TF1 (EPA:TFI) - Press release Q1 2018 TF1

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25/04/2018 17:46

Press release

Boulogne, 25 April 2018

                     TF1 GROUP 2018 FIRST-QUARTER RESULTS
                   Group share of target audience(1): 32.2%
             Current operating profit of EUR38.3 million, up 3.8%
           Current operating margin rate of 7.7%, up 0.4 of a point

The TF1 Board of Directors, chaired by Gilles Pélisson, met on 25 April 2018
to adopt the financial statements for the three months ended 31 March 2018.
The results below are presented using the segmental reporting structure adopted
by the TF1 group, and in accordance with IFRS 9 and IFRS 15 (applicable from 1
January 2018). Historical revenue and operating profit data (published and
restated) are available in our Financial Information report for the first
quarter of 2018 and on the TF1 group corporate website:
https://www.groupe-tf1.fr/en.

CONSOLIDATED FIGURES (EURm)
                                 Q1 2018  Q1 2017  Chg. EURm   Chg.%

Revenue                           499.3    503.4     (4.1)    -0.8%
TF1 group advertising revenue     368.7    366.0      2.7      0.7%
Revenue from other activities     130.6    137.4     (6.8)    -4.9%
Current operating profit/(loss)    38.3     36.9      1.4      3.8%
Current operating margin rate       7.7%     7.3%      -     +0.4 pt
Operating profit/(loss)            32.6     31.1      1.5      4.8%
Cost of net debt                   (0.4)    (0.9)     0.5    -54.7%
Net profit/(loss) attributable
to the Group                       24.8     28.0     (3.2)   -11.4%

Consolidated revenue for the first quarter of 2018 was EUR499.3 million, versus
EUR503.4 million a year earlier, a slight decrease  of 0.8%. This comprised:
- advertising revenue of EUR368.7 million, up EUR2.7 million (0.7%) on the
  first quarter of 2017;
- revenue from other activities of EUR130.6 million, down EUR6.8 million
  year-on-year. This reflects the fact that TF1 Studio(2) had no films that
  went on theatre release in the first quarter of 2018, plus lower
  interactivity revenues due to an unusually tough comparative from the first
  quarter of 2017 (the gameshows: The Wall and Les 12 coups de Midi, and the
  World Handball Championships).

First-quarter 2018 current operating profit was EUR38.3 million, against
EUR36.9 million a year earlier, a rise of EUR1.4 million. This improvement is
linked to cost control, including the EUR3.5 million savings on cost of
programmes.
The current operating margin rate rose by 0.4 of a point to 7.7%, compared with
7.3% a year earlier.

The Group posted an operating profit of EUR32.6 million, after charging EUR5.7
million of non-current expenses related to the amortisation of audiovisual
rights remeasured in connection with the Newen Studios acquisition.

The overall result was a net profit attributable to the Group of EUR24.8
million, down EUR3.2 million. However, the 2017 first- quarter figure includes
part of the gain arising on the divestment of TF1's equity interest in Groupe
AB.

(1) W<50PDM: Women aged under 50 purchasing decision-makers.
(2) TF1 Studio produces and distributes made-for-cinema films; it is separate
from TF1 Films Production, which finances films in accordance with the Group's
obligations to invest in cinema.

Audiences(3)

The TF1 group registered a 32.2% share of the target audience of W<50PDM in the
first quarter of 2018, in line with 2017 as a whole and slightly down (by 0.3
of a point) on the first quarter of 2017. This fine performance was achieved in
spite of a one- week suspension by Canal+ of access to the TF1 group's
channels, and strong competition from coverage of the Winter Olympics on France
Télévisions.

The TF1 core channel increased its share of the W<50PDM target audience for the
second consecutive quarter, reaching 22.1% in the first quarter of 2018 (up 0.2
of a point year-on-year) and widening the gap from its nearest private-sector
rival by 0.6 of a point. The channel attracted all of the top 30 audiences in
the quarter thanks largely to its prime-time range of general- interest,
must-see programmes. There were ratings successes in entertainment (Les
Enfoirés with 10.2 million viewers, The Voice with up to 7.1 million); French
drama (Les Innocents with up to 7.1 million, Les Bracelets Rouges with up to
6.8 million, and Sections de Recherches with up to 6.7 million); and movies
(Les Tuche with 7.7 million, Rien à Déclarer with 7.1 million). Weekday
access prime time(4) is also up year-on-year (W<50PDM audience +0.6 of a
point), thanks largely to the success of Demain nous appartient.

