Earnings Release • Mar 8, 2018
Earnings Release
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Head Office: Rua do General Norton de Matos, 68, r/c – Porto Fiscal Number 502 293 225 Share Capital: 25,641,459 Euro
The consolidated financial information of Cofina for the fourth quarter in 2017, prepared in accordance with the recognition and measurement principles of the International Financial Reporting Standards (IFRS), can be presented as follows:
| (Thousand Euro) | |||
|---|---|---|---|
| 4Q17 | 4Q16 | Var (%) | |
| Operational Revenues | 23,956 | 25,886 | -7.5% |
| Circulation | 10,785 | 11,818 | -8.7% |
| Advertising | 9,241 | 9,754 | -5.3% |
| Alternative marketing products and others | 3,930 | 4,314 | -8.9% |
| Operational Revenues by Segment | 23,956 | 25,886 | -7.5% |
| Newspapers | 20,367 | 21,213 | -4.0% |
| Magazines | 3,589 | 4,673 | -23.2% |
| Operational Costs (a) | 19,529 | 22,334 | -12.6% |
| Consolidated EBITDA (b) | 4,427 | 3,552 | 24.6% |
| EBITDA Margin | 18.5% | 13.7% | +4.8 pp |
| Newspapers | 4,129 | 3,535 | 16.8% |
| Newspapers EBITDA Margin | 20.3% | 16.7% | +3.6 pp |
| Magazines | 298 | 17 | 1652.9% |
| Magazines EBITDA Margin | 8.3% | 0.4% | +7.9 pp |
| Amortization and Depreciation (-) | 127 | 317 | -59.9% |
| EBIT | 4,300 | 3,235 | 32.9% |
| EBIT Margin | 17.9% | 12.5% | +5.5 pp |
| Net Financial income / (loss) | -355 | -2,716 | -86.9% |
| Income before taxes | 3,945 | 519 | 660.1% |
| Income taxes (-) | 427 | -273 | -256.4% |
| Net Consolidated Profit / (loss) (c) | 3,518 | 792 | 344.2% |
(a) Operational Costs excluding amortization
(b) EBITDA = earnings before interest, taxes, depreciation and amortization
(c) Net Profit / (Loss) attributable to the parent company
The fourth quarter of 2017 was characterized by the reinforcement of Cofina's restructuring process, a process that the company set off a few quarters ago, in order to not only adapt Cofina to the market environment, but also to prepare the company for the new challenges that the media market faces.
Thus, the fourth quarter of 2017 was marked by a strong expenses reduction, which compensated the decrease verified in the revenues. Hence, EBITDA reached 4.4 million Euro, which represents
an increase of 25% when compared with the same period of 2016. Also, EBITDA margin recorded an increase of 4.8 p.p., reaching 18.5%.
It should be noted that the closure of some publications, namely the magazines Vogue and Flash (last edition in December 2016), affected the comparative variations of revenues.
The consolidated net profit reached 3.5 million Euro, a considerable increase in relation to the fourth quarter of 2016.
As of 31 December 2017, Cofina's nominal net debt was 49.6 million Euro, which represents a decrease of 8 million when compared to the nominal net debt of 57.6 million Euro, recorded in the end of 2016.
The free cash flow yield (considering the market capitalization as of 31 December 2017) was about 17.4%.
Cofina will continue to invest in growth business areas which may enhance potential synergies within the existing businesses. Hence, it is important to refer that, already in March 2018, the online gaming platform www.nossaaposta.pt, 40% owned by Cofina, obtained the licence to explore the sports odd-bets, where the player bets against the explorer entity.
The above-mentioned licence is valid for three years, expiring in March 2021 if not extended, according to the terms and conditions of the Online Gaming Regulation ("Regulamento do Jogo Online" (RJO)).
A Nossa Aposta is an online gaming platform based on three principles: innovation, entertainment and social responsibility.
It should be noted that A Nossa Aposta is consolidated under the Equity Method, thus does not have any impact in the Group's operational revenues neither in the consolidated EBITDA.
Moreover, it should be mentioned the performance of "Correio da Manhã TV" channel, which has consistently beaten audience records. Thus, during 2017, CMTV recorded a 2.41% share, being the channel with the highest audience in the cable and the fourth largest Portuguese channel behind the Free to Air. At the end of 2017, CMTV celebrated a distribution agreement with Vodafone and NOWO. Thus, since 21st of December 2017, the channel is available in all the cable television platforms.
