Cablemas 2Q07 Net Revenue and Adjusted EBITDA Up 14.4% and 18.6% YoY
Cablemas 2Q07 Net Revenue and Adjusted EBITDA Up 14.4% and 18.6% YoY
MEXICO D.F., Aug. 31 /PRNewswire-FirstCall/ -- Cablemas, S.A. de C.V., (Cablemas), the second-largest cable television operator in Mexico based on number of subscribers and homes passed, today announced results for the three- month period ending June 30, 2007.
Cablemas CEO Carlos M. Alvarez Figueroa commented, "This was yet another quarter in which we delivered strong results across the board. Revenues rose 14.4%, adjusted EBITDA 18.6% and net income 221.9%."
"During the quarter we continued to expand the market penetration of our services. This quarter, our subscriber base rose 14.6% in cable television, 41.8% in high-speed Internet and 97.2% in IP telephony on a YoY comparison."
"We are also pleased to announce that last week we officially launched interconnection with the Telmex network in the cities of Cancun, Isla Mujeres and Chihuahua. We are now finalizing a three-week testing phase and will launch IP Telephony to the public in the first half of September. By year end we expect to be offering IP Telephony in six cities and expand the service to an additional 9 cities during 2008."
Financial and Operational Highlights(1) (in million Mexican Pesos) 2Q06 2Q07 % Chg. Financial Highlights Net revenue 574.3 657.1 14.4% Operating profit 130.6 151.8 16.2% Adjusted EBITDA(2) 219.3 260.1 18.6% Net income 14.7 47.2 221.9% Operating margin 22.7% 23.1% +37 bps Adjusted EBITDA margin(2) 38.2% 39.6% +140 bps Net income margin 2.6% 7.2% +463 bps Total Debt 2,077.7 2,127.9 2.4% Net Debt 1,627.4 2,076.5 27.6% Total Debt/ LTM Adj. EBITDA(2) 2.6x 2.2x Net Debt/ LTM Adj. EBITDA(2) 2.0x 2.2x EBITDA/ Net interest expense 3.2x 4.5x Operational Highlights Homes passed 1,841,921 2,160,634 17.3% Cable Television subscribers 657,144 753,161 14.6% High-speed internet subscribers 143,828 203,890 41.8% IP Telephony lines 15,316 30,202 97.2% (in million Mexican Pesos) 1H06 1H07 % Chg. Financial Highlights Net revenue 1,115.7 1,292.3 15.8% Operating profit 257.8 277.7 7.7% Adjusted EBITDA(2) 439.4 499.8 13.7% Net income 66.1 159.6 141.6% Operating margin 23.1% 21.5% -163 bps Adjusted EBITDA margin(2) 39.4% 38.7% -71 bps Net income margin 5.9% 12.3% +643 bps Total Debt 2,077.7 2,127.9 2.4% Net Debt 1,627.4 2,076.5 27.6% Total Debt/ LTM Adj. EBITDA(2) 2.6x 2.2x Net Debt/ LTM Adj. EBITDA(2) 2.0x 2.2x EBITDA/ Net interest expense 3.7x 3.9x Operational Highlights Homes passed 1,841,921 2,160,634 17.3% Cable Television subscribers 657,144 753,161 14.6% High-speed internet subscribers 143,828 203,890 41.8% IP Telephony lines 15,316 30,202 97.2% (1) Unless otherwise stated, all financial figures discussed in this announcement are unaudited, prepared in accordance with generally accepted accounting principles in Mexico, expressed in millions of constant Mexican pesos as of June 30, 2007, and represent comparisons between the three-month period ended June 30, 2007, and the equivalent three-month period ended June 30, 2006. (2) Adjusted EBITDA is calculated by adding amortization and depreciation, net comprehensive financial results, net other income, special items, total income tax and asset tax, total employee statutory profit sharing, effects from associated companies and minority interest to net income/loss. SECOND QUARTER 2007 CONSOLIDATED RESULTS Net Revenues
Net revenues increased 14.4%, or Ps.82.8 million, during 2Q07 to Ps.657.1 million, as described below:
- Cable Television: The 9.7% growth in cable television revenues, from Ps.454.9 to Ps.498.9 was principally due to a 14.6% YoY increase in the number of subscribers to 753,161 with a penetration rate of 34%. This was achieved despite a 6.5% decline in average monthly cable television revenues per subscriber (ARPU) to Ps.223.3. This decline in ARPU was primarily the result of a 35.6% increase in Minibasic subscribers, who pay lower monthly fees, while Basic subscribers increased 7.7%. The average monthly net churn rates for cable television increased to 2.4% for 2Q07 from 2.2% in 2Q06.
