assets

Available-for-sale financial assets are non-derivative finan- cial assets that are designated as available-for-sale or are not classified in any of the above categories of financial as- sets. Subsequent to initial recognition, they are measured at fair value plus any directly attributable transaction costs. Fair value changes (see note 3(j)(i)) and foreign currency differences on available-for-sale equity instruments (see note 3(a)) are recognised in other comprehensive income and disclosed in equity or fair value reserves. When availa- ble-for-sale financial assets are derecognised or permanent- ly impaired , the gain or loss accumulated in equity is re- classified to profit or loss. Available-for-sale financial assets comprise equity securities and debt securities.

(ii) Non-derivative financial liabilities

The Company initially recognises debt securities issued and subordinated liabilities on the date of their accrual. All other financial liabilities (including liabilities designated at fair value through profit or loss) are recognised initially on the trade date, which is the date that the Company becomes a party to the contractual provisions of the instrument.

The Company derecognises a financial liability when its con- tractual obligations are discharged, cancelled or expired. The Company classifies non-derivative financial liabilities into the other financial liabilities category. Such financial li- abilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recog- nition, these financial liabilities are measured at amortised cost using the effective interest method.

Other financial liabilities comprise loans, bank overdrafts, and trade and other payables.

(iii) Share capital

Ordinary shares

Ordinary shares are equity constituent part of share capital. Incremental costs directly attributable to the issue of ordi- nary shares and share options are recognised as a deduc- tion from equity, net of any tax effects.

Repurchase of share capital (treasury shares)

When share capital recognised as equity is repurchased, the amount of the consideration paid, which includes directly at- tributable costs, net of any tax effects, is recognised as a deduction from equity. Repurchased shares are classified as treasury shares and disclosed in equity as a deductible item; in addition treasury share reserve is created. When treas- ury shares are sold or reissued subsequently, the amount received is recognised as an increase in equity, and the re- sulting surplus or deficit on the transaction is presented in share premium.

Dividends are recognised as a liability in the period in which a resolution on dividend payment is adopted by the General Meeting of Shareholders.

(iv) Derivative financial instruments, including hedge accounting

The Company holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures. Embedded derivatives are separated from the host contract and accounted for separately if the economic characteristics and risks of the host contract and the embedded derivative are not closely related, a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative, and the combined instrument is not meas- ured at fair value through profit or loss.

On initial designation of the derivative as the hedging instru- ment, the Company formally documents the relationship be- tween the hedging instrument and hedged item, including the risk management objectives and strategy in undertaking the hedge transaction and the hedged risk, together with the methods that will be used to assess the effectiveness of the hedging relationship. The Company makes an assessment, both at the inception of the hedging relationship as well as on an ongoing basis, of whether the hedging instruments are expected to be “highly effective” in offsetting the changes in the fair value or cash flows of the respective hedged items attributable to the hedged risk, and whether the actual re- sults of each hedge are within a range of 80-125 percent. For a cash flow hedge of a forecast transaction, the transaction should be highly probable to occur and should present an exposure to variations in cash flows that could ultimately af- fect reported profit or loss.

Derivatives are recognised initially at fair value; attributable transaction costs are recognised in profit or loss as incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are accounted for as de- scribed below.

Cash flow hedge

When a derivative is designated as the hedging instrument in a hedge of the variability in cash flows attributable to a par- ticular risk associated with a recognised asset or liability or a highly probable forecast transaction that could affect profit or loss, the effective portion of changes in the fair value of the derivative is recognised in other comprehensive income and presented in the hedging reserve in equity. Any ineffec- tive portion of changes in the fair value of the derivative is recognised immediately in profit or loss.

When the hedged item is a non-financial asset, the amount accumulated in equity is included in the carrying amount of the asset when the asset is recognised. In other cases, the amount accumulated in equity is reclassified to prof- it or loss in the same period that the hedged item affects profit or loss. If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminat- ed or exercised, or the designation is revoked, then hedge accounting is discontinued prospectively. If the forecast transaction is no longer expected to occur, then the bal- ance in other comprehensive income is recognised imme- diately in profit or loss.

Other derivative financial instruments

When a non-trading derivative financial instrument is not designated in a hedge relationship that qualifies for hedge accounting, all changes in its fair value are recognised im- mediately in profit or loss.

c) Subsidiaries

Investments in subsidiaries are valued at cost. Incremen- tal costs directly attributable to the acquisition of a sub- sidiary are recognised as an increase in the cost of equity investment. Share of profit is recognized as income when a resolution on payment is adopted by the General Meet- ing of Shareholders.

d) Associates

Investments in associates are valued at cost. Incremental costs directly attributable to the acquisition of an associ- ate company are recognised as an increase in the cost of equity investment.

e) Property, plant and equipment (i) Recognition and measurement

Items of property (excluding land), plant and equipment are measured at cost less accumulated depreciation and accu- mulated impairment losses.

Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition for their intended use, the costs of dismantling and removing the items and restoring the site on which they are

located, and capitalised borrowings costs. Purchased soft- ware that is integral to the functionality of the related equip- ment is capitalised as part of that equipment.

