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b)
Equity investments in Group companies and associates: Group companies are deemed
to be those related to the Company as a result of a relationship of control and
associates are companies over which the Company exercises significant influence.
c)
Held-to-maturity investments: debt securities with fixed maturity and determinable
payments that are traded in an active market and which the Company has the positive
intention and ability to hold to the date of maturity.
d)
Held-for-trading financial assets: assets acquired with the intention of selling them in
the near term and assets that form part of a portfolio for which there is evidence of a
recent actual pattern of short-term profit-taking. This category also includes financial
derivatives that are not financial guarantees (e.g. suretyships) and that have not been
designated as hedging instruments.
Initial recognition -
Financial assets are initially recognised at the fair value of the consideration given, plus any
directly attributable transaction costs.
In the case of equity investments in Group companies affording control over the subsidiary the
fees paid to legal advisers and other professionals relating to the acquisition of the investment
have been recognised directly in profit or loss.
Subsequent measurement -
Loans and receivables and held-to-maturity investments are measured at amortised cost.
Held-for-trading financial assets are measured at fair value, based on the expected results, the
estimated dividend payable, the price per share and the volatility thereof, and the risk-free
rate at year-end. The result of these fair value changes is recognised in profit or loss.
Investments in Group companies and associates are measured at cost net, where appropriate,
of any accumulated impairment losses. These losses are calculated as the difference between
the carrying amount of the investments and their recoverable amount. Recoverable amount is
the higher of fair value less costs to sell and the present value of the future cash flows from
the investment. Unless there is better evidence of the recoverable amount, it is based on the
value of the equity of the investee, adjusted by the amount of the unrealised gains existing at
the date of measurement (including any goodwill).
At least at each reporting date the Company tests financial assets not measured at fair value
through profit or loss for impairment. Objective evidence of impairment is considered to exist
when the recoverable amount of the financial asset is lower than its carrying amount. When
this occurs, the impairment loss is recognised in the income statement.
The Company uses the strategic plans of the various businesses to calculate any possible
impairment and discounts expected future cash flows. The Company prepares the various
projections individually, taking into account the expected future cash flows of each cash-
generating unit.
For the radio unit, the key assumptions on which the cash flow projections are based relate
mainly to advertising markets, audience, advertising efficiency ratios and the evolution of
expenses. Except for advertising data, which is measured 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 accordance with the performance of the
advertising markets.
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%.