1q09 earnings announcement · 5/6/2009 · 1q09 earnings announcement zon multimédia –...

1Q09 Earnings Announcement

ZON Multimédia – Serviços de Telecomunicações e Multimédia, SGPS, S.A. 2/19

1. Key Highlights of 1Q09 Results 3

2. Business Review 6

3. Consolidated Income Statement 11

4. CAPEX and Cash Flow 14

5. Consolidated Balance Sheet 16

6. Shareholder Remuneration 18

7. Disclaimer 19

8. Enquiries 19



Lisbon, Portugal, 6 May 2009: today ZON announces its unaudited results for 1Q09.

Operating Revenues +7.1% to €201.5 million

EBITDA +9.1% to €64.3 million

Net Income (6.7)% to €19.5 million

Continued strong growth in Broadband and Voice

29% Triple Play penetration over cable customers in 1Q09

184 thousand ZON Boxes

Blended ARPU grew by 3.5% to 32.7 euros

Table 1.

Key Financial Highlights (Millions of Euros)

Operating Revenues 188.1 201.5 7.1%

EBITDA (1) 58.9 64.3 9.1%

EBITDA margin 31.3% 31.9% 0.6pp

Operating Profit (EBIT) (2) 30.7 18.4 (40.3%)

Net Income 20.9 19.5 (6.7%)

"Baseline" CAPEX 24.3 44.8 84.3%

Net Financial Debt 77.9 524.9 n.a.

(1) EBITDA = Income From Operations + Depreciation and Amortization;

1Q08 1Q09

(2) EBIT = Income Before Financials and Income Taxes

1Q09 /

1Q08

• Operating Revenues increased to 201.5 million euros in 1Q09, representing y.o.y. growth of 7.1% with revenues from Pay TV, Broadband and Voice increasing by 9.2% to 181.8 million euros;

• EBITDA increased to 64.3 million euros in 1Q09, representing y.o.y growth of 9.1%;

• EBITDA margin was 31.9% compared with 31.3% in 1Q08 and 28.2% in 4Q08;

• Net Income recorded a decline of (6.7)% to 19.5 million euros compared with 1Q08 and an increase from negative (2.9) million euros in 4Q08;



• Operating Cash Flow increased to 40.3 million euros, compared with 2.5 million euros in 1Q08 and 11.7 million euros in 4Q08;

• Baseline CAPEX of 44.8 million euros in 1Q09, representing 22.2% of operating revenues, compared with 24.3 million euros in 1Q08. Excluding customer terminal equipment, CAPEX increased by 28.4% to 22.4 million euros;

• Net Financial Debt at the end of 1Q09 was 524.9 million euros (2.1x Net Financial Debt / EBITDA) representing a reduction of 5% in comparison with 4Q08;

Table 2.

Key Operational Highlights ('000)

Net Addtions

RGUs (1) 101.9 134.2 31.6%

Triple Play Customers 38.6 64.5 67.0%

Digital Extended Basic 17.7 43.7 146.5%

Basic Subscribers (2) (3) 13.4 (18.2) n.a.

Broadband Internet 15.7 27.0 72.6%

Fixed Voice 55.1 72.8 32.1%

Mobile Voice 0.0 8.8 n.a.

End-of-Period

RGUs 2,514.8 3,116.4 23.9%



Basic Subscribers 1,560.5 1,595.4 2.2%


Fixed Voice 138.6 419.4 202.6%


Blended ARPU 31.6 32.7 3.5%

% Triple Play Cable Customers 10% 29% 19.1 pp

NOTE: 1Q09 figures include the acquisitions of TVTel and Parfitel operations.

(3) These figures include products in temporary promotions, such as "Try and Buy" promotions;

1Q091Q09 /

1Q08

(1) Revenue Generating Units correspond to the sum of Pay TV basic customers, plus Pay TV extended basic customers, plus

broadband internet customers, plus fixed and mobile voice customers.