- High Speed Internet: The 33.2%, or Ps.28.8 million, rise in high-speed Internet revenues to Ps.151.7 million resulted mainly from a 41.8% increase in the number of subscribers to 203,890, with a penetration rate of 11.4%. This was partially offset by an 8.0% decline in high-speed Internet ARPU to Ps.191.7, as lower price/ lower-speed Internet (128 Kbps) subscriptions increased at a faster rate than those of higher-speed Internet (512 Kbps). Average monthly net churn rates for high-speed Internet rose to 4.5% for 2Q07 from 4.1% in 2Q06, due to service quality limitations in the Mayan Riviera during the reconstruction of the network damaged by Hurricane Wilma and an aggressive competing service offer from Telmex.
- IP Telephony: IP telephony revenues for the quarter rose 77.5%, or Ps.12.6 million, to Ps. 28.9 million. As of June 30, 2007, there were 30,202 IP telephony lines in service, up from 15,316 as of June 30, 2006. IP telephony ARPU for 2Q07 was Ps.306.5. This does not include migration fees paid to Cablemas by Axtel for new subscribers which, if included, would increase IP telephony ARPU to Ps.339.4 for 2Q07.
Table 1. Revenues by Service Offering 2Q06 2Q07 % Chg. % of % of Total Total Revenue Revenue Revenue Revenue Cable Television 454.9 79.2% 498.9 75.9% 9.7% High-Speed Internet 86.9 15.1% 115.7 17.6% 33.2% IP telephony 16.3 2.8% 28.9 4.4% 77.5% Advertising 15.6 2.7% 12.1 1.8% -22.7% Other(1) 0.7 0.1% 1.6 0.2% 132.2% Total Net Revenue(2) 574.3 100.0% 657.1 100.0% 14.4% (1) Includes revenue relating to rental and sale of cable decoders and charges relating to customer's change of residence. (2) All net revenue figures are net of value-added taxes and other taxes on sales. Table 2. Number of Subscribers per Service Offering % Chg. in 2Q06 2Q07 Subscribers Minibasic 158,373 214,766 35.6% Basic(1) 484,151 521,271 7.7% Superbasic(1) 44,927 44,049 -2.0% Premium (1) 27,620 29,194 5.7% Hotel 14,620 17,124 17.1% Total Cable Television 657,144 753,161 14.6% High-Speed Internet 143,828 203,890 41.8% IP Telephony lines 15,316 30,202 97.2% (1) The number and percentage of Basic subscribers includes Basic, Superbasic and Premium subscribers due to the fact that all Superbasic and Premium subscribers must also be Basic subscribers. Table 3. ARPUs and Churn Per Service Offering 2Q06 2Q07 % Chg. Homes passed 1,841,921 2,160,634 17.3% Cable Television - Revenue 454.9 498.9 9.7% - Subscribers 657,144 753,161 14.6% - ARPU 238.8 223.3 -6.5% - Avg. Monthly Churn 2.2% 2.4% +14 bps High-Speed Internet - Revenue 86.9 115.7 33.2% - Subscribers 143,828 203,890 41.8% - ARPU 208.5 191.7 -8.0% - Avg. Monthly Churn 4.1% 4.5% +44 bps IP Telephony - Revenue 16.3 28.9 77.5% - Lines 15,316 30,202 97.2% - ARPU (without migration fee) 250 306.5 22.5% Operating Profit
Operating profit for 2Q07 increased by 16.2%, or Ps.21.2 million, to Ps.151.8 million, driven mainly by a 12.9% increase in gross profit. Operating margin rose to 23.1% from 22.7% in 2Q06, principally due to lower selling and administrative expenses as a percentage of sales.
Table 4. Operating Profit 2Q06 2Q07 Million % of Million % of Ps. Revenues Ps. Revenues % Chg. Service revenues 574.3 100.0% 657.1 100.0% 14.4% Cost of services 270.0 47.0% 313.5 47.7% 16.1% Gross Profit 304.3 53.0% 343.5 52.3% 12.9% SG&A 173.8 30.3% 191.8 29.2% 10.4% - Selling 57.2 10.0% 58.2 8.9% 1.7% - Administrative 105.1 18.3% 118.1 18.0% 12.4% - Amortization and depreciation 11.5 2.0% 15.5 2.4% 34.7% Total operating profit 130.6 22.7% 151.8 23.1% 16.2% Cost of Services
Cost of Services for 2Q07 increased by 16.1%, or Ps.43.5 million. The increase in cost of services was primarily due to:
- A Ps.6.0 million increase in programming costs, principally the result of the 14.6% increase in cable television subscribers.
- A Ps.10.0 million increase in payroll reflected a lower capitalization of technical labor and to a lower extent an increase in the number of technical employees.
