11th Aug 2014 13:00
Grupo Clarín announces its
Results for the First Half (1H14) and Second Quarter of 2014 (2Q14)
Buenos Aires, Argentina, August 11th, 2014 - Grupo Clarín S.A. ("Grupo Clarín" or the "Company" - LSE: GCLA; BCBA: GCLA), the largest media company in Argentina, announced today its first half and second quarter results for 2014. Figures in this report have been prepared in accordance with International Financial Reporting Standards ("IFRS") as of June 30th, 2014 and are stated in Argentine Pesos, unless otherwise indicated.
Highlights (1H14 vs. 1H13):
§ Net Sales totaled Ps. 8,767.2 million, an increase of 38.2% from 1H13, mainly due to ARPU and subscriber growth in the Cable TV and Internet access segment and, to a lesser extent, to higher advertising sales in the Broadcasting and Programming segment.
§ Adjusted EBITDA (1) reached Ps. 2,223.2 million, an increase of 57.6% from 1H13, mainly driven by higher sales in the Cable and Internet access segment.
§ Grupo Clarín's Adjusted EBITDA Margin (2) for 1H14 was 25.4%, compared to 22.2% in 1H13.
§ Income for the period totaled Ps. 307.7 million, an increase of 54.8% from the Ps. 198.8 million reported in 1H13, and the Income for the period attributable to Equity Shareholders amount to Ps 186.1 million from Ps. 83.7 million, an increase of 122.4%.
FINANCIAL HIGHLIGHTS
(In millions of Ps.) | 1H14 | 1H13 | % Ch. | 2Q14 | 1Q14 | 2Q13 | QoQ | YoY |
Net Sales | 8,767.2 | 6,344.1 | 38.2% | 4,759.4 | 4,007.8 | 3,313.5 | 18.8% | 43.6% |
Adjusted EBITDA (1) | 2,223.2 | 1,410.6 | 57.6% | 1,193.1 | 1,030.1 | 713.1 | 15.8% | 67.3% |
Adjusted EBITDA Margin (2) | 25.4% | 22.2% | 14.0% | 25.1% | 25.7% | 21.5% | (2.5%) | 16.5% |
Income / (Loss) for the period | 307.7 | 198.8 | 54.8% | 349.6 | (41.9) | 103.0 | 935.2% | 239.6% |
Attributable to: | ||||||||
Equity Shareholders | 186.1 | 83.7 | 122.4% | 217.6 | (31.5) | 48.4 | 791.4% | 350.0% |
Non-Controlling Interests | 121.6 | 115.1 | 5.6% | 132.0 | (10.4) | 54.6 | 1,371.4% | 141.7% |
(1) We define Adjusted EBITDA as net sales minus cost of sales (excluding depreciation and amortization) and selling and administrative expenses (excluding depreciation and amortization). We believe that Adjusted EBITDA is a meaningful measure of our performance. It is commonly used to analyze and compare media companies on the basis of operating performance, leverage and liquidity. Nonetheless, Adjusted EBITDA is not a measure of net income or cash flow from operations and should not be considered as an alternative to net income, an indication of our financial performance, an alternative to cash flow from operating activities or a measure of liquidity. Other companies may compute Adjusted EBITDA in a different manner; therefore, Adjusted EBITDA as reported by other companies may not be comparable to Adjusted EBITDA as we report it.
(2) We define Adjusted EBITDA Margin as Adjusted EBITDA over Net Sales.
.
Net sales reached Ps.8,767.2 million, an increase of 38.2%from Ps. 6,344.1 million in 1H13 mainly due to ARPU and subscriber growth in the Cable TV and Internet access segment and, to a lesser extent, to higher sales in the Broadcasting and Programming segment.
Following is a breakdown of Net Sales by business segment:
NET SALES
(In millions of Ps.) | 1H14 | 1H13 | YoY | 2Q14 | 1Q14 | 2Q13 | QoQ | YoY |
Cable TV and Internet Access | 6,391.4 | 4,477.3 | 42.8% | 3,403.2 | 2,988.1 | 2,296.8 | 13.9% | 48.2% |
Printing and Publishing | 1,427.7 | 1,238.3 | 15.3% | 759.8 | 667.9 | 649.1 | 13.8% | 17.1% |
Broadcasting and Programming | 1,040.0 | 700.6 | 48.4% | 653.1 | 386.8 | 409.6 | 68.8% | 59.5% |
Digital Content and Others | 303.8 | 228.4 | 33.0% | 154.2 | 149.6 | 118.4 | 3.1% | 30.3% |
Subtotal | 9,162.8 | 6,644.5 | 37.9% | 4,970.4 | 4,192.4 | 3,473.9 | 18.6% | 43.1% |
Eliminations(1) | (395.7) | (300.4) | 31.7% | (211.0) | (184.6) | (160.5) | 14.3% | 31.5% |
Total | 8,767.2 | 6,344.1 | 38.2% | 4,759.4 | 4,007.8 | 3,313.5 | 18.8% | 43.6% |
(1) Eliminations include Grupo Clarín's intercompany balances and operations and also adjustments of income/loss from discontinued operations.
Cost of sales (Excluding Depreciation and Amortization) reached Ps. 4,355.9 million, an increase of 33.7% from Ps. 3,257.1 million reported for 1H13 due to higher costs in our business segments, mainly in Cable TV and Internet access and in Broadcasting and Programming segments.
Selling and Administrative Expenses(Excluding Depreciation and Amortization) reached Ps. 2,188.1 million, an increase of 30.5% from Ps. 1,676.4 million in 1H13. This increase was mainly due to higher costs in the Cable TV and Internet access and Printing and Publishing segments.
Adjusted EBITDA reached Ps.2,223.2 million, an increase of 57.6% from Ps. 1,410.6 million reported for1H13, driven by higher sales and margin expansion in the Cable TV and Internet access and Broadcasting and Programming segments; although was partially offset by a negative EBITDA in the Printing and Publishing segment.
