Grupo IMPRESA
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IMPRESA Annual Accounts 2016 IMPRESA – SGPS, S.A. Sociedade Aberta Capital Social Eur 84.000.000 Rua Ribeiro Sanches, 65 1200–787 Lisboa NIPC 502 437 464 Conservatória do Registo Comercial de Lisboa SINGLE MANAGEMENT REPORT 2016 In compliance with the requirements imposed by law regarding public companies, the Board of Directors of IMPRESA – Sociedade Gestora de Participações Sociais, S.A. hereby presents its SINGLE MANAGEMENT REPORT relative to the financial year of 2016. In doing so, the Board was careful to include sufficient elements and information for the shareholders and investors in general to be able to assess the activity of the IMPRESA GROUP in a clear and objective manner within the respective horizon of intervention. A. Consolidated Accounts The consolidated financial statements were prepared according to IAS/IFRS provisions, as adopted by the European Union, which include the International Accounting Standards (IAS) issued by the International Standards Committee (IASC), the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), and the respective SIC and IFRIC interpretations issued by the International Financial Reporting Interpretation Committee (IFRIC) and Standing Interpretation Committee (SIC). 1. Executive Summary · IMPRESA achieved a consolidated net profit of 2.8 M€ in 2016, corresponding to a decrease of 31.5%. In the 4th quarter of 2016, net profits rose 13.9% to 3.3 M€. · Over the course of 2016, an improvement of 38.8% in financial results was reported. · IMPRESA reached a consolidated EBITDA of 15.5 M€ in 2016, corresponding to a decrease of 31.1%. · Total revenues of the IMPRESA Group fell 10.8%, reaching 206 M€ in 2016. · IMPRESA recorded a decrease of 8.6% in operating costs in 2016, with restructuring costs of 2.6 M€. In the 4th quarter of 2016, decline of operating costs of 15.1%. · At the end of 2016, IMPRESA registered a net remunerated debt of 183.2 M€, including finance leases, corresponding to an increase of 4.4 M€. · In 2016, SIC maintained its leadership position in the main commercial target (A/BCD25/54) during prime time, amongst generalist channels, with a share of 22%. Over the whole day, SIC ended with a share of 18.0% amongst generalist channels. 2 · SIC Notícias maintained its position, once again, as the leading information channel amongst subscription channels, with an average share of 2.1% in 2016, reaching the 2nd position in the general ranking of the subscription channels. · The SIC soap opera “Coração d'Ouro”, broadcast during 2016, received the gold medal in the New York Festival, by conquering the first position in the "Soap Operas" category, and the soap opera "Mar Salgado"”, broadcasted in 2015, reached the third position. · SIC “Jornal da Noite”, led on the main commercial targets. · Expresso increased its paid circulation in 2016, continuing to stand out as leader in digital circulation revenues, having reached an average number of 21,776 buyers, among digital subscribers and sales, which represented 23% of the newspaper's total sales. · SIC was the first national television to ofer all its channels in High Definition (HD). On the day of its anniversary - on 6 October 2016, it began to broadcast all of its channels - SIC, SIC Notícias, SIC Radical, SIC Mulher, SIC Caras and SIC K in High Definition (HD), and in all domestic distributors. · In October, SIC joined the European Media Alliance, which comprises several European television stations and covers more than 250 million homes. For SIC, the European Media Alliance is an excellent platform to share knowledge, have access to new technologies and opportunities to generate new business, particularly in the digital area. · IMPRESA launched a startups accelerator in September in the Media area, with the aim of supporting and collaborating in the development of startups whose object is focused on the Media or in areas of interest to Media companies. Microsoft Portugal is the technological partner collaborating on this initiative. 3 · In September, IMPRESA was chosen as media partner of the Web Summit, one of the most important European events of technology, entrepreneurship and innovation. SIC was the official television of the event and EXPRESSO was the official newspaper. VISÃO, EXAME and EXAME INFORMÁTICA were also chosen as media partners of the event. Table 1. Main Indicators (Values in €) Dec-16 Dec-15 ch % 4rd Qt 2016 4rd Qt 2015 ch % Total Revenues 205.997.090 230.922.406 -10,8% 56.171.417 66.463.033 -15,5% Television 156.192.486 173.644.532 -10,1% 42.565.142 50.536.129 -15,8% Publishing 48.424.634 55.771.924 -13,2% 13.090.270 15.390.705 -14,9% InfoPortugal & Others 1.847.448 1.818.384 1,6% 537.000 399.980 34,3% Intersegments -467.478 -312.434 -49,6% -20.995 136.219 n.a Operating Costs 190.471.192 208.377.765 -8,6% 49.382.981 58.157.217 -15,1% EBITDA 15.525.898 22.544.641 -31,1% 6.788.436 8.305.816 -18,3% EBITDA Margin 7,5% 9,8% 12,1% 12,5% EBITDA Television 18.897.128 23.726.425 -20,4% 7.656.954 9.375.381 -18,3% EBITDA Publishing -74.600 3.628.492 n.a. -182.374 1.283.584 n.a EBITDA Infoportugal & Othe -3.296.630 -4.810.276 31,5% -686.145 -2.353.149 70,8% Net Profit 2.759.895 4.027.659 -31,5% 3.345.538 2.938.418 13,9% Net Debt & Leasings (M€) 183,2 178,8 2,5% 183,2 178,8 2,5% Note: EBITDA = Operating Results + Amortisations and Depreciation + Impairment Losses. Net Debt = Loans (ST+MLT) - Cash and Cash Equivalents + Finance Leases. (1) Does not consider Amortisations and Depreciation and Impairment Losses. Restructuring costs came to 2.63 M€ in 2016, of which 1.62 M€ were recorded in the 4th quarter of 2016. 