IMPRESA Annual Report 2012 IMPRESA SGPS SA Publicly Held Company Share Capital Eur 84,000,000 Rua Ribeiro Sanches, 65 Tax Number 502 437 464 Commercial Registry Office of Lisbon SINGLE MANAGEMENT REPORT 2012 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 2012. 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 in compliance with the provisions of the IAS/IFRS, 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 respective SIC and IFRIC interpretations issued by the International Financial Reporting Interpretation Committee (IFRIC) and Standing Interpretation Committee (SIC). 2 1. Executive Summary for 2012 Net Income, without restructuring costs and impairment losses, reached 1.36 M€ at the end of 2012, relative to 187,000 euros recorded in 2011. IMPRESA reached a current EBITDA of 24.3 M€ in 2012, excluding the effect of restructuring and impairment losses, down 6.7% on 2011. Net operating income was positive, in spite of a fall in revenue of 20.7 M€, due to the implementation of a stringent cost control programme that resulted in savings of 20.1 M€, excluding restructuring costs, which represents a decrease of 8.0%. The restructuring undertaken in the last quarter of 2012, which represented an investment of 4.9 M€ and focused almost fully on IMPRESA Publishing, has an estimated pay-back period of 13 months. Total revenues fell 8.3% to 229 M€, penalised by the decline in advertising revenues and publication sales, which was not offset by the growth of channel subscription and multimedia revenues. In spite of the decline in advertising revenues, IMPRESA performed better than the advertising market in general, having improved from a market share of 24.3% in December 2011 to 25.9% at the end of 2012. Net debt reached 204.1 M€ at the end of 2012, a decrease of 8.9 M€ relative to the 213 M€ in December 2011. In average terms, net debt fell 9.2 M€ in 2012. In the last 5 years, the net debt was reduced by almost 44 M€. At the end of 2012, medium to long term loans represented 70.9% of total remunerated liabilities. SIC raised its EBITDA slightly by 0.7% to 22.8 M€, in spite of an unfavourable economic scenario and a decline in turnover of 5.5 M€. SIC's EBITDA margin increased to14.4% in 2012. IMPRESA Other benefitted from the reorganisation decided in June 2011, and its EBITDA improved by 1.52 M€. In prime time, SIC was the only generalist channel to improve relative to 2011, achieving an average of 25.2%, 0.5 percentage points more than in the previous year. In the commercial targets for daytime and prime-time, SIC also led audiences with 24.0% and 28.5%, respectively. 3 Expresso, which celebrated 40 years of existence in January 2013, continued to be the most sold weekly newspaper, with paid circulation values of 98,000 copies, and ended the year with digital sales and subscriptions in excess of the 6,000 downloads of its weekly edition. These numbers mean that the Expresso newspaper is the leading publication in both digital sales and online subscriptions. In addition, the sites of the IMPRESA Group continued to grow in terms of traffic. On average, in 2012, the sites reached 19.1 million visits, an average growth of 27.5%, and 110 million pageviews. This growth was generated by transfer of publishing websites do the portal SAPO, as part of the partnership signed with PT, for the development of App’s and Interactive TV. In October 2012, IMPRESA has adopted a new management structure, which is aligned with a new integrated vision of creating, production, distribution and content sales. Table 1. IMPRESA Main Indicators IMPRESA 4th Qt 4th Qt (Values in €) Dez-12 Dez-11 ch % ch % 2012 2011 Total Revenues 229.058 249.791 -8,3% 61.886 67.174 -7,9% Television Revenues 158.650 164.136 -3,3% 43.952 45.105 -2,6% Publishing Revenues 68.659 81.594 -15,9% 17.687 21.531 -17,9% Digital Revenues 1.749 4.061 -56,9% 248 537 -53,8% EBITDA 19.495 22.271 -12,5% 7.339 10.169 -27,8% EBITDA Margin 8,5% 8,9% 11,9% 15,1% Current EBITDA 24.350 