Grupo Media Capital SGPS — Earnings Release 2016

Apr 29, 2016

First Quarter 2016 Results

Grupo Media Capital, SGPS, S.A.

 TVI – 12th consecutive year as #1 channel in audiences  #1 as group of channels  TVI24 – #1 Portuguese news channel in prime time  TVI Reality in the Top 10 of the pay-tv most watched channels  TVI Ficção now present in a new platform in Andorra
 "A Única Mulher" and "Santa Bárbara" lead in their respective time slots, while reaching record audience figures  New series "Massa Fresca" begins recordings  Rendering of technical services outside Portugal
 MCR – improvement in audience share  The show "Parabéns in the Night" was sold-out in every venue and a further show will take place in Olympia (Paris) Launching of Estúdio 24, a music project between TVI24  and Radio Comercial
 Launching of the apps and site "EU VI"  New partnership with the digital magazine NiT (New in Town)  Relevant increase in pageviews and videos

Prizes and awards:

• Prizes "Arco-íris", attributed by ILGA Portugal to Fátima Lopes and Susana Bento Ramos
• Prizes "Personalidade Feminina LUX": attributed to Lurdes Baeta (news), Ana Sofia (drama), Cristina Ferreira (entertainment), Alexandra Lencastre (theatre)
• Prizes "Personalidade Masculina LUX": Pedro Pinto (news) and Manuel Luís Goucha (entertainment)
• TVI24 and Rádio Comercial both nominated for the prizes Marketeer, in the categories of TV-Media and Media, respectively.

FIRST QUARTER 2016 RESULTS

Media Capital's EBITDA increased by 4% to € 5.7 million

• In the first three months of 2016, Media Capital's EBITDA improved its EBITDA by 4% YoY, reaching € 5.7 million, with operating revenues rising 3%, the same as operating expenses.
• In what regards advertising, in Q1 there was a YoY improvement of 9%.
• TVI kept the leadership in TV audiences, with an average share of 22.6% and 26.2% in all day and prime time respectively. The positive gap over the second most watched channel was 4.6pp in all day and 3.6pp in prime time. TVI leadership was also maintained when analysing groups of channels, with 26.3% in all day and 29.5% in prime time, i.e. respectively 4.4pp and 3.8pp above the second most watched group of channels.
• On financial grounds, the TV segment posted and EBITDA of € 5.2 million, comparing against € 4.6 million obtained in the comparable period of 2015.
• In turn, the Audiovisual Production segment had an EBITDA of € 0.3 million.
• The EBITDA of the Radio segment was € 0.9 million, corresponding to a margin of 22.1% and improving 61% YoY. Media Capital's aggregate group of radios had an audience share of 33.4%, 1.6pp better than the previous reading. Rádio Comercial had an audience share of 22.9%, improving 0.8pp vs the latest data of 2015.

Queluz de Baixo, 29th of April 2016

1. Consolidated P&L

€ thousand	Q1 2016	Q1 2015	% Var
Total operating revenue	39,042	37,935	3 %
Television	32,439	31,279	4 %
Audiovisual Production	11,003	9,918	11%
Radio	3,882	3,384	15%
Others	4,015	4,129	-3%
Consolidation Adjustments	(12,297)	(10,775)	-14%
Total operating expenses ex-D&A	33,311	32,416	3 %
EBITDA	5,731	5,519	4 %
EBITDA Margin	14.7%	14.5%	0.1pp
Television	5,215	4,583	14%
Audiovisual Production	303	705	-57%
Radio	857	531	61%
Others	(539)	(144)	-274%
Consolidation Adjustments	(105)	(156)	33%
Depreciation and amortisation	1,982	1,719	15%
Operating income (EBIT)	3,748	3,800	-1%
Financing Results	(1,542)	(1,125)	-37%
Profit / (Loss) before inc. tax/ no contrl. Int.	2,206	2,675	-18%
Income Taxes	(350)	(397)	12%
Profit / (Loss) from continued operations	1,856	2,278	-18%
Net profit / (loss) for the period	1,856	2,278	-18%

In the first quarter of 2016, operating revenues were up 3%, reaching € 39.0 million. Opex was up 3% as well, from € 32.4 million to € 33.3 million.

Consolidated EBITDA improved 4% from € 5.5 million to € 5.7 million.

EBIT stood 1% below last year's comparable figure, mostly due to higher depreciations in the Audiovisual Production segment.

Net income was € 1.9 million, falling 18% (€ -0.4 million), chiefly as a result of the financial results line, of which we highlight the positive impact registered in 1Q15 regarding FX differences.