(2) These figures are related to the total number of Pay TV basic customers, including the cable and satellite platforms. ZON

Multimedia offers several basic services, based on different technologies, directed to different market segments (residential, real

estate and hotels), with a distinct geographical scope (mainland Portugal and the Azores and Madeira islands) and with a

variable number of channels;

1Q08

• 3,116.4 thousand RGU’s, representing continued strong momentum in take-up of new services with net adds of 134.2 thousand in 1Q09, compared with 101.9 thousand in 1Q08;

• 339.8 thousand customers subscribe to 3P services: 29% of cable customers, up from 10% in 1Q08 and 23% in 4Q08;



• RGUs per subscriber continued to increase to 1.94 compared with 1.61 in 1Q08 and 1.84 in 4Q08 (including the acquisition of TVTel and Parfitel operations);

• ARPU growth of 3.5% to 32.7 euros led by the increasing number of RGUs/subscriber and 3P penetration;

• 184 thousand ZON boxes installed, less than one year after launch, 93 thousand installed during 1Q09;

• 43.7 thousand new “Funtastic” subscribers in 1Q09 representing 33.8% penetration of this higher value digital TV service, up from 25.6% in 1Q08;

• Continued strong momentum in Broadband and Voice with net adds of 27 thousand and 72.8 thousand respectively in 1Q09.



Table 3.

Business Indicators ('000)

Pay TV, Broadband and Voice

Homes Passed 2,773.7 3,057.8 10.2%

Basic Subscribers (1) (2) 1,560.5 1,595.4 2.2%

of which


Premium Pay TV 832.6 835.3 0.3%


Fixed Voice 138.6 419.4 202.6%


RGUs (3) 2,514.8 3,116.4 23.9%

RGUs (3)

per Subscriber (units) 1.61 1.94 20.1%


% Triple Play Cable Customers 10% 29% 19.1pp

Blended ARPU 31.6 32.7 3.5%

Net Additions

Basic Subscribers 13.4 (18.2) n.a.


Premium Pay TV (8.0) (1.9) (76.0%)


Fixed Voice 55.1 72.8 32.1%


RGUs 101.9 134.2 31.6%


Cinema Exhibition

Revenue per Ticket (Euros) 4.1 4.3 4.9%

Tickets Sold 2,199.5 1,950.1 (11.3%)

Screens (units) 200 213 6.5%

NOTE: 1Q09 figures include the acquisitions of TVTel and Parfitel operations.

1Q09

(2) These figures include products in temporary promotions, such as "Try and Buy" promotions;

(1) These figures are related to the total number of Pay TV basic customers, including the cable and satellite platforms. ZON

Multimedia offers several basic services, based on different technologies, directed to different market segments (residential, real

estate and hotels), with a distinct geographical scope (mainland Portugal and the Azores and Madeira islands) and with a

variable number of channels;

(3) Revenue Generating Units correspond to the sum of Pay TV basic customers, plus Pay TV extended basic customers, plus

broadband internet customers, plus fixed and mobile voice customers.

1Q09 /

1Q081Q08



Triple Play ZON continues to record strong growth in the number of customers that subscribe to Triple Play services. Stimulated by the attractive product combinations and higher value proposition of ZON bundles, by the end of 1Q09, ZON already had 339.8 thousand Triple Play customers, of which 64.5 thousand were like-for-like net-adds in the quarter. As a percentage of cable customers, Triple Play subscribers represented 29% compared with 10% at the end of 1Q08 and 23% at the end of 4Q08.

107,3

153,3

193,4

258,0

339,8

10%

14%

18%

23%

29%

0

50

100

150

200

250

300

350

400

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

1Q08 2Q08 3Q08 4Q08 1Q09

TRIPLE PLAY SUBSCRIBERS (thousands) and PENETRATION (% of cable customers)

TRIPLE PLAY SUBSCRIBERS (thousands) and PENETRATION (% of cable customers)

Note: these numbers include the acquisition of TVTel and Parfitel Operations from 4Q08.