26.107 -6,7% 11.883 11.122 3,2% EBITDA Margin 10,6% 10,5% 19,2% 18,3% EBITDA Television 22.799 22.636 0,7% 11.426 11.230 1,8% EBITDA Publishing -1.093 3.363 n.a -2.505 986 n.a. EBITDA Digital -2.211 -3.728 40,7% -1.515 -2.047 26,0% Net Profits -4.894 -35.059 -86,0% -1.285 -1.004 28,0% Net Profits Adj (2) 1.357 187 627,6% 4.205 3.472 21,1% Net Debt (M€) 204 213 -4,2% 204 213 -4,2% Note: EBITDA = Operating Results + Amortisations + Depreciation + Impairment. Net Debt = Bank debt (ST+MLT) - Cash. (1) Current EBITDA is adjusted for restructuring costs, capital losses and impairment. (2) Net Income is adjusted for restructuring costs (4,9 M€) and impairment losses (2,7 M€). 4 2. Analysis of the Consolidated Accounts Table 2. Total Revenues 4th Qt 4th Qt (Values in €) Dec-12 Dec-11 ch % ch % 2012 2011 Total Revenues 229.058 249.791 -8,3% 61.886 67.174 -7,9% Advertising 117.316 133.608 -12,2% 31.861 35.786 -11,0% Channel Subscriptions 45.101 43.109 4,6% 11.296 10.428 8,3% Circulation 30.435 34.545 -11,9% 7.137 8.257 -13,6% Multimedia 19.987 16.850 18,6% 7.390 5.785 27,8% Associated Products 3.545 4.920 -27,2% 882 1.440 -38,8% Others 12.673 16.759 -24,3% 3.320 5.478 -39,9% In 2012, IMPRESA achieved consolidated revenues of 229.1 M€, corresponding to a decrease of 8.3% relative to the values recorded in 2011. During the 4th quarter, this decrease came to 7.9%. The following should be noted relative to business in 2012: IMPRESAIMPRESA ‐ ‐ Estrutura2012 Sales de Vendas Structure 2012 Decrease of 12.2% in AssociatedProdutos advertising revenues, with a general OtherOutras Multimedia AssociadosProducts reduction that affected television and 2% 5% 9% the press, but with a better PublicationsPublicações performance than the overall 13% advertising market, which declined 18% in 2012. In the 4th quarter of 2012, the Advertising 51% decline came to 11.0%. SubscriçõesChannel Publicidade 4.6% growth in revenues from 51% SubscriptionsCanais thematic and international channel 20% subscriptions, with the 4th quarter growing 8.3%. 11.9% decrease in revenues from the sale of publications, caused by the fall in copies sold and the discontinuation of various publications during 2012. 18.6% increase in multimedia revenues. Over the 4th quarter, multimedia revenues increased by 27.8%, year-on-year. 27.9% decrease in the sale of associated products, affected by the contraction in private consumption during 2012. 24.3% decrease in other revenues, affected by the sale of IMPRESA.DGSM, in spite of the increase in revenues of InfoPortugal, Customer Publishing and the Academia Olhares. Operating costs without impairments reached 209.5 M€, which represented a 7.9% decrease relative to 2011. In 2012 and 2011, operating costs included high restructuring costs, and adjusting for this item, the fall in operating costs would be 9.0%. This decrease was a result of variable costs, which fell by 7.3%, as a result of the contraction of business activity, as well as fixed costs, which fell by 7.6%, reflecting the cost contention and reorganisation efforts undertaken in 2012 and over the last few years. 5 Table 3. Profit & Loss 4th Qt 4th Qt Dec-12 Dec-11 ch % ch % (Values in €) 2012 2011 Total Revenues 229.058 249.791 -8,3% 61.886 67.174 -7,9% Television 158.650 164.136 -3,3% 43.952 45.105 -2,6% Publishing 68.659 81.594 -15,9% 17.687 21.531 -17,9% Other & Inter-Segments 1.749 4.061 -56,9% 248 537 -53,8% Operating Costs 209.563 227.521 -7,9% 54.548 57.005 -4,3% Total EBITDA 19.495 22.271 -12,5% 7.339 10.169 -27,8% EBITDA margin 8,5% 8,9% 11,9% 15,1% Current EBITDA 24.350 26.107 -6,7% 11.883 12.280 -3,2% EBITDA margin 10,6% 10,5% 19,2% 18,3% Television 22.799 22.636 0,7% 11.426 11.230 -1,8% Publishing -1.093 3.363 n.a. -2.565 986 n.a. Other & Holding -2.211 -3.728 40,7% -1.515 -2.047 26,0% Depreciation 7.117 8.174 -12,9% 1.639 1.990 -17,6% EBIT 12.378 14.097 -12,2% 5.700 8.180 -30,3% EBIT Margin 5,4% 9,4% 9,2% 12,2% Financial Results (-) 13.349 13.420 -0,5% 3.306 3.579 -7,6% Res.