TF1 (EPA:TFI) - 9M 2018 - TF1 Group Results

Transparency directive : regulatory news

30/10/2018 17:50

Press release

Boulogne, 30 October 2018

               TF1 GROUP RESULTS FOR THE FIRST NINE MONTHS OF 2018

                Group share of target audience(1) rises to 32.4%
                        (+.0.4 of a point year-on-year)

TV advertising revenue increases by 2.5%, driven by sustained Q3 growth of 6.6%

      Current operating profit is up EUR7.7 million at EUR124.2 million

The TF1 Board of Directors, chaired by Gilles Pélisson, met on 30 October 2018
to close off the financial statements for the third quarter of 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 nine
months of 2018 and on the TF1 group corporate website: www.groupe-tf1.fr/en.

CONSOLIDATED FIGURES (EURm)

            H1 2018 H1 2017 Q3 2018 Q3 2017  9m 2018  9m 2017  Chg. EURm  Chg.%

Revenue     1,083.6 1,042.8   492.0   431.7  1,575.6  1,474.5     101.1    6.9%
TF1 group
advertising
revenue       812.4   784.2   339.3   300.8  1,151.7  1,085.0      66.7    6.1%
Revenue from
other
activities    271.2   258.6   152.7   130.9    423.9    389.5      34.4    8.8%
Current
operating
profit/(loss) 100.5   108.0    23.7     8.5    124.2    116.5       7.7    6.6%
Current
operating
margin rate    9.3%   10.4%    4.8%    2.0%     7.9%     7.9%         -  -0.0pt
Operating
profit/(loss)  89.5    96.4    18.3     2.6    107.8     99.0       8.8    8.9%
Cost of net
debt          (1.0)   (1.1)   (0.2)   (0.1)    (1.2)    (1.2)       0.0    0.0%
Net profit/
(loss)
attributable
to the Group   65.8    74.8    15.9    10.4     81.7     85.2     (3.5)   -4.1%

Consolidated revenue of the TF1 group for the first nine months of 2018 was
EUR1,575.6 million, up 6.9%(2), driven by:
- a good performance in television advertising, reflecting the success of the
Football World Cup and the back-to-school programming schedules;
- the growing impact of agreements with telecoms operators;
- the diversification strategy, which is starting to pay off, especially with
the consolidation of the digital segment.

Current operating profit for the first nine months of 2018 was EUR124.2 million
(versus EUR116.5 million a year earlier), increasing by EUR7.7 million,
reflecting the new revenue streams and demonstrating the Group's capacity to
optimise profitability by adapting its cost structure.
Including the costs of broadcasting the World Cup (EUR72 million), the current
operating margin rate held steady year-on-year at 7.9%. Excluding the cost of
the World Cup, the current operating margin rate was 12.4%, 4.5 points higher
than a year previously.

Operating profit for the period was EUR107.8 million, after charging EUR16.4
million of non-current expenses related to the amortisation of audiovisual
rights in connection with the Newen Studios acquisition.

Net profit attributable to the Group was EUR81.7 million, down EUR3.5 million
year-on-year. However, the 2017 net profit figure included the gain on the
divestment of the equity interest in Groupe AB.

(1) W<50PDM: Women aged under 50 purchasing decision-makers.
(2) Excluding the effect of changes in structure, revenue growth for the first
nine months was 2.4%.

Audiences(3)

Over the first nine months of 2018, the audience share of the TF1 group
advanced by 0.4 of a point for both of its target audiences, reaching 32.4% of
W<50PDM and 29.2% of 25-49 year-olds.
In the third quarter, the Group posted strong growth for both targets: +1.7
points for W<50PDM, and +2 points for 25-49 year-olds.

For the fourth consecutive quarter, the TF1 core channel increased its share of
the W<50PDM target audience, which reached 22.6% in the third quarter of 2018
(up 1.2 points year-on-year), extending the gap over the nearest private-sector
rival channel by 2.7 points. The channel also increased its share of the 25-49
year-old audience significantly during the quarter, by 1.6 points. These
impressive growth figures reflect generalist, event-TV programming with many
ratings successes. The World Cup attracted 20 of the top 50 audience ratings in
the first nine months of 2018, while the series Good Doctor (the best series
launch since Lost in 2015) drew up to 7.9 million viewers and an average
audience share of 47% among W<50PDM. French drama performed well with
Insoupçonnable (up to 5.9 million viewers, average audience share of 29% among
W<50PDM), while in access prime time Demain Nous Appartient set new records
with peak viewing figures of over 4.0 million. The return of the well-known
entertainment franchises also pulled in viewers, especially Danse avec les
stars, with the launch of the new season watched by 5.2 million with a 39%
audience share among W<50PDM.

