ANNUAL REPORT 2016
a) Estimated impairment of goodwill
The Group performs annual tests to determine whether the goodwill is subject to impairment,
according to the accounting policy indicated in Note 2.5. Recoverable amounts from the units
generating cash flows are determined based on the calculation of utilisation values. Those
calculations require the use of estimates (Note 9).
If the real gross margin is less, or the discount rate - after taxes - is greater than the es-
timates by the managers, the impairment losses of the goodwill may be greater than those
recorded.
b) Income Tax
The Group is subject to Income Tax in Portugal, Spain and Angola. A significant judgement
must be made to determine the estimated income tax. The large number of transactions and
calculations make it difficult to determine the income tax during normal business procedures.
The Group recognises liabilities for additional payment of taxes that may originate from re-
views by the tax authorities. When tax audits indicate a final result different from the initially
recorded amounts, the differences will have an impact on the income tax and on deferred
taxes in the period in which those differences are identified.
c) Provisions
The Group on a periodic basis examines possible obligations arising from past events that
should be recognized or disclosed.
The subjectivity inherent in determining the probability and amount of internal resources re-
quired to settle these obligations may result in significant adjustments due to changes in the
assumptions used or the future recognition of provisions previously disclosed as contingent
liabilities.
d) Fixed tangible and intangible assets
The determination of lifetime period of the assets and the depreciation method to be applied,
is essential to determine the amount of depreciation to be recognized in the income statement
for each year.
According to the best judgment of the Board of Directors and considering the practices adop-
ted by companies in the sector internationally these two parameters are set for the assets
and business in question.
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