Financial Information - Uralita

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FINANCIAL INFORMATION ANNUAL REPORT 2006 affects neither the accounting profit nor taxable profit or loss. Deferred tax assets and liabilities are reviewed at each balance sheet to verify they remain in force, with the appropriate corrections being made in accordance with the results of the review. Law 35/2006 of 28 November on personal income tax and the partial amendments to the laws governing corporate taxation and the taxation of non-residents and personal income provide, inter alia, for a reduction over a period of two years in the general rate of corporate income tax, which until 31 December 2006 was 35%, as follows: TAX PERÍOD BEGINNING ON TAX OR AFTER: RATE 1 January 2007 32.5% 1 January 2008 30% As a result, bearing in mind the year in which the corresponding reversal is likely, in 2006 the Company reassessed the amount of deferred tax assets and liabilities recognized in the consolidated balance sheet relating to Spanish companies. This led to a net charge of €13,045 thousand to “Adjustment to income tax expense for previous years” in the consolidated income statement for the year ended 31 December 2006. 4.17. Earnings per share Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year, excluding any parent company shares held as treasury shares by Group companies. As there are no potential ordinary shares that could dilute earnings for the Group, basic and diluted earnings per share for 2006 and 2005 are the same. 4.18. Foreign currency transactions Transactions in foreign currency, i.e. currency other than the euro, which is the Company’s functional currency, are initially recorded at the euro rate ruling at the date of the transaction. Exchange gains or losses arising on the settlement of foreign currency transaction balances are recognized in the consolidated income statement when they arise. Receivables and payables in foreign currency at the balance sheet date are recorded in euros at the year-end exchange rate or the hedged exchange rate. Differences are taken to profit or loss for the year. The Group uses forward currency contracts and options to hedge its exposure to foreign currency risk (see Note 4.9 on the Group’s policy with respect to recognising derivative financial instruments). 149
ANNUAL REPORT 2006 FINANCIAL INFORMATION 4.19. Consolidated cash flow statements The consolidated cash flow statements are prepared using the indirect method and the terms used are defined as follows: • Cash flows: inflows and outflows of cash and cash equivalents; cash equivalents are shortterm investments that are highly liquid and have low risk that their value will change. • Operating activities: activities typically carried out by the Company and any others that cannot be classified as investing or financing activities. • Investing activities: the acquisition, disposal or use by other means of non-current assets and other investments not included in cash and cash equivalents. • Financing activities: activities that result in changes in the size and composition of equity and liabilities that are not generated by operating activities. 4.20. CO 2 emission rights CO 2 emission rights granted by governments freely to consolidated companies, in line with the international environmental agreements reached with the Kyoto Protocol, are measured at the market value at which they were granted (01 January 2006) and recognized in “Intangible assets” on the consolidated balance sheet at 31 December 2006. At that date, the value of the rights used and pending use, respectively, are recognized in “Provisions” and “Deferred income” in the balance sheet at that date. The use of emission rights is recognized as a period expense in “Other operating expenses” in the consolidated income statement for the year ended 31 December 2006. The recognition of the deferred income is included in “Other operating revenues.” 4.21. Environmental matters The consolidated companies treat as an expense of an environmental nature the payments made to personnel occupied exclusively with environmental tasks and the goods and purchases necessary for activity in this area, as well as the disposal of waste from operational activities. The remaining amounts related to environmental activities are considered investments. The consolidated companies also establish provisions for any responsibilities or obligations likely to arise relating to activities that affect the environment and whose amount can be estimated. 4.22. Accounting judgments and estimates The information included in the accompanying consolidated annual accounts is the responsibility of the Group’s Directors. In the preparation of the consolidated financial statements for 2006 and 2005 estimates made by the Directors of the Group have been used to measure certain assets, liabilities, revenues, expenses and commitments recognized therein. These estimates relate primarily to: 150
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Financial Information - Uralita

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