Consolidated Annual Accounts 2017

3 Recoverable amount of goodwill and licences See notes 2 a), 3 a), 3 c), 5 and 6 to the consolidated annual accounts Key Audit Matter How the Matter was Addressed in Our Audit At 31 December 2017, the Group has goodwill of Euros 161,785 thousand and licences, which are considered to have an indefinite useful life, of Euros 82,814 thousand, as a result of the various business combinations entered into in prior years. The Group calculates the recoverable amount of goodwill and licences on an annual basis to determine whether they are impaired. Estimating the recoverable amounts requires the Group to exercise a high level of judgement regarding both the assumptions used to calculate them and the valuation methodologies used. Due to the significance of the carrying amount of goodwill and licences, and the high level of judgement associated with the aforementioned assumptions and methodology used to calculate the recoverable amount, this has been considered a key audit matter. Our audit procedures included the following: – We assessed the design and implementation of the key controls relating to the process of estimating the recoverable amount of goodwill and licences. – With the assistance of our specialists, we analysed the reasonableness of the methodology, growth and discount rates and assumptions used by the Group to estimate the cash flows which served as the basis for calculating the recoverable amount of goodwill and licences. – Our audit procedures included reviewing the level of compliance with the assumptions used to estimate the recoverable amount of these assets in the prior year, and evaluating the sensitivity of the key assumptions used in 2017. – We assessed whether the disclosures included in the annual accounts comply with the requirements of the financial reporting framework applicable to the Group.