- A Ps.12.1 million increase in Internet costs, of which Ps.11.6 million was related to incremental cost for bandwidth, a 41% increase in the number of Internet subscribers and the rollout of Internet service in additional cities.
- A Ps.15.4 million increase in depreciation & amortization was related to an increase in fixed assets investments and a change to the estimate of the useful life of distribution lines. During 2Q06 the useful life of these assets was estimated at 25 years compared with 15 years in 2Q07.
Selling, General and Administrative Expenses
Selling, General and Administrative Expenses (including depreciation and amortization) or SG&A, increased Ps.18.0 million, or 10.4% YoY to Ps.191.8 million. As a percentage of sales, SG&A declined 1,100 basis points to 29.2%, from 30.3% in 2Q06. The absolute increase in SG&A principally reflected the following changes:
- A 1.7%, or Ps.1.0 million, increase in selling expenses to Ps.58.2 million, principally related to the increase in the size of the company's sales force and an increase in commissions paid, which more than offset a decline in advertising expenses. The Company employed 1,453 salespersons as of June 30, 2007 compared to 1,141 as of June 30, 2006.
- A 12.4%, or Ps.13.0 million, increase in administrative expenses to Ps.118.1 million. As a percentage of revenues, administrative expenses decreased to 18.0% in 1Q07 from 18.3% in 1Q06. Administrative expenses in absolute values increased principally due to:
- A Ps.5.6 million increase in salaries and fees principally as a result of an increase in the number of administrative employees, an increase in the outsourcing of administrative tasks, as well as a lower capitalization of administrative costs.
- An increase of Ps.4.5 million in communications and travel expenses, due to more activity resulting from operational controls and the rollout of IP telephony
- Amortization and depreciation rose 34.7%, or Ps.4.0 million, to Ps.15.5 million for 2Q07, principally due to the increase in office equipment.
Adjusted EBITDA
Adjusted EBITDA for 2Q07 increased 18.6%, or Ps.40.8 million, to Ps.260.1 million. The adjusted EBITDA margin rose 140 bps to 39.6%. The following table sets forth the reconciliation between net income and adjusted EBITDA:
Table 5. Adjusted EBITDA 2Q06 2Q07 % Chg. Net income (loss) 14.7 47.2 221.9% Add (subtract): Amortization and depreciation 89.3 108.7 21.7% Comprehensive financial results, net 48.4 72.9 50.6% Other (income) expense, net 1.1 (7.7) -785.1% Special items 34.6 (0.0) -100.0% Total income tax and asset tax 12.2 37.6 206.9% Employee profit sharing 1.7 2.5 43.9% Effects from associated companies 17.5 (1.0) -105.5% Minority interest (0.3) (0.2) -31.0% Adjusted EBITDA 219.3 260.1 18.6%
- Depreciation and amortization increased 21.7%, or Ps.19.4 million, to Ps.108.7 million, principally due to an increase in fixed asset investments and a change in the estimate of the useful life of distribution lines. Special items in 2Q06 included Ps.14.7 million in connection with IPO related expenses and Ps.12.6 million of accelerated depreciation associated with the costs of cleanup, removal and rehabilitation of the portion of the network affected by Hurricane Wilma.
- Net comprehensive financial results were an expense of Ps.72.9 million compared with an expense of Ps.48.4 million in 2Q06, principally reflecting lower gains from financial instruments and monetary position as well as lower interest income.
- During the quarter the company recorded a Ps.37.6 million provision for a higher income taxes and asset taxes, compared to Ps.12.2 million in 2Q06 as a result of a higher taxable income base.
Comprehensive Financial Results, Net
- Net comprehensive financial results were an expense of Ps.72.9 million for the three months ended June 30, 2007, an increase of Ps.24.5 million over an expense of Ps.48.4 million for the corresponding period in 2006. The increase primarily reflected higher interest income as well as higher foreign exchange and financial instrument gains in 2Q06, which more than offset the increase in interest expenses and loss from monetary position during that period.
Table 6. Comprehensive Financial Results, Net 2Q06 2Q07 % Chg. Interest income -8.5 -0.7 -91.9% Interest expense 76.2 58.0 -24.0% Financial instruments (gain) -23.8 8.7 -136.7% Foreign-exchange (gain) loss, net -11.1 -0.5 -95.2% Monetary position loss (gain) 15.5 7.5 -51.9% Comprehensive financial results, net 48.4 72.9 50.6% Net Income
For 2Q07, Cablemas posted a net gain Ps.47.2 million, a 221.9%, or Ps.32.6 million, improvement compared to a gain Ps14.7 million in 2Q06. Net income margin improved to 7.2% from 2.6% for 2Q06.
