PRISA posts profit of 89.7 million in 2020

• The net result amounted to 89.7 million, compared to losses of 182.3 million the previous year, with earnings driven by capital gains from the sale of Santillana Spain.
• Ebitda totaled 64 million, compared to 189 million in 2019, due to the effects of the pandemic. The Education business was impacted by the closure of schools in most of the countries in which it operates, although this did give a boost to subscription systems. The Media business was affected by the decline of the global advertising market.
• There was strong digital momentum throughout the year. The number of Santillana digital students in Latin America increased by 20.3%, reaching 1,727,000. EL PAÍS reached 84,793 exclusive digital subscribers after launching its new paywall model in May. Radio grew 11% in terms of streaming hours (an average of 59 million hours per month) while podcast downloads were up by 63% (a monthly average of 24 million).
• The cost control plan to reduce the impact of Covid saw savings of 49 million, exceeding the 40 million originally envisaged.
• Digital revenues have increased their contribution to the Group's total revenues by 31% and now account for 30% of the total.
• Education maintains margins of 21%, despite the impact of the crisis. Subscription models have become the chief revenue source.
• The Media businesses have forged ahead with digital transformation, while consolidating audience lead and reducing costs.
• PRISA moves to a firmer financial footing thanks to a debt refinancing agreement and the sale of Santillana Spain and Media Capital.
• The refinancing deal extends debt maturity to 2025 and cuts net debt by more than 30%, which stands at 679 million.
• As of December 31, 2020, the Group’s cash balance stood at 222 million and a further 143 million in restricted cash, providing it with the flexibility to develop subscription models for Ed-Tech in Latin America and Media.
• There were changes in the company's share structure, following the entry of a new partner with an industrial profile. Vivendi takes a 9.9% stake.

“The year 2020 has been tremendously complicated due to the pandemic, which has had a severe impact on our businesses. But I think that, despite these circumstances, PRISA's response has been exceptional,” the Group's CEO Manuel Mirat has said.

"Since the very beginning of the Covid pandemic, we have prioritized our commitment to society, offering at all times both our high-quality education services, as well as the highest quality news and information, through our newspapers and radio stations," said Mirat.

"What’s more," he continued, "we have managed to improve our flexibility and financial strength, thanks to the refinancing agreement with our creditors and the sales of Santillana Spain and Media Capital. All of this has allowed us to forge ahead at an even faster pace with our roadmap, which involves differentiating the Education and Media businesses and speeding up conversion towards Ed-Tech subscription models in Latin America and in Media," added the PRISA CEO.

POSITIVE NET RESULT

PRISA closed the year with a profit of 89.7 million, compared to a loss of 182.3 million registered the previous year. The positive result is thanks chiefly to the capital gain from the sale of Santillana Spain for € 377 million, which helps offset the impact on accounts of the new refinancing deal (€ 37 million), a write-down amounting to € 77 million deriving from the deal to sell Media Capital, impairment affecting all pending tax credits in Spain, amounting to 62.4 million, and write-downs amounting to 26 millionin radio assets in Latin America.

PRISA's Ebitda in 2020, which fell by 66%, has been affected, in line with expectations, by the Covid-19 crisis, especially across the Media business. Specifically, the pandemic has had an estimated negative impact of € 223.1 million on revenues and € 103.6 million on Ebitda.

The Group has made enormous efforts to rein in costs, with savings of 49 million, well in excess of the 40 million envisaged in the cost-savings contingency plan, implemented by all business units and aimed at lessening the impact of Covid-19

Exchange rates have also had a negative effect of 72.2 million on revenues and of 13 million on EBITDA, due to devaluations in Mexico, Argentina and Brazil.

Net bank debt at the end of 2020 stands at 679 million, compared to 1,061 million as of December 2019, after amortization from the proceeds from the sale of Santillana Spain and Media Capital. As of December 31, 2020, the Group’s cash balance stood at 222 million and a further 143 million in restricted cash.

SUCCESS OF SUBSCRIPTION MODELS

PRISA's strategic roadmap, focused on subscription models in both Education, in Latin America, and Media, has led to magnificent results. By the end of 2020, the Education business had a total of 1,727,000 digital students, which represents an increase of 20.3% compared to the same period of the previous year. Meanwhile, EL PAÍS reported 130,500 subscribers, 84,793 of whom are exclusively digital after rolling out its subscription model at the beginning of last May. And the Radio businesses registered a monthly average of 59 million hours of streaming content (an increase of 11%) and 24 million podcast downloads (an increase of 63%).

Digital revenues have thus increased their contribution to PRISA's total revenues by 31%. Digital revenue now accounts for 30% of the group total.

EDUCATION: MARGINS OF 21%

The Education business has maintained margins of 21% in an extremely complicated environment, given that the pandemic has led to the closure of most schools with which Santillana works. Margins have been held thanks, chiefly, to savings made in personnel expenses and external services. Ebitda is 77 million, compared to 122.2 million the previous year.

