TF1 (EPA:TFI) - Press release FY 2019 TF1

Transparency directive : regulatory news

14/02/2020 07:34

PRESS RELEASE

                     TF1 GROUP 2019 FULL-YEAR RESULTS

              Current operating margin of 10.9% (+2.2 points)
        Revenue of EUR2,337 million (+2.1%)(1), driven by acquisitions
   Net profit attributable to the Group up strongly, by 21.5% year-on-year
            Dividend raised by 25% in 2019 to 0.50 per share(2)

                            Guidance reiterated

                                                    Boulogne, 14 February 2020

The TF1 Board of Directors, chaired by Gilles Pélisson, met on 13 February
2020 to close off the financial statements for the year ended 31 December 2019.
The results below are presented using the segmental reporting structure adopted
by the TF1 group and in accordance with IFRS 16 (applicable from 1 January
2019). Revenue and operating profit data (published and restated) are available
in our 2019 Financial Information Report and on the TF1 group corporate
website: https://www.groupe-tf1.fr/en.

EURm          Q4 2019   Q4 2018     FY 2019     FY 2018     Chg. EURm  Chg. %
Consolidated
revenue        722.7     712.7       2,337.3     2,288.3      49.0      2.1%
TF1 group
advertising
revenue        499.7     510.5       1,658.1     1,662.2      (4.1)    -0.2%
Revenue from
other
activities     223.0     202.2         679.2       626.1      53.1      8.5%
Consolidated
revenue        722.7     712.7       2,337.3     2,288.3      49.0      2.1%
Broadcasting   528.6     531.3       1,774.2     1,763.7      10.5      0.6%
o/w
Advertising    472.6     475.0       1,567.4     1,588.2     (20.8)    -1.3%
Studios &
Entertainment  144.7     126.8         390.0       408.6     (18.6)    -4.6%
Digital
(Unify)         49.4      54.6         173.1       116.0      57.1     49.2%
Cost of
programmes    (325.8)   (288.3)       (985.5)   (1,014.2)     28.8     -2.8%
Current
operating
profit          70.7      72.2         255.1       198.8      56.3      0,3
Current
operating
margin           9.8%     10.1%         10.9%        8.7%       -       2.2
Broadcasting    28.9      56.7         185.5       151.0      34.5     22.8%
Studios &
Entertainment   32.9       8.2          57.9        35.5      22.4     63.1%
Digital (Unify)  8.9       7.3          11.7        12.3      (0.6)    -4.9%
Operating
profit          70.7      66.7         255.1       176.8      78.3     44.3%
Net profit
ttributable to
the Group       37.0      46.2         154.8       127.4      27.4     21.5%

Consolidated revenue of the TF1 group for 2019 reached EUR2,337.3 million, an
increase of EUR49.0 million(1). Advertising revenue was EUR1,658.1 million,
down slightly year-on-year (-0.2%), reflecting:

- lower advertising revenue in Broadcasting, with the effect of a tough
  comparative for the TF1 core channel partly offset by growth in advertising
  revenue for the DTT channels(3)and MYTF1;
- revenue growth for the digital segment (Unify), helped by its being
  consolidated over the full year for the first time in 2019.

The Group posted current operating profit of EUR255.1 million(4), a rise of
EUR56.3 million. Current operating margin increased sharply over the period to
10.9%, 2.2 points higher year-on-year, confirming that the Group has met its
target of double-digit current operating margin in 2019.

Net profit attributable to the Group was up EUR27.4 million at EUR154.8
million.

(1) Includes EUR53.3 million for the effects of changes in structure
(newly-consolidated acquisitions, net of the deconsolidation of Téléshopping).
(2) Subject to approval by the Annual General Meeting of 17 April 2020.
(3) TMC, TFX, TF1 Séries Films and LCI.
(4) Current operating profit after leases (i.e. excluding the impact of
IFRS 16) for 2019 was EUR251.4 million, up EUR56.6 million year-on-year.
* In 2018, operating profit included EUR22.0 million of non-current charges
relating to amortisation of audiovisual rights remeasured in connection with
the Newen Studios acquisition.

Analysis by segment

Broadcasting

- Broadcasting segment revenue reached EUR1,774.2 million, up EUR10.5 million
(+0.6%).

- Advertising revenue for the Broadcasting segment for 2019 was EUR1,567.4
   million (-1.3%). In 2018, revenue was boosted by the successful coverage
   of the Men's Football World Cup. In the fourth quarter of 2019, the climate
   of social unrest in France adversely affected demand from advertisers,
   leading to a decrease in advertising revenue for the TF1 core channel.
   Revenue from the DTT channels(5) continued to grow, in line with the
   increase in audiences and ad spot prices. Advertising revenue at MYTF1 also
   increased, with an acceleration following the makeover in June 2019. This
   good performance is linked to growth in the number of video views (+24%
   year-on-year), combined with an increase in CPM(6) thanks to more efficient
   exploitation of the data obtained from the 27 million registered users.