€ thousand	Q1 2016	Q1 2015	% Var
Operating revenue	39,042	37,935	3 %
Advertising	25,774	23,729	9 %
Other revenues	13,268	14,206	-7%

In the first quarter of 2016, advertising revenues grew by 9% (+8% in TV, +13% in Radio and +1% in the Others segment, which includes Music and Events, the holding and shared services.

Other operating revenues, which comprise mainly the audiovisual production, multimedia and retransmission revenues, decreased by 7%, due to lower activity in the multimedia business.

2. Television

€ thousand	Q1 2016	Q1 2015	Var %
Operating revenue	32,439	31,279	4 %
Advertising	21,390	19,774	8 %
Other revenues	11,049	11,505	-4%
Operating Expenses, ex D&A	27,224	26,696	2 %
EBITDA	5,215	4,583	14%
EBITDA margin	16.1%	14.7%	1.4pp
Depreciation and amortisation	662	697	-5%
Operating income (EBIT)	4,553	3,886	17%

Considering the aggregate groups of channels of each operator, TVI (comprising TVI, TVI24, TVI Ficção and TVI Reality) achieved a share 26.3% in all day and 29.5% in prime time (20h-24h). The leadership was also maintained in the main commercial target - Adults.

All Day (%)	UNIVERSE	ADULTS
TVI Group	26.3	27.2
SIC Group	21.9	22.5
RTP Group	16.9	17.6
Prime Time (%)	UNIVERSE	ADULTS
TVI Group	29.5	30.0
SIC Group	25.7	26.4

In terms of individual channels, TVI's generalist channel confirmed yet again its #1 position, with a share of 22.6% in all day, thus 4.6pp above its closest competitor, and 8.7pp above the third most watched channel.

In 2016, TVI also ranks in the first place in the main commercial target – Adults – where it registers a share of 23.3%, i.e. 4.7pp and 8.6pp above the second and third players respectively.

In prime time, TVI also beat the competition, with a share of 26.2%, meaning 3.6pp above the number two channel (12.9pp advantage over the third one). A similar situation was achieved in the Adults target, with TVI capturing a 26.6% share, while the second and third most watched channels had 23.2% and 14.0% respectively.

During this period, TVI based its programming on local drama, entertainment, news and sports.

FINANCIAL PERFORMANCE

In what regards financial performance, operating revenues in the TV segment rose 4% YoY in the quarter.

Advertising revenues improved by 8%, due to the good performance in audiences, leading to an estimated outperformance vs the market in FTA (which is estimated to have remained broadly flat YoY, excluding the effect of elections).

Other revenues, which encompass, among other, retransmission fees and multimedia services, were down 4%, mainly due to lower revenues in multimedia and sale of contents, as these were not completely offset by the positive impact of the new deals signed up with the MEO pay-tv platform. The new contracts with MEO involve the generalist channel, TVI24 as well as the maintenance of TVI Ficção as an exclusive channel.

Opex was up 2% YoY, thus below the increase in operating revenues. Hence, EBITDA in the quarter was € 5.2 million (+14% YoY), with a margin of 16.1%.

3. Audiovisual Production

€ thousand	Q1 2016	Q1 2015	Var %
Operating revenue	11,003	9,918	11%
Advertising	0	0	0 %
Other revenues	11,003	9,918	11%
Operating Expenses, ex D&A	10,700	9,213	16%
EBITDA	303	705	-57%
EBITDA margin	2.8%	7.1%	-4.4pp
Depreciation and amortisation	759	569	33%
Operating income (EBIT)	(456)	135	N/A

The Audiovisual Production segment had total operating revenues of € 11.0 million in the quarter (+11%).

In Portugal, operating revenues were up 15% YoY, benefiting from the production of contents, which offset a slight decrease in rendering of technical services.

As for the activity in Spain, there was a decrease in activity, mostly due to the delay in a production.

Opex was up 16%, as a result of higher activity in Portugal.

EBITDA reached a positive figure of € 0.3 million, down 57% YoY, due to the lower activity in Spain.

4. Radio

€ thousand	Q1 2016	Q1 2015	Var %
Operating revenue	3,882	3,384	15%
Advertising	3,652	3,233	13%
Other revenues	230	152	51%
Operating Expenses, ex D&A	3,025	2,853	6 %
EBITDA	857	531	61%
EBITDA margin	22.1%	15.7%	6.4pp
Depreciation and amortisation	460	385	19%

The audience data continues to underline the outstanding performance of the formats explored by MCR.

