Grupo Radio Centro Reports Results for Fourth Quarter and Year-End Results for the Period Ended December 31, 2011

MEXICO CITY, Feb. 21, 2012 /PRNewswire/ -- Grupo Radio Centro, S.A.B. de C.V. (NYSE: RC, BMV: RCENTRO-A) (the "Company"), one of Mexico's leading radio broadcasting companies, announced today its results of operations for the fourth quarter and for the year ended December 31, 2011. All figures were prepared in accordance with International Financial Reporting Standards (IFRS).

Fourth Quarter Results

The Company's broadcasting revenue for the fourth quarter of 2011 totaled Ps. 314,186,000, a 2.4% increase compared to the Ps. 306,908,000 reported for the fourth quarter of 2010. This increase was mainly attributable to higher advertising expenditures by the Company's clients in Mexico, who purchased more airtime during the fourth quarter of 2011 compared to the same period of 2010.

The Company's broadcasting expenses (excluding depreciation, amortization and corporate, general and administrative expenses) for the fourth quarter of 2011 totaled Ps. 205,778,000, a 7.8% increase compared to the Ps. 190,895,000 reported for the fourth quarter of 2010. This increase was primarily due to: (i) higher broadcasting expenses for the Los Angeles radio station KXOS-FM, (ii) increased promotional expenses, and (iii) the depreciation of the Mexican peso against the U.S. Dollar, which increased our operating costs payable in U.S. dollars, including those payable to Comercializadora Siete de Mexico, S.A. de C.V., in each case, in the fourth quarter of 2011 compared to the same period of 2010.

The Company's broadcasting income (i.e., broadcasting revenue minus broadcasting expenses, excluding depreciation, amortization and corporate, general and administrative expenses) for the fourth quarter of 2011 totaled Ps. 108,408,000, a 6.6% decrease compared to the Ps. 116,013,000 reported for the fourth quarter of 2010. This decrease was mainly attributable to the increase in broadcasting expenses described above.

The Company's depreciation and amortization expenses for the fourth quarter of 2011 totaled Ps. 7,442,000, a 29.6% increase compared to the Ps. 5,744,000 reported for the fourth quarter of 2010, as a result of a correction made during the third quarter of 2011 to the calculation of the depreciation expenses related to certain assets.

The Company's corporate, general and administrative expenses in the fourth quarter of 2011 totaled Ps. 4,574,000, the same amount reported for the fourth quarter of 2010.

The Company's operating income for the fourth quarter of 2011 totaled Ps. 96,392,000, an 8.8% decrease compared to the Ps. 105,695,000 reported for the fourth quarter of 2010. This decrease was mainly due to the increase in broadcasting expenses described above.

The Company's other expenses, net, for the fourth quarter of 2011 totaled Ps. 16,293,000, a decrease of 23.4% compared to the Ps. 21,271,000 reported for the fourth quarter of 2010.  This decrease was due to the reclassification under IFRS of certain tax benefits from other income to income taxes for the fourth quarter of 2010.

The Company's comprehensive financing cost in the fourth quarter of 2011 totaled Ps. 2,387,000, a 70.2% decrease compared to the Ps. 8,015,000 reported in the fourth quarter of 2010. This decrease was primarily attributable to a reduction in the interest expense paid in the fourth quarter of 2011 from Ps. 7,906,000 in fourth quarter of 2010 to Ps. 2,620,000 as a result of a reduction in the principal amount of the Company's loan with Banco Inbursa, S.A

The Company's income before income taxes for the fourth quarter of 2011 totaled Ps. 77,712,000, a 1.7% increase compared to the Ps. 76,409,000 reported for the fourth quarter of 2010.

As a result of certain tax benefits received related to the re-evaluation of the tax treatment of the broadcast time that it grants to the Mexican government in payment of broadcasting taxes and the aforementioned reclassification of tax benefits, the Company recorded an income tax benefit of Ps. 67,594,000 in the fourth quarter of 2011, as compared to income taxes of Ps. 12,669,000 recorded in the fourth quarter of 2010.  

As a result of the foregoing, the Company's net income in the fourth quarter of 2011 totaled Ps. 145,306,000, a significant increase compared to the Ps. 63,740,000 of net income recorded for the fourth quarter of 2010.

Twelve-Month Results

The Company's broadcasting revenue for the year ended December 31, 2011 totaled Ps. 988,598,000, representing an 8.9% increase compared to the Ps. 907,925,000 reported for the same period of 2010. This increase was mainly attributable to higher advertising expenditures by the Company's clients, who purchased more airtime during the period ended December 31, 2011 compared to the same period of 2010.

