Consolidated Annual Accounts 2017

2 Key Audit Matters ________________________________________________________ Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the annual accounts of the current period. These matters were addressed in the context of our audit of the annual accounts as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Recognition of deferred tax assets (Euros 238,530 thousand) See note 16 to the annual accounts Key Audit Matter How the Matter was Addressed in Our Audit The recognition of deferred tax assets entails a high level of judgement by Company management in assessing the probability and sufficiency of future taxable profits and future reversals of taxable temporary differences. Due to the significance of the balance of deferred tax assets, the high level of judgement regarding the estimates used and the uncertainty associated with the recovery of the aforementioned assets, this has been considered a key audit matter. Our audit procedures included the following: – We assessed the design and implementation of the most relevant controls established by the Company in respect of the recognition and valuation of deferred tax assets. – We assessed the key assumptions used to estimate future taxable profits and future reversals of taxable temporary differences in the financial reporting framework applicable to the Company, using the Company's historical information to verify these assumptions and estimates. – We assessed the sufficiency of future taxable profits for the offset of deferred tax assets within the time limit established in the financial reporting framework applicable to the Company. – We assessed whether the information disclosed in the annual accounts meets the requirements of the financial reporting framework applicable to the Company.