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 61 Also on 24 November 2015, the merger, whereby La Sexta Editorial Musical, S.L.U. was absorbed by Música Aparte, S.L.U. and dissolved without liquidation, was executed in a public deed subsequent to the sale of the ownership interest by Atresmedia Corporación to its subsidiary. In addition, the balance sheet for the year ended 31 December 2014 was approved as the merger balance sheet. The company availed of the special merger regime provided for in Title VII, Chapter VII of the Spanish Income Tax Law 27/2014. On 27 October 2017, the merger whereby Guadiana Producciones, S.A.U. was absorbed by Atres Advertising, S.L.U. and dissolved without liquidation, was executed in a public deed subsequent to the sale of the ownership interest by Atresmedia Corporación to its subsidiary. In addition, the balance sheet for the year ended 31 December 2016 was approved as the merger balance sheet. The company availed of the special merger regime provided for in Title VII, Chapter VII of the Spanish Income Tax Law 27/2014. B) Reconciliation of accounting profit and tax expense Reconciliation of accounting profit and income tax expense: Thousands of euros 2017 2016 Consolidated profit before tax 176,573 174,718 Permanent differences (18,121) (12,537) Tax losses incurred prior to the formation of the tax group recognised in 2017 (38) (9) Adjusted profit/(loss) 158,414 162,172 Tax rate 25.00% 25.00% Adjusted profit multiplied by tax rate 39,603 40,543 Tax credits (11,520) (16,277) Current income tax expense 28,083 24,266 Deferred tax expense 5,114 5,141 Income tax adjustment 1,268 16,198 Total tax expense 34,465 45,605 Effective tax rate 19.52% 26.10% Permanent differences in 2017 included mainly gains on bargain purchases (EUR 24,482 thousand), non-deductible impairment losses on equity instruments (EUR 5,935 miles thousand), other non-deductible expenses (EUR 765 thousand), donations (EUR 232 thousand) and negative amounts for double taxation (EUR 820 thousand) and other items (EUR 249 thousand). The gains on bargain purchases arose from the share of profit/(loss) of companies accounted for using the equity method (+EUR 1,165 thousand), increased amortisation of the trademark under IFRSs (+EUR 289 thousand) and accounting elimination differences (-EUR 3,264 thousand). In addition, the amortisation of the licence and goodwill recognised for the various Group companies as a result of the entry into force on 1 January 2016 of Spanish Audit Law 22/2015, of 20 July, is not envisaged under IFRSs, which results in a gain on bargain purchases of EUR 20,878 thousand. Lastly, there are negative adjustments for differences in the scope of consolidation, for EUR 1,795 thousand. In 2017 the Group earned tax credits for investment in audiovisual production amounting to EUR 11,423 thousand, EUR 81 thousand for donations to non-profit entities and EUR 16 thousand for other items.