Cofina SGPS

Earnings Release • Oct 30, 2015

COFINA, SGPS, S.A.

Public Company

Head Office: Rua do General Norton de Matos, 68, r/c – Porto Fiscal Number 502 293 225 Share Capital: 25,641,459 Euro

3rd quarter '15 FINANCIAL INFORMATION (not audited)

This document is a translation of a document originally issued in Portuguese, prepared using accounting policies consistent with the International Financial Reporting Standards and with accordance with the International Accounting Standard 34 – Interim Financial Reporting, some of which may not conform or be required by generally accepted accounting principles in other countries. In the event of discrepancies, the Portuguese language version prevails.

The consolidated financial information of Cofina for the 3rd quarter of 2015, prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards (IFRS), can be presented as follows:

(amounts in thousand Euro)	3Q 2015	3Q 2014	Var (%)
Operating income	25,368	26,948	3Q15/3Q14 -5.9%
Circulation	14,741	14,891	-1.0%
Advertising	7,772	8,356	-7.0%
Alternative marketing products and others	2,855	3,701	-22.9%
Operating income by segments	25,368	26,948	-5.9%
Newspapers	20,279	21,117	-4.0%
Magazines	5,089	5,831	-12.7%
Operating expenses (a)	21,478	23,099	-7.0%
Consolidated EBITDA (b)	3,890	3,849	1.1%
EBITDA margin	15.3%	14.3%	+1.1 p.p.
Newspapers EBITDA	3,711	3,376	9.9%
Newspapers EBITDA margin	18.3%	16.0%	+2.3 p.p.
Magazines EBITDA	179	473	-
Magazines EBITDA margin	3.5%	8.1%	-4.6 p.p.
Amortisation and depreciation (-)	721	741	-2.7%
EBIT	3,169	3,108	2.0%
EBIT margin	12.5%	11.5%	+1.0 pp
Net financial income	(740)	(840)	-
Income before taxes and non-controlling interests	2,429	2,268	7.1%
Income taxes	914	698	30.9%
Non-controlling interests	-	34	-100.0%
Net consolidated profit / loss (c)	1,515	1,536	-1.4%

(a) Operating expenses excluding amortisation

(b) EBITDA = earnings before interest, taxes, amortisation and depreciation

(c) Net profit / (loss) attributable to the parent company shareholders

The third quarter of 2015 was characterized by a decrease of revenue, with special focus on the decline in advertising revenue, which was less than the decrease of costs. In absolute terms, revenues decreased by 1.58 million Euro, while costs were reduced by approximately 1.61 million Euro. Thus, in the third quarter of 2015, EBITDA registered an increase of 1.1%, reaching 3.9 million Euro.

Advertising revenue reached 7.8 million Euro which represents a decrease of 7%. Circulation revenue recorded a slight decline (-1%), to 14.7 million Euro. Revenue from alternative marketing products and other amounted to 2.9 million Euro recording a decrease of 23%.

Profit before tax registered a growth of 7%, reaching 2.4 million Euro. Net profit reached 1.5 million Euro.

Newspapers Segment

(amounts in thousand Euro)	3Q 2015	3Q 2014	Var (%) 3Q15/3Q14
Consolidated operating income	20,279	21,117	-4.0%
Circulation	11,743	11,398	3.0%
Advertising	6,185	6,492	-4.7%
Alternative marketing products and others	2,351	3,227	-27.1%
Operating expenses (a)	16,568	17,741	-6.6%
Consolidated EBITDA (b)	3,711	3,376	9.9%
EBITDA margin	18.3%	16.0%	+2.3 p.p.

(a) Operating expenses excluding amortisation

(b) EBITDA = earnings before interest, taxes, amortisation and depreciation

The newspapers segment of Cofina recorded, in the third quarter of 2015, total revenues of 20.3 million Euro, which represents a decrease of 4% when compared with the last year's homologous period. The advertising income recorded a decrease of 5% reaching 6.2 million Euro and revenue related to alternative marketing products and others recorded a decrease of 27%, reaching approximately 2.4 million Euro.

