UBI Banca Group

consequent absence of taxable income for IRAP purposes in the future. Consequently deferred
tax assets for IRAP purposes were not recognised and those that had been recognised
previously were released.
In the consolidated financial statements, higher current taxation of €525,642 thousand was
recognised in the 2011 income statement, due to the substitute tax, the recognition of the
IRAP deferred tax assets already mentioned of €24,964 thousand was reversed and lower
taxation was recognised with a new deferred tax liability for IRES of €903,447 thousand. The
net positive impact amounted to €352,841 thousand.
Changes to rates for local production tax (IRAP)
Paragraph 5 of article 23 of the aforementioned Decree Law No. 98 of 6 th July 2011 raises the
rate for IRAP by 0.75% for banks and financial companies. The rate therefore rises from the
current level of 3.9% (4.82% for banks which operate in regions which levy an additional tax)
to 4.65% (5.57% for banks which operate in regions which levy an additional tax).
The change applies from the tax year 2011 and involved the recognition in the consolidated
accounts of higher current taxation of €16.2 million (€15.1 million net of non controlling
interests) and an increase in deferred tax liabilities recognised as at 31 st December 2010 of
€6,267 thousand (€5,342 thousand net of non controlling interests).
The amount relating to the increase in the deferred tax liabilities recognised in the balance
sheet as at 31 st December 2011, which relates mainly to deferred tax liabilities for intangible
assets arising from the purchase price allocation, was considered non recurring for the
purposes of the normalised income statement, while the recognition of higher current taxes
was not subject to normalisation.
Use of estimates and assumptions in the preparation of the consolidated financial
statements
Balance sheet items are measured according to the policies set out in subsequent Part A.2
“The main balance sheet items” of these accounting policies.
Where it is impossible to measure items in the financial statements with precision, the
application of those policies involves the use of estimates and assumptions which may even
have a significant effect on the amounts recognised in the balance sheet and in the income
statement.
The use of reasonable estimates forms an essential part of the preparation of financial
statements and we have listed here those items in the financial statements in which the use of
estimates and assumptions is most significant:
• measurement of loans and receivables;
• measurement of financial assets not listed in active markets;
• measurement of intangible assets and equity investments;
• quantification of provisions for risks and charges;
• quantification of deferred taxes;
• definition of the depreciation and amortisation charges for property, equipment and
investment property and intangible assets with finite useful lives.
Furthermore, in this respect an adjustment may be made to an estimate following a change in
the circumstances on which it was based or if new information is acquired or yet again on the
basis of greater experience. A change in an estimate is applied prospectively and it therefore
generates an impact on the income statement in the year in which it is made and, if it is the
case, also in future years.
No significant changes were made this financial year to the criteria previously employed for
estimates in the financial statements as at 31 st December 2010, except for the items described
below.
- Useful life of UBI Sistemi e Servizi centralised hardware
The useful life of centralised hardware assets was revised during the year. These consist of
data storage equipment and the relative servers.
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