On average, by the end of 1Q09, each customer was subscribing to 1.94 services, compared with 1.61 services at the end of 1Q08. The growth in services subscribed was led by the continued uptake of broadband and voice services and of ZON’s digitally enhanced TV offer “Funtastic” and total RGUs increased by 23.9% to 3116.4 thousand in 1Q09 compared with 2514.8 thousand in 1Q08.

1,61

1,68

1,75

1,84

1,94

1,20

1,40

1,60

1,80

2,00

2,20

1Q08 2Q08 3Q08 4Q08 1Q09

RGU / Sub

Note: these numbers include the acquisition of TVTel and Parfitel Operations from 4Q08.

This continued strong growth momentum reinforces ZON’s position as the leading Triple Play operator in Portugal and is the driver of the additional revenues received from each customer. Average Revenue per Subscriber increased by 3.5% to 32.7 euros in 1Q09, compared with 31.6 euros in 1Q08.



As from 1Q09, ARPU is reported incorporating the effect of the acquisitions of the TVTel and Parfitel operations, which had a lower average blended ARPU than ZON stand-alone. Excluding the effect of these acquisitions, ZON’s stand-alone ARPU would have increased 5.1% from 31.6 euros in 1Q08 to 33.2 euros in 1Q09.

31,6

31,8

32

32,4

32,7

31

31,2

31,4

31,6

31,8

32

32,2

32,4

32,6

32,8

1Q08 2Q08 3Q08 4Q08 1Q09

Blended ARPU(Euros)

*

*

* Excluding the acquisitions of TVTel and Parfitel operations, Blended ARPU would have been 32.7 euros in 4Q08 and 33.2 euros in 1Q09.

Television is a key differentiating factor for ZON. Operating over a hybrid fibre coaxial cable / Eurodocsis 3.0 network, ZON is able to provide almost unlimited multi-room and HD viewing capacity and these features are reinforced in all of ZON’s campaigns. On the content front, during the first months of 2009, ZON further reinforced its HD channel offering with AXN HD, a series and movie channel that ranks #2 in terms of Pay TV audience excluding FTA channels, and Brava HDTV, a premium channel dedicated to European culture in areas such as classical music, ballet and opera, amongst others. With these two HD launches, ZON now has 8 HD channels in its global content offer, being the leading operator in terms of HD channel alternatives. With the launch of TVI24 in 1Q09, exclusive to ZON customers, ZON today has the most extensive offer of Portuguese news channels, all of which rank amongst the top ten most viewed pay TV channels excluding FTA channels: SIC Notícias (#1); RTPN (#5); TVI24 (#9). In addition, SET (Sony Entertainment Television), Animax and Russia Today, a series and movies channel, a Japanese cartoon channel and a Russian news and documentary channel respectively were included in ZON’s channel offer at the beginning of April.

ZON’s video-on-demand service, “ZON Videoclube”, was launched in January, initially only for the Lisbon and Oporto headends, and has already recorded interesting results amongst customers that have installed the ZON Box.



The enthusiasm around the new features and offers remains high and during 1Q09, a further 93 thousand customers installed a new HD ZON Box, half of which including a personal video recorder leading to a total base of HD / HDR Boxes installed of 184 thousand – 12% of the total customer base.

Uptake of ZON’s enhanced digital offer “Funtastic” was also very strong with net adds in 1Q09 of 43.7 thousand and the percentage of customers that now subscribe to this tariff plan now represents 33.8%, compared with 25.6% in 1Q08.

ZON repositioned its DTH offers with the launch, on 1 March, of a new set of packages ranging from an entry product with 25 channels up to higher-end 81 channel offers including premium movie channels.

ZON’s Broadband offer was marked by the commercial launch of ZON NET Wideband in 1Q09, a high speed, next generation Internet access service providing 100 Mbps download speed, 4 Mbps upload speed and unlimited traffic. ZON Net Wideband now covers 800 thousand homes and will be available to almost the whole cable network until the end of 2009.