FIRST HALF 2007 CONSOLIDATED RESULTS Net Revenues
Net revenues increased 15.8%, or Ps.176.6 million, during 1H07 to Ps.1,292.3 million.
- Cable Television: The 11.1%, or Ps.99.0 million, growth in cable television revenues was principally due to a 14.6% YoY increase in the number of subscribers to 753,161, with a penetration rate of 34%. This was achieved despite a 4.7% decline in average monthly cable television revenues per subscriber (ARPU) to Ps.225.8. This decline in ARPU was primarily the result of a 35.6% increase in Minibasic subscribers, who pay lower monthly fees, while Basic subscribers increased 7.7%. The average monthly net churn rates for cable television declined to 2.3% for 1H07 from 2.5% in 1H06.
- High Speed Internet: Revenues rose 33.4%, or Ps.56.2 million, to Ps.224.2 million. The rise in high-speed Internet revenues resulted mainly from a 41.8% increase in the number of subscribers to 203,890, with a penetration rate of 11.4%. This was partially offset by a 9.5% decline in high-speed Internet ARPU to Ps.196.6, as lower price/ lower-speed Internet (128 Kbps) subscriptions increased at a faster rate than those of higher-speed Internet (512 Kbps). Average monthly net churn rates for high-speed Internet rose to 4.5% for 1H07 from 4.1% in 1H06 due to service quality limitations in the Mayan Riviera during the reconstruction of the network damaged by Hurricane Wilma and an aggressive competing service offer from Telmex.
- IP Telephony: IP telephony revenues for the quarter rose 86.3%, or Ps.24.6 million, to Ps.53.1 million. As of June 30, 2007, there were 30,202 IP telephony lines in service, up from 15,316 as of June 30, 2007. IP telephony ARPU for 1H07 was Ps.282.8. This does not include migration fees paid to Cablemas by Axtel for new subscribers which, if included, would increase IP telephony ARPU to Ps.320.2 for 1H07.
Table 7. Revenues by Service Offering 1H06 1H07 % of % of Total Total Revenue Revenue Revenue Revenue % Chg. Cable Television 891.5 79.9% 990.5 76.6% 11.1% High-Speed Internet 168.0 15.1% 224.2 17.3% 33.4% IP telephony 28.5 2.6% 53.1 4.1% 86.3% Advertising 25.9 2.3% 22.2 1.7% -14.2% Other(1) 1.8 0.2% 2.3 0.2% 31.2% Total Net Revenue(2) 1115.7 100.0% 1292.3 100.0% 15.8% (1) Includes revenue relating to rental and sale of cable decoders and charges relating to customer's change of residence. (2) All net revenue figures are net of value-added taxes and other taxes on sales. Table 8. Number of Subscribers per Service Offering % Chg. in 1H06 1H07 Subscribers Minibasic 158,373 214,766 35.6% Basic(1) 484,151 521,271 7.7% Superbasic(1) 44,927 44,049 -2.0% Premium (1) 27,620 29,194 5.7% Hotel 14,620 17,124 17.1% Total Cable Television 657,144 753,161 14.6% High-Speed Internet 143,828 203,890 41.8% IP Telephony lines 15,316 30,202 97.2% (1) The number and percentage of Basic subscribers includes Basic, Superbasic and Premium subscribers due to the fact that all Superbasic and Premium subscribers must also be Basic subscribers. Table 9. ARPUs and Churn Per Service Offering 1H06 1H07 % Chg. Homes passed 1,841,921 2,160,634 17.3% Cable Television - Revenue 891.5 990.5 11.1% - Subscribers 657,144 753,161 14.6% - ARPU 236.9 225.8 -4.7% - Avg. Monthly Churn 2.5% 2.3% bps High-Speed Internet - Revenue 168.0 224.2 33.4% - Subscribers 143,828 203,890 41.8% - ARPU 217.2 196.6 -9.5% - Avg. Monthly Churn 4.1% 4.5% bps IP Telephony - Revenue 28.5 53.1 86.3% - Lines 15,316 30,202 97.2% - ARPU (without migration fee) 296 282.8 -4.6% Operating Profit
Operating profit for 1H07 increased by 7.7%, or Ps.19.8 million, to Ps.277.7 million, driven mainly by a 12.2% increase in gross profit. Operating margin declined to 21.5% from 23.1% in 1H06, principally due to higher cost of services as a percentage of sales.
