46
At 31 December 2013, the tax effect of the valuation adjustments relating to the hedging
instruments amounting to EUR (361) thousandwas recognised under “Non-Current Assets”.
The deferred tax assets indicated above were recognised because the Company's directors
considered that, based on their best estimate of the Company's future earnings, including certain
tax planningmeasures, it is probable that these assets will be recovered.
On the basis of the estimate made by the Company’s directors of the timing of future profits for
the offset and use of these deferred tax assets, EUR 14,429 thousand were considered to be
recoverable in the long term while EUR 1,472 thousand were considered to be recoverable in the
short term. Both amounts are recognised under “Deferred Tax Assets”. Also, on the basis of the
aforementioned estimate of the timing of future profits, the directors consider that there are no
reasonable doubts as to the recovery of the amounts recognised in the accompanying balance
sheet within the statutory time periods and limits.
Also, on the basis of the aforementioned timing estimate of future profits, the directors consider
that there are no reasonable doubts as to the recovery of the amounts recognised in the
accompanying balance sheet within the statutory time periods and limits on the basis of the
prepared projections.
The key assumptions on which the cash flow projections are based relate mainly to advertising
markets, audience, advertising efficiency ratios and the evolution of expenses. Except for
advertising data, which is measured on the basis of external sources of information, the
assumptions are based on past experience and reasonable projections approved by Company
management and updated in accordance with the performance of the advertising markets. These
future projections cover the next ten years.
The Company performs sensitivity analyses in the event of reasonable changes in the key
assumptions used to determine the recoverability of these assets. Therefore, the sensitivity
analyses are prepared under various scenarios based on the variables that are considered to be
most relevant, i.e. advertising income, which mainly depends on the performance of the
advertising market, the investment share reached and the operating margin achieved. The
discount rate used ranges from 9% to 10%.
A variation of 0.5% in cumulative annual growth would give rise to a change in value of EUR 43
million, while an increase of 0.5% in the discount rate would give rise to a change of EUR 65
million and a decrease of 0.5% in the discount rate would give rise to a change of EUR 73million.
Zero perpetual growth was used. An increase of 0.5% would give rise to an increase in value of
EUR 80 million and a decrease of 0.5% would give rise to a decrease in value of EUR 71 million.
The aforementioned analyses do not disclose any evidence of non-recoverability of the tax assets
and tax credits recognised.
The changes in deferred tax assets recognised under "Other” include the difference between the
estimated tax for 2011 and the amount actually reported in the tax return, giving rise to an
adjustment of EUR 199 thousand to deferred tax assets. Also, the effect of this difference,
amounting to EUR 278 thousand, on the income tax expense is recognised under “Negative
Adjustments to Income Tax”.
Effective from 1 January 2013, the deductibility for tax purposes of impairment losses on securities
representing holdings in the share capital or shareholders' equity of entities was eliminated as a
result of the derogation of Article 12.3 of the Spanish Corporation Tax Law and the inclusion of
Letter j) in Article 14.1 of the foregoing law, which addresses non-deductible expenses, through
Sections 2.1 and 2.2, respectively, of Article 1 of Law 16/2013, of October 29, establishing certain
measures on environmental taxation and adopting other tax and financial measures (Spanish
Official State Gazette (BOE) of 30October 2013).
The new Article 14.1.j) stipulates that securities representing holdings in the share capital or
shareholders' equity of entities cannot be considered to be tax-deductible expenses.
Accordingly, impairment losses recognised on investees, irrespective of whether or not they belong
to the tax group, are considered to be non-deductible items and, therefore, a permanent positive
adjustment wasmade to taxable profit (see Note 18.2).
