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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 are
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 statement of profit or loss.
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%.
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 Company performs sensitivity analyses when there are reasonably possible changes in the key
assumptions used to calculate the recoverable amount of the radio cash-generating unit. In this
respect, the sensitivity analyses are prepared under various scenarios on the basis of the variables
deemed most significant, i.e. advertising revenue, which depends mainly on the performance of
the advertising market and the investment share, and the discount rate.