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For the radio unit, the key assumptions on which the cash flow projections are based relatemainly
to advertising markets, audience, advertising efficiency ratios and the evolution of expenses.
Except for advertising data, which ismeasured on the basis of external sources of information, the
assumptions are based on past experience and reasonable projections approved by Company
management and updated in accordancewith the performance of the advertisingmarkets.
These future projections cover the next five years. The cash flows for the years not considered in
the projections are estimated to be perpetual, with growth of 0%.
In assessing value in use, the estimated cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time value of money and the
risks specific to the assets. In order to calculate the rate, the current value of money and the risk
premiums generally used by analysts for the business and geographical area are taken into
account, giving rise to future discount rates of 9%-10%.
The most sensitive variable is the growth of the radio advertising market, for which cumulative
annual growth of 2.4% was used for the projection period, which is in line a mild recovery in the
coming years. A change of 0.5%would change the amount by EUR 12 million. Also, a variation of
0.5% in the discount rate would give rise to a change of EUR 8million. Zero perpetual growth was
used. An increase of 0.5%would increase the amount by EUR 6million.
In calculating such valuation adjustments asmight be required for trade and other receivables, the
Company takes into account the date onwhich the receivables are due to be settled and the equity
position of related debtors.
The Company derecognises a financial asset when the rights to the cash flows from the financial
asset expire or have been transferred and substantially all the risks and rewards of ownership of
the financial asset have also been transferred, such as in the case of firm asset sales.
However, the Company does not derecognise financial assets, and recognises a financial liability
for an amount equal to the consideration received, in transfers of financial assets in which
substantially all the risks and rewards of ownership are retained, such as in the case of bill
discounting.
4.4.2 Financial liabilities
Financial liabilities include accounts payable by the Company that have arisen from the purchase of
goods or services in the normal course of the Company's business and those which, not having
commercial substance, cannot be classed as derivative financial instruments.
Accounts payable are initially recognised at the fair value of the consideration received, adjusted
by the directly attributable transaction costs. These liabilities are subsequently measured at
amortised cost.
The Company derecognises financial liabilities when the obligations giving rise to them cease to
exist.
4.4.3 Equity instruments
An equity instrument is a contract that evidences a residual interest in the assets of the Company
after deducting all of its liabilities.
Equity instruments issued by the Company are recognised in equity at the proceeds received, net
of issue costs.
Treasury shares acquired by the Company during the year are recognised at the value of the
consideration paid and are deducted directly from equity. Gains and losses on the acquisition, sale,
issue or retirement of treasury shares are recognised directly in equity and in no case are they
recognised in profit or loss.