Growth in Broadband remained very strong with net adds of 27 thousand in 1Q09, reaching 546 thousand subscribers, maintaining the same level of net adds of 4Q08, which is seasonally a very strong quarter.

Once again, the Portuguese Telecom Regulator published its findings on a survey of the main competitors in the Portuguese Broadband market and concluded that cable provided the best quality of service, as compared to ADSL, due primarily to the higher speeds, average time to download, lower “latency” and the quickest access to national and international sites.

In terms of Fixed Voice, continued focus on up-selling services to existing customers supported the strong growth momentum of over 20 thousand Voice subscribers a month. By the end of 1Q09, ZON had 419 thousand customers, up from 139 thousand at the end of 1Q08. Again, in fixed voice, growth was in line with 4Q08.

As regards bundled offers, during 1Q09, ZON launched new offers to reflect the new 100 Mbps broadband offer and the launch of new channels. ZON3 FLY 100 at the high-end of the range provides 100 Mbps Broadband speed, 110 TV Channels, and unlimited voice calls for 64.90 euros per month. ZON3 FLY 50 provides the same TV and voice features and 50 Mbps Broadband speed for 57.90 euros a month.

The standard triple play offers are ZON3 FUN and ZON3 FAST which offer 110 TV channels, Broadband speeds ranging from 8 to 18 Mbps, and unlimited or evenings and weekend calls, for 49.90 euros and ZON 4 FILMS which include 4 premium movie channels for 54.90 euros. These bundles are proving very successful and are clearly behind the strong uptake of triple play solutions by ZON customers.

15,714,9

20,2

28,027,0

0

5

10

15

20

25

30

1Q08 2Q08 3Q08 4Q08 1Q09

Broadband Subscriber Net Adds(thousands)

55,1

65,2

50,1

73,2 72,8

0

10

20

30

40

50

60

70

80

1Q08 2Q08 3Q08 4Q08 1Q09

Voice Subscriber Net Adds(thousands)



ZON launched a pre-paid mobile broadband card in March, thus providing subscribers with a mobile Internet complement to existing services. In terms of mobile voice, ZON launched a new rate plan where the key focus is the very competitive nature of call-pricing at 0.08 eurocents per minute for triple play customers. By the end of March, ZON had 16 thousand mobile subscribers.

Cinema Exhibition and Audiovisuals With 213 screens across the country, ZON continues to innovate in its cinema business with development of new services and features. Some of the most relevant were the launch of myZONcard at the end of 2008, giving ZON’s Pay TV customers an extra ticket upon purchase of one, up to a limit of 52 movies throughout the year. In terms of payment processes, ZON Cinemas set up mobile phone payments with the key mobile operators in Portugal, in order to further facilitate the ticketing process. During 1Q09, ZON Lusomundo participated in one of the most famous film festivals in Portugal, “Fantasporto” whereby 8 ZON theatres exhibited films throughout the one-week event. Efforts to increase the average level of revenue per ticket are proving successful with the progressive increase in Revenue per ticket to 4.3 euros in 1Q09 up 4.9% from 4.1 euros in 1Q08. The total number of tickets sold recorded a decline however during the period primarily due to the lower number of blockbuster movie hits in comparison with 1Q08 and especially due to the fact that the Easter holiday fell later in 2009. In 2008 Easter was in March thereby positively impacting 1Q08 results. The Audiovisuals division recorded a slowdown in activity primarily due to a decline in DVD Retail Sales during 1Q09, accompanying the general slowdown in retail sales in other segments of the economy. Although undergoing a weaker global trading environment, ZON Lusomundo continues to strengthen its position as the leading movie distributor in Portugal, and gained further international recognition with the nomination in 1Q09 as the best European Distributor by Cartoon Movie, one of the most prestigious rewards in the industry.