- Revenue from other Broadcasting segment activities advanced by EUR31.3
  million year-on-year. This increase reflected the full-year revenue
  contribution from the agreements signed with telecoms operators and Canal+,
  and the resale to Canal+ of broadcasting rights for the Women's Football
  World Cup in the second quarter.

The audience share of the TF1 group among targets remained high, at 32.6% of
W<50PDM(7) and 29.4% of 25-49 year-olds. These results show that our
multi-channel strategy - based on a higher-powered mix that will improve the
return on our investment in content - is delivering. Key features include:

- Strengthening the access prime time and prime time(8) slots on the TF1 core
  channel, which are particularly popular with advertisers and viewers.
- Programming schedules featuring resolutely distinctive live content (French
  drama, entertainment, sport and news), with a mix of iconic programmes and
  successful gambles like the event drama Le Bazar de la Charité (7.8 million
  viewers), the new entertainment hit Mask Singer (5.7 million viewers), the
  Women's Football World Cup (up to 10.7 million viewers), and the regular
  evening news bulletin (average 5.3 million viewers over the year).

- Growth in audiences for the DTT channels(9), whose repositioning is paying
  off, with audience shares of 10.6% among W<50PDM (+0.5 of a point) and 9.6%
  among 25-49 year-olds (+0.4 of a point). TMC was France's fourth most-watched
  channel in 2019 among advertising targets, reaching a record audience share
  of 4.4% with those targets.

- A substantial uplift from non-linear audiences on MYTF1. TF1 had 8 of the 10
  strongest audiences in catch-up, including Manifest (1.5 million extra
  viewers), Le Bazar de la Charité (1.4 million), and Koh Lanta (1.1 million).

- The cost of programmes on the Group's five free-to-air channels was EUR985.5
  million, in line with our guidance. The year-on-year savings of EUR28.8
  million were mainly due to the screening in 2018 of the Men's Football World
  Cup. The fourth quarter of 2019 saw increased strategic investment in
  programming, to attract large audiences and maintain a high share among
  targets.

- Broadcasting segment current operating profit reached EUR185.5 million, a
  substantial year-on-year rise of EUR34.5 million, generating current
  operating margin of 10.5% (+1.9 points year-on-year). The margin rate has
  doubled since 2016, reflecting the transformation of our Broadcasting
  activities to a more sustainable model.

(5) TMC, TFX, TF1 Séries Films and LCI.
(6) Cost per thousand impressions.
(7) Women aged under 50 purchasing decision-makers.
(8) 7pm-11pm.
(9) TMC, TFX, TF1 Séries Films and LCI.

Studios & Entertainment

- Studios & Entertainment segment revenue for 2019 was EUR390.0 million, down
  EUR18.6 million year-on-year. Excluding the EUR43 million impact of the
  deconsolidation of Téléshopping in the second quarter of 2019, revenue would
  have increased by 6% year-on-year.

Newen Studios saw further growth in activity during 2019, with the timing of
deliveries more favourable in the final quarter than in the first nine months,
and was also boosted by international acquisitions (De Mensen in Belgium, Reel
One in Canada), giving a total order book of more than 1,500 hours(10).

Finally, growth at TF1-Entertainment - especially for the PlayTwo music label
- partially offset lower revenues at TF1-Studio, which is still affected by
the contraction in physical video sales.

- The segment posted a current operating profit of EUR57.9 million, up EUR22.4
  million year-on-year, and generated an operating margin of 14.8%. This
  increase was due to growth in Newen's international operations, and a return
  to profit for TF1 Studio's video business thanks to improved cost control.

Digital (Unify)

- Revenue from the Digital segment (Unify) totalled EUR173.1 million, up
  EUR57.1 million year-on-year. The rise was mainly due to this segment being
  consolidated over 12 months in 2019 as opposed to 8 months in 2018.
  Following the acquisitions made in recent months, the main focus in 2019 was
  on reorganising the business to build an integrated digital division. In the
  fourth quarter of 2019, although social e-commerce reported growth (6% more
  gift boxes sold than in the fourth quarter of 2018), advertising revenue was
  down. That reflects a slight contraction in audiences in some European
  countries, and the impact on Livingly Media's US business of a change in
  media platform audience buying rules in an ever more competitive market.

Unify is well placed to deliver on its objectives thanks to the rollout in
September 2019 of Unify Advertising (a one-stop ad sales agency providing
access to all Unify brands and services) and a refocus on growth businesses and
territories.

- Current operating profit was down EUR0.6 million at EUR11.7 million, as the
  reorganisation of the business dented profits. Unify posted EBITDA of EUR18.7
  million in 2019 versus EUR17.7 million in 2018(11), giving a 2019 EBITDA
  margin of 10.8%.

Financial position

Shareholders' equity attributable to the Group was EUR1,562.4 million at 31
December 2019 out of a balance sheet total of EUR3,344.1 million.