In the first audience measurement available for 2016, MCR's aggregate figures show a share of 33.4% (1.6pp above the comparable reading obtained in 2015). It is worth highlighting Rádio Comercial's share of 22.9%, 0.8pp above the previous reading.

In turn, m80 – the 70's, 80's e 90's hits radio – had a share of 6.1% (+0.3pp above the comparable period and the previous reading). It is the most listened to radio station among the ones that have no nationwide network.

As for the other formats, Cidade had a share of 3.0%, 0.2pp above the previous reading.

Advertising revenues were up 13% YoY, while other operating revenues increased 51% YoY, reaching € 0.2 million (mostly due to events).

Opex was 6% over the comparable period, growing considerably below operating revenues.

EBITDA reached € 0.9 million (+61% YoY), with a relevant increase in the margin.

5. Others

minsies
EDIA CAPITAL ENTERTAINMENT MAPRODUÇÃO E EVENTOS

€ thousand	Q1 2016	Q1 2015	Var %
Operating revenue	4,015	4,129	-3%
Advertising	753	745	1 %
Other revenues	3,262	3,384	-4%
Operating Expenses, ex D&A	4,554	4,273	7 %
EBITDA	(539)	(144)	-274%
EBITDA margin	-13.4%	-3.5%	-9.9pp
Depreciation and amortisation	102	6 8	51%
Operating income (EBIT)	(641)	(212)	-203%

This segment includes the following areas: Digital, Music & Events, as well as the holding and shared services.

Despite the strong competitive environment, MCD managed to continue to improve the quality and audiences of its network of sites, with positive impact on several KPI's. In fact, in 1Q16, pageviews increased 20% while video impressions improved by 33%.

Advertising revenues were up 1% YoY, whereas other revenues were down 4% YoY.

The EBITDA of the segment was a negative € 0.5 million, which compares with € -0.1 in Q1 2015.

6. Cash Flow

€ thousand	Q1 2016	Q1 2015	Var %
Receipts	53,676	52,896	1 %
Payments	(51,465)	(47,731)	-8%
Cash flows op. activities (1)	2,212	5,164	-57%
Receipts	704	389	81%
Payments	(1,508)	(3,393)	56%
Cash flows inv. activities (2)	(804)	(3,004)	73%
Receipts	21,776	44,804	-51%
Payments	(26,942)	(47,417)	43%
Cash flows fin. activities (3)	(5,166)	(2,613)	-98%
Cash at the begining of the period	5,545	2,996	85%
Variation of cash (4) = (1) + (2) + (3)	(3,758)	(453)	-730%
Efect of FX variations	(1)	3	N/A
Cash at the end of the period	1,787	2,546	-30%

Cash flow from operating activities was € 2.2 million, comparing with € 5.2 million in the same period last year. This resulted chiefly from the increase in the activity of audiovisual production (with a time effect on cash flow). As a reminder, please note that, due to the typical seasonality of the businesses where the Group operates, the first quarter of each year is usually not a good proxy for the whole year.

Cash flow from investing activities was € -0.8 million, while last year it was € -3.0 million. The cash flow related with tangible and intangible assets stood at € -1.5 million, thus better than the € -3.4 million observed in the comparable period of 2015. This resulted from lower capex.

Cash flow from financing activities reached € -5.2 million, reflecting the movements of both

operating and investing activities, as well as the change in cash and equivalents.

7. Net Debt

€ thousands	Mar 16	Dec 15	Abs Var	% Var
Group financial debt Bank loans / Commercial paper / Bonds Other debt	113,706 113,234 472	117,768 117,160 609	(4,063) (3,926) (137)	-3% -3% -23%
Cash & equivalents	1,787	5,545	(3,759)	-68%
Net debt	111,919	112,223	(304)	0 %

Net debt decreased € 0.3 million when compared against December 2015, ending up at € 111.9 million by the end of March.

Thus Media Capital maintains a comfortable capital structure.

It is worth mentioning that leasings, in a global amount of € 0.5 million, are included in the figure above.

GRUPO MEDIA CAPITAL, S.G.P.S, S.A.

