Consolidated Annual Accounts 2017

Atresmedia Corporación de Medios de Comunicación, S.A. 2017 FINANCIAL STATEMENTS 16 and, retrospectively, the results of the hedge are within a range of 80% to 125% with respect to the results of the hedged item. The Company used cash flow hedges in the year. With these hedges, the portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognised temporarily in equity and recognised in profit or loss in the reporting period in which the forecast hedged transaction affects profit or loss, except where the hedge relates to a forecast transaction that requires recognition of a non-financial asset or liability. In this case, the amounts recognised in equity are included in the cost of the asset or liability when it is acquired or assumed. Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised or when it no longer qualifies for hedge accounting. At that time, any cumulative gain or loss on the hedging instrument recognised in equity remains in equity until the forecast transaction occurs. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was deferred in equity is recognised in profit or loss. 4.6 Inventories Programme rights Programme rights and inventories are measured, based on their nature, as follows: - 1.- Inventoriable in-house productions (programmes produced to be rerun, such as fiction series) are measured at acquisition and/or production cost, which includes both external costs billed by third parties for programme production and for the acquisition of resources, and internal production costs, which are calculated by applying previously determined internal rates on the basis of the time during which operating resources are used in production. The costs incurred in producing the programmes are recognised, based on their nature, under the appropriate headings in the statement of profit or loss and are included under “Programme rights” in the balance sheet with a credit to “Procurements - Inventories” in the accompanying statement of profit or loss. Amortisation of these programmes is recognised under “Programme amortisation and other” in the statement of profit or loss, on the basis of the number of showings. Following the analyses performed by the Company of actual showings of this type of programme, series broadcast weekly are amortised at 99% of the production cost when the first showing of each episode is broadcast and at 1% when the broadcast is repeated. Series broadcast daily are amortised in full when first broadcast. In any event, the maximum period for the amortisation of programmes is three years, after which the unamortised amount is written off. - 2.- Non-inventoriable in-house productions (programmes produced to be shown only once) are measured using the same methods and procedures as those used to measure inventoriable in-house productions. Programmes produced and not shown are recognised at year-end under “Programme rights - In-house productions and productions in progress” in the balance sheet. The cost of these programmes is recognised as an expense under “Programme amortisation and other” in the statement of profit or loss at the time of the first showing. - 3.- Rights on external productions (films, series and other similar productions) are measured at acquisition cost. These rights are deemed to have been acquired when the term of the right commences for the Company. Payments made to external production distributors prior to the commencement of the term of the rights are recognised under “Advances to suppliers” in the balance sheet. When payments to external production distributors are made in foreign currency, these rights are recognised in the balance sheet by applying the spot exchange rate prevailing when the term of the right commences to the foreign currency amount. Also, the initial value of all the external productions acquired by the Company for which derivative instruments designated as cash flow hedges were arranged in order to hedge foreign currency risk includes: