Table of Contents - NOS Financeiros... · António da R. S. Henriques da Silva Vitor Fernando da...
Transcript of Table of Contents - NOS Financeiros... · António da R. S. Henriques da Silva Vitor Fernando da...
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ZON Multimédia – Serviços de Telecomunicações e Multimédia, SGPS, S.A. 2/55
Table of Contents 1. ZON in Numbers .......................................................................................................................................... 3
2. Highlights – First Quarter 2011 .................................................................................................................... 6
3. Governing Bodies ........................................................................................................................................ 7
4. Management Report .................................................................................................................................... 8
4.1. Business Review .................................................................................................................................. 8
4.2. Consolidated Financial Review .......................................................................................................... 12
5. Consolidated Financial Statements ........................................................................................................... 20
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ZON Multimédia – Serviços de Telecomunicações e Multimédia, SGPS, S.A. 3/55
1. ZON in Numbers
Business Indicators (in thousands):
Triple Play Subscribers: Triple Play Penetration in Cable Customer Base (%):
537 572603 642
666
1Q10 2Q10 3Q10 4Q10 1Q11
+24.1%
46%49%
52%55%
58%
1Q10 2Q10 3Q10 4Q10 1Q11
+12.0pp
RGUs: RGUs per Subscriber (units):
2,9503,011
3,0773,147 3,181
1Q10 2Q10 3Q10 4Q10 1Q11
+7.8%
2.082.14
2.192.25
2.29
1Q10 2Q10 3Q10 4Q10 1Q11
+10.0%
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ZON Multimédia – Serviços de Telecomunicações e Multimédia, SGPS, S.A. 4/55
Blended ARPU (Euros): Basic Subscribers:
35.235.6 35.8
33.8
35.8
1Q10 2Q10 3Q10 4Q10 1Q11
+1.7%
1,588 1,577 1,573 1,572 1,554
1Q10 2Q10 3Q10 4Q10 1Q11
(2.1%)
BroadBand Subscribers: Voice Subscribers:
635 650666 690
705
1Q10 2Q10 3Q10 4Q10 1Q11
+10.9%
646692 732
778 807
1Q10 2Q10 3Q10 4Q10 1Q11
+25.0%
Mobile:
8192
105 108115
1Q10 2Q10 3Q10 4Q10 1Q11
+42.5%
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ZON Multimédia – Serviços de Telecomunicações e Multimédia, SGPS, S.A. 5/55
Financial Indicators (in millions of Euros): Operating Revenues: EBITDA (EBITDA margin as % of Revenues):
213 214
1Q10 1Q11
+0.3%
7380
34.3%37.1%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100 %
0
10
20
30
40
50
60
70
80
90
1Q10 1Q11
+8.5%
Net Income: CAPEX:
9
10
1Q10 1Q11
+9.3%
5036
4
3
54
39
1Q10 1Q11
Baseline CAPEX Non Recurrent CAPEX
(28.0)%
Net Financial Debt: Net Financial Debt / EBITDA [x]:
577
642
1Q10 1Q11
+11.2%
2.1x 2.1x
1Q10 1Q11
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ZON Multimédia – Serviços de Telecomunicações e Multimédia, SGPS, S.A. 6/55
2. Highlights – First Quarter 2011
Operational ('000)
Triple Play Customers 536.7 666.0 24.1%
Triple Play Penetration (%) 45.6% 57.6% 12.0pp
RGUs (1)
2,950.5 3,181.3 7.8%
Blended ARPU (Euros) 35.2 35.8 1.7%
Financial (Millions of Euros)
Operating Revenues 213.5 214.1 0.3%
Pay TV, Broadband and Voice 192.7 195.6 1.5%
EBITDA 73.3 79.5 8.5%
EBITDA Margin 34.3% 37.1% 2.8pp
Net Income 9.3 10.2 9.3%(1) Total RGUs reported reflect the sum of Pay TV, Broadband, Fixed Voice and Mobile subscribers.
Highlights of 1Q11 Results 1Q11 1Q11 / 1Q101Q10
CONTINUED LEADERSHIP IN TRIPLE PLAY
o RGU growth of 7.8% yoy to 3.181 million services with RGUs per cable subscriber growing by 10% to
2.29;
o 666 thousand cable subscribers subscribe to Triple Play bundles, 57.6% of the cable base;
o Continued strong growth in Broadband to 704.7 thousand customers, representing growth of 10.9% yoy;
o 807.5 thousand customers now take Fixed Voice services, 68.2% of the cable base, an increase of 25%
yoy;
o Continued strength of NGN bandwidth services representing over 23% of broadband customers;
o Strong sequential ARPU growth reaching 35.8 euros in 1Q11 led by continued Triple Play uptake.
STRONG OPERATING FCF IMPROVEMENT ON THE BACK OF STRONG COST CONTROL AND LOWER
CAPEX
o Growth in core Triple Play Revenues of 1,5% yoy to 195.6 million euros and a marginal increase in
consolidated revenues of 0.3% yoy;
o EBITDA up by 8,5% to 79.5 million euros;
o Total CAPEX down by 28% to 38.8 million euros, compared with 53.9 million euros in 1Q10.
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3. Governing Bodies
As at the date of this report, 11 May 2011, the Governing Bodies of ZON had the following composition:
Board of Directors
Chairman of the Board of Directors Daniel Proença de Carvalho
Chairman of the Executive
Committee
Members of the Executive Committee
Rodrigo Jorge de Araújo Costa
José Pedro Faria Pereira da Costa
Luis Miguel Gonçalves Lopes
Duarte Maria de Almeida e Vasconcelos Calheiros
Members
Chairman of the Audit Committee
Members of the Audit Committee
Fernando Fortuny Martorell
António Domingues
Luis João Bordallo da Silva
László Istvan Hubay Cebrian
Norberto Emílio Sequeira da Rosa
Jorge Telmo Maria Freire Cardoso
Joaquim Francisco Alves Ferreira de Oliveira
João Manuel Matos Borges de Oliveira
Mário Filipe Moreira Leite da Silva António da R. S. Henriques da Silva
Vitor Fernando da Conceição Gonçalves
Nuno João Francisco Soares de Oliveira Sílvério Marques
Paulo Cardoso Correia da Mota Pinto
Officials of the General Meeting of Shareholders
President Júlio de Castro Caldas
Secretary Maria Fernanda Carqueija Alves de Ribeirinho Beato
Statutory Auditor
In Office Oliveira, Reis & Associados, SROC, Lda., represented by José Vieira
dos Reis
Alternate Fernando Marques Oliveira
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4. Management Report
4.1. Business Review
Pay TV, Broadband and Voice
Homes Passed 3,138.9 3,206.9 2.2%
RGUs (1)
2,950.5 3,181.3 7.8%
Cable RGUs per Subscriber (units) (2)
2.08 2.29 10.0%
Basic Subscribers (3) 1,588.4 1,554.4 (2.1%)
o.w. Cable Subscribers 1,176.4 1,155.5 (1.8%)
Triple Play Customers 536.7 666.0 24.1%
% Triple Play Cable Customers 45.6% 57.6% 12.0pp
o.w. DTH Subscribers 412.1 398.9 (3.2%)
Broadband Subscribers 635.4 704.7 10.9%
Fixed Voice Subscribers 646.1 807.5 25.0%
Mobile Subscribers 80.5 114.7 42.5%
Blended ARPU ( Euros ) 35.2 35.8 1.7%
Cinema
Revenue per Ticket (Euros) 4.6 4.7 2.8%
Tickets Sold 2,471.6 2,016.5 (18.4%)
Screens (units) 213 217 1.9%
(2) Cable RGUs per Subscriber correspond to the sum of Cable Pay TV, Broadband and Voice Subscribers, divided by the number of Cable Pay TV
Customers.
(3) 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 corporate), with a distinct geographical scope
(mainland Portugal and the Azores and Madeira islands) and with a variable number of channels.
1Q10
(1) Total RGUs reported reflect the sum of Pay TV, Broadband, Fixed Voice and Mobile subscribers.
1Q11 1Q10 / 1Q11Business Indicators ('000)
ZON was able to deliver still positive growth in its core Triple Play business, both in RGUs and in Revenues,
despite the very challenging economic environment and its inevitable negative impact on consumer sentiment.
Triple Play penetration now at over 57.6%
The number of customers taking Triple Play bundles continues to grow reaching penetration of 57.6% of the
cable base by the end of 1Q11, up 12 p.p. in comparison with 1Q10 – ZON is the leading Triple Play operator in
Portugal and still one of the leading Triple Play operators in its peer group in Europe in terms of Triple Play
penetration. Each customer subscribes to 2.29 services on average compared with 2.08 services in 1Q10 and
the total number of services subscribed, RGUs, increased by 7.8% to 3.181 million services in 1Q11.
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ZON Multimédia – Serviços de Telecomunicações e Multimédia, SGPS, S.A. 9/55
In January, ZON started to sell its new high-end Triple Play bundles, “IRIS” – a service based on a new pay TV
user interface developed by NDS and only sold to customers that subscribe to “ZON Fibra” broadband offers ie
customers that subscribe to broadband speeds of 30 Mbps or over.
“IRIS” is positioned as a completely new, premium Triple Play offer, providing a revolutionary TV viewing
experience. The new user interface was developed by NDS based on their award winning design “Snowflake”
software and was premiered worldwide on the ZON platform. The new interface has several functions that set it
apart from other systems, amongst which advanced management of recordings, cross searching and intelligent
searching, access to the best of the Internet through the TV, recommendations based on preferences and
customization of additional services, amongst others.
The launch of the new “IRIS” TV user interface together with the upgrades made to the existing user interface is
helping stimulate take-up of new video functionalities such as VoD. In 1Q11, the number of videos rented
through the ZON video-club including subscription VoD increased by 160% and VoD revenues increased to
almost 0.8% of total Triple Play revenues in the quarter.
The proportion of customers receiving digital services continues to grow and now stands at 85% compared with
76% at the end of 1Q10 and the number of next generation ZON HD Boxes installed at the end of 1Q11 stood
at 910 thousand. The pace of net growth in ZON boxes installed declined in the quarter to 25.6 thousand from
72.8 thousand in 3Q10 and 69.1 thousand in 4Q10, reflecting the already very high penetration of the digital
subscriber base.
However weakness was felt in the penetration of premium channel services, which fell to 44.1% at the end of
1Q11, a decline which is likely related with the challenging economic environment in Portugal and more
cautious consumer behavior from certain segments of the customer base.
Basic subscribers registered a reduction of 17.1 thousand in 1Q11, to 1,554.4 thousand compared with 1,588.4
thousand at the end of 1Q10, a decline which affected mainly Single Play cable and DTH customers with lower
than average ARPU. The decline was felt primarily in January and less in February, with a gradual improvement
in trend being felt as the quarter progressed. The headline price increase implemented in January on top of the
VAT increase from 21% to 23% explains much of the negative impact in January and February.
Sequential recovery in ARPU
ARPU posted an increase of 1.7% compared with 1Q10 and a sequential recovery of 2% in 1Q11 to 35.8 euros,
compared with 35.1 euros in 4Q10, which had been affected by aggressive promotional activity. These
promotional campaigns were withdrawn towards the end of 4Q10 albeit some spill over effect was still felt in the
start of 1Q11. The ARPU recovery was also influenced by the aforementioned price adjustment made at the
beginning of the year.
Over 700 thousand Broadband customers with strong take-up of NGN services
The number of Broadband subscribers continued to grow in 1Q11, posting net adds of 14.4 thousand to 704.7
thousand, an increase of 10.9% compared with 1Q10, bringing the penetration in ZON’s cable base to 61%
compared with 54% at the end of 1Q10.
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The proportion of customers subscribing to top tier “ZON Fibra” offers continued to grow by a further 3.5 p.p to
over 23%, reflecting sustained enthusiasm with the superior quality and features of ZON’s NGN broadband
offers. ZON’s share of customers connected with NGN speeds, according to data published by ANACOM,
stands at 74%, and repeated consumer surveys reflect that ZON is the operator to deliver the closest to
maximum rated speeds.
This leading position in NGN services is possible due to ZON’s focus on upgrading its entire cable footprint to
Eurodocsis 3.0 and continued cell-splitting in order to ensure both very high bandwidth to all customers on its
footprint and assure continuous quality and consistency of service. The major investments to upgrade the
network have already been completed and from now on, cell-splitting will continue to be done on a more
selective basis and driven by the success of customer take-up and usage patterns in particular geographies.
Over 800 thousand Fixed Voice customers
In 1Q11, ZON surpassed another milestone in terms of Fixed Voice customers reaching 807.5 thousand
subscribers, 68.2% of the cable base, having registered net adds of 29.9 thousand subscribers in the quarter.
ZON’S Fixed Voice offers are by far some of the most attractive in the market, given the cost of calls placed to
fixed networks in Portugal and to 50 other international destinations in 4 continents, and the unlimited traffic
incorporated in higher-end Triple Play bundles.
ZON Mobile continues to grow
The mobile subscriber base posted net growth of 6.8 thousand subscribers to 114.7 thousand customers at the
end of 1Q11, representing an increase of 42.5% compared with 1Q10. ZON’s mobile offer is one of the most
attractive mobile voice and data propositions in the Portuguese market and is recognized as an attractive
complement for ZON Triple Play customers.
End of accelerated investment cycle - forecast decline in quarterly CAPEX
In 2010, ZON concluded a period of accelerated CAPEX dedicated to rolling out it its next generation HFC
network with deployment of Eurodocsis 3.0 to almost all the cable footprint, ongoing cell-splitting and
deployment of its own primary network, therefore replacing previously rented infrastructure from the incumbent
with own equipment. ZON has therefore almost completed the necessary investment in an upgraded, GPON-
ready, and independent infrastructure covering around 80% of first homes in Portugal and with more than
enough capacity and scalability to accommodate the continuing broadband growth requirements of the
foreseeable future.
The level of quarterly investment in terminal equipment was almost halved to 15.1 million euros in 1Q11 due to
the fact that ZON has already reached a relatively high level of penetration of Next Generation HD set top boxes
in its customer base, the fact that the pace of RGU growth is also beginning to slowdown, and to the successful
refurbishment of terminal equipment and its reinjection into the distribution chain, subsequently translating, as
expected, into a need for lower customer related CAPEX.
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ZON Multimédia – Serviços de Telecomunicações e Multimédia, SGPS, S.A. 11/55
Audiovisuals and Cinemas
The number of tickets sold in ZON’s cinemas posted a significant decline of 18.4% in 1Q11 to 2.016 million
tickets and a sequential decline of 10% compared with 4Q10. This reduction is explained primarily by the fact
that 2010 was an exceptionally strong year for the movies business due to the large number of blockbuster
movies exhibited, particularly in 1Q10, a number of which in 3D format such as “Avatar” and “Alice in
Wonderland”. In 1Q11, the quantity of box-office hits shown in movie theatres was significantly less. Stepping
back to reflect on more longer-term trends, namely comparing with 2009, ticket sales in 1Q11 were actually
3.4% higher than in 1Q09 and total revenues were 8.1% higher, thus reinforcing the fact that 2010 was an
extraordinary year in terms of movie content.
Partially offsetting the decline in ticket sales in 1Q11, the average level of revenue generated per ticket sale
increased 2.8% to 4.7 euros compared with 4.6 euros in 1Q10. Total cinema revenues fell by 13.1% yoy in
1Q11 to 13.6 million euros.
The material slowdown in ticket sales in 1Q11 was felt in the market as a whole, with ZON actually posting a
better relative performance than the rest of the market, explained by its strong focus on innovation and the
improvement of the quality of its cinema network which is now fully digitalized and already has 3D projection
technology in 83 screens, more than 2 screens per multiplexer. In fact, the total number of spectators in the
market went down by 21.3% in 1Q11, according to ICA (Portuguese Institute For Cinema and Audiovisuals) and
total market gross revenues went down by 20.2%. This trend is in line with other international movie markets
namely the USA, which according to public data presented a decline in gross box office revenues of around
20% year-to-date. The most successful films of 1Q11 were “The Tourist”, “The King’s Speech” and “Black
Swan”.
The Audiovisuals business posted an improvement in revenues of 9.8% to 17.1 million euros in 1Q11, which
was explained primarily by the consolidation in 2Q10 of 50% of Dreamia. ZON’s audiovisuals unit is the leading
distributor of movies for cinema exhibition, VoD viewing and sale of DVD content in Portugal. Of the top 10 films
shown in cinemas in 1Q11, ZON Lusomundo distributed 6 of them, the most successful films being “The King’s
Speech”, “No Strings Attached”, “Rango”, “Tangled”, “Little Fockers” and “True Grit”.
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ZON Multimédia – Serviços de Telecomunicações e Multimédia, SGPS, S.A. 12/55
4.2. Consolidated Financial Review
Operating Revenues 213.5 214.1 0.3%
Pay TV, Broadband and Voice 192.7 195.6 1.5%
Audiovisuals 15.5 17.1 9.8%
Cinema 15.7 13.6 (13.1%)
Others and Eliminations (10.4) (12.1) 16.6%
Operating Costs Excluding D&A 140.2 134.6 (4.0%)
W&S 14.3 14.7 2.7%
Direct Costs 61.6 61.1 (0.8%)
Commercial Costs (1) 16.7 15.2 (8.9%)
Other Operating Costs 47.5 43.6 (8.3%)
EBITDA (2) 73.3 79.5 8.5%
EBITDA Margin 34.3% 37.1% 2.8pp
Depreciation and Amortization 53.1 55.6 4.7%
Income From Operations (3) 20.3 24.0 18.3%
Other Expenses / (Income) 0.0 (0.3) n.a.
Operating Profit (EBIT) (4) 20.2 24.3 19.8%
Financial Expenses (Income) 8.1 10.3 26.6%
Income Before Income Taxes 12.1 14.0 15.3%
Income Taxes (2.4) (3.6) 48.8%
Income From Continued Operations 9.7 10.4 7.0%
o.w. Attributable to Minority Shareholders (0.4) (0.2) (46.7%)
Net Income 9.3 10.2 9.3%(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
1Q11 / 1Q10Profit and Loss Statement
(Millions of Euros)1Q10 1Q11
(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.
Operating Revenues
Operating Revenues grew by 0.3% in 1Q11 to 214.1 million euros compared with 1Q10 representing a clear
slowdown in comparison with previous quarters, due to the negative performance of the smaller, less core
business units which together had a decline of 11% yoy. Still, the core Pay TV, Broadband and Voice unit grew
by 1.5% to 195.6 million euros, helped by the ARPU recovery which more than compensated the lower
subscriber base.
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ZON Multimédia – Serviços de Telecomunicações e Multimédia, SGPS, S.A. 13/55
Core Triple Play revenues posted a slowdown due to the lower basic subscriber base in the quarter, albeit this
decline was more than offset by the increase in ARPU driven by continued growth in Triple Play penetration, the
price increase implemented at the start of 2011 and the less aggressive promotional environment.
As regards the Cinema business, as mentioned before in this report, the number of box office hits premiered in
1Q11 was significantly less than in 1Q10, however 2010 was an exceptionally good year for movie content in
general. The level of ticket sales and revenues from the cinema business is actually 3.4% and 8.1% higher
respectively than in 1Q09, further highlighting the fact that 2010 was an extraordinarily good year in what is a
relatively mature sector. Revenues from the Audiovisuals business grew by 9.8% yoy to 17.1 million euros, an
increase explained primarily by the proportionate consolidation of the Dreamia joint venture (stake of 50%)
which only happened as from 2Q10.
EBITDA
EBITDA grew more than proportionately to the increase in revenues, posting an increase of 8.5% in 1Q11 to
79.5 million euros with EBITDA margin increasing by 2.8 pp to 37.1% in 1Q11 and a strong sequential quarterly
improvement of 4.0 pp compared with 4Q10.
The growth in EBITDA was led by very good performance in terms of cost discipline, led by both a clear focus
on cost control and a reduction in commercial and customer driven costs mostly due to the slower pace of RGU
growth and the less aggressive promotional environment.
EBITDA Margins (%)
34,3%35,3% 35,9%
33,2%
37,1%
1Q10 2Q10 3Q10 4Q10 1Q11
Consolidated Operating Costs
Wages and Salaries increased by 2.7% in 1Q11 compared with 1Q10 reflecting the marginal annual increase
in lower and mid scale salaries that was implemented in 2010 and some headcount increase in new areas.
Wages and Salaries were 5.4% lower than in 4Q10 due to the provision, in 4Q10, of bonuses to be paid in
2011.
Direct Costs in 1Q11 amounted to 61.1 million euros, marginally lower (0.8%) than in 1Q10, however posting a
4.3% sequential decline from 4Q10 as a result mostly of the lower level of costs relating to seasonally lower
advertising revenues shared, less royalty charges related with the lower level of activity of the cinema business
and comparatively lower costs related to DVD sales.
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Commercial Costs posted a significant sequential decline of 32% in 1Q11 in comparison with 4Q10 to 15.2
million euros, and a decline of 8.9% in comparison with 1Q10. The yoy reduction is a result of the lower level of
commercial activity driving lower sales commissions related costs, also supported by a more efficient use of
available sales channels, reducing the relative weight of more expensive door-to-door sales channels.
Other Operating Costs posted a yoy decline of 8.3% in 1Q11 to 43.6 million euros and of 5.1% compared with
the previous quarter. The yoy reduction was achieved through cost control of several General and
Administrative areas.
Net Income
Net Income increased by 9.3% to 10.2 million euros in 1Q11, explained primarily by the 8.5% increase in
EBITDA explained before.
Depreciation and Amortization recorded an increase of 4.7% in 1Q11 to 55.6 million euros, explained by the
accelerated roll-out of terminal equipment and by the peak in network related CAPEX which occurred in 2010.
This investment will flow through the P&L in coming years with relatively high levels of depreciation, thus
affecting operating results even though CAPEX going forward will be recording significantly lower levels than the
ones incurred in 2010.
Net Financial Expenses in 1Q11 amounted to 10.3 million euros, compared with 8.1 million euros in 1Q10, an
increase explained by the equity consolidation of the Angolan operation, “ZAP” as from March 2010 which in
1Q11 represented a negative contribution of 2.8 million euros and had a negligible impact in 1Q10. Net interest
and other financial expenses recorded an increase of 2.3% to 7.5 million euros in comparison with 1Q10 led
primarily by the higher interest rate environment and marginally higher level of net financial debt.
Income Taxes amounted to 3.6 million euros in 1Q11 which represents an increase of 48.8% compared with
1Q10, albeit translating into a reduction in P&L tax rate to around 26%. ZON continues to receive tax benefits
for development and investments in Next Generation Networks which had a smaller impact in 1Q11 than in
1Q10, and thus generating some discrepancies when comparing quarterly tax rates.
CAPEX
Pay TV, Broadband and Voice Infrastructure 20.3 19.1 (6.0%)
Terminal Equipment 27.9 15.1 (45.9%)
Other 1.8 1.7 (8.4%)
"Baseline" CAPEX 50.1 35.9 (28.3%)
Long Term Contracts 1.0 0.0 (100.0%)
Other Non-Recurrent Items 2.8 2.9 5.9%
Total CAPEX 53.9 38.8 (28.0%)
CAPEX (Millions of Euros) 1Q10 1Q11 1Q11 / 1Q10
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ZON Multimédia – Serviços de Telecomunicações e Multimédia, SGPS, S.A. 15/55
CAPEX, as expected, is posting significant quarter on quarter reductions, reaching 38.8 million euros in 1Q11,
compared with 53.9 million euros in 1Q10 and 78.5 million euros in 4Q10.
Baseline CAPEX, a measure of the more recurrent levels of CAPEX declined by 28.3% yoy to 35.9 million
euros led by the significant decline in customer related investment. As anticipated, once the pace of market
growth started to subside, with penetration of HD boxes already at very significant levels and with the success
of terminal equipment refurbishment processes, the additional need for investment in new terminal equipment
would also begin to decline. In 1Q11, customer related investment fell to 15.1 million euros, almost half that of
1Q10 and 15% less than the previous quarter and this kind of CAPEX is set to remain at lower levels going
forward.
Total CAPEX (Millions of Euros)
50,141,5 41,6 45,2 35,9
3,8 14,9 17,8
33,3
2,9
53,9 56,359,4
78,5
38,8
1Q10 2Q10 3Q10 4Q10 1Q11
Baseline CAPEX Non-Recurrent CAPEX
With the conclusion in 2010 of important non-recurrent projects, which made a structural change to how ZON
manages its network infrastructure, the most relevant of which being “ZON-IN” (ZON invested to ensure network
independence by deploying own fibre along the primary network and relocating hubs onto own infrastructure)
and the deployment of a new data centre, additional, non-recurrent investments are no longer significant
representing just 2.9 million euros in 1Q11 and potentially decreasing further in the coming quarters.
EBITDA 73.3 79.5 8.5%
CAPEX (53.9) (38.8) (28.0%)
Baseline CAPEX (50.1) (35.9) (28.3%)
Non-Recurrent CAPEX (3.8) (2.9) (22.7%)
Non-Cash Items Included in EBITDA - CAPEX and Change in Working Capital (1) (18.1) (35.0) n.a.
Operating Cash Flow After Investment 1.3 5.7 n.a.
Long Term Contracts (39.8) (14.2) (64.4%)
Net Interest Paid and Other Financial Charges (2.3) 1.9 (181.7%)
Income Taxes Paid (0.3) (0.7) 108.5%
Disposals 6.7 6.7 (0.0%)
Other Cash Movements 0.4 (0.8) n.a.
Free Cash-Flow (34.0) (1.4) (96.0%)(1) This caption includes non-cash provisions included in EBITDA and non-cash CAPEX related to the upfront capitalization of long term contracts.
Cash Flow (Millions of Euros) 1Q10 1Q11 1Q11 / 1Q10
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Operating Cash Flow
Operating Cash Flow in 1Q11 posted an improvement to 5.7 million euros supported by the 8.5% growth in
EBITDA and the significant reduction in CAPEX, both of which discussed earlier in this report, thus generating
significant growth in EBITDA - CAPEX to 40.7 million euros compared with 19.5 million euros in 1Q10 and (5.2)
euros in 4Q10 due to the high level of non-recurrent CAPEX of the last quarter.
EBITDA - Total CAPEX (Millions of Euros)
16.920.9
15.9
(4.7)
19.5 19.9 20.1
(5.2)
40.7
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11
Operating Cash Flow was negatively impacted by the seasonally higher level of working capital mostly on the
back of supplier payments that had been carried through from the end of 4Q10, which were particularly
significant due to the high level of CAPEX incurred in 4Q10.
Free Cash Flow
Total FCF in 1Q11 was just marginally negative by 1.4 million euros and represented a significant improvement
on the negative 34 million euros recorded in 1Q10. Main additional items affected total FCF were cash
payments for long term contracts of 14.2 million euros and the receipt of the final payment due from the sale in
2009 of the stake in Lisboa TV representing a cash inflow of 6.7 million euros. Again, if it were not for the strong
negative impact of the seasonal working capital, Free Cash Flow would already have been largely positive in
1Q11.
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ZON Multimédia – Serviços de Telecomunicações e Multimédia, SGPS, S.A. 17/55
Consolidated Balance Sheet
Current Assets 531.4 700.1
Cash and Equivalents 264.6 428.3
Accounts Receivable, Net 188.8 196.2
Inventories, Net 58.6 55.5
Taxes Receivable 2.8 3.4
Prepaid Expenses and Other Current Assets 16.6 16.6
Non-current Assets 1,119.3 1,096.4
Investments in Group Companies 1.1 1.0
Intangible Assets, Net 336.7 319.4
Fixed Assets, Net 645.8 645.6
Deferred Taxes 51.0 50.4
Other Non-current Assets 84.5 80.0
Total Assets 1,650.7 1,796.4
Current Liabilities 398.7 570.9
Short Term Debt 92.6 285.8
Accounts Payable 210.5 174.4
Accrued Expenses 70.4 80.3
Deferred Income 4.1 5.7
Taxes Payable 10.8 18.6
Current Provisions and Other Liabilities 10.4 6.0
Non-current Liabilities 1,001.8 964.8
Medium and Long Term Debt 973.0 937.9
Non-current Provisions and Other Liabilities 28.8 26.9
Total Liabilities 1,400.5 1,535.7
Equity Before Minority Interests 240.3 251.2
Share Capital 3.1 3.1
Own Shares (0.0) (0.0)
Reserves, Retained Earnings and Other 201.8 238.0
Net Income 35.4 10.2
Minority Interests 9.9 9.6
Total Shareholders' Equity 250.2 260.7
Total Liabilities and Shareholders' Equity 1,650.7 1,796.4
Balance Sheet (Millions of Euros) 2010 1Q11
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ZON Multimédia – Serviços de Telecomunicações e Multimédia, SGPS, S.A. 18/55
Capital Structure
At the end of March 2011, Net Financial Debt stood at 641.7 million euros, an increase of 0.3% in comparison
with the end of FY10.