Table 10. Operating Profit 1H06 1H07 Million % of Million % of Ps. Revenues Ps. Revenues % Chg. Service revenues 1,115.7 100.0% 1,292.3 100.0% 15.8% Cost of services 528.1 47.3% 633.1 49.0% 19.9% Gross Profit 587.6 52.7% 659.2 51.0% 12.2% SG&A 329.7 29.6% 381.5 29.5% 15.7% - Selling 106.7 9.6% 121.3 9.4% 13.8% - Administrative 196.6 17.6% 233.2 18.0% 18.6% - Amortization and depreciation 26.5 2.4% 27.0 2.1% 1.9% Total operating profit 257.8 23.1% 277.7 21.5% 7.7% Cost of Services
Cost of Services for 1H07 increased by 19.9%, or Ps.105.0 million. The increase in cost of services was primarily due to:
- A 12.8% increase in programming costs derived from a 14.6% growth in cable television subscribers.
- A 24.2% increase reflecting a lower capitalization of technical labor costs, as well as an increase in the number of technical employees as a result of increase in video subscribers.
- A Ps.23.6 million increase in Internet costs, of which Ps.23.4 million are related to the incremental cost for bandwidth, the 41.8% increase in the number of internet subscribers and the rollout of internet service.
- A Ps.40.4 million increase in depreciation & amortization related to an increase in fixed asset investments and to a change in the estimate of the useful life of distribution lines. During 1H06 the useful life of these assets was estimated at 25 years compared with 15 years in 1H07.
Selling, General and Administrative Expenses
Selling, General and Administrative Expenses (including depreciation and amortization) or SG&A, increased Ps.51.8 million, or 15.7% YoY to Ps.381.5 million. As a percentage of sales, SG&A declined 10 basis points to 29.5%, from 29.6% in 1H06. The absolute increase in SG&A principally reflected the following factors:
- A 13.8%, or Ps.14.7 million, increase in selling expenses to Ps.121.3 million principally related to the increase in the size of the company's sales force (1,453 salespersons as of June 30, 2007 as compared to 1,141 as of June 30, 2006), an increase in commissions paid as well as the number of call centers.
- A 18.6%, or Ps.36.6 million, increase in administrative expenses, including Ps.5.1 million from the increase in office expenses, mainly software maintenance and renewal of licenses, Ps.6.7 million from higher professional fees, insurance and travel expenses, Ps.5.2 million from increased communication activities and travel expenses and Ps.13.7 million from increased outsourcing of administrative personnel.
- Amortization and depreciation rose 1.9%, or Ps.0.5 million, to Ps.27.0 million for 1H07, principally due to an increase in office equipment.
Adjusted EBITDA
Adjusted EBITDA for 1H07 increased 13.7%, or Ps.60.4 million, to Ps.499.8 million. The adjusted EBITDA margin declined 71 bps to 38.7%. The following table sets forth the reconciliation between net income and adjusted EBITDA:
Table 11. Adjusted EBITDA 1H06 1H07 % Chg. Net income (loss) 66.3 159.6 140.5% Add (subtract): Amortization and depreciation 182.1 222.5 22.2% Comprehensive financial results, net 90.8 82.1 -9.6% Other (income) expense, net 8.6 (7.0) -180.9% Special items 47.8 (23.8) -149.7% Total income tax and asset tax 38.6 69.5 79.9% Employee profit sharing 2.6 4.5 71.3% Effects from associated companies 2.7 (7.4) -370.4% Minority interest (0.3) (0.2) -31.0% Adjusted EBITDA 439.4 499.8 13.7%
- Depreciation and amortization increased 22.2%, or Ps.40.4 million, to Ps.222.5 million, principally due to an increase in fixed assets investments and a change in the estimate of the useful life of distribution lines.
- Special items in 1H07 mainly included funds received from the insurance company for damages incurred by Hurricane Wilma. Special items in 1H06 included IPO expenses, extraordinary charges related to Hurricane Wilma, expenses related to the purchase of the financial partners' equity stake, consulting fees related to the search for a new strategic partner.
- Net comprehensive financial results were an expense of Ps.82.1 million compared with an expense of 90.8 million in 1H06 principally as explained below.
- During the period the company recorded a Ps.69.5 million provision for income taxes and asset taxes, compared to Ps.38.6 million in 1H06 as a higher taxable income base.
Comprehensive Financial Results, Net
Net comprehensive financial results was an expense of Ps.82.1 million for 1H07, a decline of Ps.9.4 million from an expense of Ps.90.6 million for the corresponding period in 2006. The decline primarily reflected a higher gain from financial instruments and monetary position, which more than offset the increase in net interest expense and the foreign exchange loss.
