CONV68247.Pdf

2018 SHAREHOLDERS GENERAL MEETING FIRST ITEM PROPOSAL REGARDING THE FIRST ITEM OF THE AGENDA The Board of Directors of the Grupo Média Capital, SGPS, S.A., in accordance with the FIRST Item of the Agenda regarding the Directors’ Report and the individual and consolidated Financial Report for financial year 2017, and taking into account the version subject to the approval of the Shareholders’ General Meeting, which is herewith enclosed, which includes: (i) individual and consolidated Management Report; (ii) Corporate Governance Report; (iii) individual and consolidated Financial Statements, which includes individual and consolidated balance sheets, individual and consolidated statement of profit and loss, consolidated statement of comprehensive income, individual and consolidated cash flow statements and statement of changes in equity, and respective notes; (iv) Audit Committee report; (v) Sustainability report. The following resolution is proposed: Approval of the Directors’ Report and the individual and consolidated Financial Report for financial year 2017. Queluz de Baixo, 27 february 2018 The Board of Directors, Grupo Media Capital, SGPS, SA Contribuinte Nº 502 816 481 Matriculada na Conservatória do Registo Capital Social: € 89. 583.970,80 Comercial de Cascais Sociedade Aberta Sede: Tel: 21 434 59 04/ 07 Rua Mário Castelhano, Nº 40 Fax: 21 434 59 01 Queluz de Baixo 2734-502 Barcarena Annual Report 2017 Grupo Média Capital, SGPS, S.A. NOTE: Free translation for information purposes only. In the event of discrepancies, the Portuguese language version prevails INDEX Management Report 3 Television 9 Audiovisual Production 21 Radio 26 Others 30 Social Responsibility 37 Legal Provisions 49 Corporate Governance Report 53 Consolidated Accounts Individual Accounts ANNEX Statutory Audit Report of The Audit Committee 2 GRUPO MEDIA CAPITAL, SGPS, S.A. Dear Shareholders, The Board of Directors of the Grupo Media Capital, SGPS, S.A. in compliance with the legal and statutory precepts instituted, presents the Management Report and Statutory Consolidated Accounts for the year of 2017. Under the terms of number 6 of article 508 – C of the Portuguese Companies Code, the Board of Directors has decided to present a sole Management Report, in which all the required legal precepts are fulfilled. On this date, the Board of Directors also presented, separately from the Management Report and under the terms of article 508-B of the Portuguese Companies Code, consolidated non-financial information. SOLE MANAGEMENT REPORT OF THE BOARD OF DIRECTORS 2017 ACCOUNTS Grupo Média Capital, SGPS, SA Contribuinte Nº 502 816 481 Matriculada na Conservatória do Registo Capital Social: € 89.583.970,80 Comercial de Cascais sob o Nº 17831 Sociedade Aberta Sede: Tel: 21 434 59 04/ 07 Rua Mário Castelhano, Nº 40 Fax: 21 434 59 01 Queluz de Baixo | 2734-502 Barcarena INTRODUCTION The company Grupo Média Capital, SGPS, S.A. (“Company” or “Society” or “MÉDIA CAPITAL” or “Grupo Media Capital” or “Group” or “GMC”) has as its only investment, a 100% share of MEGLO – Media Global, SGPS, S.A. (“Meglo”). Through this investment the Company holds, indirectly, participations in the companies mentioned in note 4 of the Notes to the Consolidated Financial Statements on December 31, 2017. The complete designations of the companies included in this report have the due correspondence in the aforementioned notes to the financial statements, which are an integral part of the Management Report and Consolidated Financial Statements of the Company. GROUP STRUCTURE Grupo Media Capital is currently the leading media group in Portugal in terms of EBITDA and Net Income, with a strong presence in most of the segments in the media sector and in the production of audiovisual contents. Its operational structure reflects this broad business scope and is horizontal, organized into five different business units and a Shared Services Unit that centralizes all the administrative functions and serves the other Group companies in areas such as payroll, accounting, financial management, treasury, purchases and information systems, including the Group’s Holding and sub-holdings. The Group’s strategy is founded on basis of quality, independence and credibility, and on a commitment to develop information, culture and entertainment in Portugal, permanently guided by the interests and preferences of viewers, listeners, customers and advertisers. In terms of financial reporting, the structure adopted by Media Capital comprises three reporting segments: Television, Audiovisual Production and Radio. The remaining companies and business units– including Digital – are grouped in a separate reportable segment called Other. The purpose of this structure is to simplify the evaluation and visibility of the different business units where the company operates, taking into account the dimension and the existing relations and synergies between the companies of each business reportable segment. 