PRISA: First quarter Group results highlights

First quarter Group results highlights 

 The economic environment in Spain and Portugal continues improving….

• Economic environment improvement since 2013
• Improvement expected for 2014 and 2015 both in Spain and Portugal
• Minority consumption shows quarterly improvement from -9.9% in 1Q to 0.0% in 1Q 2014

 although advertising investment still shows fragile signs of recovery

• The advertising market in Spain fell by 10.1% in 2013, with an important quarterly improvement (from -16.8% in 1Q to -1.7% in 4Q). In 1Q 2014, the Spanish ad market fell by 1.3%
• In Spain, advertising Revenues fall by 5.9% in 1Q 2014 (-10.6% Press and -2.9% Radio)
• In Portugal, advertising Revenues grow by 3.1% in 1Q 2014

Prisa maintains the leading position in all media in which it is present 

• Press:                           #1 in generalist press in Spain with 31% share
• Radio:                           #1 in generalist and music radio in Spain, in Colomb and Chile
• Education:                     #1 in Spain, Brazil, Mexico, Argentina, Chile, Colombia; #3 in Portugal                                    
• FTA Portugal:                #1 in 24 hours and prime time
• Pay TV Spain:               #1 in 2013 and 1Q 2014 in number of subscribers

Latam activities show solid growth in local currency but negative FX impact 

• Solid growth in local currency in Education (+2.1%) and Radio (+7.6% excluding the impact of the change in consolidation perimeter)
• Negative impact from FX evolution of 40 million Euros in 1Q 2014 at Revenues and 16 million at EBITDA
• 30.3% of Group Revenues from this area (34.4% at constant currency)

PRISA continues its progress on the digital development 

• Digital advertising grows by 6.9%
• In the press division, digital advertising represents 29% of advertising revenues
• Average unique browsers to the Group’s web sites grows by +16.6%, reaching more than 90 million
• Digital education systems continue their development in Brazil, Mexico and Colombia, increasing the number of schools and pupils reached

OPEX and CAPEX control continues

• Fall in all operating expenses except football rights
• Adjusted personnel expenses fall by 11 million Euros (-8.3%)
• In 1Q new collective agreements have been signed in several Group areas
• CAPEX reduced to a minimum to cannel resources to growth areas, namely Santillana 

The Group continues with its focus on the execution of the debt reduction plan

• PRISA has signed a sale agreement for it trade publishing division (Ediciones Generales)
• In April 2014, the Group has sold 3.69% of Mediaset Spain. Funds will be destined to the purchase of debt in the secondary market
• PRISA has accepted the offer received from Telefonica for the purchase of PRISA’s 56% stake in Canal+
• Group net debt stands at 3.341 million Euros as of 31^st March 2014

Results by business division

Education

• In 1Q the campaigns in the Southern area take place: Brazil,Colombia, Costa Rica, Northern Central America, Uruguay, Chile, Bolivia, Argentina, Paraguay, Peru and Ecuador
• Latam & USA revenues in local currency grow by +2.1%: Brazil (-0.5%), Chile (+14.5%), Argentina (+14.4%), Mexico (+11.1%). Currency negatively impacts Santillana revenues in 34.8 million Euros
• In Spain the education campaign takes place in 2Q and 3Q and we are currently working in the implementation of the “new education law”
• Digital education systems (UNO) continue their development in Brazil, Mexico and Colombia
• EBITDA falls by -2.6% in local currency (-26.3% in Euros)

Radio

• Advertising in Spain falls by -2.9%
• Advertising in Latam grows in local currency in all countries. Reported results are impacted by:
  • FX has a negative impact in radio Revenues of 4,5 million Euros
  • Change in consolidation of Mexico and Costa Rica,whichare integrated through equity on the back of an international accounting law change, adopted by the EU and which impacts since January 2014

Excluding this impact, advertising revenues in Radio Latam would have grown by 10.4%

• Adjusted EBITDA in Radio reached 5.62 million Euros (+64.2%) in 1Q 2014
• Advertising in Spain falls by -2.9%
• Advertising in Latam grows in local currency in all countries. Reported results are impacted by:
  • FX has a negative impact in radio Revenues of 4,5 million Euros
  • Change in consolidation of Mexico and Costa Rica,whichare integrated through equity on the back of an international accounting law change, adopted by the EU and which impacts since January 2014

Excluding this impact, advertising revenues in Radio Latam would have grown by 10.4%

• Adjusted EBITDA in Radio reached 5.62 million Euros (+64.2%) in 1Q 2014

Press

• Printed advertising revenues fall by -17.7%
• Digital advertising revenues grow by +13.6% and already represent 29% of the division’s ad revenues. We highlight the strength of AS where digital advertising revenues already represent over 50% of the total.
• Circulation revenues fall by -15.6%
• Strong growth in other Revenues, mainly promotions
• Adjusted EBITDA in press reaches2.8 million Euros (-13.7% compared to 1Q 2013)
• Printed advertising revenues fall by -17.7%
• Digital advertising revenues grow by +13.6% and already represent 29% of the division’s ad revenues. We highlight the strength of AS where digital advertising revenues already represent over 50% of the total.
• Circulation revenues fall by -15.6%
• Strong growth in other Revenues, mainly promotions
• Adjusted EBITDA in press reaches2.8 million Euros (-13.7% compared to 1Q 2013)

Media Capital

• Advertising Revenues increase by +5.3% in 1T 2014
• Operating expenses fall by -4.4% in the period
• Adjusted EBITDA reaches 5.64 million Euros and grows by +42.5 % on the back of the stability of Revenues and a strong effort in cost control

Canal+

• Revenues reach in 1Q 2014 292.58 million Euros (-2.7%)
• Net adds in satellite subs increase in 1Q by 10,975
• Canal+ maintains its leadership in the market with a share of 43.2%
• Satellite ARPU stands at 43.5 Euros on average in 1Q (43.1 Euros in 1Q 2013)
• Adjusted EBITDA reaches 0.62 million Euros versus 15.98 million euros in 1Q2013 

Consolidated P&L

The comparison of the results of the first quarter of 2014 and 2013 is affected by extraordinary items recorded under both revenues, expenses, amortizations & provisions. To conduct a homogeneous comparison, we are presenting a profit and loss account adjusting these extraordinary items.

PRISA reaches in the first quarter of 2014 an adjusted EBITDA of 58.5 million Euros 

Excluding the impact of Canal+ and the evolution of Exchange rates:

• Revenues would have remained flat (+0.1%)
• Adjusted EBITDA grows by +9.9% reaching 73.50 million Euros
• EBITDA margin grows from 17.7% to 19.4%
• EBIT margin grows from 9.3% to 10.7%