Table 12. Comprehensive Financial Results, Net 1H06 1H07 % Chg. Interest income -16.9 -2.3 -86.2% Interest expense 135.4 129.2 -4.6% Financial instruments (gain) -5.7 -28.0 392.6% Foreign-exchange (gain) loss, net -19.8 1.4 -107.0% Monetary position loss (gain) -2.4 -18.2 650.3% Comprehensive financial results, net 90.6 82.1 -9.4% Net Income
For 1H07, Cablemas posted a net gain Ps.159.6 million, a 141.6%, or Ps.93.1 million, improvement compared to a gain Ps.66.1 million in 1H06. Net income margin improved to 12.3% from 5.9% for 1H06.
CAPEX
Capital expenditures for 1H07 increased 22.7%, or Ps.131.3 million, to Ps.709.4 million from Ps.578.1 million in 1H06. Capital expenditures principally related to investments incurred in connection with the roll out of IP telephony and to expand and upgrade Cablemas' network.
As of June 30, 2007, Cablemas had a network of 13,698 km, of which 82% was bidirectional, 87% was operating at or greater than 550 MHz and 74% was operating at or greater than 750 MHz.
DEBT STRUCTURE AND CASH FLOW
Consolidated gross debt as of June 30, 2007, totaled Ps.2,127.9 million, of which Ps.1,906.9 million was long-term and Ps.220.9 million was short term. Consolidated gross debt rose YoY by 2.4%, from Ps.2,077.7 million as of June 30, 2006.
Net debt, which is calculated as total debt minus cash and cash equivalents, increased YoY by 27.6% to Ps.2,076.5 million, from 1,627.4 million as of June 30, 2006. As of June 30, 2007, Cablemas had a cash balance of Ps.51.3 million.
Table 13. Debt Indicators 1H06 1H07 % Chg. Total Debt 2,077.7 2,127.9 2.4% Short-Term Debt - 220.9 N/A Long-Term Debt 2,077.7 1,906.9 -8.2% Cash and Cash Equivalents 450.3 51.3 -88.6% Total Net Debt 1,627.4 2,076.5 27.6% Leverage Total Debt/ LTM Adjusted EBITDA 2.6x 2.2x Total Net Debt/ LTM Adjusted EBITDA 2.0x 2.2x Interest Coverage Adjusted EBITDA / Net Interest Expense 3.7x 3.9x
Cash flow from operations during 1H07 increased 165.9%, or Ps.290.8 million, to Ps.466.2 million. Net borrowings declined Ps.43.6 million to Ps.98.5 million. CAPEX for 1H07 decreased Ps.47.9 million to Ps.611.1 million, principally related to the upgrade and expansion of Cablemás' network, customers' premises equipment investments and the roll out of IP telephony.
Table 14. Cash Flow 1H06 1H07 Change Cash at the beginning of the year 806.8 54.6 (752.2) Net Income 66.1 159.6 93.5 + Depreciation and amortization 181.7 225.6 44.0 + Change in Working Capital (0.8) 91.9 92.7 + Other (71.6) (10.9) 60.7 Cash Flow from Operations 175.3 466.2 290.8 - Capex (659.0) (611.1) 47.9 - Other (1.5) 43.2 44.7 Net Investing Activities (660.4) (567.9) 92.6 + Debt 142.1 135.8 (6.3) + Other (0.1) (37.3) (37.2) Net Financing Activities 142.0 98.5 (43.6) Cash at the end of the year 463.7 51.3 (412.4) RECENT DEVELOPMENTS Hurricane Dean
On August 20-24, 2007 Hurricane Dean passed over the Mexican states of Quintana Roo and Yucatan in the southeast region of Mexico. As a result, a portion of Cablemas' network in certain areas of the cities of Chetumal, Campeche, Mahahual, Poza Rica, and Coatzintla was down. The company is currently assessing the extent of the damage with its insurance company.
Management Changes
On August 22, Cablemas announced that Mr. Rafael Lira has been appointed Chief Financial Officer of the company, replacing Mr. Fernando Urresta.
Prior to rejoining Cablemas, Mr. Lira was Chief Financial Officer of Salesko, a subsidiary of The Coca Cola Company for two years. Prior to Salesko, Mr. Lira was Chief Financial Officer of Cablemas and earlier, served as Chief Financial Officer of Bardahl de Mexico. Mr. Lira's experience also includes 13 years with PANAMCO, the largest Coca Cola bottler in Latin America, which was acquired by Femsa. At PANAMCO, among other finance positions he served as CFO of Costa Rica, Treasury Director of North Latin America and head of M&A for Latin America.
