Consolidated Annual Accounts 2017

Atresmedia Corporación de Medios de Comunicación, S.A. 2017 FINANCIAL STATEMENTS 44 The detail for 2016 is as follows: CHANGES IN DEFERRED TAX ASSETS Thousands of euros 2015 Additions Disposals Other Effect of change in tax rate 2016 Contingencies and charges 8,556 1,526 927 - - 9,156 Payables 122 762 60 - - 825 Other 1,889 - 168 306 (33) 1,994 Tax effect of assets at fair value 392 - 256 (152) 16 - Hedging instruments (954) (639) - - - (1,593) Total 10,005 1,649 1,410 154 (16) 10,382 The tax effect of the valuation adjustments relating to the hedging instruments in 2017 amounted to EUR 1,778 thousand, recognised under “Non-current assets”. These deferred tax assets were recognised in the balance sheet as the directors considered that, based on the best estimates of the Company's future earnings, including certain tax planning measures, it is probable that these assets will be recovered. On the basis of the estimate made by the Company’s directors of the timing of future profits for the offset and use of these deferred tax assets, EUR 11,139 thousand were considered to be recoverable in the long term, while EUR 168 thousand were considered to be recoverable in the short term. Both amounts are recognised under “Deferred tax assets”. Also on the basis of the timing estimate of future profits, the directors consider that there are no reasonable doubts as to the recovery of the amounts recognised in the accompanying balance sheet, within the statutory time periods and limits on the basis of the projections prepared. The key assumptions underlying these projections relate mainly to advertising markets, audience, advertising efficiency ratios and trends in costs. Except for advertising, which is measured on the basis of external information sources, the rest of the assumptions are based on past experience and reasonable projections approved by management of the Company and updated in accordance with the performance of the advertising markets. These future projections cover the next 10 years. The Company performs of sensitivity analysis of the projections to reasonable changes in the key assumptions used to determine the recoverability of these assets. Therefore, the sensitivity analyses are prepared under various scenarios based on the variables considered to be most relevant, i.e. advertising revenue, which depends mainly on the performance of the advertising market, the investment share reached and the operating margin achieved. The changes in deferred tax assets recognised in "Other" include mainly the difference between the estimated tax for 2016 and the tax return actually filed with the taxation authorities, giving rise to an adjustment in deferred tax assets of EUR 275 thousand. Also, the effect of this difference, amounting to EUR 1,259 thousand, on the income tax expense is recognised under “Adjustments to income tax”. At 31 December 2017, Company had unused tax credits amounting to EUR 99,447 thousand, of which EUR 99,307 thousand are recognised in the balance sheet. Of the total tax credits, EUR 1,189 thousand arose from the merger with La Sexta. The Company also has tax losses arising in full from the merger with La Sexta amounting to EUR 152,941 thousand, having recognised EUR 127,942 thousand.