Consolidated Annual Accounts 2017

Atresmedia Corporación de Medios de Comunicación, S.A. and Subsidiaries Translation of consolidated financial statements originally issued in Spanish and prepared in accordance with the regulatory financial reporting framework applicable to the Group in Spain (see Notes 2 and 29). In the event of discrepancy, the Spanish-language version prevails. 2017 CONSOLIDATED FINANCIAL STATEMENTS 12 instrument and the hedged item and that the hedge ratio be the same as that applied by the entity in its risk management. The new standard also amends the criteria for documenting hedging relationships. Based in the quantitative and qualitative analyses performed, the Group does not expect application of the new standard to have a material impact. The Group has decided to apply IFRS 9 retrospectively and not restate information for comparative periods presented in the year of the first-time application of the new standard. IFRS 16 Leases IFRS 16 becomes effective in 2019 and will supersede IAS 17 and the related interpretations. The main change in IFRS 16 is the single accounting model for lessees, which will include all leases (with certain limited exceptions) on the balance sheet, with a similar impact to current finance leases (depreciation charge from the right-of-use asset and finance cost for the amortised cost of the liability). The Group is assessing the potential impact of this standard, but does not expect it to be significant given the scant relevance of leases in the consolidated financial statements. Responsibility for the information and estimates The information in these consolidated financial statements is the responsibility of the directors of the Parent. In the consolidated financial statements for the year ended 31 December 2017, estimates were occasionally made in order to quantify certain of the assets, liabilities, income, expenses and obligations reported herein. These estimates relate basically to: - The Group tests its goodwill and intangible assets with indefinite useful lives for impairment annually. The determination of the recoverable amount of the cash- generating units (CGUs) to which the goodwill or the intangible asset with an indefinite useful life was assigned implies the use of estimates. Recoverable amount is the higher of fair value less costs of disposal and value in use. The Group generally uses discounted cash flow methods to determine these values. The discounted cash flow calculations are based on the five-year projections of the budgets approved by the Group. The cash flows take into account past experience and represent the best estimate of future market performance. Cash flows beyond the fifth year are extrapolated using individual growth rates. The key assumptions for measuring fair value less costs of disposal and value in use include growth rates, the weighted average cost of capital (WACC) and tax rates. The estimates, including the methodology applied, could have a significant impact on the values and impairment loss (see Notes 3.c and 5). - If there are indications of impairment, the determination of the recoverable amount of available-for-sale financial assets is subject to uncertainty, due to the absence of benchmark market values for these investments. The directors' base these estimates on the business plans of the investees or the existence of possible commitments, rights or set-price repurchase or capitalisation agreements. - The estimation of the useful life of certain intangible assets, such as trademarks and licenses, is highly subjective. Note 3.c indicates the useful lives considered for each type of intangible asset.