ZON’s gross bank debt is represented primarily by commercial paper lines, by the loan from the European
Investment Bank described in previous announcements and by bond issues secured in 2009 and 2010.
Facilities are all negotiated at floating interest rates. To protect against future interest rate fluctuations, ZON has
negotiated interest rate hedging operations of 511.3 million euros (approximately 80% of total Net Financial
Debt). The hedging operations are booked at fair value on the Balance Sheet.
With these funds in place, ZON today has a very solid debt position, under very good financial terms.
Due to the refinancing of a 150 million euros commercial paper line until 2016, which took place at the end of
1Q11, the average maturity of ZON’s financial debt had increased to 2.89 years. The all-in average cost of
ZON’s Net Financial Debt was 3.7%.
Net Financial Gearing reduced to 71.1% compared with 71.9% at the end of 2010, and Net Financial Debt /
EBITDA (last 4 quarters) stands at 2.1x, well below the average of ZON’s peer group of cable companies. Total
Net Debt of 780.4 million euros also includes commitments with Long Term contracts recorded as liabilities on
the Balance Sheet, of which the most relevant are long-term telecom, transponder and content contracts.
Short Term 45.5 249.3 n.a.
Bank and Other Loans 41.4 243.4 n.a.
Financial Leases 4.1 5.9 43.5%
Medium and Long Term 867.4 836.3 (3.6%)
Bank Loans 853.3 823.6 (3.5%)
Financial Leases 14.0 12.7 (9.8%)
Total Debt 912.9 1,085.7 18.9%
Cash, Short Term Investments and Intercompany Loans 273.2 444.0 62.5%
Net Financial Debt 639.7 641.7 0.3%
Net Financial Gearing (1) 71.9% 71.1% (0.8pp)
Net Financial Debt / EBITDA 2.1x 2.1x n.a.(1) Net Financial Gearing = Net Financial Debt / (Net Financial Debt + Total Shareholders' Equity).
Net Financial Debt (Millions of Euros) 2010 1Q11 / 20101Q11
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ZON Multimédia – Serviços de Telecomunicações e Multimédia, SGPS, S.A. 19/55
International Growth - Angola
“ZAP”, ZON’s Pay TV joint venture in Angola continues to develop well, with strong customer take-up to over 60
thousand active customers by the end of 1Q11. Enthusiasm with ZAP’s offer remains high, with the majority of
customers subscribing to the higher-tier pay TV offers sold at 60 USD per month including premium sports and
movies. ZAP’s offer in Angola benefits from the exclusive distribution of the Portuguese Football League (Liga
ZON Sagres), and other key Portuguese sports competitions, and is also proving very attractive in other areas
of content with a clear predominance of Portuguese language channels.
During the quarter, ZAP further increased its reach being distributed by the cable providers in Angola and
Mozambique. ZAP will be distributed potentially to an additional 20 thousand subscribers.
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5. Consolidated Financial Statements
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ZON Multimédia – Serviços de Telecomunicações e Multimédia, SGPS, S.A.
Consolidated Statement of Comprehensive Income for the quarters ended on 31 March 2010 and 2011
(Amounts stated in euros)
Notes 3M 10 3M 11
( U naud it ) ( a) ( U naud it ) ( a)
REVENUES:
Services rendered 203 789 477 206 507 947
Sales 8 673 275 6 512 848
Other operating revenues 1 029 366 1 091 338
5 213 492 118 214 112 133
COSTS, LOSSES AND GAINS:
Wages and salaries 14 327 977 14 711 606
Direct costs 61 577 770 61 068 637
Costs of products sold 2 248 740 2 224 195
Marketing and advertis ing 5 292 837 4 926 222
Support services 17 663 953 18 941 703
Supplies and external services 33 590 883 33 636 640
Other operational costs 211 397 244 753
Taxes 649 187 1 419 228
Provisions and adjustments 6 4 608 931 ( 2 578 509)
Depreciation and amortization 7 50 382 442 55 444 115
Impairment of assets 2 683 829 121 669
Reestructuring costs - 150 551
Losses/(gains) on sale of assets, net ( 117 193) ( 557 651)
Other losses/(gains), net 121 588 96 649
193 242 341 189 849 809
Income before financial results and taxes 20 249 777 24 262 324
Financial costs 8 5 696 718 6 056 934
Net foreign exchange losses/(gains), net ( 141 860) ( 22 106)
Net losses/(gains) on financial assets, net 3 471 0
Equity in earnings of affiliated companies, net 9 948 416 2 829 887
Net other financial expenses/(income) 8 1 635 396 1 441 359
8 142 141 10 306 074
Income before taxes 12 107 636 13 956 250
Income taxes 10 2 403 163 3 576 868
Net consolidated income 9 704 473 10 379 382
Attributable to:
Non-controlled interests 412 100 219 540
Zon Multimédia Group shareholders 9 292 373 10 159 842
Earnings per share
Basic 11 0,03 0,03
Diluted 11 0,03 0,03
(a) As standard practice, only the annual accounts are audited; the quarterly results are not audited separately.
The Notes to the Financial Statements form an integral part of the consolidated statement of comprehensive income for the
quarter ended on 31 March 2011.
Accountant The Board of Directors
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ZON Multimédia – Serviços de Telecomunicações e Multimédia, SGPS, S.A.
Consolidated Statement of Comprehensive Income for the quarters ended on 31 March 2010 and 2011
(Amounts stated in euros)
3M 10 3M 11
( Unaud it ) ( a) ( Unaud it ) ( a)
Net income 9 704 473 10 379 382
Share Incentive scheme (Note 19) 1 576 469 238 773
Fair value of interest rate swap (Note 16) ( 4 197 248) 1 355 803
Fair value of exchange rate forward (Note 16) - 17 392
Currency translation differences 48 644 ( 9 102)
Other movements 34 258 10 929
Other comprehensive income ( 2 537 877) 1 613 795
Total comprehensive income for the period 7 166 596 11 993 177
Attributable to:
Share owners of the company 6 754 496 11 773 638
Non-controlled interests 412 100 219 539
7 166 596 11 993 177
(a) As standard practice, only the annual accounts are audited; the quarterly results are not audited separately.
The Notes to the Financial Statements form an integral part of the consolidated statement of comprehensive income for the
quarter ended on 31 March 2011.
Accountant The Board of Directors
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ZON Multimédia – Serviços de Telecomunicações e Multimédia, SGPS, S.A.
Consolidated Statement of Financial Position at 31 December 2010 and 31 March 2011
(Amounts stated in euros)
Notes 31-12-2010 31-03-2011
Assets
Current assets:
Cash and cash equivalents 12 264 645 614 428 334 820
Accounts receivable - trade 126 661 588 128 912 694
Accounts receivable - other 62 122 278 67 309 576
Inventories 58 628 028 55 465 827
Taxes receivable 2 765 914 3 392 178
Non-current assets held-for-sale 678 217 678 218
Prepaid expenses 15 924 543 15 970 728
Total current assets 531 426 182 700 064 041
Non-current assets:
Accounts receivable - other 60 945 529 56 250 268
Investments in participated companies 1 137 616 1 029 140
Available-for-sale financial assets 21 798 211 21 798 211
Intangible assets 336 732 524 319 376 451
Tangible assets 645 848 283 645 649 375
Deferred income tax assets 10 51 037 647 50 360 075
Other non-current assets 1 786 302 1 860 287
Derivative financial instruments 16 - 35 644
Total non-current assets 1 119 286 112 1 096 359 451
Total assets 1 650 712 294 1 796 423 492
Liabilities
Current liabilities:
Borrowings 13 92 577 453 285 778 294
Accounts payable-trade 135 399 988 116 013 804
Accounts payable-other 75 083 100 58 364 673
Accrued expenses 70 452 210 80 339 451
Deferred income 4 070 343 5 700 289
Taxes payable 10 797 273 18 638 710
Provisions for other liabilities and charges 14 10 365 327 4 732 974
Derivative financial instruments 16 - 1 310 428
Total current liabilities 398 745 695 570 878 623
Non-current liabilities:
Borrowings 13 973 044 728 937 861 076
Accounts payable-other 5 331 314 4 146 987
Accrued expenses - 17 231
Defered income 2 945 265 2 280 912
Provisions for other liabilities and charges 14 12 631 436 15 466 428
Deferred income tax liabilities 10 5 258 790 4 933 809
Derivative financial instruments 16 2 571 610 65 561
Total non-current liabilities 1 001 783 144 964 772 004
Total liabilities 1 400 528 838 1 535 650 627
Shareholder's equity
Share capital 15.1 3 090 968 3 090 968
Treasury shares 15.2 ( 17 305) ( 48 583)
Legal reserve 15.3 3 556 300 3 556 300
Other reserves 15.3 155 146 027 156 587 456
Retained earnings 78 516 745 88 028 971
Equity before non-controlled interests 240 292 735 251 215 112
Non-controlled interests 9 890 721 9 557 753
Total equity 250 183 456 260 772 865
Total liabilities and shareholder's equity 1 650 712 294 1 796 423 492
The Notes to the Financial Statements form an integral part of the consolidated statement of financial position as at 31 March
2011.
Accountant The Board of Directors
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ZON Multimédia – Serviços de Telecomunicações e Multimédia, SGPS, S.A.
