20-F 1 form20f.htm PROMOTORA DE INFORMACIONES SA 20-F 12-31-2012 form20f.htm
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
(Mark One)
 
o
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2012
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
o
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
Commission file number: 001-34983
PROMOTORA DE INFORMACIONES, S.A.
(Exact Name of Registrant as Specified in Its Charter)
 
PROMOTER OF INFORMATION, S.A.
(Translation of Registrant’s name into English)

KINGDOM OF SPAIN
(Jurisdiction of incorporation or organization)
Gran Vía, 32
28013 Madrid, Spain
(Address of principal executive offices)

Antonio Garcia-Mon Marañes
General Counsel
Gran Vía, 32
28013 Madrid, Spain
Tel: +34 (91) 330 10 00
Fax: +34 (91) 330 10 70
(Name, Telephone, E-Mail and/or Facsimile number and Address of Company Contact Person)
 
Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class
Name of each exchange on which registered
American Depositary Shares, each representing four (4) Class A ordinary shares
New York Stock Exchange
 
 
Class A ordinary shares, nominal value €0.10 per share*
 
 
 
American Depositary Shares, each representing four (4) Class B convertible non-voting shares
New York Stock Exchange
 
 
Class B convertible non-voting shares, nominal value €0.10 per share*
 
 
 
*  Listed not for trading or quotation purposes, but only in connection with the registration of the American Depositary Shares (“ADSs”) pursuant to the requirements of the Securities and Exchange Commission.
 
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
 
 
 
 
 
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:

Class A Ordinary Shares: 651,054,490 Class B convertible non-voting shares: 340,268,409
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes o No ý

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes o No ý

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes ý No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ý Accelerated filer o Non-accelerated filer o

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

US GAAP o International Financial Reporting Standards as Issued by the International Accounting Standards Board ý Other o

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

Item 17 o Item 18 o

If this is an annual report indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No ý
 
 
2
 
 
 
 
 
Page
 
PART I
 
Item 1.
8
A.
8
B.
8
C.
8
Item 2.
8
Item 3.
8
A.
8
B.
11
C.
11
D.
11
—
11
—
14
—
20
Item 4.
21
A.
21
B.
24
C.
46
D.
27
Item 4A.
47
Item 5.
47
A.
48
B.
63
C.
69
D.
71
E.
73
F.
73
G. Safe Harbor 74
Item 6.
74
A.
74
B.
82
C.
89
D.
96
E.
96
Item 7.
98
A.
98
B.
102
C.
104
Item 8.
104
A.
104
B.
108
Item 9.
108
A.
108
B.
110
C.
110
D.
110
E.
110
F.
110
Item 10.
110
A.
110
B.
110
C.
118
D.
118
E.
119
F.
123
G.
123
H.
123
I.
123
Item 11.
123
 
 


 
CURRENCIES

In this annual report, unless otherwise specified or the context otherwise requires:

●
“Prisa”, the “Company” and the “parent Company” each refer to Promotora de Informaciones, S.A., and the “Group” refers to the Company and its consolidated subsidiaries.
 
●
‘‘$,” “US$” and “U.S. dollar”each refer to the United States dollar; and
 
●
‘‘€,” “EUR” and “euro” each refer to the euro, the single currency established for members of the European Economic and Monetary Union since January 1, 1999.
 
IMPORTANT INFORMATION ABOUT GAAP AND NON-GAAP FINANCIAL MEASURES

Our audited financial statements are prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board and referred to in this annual report as “IFRS.”

Adjusted EBITDA, as presented in this annual report, is a supplemental measure of performance that is not required by, or presented in accordance with, IFRS. It is not a measurement of financial performance under IFRS and should not be considered as (i) an alternative to operating or net income or cash flows from operating activities, in each case determined in accordance with IFRS, (ii) an indicator of cash flow or (iii) a measure of liquidity.

We define “Adjusted EBITDA” as profit from operations, as shown on our financial statements, plus asset depreciation expense, plus changes in operating allowances, plus impairment of assets and plus goodwill deterioration. We use Adjusted EBITDA as a financial measure to assess the performance of our businesses. We present Adjusted EBITDA because we believe Adjusted EBITDA is frequently used by securities analysts, investors and other interested parties in evaluating similar issuers, a significant number of which present Adjusted EBITDA (or a similar measure) when reporting their results.