Following some key financial figures of the main business segments:
| (thousand Euro) | |||
|---|---|---|---|
| 4Q17 | 4Q16 | Var. | |
| Operational Revenues | 20,367 | 21,213 | -4.0% |
| Circulation | 9,169 | 9,640 | -4.9% |
| Advertising | 8,016 | 7,888 | 1.6% |
| Alternative marketing products and others | 3,182 | 3,685 | -13.6% |
| Operational Expenses (a) | 16,238 | 17,678 | -8.1% |
| EBITDA (b) | 4,129 | 3,535 | 16.8% |
| EBITDA margin | 20.3% | 16.7% | + 3.6 pp |
(a) Operational Costs excluding amortization
(b) EBITDA = earnings before interest, taxes, depreciation and amortization
Cofina's newspapers' segment recorded, in the fourth quarter of 2017, total revenues of approximately 20.4 million Euro, a decrease of 4% when compared to the same period of the previous year.
Revenues from circulation recorded a decrease of about 5% to 9.2 million Euro. The alternative marketing products revenues recorded a decrease of 14%, reaching 3.2 million Euro.
The advertisement revenues recorded an increase of 1.6%, amounting approximately 8 million Euro.
To point out that the importance of television in this caption is being increasing and, due to seasonal effects, it is expected that, as it occurred in 2017, the fourth quarter will continue to be the strongest in the forthcoming years.
The operational expenses recorded a decrease of about 8%. Thus, the EBITDA of the newspapers' segment reached to 4.1 million Euro, an increase of about 17% comparing to the same period of 2016. EBITDA margin amounted to 20.3%.
| (thousand Euro) | |||
|---|---|---|---|
| 4Q17 | 4Q16 | Var. | |
| Operational Revenues | 3,589 | 4,673 | -23.2% |
| Circulation | 1,616 | 2,178 | -25.8% |
| Advertising | 1,225 | 1,866 | -34.4% |
| Alternative marketing products and others | 748 | 629 | 18.9% |
| Operational Expenses (a) | 3,291 | 4,656 | -29.3% |
| EBITDA (b) | 298 | 17 | |
| EBITDA margin | 8.3% | 0.4% | + 7.9 pp |
(a) Operational Costs excluding amortization
(b) EBITDA = earnings before interest, taxes, depreciation and amortization
In the fourth quarter of 2017, total revenues of this segment reached approximately 3.6 million Euro, reflecting a decrease of about 23% over the same period of 2016.
The strong cost control reflects the strategic measure of portfolio optimisation, leading to an EBITDA of 0.3 million Euro, comparatively to an EBITDA of 17 thousand Euro in the fourth quarter of 2016.
The consolidated financial information of Cofina in 2017 can be presented as follows:
| (Thousand Euro) | |||
|---|---|---|---|
| Dec 17 | Dec 16 | Var (%) | |
| Operational Revenues | 91,058 | 99,926 | -8.9% |
| Circulation | 45,844 | 51,138 | -10.4% |
| Advertising | 31,017 | 32,965 | -5.9% |
| Alternative marketing products and others | 14,197 | 15,823 | -10.3% |
| Operational Revenues by Segment | 91,058 | 99,926 | -8.9% |
| Newspapers | 77,197 | 82,355 | -6.3% |
| Magazines | 13,861 | 17,571 | -21.1% |
| Operational Costs (a) | 77,437 | 86,414 | -10.4% |
| Consolidated EBITDA (b) | 13,621 | 13,512 | 0.8% |
| EBITDA Margin | 15.0% | 13.5% | +1.4 pp |
| Newspapers | 13,987 | 14,080 | -0.7% |
| Newspapers EBITDA Margin | 18.1% | 17.1% | +1.0 pp |
| Magazines | -366 | -568 | 35.6% |
| Magazines EBITDA Margin | -2.6% | -3.2% | +0.6 pp |
| Restructuring Costs | -2,450 | - | |
| Consolidated EBITDA after restructuring | 11,171 | 13,512 | -17.3% |
| Amortization and Depreciation (-) | 1,511 | 2,214 | -31.8% |
| EBIT | 9,660 | 11,298 | -14.5% |
| EBIT Margin | 10.6% | 11.3% | -0.7 pp |
| Net Financial income / (loss) | -2,971 | -5,202 | -42.9% |
| Income before taxes | 6,689 | 6,096 | 9.7% |
| Income taxes (-) | 1,622 | 1,763 | -8.0% |
| Net Consolidated Profit / (loss) (c) | 5,067 | 4,333 | 16.9% |
(a) Operational Costs excluding amortization
(b) EBITDA = earnings before interest, taxes, depreciation and amortization
(c) Net Profit / (Loss) attributable to the parent company
2017 financial year was characterized by a decrease of total revenues, when compared with the previous year (-8.9%), having recorded a decrease of circulation revenues (-10.4%) and in the advertising revenues (-5.9%). Revenues associated with alternative marketing products recorded a decrease of 10.3%, reaching 14.2 million Euro.
EBITDA after restructuring costs recorded in this period was 11.2 million Euro, which represents a decrease of approximately 17% over the same period.
The consolidated net income reached 5.1 million Euro, an increase of 17% when compared to 2016.
Oporto, 8 th of March 2018
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