Consolidated Statement of Changes in Shareholders' Equity for the quarters ended on 31 March 2010 and 2011
(Amounts stated in euros)
Notes Share capital
Capital
issued
premium
Treasury
shares
Legal
reserve
Other
reserves
Accumulated
earnings
Non-
controlled
interests Total
Balance as at 1 January 2010 3 090 968 ( 87 096 566) ( 140 064) 3 556 300 197 195 421 63 779 018 9 249 849 189 634 926
Dividends attributed to non-controlled interests - - - - - - ( 714 864) ( 714 864)
Undistributed profit - - - - ( 20 648) 20 648 - -
Aquisition of treasury shares 15.3 - ( 1 475 627) ( 3 722) - - - - ( 1 479 349)
Distribuition of treasury shares 15.3 - 1 875 014 3 659 - - ( 1 878 673) - -
Sale of treasury shares 15.3 - 2 771 245 3 994 - ( 659 700) - - 2 115 539
Sale of treasury shares - Equity swap 15.3 - 83 986 630 136 071 - ( 11 970 731) - - 72 151 970
Comprehensive income for the period - - - - ( 2 537 877) 9 292 373 412 100 7 166 596
Consolidation differences - - - - 254 462 - 2 717 257 179
Balance as at 31 March 2010 3 090 968 60 696 ( 63) 3 556 300 182 260 927 71 213 366 8 949 802 269 131 996
Balance as at 1 January 2011 3 090 968 ( 17 250) ( 55) 3 556 300 155 146 027 78 516 745 9 890 720 250 183 456
Dividends attributed to minority interests - - - - - - ( 542 381) ( 542 381)
Aquisition of treasury shares 15.3 - ( 676 986) ( 1 907) - - - - ( 678 893)
Distribuition of treasury shares 15.3 - 645 788 1 827 - - ( 647 615) - -
Comprehensive income for the period - - - - 1 613 797 10 159 841 219 539 11 993 177
Consolidation differences - - - - ( 172 368) ( 2) ( 10 125) ( 182 495)
Balance as at 31 March 2011 3 090 968 ( 48 448) ( 135) 3 556 300 156 587 456 88 028 971 9 557 753 260 772 865
The Notes to the Financial Statements form an integral part of the consolidated statement of changes in shareholders' equity
for the quarter ended on 31 March 2011.
Accountant The Board of Directors
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ZON Multimédia – Serviços de Telecomunicações e Multimédia, SGPS, S.A.
Consolidated Statement of Cash Flows for the quarters ended on 31 March 2010 and 2011
(Amounts stated in euros)
Notes 3M 10 3M 11
OPERATING ACTIVITIES
Collections from clients 251 513 118 252 965 818
Payments to suppliers ( 200 140 316) ( 160 349 197)
Payments to employees ( 12 835 799) ( 12 272 242)
Payments relating to income taxes ( 359 321) ( 403 953)
Other cash receipts / payments related with operating activities ( 16 420 073) ( 14 395 990)
Cash flow from operating activities (1) 21 757 609 65 544 436
INVESTING ACTIVITIES
Cash receipts resulting from
Financial investments 6 666 666 6 666 666
Tangible fixed assets 1 512 240 9 932
Loans granted 33 300 000 2 650 000
Interest and related income 2 648 697 3 334 812
44 127 603 12 661 409
Payments resulting from
Tangible fixed assets ( 53 049 514) ( 53 250 299)
Intangible assets ( 1 040 009) ( 1 926 710)
Loans granted - ( 9 223 233)
( 54 089 523) ( 64 400 243)
Cash flow from investing activities (2) ( 9 961 920) ( 51 738 833)
FINANCING ACTIVITIES
Cash receipts resulting from
Loans obtained 297 916 667 230 000 000
Sales of treasury shares 74 196 999 -
372 113 666 230 000 000
Payments resulting from
Loans obtained ( 322 751 868) ( 58 000 000)
Lease rentals (principal) ( 7 410 065) ( 16 415 922)
Interest and related expenses ( 7 396 296) ( 4 491 581)
Dividends ( 113 322) -
Acquisition of treasury shares ( 1 479 349) ( 678 893)
( 339 150 900) ( 79 586 396)
Cash flow from financing activities (3) 32 962 766 150 413 604
Change in cash and cash equivalents (4)=(1)+(2)+(3) 44 758 455 164 219 207
Effect of exchange differences 137 281 ( 530 001)
Cash and cash equivalents at the beginning of the period 176 988 410 264 645 614
Cash and cash equivalents at the end of the period 12 221 884 146 428 334 820
The Notes to the Financial Statements form an integral part of the consolidated statement of cash flows for the quarter ended
on 31 March 2011.
Accountant The Board of Directors
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Consolidated Management Report 1Q11
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ZON Multimédia – Serviços de Telecomunicações e Multimédia, SGPS, S.A.
Notes to the Consolidated Financial Statements at 31 March 2011
Index of notes to the consolidated financial statements
1. Introductory Note........................................................................................................................................ 27 2.Accounting Policies ..................................................................................................................................... 28 3.Judgements and estimates ......................................................................................................................... 28 4.Changes in the consolidation perimeter ..................................................................................................... 28 5.Segment Reporting ..................................................................................................................................... 29 6.Provisions and adjustments ........................................................................................................................ 32 7.Depreciation and amortisation .................................................................................................................... 32 8.Finance costs and other net financial charges ........................................................................................... 33 9.Losses/(gains) in associated companies .................................................................................................... 33 10.Income tax expense .................................................................................................................................. 33 11.Earnings per share .................................................................................................................................... 37 12.Cash and cash equivalents ....................................................................................................................... 38 13.Borrowings and loans ............................................................................................................................... 38 14.Provisions for other risks and contingencies ............................................................................................ 41 15.Shareholder's equity ................................................................................................................................. 42 16.Derivative financial instruments ................................................................................................................ 44 17.Guarantees and financial undertakings .................................................................................................... 46 18.Legal actions ............................................................................................................................................. 47 19.Share incentive scheme ............................................................................................................................ 52 20.Subsequent events ................................................................................................................................... 52
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ZON Multimédia – Serviços de Telecomunicações e Multimédia, SGPS, S.A.
Notes to the Consolidated Financial Statements at 31 March 2011
(Amounts stated in euros)
1. Introductory Note
ZON Multimédia – Serviços de Telecomunicações e Multimédia, SGPS, S.A. (“ZON Multimédia” or “the Company”)
was set up by Portugal Telecom, SGPS, S.A. (“Portugal Telecom”) on 15 July 1999 with the purpose of developing
its strategy for the multimedia business.
During the 2007 financial year, Portugal Telecom proceeded with the spin-off of ZON Multimédia by means the
attribution of its shares in the latter company to its shareholders, which then became fully independent from Portugal
Telecom.
The multimedia business operated by ZON Multimédia and the associated companies comprising its portfolio of
companies (“ZON Group” or “Group”) includes cable and satellite television services, voice and internet access
services, video production and sale, Pay TV channel advertising, cinema exhibition and distribution, and the
production of channels for Pay TV.
ZON Multimédia shares are listed on the Euronext Lisbon market.
The cable and satellite television service is supplied by ZON TV Cabo Portugal, S.A. (“ZON TV Cabo”) and its
associated companies. The activities of these companies include: a) television signal cable and satellite distribution;
b) the operation of electronic communications services, including data and multimedia communication services in
general; c) IP voice services (“VOIP” – Voice over IP); d) mobile virtual network operator (MVNO); and e) the
provision of consultancy and similar services directly or indirectly related to the above mentioned activities and
services. The business of ZON TV Cabo and its associated companies is regulated by Law 5/2004 (Electronic
Communications Law), which establishes the legal regime governing electronic communications networks and
services.
ZON Conteúdos – Actividade de Televisão e de Produção de Conteúdos, S.A. (“ZON Conteúdos”), ZON
Lusomundo TV, Lda (“ZON Lusomundo TV”), Sport TV Portugal, S.A. (“Sport TV”) and Dreamia – Serviços de
Televisão, S.A. (“Dreamia SA”) operate the television and content production business and currently produce movie,
television series, sports and children’s channels which are distributed to other operators by ZON TV Cabo and its
associated companies. ZON Conteúdos also manages the advertising space on Pay TV channels and in the
cinemas of ZON Lusomundo Cinemas, S.A. (“ZON LM Cinemas”).
ZON Lusomundo Audiovisuais, S.A. (“ZON LM Audiovisuais”) and ZON LM Cinemas and their subsidiaries operate
in the audiovisual sector, which includes video production and sale, cinema distribution and exhibition, and the
acquisition/negotiation of Pay TV and VOD (video-on-demand) rights.
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The notes in these Notes to the Interim Consolidated Financial Statements follow the order in which the items are
shown in the consolidated financial statements.
The consolidated financial statements for the financial year ended on 31 March 2011 were approved by the Board of
Directors and their issue authorised on 11 May 2011.
2. Accounting Policies
The consolidated financial statements were prepared on a going concern basis from the books and accounting
records of the companies included in the consolidation (Annex I), using the historical cost convention, adjusted
where applicable by the valuation of financial assets and liabilities (including derivatives) at fair value.
The accounting policies adopted, including the financial risk management policies, are consistent with those used in
the preparation of the financial statements for the financial year ended on 31 December 2010.
2.1. Principles of presentation
The consolidated financial statements of ZON Multimédia were prepared using accounting policies consistent with
International Financial Reporting Standards (“IAS/IFRS”), as adopted in the European Union on 01 January 2011,
and in accordance with IAS 34 - Interim Financial Reporting.
3. Judgements and estimates
During the quarter ended on 31 March 2011, no significant changes occurred in the accounting estimates, other
than those mentioned in Note 7, compared with those used in the preparation of the financial information for the
year ended on 31 December 2010, nor were any material errors relating to previous financial years recognised.
4. Changes in the consolidation perimeter
In 2010, three new companies were included in the consolidation perimeter. Two of these were included in the
second quarter of 2010: Dreamia Holding BV (“Dreamia BV”), 50% owned by ZON Audiovisuais SGPS; and
Dreamia SA, 100% owned by Dreamia BV (see Annex I c)). MSTAR, SA, 100% owned by the Group, was included
in the fourth quarter of 2010.
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The impact on the statement of comprehensive income at 31 March 2011 is shown below:
Dreamia BV Dreamia SA Mstar Total
Revenue - 1 817 319 110 338 1 927 657
Costs 203 373 838 155 72 503 1 114 032
Operating income/(loss) ( 203 373) 979 164 37 835 813 625
Financial results ( 17 231) 20 619 ( 66) 3 324
Other - - ( 3 249) ( 3 249)
Income before taxes ( 220 604) 999 783 34 520 813 699
Income taxes - - - -
Net income ( 220 604) 999 783 34 520 813 699
There is no impact in terms of the financial position since the three companies were already included in the
consolidation perimeter at 31 December 2010.
5. Segment Reporting
5.1. Main report format – business segments
The business segments are as follows:
• Pay TV, broadband and voice relates mainly to the supply of TV, Internet (fixed and mobile) and voice
(fixed and mobile) services and includes the following companies: ZON Multimédia, ZON Televisão por
Cabo, SGPS, S.A. (“ZON Televisão por Cabo”), ZON TV Cabo Portugal, ZON TV Cabo Açoreana, S.A.
(“ZON TV Cabo Açoreana”), ZON TV Cabo Madeirense, S.A. (“ZON TV Cabo Madeirense”), ZON
Conteúdos, ZON Lusomundo TV, Teliz Holding B.V., MSTAR and the Sport TV joint venture.
• Audiovisuals relates to the supply of video production services and video sales, cinema distribution and
cinema exhibition services and the acquisition/negotiation of Pay TV and VOD (video-on-demand) rights
and includes the following companies: ZON Audiovisuais, SGPS, S.A., ZON Cinemas, SGPS, S.A., ZON
LM Audiovisuais, ZON LM Cinemas, Lusomundo Moçambique, Lda. (“Lusomundo Moçambique”),
Lusomundo España, SL (“Lusomundo España”), Grafilme – Sociedade Impressora de Legendas, Lda.
(“Grafilme”), Lusomundo Imobiliária 2, S.A. (“Lusomundo Imobiliária 2“), Lusomundo Sociedade de
Investimentos Imobiliários, SGPS, S.A. (“Lusomundo SII”), Empracine – Empresa Promotora de
Actividades Cinematográficas, Lda. (“Empracine”) and the joint venture in Dreamia BV and Dreamia SA.
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The results by segment for the quarters ended on 31 March 2010 and 2011 are shown below:
3M 10 3M 10 3M 10
Total segment revenue 193 649 943 28 585 971 222 235 913
Inter-segment revenue ( 3 133 678) ( 5 610 117) ( 8 743 795)
Sales and services rendered 190 516 265 22 975 854 213 492 118
Operational income by segment 17 544 599 2 705 178 20 249 777
Net interest expense and other 6 789 104 401 150 7 190 254
Gains in financial assets - 3 471 3 471
Share of profit/(loss) from associates 982 430 ( 34 014) 948 416
Income before taxes 9 773 065 2 334 571 12 107 636
Income tax expense 1 708 810 694 353 2 403 163
Net income 8 064 255 1 640 218 9 704 473
Other costs:
Depreciation, amortisation and impairment 51 447 607 1 618 664 53 066 271
Provisions and adjustments 4 282 971 325 960 4 608 931
Costs / (revenues) non-recurrent 12 790 ( 8 395) 4 395
Group
Pay TV, broadband
and voice Audiovisuals
3M 11 3M 11 3M 11
Total segment revenue 196 481 130 28 506 490 224 987 620
Inter-segment revenue ( 4 550 076) ( 6 325 411) ( 10 875 487)
Sales and services rendered 191 931 054 22 181 079 214 112 133
Operational income by segment 20 075 757 4 186 567 24 262 324
Net interest expense and other 7 073 988 402 200 7 476 187
Gains in financial assets - - -
Share of profit/(loss) from associates 2 806 826 23 062 2 829 887
Income before taxes 10 194 944 3 761 306 13 956 250
Income tax expense 2 653 620 923 247 3 576 868
Net income 7 541 323 2 838 058 10 379 382
Other costs:
Depreciation, amortisation and impairment 54 081 153 1 484 631 55 565 784
Provisions and adjustments ( 2 681 832) 103 323 ( 2 578 509)
Costs / (revenues) non-recurrent ( 312 828) 2 376 ( 310 452)
Pay TV, broadband
and voice Audiovisuals Group
Inter-segment transactions are effected on market terms and conditions in a comparable way to transactions
effected with third parties.
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Assets and liabilities by segment, and investments in tangible fixed assets at 31 December 2010, are shown below:
Pay TV, broadband
and voice Audiovisuals Eliminations Not allocated Group
Assets 1 565 078 162 143 700 996 ( 132 770 447) 73 565 968 1 649 574 678
Investment in associated companies and joint ventures 99 132 1 038 484 - - 1 137 616
Total assets 1 565 177 294 144 739 480 ( 132 770 447) 73 565 968 1 650 712 294
Liabilities 335 511 213 124 309 961 ( 132 770 447) 1 073 478 112 1 400 528 838
Investment in tangible assets 227 476 270 4 640 512 - - 232 116 782
Investment in intangible assets 65 467 020 - - - 65 467 020
The assets and liabilities not allocated to segments are reconciled with total assets and liabilities as follows:
Assets Liabilities
Not allocated:
Deferred tax (Note 10) 51 037 647 5 258 790
Income tax expense 51 893 2 597 141
Borrowings - current (Note 13) - 92 577 453
Borrowings - non current (Note 13) - 973 044 728
Available-for-sale financial assets 21 798 211 -
Non-current assets held-for-sale 678 217 -
73 565 968 1 073 478 112
Assets and liabilities by segment, and investments in tangible fixed assets at 31 March 2011, are shown below:
Pay TV, broadband
and voice Audiovisuals Eliminations Not allocated Group
Assets 1 714 142 020 134 048 259 ( 125 748 788) 72 952 860 1.795.394.352
Investment in associated companies and joint ventures 111 416 917 724 - - 1.029.140
Total assets 1 714 253 436 134 965 983 ( 125 748 788) 72 952 860 1.796.423.492
Liabilities 316 615 531 110 532 904 ( 125 748 788) 1 234 250 980 1.535.650.627
Investment in tangible assets 35 022 812 699 024 - - 35.721.836
Investment in intangible assets 3 500 837 - - - 3.500.837
The assets and liabilities not allocated to segments are reconciled with total assets and liabilities as follows:
Assets Liabilities
Not allocated:
Deferred tax (Note 10) 50 360 075 4 933 809
Income tax expense 116 356 5 677 800
Borrowings - current (Note 13) - 285 778 294
Borrowings - non current (Note 13) - 937 861 076
Available-for-sale financial assets 21 798 211 -
Non-current assets held-for-sale 678 218 -
72 952 860 1 234 250 980
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6. Provisions and adjustments
In the quarters ended on 31 March 2010 and 2011, provisions and adjustments were composed as follows:
3M 10 3M 11
Provisions for other liabilities and charges (Note 14) 1 382 813 ( 5 519 381)
Provision for impairment of trade receivable 3 227 893 2 941 623
Provision for impairment of other receivable - -
Debts recovery ( 1 774) ( 752)
4 608 931 ( 2 578 509)
7. Depreciation and amortisation
In the quarters ended on 31 March 2010 and 2011, depreciation and amortisation were composed as follows:
3M 10 3M 11
Intangible assets:
Industrial property and other rights 19 146 619 18 681 883
Other intangible assets 450 630 600 901
19 597 249 19 282 784
Tangible assets:
Buildings and other constructions 970 433 956 687
Basic equipment 24 629 425 29 879 079
Transportation equipment 467 335 471 006
Tools and dies 4 487 2 568
Administrative equipment 3 976 909 4 280 514
Other tangible assets 736 604 571 478
30 785 193 36 161 331
50 382 442 55.444.115
The increase in depreciation occurred mainly in basic equipment, reflecting the major investment made in terminal
equipment in 2010, and was partially offset by the impact (approximately 2.6 million euros) of the review of the
useful lives of tangible assets conducted in 2011.
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8. Finance costs and other net financial charges
In the quarters ended on 31 March 2010 and 2011, finance costs were composed as follows:
3M 10 3M 11
Interest expense:
Borrowings 5 414 827 7 674 645
Finance leases 1 431 561 1 533 791
Other 154 036 99 469
7 000 424 9 307 904
Interest earned ( 1 303 706) ( 3 250 970)
5 696 718 6 056 934
Other financial costs:
Comissions and guarantees 1 875 180 2 068 787
Prompt payment discount 1 561 1 957
Other 236 220 158 402
2 112 961 2 229 146
Other financial income:
Prompt payment discount ( 477 565) ( 787 787)
1 635 396 1 441 359
9. Losses/(gains) in associated companies
In the quarters ended on 31 March 2010 and 2011, this item was composed as follows:
3M 10 3M 11
Equity accounting:
Distodo ( 34 014) 23 062
Canal 20 TV - 601
Upstar ( 11 349) ( 12 885)
Finstar 993 779 2 819 110
948 416 2 829 887
The change in this item is mainly explained by the increase in the provision for the losses of Finstar - Sociedade de
Investimentos e Participações, S.A., totalling 2.8 million euros (Note 14).
