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Vocento Social

VOCENTO obtains EBITDA of 13.5 million euros in 2Q13, 11.4% more than in the same period last year

  • The print version of ABC reaches positive EBITDA in a quarter for the first time since 2007
  • The digital editions of Vocento's newspapers record EBITDA of 1.3 million euros in 2Q13, double the level of the previous year
  • In the first half of 2013, the digital business (advertising and e-commerce) contributed 21.9% of revenues
  • The consolidated net result (-8.2 million euros) improves by 55.8% compared to 1H1`2 (-18.5 million euros)

Madrid, 29 July 2013.- In challenging market conditions, Vocento has been able to mitigate the impact of the economic cycle thanks its brand strategy, by changing the profile of its revenues and outperforming the sector in advertising, both in the offline market (regional titles and ABC -17.8% vs. -19.7% for the market according to i2p) and online (Digital Editions +0.8% vs. -4.1% for the market).

In 1H13, Operating Revenues were 266.7 million euros, 15.6% less than in the same period in the previous year. This reduction reflects the economic environment and Vocento's strategy of a controlled decrease in non-ordinary and unprofitable circulation, as well as the fall in advertising revenues, which were also affected by the closure of Qué! and by the transfer of the activity of ABC Punto Radio following the strategic agreement with COPE.

Internet advertising revenues and e-commerce revenues contributed 21.9% of total revenues in 1H13 (+6.0 percentage points from 1H12).

In the second quarter of the year, Vocento obtained EBITDA of 13.5 million euros, 11.4% more than in the same period last year and all areas of the business contributed positive EBITDA, except for Classifieds and Vertical Portals. In a quarter that began to feel the impact of the Efficiency Plan and recorded a decline of almost 12 million euros in advertising revenues, this performance was possible due to the reduction of comparable costs (by 15.9%) in 2Q13. In the first half of the year, comparable EBITDA was 16.2 million euros, compared to 20.8 million euros in the same period last year.

The net financial result decreased by -0.9 million euros in 1H13, partly because in 1H12 financial income of almost 3 million euros was booked following the negotiation of the put option for Las Provincias. Regularization of the tax base from previous year and other items also led to a tax expense of -1.4 million euros. The consolidated net result improved by 55.8% to -8.2 million euros from -18.5 million euros in 1H12. It should be noted that excluding the investment in restructuring and other extraordinary tax items, the net result in 2Q13 would have been positive, at over 100 thousand euros.

Vocento's financial position continues to differentiate it from the rest of the media sector. The net financial position at the end of the period was -158.6 million euros, including cash and cash equivalents and current financial assets of 32.7 million euros. Excluding the effect of the Efficiency Plan, which led to a cash exit of 16.9 million euros because of the investment made in restructuring, the financial position would have been 141.7 million euros, slightly below the level of the end of December 2012. This shows that excluding the Efficiency Plan Vocento generated positive cash flow in 1H13, thanks among other factors to its financial strategy, which is based on strict management of working capital and a close control of investments.

Results by business area

In its Print Media business, Vocento has consolidated is leadership with a 24.7% market share of ordinary circulation and 24.4% share of the advertising market. It also has a privileged position on the Internet, with around 11.4 million unique monthly users according to ComScore (June 2013).

Operating Revenues declined by 14.5% to 174.4 million euros, as a result of the decline in advertising revenues and the controlled reduction in non-ordinary circulation in order to improve profitability.

Comparable EBITDA was 13.5 million euros, down by 2.7 million euros from 1H12. Vocento was able to offset a large part of the fall in advertising (of -18.5 million euros) with cost savings that will continue over the course of this year, reflecting the positive impact of the Efficiency Plan. The 2Q13 EBITDA margin of the regional titles was stable at 16% and improved by +2.1 p.p. at ABC. On a quarterly basis, there has been a clear improvement from 1Q12 to 2Q13 as a result of the Efficiency Plan that began to take effect in 2Q13. Of the decline in EBITDA in the first half of 2.7 million euros, 2.5 million euros corresponded to the first quarter and only 0.2 million euros to the second quarter.

In addition, the increased contribution of new digital businesses and online advertising led to the digital editions of Vocento's newspapers recording positive EBITDA of 1.3 million euros in 2Q13, double the level of the previous year.

At Regional Press, the focus has been on maintaining the leadership of the newspapers both in print and online, based on improving the products while accessing new readers and increasing the share of the advertising market thanks to the roll-out of the Tarifa 3.0. strategy. In addition, new sources of revenues such as Kiosko y Más and Oferplan have been developed, and the digital business contributed 18.8% of total revenues in 1H13, up from 15.4% in 1H12.

The net margin on circulation sales also improved, and thanks to cost controls and operating savings (2.6 million euros) the comparable EBITDA margin expanded to 16% in 2Q13 from 15.6% in 2Q12.

At ABC, there continues to be a controlled reduction in non-ordinary circulation, with the corresponding improvement in the net margin on circulation. In addition, abc.es increased unique users by 39.5% and closed the gap to its main competitors. As a result, the contribution of the digital business to revenues increased from 11.4% in 1H12 to 18.3% in 1H13.

EBITDA in 2Q13 was positive (1.7 million euros) at all areas of ABC, including the print edition, where positive EBITDA (12 thousand euros, an improvement of over 500 thousand euros) was obtained in 2Q13, for the first time since 2Q07.

In the Audiovisual, business, all areas (National and Regional DTT, Radio and Content), reported positive comparable EBITDA in the second quarter. The revenue performance reflected the change of business model at Radio and a lower level of activity in the Content area. The strategic agreement with COPE and the change of supplier in the Regional DTT business enabled the Division to meet its target of positive comparable EBITDA (3.5 million euros), with a gradual recovery of profitability in loss-making businesses. It is important to note that all businesses in the area reached positive EBITDA in 2Q13, among other reasons because of the impact of the Efficiency Plan.

DTT continues to create value, with revenues of 24.9 million euros in 1H13, up 5.1%, reflecting the positive impact of the agreement with Paramount Channel. The agreement with COPE changed the business model for Radio in 2Q13, with advertising and other sales now recorded under 'other revenues.' This is the reason for the -74.2% fall in radio revenues and the positive EBITDA at radio in 2Q13.

In the Internet business, Vocento is the leader in the news category and is in the seventh position in the overall Internet ranking in Spain, with over 11 million users according to ComScore. Vocento is focused on developing new sources of digital revenues, on adapting content for new platforms and optimizing its sales strategy.

Operating Revenues were 27.9 million euros, a similar level to 1H12. This reflects growth in revenues at the Digital Editions (+11.5%), mainly because of the contribution of new sources of digital revenues, and a weaker performance at Vertical Portals and Classifieds (-12.9%) because of the impact on these businesses of the deterioration in economic conditions.

Comparable EBITDA improved by 0.9 million euros and was positive for the first half of the year, at 1.4 million euros. There was an improvement at the Local Portals (where the EBITDA margin expanded by 7.5 percentage points) and at ABC.es (+19.3 p.p.), reflecting revenue growth and the development of new digital businesses that have not resulted in significant extra central costs.