Although we use Adjusted EBITDA as a financial measure to assess the performance of our businesses, the use of Adjusted EBITDA has important limitations, including that Adjusted EBITDA:
 
●
does not represent funds available for dividends, reinvestment or other discretionary uses;
 
●
does not reflect cash outlays for capital expenditures or contractual commitments;
 
●
does not reflect changes in, or cash requirements for, working capital;
 
●
does not reflect the interest expense or the cash requirements necessary to service interest or principal payments on indebtedness;
 
●
does not reflect income tax expense or the cash necessary to pay income taxes;
 
●
excludes depreciation and amortization and, although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future;
 
●
does not reflect cash requirements for such replacements; and
 
●
may be calculated differently by other companies, including other companies in our industry, limiting its usefulness as a comparative measure.
 
Because of these limitations, Adjusted EBITDA should not be considered as a measure of discretionary cash available to us to invest in the growth of our businesses. We compensate for these limitations by relying primarily on IFRS results and using Adjusted EBITDA measures only supplementally. See “Operating and Financial Review and Prospects” and the consolidated financial statements contained elsewhere in this annual report.

We also occasionally use “EBIT” as another name for the IFRS measure profit from operations, as shown in our audited financial statements and accompanying notes.
 
 
INDUSTRY AND MARKET DATA

In this annual report, we rely on and refer to information and statistics regarding market shares in the sectors in which we compete and other industry data. We obtained this information and statistics from third-party sources, such as independent industry publications, government publications or reports by market research firms, such as Zenith Optimedia and Marktest. We have supplemented this information where necessary with information from various other third-party sources, discussions with our customers and our own internal estimates taking into account publicly available information about other industry participants and our management’s best view as to information that is not publicly available. We believe that these third-party sources are reliable, but we have not independently verified the information and statistics obtained from them.
 
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This annual report contains statements that constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements in this annual report can be identified, in some instances, by the use of words such as “plan,” “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project,” “continue,” “could,” “may,” “might,” “possible,” “potential,” “predict,” “should,” “would” and other similar words and expressions, but the absence of these words does not mean that a statement is not forward-looking. These statements appear in a number of places in this annual report including, without limitation, certain statements made in “Item 3. Key Information—Risk Factors,” “Item 4. Information about Prisa,” “Item 5. Operating and Financial Review and Prospects” and “Item 11. Quantitative and Qualitative Disclosures About Market Risk” and include statements regarding our intent, belief or current expectations with respect to, among other things:
 
  ●
the effect on our results of operations of competition in the markets in which we operate;
 
  ●
trends affecting our financial condition or results of operations;
 
  ●
acquisitions or investments that we may make in the future;
 
  ●
our capital expenditures plan;
 
  ●
our ability to repay debt with estimated future cash flows;
 
  ●
supervision and regulation of the sectors where we have significant operations;
 
  ●
our strategic partnerships; and
 
  ●
the potential for growth and competition in current and anticipated areas of our business.
 
Such forward-looking statements are not guarantees of future performance and involve numerous risks and uncertainties, and actual results may differ materially from those anticipated in the forward-looking statements as a result of various factors. The risks and uncertainties involved in our business that could affect the matters referred to in such forward-looking statements include but are not limited to:
 
 
●
changes in general economic, business or political conditions in the domestic or international markets (particularly in Latin America) in which we operate or have material investments that may affect demand for our services;
 
 
●
changes in currency exchange rates, interest rates or in credit risk in our treasury investments or in some of our financial transactions;
 
 
●
general economic conditions in the countries in which we operate;
 
 
●
existing or worsening conditions in the international financial markets;
 
 
●
the actions of existing and potential competitors in each of our markets;

 
●
the impact of current, pending or future legislation and regulation in countries in which we operate;
 
 
●
failure to renew or obtain the necessary licenses, authorizations and concessions to carry out our operations; and
 
 
●
the outcome of pending litigation.
 
 
 PART I
 
 
 
Not applicable.


Not applicable.


Not applicable.
 
 
Not applicable.
 
Item 3.
 
 
The following table presents financial data as of and for the years ended December 31, 2012, 2011, 2010, 2009 and 2008. You should read this information in conjunction with our historical consolidated financial statements, including the related notes. Our financial data as of and for the years ended December 31, 2012, 2011 and 2010 are derived from our audited consolidated financial statements for those years included elsewhere in this annual report. Our financial data as of and for the years ended December 31, 2009 and 2008 are derived from our audited financial statements for those years that are not included in this annual report. The historical results below and elsewhere in this annual report may not be indicative of our future performance.

