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 25 f) Programme rights Programme rights are measured, based on their nature, as follows: 1. Inventoriable in-house productions (programmes produced to be rerun, such as fictional 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 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 consolidated statement of profit or loss and are included under “Programme rights” in the consolidated balance sheet with a credit to “Additions to programme rights” under “Programme amortisation and other procurements” in the accompanying consolidated statement of profit or loss. Amortisation of these programmes is recognised under “Programme amortisation and other procurements” in the consolidated statement of profit or loss, on the basis of the number of showings. Following the analyses performed by the Parent 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 consolidated balance sheet. The cost of these programmes is recognised as an expense under “Programme amortisation and other procurements” in the consolidated 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 Group. When payments to external production distributors are made in foreign currency, these rights are recognised in the consolidated 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 Group for which derivative instruments designated as cash flow hedges pursuant to IAS 39 were entered into in order to hedge foreign currency risk includes: the portion of the cumulative gain or loss on the hedging instrument recognised in equity (effective hedge) at the beginning of the term of the right; and the accumulated exchange gains or losses on that date for payments made prior to the commencement of the term of the right. The amortisation of the rights is recognised under “Programme amortisation and other procurements” in the consolidated statement of profit or loss, on the basis of the number of showings, at the rates shown below, which are established on the basis of the number of showings contracted: