COFINA : SGPS, S.A. announces 3Q2017 results

COFINA, SGPS, S.A.

Public Company

Head Office: Rua do General Norton de Matos, 68, r/c - Oporto Fiscal Number 502 293 225

Share Capital: 25,641,459 Euro

Financial Information - 3rd Quarter of 2017 (Unaudited)

This document is a translation of a document originally issued in Portuguese, prepared using accounting policies consistent with the International Financial Reporting Standards and in accordance with the International Accounting Standard 34 - Interim Financial Reporting, some of which may not conform or be required by generally accepted accounting principles in other countries. In the event of discrepancies, the Portuguese language version prevails.

The consolidated financial information of Cofina for the third quarter of 2017, prepared in accordance with the recognition and measurement principles of the International Financial Reporting Standards (IFRS), can be presented as follows:

(Thousand Euro)	3Q17	3Q16	Var (%)
Operational Revenues Circulation Advertising Alternative marketing products and others Operational Revenues by Segment Newspapers Magazines	23,111	25,569	-9.6%
	12,249	13,991	-12.5%
	7,322	8,064	-9.2%
	3,540	3,514	0.7%
	23,111	25,569	-9.6%
	19,713	21,237	-7.2%
	3,398	4,332	-21.6%
Operational Costs (a)	19,540	22,050	-11.4%
Consolidated EBITDA (b)	3,571	3,519	1.5%
EBITDA Margin	15.5%	13.8%	1.2%
Newspapers	3,572	3,529
Newspapers EBITDA Margin	18.1%	16.6%
Magazines	-1	-10	-90.0%
Magazines EBITDA Margin	0.0%	-0.2%
Restructuring Costs	-450	0
Consolidated EBITDA after restructuring	3,121	3,519	-11.3%
Amortization and Depreciation (-)	461	632	-27.1%
EBIT	2,660	2,887	-7.9%
EBIT Margin	11.5%	11.3%
Net Financial income / (loss)	-1,134	-898	26.3%
Income before taxes	1,526	1,989	-23.3%
Income taxes (-)	695	788	-11.8%
Net Consolidated Profit / (loss) (c)	831	1,201	-30.8%

1. Operational Costs excluding amortization

2. EBITDA = earnings bef ore interest, taxes, depreciation and amortization

3. Net Prof it / (Loss) attributable to the parent company

   The current period was characterized by the reinforcement of Cofina's restructuring process. Hence, excluding the non-recurring costs associated to this process during the quarter under analysis (450 thousand Euro), Cofina's EBITDA in the third quarter of 2017 recorded an increase of 1.5% comparing with the same period of the previous year, reaching approximately 3.6 million Euro.

   This restructuring process consists on the optimization of the portfolio's resources, the reorganization of the newsroom and the investment in business areas with strong potential of growth, namely digital and online gaming. Thus, in September, Cofina stopped editing the fashion magazine Vogue and, in the same month, started the operation of the website Nossa Aposta (https://www.nossaaposta.pt/), an online gaming platform, of which Cofina owns 40%.

   The financial indicators of A Nossa Aposta online gaming platform, although still very recent, show an upward positive trend.

   It should be noted that A Nossa Aposta is consolidated under the Equity Method, thus does not have any impact in the operational revenues neither in the consolidated EBITDA of the Group.

   In terms of revenues, during the third quarter of 2017, it was recorded a decrease of 10% comparing with the total revenues recorded in the third quarter of 2016, reaching around 23 million Euro: circulation revenues (-12.5%), advertising revenues (-9.2%) and alternative marketing and other revenues (+0.7%). It should also be highlighted that divestment in unprofitable titles had a negative impact in revenues evolution.

   Consolidated net profit reached 0.8 million Euro, which reflects a decrease of approximately 31%.

   As of September 30, 2017, Cofina's nominal net debt amounted to 53.3 million Euro, which represents a decrease of 2.7 million Euro comparing to the net debt of 56 million Euro recorded in the end of June 2017.

   We now present some key financial figures of the main business segment, excluding the restructuring costs:

   Newspapers' segment

   (Thousand Euro)	3Q17	3Q16	Var (%)
   Operational Revenues	19,713	21,237	-7.2%
   Circulation	10,227	11,293	-9.4%
   Advertising	6,411	6,593	-2.8%
   Alternative marketing products and others	3,075	3,351	-8.2%
   Operational expenses (a)	16,141	17,708	-8.8%
   EBITDA (b)	3,572	3,529	1.2%
   EBITDA margin	18.1%	16.6%

4. Operational expenses excluding amortization

5. EBITDA = earnings bef ore interest, taxes, depreciation and amortization

6. Cofina's newspapers' segment recorded, in the third quarter of 2017, total revenues of approximately

   19.7 million Euro, a decrease of 7% comparing to the same period of the previous year. Revenues from circulation recorded a decrease of approximately 9% to 10.2 million Euro. The advertisement revenues recorded a decrease of 2.8%, reaching around 6.4 million Euro. Alternative marketing products revenues recorded a decrease of 8%, reaching 3.1 million Euro.

   Expenses, excluding the restructuring costs, recorded a decrease of 9%. Hence, newspapers EBITDA reached approximately 3.6 million Euro, which corresponds to a raise of 1.2% comparatively to the same period of the previous year. EBITDA margin reached 18.1%, having recorded an improvement of

7. percentage points.

   The newspapers' segment includes the results of the "Correio da Manhã TV" channel, which has consistently beaten audience records. Thus, during the first nine months of 2017, CMTV recorded a 2.4% share, being the channel with the highest audience in the cable and the fourth largest Portuguese channel behind the Free to Air, being only present in 85% of the market (since it is not present on Vodafone and Nowo platforms).

   Magazine's Segment

   During the third quarter of 2017, total revenues of this segment reached approximately 3.4 million Euro, reflecting a decrease of approximately 22% when compared to the same period of the previous year.

   (Thousand Euro)	3Q17	3Q16	Var (%)
   Operational Revenues	3,398	4,332	-21.6%
   Circulation	2,022	2,698	-25.1%
   Advertising	911	1,471	-38.1%
   Alternative marketing products and others	465	163	185.3%
   Operational expenses (a)	3,399	4,342	-21.7%
   EBITDA (b)	-1	-10	90.0%
   EBITDA margin	0.0%	-0.2%

8. Operational expenses excluding amortization

9. EBITDA = earnings bef ore interest, taxes, depreciation and amortization

10. Circulation revenues recorded a decrease of 25%, reaching approximately 2.0 million Euro, while advertisement revenues decrease around 38%. The revenues associated to alternative marketing product recorded a sharp increase.

    As referred, following the restructuring process of the Group's portfolio, it was not renewed the contract with Condé Naste. Hence, since September, the fashion magazine Vogue stopped being published by Cofina.

    The operational rationalization measures allowed the magazines' segment to achieve, in the third quarter of 2017, the operational break-even, with a negative EBITDA of only one thousand Euro.