4 ECONOMIC ENVIRONMENT After a 2.9% growth in the first half of 2017, the latest major indicators of the Portuguese economy indicate a slight deceleration during the second half of the year, registering a 2.5% increase in the third quarter. This deceleration, mostly due to a slowdown in public investment and to the negative contribution of external demand, was partially offset by domestic demand (due to an acceleration of private consumption). In the fourth quarter, the economic climate index calculated by the National Statistics Office had a small deterioration against the previous quarter. In this context, Banco de Portugal expects a 2.6% increase in GDP indicator (vs 1.5% in 2016), mainly lead by public investment and net exports. In 2017, unemployment rate reached 8.9% (vs 11.1% in 2016) whilst the inflation rate increased 1pp to 1.6%. Advertising market performance Following the recovery that begun in the last third of 2013, the Portuguese agencies advertising market (before rebates discounts) registered a 3% increase in 2017 (10% in 2014, 3% in 2015 and 5% in 2016). Regarding the segments in which the Group is present, the Television segment improved by 1% (- 1% in FTA (Free-to-Air) and +10% in pay TV), while Digital (once again) significantly improved by 15% (21% in 2016) and Radio increased 5% (8% in 2016). As for other segments, Press registered a decrease in 2017 (-19%), while Cinema decreased 8% and Outdoor recorded a 10% increase. Taking into consideration the recent economic favourable context, advertising market is expected to experience a new (but moderated) growth in 2018, albeit the extent and impact of this tendency is still unknown. 5 MAIN FACTS IN 2017 . In 2017, net income increased by 4% to € 19.8 million. Consolidated EBITDA reached € 40.1 million, decreasing 3% YoY, although the cost cutting effort (-5%). Advertising revenues were down 2% for the full year vs 2016, although there was a 3% recovery in Q4. TVI kept the leadership in TV audience share, achieving an average of 21.0% and 24.7% in all day and prime time, respectively. The gap over the second most watched channel was 3.9pp in all day and 3.1pp in prime time. TVI’s leadership in audiences was also maintained when analysing by groups of channels (TVI, TVI24, TVI Ficção and TVI Reality, in the case of TVI), with 23.8% in all day and 27.2% in prime time, i.e., respectively 3.1pp and 2.5pp above the second most watched group of channels (although TVI has a lower number of channels than its main competitor). The Television segment registered a 2% decrease in EBITDA to € 33.0 million but showed an improvement in EBITDA margin, from 23.6% to 24.2%. The Radio segment achieved an EBITDA of € 6.5 million, with a margin of 35.1%, and was up 21% vs last year’s figure. Throughout 2017, Media Capital’s radios had their best performance ever in terms of average share (36.4%, thus 1.5pp better than 2016), with the fourth audience reading (out of five) providing a new record, with a 38.6% share. Following the closing of 2017, there were no subsequent events with material relevance, other than those in line with the normal evolution of the Group's operating activity. BRIEF OVERVIEW OF THE CONSOLIDATED RESULTS In 2017, operating revenues decreased 5%, reaching € 165.5 million. Opex, excluding amortization and depreciation, was down 5%, from € 132.5 million to € 125.4 million. Consolidated EBITDA declined 3%, from € 41.5 million to € 40.1 million and EBIT stood 3% below last year’s comparable figure, reaching € 32.2 million. Net income improved by 4%, reaching € 19.8 million. Net income improved by 4%, reaching € 19.8 million. During 2017, the group recorded an investment in tangible and intangible fixed assets of € 4.0 million (vs € 6.3 million in 2016). 6 BRIEF OVERVIEW OF THE INDIVIDUAL RESULTS Grupo Média Capital SGPS, S.A. accounts are mainly a reflexion of the operational activity of its participated companies, as well as the dividend received and distributed to its shareholders. In terms of the full income statement, operational result was € 25.5 thousand (€ - 187.2 thousand in 2016), once the reduction in operational income (essentially composed by services rendered to the Group’s companies), was offset by the reduction in operating expenses (€ 5,833.9 thousand in 2016 to € 5,566.6 thousand), which occurred due to lower expenses with human resources. Financial results improved € 23.9 thousand. In turn, gains in subsidiaries, which correspond to dividends from is participated company Meglo, rose to € 18,032.1 thousand in 2017 from € 16,398.9 thousand in 2016. It is worth mentioning that during 2017 Grupo Média Capital, SGPS, S.A. distributed dividends amounting to € 17,747.8 thousand (€ 16,057.5 thousand in 2016), which corresponded to a dividend per share of € 0.21. Taxes had a positive impact in 2017 (above the impact registered in 2016), reaching € 436.0 thousand (vs € 269.1 thousand).

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