Circulation revenue increased 3% reaching 11.7 million Euro.

The implemented policies of control and rationalization of costs led to a cost decrease of 1.2 million Euro (-6.6%) reaching 16.6 million Euro.

Therefore, the newspapers segment EBITDA reached in the quarter under analysis amounted to approximately 3.7 million Euro, which represents an increase of approximately 10%, when compared with the last year´s homologous period. EBITDA margin amounted to 18.3% which represents an increase of 2.3 percentage points when compared with the third quarter of 2014.

Magazines Segment

Total income from this segment reached approximately 5.1 million Euro reflecting a decrease of 13% when compared with the homologous period of 2014.

	3Q 2015	3Q 2014	Var (%)
(amounts in thousand Euro)			3Q15/3Q14
Consolidated operating income	5,089	5,831	-12.7%
Circulation	2,998	3,493	-14.2%
Advertising	1,587	1,865	-14.9%
Alternative marketing products and others	504	473	6.6%
Operating expenses (a)	4,910	5,358	-8.4%
Consolidated EBITDA (b)	179	473	-
EBITDA margin	3.5%	8.1%	-4.6 p.p.

(a) Operating expenses excluding amortisation

(b) EBITDA = earnings before interest, taxes, amortisation and depreciation

Circulation income recorded a decrease of 14%, having reached approximately 3 million Euro, whilst the advertising revenue decreased 15% to 1.6 million Euro. Revenue related to alternative marketing products reached approximately 0.5 million Euro, having increased 6.6%.

Therefore, EBITDA recorded in the magazines segment, in the third quarter of 2015, was 179 thousand Euro, compared to an EBITDA of 473 thousand Euro recorded in the third quarter of 2014.

Accumulated results as of September 2015

(amounts in thousand Euro)	9M 2015	9M 2014	Var (%) 9M15/9M14
Operating Income	75,365	78,355	-3.8%
Circulation	40,637	41,123	-1.2%
Advertising	24,126	26,551	-9.1%
Alternative marketing products and others	10,602	10,681	-0.7%
Operating income by segments	75,365	78,355	-3.8%
Newspapers	60,601	62,827	-3.5%
Magazines	14,764	15,528	-4.9%
Operating expenses (a)	64,619	67,357	-4.1%
Consolidated EBITDA (b)	10,746	10,998	-2.3%
EBITDA margin	14.3%	14.0%	+0.2 p.p.
Newspapers EBITDA	10,982	10,785	1.8%
Newspapers EBITDA margin	18.1%	17.2%	+1.0 p.p.
Magazines EBITDA	-236	213	-
Magazines EBITDA margin	-1.6%	1.4%	-3.0 p.p.
Amortizações Correntes (-)	2,163	2,221	-2.6%
EBIT	8,583	8,777	-2.2%
EBIT margin	11.4%	11.2%	+0.2 pp
Net financial income	(2,756)	(3,168)	-13.0%
Income before taxes and non-controlling interests	5,827	5,609	3.9%
Income taxes	2,009	851	136.1%
Non-controlling interests	-	55	-
Net consolidated profit / loss (c)	3,818	4,703	-18.8%

(a) Operating expenses excluding amortisation

(b) EBITDA = earnings before interest, taxes, amortisation and depreciation

(c) Net profit / (loss) attributable to the parent company shareholders

The accumulated profit for the first 9 months of 2015 was characterized by a decrease of revenue, with special focus on the decline in advertising revenue. Thus, in the period under analysis, EBITDA decreased 2% reaching 10.7 million Euro.

Net profit reached 3.8 million Euro.

As of September 30th, 2015 the nominal net debt of Cofina amounted 64.2 million Euro which corresponds to a decrease of 2.4 million Euro in relation to the net debt recorded on June 30th, 2015.

Oporto, October 30th, 2015 The Board of Directors

COFINA, S.G.P.S., S.A.