Borrowing costs directly attributable to the acquisition, con- struction or production of a qualifying item of property, plant and equipment were capitalised subject to the following con- ditions: if the value of individual asset under construction in total sales exceeded 5%, and if the duration of assets under construction exceeded six months.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. Fair value model or revaluation model is applied to land. The effect of revaluation is recorded in other comprehen- sive income. Impairment of land previously increased in value results in a decrease in revaluation surplus in other comprehensive income; otherwise, it is recognised in the income statement.

The gain or loss on disposal of an item of property, plant and equipment is determined by comparing the proceeds from disposal with the carrying amount of the property, plant and equipment, and is recognised net within other income/other expenses in profit or loss.

(ii) Reclassification to investment property

When the use of a property changes from owner-occupied to investment property, the property is remeasured to fair value and reclassified as investment property. Any gain arising on remeasurement of fair value is recognised in profit or loss to the extent that it reverses a previous impairment loss on the specific property, with any remaining gain recognised in other comprehensive income and presented in the fair value reserve in equity.

(iii) Subsequent expenditure

The cost of replacing a component of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the component will flow to the Company, and if its cost can be measured reliably. All others costs, such as day-to-day servicing of property, plant and equip- ment, are recognised in profit or loss as incurred.

(iv) Depreciation

Depreciation is recognised on a straight-line basis over the estimated useful lives of each component of an item of prop- erty, plant and equipment; this method most accurately re- flects the expected pattern of the use of the asset. Leased assets are depreciated over the shorter of the lease term and their useful lives. Land is not depreciated.

Items of property, plant and equipment are depreciated on the first day of the following month, when they are installed and are ready for use, or in respect of internally constructed assets, from the date that the asset is completed and ready for use. Estimated useful lives for the current and comparative years are as follows:

buildings 20–50 years

plant and equipment 5–20 years

computer equipment 2–5 years

transportation means 5–20 years

office equipment 5–10 years

tools 5–10 years

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted, if appropriate.

f) Intangible assets

(i) Research and development

Expenditure on research activities, undertaken with the pros- pect of gaining new scientific or technical knowledge and understanding, is recognised in profit or loss as incurred. Development activities involve a plan or design for the pro- duction of new or substantially improved products and processes. Development expenditure is capitalised only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Company intends to and has sufficient resources to complete development and to use or sell the asset. The expenditure capitalised in- cludes the cost of materials, direct labour, other costs that are directly attributable to preparing the asset for its intend- ed use, and capitalised borrowing costs. Other development expenditure is recognised in profit or loss as incurred.

Capitalised development expenditure is measured at cost less accumulated amortisation and accumulated impair- ment losses.

(ii) Other intangible assets

Other intangible assets that are acquired by the Company and have finite useful lives are measured at cost less accu- mulated amortisation and accumulated impairment losses. (iii) Subsequent expenditure

Subsequent expenditure is capitalised only when it increas- es the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in profit or loss as incurred.

(iv) Amortisation

Amortisation is based on the cost of an asset less its resid- ual value. Amortisation is recognised on a straight-line ba- sis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use. The estimated useful lives for the current and comparative periods are as follows:

patents and trademarks 10 years

capitalised development costs 7 - 10 years

Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

g) Investment property

Investment property is property held either to earn rental in- come or to increase the value of non-current investment or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administra- tive purposes. Investment property is recognised at fair value with any change therein recognised in the income statement. Cost includes expenditure that is directly attributable to the acquisition of the investment property. The cost of self-con- structed investment property includes the cost of materials and direct labour, any other costs directly attributable to bringing the investment property to a working condition for their intended use, and capitalised borrowing costs.

Property rented to a subsidiary and associate with the con- duct of the Company's business activities, is accounted for as an item of property, plant and equipment. Investment property also includes property, of which more than 50% of the available surface area is leased out.

Any gain or loss on disposal of an investment property (cal- culated as the difference between the net proceeds from disposal and the carrying amount of the item) is recognised in profit or loss.

When the use of a property changes such that it is reclas- sified as property, plant and equipment, its fair value at the date of reclassification becomes its cost for subsequent ac- counting of depreciation.

h) Leased assets

Leases in terms of which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

Other leases are operating leases and are not recognised in the Company’s balance sheet.

i) Inventories

Inventories of merchandise and goods are measured at the lower of cost and net realisable value. The cost of inventories of materials and merchandise is based on the weighted average price method and includes expenditure incurred in acquiring the inventories, dependent costs and other costs incurred in bringing them to their existing location and condition.

Inventories of products and work in progress are valued at production costs (in broader sense), which in addition to direct costs of material, labour, services, depreciation and part of production costs, include also costs of production overheads, acquisition costs, costs of maintenance and quality assurance overheads, and total costs of research and development. The standard price method is applied when disclosing inven- tories of products. Deviations from input (charged) and stand- ard prices are established and accounted on a monthly basis.

Inventories of work in progress and products are not re- valued due to value increase. Their write-off is mandatory if the carrying amount exceeds their market value. Net re- alisable value is the estimated selling price in the ordinary course of business, less the estimated costs of comple- tion and selling expenses. Decline in value of inventories of work in progress and products due to write-off is credited against change in inventories.

Write-off of obsolete inventories of products and semi-finished products in carried out in compliance with Group's policies.