10. Income tax expense
ZON Multimédia and its associated companies are subject to IRC - Corporate Income Tax - at the rate of 25% (20%
in the case of ZON TV Cabo Madeirense and 17.5% in the case of ZON TV Cabo Açoreana), plus IRC surcharge at
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the maximum rate of 1.5% on taxable profit, giving an aggregate rate of approximately 26.5%. With the introduction
of the austerity measures approved by Law 12-A/2010 of 30 September, the latter rate was increased by 2.5% on
that part of a company’s taxable profit in excess of 2 million euros. In the calculation of taxable income, to which the
above tax rate applies, amounts which are not fiscally allowable are added to and subtracted from the book results.
These differences between book income and taxable income may be temporary or permanent.
ZON Multimédia is taxed in accordance with the special taxation regime for groups of companies (RETGS), which
covers the companies in which it directly or indirectly holds at least 90% of their share capital and which fulfil the
requirements of Article 69 of the IRC Code.
The companies which are covered by the RETGS are:
• ZON Multimédia
• ZON Lusomundo TV
• Empracine
• Lusomundo SII
• ZON Cinemas SGPS
• ZON Audiovisuais SGPS
• ZON TV Cabo
• ZON Televisão por cabo SGPS
• Lusomundo Imobiliária 2
• ZON LM Audiovisuais
• ZON LM Cinemas
• ZON Conteúdos
In accordance with current legislation, tax declarations are subject to review and correction by the tax authorities for
a period of four years (five years in the case of Social Security; ten years in the case of contributions relating to
financial years prior to 2001), except where tax losses have occurred (where the period is six years) or tax benefits
have been obtained or inspections, appeals or disputes are in progress, in which case, depending on the
circumstances, the periods are extended or suspended.
The Board of Directors of ZON Multimédia, based on information from its tax advisers, believes that these and any
other revisions and corrections to these tax declarations, as well as other contingencies of a fiscal nature, will not
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have a significant effect on the consolidated financial statements as at 31 March 2011, except for the situations
which were the subject of provisions (Note 14).
a) Deferred tax
ZON Multimédia and its associated companies have reported deferred tax relating to temporary differences between
the taxable basis and the book amounts of assets and liabilities, and tax losses carried forward at the date of the
statement of financial position.
The movements in deferred tax assets and liabilities for the quarters ended on 31 March 2010 and 2011 were as
follows:
Equity
31-12-2009
Deferred taxes
of the period
Deferred taxes
of the period
Other
movements 31-03-2010
Deferred income tax assets:
Provisions and adjustments:
Doubtful accounts receivable 6 638 511 ( 36 319) - 876 985 7 479 177
Inventories 1 454 932 ( 213 592) - - 1 241 340
Other 15 761 044 876 584 593 922 ( 489 643) 16 741 908
Intergroup gains 23 240 500 ( 581 013) - ( 387 342) 22 272 145
Tax losses carried forward 818 349 - - - 818 349
47 913 336 45 660 593 922 - 48 552 919
Deferred income tax liabilities:
Reavaluation of fixed assets 6 075 949 ( 330 171) - - 5 745 778
Net deferred tax 41 837 387 375 831 593 922 - 42 807 141
Income (note 10
b))
Equity
31-12-2010
Deferred taxes
of the period
Deferred taxes
of the period
Other
movements 31-03-2011
Deferred income tax assets:
Provisions and adjustments:
Doubtful accounts receivable 7 696 483 ( 48 961) - ( 391 553) 7.255.969
Inventories 1 443 085 ( 70 617) - - 1.372.468
Other provisions and adjustments 20 550 621 809 648 ( 491 264) 96 188 20.965.193
Intergroup gains 20 529 108 ( 581 013) - - 19.948.095
Tax losses carried forward 818 349 - - - 818.349
51 037 647 109 057 ( 491 264) ( 295 365) 50.360.075
Deferred income tax liabilities:
Reavaluation of fixed assets 5 258 790 ( 335 318) - - 4.923.472
Derivatives - - 10 337 - 10.337
5 258 790 ( 335 318) 10 337 - 4.933.809
Net deferred tax 45 778 857 444 375 ( 501 601) ( 295 365) 45.436.604
Income (note 10
b))
At 31 March 2011, the deferred tax liability relating to the revaluation of fixed assets includes approximately 4.914
million euros (2010: 5.732 million euros) resulting from the difference in the acquisition at fair value of the assets
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(client portfolio and network) of TVTel and of the companies of the Parfitel Group (Bragatel, Pluricanal Leiria and
Pluricanal Santarém).
Deferred tax assets were recognised where it is probable that taxable profits will occur in future that may be used to
absorb tax losses or deductible tax differences. This assessment was based on the business plans of the Group’s
companies, which are regularly revised and updated.
Under the terms of current legislation in Portugal, tax losses generated up to 2009 and from 2010 onwards may be
carried forward for a period of six years and four years, respectively, after their occurrence and may be deducted
from taxable profits generated during that period.
At 31 March 2011 and 31 March 2010, ZON Multimédia’s tax losses carried forward, totalling 3.273 million euros,
expire in 2014. This amount derives from the companies acquired in 2008 or the subject of mergers in 2009.
The Company reported deferred income tax assets and requested permission from the Tax Authorities to use them
in the tax consolidation.
b) Tax rate reconciliation
In the quarters ended on 31 March 2010 and 2011, the reconciliation between the nominal and effective tax rates
was as follows:
3M 10 3M 11
Income before taxes 12 107 636 13 956 250
Statutory tax rate 26,5% 26,50%
Estimated tax 3 208 524 3 698 406
Permanent differences i) ( 426 428) ( 612 116)
Differences in tax rate of the Açores and Madeira ( 173 598) ( 77 499)
Underestimated or Overestimated corporate tax - 865 460
Estimated corparate tax corrections 677 311 -
Fiscal benefits ii) ( 1 107 903) ( 460 808)
Changes in the income tax rate - 22 970
Autonomous taxation 133 613 173 737
Others 91 644 ( 33 283)
Income tax 2 403 163 3 576 868
Effective Income tax rate for the period 19,85% 25,63%
Income tax 2 778 994 4 021 243
Deferred tax ( 375 831) ( 444 375)
2 403 163 3 576 868
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i) At 31 March 2010 and 2011 the permanent differences were composed as follows:
3M 10 3M 11
Financial costs not accepted for fiscal purposes 827 089 -
Provisions 1 476 174 ( 5 482 321)
Depreciations and amortizations 724 404 506 736
Equity method (Note 9) 948 417 2 829 887
Other ( 5 585 247) ( 164 173)
( 1 609 163) ( 2 309 871)
26,50% 26,50%
( 426 428) ( 612 116)
ii) The reduction in tax results from the application by ZON TV Cabo of the SIFIDE (Business Research and
Development Incentives System) tax benefit introduced by Law 40/2005 of 3 August and of the RFAI
(Investment Tax Incentive Regime) introduced by Law 10/2009 of 10 March. This amount corresponds to the
amount to be deducted from taxable income for 2010 and 2011.
11. Earnings per share
Earnings per share for the quarters ended on 31 March 2010 and 2011 were calculated as follows:
3M 10 3M 11
Net income attributable to equity holders of the parent 9 292 373 10 159 842
Weighted average number of ordinary shares in issue 304 599 491 309 084 515
Basic earnings per share 0,03 0,03
Diluted earnings per share 0,03 0,03
At 31 March 2010 and 2011, as there were no diluting effects on the net earnings per share, the diluted earnings per
share is equal to the basic earnings per share.
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12. Cash and cash equivalents
At 31 December 2010 and 31 March 2011, this item was composed as follows:
31-12-2010 31-03-2011
Cash 812 708 90 957
Deposits 5 558 103 9 933 863
Term deposits i) 258 274 803 418 310 000
264 645 614 428 334 820
i) At 31 March 2011, term deposits had short-term maturities with approximately 218 million euros maturing in
the second quarter of 2011, 100 million euros in September 2011 and 100 million euros in March 2012.
The term deposits bear interest at normal market rates.
13. Borrowings and loans
At 31 December 2010 and 31 March 2011, the composition of borrowings and loans was as follows:
Current Non Current Current Non Current
Loans:
Internal loans 11 376 217 52 999 714 13 404 753 48 135 660
Foreign loans - 97 137 698 - 97 288 346
Commercial paper 30 000 000 475 000 000 230 000 000 450 000 000
Debenture loan - 227 500 000 - 227 500 000
- - - -Financial Leases:
Long Term Contracts 45 304 812 108 115 735 36 434 761 102 259 552
Other 5 896 424 12 291 581 5 938 780 12 677 518
92 577 453 973 044 728 285 778 294 937 861 076
31-03-201131-12-2010
13.1. Internal loans
At 31 March 2011, the current and non-current parcels relate to the Group's share of the loans contracted by Sport
TV totalling 61.541 million euros (13.405 million euros current and 48.136 million euros non-current), with quarterly
repayments and maturing in 2013.
13.2. Foreign loans
In September 2009 ZON Multimédia and ZON TV Cabo signed a Next Generation Network Project Finance Contract
with the European Investment Bank totalling 100 000 000 euros. This contract matures in September 2015 and is
intended for investments relating to the implementation of the next generation network.
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Then amount of 2.711 million euros was deducted from this finance, corresponding to the benefit associated with
the fact that the loan is at a subsidised rate, constituting an investment subsidy, and is therefore stated as deferred
income.
13.3. Commercial paper
The Company has borrowings of 680 million euros in the form of commercial paper contracted with seven banks,
corresponding to seven programmes bearing interest at market rates. Five grouped programmes of commercial
paper with maturities over 1 year totalling 450 million euros are classed as non-current. In view of the fact that the
Company has the capacity to unilaterally renew the current issues on or before the programmes’ maturity dates and
that they are underwritten by the organiser, the amount concerned, although having current maturity, is classified as
non-current for the purposes of presentation in the statement of financial position. The remaining programmes are
classified as current.
13.4. Debenture loans
The Company has bonds issued via five banks totalling 227.500 million euros (70.000 million euros with a maturity
of 3 years and 157.500 million euros with a maturity of 4 years), with half-yearly payment of interest and repayment
at par in the end of the contract.
13.5. Finance Leases
At 31 December 2010 and 31 March 2011, the item “Long Term Contracts” relates to contracts entered into by ZON
TV Cabo for the exclusive acquisition of satellite capacity and the acquisition of distribution network capacity
utilisation rights, and to the acquisition of broadcasting rights for the professional football matches of the Liga
Sagres and Liga Orangina by Sport TV, and the purchase of digital equipment for the cinemas of ZON Cinemas.
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Finance Leases
31-12-2010 31-03-2011
Financial leases - payments:
Until 1 year 56 123 907 47 772 913
Between 1 and 5 years 102 655 297 103 635 886
Over 5 years 32 421 998 24 716 016
191 201 202 176 124 815
Future financial costs ( 19 592 650) ( 18 814 205)
Present value of finance lease liabilities 171 608 552 157 310 610
31-12-2010 31-03-2011
The present value of the finance lease liabilities:
Until 1 year 51 201 236 42 373 541
Between 1 and 5 years 90 282 916 91 770 596
Over 5 years 30 124 400 23 166 474
171 608 552 157 310 610
All bank loans obtained and finance leases contracted are negotiated at variable short term interest rates and their
book value is therefore broadly similar to their fair value.
Maturity of loans
The maturities of the loans obtained are as follows:
Until 1 year
Between 1 and
5 years Over 5 years Until 1 year
Between 1 and
5 years Over 5 years
Internal loans 11 376 217 52 999 714 - 13 404 753 48 135 660 -
Foreign loans - 97 137 698 - - 97 288 346 -
Commercial paper 30 000 000 475 000 000 - 230 000 000 450 000 000 -
Debenture loan - 227 500 000 - - 227 500 000 -
Financial Leases 51 201 236 90 282 916 30 124 400 42 373 541 91 770 596 23 166 474
92 577 453 942 920 328 30 124 400 285 778 294 914 694 602 23 166 474
31-03-201131-12-2010
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14. Provisions for other risks and contingencies
At 31 December 2010 and 31 March 2011, the breakdown of provisions between current and non-current was as
follows:
31-03-2011 31-12-2010
Current provision
Taxes 563 074 563 074
Litigation 2 257 894 2 257 894
Other 7 544 359 1 912 006
10 365 327 4 732 974
Non-current provision
Other 12 631 436 15 466 428
22 996 763 20 199 402
Net movements for the quarter ended on 31 March 2011, reflected in the statement of comprehensive income under
“Provisions for risks and contingencies” are broken down as follows:
3M 11
Taxes -
Other liabilities and charges ( 5 519 381)
Provisions (Note 6) ( 5 519 381)
Interest paid 38 560
Investments in participated companies 2 819 110
Other 1 784
2 859 453
Provision for other liabilities and charges ( 2 659 928)
The balance in the item “Other risks and contingencies” at 31 December 2010 and 31 March 2011 is composed as
follows:
31-12-2010 31-03-2011
Investments in participated companies i) 8 032 658 10 829 091
Asset retirement obligation 4 598 778 4 637 337
Contigencies - other ii) 6 452 204 807 481
Other risks 1 092 155 1 104 525
20 175 795 17 378 434
i) Amount resulting from the application of the equity method to FINSTAR (see Note 9).
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ii) The amount shown under “Miscellaneous contingencies” relates to provisions for risks and contingencies relating to
miscellaneous events/disputes, mainly of a fiscal nature with the exception of income taxes, the settlement of which could
result in outflows of cash.
15. Shareholder's equity
15.1. Share capital
At 31 March 2011, the share capital of ZON Multimédia was 3 090 968 euros, represented by 309 096 828
registered book-entry shares with a nominal value of 1 Euro cent per share.
The principal shareholders at 31 March 2011 and 31 December 2010 are:
NO.Of Shares % Voting Rights NO.Of Shares % Voting Rights
Caixa Geral de Depósitos, SA 33 795 931 10,93% 33 795 931 10,93%
Kento Holding Limited i) 30 909 683 10,00% 30 909 683 10,00%
Banco BPI, SA 23 979 874 7,76% 23 979 874 7,76%
Telefónica, SA 16 879 406 5,46% 16 879 406 5,46%
Espírito Santo Irmãos, SGPS, SA ii) 15 455 000 5,00% 15 455 000 5,00%
Cofina, SGPS, SA 15 190 000 4,91% 15 190 000 4,91%
Joaquim Alves Ferreira de Oliveira iii) 14 955 684 4,84% 14 955 684 4,84%
Fundação José Berardo iv) 13 408 982 4,34% 13 408 982 4,34%
Ongoing Strategy Investments, SGPS, SA v) 10 649 750 3,45% 10 649 750 3,45%
Estêvão Neves - SGPS, SA vi) 9 075 782 2,94% 9 075 782 2,94%
Cinveste, SGPS, SA 8 707 136 2,82% 8 707 136 2,82%
Banco Espírito Santo, SA 6 966 448 2,25% 6 966 448 2,25%
Grupo Visabeira, SGPS, SA vii) 6 641 930 2,15% 6 641 930 2,15%
SGC, SGPS, SA viii) 6 182 000 2,00% 6 182 000 2,00%
ESAF - Espírito Santo Fundos de Investimento Mobiliário, SA 6 088 616 1,97% 6 088 616 1,97%
BES Vida - Companhia de Seguros, S. A. 5 721 695 1,85% 5 721 695 1,85%
Credit Suisse Group AG 5 649 670 1,83% 5 649 670 1,83%
Metalgest - Sociedade de Gestão, SGPS, SA iv) 3 985 488 1,29% 3 985 488 1,29%
ZON Multimédia (Own Shares) 5 486 0,00% 13 454 0,00%
Total 234 256 529 75,79% 234 248 561 75,78%
2010 2011
Shareholder
i) Under the terms of Article 20, paragraph 1 b) and Article 21 of the Securities Code, the above qualifying shareholding is
attributable to Isabel José dos Santos, in her capacity as a shareholder of Kento.
ii) The voting rights corresponding to Espírito Santo Irmãos, SGPS, SA are attributable to Espírito Santo Industrial, SA,
Espírito Santo Resources Limited, and Espírito Santo Internacional, SA, companies that control Espírito Santo Irmãos in
that order.
iii) The voting rights corresponding to 4.84% of the share capital are attributed to Joaquim Francisco Alves Ferreira de
Oliveira, as he controls GRIPCOM, SGPS, SA, and Controlinveste International SARL, which own, respectively, 2.26%
and 2.58% of the share capital of ZON Multimédia.
iv) The position of the Fundação José Berardo is reciprocally attributed to Metalgest - Sociedade de Gestão, SGPS, S.A.
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v) The voting rights of Ongoing Strategy Investments, SGPS, SA are attributable to RS Holding, SGPS, SA, which owns
50.01% of Ongoing Strategy Investments. In turn, 99.9% of RS Holding, SGPS, SA is owned by Isabel Maria Alves Rocha
dos Santos, to whom its voting rights are accordingly attributable.
vi) The qualifying shareholding of Estêvão Neves – SGPS, SA is attributable to its majority shareholder, José Estêvão
Fernandes Neves.
vii) Visabeira Investimentos Financeiros, SGPS, SA holds 0.99% of the share capital and voting rights in ZON Multimédia, with
1.16% being directly held by Grupo Visabeira, SGPS, SA. Visabeira Investimentos Financeiros, SGPS, SA is 100% owned
by Visabeira Estudos e Investimentos, SA, which is 100% owned by Visabeira Serviços, SGPS, SA, which in turn is owned
by Grupo Visabeira, SGPS, SA. 74.0104% of the latter is held by Fernando Campos Nunes.
viii) The shareholding of SGC, SGPS, SA is attributed to its majority shareholder, Dr. João Pereira Coutinho.
15.2. Own shares
Company law regarding own shares requires the establishment of a non-distributable reserve in an amount equal to
the purchase price of such shares, which becomes frozen until the shares are disposed of. In addition, the
applicable accounting rules determine that gains or losses on the disposal of own shares are stated in reserves.
At 31 March 2011 there were 13 454 own shares, representing 0.00435% of the share capital (31 March 2010: 6373
own shares), representing 0.00204% of the share capital).
Movements in the quarters ended on 31 March 2011 and 2010 were as follows:
Quantity Value
Balance as at 31 December 2009 14 006 437 87 236 630
Acquisition of treasury shares 372 238 1 479 350
Sale of treasury shares ( 14 006 437) ( 86 897 940)
Distribution of treasury shares ( 365 865) ( 1 878 673)
Balance as at 31 March 2010 6 373 ( 60 633)
Balance as at 31 December 2010 5 486 17 305
Acquisition of treasury shares 190 684 678 893
Distribution of treasury shares ( 182 716) ( 647 615)
Balance as at 31 March 2011 13 454 48 583
15.3. Reserves
Legal reserve
Company law and ZON Multimédia’s Articles of Association establish that at least 5% of the Company’s annual net
profit must be used to build up the legal reserve until it corresponds to 20% of the share capital. This reserve cannot
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