FOR THE NINE AND THREE MONTHS PERIODS ENDED SEPTEMBER 30, 2015 AND 2014 CONSOLIDATED STATEMENTS OF PROFIT AND LOSS BY NATURES

(Translation of financial statements originally issued in Portuguese) (Amounts expressed in Euro)

			3rd quarter	3rd quarter
	30.09.2015	30.09.2014	2015	2014
Sales	40,636,708	41,122,706	14,740,619	14,890,808
Services rendered	24,125,836	26,551,216	7,771,827	8,356,604
Other operating income	10,602,537	10,681,225	2,855,123	3,700,789
Cost of sales	(9,772,580)	(11,109,608)	(3,399,587)	(3,880,089)
External supplies and services	(29,775,923)	(31,496,232)	(9,391,932)	(11,054,058)
Payroll expenses	(24,475,772)	(23,909,343)	(8,446,719)	(7,855,254)
Amortisation and depreciation	(2,163,063)	(2,220,877)	(720,754)	(740,720)
Provisions and impairment losses	(356,531)	(546,528)	(162,241)	(199,077)
Other operating expenses	(238,435)	(295,263)	(77,657)	(111,005)
Financial expenses	(2,757,661)	(3,687,647)	(739,241)	(1,145,520)
Financial income	2,101	519,394	-	305,427
Profit / loss before income tax	5,827,217	5,609,043	2,429,438	2,267,905
Income tax	(2,009,534)	(850,353)	(914,535)	(697,431)
Net consolidated profit / (loss) for the per	3,817,683	4,758,690	1,514,903	1,570,474
Attributable to:
Shareholders of the parent company	3,817,683	4,703,263	1,514,903	1,536,390
Non-controlling interests	-	55,427	-	34,084

COFINA, S.G.P.S., S.A.

CONSOLIDATED STATEMENTS OF FINANCIAL INFORMATION FOR THE PERIODS ENDED

SEPTERMBER 30, 2015 AND DECEMBER 31, 2014

(Translation of financial statements originally issued in Portuguese)

(Amounts expressed in Euro)

ASSETS	30.09.2015	31.12.2014
NON CURRENT ASSETS
Tangible assets	4,908,502	5,883,466
Goodw ill	88,730,854	89,316,685
Intangible assets	231,045	489,077
Investments in associated companies	2,902,006	3,860,407
Investments held for sale	9,080	29,498
Investments recorded at fair value through profit and loss	13,574	5,482
Other non current debtors	350,000	350,000
Deferred tax assets	1,482,641	2,578,268
Total non current assets	98,627,702	102,512,883
CURRENT ASSETS
Inventories	1,456,399	1,872,891
Customers	8,551,437	9,088,161
State and other public entities	1,071,419	945,464
Other current debtors	1,638,746	312,548
Other current assets	9,284,758	7,115,217
Cash and cash equivalents	3,784,999	12,658,992
Total current assets	25,787,758	31,993,273
TOTAL ASSETS	124,415,460	134,506,156
EQUITY AND LIABILITIES
SHAREHOLDERS' FUNDS
Share capital	25,641,459	25,641,459
Share premium account	15,874,835	15,874,835
Legal reserve	5,409,144	5,409,144
Other reserves	(29,425,374)	(32,913,647)
Consolidated net profit/(loss) for the period attributable to the parent company	3,817,683	6,173,887
Equity attributable to equity holder of the parent company	21,317,747	20,185,678
Non controlling interests	-	90,981
TOTAL EQUITY	21,317,747	20,276,659
LIABILITIES
NON CURRENT LIABILITIES
Other loans	48,965,501	49,274,676
Other non current creditors	45,080	45,080
Provisions	10,695,265	10,320,480
Total non current liabilities	59,705,846	59,640,236
CURRENT LIABILITIES
Bank loans	-	4,732,462
Other loans	17,922,295	23,496,752
Suppliers	9,670,799	9,158,181
State and other public entities	3,671,466	3,065,338
Other current creditors	4,195,206	5,346,958
Other current liabilities	7,932,101	8,789,570
Total current liabilities	43,391,867	54,589,261
TOTAL LIABILITIES	103,097,713 124,415,460	114,229,497 134,506,156
TOTAL EQUITY AND LIABILITIES