Excluding lease obligations(12), the TF1 group had net debt of EUR126.3 million
at 31 December 2019 (net debt of EUR225.8 million including lease
obligations(12)), compared with net debt of EUR27.5 million at 31 December 2018
(net debt of EUR130.9 million including lease obligations(12)). The
year-on-year increase is attributable mainly to the acquisitions of De Mensen
and Reel One during the year for a total of EUR107 million.

In 2019, ROCE(13) came to 9.6%, an improvement on the 2018 figure of 8.8%.

To reward shareholders for the capital they have invested, the Board of
Directors will ask the Annual General Meeting of 17 April 2020 to approve the
payment of a dividend of EUR0.50 per share, representing 68% of net profit.
The ex-date will be 4 May, the date of record will be 5 May, and the payment
date will be 6 May 2020.

Movements in share capital

Between 1 January and 31 December 2019, 728,385 shares were issued as a result
of the exercise of stock options. TF1 did not hold any of its own shares during
that period.

(10) Number of hours ordered net of hours delivered as of 31 December 2019, on
projects worth more than EUR1 million and excluding Reel One (acquired Q4
2019).
(11) Unify was consolidated for only 8 months in 2018.
12 Under IFRS 16, applicable from 1 January 2019.
(13) ROCE = the ratio of [current operating profit - theoretical income tax
expense + net profit from associates] for a given year to average capital
employed that year and the previous year. Capital employed = shareholders'
equity including non-controlling interests + net debt at period-end. ROCE is
calculated before IFRS 16 impacts.

As of 31 December 2019, the number of shares and voting rights stood at
210,242,074, and the share capital was EUR42,048,414.80.

Governance

Acting on the advice of the Selection and Remuneration Committee, the Board of
Directors will ask the Annual General Meeting of 17 April 2020 to reappoint
Catherine Dussart and Olivier Bouygues as Directors for a three-year term of
office.

The Board assessed the independence of Catherine Dussart and concluded that she
would continue to have no business relationship with the TF1 group, and would
retain her status as an independent Director by reference to all the AFEP-MEDEF
Code criteria.
Subject to shareholder approval and excluding employee representative
Directors, the TF1 Board of Directors would continue to have four female
independent Directors, which means that the proportion of both female and
independent Directors would be 44% (without taking account of the two employee
representative Directors, both of whom are women).

The terms of office of the two employee representative Directors, Fanny
Chabirand and Sophie Leveaux Talamoni, expire in 2020. Employee representative
Directors are directly elected by TF1 employees in advance of the Annual
General Meeting. The first round of elections takes place on 19 March 2020. The
Annual General Meeting of 17 April 2020 will know the names of the two employee
representative Directors who will have been elected for a two-year term.

Extra-financial performance

In October 2019, it was confirmed that the TF1 group had retained its place in
the Gaïa extra-financial index. This means that the TF1 group was included in
the following extra-financial indices in 2019: DJSI (Europe & World), MSCI, ISS
(formerly Oekom) and Gaïa - official recognition of the Group's commitment to
corporate social responsibility.

And the TF1 group consolidated its status as the highest ranked media group in
the world's top 100 companies for gender
equality(14), underlining our commitment to equal opportunities at work.

Outlook

Our 2019 full-year results confirm our capacity to improve our profitability in
line with our target.

The TF1 group has sustainable growth momentum, and opportunities - in content,
tech and data - to position itself as a major player in the video market.

We are announcing the following guidance:

In 2020:

- double-digit current operating margin maintained;
- cost of programmes at EUR985 million;

In 2021:

- revenue of at least EUR250 million from the Unify digital division;
- EBITDA margin of at least 15% from the Unify digital division;
- improvement in the TF1 group's return on capital employed(15) relative to the
  2018 level (8.8%).

(14) Source: Equileap
(15) ROCE = the ratio of [current operating profit - theoretical income tax
expense + net profit from associates] for a given year to average capital
employed that year and the previous year. Capital employed = shareholders'
equity including non-controlling interests + net debt at period-end.

Executive remuneration

In accordance with the AFEP-MEDEF recommendations, disclosures about executive
remuneration are being published today on our corporate website at
www.groupe-tf1.fr/en: go to Investors / Governance / Report on Remuneration.

The financial statements have been audited, and an unqualified opinion has been
                            issued by the auditors.
Find the full financial statements and notes at http://www.groupe-tf1.fr/en..
The analyst meeting presenting the TF1 group's results will be streamed live
on http://www.groupe-tf1.fr/en starting 11.00 hours Paris time on 14 February
                                   2020.
        The presentation is available on http://www.groupe-tf1.fr/en.
                   For details of how to connect go to
       https://www.groupe-tf1.fr/en/investors/results-and-publications.

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

                 This document is certified by Wiztrust.

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

               This document is certified by Wiztrust.

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