The channel's news bulletins remained well ahead of the competition during the
quarter. The evening bulletin attracted up to 8.4 million viewers and an
average of 4.8 million, while the audience for the lunchtime bulletin peaked at
5.3 million with an average of 4.6 million viewers. The TF1 core channel has
optimised the strategic 8pm-9pm time slot on weekdays by screening Le 20H Le
Mag, a new current affairs magazine launched in March 2018, which averaged 4.6
million viewers.

The TF1 group is France's most-watched DTT broadcaster, with the DTT channels
(TMC, TFX, TF1 Séries Films, LCI) attracting 9.6% of W<50PDM in the quarter
(+0.5 of a point year-on-year) and 8.6% of 25-49 year-olds (+0.4 of a point
year-on-year). In the third quarter of 2018, TMC was the most popular DTT
channel among the target audience of 25-49 year-olds, thanks to the September
return in access prime time of Quotidien, with year-to-date best viewing
figures of up to 1.5 million (12% audience share, the most-watched DTT channel
in this time slot); the prime-time show Burger Quiz (up to 1.2 million viewers,
12% audience share); and movies such as Expendables (1.2 million viewers).

TFX and TF1 Séries Films retained their very strong momentum. TFX maintained
its performance with its target 15-24 year-old audience: a 4.1% share means it
is the no.2 DTT channel for this target, thanks to reality TV shows La Villa:
la bataille des couples and Beauty match. TF1 Séries Films has a 2.3% share of
the W<50PDM target audience, up 0.2 of a point year-on-year, including a record
1.2 million audience for the launch of the series The Handmaid's tale: la
servante écarlate.

LCI captured an audience share of 0.6% among individuals aged 4+, confirming
its status as France's no. 2 news channel.

MYTF1 performed well during the quarter with 326 million video views(4), up
6.8% year-on-year, largely driven by flagship programmes such as the TFX show
La Villa: la bataille des couples (47 million video views); the World Cup (21
million video views); and Good Doctor (14 million video views).

By end September, MYTF1 had broken the billion video views barrier, with a
year-on-year increase of 10%.

(3) Source: Médiamétrie-Mediamat.
(4) Excluding news content, XTRA content and live sessions.

Analysis by segment

Following the acquisition of the aufeminin group on 27 April 2018, a new
segmental reporting structure is being applied, starting in the second quarter
of 2018. The main change is the creation of a new "Digital" segment, which
combines the operations of the aufeminin group with those of Neweb, Studio71,
TF1 Digital Factory and MinuteBuzz(5). Given the immateriality of the impacts
on 2017 and the first quarter of 2018, prior periods have not been restated.

                                                                       Chg.
EURm          H1 2018  H1 2017  Q3 2018  Q3 2017  9m 2018   9m 2017    EURm

Consolidated
revenue       1,083.6  1,042.8    492.0   431.7   1,575.6   1,474.5   101.1
Broadcasting    869      857.5    363.4   331.5   1,232.4   1,189.0    43.4
TV advertising
on free-to-air
channels        754.5    747.3    303.9   285.1   1,058.3   1,032.4    25.9
Studios &
Entertainment   185.8    185.3     96.0   100.2     281.8     285.5    (3.7)
Digital *        28.8      -       32.6     -        61.4       -      61.4
Current
operating
profit/(loss)   100.5    108.0     23.7     8.5     124.2     116.5     7.7
Broadcasting     79.3     91.5     14.0    (8.0)     93.3      83.5     9.8
Studios &
Entertainment    18.6     16.5      7.5    16.5      26.1      33.0    (6.9)
Digital *         2.6      -        2.2      -        4.8        -      4.8
Cost of
programmes      499.2    482.2   (226.7) (211.7)   (725.9)   (693.9)  (32.0)
Football World
Cup             (46.0)     -      (25.7)     -      (71.7)       -    (71.7)

  Chg.%

  6.9%
  3.7%
  2.5%
-1.3%
  N/A
  6.6%
11.7%
-20.9%
  N/A
  4.6%
  N/A

* The aufeminin group is included in the consolidation with effect from
  May 2018

Broadcasting

Revenue for the Broadcasting segment for the first nine months of 2018 was
EUR43.4 million higher at EUR1,232.4 million. This rise was attributable mainly
to a EUR25.9 million increase in TV advertising revenue for the five
free-to-air channels and to revenues from agreements signed with all French
telecoms operators, demonstrating the Group's ability to monetise the most
popular content.

The cost of programmes for the five free-to-air channels for the first nine
months of 2018 was EUR725.9 million, a net year-on-year increase of EUR32
million. That figure includes EUR71.7 million for the Football World Cup(6),
but also savings of EUR39.7 million, showing that the Group has the agility to
optimise its programming cost structure while keeping audiences high.

The Broadcasting segment reported a current operating profit of EUR93.3 million
for the first nine months of 2018, up EUR9.8 million year-on-year.

Studios & Entertainment

Studios & Entertainment segment revenue for the first nine months of 2018 was
EUR281.8 million, down EUR3.7 million year-on- year. After a favourable third
quarter of 2017 in terms of deliveries, Newen Studios returned to more normal
seasonal patterns of activity. Meanwhile, growth in production activities did
not fully offset lower revenue at TF1 Studios; this was due to a less
favourable line-up this year, and to a decrease in the physical video sales and
home shopping businesses which are operating in declining markets. Segment
revenues have also been impacted since the second quarter of 2018 by the
reclassification of the segment's web activities (Neweb) to the new Digital
segment.

The segment posted a current operating profit of EUR26.1 million for the first
nine months of 2018, down EUR6.9 million year-on-year. The main impacts were
costs associated with the buyout of the residual 30% equity interest in Newen
at the start of July, and weaker performances from the film and entertainment
businesses.

Digital

Revenue from the new Digital segment for the first nine months of 2018 totalled
EUR61.4 million, and includes revenue from the aufeminin group (consolidated
from May 2018 onwards).

The segment made a current operating profit of EUR4.8 million over the same
period, including the results of operations from the aufeminin group, which
were affected by the recognition of costs associated with the acquisition.

(5) Accounted for by the equity method.
(6) The cost of replacement programmes was EUR13.4 million

Financial position

Shareholders' equity attributable to the Group was EUR1,529.5 million at
30 September 2018, out of a balance sheet total of EUR3,156.0 million.

Cash and cash equivalents amounted to EUR117.7 million at 30 September 2018,
versus EUR495.5 million at end December 2017. Net debt was EUR50.9 million at
30 September 2018 (versus a net cash surplus of EUR256.7 million at end
December 2017), after taking account of (i) the acquisition of the aufeminin
group, (ii) the impact of the buyout of the residual 30% interest in Newen
Studios, and (iii) commitments/options to buy out non-controlling interests
(mainly aufeminin, in connection with the squeeze-out).

The Board of Directors intends to carry out a EUR50 million share buyback
programme(7), on the basis of the 11th resolution approved by the Annual
General Meeting on 19 April 2018.

Outlook

Our 2018 nine-month results confirm that we are well on track to achieve our
guidance with:
- current operating margin (excluding major sporting events) up 4.5 points
  year-on-year, at 12.4%;
- cost of programmes (excluding major sporting events) of EUR654.2 million,
  versus EUR693.9 million a year earlier;
- revenue from sources other than advertising on the free-to-air channels
  representing 33% of consolidated revenue, versus 30% a year earlier.

Highlights of the fourth quarter of 2018 will include the screening of new
series including La Vérité sur l'Affaire Harry Quebert; the return of light
entertainment shows such as The Voice Kids; and a special evening to mark the
20th anniversary of the NRJ Music Awards. The policy of backing French drama
will continue with the screening of Jacqueline Sauvage and Balthazar.

We are reiterating our guidance:

- for 2018:

   o growth in current operating margin rate at Group level (excluding major
     sporting events);

- in 2019:

   o growth in revenue from activities other than TV advertising on the five
     free-to-air channels, with those other activities expected to account for
     at least one-third of consolidated revenue;
   o target of double-digit current operating margin rate;

- in 2021:

   o revenue from the digital segment of at least EUR250 million;
   o EBITDA margin from the digital segment of at least 15%;
   o improvement in return on capital employed(8) for the TF1 group(9).

- Given the savings achieved in the cost of programmes to end September 2018,
we expect that by end 2018 we will have hit our target of EUR960 million
(excluding major sporting events) for our five free-to-air channels, and are
reiterating our guidance of an average cost of programmes of EUR960 million
(excluding major sporting events) for the 2018-2020 period.

Our Financial Information Report for the first nine months of 2018 is available
at http://www.groupe-tf1.fr/en.
A conference call is scheduled for 30 October 2018 at 6.30pm (Paris time).
For details of how to connect to the conference call go to
http://www.groupe-tf1.fr/en/investisseurs/en.

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

(7) When the TF1 group decides to launch the buyback programme, an announcement
will be made in accordance with the regulations.
(8) ROCE = the ratio of (i) current operating profit - theoretical income tax
expense + net profit from associates to for a given year to (ii) average
capital employed for that year and the previous year. Capital employed =
shareholders' equity including non-controlling interests + net debt at
period-end. TF1 group ROCE was 8.9% in 2017.
(9) 2021 ROCE higher than 2018 ROCE.

TF1's latest news

02/04/2024 18:09

TF1 (EPA:TFI) - 9M 2018 - TF1 Group Results

Transparency directive : regulatory news

TF1's latest news

Other stories