COFINA : SGPS, S,A. announces results for the 2016 financial year

COFINA, SGPS, S.A.

Public Company

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

Share Capital: 25,641,459 Euros

ANNUAL FINANCIAL INFORMATION - FY16 (Unaudited)

(This is a translation of a document originally issued in Portuguese.

In the event of discrepancies, the Portuguese language version prevails.)

The consolidated financial information of Cofina for 2016, prepared in accordance with the recognition and measurement principles of the International Financial Reporting Standards (IFRS), can be presented as follows:

(amounts in thousand of Euro)	2016	2015	Var (%) 2016/2015
Consolidated operating revenue Circulation Advertising Alternative marketing products and others Operating income by segment Newspapers Magazines	99,926 51,138 32,965 15,823 99,926 82,355 17,571	100,676 52,848 33,802 14,026 100,676 81,345 19,331	-0.7% -3.2% -2.5% 12.8% -0.7% 1.2% -9.1%
Operating Expenses (a)	86,414	85,636	0.9%
Consolidated EBITDA (b)	13,512	15,040	-10.2%
EBITDA Margin Newspapers EBITDA Newspapers EBITDA Margin Magazines EBITDA Magazines EBITDA Margin	13.5% 14,080 17.1% -568 -3.2%	14.9% 15,273 18.8% -233 -1.2%	-1.4 p.p. -7.8% -1.7 p.p. - -2.0 p.p.
Amortisation and depreciation (-)	2,214	2,892	-23.4%
EBIT EBIT Margin	11,298 11.3%	12,148 12.1%	-7.0% -0.8 pp
Net financial income / (loss)	(5,202)	(3,771)	37.9%
Income before taxes and non-controlling interests	6,096	8,377	-27.2%
Income taxes (-)	1,763	3,316	-46.8%
Net consolidated profit / (loss) (c)	4,333	5,061	-14.4%

1. Operating expenses excluding amortisation

2. EBITDA = Earnings before interest, taxes, depreciation and amortisation

3. Net Profit / (Loss) attributable to the parent company shareholders

The year 2016 was characterized by a decrease in total revenue compared to the previous year (- 0.7%), with a reduction in circulation revenue (-3.2%) and advertising revenue (-2.5%). Alternative marketing products and other revenues recorded an increase of 12.8%, having reached 15.8 million Euros.

EBITDA recorded in this period amounted to 13.5 million Euros, which represents a decrease of about 10%, compared to the previous year.

The consolidated net profit reached 4.3 million Euros, resulting in a decrease of 14%, compared with 2015.

As of 31 December 2016, the nominal net debt of Cofina was 57.6 million Euros, which represents a decrease of 2.2 million Euros in relation to the nominal net debt of 59.8 million Euros, recorded in the end of 2015.

Free cash flow to equity generated by Cofina in 2016 reached about 3.7 million Euros, resulting in a free cash flow yield (considering the market capitalization as of 31 December 2016) of about 14%.

It should be noted that, during the year of 2016, Cofina paid an extraordinary income tax in the amount of 3.6 million Euros. Excluding this effect free cash flow to equity generated by Cofina would reach about 7.3 million Euros.

Cofina will enhance its operating efficiency policy in order to face the extremely adverse market environment. Therefore, cost cutting measures will be reinforced in the areas more exposed to the business cycle and, simultaneously, the growing businesses such as TV and online will be strengthened.

Some indicators of the main business segments are as follows:

Newspapers' Segment

(amounts in thousand of Euro)	2016	2015	Var (%) 2016/2015
Operating income	82,355	81,345	1.2%
Circulation	41,538	42,350	-1.9%
Advertising	27,048	27,284	-0.9%
Alternative marketing products and others	13,769	11,711	17.6%
Operating expenses (a)	68,275	66,072	3.3%
EBITDA (b)	14,080	15,273	-7.8%
EBITDA Margin	17.1%	18.8%	-1.7 p.p.

1. Operating expenses excluding amortisation

2. EBITDA = Earnings bef ore interest, taxes, depreciation and amortisation

In 2016, Cofina's newspapers' segment recorded total revenues of about 82.4 million Euros, an increase of about 1.2% compared with the previous year.

Circulation revenues recorded a decrease of about 2% to 41.5 million Euros. Advertising revenues recorded a decrease of 0.9%, reaching about 27.0 million Euros. Alternative marketing products recorded an increase of 18%, reaching 13.8 million Euros.

The operational expenses' evolution is directly related with the marketing campaigns costs' recorded in the alternative marketing products and other revenues.

Therefore, the newspaper segment's EBITDA amounted to 14.1 million Euros, a decrease of 8% in comparison to the previous year. EBITDA margin reached 17.1%.

The newspapers' segment includes the results of the television channel "Correio da Manhã TV", which has recorded a remarkable performance. In 2016 - and it should be noted that the channel was only available in the platform "NOS" since February - the annual average share of CM TV reached 2% (0.8% in the previous year).

During 2017, the extension of the CM TV presence in other cable platforms will be negotiated.

Magazines' Segment

In 2016, total revenues in this segment amounted to 17.6 million Euros, reflecting a decrease of about 9%, compared to 2015.

(amounts in thousand of Euro)	2016	2015	Var (%) 2016/2015
Operating income	17,571	19,331	-9.1%
Circulation	9,600	10,498	-8.6%
Advertising	5,917	6,518	-9.2%
Alternative marketing products and others	2,054	2,315	-11.3%
Operating expenses (a)	18,139	19,564	-7.3%
EBITDA (b)	-568	-233	-
EBITDA Margin	-3.2%	-1.2%	-

1. Operating expenses excluding amortisation

2. EBITDA = Earnings before interest, taxes, depreciation and amortisation

Circulation revenue fell 8.6% to 9.6 million Euros, while advertising decreased 9%. Similarly, revenues associated with alternative marketing products decreased about 11%.

The magazines' segment EBITDA recorded in 2016 amounted to -568 thousand Euros.