Following is a breakdown of adjusted EBITDA by business segment:
ADJUSTED EBITDA
(In millions of Ps.) | 1H14 | 1H13 | YoY | 2Q14 | 1Q14 | 2Q13 | QoQ | YoY |
Cable TV and Internet access | 2,105.8 | 1,338.3 | 57.3% | 1,062.3 | 1,043.5 | 649.9 | 1.8% | 63.4% |
Printing and Publishing | (41.2) | 13.1 | (414.0%) | (9.5) | (31.6) | 8.6 | 69.8% | (210.6%) |
Broadcasting and Programming | 146.4 | 52.2 | 180.7% | 137.4 | 8.9 | 57.2 | 1,436.7% | 140.4% |
Digital Content and Others | 13.8 | 9.0 | 52.4% | 5.6 | 8.1 | 2.4 | (31.0%) | 130.0% |
Subtotal | 2,224.7 | 1,412.6 | 57.5% | 1,195.8 | 1,029.0 | 718.1 | 16.2% | 66.5% |
Eliminations(2) | (1.5) | (2.0) | 22.2% | (2.7) | 1.2 | (5.0) | (330.7%) | 46.5% |
Total | 2,223.2 | 1,410.6 | 57.6% | 1,193.1 | 1,030.1 | 713.1 | 15.8% | 67.3% |
(2) Adjustments of income/loss from discontinued operations.
Financial results net totaled Ps. (1,163.9) million compared to Ps. (564.8) million for 1H13. The increase was mainly due to higher interest expenses and peso depreciation during 1H14, which went from Ps 6.52 per dollar at the end of December 2013, to Ps 8.133 per dollar as of June 30th, 2014.
Equity in earnings from unconsolidated affiliates in 1H14 totaled Ps. 18.2 million, compared to Ps. (4.3) million for 1H13.
Other Income (expenses), netreached Ps.3.4 million, compared to Ps. 3.0 million in 1H13.
Income tax as of June 2014 reached Ps. (111.5) million, from Ps. (125.0) million in June 2013.
Income from Discontinued Operations, reached Ps. 6.5 million in 1H14, compared to Ps. 8.7 million for 1H13.
Income for the period totaled Ps. 307.7 million, an increase of 54.8% from Ps. 198.8 million reported for 1H13. This was mainly a consequence of higher EBITDA in the Cable TV and Internet access and Broadcasting and Programming segments, and was partially offset by a negative EBITDA in the Printing and Publishing segment and the peso depreciation. The Equity Shareholders Income for the period amounted to Ps.186.1 million, an increase of 122.4% compared with June 2013.
Cash used in acquisitions of property, plant and equipment (CAPEX) totaled Ps. 1,312.9 million in 1H14, an increase of 64.9% from Ps. 796.0 million reported for 1H13. Out of the total CAPEX in 1H14, 93.4% was allocated to the Cable TV and Internet access segment, 4.1% to Printing and Publishing segment and the remaining 2.5% to other activities. Capex in the Cable TV and Internet Access segment pertains to subscriber growth, network upgrades and digitalization.
Debt profile (1): Debt coverage ratio for the period ended June 30th, 2014 was 1.0x and the Net Debt at the end of this period totaled Ps. 3,050.9 million.
(1) Debt Coverage Ratio is defined as Total Financial Debt divided by Adjusted EBITDA (Last Quarter Annualized). Total Financial debt is defined as financial loans and debt for acquisitions, including accrued interest.
SALES BREAKDOWN BY SOURCE OF REVENUE - JUNE 2014
(In millions of Ps.) | Cable TV & Internet access | Printing & Publishing | Broadcasting & Programming | Digital Content & Others | Eliminations(1) | Total | % |
Advertising | 39.2 | 656.6 | 793.2 | 25.7 | (84.3) | 1,430.4 | 16.3% |
Circulation | - | 605.2 | - | - | (0.0) | 605.2 | 6.9% |
Printing | - | 90.5 | - | - | (28.2) | 62.3 | 0.7% |
Video Subscriptions | 4,922.1 | - | - | - | - | 4,922.1 | 56.1% |
Internet Subscriptions | 1,165.2 | - | - | - | (5.1) | 1,160.1 | 13.2% |
Programming | - | - | 211.8 | - | (68.1) | 143.6 | 1.6% |
Other Sales
| 264.8 | 75.5 | 35.0 | 278.1 | (209.8) | 443.5 | 5.1% |
Total Sales | 6,391.4 | 1,427.7 | 1,040.0 | 303.8 | (395.7) | 8,767.2 | 100.0% |
(1) Eliminations include Grupo Clarín's intercompany balances and operations and also adjustments of income/loss from discontinued operations.
SALES BREAKDOWN BY SOURCE OF REVENUE - JUNE 2013
(In millions of Ps.) | Cable TV & Internet access | Printing & Publishing | Broadcasting & Programming | Digital Content & Others | Eliminations(1) | Total | % |
Advertising | 31.7 | 542.0 | 507.9 | 27.3 | (54.3) | 1,054.6 | 16.6% |
Circulation | - | 533.8 | - | - | - | 533.8 | 8.4% |
Printing | - | 112.7 | - | - | (24.0) | 88.7 | 1.4% |
Video Subscriptions | 3,407.9 | - | - | - | - | 3,407.9 | 53.7% |
Internet Subscriptions | 896.6 | - | - | - | (3.1) | 893.5 | 14.1% |
Programming | - | - | 147.6 | - | (49.6) | 98.1 | 1.5% |
Other Sales
| 141.0 | 49.8 | 45.1 | 201.1 | (169.4) | 267.5 | 4.2% |
Total Sales | 4,477.3 | 1,238.3 | 700.6 | 228.4 | (300.4) | 6,344.1 | 100.0% |
(1) Eliminations include Grupo Clarín's intercompany balances and operations and also adjustments of income/loss from discontinued operations.
CABLE TV AND INTERNET ACCESS
Net Sales
Net sales increased by 42.8%to Ps. 6,391.4 million for 1H14 compared to Ps. 4,477.3 million for 1H13. The increase is mostly attributable to an increase in subscription charges registered during the last twelve months, and also reflects the growth in Cable, Broadband and Digital subscribers. Total Consolidated Cable TV basic subscribers reached 3,519,197 as of June 2014, compared to the 3,452,029 reported for the same date in 1H13. Internet subscribers reached 1,786,746 in June 2014, compared to the 1,616,425 of June 2013.
Cost of Sales(Excluding Depreciation and Amortization)
Cost of sales (excluding depreciation and amortization) increased by 37.5% to Ps. 2,751.6 million for June 2014, compared to Ps. 2,000.9 million in June 2013. This was mainly due to higher programming costs, salaries and network expenses and fixed assets maintenance costs.
Selling and Administrative Expenses (Excluding Depreciation and Amortization)
Selling and administrative expenses (excluding depreciation and amortization) increased by 34.8% to Ps. 1,534.0 million for 1H14, compared to Ps. 1,138.1 million reported in 1H13. This increase is driven by higher fees for services, taxes, duties and contributions, salaries and marketing expenses.
Depreciation and Amortization
Depreciation and amortization expenses increased by 27.5% to Ps. 616.8 million for 1H14 from Ps. 483.8 million reported in 1H13.
PRINTING AND PUBLISHING
Net Sales
The 15.3% increase of Net Sales to Ps. 1,427.7 million in 1H14, was the result of higher sales in advertising andcirculation, although it was partially offset by lower printing services revenues.
Cost of Sales(Excluding Depreciation and Amortization)
Cost of sales (excluding depreciation and amortization) increased by 20.0% to Ps. 949.1 million in 1H14, compared to Ps. 791.1 million in 1H13. The increase was mainly the result of higher salaries, printing costs and cost of the goods sold.
Selling and Administrative Expenses (Excluding Depreciation and Amortization)
Selling and administrative expenses (excluding depreciation and amortization) increased by 19.7% to Ps. 519.8 million in 1H14, compared to the Ps. 434.1 million reported for 1H13. This was primarily the result of higher salaries, fees for services and marketing expenses.
Depreciation and Amortization
Depreciation and amortization expenses increased by 18.2% to Ps. 29.8 million in 1H14 compared to Ps. 25.2 million in 1H13.
BROADCASTING AND PROGRAMMING
Net Sales
Net sales increased by 48.4% to Ps. 1,040.0 million in 1H14, compared to Ps. 700.6 million in 1H13. The increase was primarily the result of higher advertising sales related to Canal Trece and Radio Mitre.
Cost of Sales(Excluding Depreciation and Amortization)
Cost of sales (excluding depreciation and amortization) increased by 39.1% to Ps. 673.1 million in 1H14, compared to Ps. 483.8 million in 1H13. This is attributable mainly to higher salaries and production and programming costs.
Selling and Administrative Expenses (Excluding Depreciation and Amortization)
Selling and administrative expenses (excluding depreciation and amortization) increased by 33.9% to Ps. 220.5 million in 1H14, compared to Ps. 164.7 million in 1H13. The increase was primarily the result of higher salaries, marketing expenses and fees for services.
Depreciation and Amortization
Depreciation and amortization expenses increased by 2.2% to Ps. 14.9 million in 1H14 compared to Ps. 14.6 million reported in 1H13.
DIGITAL CONTENT AND OTHERS
Net sales in this segment are derived from administrative and corporate services rendered by the Company and by our subsidiary GC Gestión Compartida S.A. to third parties as well as to other subsidiaries of the Company (which are eliminated in the consolidation). Additionally, this segment includes the production of digital content and the organization of trade fairs and exhibitions. Cost of sales (excluding depreciation and amortization) is driven mainly by salaries and professional fees paid to advisers.
In this period, net sales increased 33.0% to Ps. 303.8, from Ps. 228.4 million reported in 1H13, due to higher sales in digital content, Gestión Compartida and higher fees at Grupo Clarín. EBITDA resulted in Ps. 13.8 million.
OPERATING STATISTICS BY BUSINESS SEGMENT
CABLE TV AND INTERNET ACCESS
1H14 | 1H13 | YoY | 2Q14 | 1Q14 | 2Q13 | QoQ | YoY | |||||||||
Homes Passed (1) | 7,511.4 | 7,455.8 | 0.7% | 7,511.4 | 7,509.5 | 7,455.8 | 0.0% | 0.7% |
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Bidirectional Homes Passed | 67.2% | 64.5% | 4.2% | 67.2% | 66.8% | 64.5% | 0.5% | 4.2% |
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Cable TV |
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Total Consolidated Subscribers (1)(3) | 3,519.2 | 3,452.0 | 1.9% | 3,519.2 | 3,486.8 | 3,452.0 | 0.9% | 1.9% |
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Subscribers - Argentina | 3,389.2 | 3,329.9 | 1.8% | 3,389.2 | 3,361.7 | 3,329.9 | 0.8% | 1.8% |
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Subscribers - International (Uruguay) | 130.0 | 122.1 | 6.5% | 130.0 | 125.1 | 122.1 | 3.9% | 6.5% |
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% over Homes Passed | 46.9% | 46.3% | 1.2% | 46.9% | 46.4% | 46.3% | 0.9% | 1.2% |
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Total Equity Subscribers(4) | 3,645.9 | 3,574.3 | 2.0% | 3,645.9 | 3,613.2 | 3,574.3 | 0.9% | 2.0% |
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Churn Rate % | 16.0% | 15.5% | 3.2% | 15.5% | 16.5% | 14.1% | (6.4%) | 9.5% |
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Digital Video |
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Digital Ready Pay TV Subs | 2,795.5 | 2,727.7 | 2.5% | 2,795.5 | 2,770.0 | 2,727.7 | 0.9% | 2.5% |
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Total Digital Decoders | 1,365.9 | 1,199.3 | 13.9% | 1,365.9 | 1,291.6 | 1,199.3 | 5.8% | 13.9% |
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Argentina | 1,204.4 | 1,068.3 | 12.7% | 1,204.4 | 1,144.2 | 1,068.3 | 5.3% | 12.7% |
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International | 161.5 | 130.9 | 23.4% | 161.5 | 147.4 | 130.9 | 9.6% | 23.4% |
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Penetration over Digital Ready TV Subs | 48.9% | 44.0% | 11.1% | 48.9% | 46.6% | 44.0% | 4.8% | 11.1% |
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Internet Subscribers |
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Total Internet Subscribers (1) | 1,786.7 | 1,616.4 | 10.5% | 1,786.7 | 1,741.0 | 1,616.4 | 2.6% | 10.5% |
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Cablemodem(1) | 1,775.9 | 1,603.0 | 10.8% | 1,775.9 | 1,729.6 | 1,603.0 | 2.7% | 10.8% |
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ADSL(1) | 5.48 | 7.3 | (24.8%) | 5.5 | 5.9 | 7.3 | (7.2%) | (24.8%) |
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Dial Up (1) | 5.4 | 6.1 | (12.2%) | 5.4 | 5.5 | 6.1 | (1.6%) | (12.2%) |
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% over Bidirectional Homes Passed | 35.4% | 33.6% | 5.3% | 35.4% | 34.8% | 33.6% | 1.6% | 5.3% |
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Total ARPU(2) | 303.8 | 217.7 | 39.6% | 323.8 | 285.4 | 223.2 | 13.5% | 45.1% |
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(1) Figures in thousands
(2) Net Sales/ Average Pay TV Subscribers
(3) Total subscribers consolidated following the same consolidation methods used in the financial statements as of each year end.
(4) Total subscribers considering the equity share in each subsidiary.
PRINTING AND PUBLISHING
1H14 | 1H13 | YoY | 2Q14 | 1Q14 | 2Q13 | QoQ | YoY | |
Circulation (1) | 283.2 | 304.9 | (7.1%) | 283.7 | 282.8 | 305.3 | 0.3% | (7.1%) |
Circulation share % (2) | 38.8% | 38.8% | 0.0% | 38.8% | 38.8% | 38.8% | (0.0%) | (0.2%) |
Advertising share %(3) | 53.9% | 51.9% | 3.7% | 53.5% | 54.3% | 51.5% | (1.6%) | 3.9% |
(1) Average number of copies according to IVC (including Diario Clarín and Olé)
(2) Share in Buenos Aires and Greater Buenos Aires Area (AMBA) Diario Clarín. Source: AGEA and IVC.
(3) Share in Buenos Aires and Greater Buenos Aires Area (AMBA) Diario Clarín. Source: Monitor de Medios Publicitarios S.A.
BROADCASTING AND PROGRAMMING
1H14 | 1H13 | YoY | 2Q14 | 1Q14 | 2Q13 | QoQ | YoY | |
Advertising Share % (1) | 35.0% | 31.6% | 10.8% | 36.8% | 31.9% | 31.3% | 15.5% | 17.6% |
Audience Share % (2) | ||||||||
Prime Time | 31.5% | 34.9% | (9.8%) | 34.3% | 28.1% | 33.9% | 21.8% | 1.0% |
Total Time | 25.4% | 27.8% | (8.4%) | 27.1% | 23.5% | 27.7% | 15.3% | (2.3%) |
(1) Company estimate, over ad spend in Ps. in broadcast TV for AMBA region.
(2) Share of broadcast TV audience according to IBOPE for AMBA. PrimeTime is defined as Monday through Friday from 8pm to 12am. Total Time is defined as Monday through Sunday from 12 pm to 12 am.
DIGITAL CONTENT AND OTHERS
1H14 | 1H13 | YoY | |
Page Views (1) | 749.3 | 696.8 | 7.5% |
Unique Visitors(1) | 41.8 | 36.6 | 14.2% |
(1)In millions. Average. Source IAB and Company Estimates.
DEBT AND LIQUIDITY
(In millions of Ps.) | June 14 | June 13 | % Change | March 14 | % Change |
Short Term and Long Term Debt | |||||
Current Financial Debt | 1,516.9 | 962.2 | 57.7% | 1,322.3 | 14.7% |
Financial loans | 289.2 | 41.7 | 593.9% | 141.0 | 105.2% |
Negotiable obligations | 715.7 | 652.1 | 9.7% | 796.7 | (10.2%) |
Accrued interest | 133.0 | 98.2 | 35.4% | 57.1 | 132.8% |
Acquisition of equipment | 129.4 | 86.5 | 49.7% | 125.6 | 3.0% |
Sellers Financing Capital | 2.4 | 1.6 | 44.1% | 3.3 | (29.1%) |
Sellers Financing accrued interest | - | - | NA | - | NA |
Related Parties Capital | 7.2 | 6.3 | 14.5% | 6.5 | 10.2% |
Related Parties accrued interest | 1.4 | 0.6 | 153.1% | -1.1 | (221.6%) |
Bank overdraft | 238.6 | 75.2 | 217.4% | 193.1 | 23.5% |
Non-Current Financial Debt | 3,257.8 | 2,465.9 | 32.1% | 3,227.0 | 1.0% |
Financial loans | 235.9 | 30.1 | 684.4% | 287.1 | (17.8%) |
Negotiable obligations | 2,800.4 | 2,330.2 | 20.2% | 2,754.6 | 1.7% |
Accrued interest | - | - | NA | - | NA |
Acquisition of equipment | 218.5 | 99.5 | 119.7% | 182.8 | 19.6% |
Sellers Financing Capital | - | - | NA | - | NA |
Sellers Financing accrued interest | - | - | NA | - | NA |
Related Parties Capital | 2.7 | 4.2 | (36.7%) | 2.4 | 12.6% |
Related accrued interest | 0.3 | 1.9 | (82.7%) | 0.2 | 86.8% |
Bank overdraft | - | - | NA | - | NA |
Total Financial Debt (A) | 4,774.7 | 3,428.1 | 39.3% | 4,549.4 | 5.0% |
Measurement at fair Value | (41.7) | (44.3) | 5.8% | (44.9) | 7.2% |
Total Short Term and Long Term Debt | 4,733.0 | 3,383.8 | 39.9% | 4,504.4 | 5.1% |
Cash and Cash Equivalents (B) | 1,723.9 | 1,166.9 | 47.7% | 1,626.6 | 6.0% |
Net Debt (A) - (B) | 3,050.9 | 2,261.2 | 34.9% | 2,922.8 | 4.4% |
Net Debt/Adjusted Ebitda (1) | 0.64x | 0.79x | (19.4%) | 0.71x | (9.9%) |
% USD Debt | 83.2% | 96.5% | (13.8%) | 85.6% | (2.9%) |
% Ar. Ps Debt | 16.8% | 3.5% | 377.4% | 14.4% | 17.3% |
Total Financial Debt(1) and Net Debt, increased from Ps. 3,428.1 million to Ps. 4,774.7 million and from Ps. 2,261.2 million to Ps. 3,050.9 million respectively. This represents an increase of 39.3% in the Total Debt and an increase of 34.9% in the Net Debt.
Debt coverage ratio (1) as of June 30th, 2014 was 0.64x in the case of Net Debt and of 1.0x in terms of Total Financial Debt.
(1) Debt Coverage Ratio is defined as Total Financial Debt divided by Adjusted EBITDA (Last Quarter Annualized). Total Financial debt is defined as financial loans and debt for acquisitions, including accrued interest.
RELEVANT MATTERS
NEW MEDIA LAW AND VOLUNTARY CONFORMING PROPOSAL
On June 30, 2014 the Company's shareholders at the General Extraordinary Shareholders' Meeting approved (i) the partial spinoff of the Company, (ii) the creation of a new sociedad anónima (a corporation with limited liability) with the equity subject to the spinoff under the name CABLEVISIÓN HOLDING S.A., which will request admission to the public offering regime, under the terms set forth in the spinoff prospectus filed by Grupo Clarín with the CNV in accordance with applicable legislation and which was published in the BCBA's Daily Bulletin and in the CNV's Financial Information Highway, (iii) the reduction of the Company's capital stock as a consequence of the partial spinoff approved, (iv) the reduction in the amount of the capital stock that is authorized for public offering and listing on the Buenos Aires Stock Exchange and the London Stock Exchange, (v) the amendment of Articles 4, 5, 16, 21 and 24 of the Company's Bylaws under the terms established in the Spinoff Prospectus, (vi) the deletion of Article 27 of the Company's current Bylaws, and (vii) the performance of the Task Force Created to Implement the Proposal as from the Extraordinary Shareholders' Meeting held on March 20, 2014 up to this date and grant such Task Force the broadest powers to consider, manage and submit to competent authorities all the required authorizations for the implementation of the Proposal.
At such Shareholders' Meeting held on June 30, 2014, the Shareholders also approved (i) the irrevocable offer received for the acquisition of Unit III under the Proposal, (ii) the irrevocable offers received for the acquisition of the assets that make up Unit V under the Proposal, (iii) the irrevocable offer for the acquisition of the shares of Telba, and (iv) the motion to adjourn the meeting until July 11, 2014 so that the Company may make a filing before AFSCA to ratify the existence of certain precedents issued in processes carried out to conform to the Audiovisual Communication Services Law in connection with the limits applicable to the registered titles of cable television signals and, if any, to consider the proposal submitted as if it had been reformulated and then submit it to the shareholders so that, with the answer from that agency, they may consider the irrevocable offers received for the sale of shares and/or assets that make up Unit IV under the Proposal and an irrevocable offer for the acquisition of the shares of Cuyo Televisión S.A. if there was one as of the date the shareholders' meeting is scheduled to resume.
On July 11, 2014, at the Shareholders' Meeting held as reconvened by the Company's shareholders to resume the meeting that had been adjourned until that date on June 30, 2014, the shareholders approved (i) the firm and irrevocable Alternative Offer of 34 South Media LLC for Unit IV under the Proposal, which was considered by the Company's Board of Directors on the same date, and instructed the Board of Directors, in the light of the response received from AFSCA, to carry out all the necessary steps to comply with the Proposal and to bring the administrative and legal actions required to best safeguard the interests of the Company and (ii) the Irrevocable Offer for the acquisition of the shares of Cuyo Televisión S.A. (which makes up Unit VI under the Proposal) owned by Diario Los Andes Hermanos Calle S.A. considered by the Company's Board of Directors on the same date.
For more information see Note 7 to THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2014.
STOCK AND MARKET INFORMATION
Grupo Clarín trades its stock in the Buenos Aires Stock Exchange (BCBA) and in the London Stock Exchange (LSE), in the form of shares and GDS's, respectively.
GCLA (BCBA) Price per Share (ARS)
| 44.00 |
GCLA (LSE) Price per GDS (USD) | 9.00 |
Total Shares | 287,418,584 |
Total GDSs | 143,709,292 |
Market Value (USD MM) | 1,293.4 |
Closing Price | August 8th, 2014 |
CONFERENCE CALL AND WEBCAST INFORMATION
Grupo Clarín will host a conference call and webcast to discuss its Second Quarter Results for 2014, on Monday, August 11th, 2014.
Time: 12:00pm Buenos Aires Time/4:00pm London Time/11:00am New York Time
Those interested in connecting via conference call are invited to please dial (0) 800-092-3582 toll free from the U.K., 1 (800) 311-9404 toll free from the U.S., (0800) 333-0050 from Argentina, or 1 (334) 323-7224 from all other countries, 5-10 minutes prior to the start time. The Conference ID is 9011.
To access the simultaneous webcast presentation, please direct your browser to:
http://www.grupoclarin.com/ir.
There will be a two week replay available starting one hour after the conclusion of the conference call. To access the replay, please dial 1 (877) 919-4059 toll free from the U.S., or 1 (334) 323-0140 from anywhere outside the U.S. The replay passcode is: 18060295.
The PDF version of the webcast presentation will be available at http://www.grupoclarin.com.ar/ir prior to the call, on August 11th, and archived in our Website after its conclusion.
ABOUT THE COMPANY
Grupo Clarín is the largest media company in Argentina and a leading company in the cable television and Internet access, printing and publishing, and broadcasting and programming markets. Its cable television network is one of the largest in Latin America in term of subscribers, and is a leading broadband provider in Argentina. Its flagship newspaper -Diario Clarín- is one of the highest circulation newspapers in Latin America. Grupo Clarín is the largest producer of media content in Argentina, including news, sports and entertainment and reaches substantially all segments of the Argentine population in terms of wealth, geography and age.
Disclaimer
Some of the information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of Grupo Clarín. You can identify forward-looking statements by terms such as "expect", "believe", "anticipate", "estimate", "intend", "will", "could", "may" or "might" the negative of such terms or other similar expressions. These statements are only predictions and actual events or results may differ materially. Grupo Clarín does not intend to or undertake any obligation to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in Grupo Clarín's projections or forward-looking statements, including, among others, general economic conditions, Grupo Clarín's competitive environment, risks associated with operating in Argentina a, rapid technological and market change, and other factors specifically related to Grupo Clarín and its operations.
GRUPO CLARÍN S.A.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2014 AND 2013,AND FOR THE THREE-MONTH PERIODS BEGINNING ON APRIL 1 AND ENDED ON JUNE 30, 2014 AND 2013
In Argentine Pesos (Ps.)
June 30, 2014 | June 30, 2013 | April 1, 2014 through June 30, 2014 | April 1, 2013 through June 30, 2013 | ||||
Continuing Operations | |||||||
Revenues | 8,767,188,302 | 6,344,125,605 | 4,759,376,858 | 3,313,469,000 | |||
Cost of Sales (1) | (4,971,042,945) | (3,743,145,787) | (2,686,184,695) | (1,967,157,439) | |||
Subtotal - Gross Profit | 3,796,145,357 | 2,600,979,818 | 2,073,192,163 | 1,346,311,561 | |||
Selling Expenses (1) | (1,110,309,382) | (843,772,463) | (604,748,377) | (446,170,356) | |||
Administrative Expenses (1) | (1,130,912,365) | (875,944,252) | (622,854,205) | (459,351,655) | |||
Other Income and Expense, net | 3,431,437 | 2,994,423 | 4,966,397 | 274,144 | |||
Financial Costs | (1,240,554,146) | (492,080,736) | (240,547,443) | (229,998,786) | |||
Other Financial Results, net | 76,680,657 | (72,727,379) | (107,070,250) | (66,425,969) | |||
Financial Results | (1,163,873,489) | (564,808,115) | (347,617,693) | (296,424,755) | |||
Equity in Earnings from Affiliates and Subsidiaries | 18,237,068 | (4,321,653) | 13,780,428 | (1,313,816) | |||
Income before Income Tax and Tax on Assets | 412,718,626 | 315,127,758 | 516,718,713 | 143,325,123 | |||
Income Tax and Tax on Assets | (111,533,152) | (124,974,873) | (164,126,032) | (47,398,380) | |||
Income for the period from continuing operations | 301,185,474 | 190,152,885 | 352,592,681 | 95,926,743 | |||
Discontinued Operations | |||||||
Net Income from Discontinued Operations | 6,535,351 | 8,690,645 | (3,017,438) | 7,025,276 | |||
Income for the period | 307,720,825 | 198,843,530 | 349,575,243 | 102,952,019 | |||
Other Comprehensive Income | |||||||
Items which may be reclassified to net income | |||||||
Variation in Translation Differences of Foreign Operations from Continuing Operations | 259,831,597 | 58,050,515 | 93,142,810 | (79,160,272) | |||
Other Comprehensive Income for the period | 259,831,597 | 58,050,515 | 93,142,810 | (79,160,272) | |||
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD | 567,552,422 | 256,894,045 | 442,718,053 | 23,791,747 | |||
Profit Attributable to: | |||||||
Shareholders of the Parent Company | 186,129,650 | 83,696,435 | 217,604,214 | 48,353,853 | |||
Non-Controlling Interests | 121,591,175 | 115,147,095 | 131,971,029 | 54,598,166 | |||
Total Comprehensive Income Attributable to: | |||||||
Shareholders of the Parent Company | 336,174,774 | 114,295,453 | 263,630,146 | 7,655,040 | |||
Non-Controlling Interests | 231,377,648 | 142,598,592 | 179,087,907 | 16,136,707 | |||
Basic and Diluted Net Income (Loss ) per Share from Continuing Operations | 0.63 | 0.26 | 0.49 | 0.15 | |||
Basic and Diluted Net Income (Loss) per Share from Discontinued Operations | 0.02 | 0.03 | 0.05 | 0.02 | |||
Basic and Diluted Net Income (Loss) per Share - Total | 0.65 | 0.29 | 0.54 | 0.17 | |||
(1) Includes amortization of intangible assets and film library, and depreciation of property, plant and equipment in the amount of Ps. 668,277,585 and
Ps. 529,340,110 for the six-month periods ended June 30, 2014 and 2013, respectively.
The Consolidated Statements of Operations for each business segment are included in the Financial Statements as of June 30th, 2014, available at http://www.grupoclarin.com/ir.
GRUPO CLARÍN S.A.
CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 2014 AND DECEMBER 31, 2013
In Argentine Pesos (Ps.)
June 30, 2014 | December 31, 2013 | ||
ASSETS | |||
NON-CURRENT ASSETS | |||
Property, Plant and Equipment | 5,829,051,322 | 5,087,330,686 | |
Intangible Assets | 387,893,056 | 455,181,212 | |
Goodwill | 2,890,833,749 | 2,876,255,652 | |
Deferred Tax Assets | 220,505,224 | 140,001,740 | |
Investments in unconsolidated affiliates | 342,212,847 | 418,620,000 | |
Other Investments | 187,919,528 | 143,313,288 | |
Inventories | 24,845,188 | 28,181,042 | |
Other Assets | 1,599,768 | 1,791,901 | |
Other Receivables | 135,921,228 | 232,328,526 | |
Trade Receivables | 125,875,054 | 129,021,518 | |
Total Non-Current Assets | 10,146,656,964 | 9,512,025,565 | |
CURRENT ASSETS | |||
Inventories | 299,050,939 | 269,203,901 | |
Other Assets | 6,464,636 | 4,990,825 | |
Other Receivables | 567,884,164 | 534,989,603 | |
Trade Receivables | 2,358,076,458 | 2,096,136,611 | |
Other Investments | 911,275,590 | 634,453,975 | |
Cash and Banks | 1,349,627,303 | 1,332,983,003 | |
Total Current Assets | 5,492,379,090 | 4,872,757,918 | |
Assets held for sale | 139,383,305 | - | |
Total Assets | 15,778,419,359 | 14,384,783,483 | |
EQUITY (as per the corresponding statement) | |||
Attributable to Shareholders of the Parent Company | |||
Shareholders' Contributions | 2,010,638,503 | 2,010,638,503 | |
Other items | 432,860,490 | 288,232,326 | |
Retained Earnings | 2,377,167,126 | 2,431,037,476 | |
Total Attributable to Shareholders of the Parent Company | 4,820,666,119 | 4,729,908,305 | |
Attributable to Non-Controlling Interests | 1,808,555,432 | 1,748,885,854 | |
Total Shareholders' Equity | 6,629,221,551 | 6,478,794,159 | |
LIABILITIES | |||
NON-CURRENT LIABILITIES | |||
Provisions and Other | 308,716,136 | 282,932,957 | |
Debt | 3,205,854,079 | 2,844,810,110 | |
Deferred Tax Liabilities | 94,798,546 | 87,867,286 | |
Taxes Payable | 102,715,290 | 108,608,440 | |
Other Liabilities | 127,951,290 | 121,900,186 | |
Trade Payables and Other | 8,283,868 | 5,344,594 | |
Total Non-Current Liabilities | 3,848,319,209 | 3,451,463,573 | |
CURRENT LIABILITIES | |||
Debt | 1,524,833,683 | 1,294,528,866 | |
Sellers Financing | 2,350,839 | 3,484,674 | |
Taxes Payable | 416,908,691 | 395,187,379 | |
Other Liabilities | 677,623,487 | 247,916,402 | |
Trade Payables and Other | 2,679,161,899 | 2,513,408,430 | |
Total Current Liabilities | 5,300,878,599 | 4,454,525,751 | |
Total Liabilities | 9,149,197,808 | 7,905,989,324 | |
Total Equity and Liabilities | 15,778,419,359 | 14,384,783,483 |
GRUPO CLARÍN S.A.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2014 AND 2013
In Argentine Pesos (Ps.)
Equity attributable to Shareholders of the Parent Company | Equity Attributable to Non-Controlling Interests | |||||||||||||||
Shareholders' Contributions | Other items | Retained Earnings | Total Equity of Controlling Interests | |||||||||||||
Capital Stock | Inflation Adjustment on Capital Stock | Additional Paid-in Capital | Subtotal | Translation of Foreign Operations | Other Reserves | Legal Reserve | Optional reserves (1) | Accumulated Results | Total Equity | |||||||
Balances as of January 1st, 2014 | 287,418,584 | 309,885,253 | 1,413,334,666 | 2,010,638,503 | 283,025,052 | 5,207,274 | 112,710,297 | 1,838,495,623 | 479,831,556 | 4,729,908,305 | 1,748,885,854 | 6,478,794,159 | ||||
Set-up of reserves (Note 10.a.) | - | - | - | - | - | - | 6,750,470 | 233,081,086 | (239,831,556) | - | - | - | ||||
Dividend Distribution (Note 10.a.) | - | - | - | - | - | - | - | - | (240,000,000) | (240,000,000) | - | (240,000,000) | ||||
Changes in Reserves for Acquisition of Investments | - | - | - | - | - | (5,416,960) | - | - | - | (5,416,960) | - | (5,416,960) | ||||
Dividends and Other Movements of Non-Controlling Interest | - | - | - | - | - | - | - | - | - | - | (171,708,070) | (171,708,070) | ||||
Income for the period | - | - | - | - | - | - | - | - | 186,129,650 | 186,129,650 | 121,591,175 | 307,720,825 | ||||
Other Comprehensive Income: | ||||||||||||||||
Variation in Translation Differences of Foreign Operations | - | - | - | - | 150,045,124 | - | - | - | - | 150,045,124 | 109,786,473 | 259,831,597 | ||||
Balances as of June 30, 2014 | 287,418,584 | 309,885,253 | 1,413,334,666 | 2,010,638,503 | 433,070,176 | (209,686) | 119,460,767 | 2,071,576,709 | 186,129,650 | 4,820,666,119 | 1,808,555,432 | 6,629,221,551 | ||||
Balances as of January 1st, 2013 | 287,418,584 | 309,885,253 | 1,413,334,666 | 2,010,638,503 | 122,978,415 | 5,207,274 | 88,652,667 | 1,381,400,655 | 481,152,598 | 4,090,030,112 | 1,374,568,933 | 5,464,599,045 | ||||
Set-up of reserves | - | - | - | - | - | - | 24,057,630 | 457,094,968 | (481,152,598) | - | - | - | ||||
Dividends and Other Movements of Non-Controlling Interest | - | - | - | - | - | - | - | - | - | - | (108,857,225) | (108,857,225) | ||||
Income for the period | - | - | - | - | - | - | - | - | 83,696,435 | 83,696,435 | 115,147,095 | 198,843,530 | ||||
Other Comprehensive Income: | ||||||||||||||||
Variation in Translation Differences of Foreign Operations | - | - | - | - | 30,599,018 | - | - | - | - | 30,599,018 | 27,451,497 | 58,050,515 | ||||
Balances as of June 30, 2013 | 287,418,584 | 309,885,253 | 1,413,334,666 | 2,010,638,503 | 153,577,433 | 5,207,274 | 112,710,297 | 1,838,495,623 | 83,696,435 | 4,204,325,565 | 1,408,310,300 | 5,612,635,865 | ||||
(1) Broken down as follows: (i) Optional reserve for future dividends of Ps. 300,000,000; (ii) Judicial reserve for future dividend distribution of Ps. 387,028,756, (iii) Optional reserve for illiquidity of results of Ps. 694,371,899 and (iv) Optional reserve to provide financial aid to subsidiaries and in connection with the Audiovisual Communication Services Law of Ps. 690,176,054.
