02. PRISA, a global group Annual Report 2013 ƒƒ In this regard, the risk on Pay TV revenues, which depends on the capability to offer audiovisual premium 32 contents, in particular the sports rights, and mainly soccer competitions are managed by the General Audiovisual Management. ƒƒ En relation to the risks related to the products and services adaptation, changes over the distribution channels, or technological changes, are assessed in the Digital Committee, formed by the Digital Development Managers of the Group and coordinated by PRISA’s digital area. ƒƒ Otherwise, Tax Management supervises the compliance of the Tax requirements in every of the geographic and business segment where the Group operates, and manages the potential risk of different interpretation of the laws that could be made by the Tax Authorities in each case, and the risk of recoverability of the tax assets. ƒƒ In addition the Committee of Contents coordinates the different business units that analyze business opportunities as well as joint actions. Control of financial management risks ƒƒ Financing risks The Group’s financial obligations are described in Note 12, “Financial Debt” in PRISA’s 2012 Consolidated Annual Report. At 31 December 2012 the Group’s bank borrowings amounted to 3,072 million euros. In that regard, the Group’s debt level involves certain payment obligations, interest payments and amortization of principal, as well as, derived from the financing contracts undertaken, compliance with a certain financial ratios and some operational limitations. The level of indebtness increases the vulnerability to the economic cycle and the market trends, and reduces the capability of the Group to afford new investments to adapt to the changing business environment. For the risk management described, the Group performs actions in order to reduce its financial debt, attend its financial obligations and strengthen its capital structure. In this regard during 2012 the Group has issued a share-convertible bond for the amount of 434 million euros, the dividend for the class B shares has been modified, so it can be satisfied with cash, class A shares or a combination of both, and the main PRISA shareholders had converted 75 million of warrants. Concerning the management of its short-term financial obligations, the Group envisions strictly following the maturity schedule for its financial debt, and financial ratios set forth in the financing agreements, as well as the evolution of revenues, in particular advertising and newspaper distribution revenues, due to its negative evolution and negative impact on cash flows and results, in addition to the availability of lines of credit and other means of financing that will enable it to cover its short, medium and longterm cash needs. In that regard, the Group maintains a centralized treasury management system for the Spanish subsidiaries, excluding the Pay TV subsidiaries controlled by the Treasury Account Committee that monitors the Group’s expenditures weekly, as well as making periodic consolidated financial forecasts that have the objective of optimize available resources to meet the financial needs of each business and to service the debt. Additionally the Capex Committee reviews monthly all the new investments over 30,000 euros for all business units. ƒƒ Exposure to interest rate risks The Group is exposed to interest rate fluctuations, since all of its debt with financial entities is at variable interest rates. In that regard, the Company, as far as credit facilities are available, takes out contracts to cover interest rate risk, basically by means of contracts that ensure maximum rates of interest. ƒƒ Exposure to exchange rate risks The Group is exposed to exchange rate fluctuations, basically due to financial investments in American companies, as well as income and profit from those investments. During 2012 revenue from Latin America accounted for 26.72 % of the Group’s consolidated income.
PRISA Annual Report 2013
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