SECOND QUARTER 2007 EARNINGS CONFERENCE CALL Date: Friday, August 31, 2007 Time: 11:30 AM US EDT- 10:30 AM Mexico City Time Dial Information: 866.383.7998 (U.S.) or 617.597.5329 (international) Passcode: 77241338 Replay: Starting Friday, August 31, 2007, at 1:30 PM US EDT, ending at midnight US EDT on Friday, September 7, 2007, 888-286-8010 (U.S.) or 617-801-6888(international). Confirmation Code: 83899235 About Cablemas
Cablemas is the second-largest cable television operator in Mexico based on number of subscribers and homes passed. As of June 30, 2007, Cablemas' cable network served over 753,161 cable television subscribers, 203,890 high- speed internet subscribers, and 30,202 IP telephony lines, with 2,160,634 homes passed.
Cablemas is the concessionaire with the broadest coverage in Mexico, operating in 46 cities throughout the country's oil, maquiladora and tourist regions as of June 30, 2007. Cablemás has consistently introduced innovative products in Mexico and is the first cable operator in the country to provide a "Triple Play" bundled service package of cable television, high speed internet and IP telephony. More information about Cablemás can be found at www.cablemas.com.
This document may contain certain forward-looking statements concerning Cablemás' operations, performance, business, financial condition and growth prospects. These statements are based upon beliefs of management as well as a number of assumptions and estimates, which are inherently subject to significant uncertainties, many of which are beyond Cablemas' control. Actual results may differ materially from those expressed or implied by such forward- looking statements. Factors that could cause actual results to differ materially include, but are not limited to, changes in the Mexican economy, including changes in inflation rates or exchange rates, changes in political conditions and government policies in Mexico, increased competition, regulatory developments and customer demand. These statements are made as of the date of this press release and Cablemás undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise in light of these risks and uncertainties, there can be no assurances that the events described or implied in the forward-looking statements contained in this document will in fact transpire.
- UNAUDITED FINANCIAL TABLES TO FOLLOW - CABLEMAS, S. A. DE C. V. Y SUBSIDIARIAS Consolidated Balance Sheets June 30, 2007 and 2006 (Constant Mexican Pesos as of June 30, 2007) (Unaudited) Assets 2007 2006 Current assets: Cash and equivalent 51,337,205 450,299,049 Accounts receivables, less estimate for past due accounts for $10,716,063 in 2007 and $7,315,657 in 2006 50,403,002 37,117,743 Other accounts receivables, net 173,867,978 286,756,295 Associated companies 3,273,814 3,507,074 Prepaid expenses 40,690,959 40,091,880 Total current assets 319,572,958 817,772,041 Financial Instruments 339,223,594 0 Inventory of components of signal distribution systems, net 397,287,501 366,897,934 Investment in associated companies 106,585,226 70,292,345 Property, signal distribution systems, and equipment, net 3,395,918,489 2,729,626,892 Deferred employee statutory profit sharing 5,543,311 4,958,811 Goodwill, net 999,662,889 1,000,529,812 Intangible asset from pension and seniority premium plans and severance compensation for reasons other than restructuring 19,181,525 22,737,716 Other non-current assets, net 171,808,792 171,350,203 $5,754,784,285 $5,184,165,754 Liabilities 2007 2006 Current liabilities: Current installments of: Bank loans $220,940,017 $0 Obligations under capital leases 6,096,144 0 Notes 22,137,363 61,766,130 Financial instruments 0 0 Accounts payable 274,595,791 316,025,427 Accruals 107,589,070 74,677,397 Accrued liabilities 19,150,669 22,840,373 Taxes payable 5,917,840 16,389,662 Employee statutory profit sharing 3,345,488 2,249,138 Productora y Comercializadora de Television, S. A. de C. V. (asociated company) 38,637,630 30,042,150 Subscriber deposits and advances 37,895,181 45,326,661 Total current liabilities 736,305,193 569,316,938 Financial intruments 331,076,629 90,289,101 Corporate bond 1,906,940,001 2,077,699,297 Obligations under capital leases, excluding current installments 11,901,446 0 Pension and seniority premiums plans and severance compensation for reasons other than restructuring 48,842,609 46,097,179 Income tax 8,668,349 10,913,476 Deferred income tax 370,434,432 327,776,426 Total liabilities 3,414,168,659 3,122,092,417 Stockholders' equity Majority stockholders' equity: Capital stock 732,384,991 726,956,213 Additional paid-in capital 1,169,906,565 1,133,226,641 Retained earnings 515,017,497 419,536,964 Valuation effects of financial instruments (70,702,328) (211,114,091) Effect for labour