GRUPO CLARÍN S.A.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2014 AND 2013
In Argentine Pesos (Ps.)
June 30, 2014 | June 30, 2013 | ||||||
CASH PROVIDED BY OPERATING ACTIVITIES | |||||||
Income for the period | 307,720,825 | 198,843,530 | |||||
Income Tax and Tax on Assets | 111,533,152 | 124,974,873 | |||||
Accrued Interest, net | 236,490,428 | 136,543,884 | |||||
Adjustments to reconcile net income for the period to cash provided by operating activities: | |||||||
Depreciation of Property, Plant and Equipment | 583,756,032 | 447,128,078 | |||||
Amortization of Intangible Assets and Film Library | 84,521,553 | 82,212,032 | |||||
Net of allowances | 127,151,661 | 108,156,607 | |||||
Financial Results | 801,048,871 | 265,356,571 | |||||
Equity in Earnings from Affiliates and Subsidiaries | (18,237,068) | 4,321,653 | |||||
Other Income and Expense | (2,183,467) | (379,989) | |||||
Net Income from Discontinued Operations | (6,503,457) | (8,004,574) | |||||
Changes in Assets and Liabilities: | |||||||
Trade Receivables | (351,923,879) | (146,098,127) | |||||
Other Receivables | 143,239,838 | (92,450,163) | |||||
Inventories | (32,550,707) | (9,641,107) | |||||
Other Assets | (2,451,678) | 124,198 | |||||
Trade Payables and Other | 184,064,027 | 113,263,156 | |||||
Taxes Payable | (36,874,779) | (93,688,575) | |||||
Other Liabilities | 59,651,106 | 42,229,992 | |||||
Provisions | (19,908,990) | (15,833,664) | |||||
Income Tax and Tax on Assets Payments | (143,507,986) | (208,023,895) |
| ||||
| |||||||
Net Cash Flows Provided by Operating Activities | 2,025,035,482 | 949,034,480 |
| ||||
| |||||||
CASH PROVIDED BY INVESTMENT ACTIVITIES |
| ||||||
Acquisition of Property, Plant and Equipment, net | (1,312,862,384) | (795,981,121) |
| ||||
Acquisition of Intangible Assets | (27,099,981) | (30,730,066) |
| ||||
Acquisition of Subsidiaries, Net of Cash Acquired | (2,034,875) | (2,113,981) |
| ||||
Collection of Interest | 1,943,241 | 480,375 |
| ||||
Proceeds from Sale of Property, Plant and Equipment | 2,172,217 | 35,242 |
| ||||
Dividends collected | 2,309,220 | 24,761,721 |
| ||||
Loans granted | - | (7,416,658) |
| ||||
Certificates of Deposit | (413,474,846) | (98,589) |
| ||||
Collections of Certificates of Deposit | 256,554,392 | 1,965,740 |
| ||||
| |||||||
Net Cash Flows used in Investment Activities | (1,492,493,016) | (809,097,337) |
| ||||
| |||||||
CASH PROVIDED BY FINANCING ACTIVITIES |
| ||||||
Loans | 616,910,479 | 66,126,370 |
| ||||
Repayment of Loans and Issue Expenses | (959,687,452) | (225,062,598) |
| ||||
Payment of Interest | (253,876,618) | (148,921,865) |
| ||||
Collections / (Payments) on Financial Instruments, Net | 6,722,112 | (4,680,000) |
| ||||
Dividends Paid | (15,985,307) | - |
| ||||
Partial prepayment of investments for the purchase of Notes from Subsidiaries | - | 67,182,254 |
| ||||
Reserve set-up and other | (11,428,239) | (7,516,839) |
| ||||
Payments to Non-Controlling Interests, net | (14,981,899) | (102,888,537) |
| ||||
| |||||||
Net Cash Flows used in Financing Activities | (632,326,924) | (355,761,215) |
| ||||
| |||||||
FINANCING RESULTS GENERATED BY CASH AND CASH EQUIVALENTS | 194,831,292 | 72,783,465 |
| ||||
| |||||||
Net Increase / (decrease) in cash flow | 95,046,834 |
| (143,040,607) |
| |||
Cash and Cash Equivalents at the Beginning of the Year | 1,650,463,169 |
| 1,304,735,665 |
| |||
Effect in Cash from Disposal of Businesses for Sale | (21,654,124) |
| - |
| |||
Cash and Cash Equivalents at the End of the Period | 1,723,855,879 |
| 1,161,695,058 |
| |||
| |||||||
Related Shares:
GCLA.L