Table 4.

Profit and Loss Statement (Millions of Euros)

Operating Revenues 188.1 201.5 7.1%

Pay TV, Broadband and Voice 166.5 181.8 9.2%

Audiovisuals 14.9 14.3 (3.8%)

Cinema 12.8 12.6 (1.3%)

Others and Eliminations (6.0) (7.2) 19.7%

Operating Costs Excluding D&A 129.2 137.2 6.2%

W&S 11.5 14.6 26.6%

Direct Costs 60.2 56.2 (6.7%)

Commercial Costs (1) 13.2 18.7 41.9%

Other Operating Costs 44.3 47.8 7.9%

EBITDA (2) 58.9 64.3 9.1%

EBITDA Margin 31.3% 31.9% 0.6pp

Depreciation and Amortization 27.0 46.0 70.6%

Income From Operations (3) 31.9 18.3 (42.7%)

Other Expenses / (Income) 1.2 (0.1) (106.2%)

Operating Profit (EBIT) (4) 30.7 18.4 (40.3%)

Financial Expenses (Income) 1.6 (8.7) n.a.

Income Before Income Taxes 29.1 27.1 (7.1%)

Income Taxes (7.4) (7.0) (4.9%)

Income From Continued Operations 21.7 20.0 (7.8%)

o.w. Attributable to Minority Shareholders (0.8) (0.5) (35.5%)

Net Income 20.9 19.5 (6.7%)

(1) Commercial costs include commissions, marketing and publicity expenses and costs of equipment sold;

(2) EBITDA = Income From Operations + Depreciation and Amortization;

(4) EBIT = Income Before Financials and Income Taxes

(3) Income From Operations = Income Before Financials and Income Taxes + work force reduction programme costs + impairment of

goodwill + Losses/Gains on disposal of fixed assets + Other costs/income.

1Q08 /

1Q091Q08 1Q09

3.1 – Operating Revenues

Consolidated Revenues grew by 7.1% in 1Q09 to 201.5 million euros. Pay TV, Broadband and Voice Revenues increased by 9.2% driven primarily by continued strong growth in the number of RGUs, (+23.9%), the number of services subscribed by each customer (+20.1%) and the improvement in ARPU (+3.5%). Pay TV, Broadband and Voice Revenues would have recorded even higher growth were it not for the decline in advertising revenues which fell by 19.6% to approximately 5.6 million euros as a result of the generalized slowdown in the macroeconomic environment.



Consolidated Revenue growth was affected by a reduction in revenues from the Audiovisuals and Cinema business, due to a slowdown in trading conditions in DVD retail sales business, the fact that Easter holidays fell in 2Q in 2009 as compared with 1Q in 2008 and a comparatively lower occurrence of blockbuster movies in 1Q09, thus leading to lower cinema and audiovisuals activity in comparison with 1Q08.

3.2 – EBITDA EBITDA reached 64.3 million euros in 1Q09, up 9.1% from 58.9 million euros in 1Q08 and representing a 31.9% EBITDA margin, up from 31.3% in 1Q08 and 28.2% in 4Q08. ZON has been able to deliver revenue growth with less than proportionate growth in operating costs as a result of natural operating leverage and rigorous measures to contain costs and implement more efficient processes.