4 2. Consolidated Accounts Analysis IMPRESA reached consolidated revenues of 206 M€ in 2016, representing a decrease of 10.8% in relation to 230.9 M€ registered in 2015. In the 4th quarter, consolidated revenues came to 56.2 M€, which represented a decline of 15.5%. The following should be noted relative to business in 2016: · 2.5% decline in total advertising revenues. A substantial rise in the Digital area was registered, along with a slight rise in the Television area, and a contraction in the publications area. · 13.8% slide in channel subscription revenues, resulting from the renegotiation of contracts in the international and domestic areas. · 7.9% decrease in publication sales, due to the general decline in copies sold. Nevertheless, in terms of total circulation, 5 of IMPRESA publications rose, and in subscription numbers increase across the portofolio. · 36.0% fall in other revenues, penalised by the decrease in alternative products, multimedia and content sales, which was not offset by the growth in other areas, such as: Infoportugal, Customer Publishing and technical services. Table 2. Total Revenues (Values in €) Dec-16 Dec-15 ch % 4rd Qt 2016 4rd Qt 2015 ch % Total Revenues 205.997.090 230.922.406 -10,8% 56.171.417 66.463.033 -15,5% Advertising 116.219.951 119.160.816 -2,5% 34.042.462 34.402.403 -1,0% Channel Subscriptions 43.488.469 50.423.742 -13,8% 10.926.146 12.581.804 -13,2% Circulation 23.019.578 25.002.256 -7,9% 5.677.291 6.237.276 -9,0% Others 23.269.092 36.335.592 -36,0% 5.525.519 13.241.550 -58,3% Operating costs in 2016, without considering amortisations and depreciation and impairment losses, registered a decrease of 8.6% in relation to 2015, with a sharper decline (15.1%) in the 4th quarter of 2016. In 2016 there was an overall decline in variable costs and fixed costs of 10.4% and 5.0%, respectively. The fall in operating costs was due to the declines in the following item’s: staff, costs related to the multimedia activity, channels distribution, content sales, marketing, publications production and programming costs. The year of 2016 continued to be marked by reorganisation measures, affecting in particular the Publishing area. Restructuring costs reached 2.6 M€, lower than 3.8 M€ registered in 2015. With the negative evolution of revenues, in spite of the good performance in terms of costs, consolidated EBITDA reached 15.5 M€ in 2016, which represented a decline of 31.1%, impacted by the 2.6 M€ of restructuring costs. Adjusted for restructuring costs, it would have reached 18.1 M€, which represents a margin of 8.8%. 5 In a year marked by a reduced volume of investment, which came to 3.9 M€, the volume of amortisation fell 8.9% in 2016 to 3.5 M€. The year of 2016 was marked by a substantial improvement in financial results, which increased by 38.8% to 7.3 M€. In the 4th quarter of 2016, financial results came to 1.3 M€, down 53.2% year-on-year. This positive evolution of financial results in 2016 was due to the following factors: · Decline in interest rates. In spite of a higher average debt balance, interest expenses fell by 1.6 M€. · A reduction of exchange rate losses of about 3.2 M€. · In the opposite direction, the results from associated companies were negative by 0.14 M€, affected by the losses generated in LUSA, in spite of the positive contribution of VASP. Table 3. Profit & Loss (Values in €) Dec-16 Dec-15 ch % 4rd Qt 2016 4rd Qt 2015 ch % Total Revenues 205.997.090 230.922.406 -10,8% 56.171.417 66.463.033 -15,5% Television 156.192.486 173.644.532 -10,1% 42.565.142 50.536.129 -15,8% Publishing 48.424.634 55.771.924 -13,2% 13.090.270 15.390.705 -14,9% InfoPortugal 1.847.448 1.818.384 1,6% 537.000 399.980 34,3% Intersegments & Outras -467.478 -312.434 -49,6% -20.995 136.219 n.a Operating Costs (1) 190.471.192 208.377.765 -8,6% 49.382.981 58.157.217 -15,1% Total EBITDA 15.525.898 22.544.641 -31,1% 6.788.436 8.305.816 -18,3% EBITDA margin 7,5% 9,8% 12,1% 12,5% Television 18.897.128 23.726.425 -20,4% 7.656.954 9.375.381 -18,3% Publishing -74.600 3.628.492 n.a -182.374 1.283.584 n.a Infoportugal & Others -3.296.630 -4.810.276 31,5% -686.145 -2.353.149 70,8% Depreciation 3.501.245 3.845.005 -8,9% 893.630 944.241 -5,4% EBIT 12.024.653 18.699.636 -35,7% 5.894.806 7.361.575 -19,9% EBIT Margin 5,8% 8,1% 10,5% 11,1% Financial Results (-) 7.332.479 11.985.074 -38,8% 1.310.649 2.800.908 -53,2% Res.