obligations (1,524,394) (1,384,251) Cumulative effect on deferred taxes 3,360,676 3,360,676 Result from holding non monetary assets (10,036,909) (10,036,909) Total majority stockholders' equity 2,338,406,098 2,060,545,243 Minority stockholders' equity 2,209,528 1,528,094 Total stockholders' equity 2,340,615,626 2,062,073,337 Commitments and contingent liabilities $5,754,784,285 $5,184,165,754 CABLEMAS, S. A. DE C. V. Y SUBSIDIARIAS Consolidated Statements of Income Six months period ending June 30, 2007 and 2006 (Constant Mexican pesos as of June 30, 2007) (Unaudited) 2007 2006 Service revenues $1,292,303,807 $1,128,830,545 Cost of services 633,138,894 538,247,122 Gross profit 659,164,913 590,583,423 Operating expenses: Selling 121,333,498 112,150,734 Administrative 233,174,504 194,826,666 Amortization and depreciation 27,001,500 26,425,670 Total operating expenses 381,509,502 333,403,070 Operating profit 277,655,411 257,180,353 Comprehensive financial results: Interest income 2,332,761 16,914,966 Interest expense (129,208,273) (135,375,909) Foreign exchange (loss) gain, net (1,378,642) 19,763,127 Financial instruments 27,973,301 5,678,795 Monetary position gain 18,222,370 2,428,808 Comprehensive financial results, net (82,058,483) (90,590,213) Other income (expenses), net 6,987,583 (8,474,358) Special items 23,756,612 (47,755,536) Income before income taxes, employee statutory profit sharing 226,341,123 110,360,246 Income taxes: Current 48,739,209 9,965,335 Deferred 20,741,946 28,551,604 Total income taxes 69,481,155 38,516,939 Employee statutory profit sharing Current 3,349,042 3,345,068 Deferred 1,143,887 (722,473) Total employee statutory profit sharing 4,492,929 2,622,595 Income before effects from associated companies and minority interest 152,367,039 69,220,712 Effects from associated companies 7,400,921 (2,729,743) Income before minority interest 159,767,960 66,490,969 Minority interest (201,186) (433,242) Majority interest net income $159,566,774 $66,057,727 CABLEMAS, S. A. DE C. V. Y SUBSIDIARIAS Consolidated Statements of Changes in Financial Position Six months period ending June 30, 2007 and 2006 (Constant Mexican pesos as of June 30, 2007) (Unaudited) 2007 2006 Operating activities: Net income $159,566,774 $52,636,908 Add charges (deducted credit) to operations not requiring (providing) funds: Depreciation and amortization 225,622,629 181,666,237 Increase in allowance for inventory of components of signal distribution systems 400,000 1,866,062 Effects from associated companies (7,400,921) 2,729,743 Goodwill deterioration 13,542,100 Goodwill cancellation - 8,036,034 Accruals for pensions and severance packages 1,898,292 4,808,533 Deferred income taxes 20,741,946 28,551,604 Deferred employee statutory profit sharing 1,143,887 (722,473) Financial instruments (27,897,506) (130,882,674) Minority interest 201,186 433,242 Funds provided by operations 374,276,287 162,665,317 Net financing from (investing in) operating accounts: Trade and other accounts receivable, net 58,438,878 (125,690,532) Prepaid expenses (21,357,477) (14,806,759) Accounts payable 8,979,499 152,881,697 Accruals and accrued liabilities 19,356,580 11,070,050 Taxes payable (18,046,345) 383,347 Subscriber deposits and advances (6,469,887) (20,475,346) Employee statutory profit sharing (3,544,229) (1,140,984) Related parties 54,543,357 (2,980,908) Funds provided by operating activities 466,176,663 161,905,881 Financing activities: Proceeds from (payments of) bank loans, net 134,047,349 - Proceeds from corporate bond (15,375,596) 142,115,598 Income tax (49,485) (81,852) Dividends Paid (37,244,084) - Proceeds from financial leases 17,100,228 - Funds provided by financing activities 98,478,412 142,033,746 Investing activities: Acquisition of distribution systems and equipment (126,097,617) (221,562,323) Inventory of components of signal distribution systems (479,967,913) (389,098,348) Other assets, net (5,018,586) (48,314,215) Investment in associated companies (1,366,400) (1,472,718) Insurance 44,557,404 - Funds used in investing activities (567,893,112) (660,447,603) Decrease (increase) in cash and cash equivalents (3,238,037) (356,507,977) Cash and cash equivalents: At beginning of year 54,575,242 806,807,025 At end of year $51,337,205 $450,299,049
First Call Analyst:
FCMN Contact:
Source: Cablemas, S.A. de C.V.
CONTACT: Susan Borinelli, +1-646-452-2332,
sborinelli@breakstone-group.com, or Maura Gedid, +1-646-452-2335,
mgedid@breakstone-group.com, both of Breakstone Group; Sebastian Castro
Brotto, Budget and IR Manager of Cablemas, +5255-24-54-58-84,
sebastian.castro@admCablemas.com.mx
Profile: International Entertainment
posted by EntertainmentNews @ 9:43 PM
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