3.3 – Consolidated Operating Costs Wages and salaries were 14.6 million euros in 1Q09, 26.6% higher than in 1Q08 although 12.7% lower than the level recorded in 4Q08. This cost line is influenced by the previously explained internalization of functions (namely personnel and administrative functions) that in the past had been outsourced and the organizational changes post spin-off, expenses with share plans (approved in 4Q08) and the higher average number of employees, which now includes the impact of employees integrated upon acquisition of TVTel and Parfitel operations. Direct Costs decreased by 6.7% to 56.2 million euros in 1Q09. This decline reflects a combination of lower programming costs in part reflecting the initial impact of one month, of the contract renegotiation for “SIC Notícias” and the renegotiation of some other content costs. Direct costs also fell due to a decline in the advertising revenue share with content providers, led by lower advertising revenues. The aforementioned reductions in costs were partially offset by an increase in traffic and capacity costs both of which are driven by the higher communications activity as a result of the larger broadband and voice subscriber base. Commercial Costs amounted to 18.7 million euros, up 41.9% from 1Q08 led by higher commercial activation related charges, namely sales commissions, associated with the strong growth in services subscribed. This item also includes a 2.7 million euros increase in COGS due to the launch of ZON Mobile in October 2008. Other Operating Costs grew by 7.9% to 47.8 million euros in 1Q09 compared with 44.3 million euros in 1Q08. The most relevant increase within this item was felt in Supplies and External Services which grew by 15% to 20.1 million euros of which the most important costs were related with call centre and customer support activity. Increased investment to upgrade the network and changes in broadcasting frequencies generated an exceptionally higher volume of activity in customer support platforms and processes.

3.4 – Net Income Net Income was 19.5 million euros in 1Q09, representing a 6.7% decrease in comparison with 1Q08. It is important to note that in the first two quarters of 2008, Net Income did not reflect the impact of: (i) increasing depreciation led by higher customer driven CAPEX which increased significantly as from 3Q08 and (ii) higher financial charges that also started to rise after the increase in the level of Net Financial Debt after payment of dividends in 2Q08 and completion of the acquisitions of TVTel and Parfitel operations in 4Q08.



Depreciation and Amortization in 1Q09 was 46.0 million euros, 70.6% higher than the depreciation charges recorded in 1Q08 as a result of a combination of higher operational investment in customer terminal equipment, depreciation of long-term contracts and the depreciation of the fair value of the assets consolidated with the acquisition in November 2008 of the TVTel and Parfitel operations. Net Financial Results in 1Q09 were positive by 8.7 million euros, compared with (1.6) million euros in 1Q08. Net interest charges increased to 8.1 million euros in 1Q09, up from 2.2 million euros primarily driven by a strong increase in average gross debt over the past year. Net Financial Expenses also includes a pre-tax capital gain of 16.9 million euros resulting from ZON’s sale of its 40% stake in Lisboa TV, owner of SIC Notícias, the leading Portuguese news channel, announced at the end of February. Income Taxes were 7.0 million euros in 1Q09, similar to the levels recorded in 1Q08, and representing 26% of Net Income before Taxes and Minorities.



4.1 CAPEX

LA

Table 5.

CAPEX (Millions of Euros)

1Q08 1Q091Q09 /

1Q08

Pay TV, Broadband and Voice Infrastructure 13.7 17.7 29.1%

Terminal Equipment 7.3 23.3 220.5%

Other 3.3 3.9 15.4%

"Baseline" CAPEX 24.3 44.8 84.3%

Long Term Contracts 0.4 0.6 47.8%

Other Non-Recurrent Items 0.0 0.3 n.a.

Total CAPEX 24.7 45.7 84.7%

Total CAPEX in 1Q09 was 45.7 million euros, 22.7% of Operating Revenues, representing an increase of 84.7% in relation to 1Q08 and in line with 4Q08, explained by continued high investment in rental based terminal equipment, namely the new ZON boxes which are capitalized and depreciated over the average lifetime of Triple Play terminal equipment. This CAPEX item amounted to 23.3 million euros in 1Q09, representing more than half of total CAPEX. As it is customer driven, variable investment may be adjusted to reflect the level of commercial activity. Excluding investment in customer terminal equipment, CAPEX grew by 28.4% to 22.4 million euros.

Table 6.

Cash Flow (Millions of Euros)

1Q08 1Q091Q09 /

1Q08

EBITDA minus CAPEX 34.2 18.6 (45.6%)

Non-Cash Items Included in EBITDA minus CAPEX(1) (0.7) 3.5 n.a.