The Company's broadcasting expenses (excluding depreciation, amortization and corporate, general and administrative expenses) for the year ended December 31, 2011 totaled Ps. 719,294,000, a 4.0% increase compared to the Ps. 691,434,000 reported in the same period of 2010.  This increase was primarily due to (i) increased promotional expenses, (ii) higher commissions paid to the Company's sales force and to advertising agencies due to higher broadcasting revenues, and (iii) the depreciation of the Mexican peso against the U.S. Dollar, which increased our operating costs payable in U.S. dollars, including those payable to Comercializadora Siete de Mexico, S.A. de C.V., in each case, for the year ended December 31, 2011 compared to the same period in 2010.

The Company's broadcasting income (i.e., broadcasting revenue minus broadcasting expenses, excluding depreciation, amortization and corporate, general and administrative expenses) for the year ended December 31, 2011 totaled Ps. 269,304,000, a 24.4% increase compared to the Ps. 216,491,000 reported for the same period of 2010.  This increase was mainly attributable to the aforementioned increase in broadcasting revenue.

The Company's depreciation and amortization expenses for the year ended December 31, 2011 totaled Ps. 24,967,000, a slight increase compared to the Ps. 23,861,000 reported for the same period of 2010.

The Company's corporate, general and administrative expenses for the year ended December 31, 2011 totaled Ps. 14,939,000, the same amount reported for the year ended December 31, 2010.

As a result of the foregoing, the Company recorded operating income of Ps. 229,398,000 for the year ended December 31, 2011, a 29.1% increase compared to the Ps. 177,691,000 reported for the same period of 2010.

The Company's other expenses, net, for the year ended December 31, 2011 totaled Ps. 60,077,000, a 4.2% increase compared to the Ps. 57,661,000 reported for the same period of 2010.  This increase was mainly attributable to an increase in legal expenses incurred in 2011 related to the arbitral proceeding.

The Company's comprehensive cost of financing for the year ended December 31, 2011 totaled Ps. 18,064,000, a 30.8% decrease compared to the Ps. 26,116,000 reported for the same period of 2010.  This decrease was mainly due to a decrease in interest expense from Ps. 26,345,000 for the year ended December 31, 2010 to Ps. 17,886,000 in the same period of 2011 as a result of the reduction in the annual interest rate of the Company's loan with Banco Inbursa, S.A. from 13% through March 18, 2010 to 9.5% thereafter combined with a reduction in the principal amount of such loan.

The Company's income before income taxes for the year ended December 31, 2011 totaled Ps. 151,257,000, a 61.1% increase compared to Ps. 93,914,000 recorded for the same period of 2010. This increase was mainly due to the aforementioned increase in broadcasting income.

As a consequence of the reclassification under IFRS of certain tax benefits from other income to income taxes and the impact of the reevaluation of the tax treatment of the portion of the broadcast time that it grants to the Mexican government, the Company recorded an income tax benefit for the year ended December 31, 2011 of 24,250,000, as compared to income taxes of Ps. 42,663,000 recorded for the year ended December 31, 2010.

As a result of the foregoing, the Company recorded net income of Ps. 175,507,000 for the year ended December 31, 2011, a significant increase when compared to the net income of Ps. 51,251,000 reported for the same period of 2010.  

Company Description

Grupo Radio Centro owns and/or operates 15 radio stations. Of these 15 radio stations, 12 are located in Mexico City, two stations are located in Guadalajara and Monterrey, and one station is located in Los Angeles. The Company's principal activities are the production and broadcasting of musical and entertainment programs, talk shows, news and special events programs.  Revenue is primarily derived from the sale of commercial airtime. In addition to the Organizacion Radio Centro radio stations, the Company also operates Grupo RED radio stations and Organizacion Impulsora de Radio (OIR), a radio network that acts as the national sales representative for, and provides programming to 108 Grupo Radio Centro-affiliated radio stations throughout Mexico.

Note on Forward Looking Statements

This release may contain projections or other forward-looking statements related to Grupo Radio Centro that involve risks and uncertainties. Readers are cautioned that these statements are only predictions and may differ materially from actual future results or events. Readers are referred to the documents filed by Grupo Radio Centro with the United States Securities and Exchange Commission, specifically the most recent filing on Form 20-F, which identifies important risk factors that could cause actual results to differ from those contained in the forward-looking statements. All forward-looking statements are based on information available to Grupo Radio Centro on the date hereof, and Grupo Radio Centro assumes no obligation to update such statements.

SOURCE Grupo Radio Centro, S.A.B. de C.V.