Our consolidated financial statements are presented in accordance with International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB, and as approved by the European Union, and the year-end financial statements have been audited. The IFRS approved by the European Union differ in some aspects to IFRS published by the IASB; however, these differences do not have a relevant impact on our consolidated financial statements for the years presented. Accordingly, they present fairly our consolidated equity and financial position at December 31, 2012. For additional information see our financial statements and the accompanying notes in this annual report.

Spanish free-to-air TV “Cuatro”: In 2010, due to the restructuring process (spin-off) of the Spanish free-to-air TV business, and after the sale of Sociedad General de Televisión Cuatro, S.A. on December 28, 2010, we presented the results of Spanish free-to-air TV in “Loss after tax from discontinued operations” on the consolidated income statement. For comparison effects, the consolidated income statements and the selected financial data for the years ended December 31, 2009 and 2008 present the results of operations of Cuatro as discontinued operations.
 
 
 
 
For the Year Ended December 31,
 
 
 
2012
 
 
2011
 
 
2010
 
 
2009
 
 
2008
 
 
 
(thousands of euros, except per share data)
 
Consolidated Statements of Operations Data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Income
 
 
2,664,692
 
 
 
2,724,450
 
 
 
2,822,731
 
 
 
2,975,120
 
 
 
3,694,738
 
Operating Expenses
 
 
(2,839,746
)
 
 
(2,760,186
)
 
 
(2,486,579
)
 
 
(2,594,656
)
 
 
(2,946,031
)
Profit (loss) from Operations
 
 
(175,054
)
 
 
(35,736
)
 
 
336,152
 
 
 
380,464
 
 
 
748,707
 
Financial Loss
 
 
(174,092
)
 
 
(195,152
)
 
 
(159,211
)
 
 
(214,269
)
 
 
(397,068
)
Result of companies accounted for using the equity method
 
 
(6,275
)
 
 
(19,694
)
 
 
(99,553
)
 
 
(20,158
)
 
 
(7,592
)
Profit (loss) from other investments
 
 
2
 
 
 
5,867
 
 
 
(4,302
)
 
 
(4,256
)
 
 
(1,350
)
Profit (loss) before tax from continuing operations
 
 
(355,419
)
 
 
(244,715
)
 
 
73,086
 
 
 
141,781
 
 
 
342,697
 
Income tax
 
 
20,436
  
 
 
(147,973
)
 
 
(73,024
)
 
 
(67,068
)
 
 
(105,590
)
Profit (loss) from continuing operations
 
 
(334,983
)
 
 
(392,688
)
 
 
62
 
 
 
74,713
 
 
 
237,107
 
Loss after tax from discontinued operations
 
 
(3,496
)
 
 
(2,646
)
 
 
(35,011
)
 
 
(9,888
)
 
 
(110,707
)
Consolidated profit for the year
 
 
(338,479
)
 
 
(395,334
)
 
 
(34,949
)
 
 
64,825
 
 
 
126,400
 
Profit (loss) attributable to non-controlling interests
 
 
83,446
  
 
 
(55,884
)
 
 
(37,921
)
 
 
(14,346
)
 
 
(43,404
)
Profit (loss) attributable to the parent
 
 
(255,033
)
 
 
(451,218
)
 
 
(72,870
)
 
 
50,479
 
 
 
82,996
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings (loss) per share from continuing operations
 
€
(0.27
)
 
€
(0.61
)
 
€
(0.16
)
 
€
0.28
 
 
€
0.86
 
Basic earnings per share
 
€
(0.27
)
 
€
(0.62
)
 
€
(0.28
)
 
€
0.23
 
 
€
0.38
 
Cash dividend per share (ordinary shares)
 
 
—
 
 
 
—
 
 
 
—
 
 
 
—
 
 
 
—
 
Cash dividend per share (Class B shares)
 
€
0.175
 
 
€
0.175
 
 
€
0.0146
 
 
 
—
 
 
 
—
 
 
 
 
 
As of December 31,
 
 
 
2012
 
 
2011
 
 
2010
 
 
2009
 
 
2008
 
 
 
(thousands of euros, except per share data)
 
Consolidated Balance Sheet Data:
 
 
 
ASSETS
 
Non-Current Assets
 
 
6,003,095
 
 
 
6,178,703
 
 
 
6,293,489
 
 
 
6,420,766
 
 
 
6,512,270
 
Property, Plant and Equipment
 
 
296,419
 
 
 
307,441
 
 
 
295,560
 
 
 
345,754
 
 
 
397,932
 
Investment Property
 
 
319
 
 
 
422
 
 
 
430
 
 
 
1
 
 
 
28
 
Goodwill
 
 
3,359,717
 
 
 
3,645,077
 
 
 
3,903,514
 
 
 
4,319,603
 
 
 
4,302,739
 
Intangible assets
 
 
320,232
 
 
 
331,260
 
 
 
360,512
 
 
 
365,670
 
 
 
400,084
 
Non-current financial assets
 
 
64,639
 
 
 
121,688
 
 
 
70,611
 
 
 
57,218
 
 
 
93,344
 
Investments accounted for using the equity method
 
 
612,214
 
 
 
604,082
 
 
 
613,542
 
 
 
13,644
 
 
 
12,936
 
Deferred tax assets
 
 
1,343,869
 
 
 
1,166,694
 
 
 
1,046,030
 
 
 
1,313,820
 
 
 
1,298,475
 
Other non-current assets
 
 
5,686
 
 
 
2,039
 
 
 
3,290
 
 
 
5,056
 
 
 
6,732
 
Current Assets
 
 
1,655,647
 
 
 
1,699,696
 
 
 
1,854,312
 
 
 
1,514,898
 
 
 
1,594,297
 
Inventories
 
 
270,309
 
 
 
275,403
 
 
 
203,152
 
 
 
218,066
 
 
 
306,079
 
Trade and other receivables
 
 
1,252,015
 
 
 
1,269,641
 
 
 
1,245,687
 
 
 
1,207,204
 
 
 
1,237,723
 
Current financial assets
 
 
20,063
 
 
 
56,494
 
 
 
160,260
 
 
 
6,593
 
 
 
838
 
Cash and cash equivalents
 
 
113,260
 
 
 
98,158
 
 
 
244,988
 
 
 
82,810
 
 
 
49,432
 
Other current assets
 
 
—
 
 
 
—
 
 
 
225
 
 
 
225
 
 
 
225
 
Assets Held For Sale
 
 
3,271
 
 
 
125
 
 
 
3,653
 
 
 
257,388
 
 
 
519
 
Total Assets
 
 
7,662,013
 
 
 
7,878,524
 
 
 
8,151,454
 
 
 
8,193,052
 
 
 
8,107,086
 
       
 
 
EQUITY AND LIABILITIES
 
Equity
 
 
2,611,627
 
 
 
2,218,035
 
 
 
2,650,185
 
 
 
1,373,019
 
 
 
1,258,236
 
Share Capital
 
 
99,132
 
 
 
84,786
 
 
 
84,698
 
 
 
21,914
 
 
 
21,914
 
Other Reserves
 
 
1,299,881
 
 
 
1,152,640
 
 
 
1,120,539
 
 
 
833,697
 
 
 
779,225
 
Accumulated Profit
 
 
769,583
 
 
 
380,282
 
 
 
798,876
 
 
 
403,478
 
 
 
398,975
 
From prior years
 
 
1,024,616
 
 
 
831,500
 
 
 
871,746
 
 
 
352,999
 
 
 
315,979
 
For the year: Profit attributable to the Parent
 
 
(255,033
)
 
 
(451,218
)
 
 
(72,870
)
 
 
50,479
 
 
 
82,996
 
Treasury Shares
 
 
(727
)
 
 
(2,505
)
 
 
(4,804
)
 
 
(3,044
)
 
 
(24,726
)
Exchange Differences
 
 
17,805
 
 
 
9,755
 
 
 
20,213
 
 
 
(1,561
)
 
 
(18,422
)
Non-controlling interests
 
 
425,953
 
 
 
593,077
 
 
 
630,663
 
 
 
118,535
 
 
 
101,270
 
Non-Current Liabilities
 
 
3,331,781
 
 
 
3,882,329
 
 
 
3,526,496
 
 
 
2,351,466
 
 
 
2,751,369
 
Non-Current Bank Borrowings
 
 
2,866,786
 
 
 
3,176,491
 
 
 
2,931,190
 
 
 
1,917,963
 
 
 
2,348,078
 
Non-Current Financial Liabilities
 
 
158,655
 
 
 
302,864
 
 
 
362,754
 
 
 
249,538
 
 
 
232,565
 
Deferred Tax Liabilities
 
 
22,177
 
 
 
30,409
 
 
 
28,555
 
 
 
72,799
 
 
 
79,278
 
Long-Term Provisions
 
 
254,018
 
 
 
356,520
 
 
 
185,592
 
 
 
90,150
 
 
 
74,807
 
Other Non-Current Liabilities
 
 
30,145
 
 
 
16,045
 
 
 
18,405
 
 
 
21,016
 
 
 
16,641
 
Current Liabilities
 
 
1,718,605
 
 
 
1,778,160
 
 
 
1,974,773
 
 
 
4,263,133
 
 
 
4,097,481
 
Trade Payables
 
 
1,151,739
 
 
 
1,180,075
 
 
 
1,234,846
 
 
 
1,181,437
 
 
 
1,257,945
 
Payable to Associates
 
 
10,870
 
 
 
13,870
 
 
 
16,361
 
 
 
10,955
 
 
 
27,296
 
Other Non-Trade Payables
 
 
97,228
 
 
 
115,865
 
 
 
99,583
 
 
 
107,693
 
 
 
142,568
 
Current Bank Borrowings
 
 
205,467
 
 
 
223,625
 
 
 
411,109
 
 
 
2,796,362
 
 
 
2,532,091
 
Current Financial Liabilities
 
 
43,291
 
 
 
88,853
 
 
 
17,788
 
 
 
3,295
 
 
 
21,676
 
Payable to Public Authorities
 
 
129,219
 
 
 
114,814
 
 
 
154,879
 
 
 
124,288
 
 
 
79,972
 
Provisions for Returns
 
 
7,577
 
 
 
8,686
 
 
 
9,804
 
 
 
9,417
 
 
 
9,369
 
Other Current Liabilities
 
 
73,214
 
 
 
32,372
 
 
 
30,403
 
 
 
29,686
 
 
 
26,564
 
Liabilities Held For Sale
 
 
—
 
 
 
—
 
 
 
—
 
 
 
205,434
 
 
 
—
 
Total Equity and Liabilities
 
 
7,662,013
 
 
 
7,878,524
 
 
 
8,151,454
 
 
 
8,193,052
 
 
 
8,107,086
 
Book value per share
 
€
2.21
 
 
€
1.92
 
 
€
2.39
 
 
€
5.74
 
 
€
5.39
 
 
 
Exchange Rate Information

The following table provides, for the periods and dates indicated, information concerning the exchange rate between the U.S. dollar and the euro. These rates may differ from the rates we use in the presentation of our financial statements or other financial information appearing in this annual report.

The data provided in the following tables are expressed in U.S. dollars per euro and are based on the closing spot rates as published by Bloomberg at 5:00 p.m. (New York time) (the “Closing Rate”) on each business day during the period. The Closing Rate on  March 20th, 2013 was $1,294 = €1.00.
 
 
 
High
 
 
Low
 
 
Average (1)
 
 
Period End
 
Annual Data (Year Ended December, 31)
 
(U.S. dollars per euro)
 
2008
 
 
1.599
 
 
 
1.245
 
 
 
1.471
 
 
 
1.397
 
2009
 
 
1.513
 
 
 
1.253
 
 
 
1.395
 
 
 
1.433
 
2010
 
 
1.458
 
 
 
1.188
 
 
 
1.327
 
 
 
1.326
 
2011
 
 
1.494
 
 
 
1.286
 
 
 
1.400
 
 
 
1.296
 
2012
    
1.346
      
1.205
      
1.286
      
1.320
  

(1)
The average rates for the annual periods were calculated by taking the simple average of the exchange rates on the last business day of each month during the relevant period.

 
 
High
 
 
Low
 
Recent Monthly Data
 
(U.S. dollars per euro)
 
September 2012
 
 
1.312
 
 
 
1.256
 
October 2012
 
 
1.312
 
 
 
1.288
 
November 2012
 
 
1.300
 
 
 
1.271
 
December 2012
 
 
1.325
 
 
 
1.294
 
January 2013
 
 
1.358
 
 
 
1.305
 
February 2013
 
 
1.367
 
 
 
1.305
 
March 2013 (through March 20th)
 
 
1.310
 
 
 
1.288
 


Not applicable.


Not applicable.


In addition to the other information contained in this annual report, prospective investors should carefully consider the risks described below before making any investment decision. The risks described below are not the only ones that we face. Additional risks not currently known to us or that we currently deem immaterial may also impair our business and results of operations. Our business, financial condition, results of operations and cash flow could be materially adversely affected by any of these risks, and investors could lose all or part of their investment.