Change in Working Capital (31.0) 18.2 (158.7%)

Operating Cash-Flow 2.5 40.3 n.a.

Net Interest Paid 0.7 (0.4) (162.2%)

Income Taxes Paid (0.4) (0.9) 92.1%

Long Term Contracts (31.5) (14.8) (53.1%)

Acquisitions of Financial Investments (16.8) 0.0 (100.0%)

Acquisition of Own Shares (7.3) 0.0 (100.0%)

Disposals 0.0 6.7 n.a.

Other Cash Movements (1.5) (3.2) n.a.

Free Cash-Flow (54.4) 27.6 n.a.

(1) This caption includes non-cash provisions included in EBITDA.



4.2 - Operating Cash Flow EBITDA – CAPEX decreased by 45.6% in 1Q09 to 18.6 million euros, lower than in 1Q08 as a result of the significantly higher CAPEX due to investment in customer growth. After adjusting for non-cash items and investment in working capital, Operating Cash Flow recorded a significant increase to 40.3 million euros compared with 2.5 million euros in 1Q08 and 11.7 million euros in 4Q08, an improvement supported by negative investment in working capital of 18.2 million euros in 1Q09 compared with an investment of 31 million euros in 1Q08.

4.3 - Free Cash Flow Free Cash Flow was positive by 27.6 million euros compared with negative FCF of 54.4 million euros in 1Q08 and 162.5 million euros in 4Q08. In addition to the aforementioned variation in Operating Free Cash Flow, total Free Cash Flow was impacted by cash payments of long term contracts amounting to 14.8 million euros and cash received of 6.7 million euros related with the sale of the 40% stake of Lisboa TV.



TABELA

Table 7.

Balance Sheet (Millions of Euros)

2008 1Q09

Current Assets 295.6 281.1

Cash and Equivalents 63.4 65.9

Accounts Receivable, Net 162.8 155.3

Inventories, Net 31.3 34.7

Taxes Receivable 25.2 11.8

Prepaid Expenses and Other Current Assets 12.9 13.4

Non-current Assets 1,027.5 1,014.5

Investments in Group Companies 6.0 1.4

Intangible Assets, Net 372.8 356.6

Fixed Assets, Net 468.0 483.7

Deferred Taxes 57.7 51.5

Other Non-current Assets 123.0 121.3

Total Assets 1,323.1 1,295.6

Current Liabilities 597.4 539.4

Short Term Debt 317.1 251.5

Accounts Payable 181.1 185.0

Accrued Expenses 67.7 75.1

Deferred Income 5.0 5.5

Taxes Payable 14.3 8.7

Current Provisions and Other Liabilities 12.4 13.4

Non-current Liabilities 533.9 545.7

Medium and Long Term Debt 510.1 522.2

Non-current Provisions and Other Liabilities 23.8 23.5

Total Liabilities 1,131.3 1,085.0

Equity Before Minority Interests 182.7 202.4

Share Capital 3.1 3.1

Own Shares (89.6) (88.6)

Reserves, Retained Earnings and Other 221.3 268.5

Net Income 47.9 19.5

Minority Interests 9.0 8.1

Total Shareholders' Equity 191.7 210.6

Total Liabilities and Shareholders' Equity 1,323.1 1,295.6



5.1 – Capital Structure At 31 March, Net Financial Debt was 524.9 million euros, down 5.0% from the end of 2008. The decline of 27.6 million euros is a result of the positive FCF generation explained above. All of ZON’s gross bank debt is represented by commercial paper lines, with an average maturity of 2.4 years and by equity swap agreements used to fund the share buyback programme, with a balance of 89.5 million euros at the end of 1Q09. The commercial paper lines are all negotiated at floating interest rates. Net Financial Gearing (last 4 quarters) improved in 1Q09 to 71.4% compared with 74.2% at the end of 2008, as a result of the lower level of Net Debt which, together with the increase in EBITDA, led to a reduction in Net Financial Debt / EBITDA to 2.1x from 2.3x at the end of 2008. Total Net Debt also includes commitments with Long Term contracts also recorded as liabilities on the Balance Sheet of which the most relevant are long-term telecom, transponder and content contracts.

