Consolidated Financial Statements and Consolidated Management ...

The reconciliation between the accounting profit or loss, the corporation tax base, current and deferred tax for the year, is as follows (in thousand euros):
Consolidated profit (loss)
before tax
Adjustments to accounting
profit (loss):
Accounting consolidation
adjustments (1)
Spain
Germany
(2)
Romania Poland Switzerland Luxembourg
2011 2010
Latin
America (3)
Italy
Netherlands
(4)
Portugal
TOTAL
Spanish
Companies
Other
Companies
(59,766) 25,889 349 58 (708) 2,943 14,135 2,147 19,155 100 4,301 (32,142) (20,413)
- (32,407) - - - - - - 25,000 - (7,407) - 43,500
Due to permanent differences 24,661 11,700 157 (4) 1,080 (2,684) (16,212) (10,003) (8,266) (32) 397 (25,573) (29,412)
Due to temporary differences 2,998 (4,995) - - - (46) 10,156 38,249 6,089 - 52,451 31,536 (35,120)
Tax base (Taxable profit or loss) (32,107) 187 506 54 372 213 8,079 30,393 41,978 68 49,742 (26,178) (128,445)
Current taxes to be refunded /
(pay)
509 1,885 - (1) - 6 (3,576) (529) (3,316) - (5,021) - -
Total current tax income /
(expense)
10,530 (1,727) (81) (10) (55) (71) 578 2,466 (8,972) (16) 2,642 10,136 (17,667)
Total deferred tax income 417 - - - - - 2,799 496 1,522 - 5,234 9,461 3,179
Total deferred tax expense - (1,664) - - - (12) - - - - (1,676) - -
Total Corporation Tax income
/ (expense)
10,947 (3,391) (81) (10) (55) (83) 3,377 2,962 (7,450) (16) 6,200 19,597 (14,488)
(1) Accounting adjustments for the asset repurchase and sale transaction in Germany and incorporation of the dividends received in Holland, which is eliminated in tax consolidation.
(2) The Germany business area consolidates the profits and losses of France and the Czech Republic.
(3) The Latin America business area includes the profits and losses obtained by the Group in Argentina, Mexico, Uruguay, the Dominican Republic, Colombia, Chile, Panama and Brazil.
(4) The Netherlands business area includes Belgium and South Africa.
Financial years subject to tax inspection
The last four financial years of the Tax Consolidation Group are open to inspection in accordance with Spanish tax legislation.
Regarding the financial years open to inspection, contingent liabilities not susceptible to objective quantification may exist, which are not significant in the
opinion of the Group’s Directors.
Write-offs applied by the consolidated tax group of the Parent Company
Write offs generated during the financial year are essentially due to export activity investments, double taxation and donations.
No write offs for investments in environmental impact reduction measures were applied or credited to calculate Corporation Tax.
At 31 December 2011, the Tax Group held the following tax incentive carry forwards (in thousand euros):
Year of Origin Write-off pending Amount
2002 to 2010 Investment in export activity 29,047
2006 to 2011 Tax write off to avoid double taxation 14,493
2002 to 2010 Others 4,104
47,644
Similarly, the consolidated tax group of the Parent Company took advantage in prior years of the “Deferral of extraordinary profits for re-investment”
scheme. The essential characteristics of such re-investment are as follows (thousands of euros):
Amount offset
Year of origin Revenue subject to deferral Prior years 2011 Outstanding Amount Last year of deferral
1999 75,145 48,711 682 25,752 2049
2001 4,335 3,715 620 - 2011
All these revenues were reinvested through various financial interests, except for those originating in 1999, which were re-invested in the acquisition of
real estate.
Revenue from previous year written off for the re-investment of extraordinary profits in accordance with the provisions set forth in Article 42 of the Revised
Text of the Company Tax act is shown below (thousands of euros).
Financial year Date of transfer
Revenue
Write-off
Company generating the
subject Applied Outstanding
capital gain
Company reinvesting
2008 June 7,021 - 843 NH Hoteles España S.L. NH Hotel Rallye, S.A.
2008 June 19,630 - 2.356 NH Hotel Rallye, S.A. NH Hotel Rallye, S.A.
2008 June 3,627 - 435 Hotelera Onubense, S.A. NH Hotel Rallye, S.A.
2008 June 1,583 - 190 Gran Círculo de Madrid, S.A. NH Hotel Rallye, S.A.
The capital gains obtained in 2008 were re-invested in 2009 through the Group’s acquisition of new shares in its Italian subsidiary through NH Hotel Rallye,
S.A. These shares were issued as a result of an increase of capital amounting to 73 million euros allocated to acquire new hotels and refurbish existing
hotels. There is an obligation to maintain the investment during a three year period.
94
REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS