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Vocento Social

2012 Results

Vocento maintains levels of EBITDA despite the fall in advertising

  • Market share improvements and diversification of digital revenues: Internet advertising revenues represent 16.3% of total advertising
  • Continued improvements in cos ts, which fell by 14% . Backed up by the Efficiency Plan approved in December 2012
  • Comparable EBITDA of 38 .5 million euros, at levels of 2011, despite the fall in advertising revenues in 2012 of - 48.3 million euros
  • The agreement with COPE, the closure of Qué! and the change of regional DTT supplier release negative EBITDA of 11.1 million euros
  • Results impacted by restructuring and writedown of goodwill. Comparable net result before minority interest improves from 2011
  • Vocento maintains a finan cial position that differentiates it in the media sector, in an uncertain economic cycle

Madrid, 27 de febrero de 2013.- Despite the difficult economic environment, which is having a major impact on the media sector, in 2012 Vocento outperformed its competitors. The Company is continuously looking for new levers of growth via innovation, the development of new sources of revenues and the optimisation of its sales strategy.

El mejor comportamiento que el mercado se refleja en términos operativos donde ABC es la cabecera con mejor evolución en kiosco (2012 -6,7% vs. comparables -12,6% según OJD) por el esfuerzo en mantener una difusión de calidad y rentable. Las marcas de ABC y medios regionales han registrado una mejor evolución en ingresos publicitarios que el mercado de prensa e Internet en su conjunto, tanto en su formato offline (-19,2% vs. -21,2% del mercado según i2p) como online (-4% vs. Mercado -8,1 según i2p).

The Efficiency Plan released to the market at the end of 2012 continues the Company's commitment to operating efficiency and cost discipline. As a result of all these efforts, in 2012 the Company's comparable EBITDA was maintained at similar levels to 2011, with loss-making businesses narrowing their losses and debt held at the same level.

This outperformance to the market was also seen in operational data. ABC was the best performing newspaper in kiosk sales (-6.7% in 2012 vs. -12.6% for competitors, according to OJD), reflecting the focus on high quality, profitable circulation. ABC and the regional press brands outperformed the print and Internet markets in terms of advertising in their print editions (-19.2% vs. -21. -2% for the market according to i2p) and also online (-4% vs. Market -8.1% according to i2p).

Comparable EBITDA (excluding restructuring costs of -24.2 million euros in 2012 and -24.1 million euros in 2011) was 38.5 million euros in 2012, nearly the same as in the previous year (40.7 million euros) despite a fall in advertising revenues of -48.3 million euros. ABC continued to improve comparable EBITDA despite the cycle, by 2.5 million euros.

The strategic decisions and cost reductions that Vocento has implemented in the last five years have enabled the company to absorb an accumulated fall in advertising of -158.6 million euros since 2008 and to improve comparable EBITDA by 9.2 million euros since 2008. The positive performance of comparable EBITDA is partly due to the reduction of losses at loss-making businesses (ABC, Television, Qué! and Radio), which improved their combined comparable EBITDA by 56.5 million euros in 2008-2011.

In addition, the measures taken last year to close Qué!, to reach a strategic alliance with COPE and to change supplier in regional DTT will in the future have the immediate effect of releasing -11.1 million euros of negative EBITDA in 2012. Value has also been created in the Television business model, completing the niche TV strategy by signing a new agreement with an international partner, leading to the area posting positive EBITDA of 7.5 million euros.

The net adjusted result before minority interest, excluding the impact of extraordinary items, was -3.6 million euros, a major improvement from -10.0 million euros in 2011. The extraordinary items are linked to the target of improving profitability, maintaining the Company's financial solidity and its healthy balance sheet. These impacts include restructuring costs which mostly correspond to the costs of the Efficiency Plan, which is expected to deliver savings from the second quarter of 2013. In addition, 35.6 million euros of writedowns and impairments of goodwill, fixed assets and equity stakes were recorded in 2012.

In terms of its financial position, Vocento continues to stand out from the rest of the sector. The Company ended 2012 with net debt of 142.9 million euros. This includes cash of 40.3 million euros as well as the impact of the agreement with minority shareholders in Las Provincias (12.5 million euros booked as financial debt at the end of the year). Excluding this, the net financial debt of Vocento as of 31 December 2012 would be below the levels of the end of 2011 (130.4 million euros vs. 136.0 million euros), despite the fall in advertising and the restructuring carrie dout. In addition, the Company has available to it at the corporate level unused credit lines of about 50 million euros.

Elsewhere, the strength of the brands has been reflected in successful innovations in sales and in combined offline-online actions, such as Tarifa Única 3.0, which provides advertisers with a differential level of coverage, by combining ABC with the regional press and other third party regional titles. This has led to advertising revenues outperforming the market.

Results by business area

In print media, the circulation of Vocento's titles outperformed the market. The company is focused on maintaining the leadership of its brands in their markets and on high quality, profitable circulation. The margin on ABC and regional press circulation sales, net of variable costs, improved by 9.5 million euros.

At ABC, the lower decline in kiosk sales (-6.7%) vs. peers (-12.6%) and the 0.1 euro cover price increase on weekdays carried out in 2012 has led to stable circulation revenues from kiosks, down just -1.3%. A combined analysis of the ABC Brand (the print edition, digital and printing plants) reveals a major improvement in comparable EBITDA of 2.5 million euros (and an improvement of +30.0 million euros since 2008), to negative EBITDA of 2.4 million euros despite a fall of -10.2 million euros in advertising revenues.

In the Regional Press the advertising performance of Vocento's titles outperformed its competitors, with market share of 25.1%, ahead of the second player on 15.1%.

The advertising revenues of the Regional Press outperformed the market, falling by 17.9% compared to a market contraction of 21.2% in 2012, according to i2p.

The Vocento regional press ended the period with comparable EBITDA of 33.3 million euros, and with a comparable EBITDA margin of 13.7% (vs. 12.8% in 9M12).

In audiovisual, following the strategic agreements reached in TV and Radio in 2012, Vocento has retained its options for the future of the sector by maintaining ownership of its licences, while complying with its target of profitability by reaching positive EBITDA. Last year, the business improved comparable EBITDA to 6.9 million euros. National television is creating value, with positive comparable EBITDA of 7.5 million euros.

In radio, to respond to the adverse economic and advertising environment, and to achieve profitability, in December 2012 Vocento reached a strategic alliance with the Cadena COPE, subject to approval by the Comisión Nacional de la Competencia ("CNC"), which will lead to a combined editorial approach and the defence of shared values. The agreement, under which Vocento maintains ownership of the licences, will result in the combination of the broadcasters owned by Vocento with those in the Cadena Cope network. Financial data for 2012 already include the costs of closure that have been incurred and the continued operation of the radio network, which will continue until the approval of the CNC.

On the Internet, Vocento consolidated its leadership, in the number seven position of the total audience ranking compiled by ComScore, with 11.8 million users.

Internet advertising revenues now represent 16.3% of the total, 2.8 percentage points more than in December 2011. New digital initiatives such as Oferplan.com and Kiosko y Más had a combined impact on EBITDA of more than 1.6 million euros, with no increase in central costs.