year-end are likewise charged to the consolidated comprehensive profit and loss statement for the amount of the difference between the
recognised liability to date and the corresponding updated value.
Lastly, as set out in Note 19 of this consolidated annual report, in order to hedge against any possible financial liabilities from such remuneration
scheme, the Group has contracted a financial instrument to hedge the future cash flows needed to settle this remuneration scheme. This
financial instrument (an equity swap arrangement) is considered a derivative and booked in accordance with the general rules that apply to
such instruments (see Note 4.7).
4.17
Treasury shares
Pursuant to IAS 32, treasury shares are presented by reducing the Group’s equity.
The profits and losses obtained by the Group on the disposal of these treasury shares are booked in the “Share premium” item of the consolidated
balance sheet.
4.18
Provisions
The Group follows the policy of provisioning for the estimated amounts arising from ongoing litigation, indemnities or obligations, as well as
for any sureties or guarantees granted by Group companies which could involve a the Group in a payment obligation (either legal or implicit),
provided the amount can be reliably estimated.
4.19
Severance payments
In accordance with current employment regulations and certain employment contracts, the Group is obliged to pay indemnities to employees
who are dismissed under certain conditions. The Group recorded expenses of €25,266 thousand for this item in 2012 ( €18,263 thousand in 2011).
The consolidated financial statement at 31 December 2012 includes, pursuant to the International Financial Report Standards (IAS 37), a provision
of €19,981 thousand for this item ( €1,090 thousand at 31 December 2011).
4.20
Business combinations
The business combinations by which the Group acquires control of an entity are accounted for using the acquisition cost method, calculating
goodwill as the difference between the sum of the consideration transferred, the minority interests and the fair value of any previous stake in the
acquired entity, less the identifiable net assets of the acquired entity, measured at fair value.
In the event that the difference between these items is negative, an income is booked in the consolidated comprehensive profit and loss statement.
In the case of business combinations carried out in stages, goodwill is only measured and recorded once the control of a business has been
acquired. To do this, any holdings are measured subject to fair value and the corresponding profit or loss is recognised.
4.21
Environmental policy
Investments arising from environmental activities are valued at their original cost and activated as increased fixed asset or inventory costs in the
financial year in which they are incurred.
Any expenses arising from environmental protection and improvement are attributed to the profit or loss for the year when they are incurred,
irrespective of the moment when the cash or financial flows arising from them arise.
Provisions for likely or certain liabilities, ongoing litigation and outstanding indemnities or obligations of an indeterminate amount connected
with the environment and not covered by the insurance policies taken out are incorporated at the moment the liability or obligation linked to the
indemnities or payment arises.
4.22
Consolidated cash flow statements
The following terms with their corresponding explanation are used in the consolidated cash flow statements prepared using the indirect
method:
-
Cash flows: Inflows or outflows of cash or cash equivalents. The latter are construed as highly liquid short-term investments with a little risk of
change in their value.
-
Operating activities: The typical activities of the entities comprising the consolidated group, along with other activities that cannot be
classified as investment or financing activities.
-
Investment activities: Activities involving the acquisition, disposal or drawing down by other means of long-term assets and other investments
not included under cash and cash equivalents.
-
Financing activities: Activities resulting in changes in the amount and composition of equity and liabilities and which do not form part of the
operating activities.
REPORT ON THE CONSOLIDATED
FINANCIAL STATEMENTS
77