The channel's regular news bulletins remained well ahead of the competition
with an average of 6 million viewers on weekday evenings and 5.4 million on
weekday lunchtimes. The TF1 channel has optimised the strategic 8pm-9pm
time-slot with the launch in mid-March of Le 20H Le Mag, a new ten-minute
current affairs programme.

The group's DTT offer (the TMC, TFX, TF1 Séries Films and LCI channels), which
is France's leading DTT offer with a combined 10.1% share of the W<50PDM target
audience, held its share of this target steady. In the first quarter of 2018,
TMC was the most-watched DTT channel among the target audience of 25-49
year-olds thanks to Quotidien in access prime time (average of 1.3 million
viewers in the quarter, 9% share of 25-49 year-olds) and to consistently strong
prime-time programming such as the movie Salt (1.4 million viewers) and the
France-Colombia football match (4.7 million). TFX and TF1 Séries Films were
both benefited from the rebranding at the end of January, and increased their
audience share among their respective targets: TFX had a strong start to the
year among younger viewers (15-24 year-olds), with a 4.9% share (up 0.2 of a
point year- on-year), while TF1 Séries Films progressed on the W<50PDM target,
adding 0.3 of a point year-on-year to 2.5%.

LCI captured an audience share of 0.6% among individuals aged 4+, and has
consolidated its status as France's no. 2 news channel over the last year. The
weekday La Matinale current affairs magazine achieved further growth and posted
an all-time high 2.1% audience share in March.

MYTF1 performed well during the quarter with 365 million video views(5) (up 10%
year-on-year) driven largely by flagship programmes such as La Villa des coeurs
brisés (65 million video views), Demain nous appartient (44 million) and The
Voice (33 million).

Analysis by segment

       EURm                 Q1 2018  Q1 2017  Chg. EURm   Chg. %

Consolidated revenue         499.3    503.4     (4.1)     -0.8%
Broadcasting                 402.3    404.9     (2.6)     -0.6%
TV advertising on
unencrypted channels         349.8    348.9      0.9       0.3%
Other revenues                52.5     56.0     (3.5)     -6.3%
Studios & Entertainment       97.0     98.5     (1.5)     -1.5%
Current operating
profit/(loss)                 38.3     36.9      1.4       3.8%
Broadcasting                  26.4     26.6     (0.2)     -0.8%
of which unencrypted
platforms                     15.3     13.9      1.4      10.1%
Studios & Entertainment       11.9     10.3      1.6      15.5%
Cost of programmes          (230.0)  (233.5)     3.5      -1.5%

(3) Source: Médiamétrie-Médiamat.
(4) 6pm-8pm, Mondays to Fridays.
(5) Excluding news content, XTRA content and live sessions.

Broadcasting

Broadcasting segment revenue for the first quarter of 2018 was EUR402.3
million, down EUR2.6 million year-on-year. Lower interactivity revenue due to
less favourable programming than a year earlier was partly offset by a EUR0.9
million rise in advertising revenue for the five unencrypted channels and
growth in revenue from digital activities and distribution of the Group's
channels.

By the end of March 2018, the TF1 group had signed three new agreements for the
distribution of its unencrypted channels and associated services: with
Altice-SFR in November 2017, Bouygues Telecom in January 2018 and Orange in
March 2018. The TF1 group has today signed a new agreement with Iliad-Free, and
negotiations with Canal+ are ongoing.

Advertising revenue from the TF1 group's five unencrypted channels amounted to
EUR349.8 million (+0.3% year-on-year), and was impacted by negotiations on
distribution agreements with some operators and by the first advertising
revenue streams from Belgium.