Table 8.

Net Finantial Debt (Millions of Euros)

2008 1Q09 1Q09 / 2008

Short Term 287.0 231.5 (19.3%)

Bank and Other Loans 282.6 227.5 (19.5%)

Financial Leases 4.5 3.9 (11.6%)

Medium and Long Term 389.4 405.0 4.0%

Bank Loans 385.9 401.4 4.0%

Financial Leases 3.5 3.7 3.4%

Total Debt 676.4 636.5 (5.9%)

Cash, Short Term Investments and Intercompany Loans 123.9 111.6 (9.9%)

Net Financial Debt 552.5 524.9 (5.0%)

Net Financial Gearing (1) 74.2% 71.4% (2.9pp)

Net Financial Debt / EBITDA 2.3x 2.1x n.a.(1) Net Financial Gearing = Net Financial Debt / (Net Financial Debt + Total Shareholders' Equity).



Dividends: The Board of ZON proposed a 16 euro cent ordinary dividend, per share, representing close to 100% payout ratio, which was approved at the General Assembly held on 28 April 2009. At the closing price of 28 April 2009, this dividend represented a dividend yield of 3.96%. Share buyback programme: During 1Q09, ZON did not purchase any own shares within the previously announced share buyback programme. However some of the shares purchased were used to give to employees within the approved employee share programme, available for consultation on ZON’s website. As such, of the balance at the end of December 2008 whereby ZON had purchased a total of 14,313,730 shares, (4.63% of its share capital), 124,904 shares were transferred to employees, leaving a balance of 14,188,826 million shares at the end of March.



Except for historic information contained herein, this document contains certain forward-looking information and statements on [the results of operations or its economic and financial conditions] which are not guarantees of future performance. The Forward-looking statements herein included are subject to a number of factors, risks and uncertainties that could cause the assumptions and beliefs upon which the forward-looking statements were based to substantially differ from the expectations predicted herein. These factors, risks and uncertainties include, but are not limited to, [the continuous and increasing demand of the company’s services by its clients, the technological outcome, the effects of competition, the telecommunications’ sector conditions, the changes in regulation, and the economic conditions]. The forward-looking information and statements are naturally based on management’s current and reasonable expectations or beliefs only as of the date they were made. ZON Multimedia does not undertake any obligation to update any forward-looking information or statements included in this document or to provide reasons why actual results my differ from the plan, objectives, expectations, estimates and intentions expressed or implied in such forward-looking statements. This document is not an offer to sell or a solicitation of an offer to buy any securities. ZON Multimedia is exempt from filing periodic reports with the United States Securities and Exchange Commission (“SEC”) pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934, as amended. The SEC file number for ZON Multimedia’s exemption is No. 82-5059. Under this exemption, ZON Multimedia is required to post on its website English language translations, versions or summaries of certain information that it has made or is required to make public in Portugal, has filed or is required to file with the regulated market eurolist by euronext Lisbon or has distributed or is required to distribute to its security holders.”

Chief Financial Officer: José Pedro Pereira da Costa Tel.: 21 799 88 19 Analysts/Investors: Maria João Carrapato Tel.: 21 782 47 25 / E-mail: [email protected] Press: Paulo Camacho / Irene Luís Tel.: 21 782 48 07 / E-mail: [email protected]

Conference call scheduled for 15h30 GMT Conference ID: 96179102

Portugal Free Call: 800 819 108 UK Standard International: +44 (0) 1452 586 513

Encore Replay Access Number: 96179102# International Dial In: +44 (0) 1452 550 000

UK Dial In: 0800 953 1533 USA Dial In: 1866 247 4222

1q09 earnings announcement · 5/6/2009 · 1q09 earnings announcement zon multimédia –...

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