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 33 For the “Radio” CGU (which coincides with the radio segment) and the “Smartclip” CGU, the key assumptions on which the cash flow projections are based relate mainly to advertising markets (the data relate to scenarios used by market participants to set prices, based on a consensus among analysts, who are independent third parties, employed by the industry in general), audience figures, advertising efficiency ratios and cost forecasts. Except for advertising, which is measured on the basis of external information sources, the rest of assumptions are based on past experience and reasonable projections approved by management of the Parent 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 1.0% for the “Radio” CGU and no growth for the “Smartclip” CGU. 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 time value of money and the risk premiums generally used by analysts for the business and geographical area (Spain) are taken into account, giving rise to future discount rates of 9.5% for the “Radio” CGU and 12.0% for the “Smartclip” CGU in 2016 and 2017. Based on the methods used and the estimates, projections and assessment of value in use available to the Parent's directors, at the date of presentation of these consolidated financial statements, it was determined that the goodwill recognised by the Group represents its carrying amount and, therefore, it was not necessary to recognise any impairment losses. The Group also performs sensitivity analyses when there are reasonably possible changes in the key assumptions used to calculate the recoverable amounts of the “Radio” and “Smartclip” CGUs. In this respect, the sensitivity analyses are prepared under various scenarios on the basis of the variables deemed most significant, i.e. advertising revenues, which depend mainly on the performance of the advertising market and the investment share, and the discount rate. For the “Radio” CGU, the sensitivity analysis conducted demonstrates that an increase in the perpetuity growth rate of 1.0% would give rise to an increase in value of EUR 17 million, whereas a decrease in the perpetuity growth rate of 1.0% would give rise to a decrease in value of EUR 14 million. Also, a 1.0% decrease in the discount rate would give rise to an increase of EUR 23 million, and a 1.0% increase in the discount rate would give rise to a decrease of EUR 18 million. The changes in value used in all these sensitivity analyses would not reduce the recoverable amount to below the carrying amount. For the “Smartclip” CGU, the sensitivity analysis conducted demonstrates that an increase in the perpetuity growth rate of 1.0% would give rise to an increase in value of EUR 2.3 million, whereas a decrease in the perpetuity growth rate of 1.0% would give rise to a decrease in value of EUR 1.9 million. Also, a 1.0% decrease in the discount rate would give rise to an increase of EUR 3.3 million, and a 1.0% increase in the discount rate would give rise to a decrease of EUR 2.8 million. The changes in value used in all these sensitivity analyses would not reduce the recoverable amount to below the carrying amount.