The cost of programmes for the TF1 group's five unencrypted channels was
EUR230.0 million, a reduction of EUR3.5 million relative to the first quarter
of 2017. Those savings reflect: the initial benefits of the rights buying
strategy adopted by the Group over the last two years; lower unit prices
achieved by renegotiating programme buying deals; and optimization through
multi-channel screening.

The Broadcasting segment reported a current operating profit of EUR26.4 million
for the first quarter of 2018, stable year-on- year. This figure includes a
higher level of amortisation expense on co-production shares delivered in the
quarter than in the comparative period of 2017.

Studios & Entertainment

Revenue from the Studios & Entertainment segment for the quarter was EUR97
million, a slight year-on-year decrease of EUR1.5 million. Increased revenue at
Newen Studios, organic growth for the La Seine Musicale concert venue and
expansion of the Play Two music production business partly offset lower revenue
at TF1 Studio(6), due mainly to the fact that no films went on theatre release
in the quarter (versus two successful releases a year earlier).

The segment posted a current operating profit for the quarter of EUR11.9
million, up EUR1.6 million year-on-year, thanks to good performances from
production activities.

Financial position

Shareholders' equity attributable to the Group was EUR1,612.5 million as of 31
March 2018, out of a balance sheet total of EUR3,260.3 million.

Cash and cash equivalents amounted to EUR519.4 million as of 31 March 2018,
versus EUR495.5 million as of 31 December 2017. The net cash position as of 31
March 2018 was EUR280.0 million (versus EUR256.7 million as of 31 December
2017), after taking account of the net debt carried by Newen Studios and
options to buy out minority interests.

Outlook

Since the start of the year, the TF1 group has been delivering on its
previously-announced strategy: distribution agreements have been signed with
Bouygues Telecom, Orange and Iliad-Free, and negotiations with Canal+ are
ongoing; the TFX and TF1 Séries Films channels have been rebranded; the
strategic 8pm-9pm time-slot on the TF1 core channel has had a makeover; and the
acquisition of the 30% stake held by the minority interests in Newen Studios
has been announced(7).

During the second quarter, the Group will carry exclusive unencrypted coverage
of Football World Cup matches across its channels, while also continuing to
refresh French drama (Traqués, Balthazar and Coup de Foudre à Bora Bora on
TF1) and entertainment (Tattoo Cover on TFX, Burger Quiz on TMC).
The planned acquisition of Axel Springer's 78.4% stake in the aufeminin group
will enhance the TF1 group's digital offer, building on strong internet
audiences delivered by highly-engaged web communities around aufeminin brands
(aufeminin.com, Marmiton, My Little Paris). The French Competition Authority
having given clearance for this deal on 23 April, all the conditions have been
met for TF1 to acquire Axel Springer's 78.4% controlling interest and initiate
a public tender offer.

(6) TF1 Studio produces and distributes made-for-cinema films; it is separate
from TF1 Films Production, which finances films in accordance with the Group's
obligations to invest in cinema.
(7) Pending clearance from the French Competition Authority.

The TF1 group's first-quarter results confirm the guidance previously issued:

- from 2018 onwards: growth in current operating margin at Group level
  (excluding major sporting events);
- average annual cost of programmes reduced to EUR960 million (excluding major
  sporting events) for the five unencrypted channels for the 2018-2020 period,
  thanks to optimisation of investment in content;
- growth in revenue from activities other than advertising on the five
  unencrypted channels, with those other activities expected to account for at
  least one-third of consolidated revenue in 2019;
- a target of double-digit current operating margin in 2019.

The statutory auditors have conducted a review of the financial statements, on
which they have issued an unqualified report.
Our financial information report for the first quarter of 2018 is available on
our corporate website: http://www.groupe-tf1.fr/en.
A conference call is scheduled for 25 April 2018 at 6.30pm (Paris time).
The presentation is available on http://www.groupe-tf1.fr/en.
For details of how to connect to the conference call go to
http://www.groupe-tf1.fr/en/investisseurs/en.

                                   TF1 GROUP
               CORPORATE COMMUNICATIONS DIVISION - vduval@tf1.fr
                      INVESTOR RELATIONS - comfi@tf1.fr
                                  @GroupeTF1

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