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS OF 31 MARCH 2016 AND 31 DECEMBER 2015

(Amounts stated in Euro thousand)

ASSETS	31.03.2016	31.12.2015
NON-CURRENT ASSETS:
Goodwill	152,847	153,178
Intangible assets	14,439	15,167
Tangible fixed assets	14,487	15,476
Investments in associates	1,590	1,596
Assets held for sale	5	5
Transmission rights and TV programs	56,385	53,891
Other non-current assets	3,162	3,229
Deferred income tax assets	2,843	2,832
	245,758	245,375
CURRENT ASSETS:
Transmission rights and TV programs	28,805	29,099
Inventories	9	1 3
Trade and other account receivable	40,188	39,791
Current tax assets	444	129
Other current assets	8,626	8,048
Cash and cash equivalents	1,787	5,545
	79,858	82,626
TOTAL ASSETS	325,616	328,001
EQUITY AND LIABILITIES
EQUITY:
Share capital	89,584	89,584
Reserves	46,521	29,150
Profit for the period	1,856	17,300
Equity attributable to controlling interests	137,961	136,034
Total Equity	137,961	136,034
LIABILITIES:
NON-CURRENT LIABILITIES:
Borrowings	104,950	112,197
Provisions	7,366	7,108
Deferred income tax liabilities	1,277	1,294
	113,593	120,598
CURRENT LIABILITIES:
Borrowings	8,756	5,572
Trade and other payables	37,460	38,746
Current tax liabilities	3 0	3 0
Other current liabilities	27,816	27,020
	74,062	71,368
Total liabilities TOTAL EQUITY AND LIABILITIES	187,655 325,616	191,967 328,001

GRUPO MEDIA CAPITAL, S.G.P.S, S.A.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE PERIOD ENDED 31 MARCH 2016 AND 2015

(Amounts stated in Euro thousand)

	31.03.2016	31.03.2015
OPERATING REVENUES:
Services rendered	27,930	26,292
Sales	3 9	4 6
Other operating revenue	11,073	11,598
Total operating revenue	39,042	37,935
OPERATING EXPENSES:
Cost of programs broadcasted and goods sold	(2,312)	(4,496)
Subcontrats and third party supplies	(18,728)	(17,240)
Payroll expenses	(11,612)	(10,809)
Depreciation and amortization	(1,982)	(1,719)
Provisions and impariment losses	(287)	497
Other operating expenses	(371)	(367)
Total operating expenses	(35,293)	(34,135)
Net operating profit	3,748	3,800
FINANCIAL EXPENSES:
Financial expense	(1,247)	(1,535)
Financial income	0	421
Finance costs, net	(1,247)	(1,113)
Gains (losses) on associated companies, net	(295)	(12)
	(1,542)	(1,125)
Profit before tax	2,206	2,675
Income tax expense	(350)	(397)
Consolidated net profit for continued operations	1,856	2,278
Attributable to:
Equity holders of the parent	1,856	2,278
Earnings per share (Euros)
Basic	0.0220	0.0270
Diluted	0.0220	0.0270

GRUPO MEDIA CAPITAL, SGPS, S.A.

CONDENSED CONSOLIDATED CASH FLOW STATEMENTS

FOR THE PERIOD ENDED 31 MARCH 2016 AND 2015

(Amounts stated in Euro thousand)

	31.03.2016	31.03.2015
OPERATING ACTIVITIES:
Cash receipts from customers	53,676	52,896
Cash paid to suppliers	(30,196)	(28,238)
Cash paid to employees	(10,870)	(10,595)
Cash generated from operations	12,610	14,063
Cash received/(paid) relating to income tax	(27)	(32)
Other cash received/(paid) relating to operating activities	(10,372)	(8,867)
Net cash from operating activities (1)	2,212	5,164
INVESTING ACTIVITIES:
Cash received relating to:
The sale of subsidiaries	-	52
Disposal of fixed tangible and intangible assets	704	3
Disposal of assets held for sale	-	9
Dividends	-	35
Interest and similar income	0	42
Loans granted	-	248
	704	389
Payments resulting from:
Acquisition of tangible assets	(1,234)	(3,351)
Acquisition of intangible assets	(274)	(23)
Loans granted	-	(19)
	(1,508)	(3,393)
Net cash from /(used in) investing activities (2)	(804)	(3,004)
FINANCING ACTIVITIES:
Cash received relating to:
Borrowings	21,776	44,804
Cash paid relating to:
Borrowings	(24,963)	(29,120)
Leases	(196)	(331)
Interest and other similar expenses	(1,739)	(1,995)
Dividends	-	(15,821)
Other financial expenses	(45)	(150)
Net cash from/(used in) financing activities (3)	(26,942) (5,166)	(47,417) (2,613)
Cash and equivalents at the begining of the period	5,545	2,996
Net increase in cash and cash equivalents (4) = (1) + (2) + (3)	(3,758)	(453)
Exchange rate effect	(1)	3
Cash and equivalents at the end of the period	1,787	2,546