Meanwhile, while revenues, in general, reported a 13.5% fall in local currency, digital revenues showed robust performance. It should be noted that digital revenues now account for 38% of the total and 54% of total private sales in Latin America. Revenue from subscription models grew 12% in local currency, reaching 137 million euros, and student numbers increased by 20.3%, totaling 1,727,000.

Subscription models have become the largest source of income for Education. Its technological platform has registered exponential growth in terms of connectivity and for the use of content since the beginning of the pandemic, and the system has proved capable of guaranteeing its customers normal school activity. By 2021, and based on contracts already signed, a growth in student numbers of more than 10% is expected, leading to a final figure of close to two million.  

Covid-19 has an estimated negative impact of 90.3 million on revenue and of 41.9 million on Ebitda. The negative impact of exchange rates on revenue was 64.2 million and of 14.7 million in terms of Ebitda.

MEDIA: LEADERSHIP AND NEW CONTENT

PRISA's Media businesses have been greatly affected by the severe impact of the pandemic on advertising markets, both in Spain and Latin America. Nevertheless, they have forged ahead with new business models, have strengthened their leads and cut costs.

PRISA Radio is the world’s largest Spanish-language radio group, with more than 21 million listeners across 11 countries. It is audience leader in Spain, Colombia and Chile. Over the past year, it saw both audience and market share grow in the chief countries where it has operations. In 2020 it was at the forefront of creating new digital audio content, multichannel distribution and product innovation, a strategy which has translated into growth in the number of hours streamed and podcast downloads, which reached a monthly average of 59 million (an increase of 11%) and 24 million (an increase of 63%), respectively.

Radio revenues last year reached 186.3 million euros, compared to 273.8 million the previous year, which represents a decrease of 29% in local currency.

Ebitda stood at 4.9 million, compared to 63.4 million the previous year. Covid-19 has had an estimated negative impact in the period of 82.3 million on revenues and of 68.1 million on Ebitda. Exchange rates had a negative effect of 7.7 million with regard to revenue and a positive impact of 0.8 million on Ebitda

PRISA Noticias has firmly committed itself to the development of content, as well as a subscription model for its flagship newspaper, EL PAÍS. As of December 31, 2020, the newspaper had 130,500 subscribers, 84,793 of whom are exclusively digital, thereby demonstrating that this is a profitable economic model with enormous potential. 30% of subscriptions are annual and 25% come from outside Spain. The number of readers registered with EL PAÍS at the end of 2020 was 3.3 million, an increase of 55% compared to a year earlier.

The effects of Covid-19 led to a decrease in advertising revenue of 23.3%, while the drop in revenue from the sale of newspapers was 18.5%.

PRISA Noticias' digital revenue accounts for 42% of the total, up by 7.8 per cent in one year. Revenues from digital advertising account for 67% of PRISA Noticias' total advertising revenue.

Negative Ebitda of 10.2 million was registered in the period, against positive Ebitda of 12.1 million during the same period the previous year. The negative impact of Covid-19 over the period was 50.6 million in terms of revenue and 42.5 million with regard to Ebitda

Digital advertising revenue now accounts for 89% of the total for AS, world leader for Spanish-language sports news.

SOCIAL COMMITMENT AND SUSTAINABILITY

One outstanding feature of PRISA's activity in 2020 has been its firm commitment to society. In a year marked by the pandemic, the Group’s Education arm has focused on virtual teacher training. What’s more, it has made every effort to guarantee normality in school activity, through the opening of its technological platforms to all its students and teachers.

The Media side of the business, meanwhile, has sought to provide ongoing, in-depth, understandable and rigorous news and information to the General public. The Group's media are keenly aware of their role as essential services, and of their duty to strictly monitor the actions of authorities and public administrations.

REFINANCING, SALES AND NEW SHAREHOLDER

PRISA closed the year with two major operations under its belt, both key to its future development: the debt refinancing agreement and the sale of the education business in Spain.

The debt refinancing agreement involves extending debt maturity until March 2025. It includes the amortization of 400 million of debt (slashing total net debt by more than 30%) and establishes a framework for a future effective separation of the Education and Media businesses.

The sale of Santillana's Spanish business to the Finnish group Sanoma was worth 465 million, which represents 9.6 times the average EBITDA registered for the educational cycles over the 2017/2019 period, and is considerably higher than the chief comparable transactions in the sector. The sale will generate a capital gain of 377 million euros.

2020 also saw the sale of Media Capital to a group of Portuguese investors for a total of 47.3 million euros.

With regard to shareholding structure, 2020 saw the entry of a new partner, with an industrial profile, after Vivendi took a 9.9% stake in PRISA's capital.