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 11 Step 4: Allocate the transaction price to the performance obligations identified in the contract. Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation. Under IFRS 15, revenue must be recognised as the entity satisfies the obligations; i.e. when “control” of the goods or services underlying the obligation in question is transferred to the customer. IFRS 15 also includes much more prescriptive guidelines for specific scenarios and extensive disclosure requirements. The Group has performed an extensive analysis of the various classes of customer contracts covered by the standard, verifying the obligations identified for each contract type as provided for in the standard, and verifying the approaches for determining the transaction price and its allocation to each of the obligations, as established in IFRS 15, to determine the impact that the principles in the new standard will have on the accounting recognition of revenue from those contracts. For advertising revenues from television, radio and other media, which make up more than 90% of the Group's total revenue, application of IFRS 15 will not imply any significant difference in the recognition of revenue from the approach applied currently. Accordingly, it will not have a material impact on the consolidated financial statements. For other business lines, mainly audiovisual production and distribution, the sale of content and the digital business, application of IFRS 15 will not imply any significant difference in the recognition of revenue from the accounting criteria applied currently. Accordingly, it will not have a material impact on the consolidated financial statements. The Group did not early adopt this standard in 2017 and intends to apply IFRS 15 retrospectively, without restating comparative information. IFRS 9 Financial Instruments IFRS 9 outlines the principles for the recognition and measurement of financial instruments. This standard simplifies the current financial asset measurement model and establishes three measurement categories: amortised cost, fair value through profit or loss and fair value through other comprehensive income, based on the business model and the characteristics of the contractual cash flows. The Group has performed a detail analysis of the financial assets affected by this standard, verifying their classification, recognition and measurement in accordance with the criteria of the new standard. Equity instruments included in “Non-current financial assets” in the consolidated balance sheet currently classified as available-for-sale financial assets and measured at cost less any impairment will be measured at fair value. However, to date, the Group has yet to decide whether it will recognise the changes in value with impact on the consolidated statement of profit or loss, or elect to irrevocably classify them in the new category, recognising the changes in value in equity until they are realised, when they will be recognised in the consolidated statement of profit or loss. IFRS 9 introduces a new model of impairment losses on financial assets, the expected credit loss model, which replaces the current incurred loss model. The Group will apply the simplified approach and record lifetime expected losses on its trade receivables. Application of the new requirements will, most likely, result in earlier recognition of impairment losses on financial assets measured at amortised cost, mostly trade receivables. Under current standards, hedges must be highly effective both prospectively and retrospectively. However, IFRS 9 introduce a new model for hedge accounting, which is less restrictive. It requires that an economic relationship exist between the hedging