Consolidated Annual Accounts 2017

5 Risk analysis and control touches on all the Group's businesses and activities, and involves all our organisational units. This means that risk management and control is a corporate system in which the entire organisation is on alert. The system is headed and overseen by the Board, yet some of its functions are delegated to the Audit and Control Committee. Risk management also brings into play the coordinating role of the Compliance Committee, and input from the Legal Affairs, in risk management and compliance control, Finance, related to financial risks and the controls comprising the system for internal control over financial reporting (ICFR), and, lastly, Internal Audit and Process Control, the coordination and oversight of the overall operation of the risk management system. The Group has the necessary tools and organisation to ensure effectiveness of the control procedures approved. The Group’s main financial risks are: a) Foreign currency risk. Foreign currency risk is concentrated basically in payments in international markets to acquire broadcasting rights. To mitigate this risk, the Group enters into hedging instruments, mainly currency forwards. b) Liquidity risk. The Group's liquidity policy is to arrange credit facilities and short-term investments for sufficient amounts to cover funding requirements based on the outlook for the business. a) Credit risk. The Group does not have significant credit risk since the average customer collection period is short and guarantees are required for deferred payment sales. Cash placements are made and derivative instruments are arranged with institutions of recognised solvency. d) Interest rate risk. The Group's borrowings are exposed to interest rate risk. Financing is arranged at interest rates tied to Euribor. To mitigate this risk, the Parent has entered into interest rate swaps (IRSs) to reduce its exposure to variable rates. Alternative performance measures To comply with the European Securities Market Authority (ESMA) guidelines on Alternative Performance Measures (“APMs”), the Group presents additional information to improve comparability, reliability and comprehensibility of its financial information. The Group presents its earnings in accordance with the applicable financial reporting framework (EU- IFRSs), but the directors consider that certain APMs add useful financial information that should be considered when assessing its performance. Directors and management may also use APMs in their financial, operational and planning decision-making and to evaluate the Group's performance. The Group provides the APMs it considers appropriate and useful for decision-making by users. • Working capital: Calculated as current assets minus current liabilities. This a financial measure of the operational liquidity available to the Group. • Gross operating profit: profit from operations plus amortisation and depreciation. • Operating cash flow: Calculated as net cash flows from operating activities less net investments in group companies, joint ventures and associates. • Net financial debt: payables on bank borrowings and other loans and borrowings (if any) less cash and cash equivalents. • Any ratios between the APMs can also be considered an alternative performance measure.