Tiscali 2012 Annual Report Download - page 73

Annual financial report as at 31 December 2012
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Date File Name Status Page
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Annual Report as at 31
December 2012 73
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Deferred tax assets, arising from timing differences and/or previous losses, are recognised to the
extent that it is probable that taxable profits will be available in the future against which deductible
timing differences and/or previous losses can be utilised. The provisions are based on taxable income
likely to be generated in light of the approved business plans. Such assets and liabilities are not
recognised if the timing differences derive from goodwill or from the initial recognition (other than in a
business combination) of other assets and liabilities in transactions that affect neither the accounting
result nor taxable income. The book value of deferred tax assets is reviewed at each balance sheet
date and reduced to the extent that it is no longer likely that sufficient taxable income will be available
to allow all or part of the assets to be recovered.
Deferred tax is calculated at the tax rates expected to apply in the period when the liability is settled or
the asset realised. Deferred tax is charged or credited to the income statement, except when it relates
to items charged or credited directly to equity, in which case the deferred tax is also dealt with under
equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current
tax assets against current tax liabilities and when they relate to income taxes levied by the same
taxation authority, and the Group intends to settle its current tax assets and liabilities on a net basis.
Earnings per share
The basic result per ordinary share is calculated by dividing the portion of the Group’s economic result
attributable to ordinary shares by the weighted average of the ordinary shares in circulation during the
financial year, excluding treasury shares.
For calculating the diluted result per ordinary share, the weighted average of shares in circulation is
changed by assuming the subscription of all potential shares deriving, for instance, from the
conversion of bonds, from exercising rights on shares with diluting effects, or from the potential diluting
effect due to the allocation of shares to the beneficiaries of already accrued stock option plans.
Critical decisions in applying accounting standards and in the use of estimates
In the process of applying the accounting standards disclosed in the previous section, Tiscali’s
directors made some significant decisions in view of the recognition of amounts in the financial
statements. The directors’ decisions are based on historical experience as well as on expectations
associated with the realisation of future events, considered reasonable under the circumstances.
Assessment of whether primary assets reported can be recovered is based on the estimate of income
and financial flows the Group feels it will be able to generate in the future. As more fully described in
the note “Evaluation of the company as a going-concern”, achieving the results set forth in the
business and financial plan, used for the assessment, depends on whether the forecasts and
assumptions contained therein are reached. Some of these variables are beyond the control of the
Directors and the Group management and especially with regards to developments in the
telecommunications market and achieving the growth objectives set in an extremely competitive
market.
Assumptions for the application of accounting standards
Activation costs and customer acquisition costs
The costs incurred for customer activation (Subscriber Acquisition Costs – SACs) were capitalised and
amortised over a period of 36 months.
Losses in value on assets (Impairment)
The impairment test is carried out annually or more frequently during the financial year, as disclosed in
the preceding section, ‘Business combinations and goodwill’. The ability of each ‘unit’, identifiable in