We have a significant amount of indebtedness, which may adversely affect our cash flow and our ability to operate our businesses, remain in compliance with debt covenants and make payments on our indebtedness

We have significant financial obligations, as summarized in “Operating and Financial Review and Prospects—Liquidity and Capital Resources.” During 2012 several recapitalization transactions were approved by the Annual Shareholders’ Meeting. The obligation to pay the preferred dividend of non-voting B shares in cash was eliminated, allowing us to pay the dividend in shares (at one euro per share), in cash or a combination of both. In addition we issued two mandatory convertible bonds, which were fully subscribed by three of our financial creditors in exchange of existing debt, and by a strategic partner that subscribed in cash. As of December 31, 2012, our bank borrowings amounted to €3,072 million (December 31, 2011: €3,400 million). Our borrowing levels pose significant risks, including:

●
increasing our vulnerability to general economic downturns and adverse industry conditions;
 
 
●
requiring a substantial portion of cash flow from operations to be dedicated to the payment of interest on the indebtedness, therefore reducing our ability to use our cash flow to fund short term operations, working capital requirements, capital expenditures and future business operations;
 
●
exposing us to the risk of increased interest rates, as most of the borrowings are at variable rates of interest; and

●
limiting our ability to adjust to changing market conditions and placing us at a disadvantage compared to competitors who have less debt.

Further, if our operating cash flow and capital resources are insufficient to service our debt obligations, we may be forced to sell assets, seek additional equity or debt capital or further restructure our debt. However, these measures might be unsuccessful or inadequate in permitting us to meet scheduled debt service obligations.

Restrictive covenants in our agreements governing our indebtedness could adversely affect our businesses and operating results by limiting flexibility.

The agreements governing the terms of our indebtedness contain restrictive covenants and requirements to comply with certain leverage and other financial maintenance tests. Many of these agreements also include cross default provisions applicable to other agreements, meaning that a default under any one of these agreements could result in a default under our other debt agreements. These covenants and requirements limit our ability to take various actions, including incurring additional debt, guaranteeing indebtedness and engaging in various types of transactions, including mergers, acquisitions and sales of assets. On December 26, 2011 we signed an agreement to refinance our bank borrowings, extending the different maturities of the loans to 2014/2015 and eliminating the schedule for amortizations previously established for the syndicated loan to transform it into a bullet loan. This agreement also modified our financial covenants in order to permit our compliance at that year-end and to adapt the future level of covenants to the new financial estimation. These covenants could place us at a disadvantage compared to competitors, who may have fewer restrictive covenants and may not be required to operate under these restrictions. Further, these covenants could adversely impact our businesses by limiting our ability to take advantage of financing, mergers and acquisitions or other opportunities.

Our loans are subject to fluctuations in interest rates which may not be adequately protected, or protected at all, by our hedging strategies.

The terms of our bank debt provide exclusively for variable interest rates, and therefore we are exposed to fluctuations in interest rates (see “Operating and Financial Review and Prospects—Liquidity and Capital Resources”). Consequently, we arrange interest rate hedges as far as there are lines of credit available, and a portion of our outstanding debt is hedged to fixed rates. There can be no certainty that our hedging activities will be successful or fully protect us from interest rate exposure. If we cannot arrange interest rate hedges or our hedging strategy is inadequate or the counterparties to the hedging agreements become insolvent, we may not be capable of fully or partially neutralizing the risks associated with changes in interest rates, which would adversely impact our results of operations and financial condition.

As of December 31, 2012, €434 million of our outstanding debt is hedged.

Fluctuations in foreign exchange rates could have an adverse effect on our results of operations.

We are exposed to fluctuations in the exchange rates of the various countries in which we operate. Our foreign currency risk relates mainly to operating income (revenues) generated outside of the European market, resulting from operations carried on in non-euro zone countries which are tied to the performance of their respective currencies, the acquisition of audiovisual rights from international suppliers of television content and financial investments made to acquire ownership interests in foreign companies. Our principal foreign currencies are the U.S. dollar, Brazilian real, Mexican peso, Argentine peso, Chilean peso and Colombian peso. In order to mitigate this risk and, as far as there are credit lines available, we arrange hedges to cover the risk of changes in exchange rates (mainly foreign currency hedges and forwards) on the basis of our projections and budgets. If our hedging strategy is inadequate or the counterparties in the hedging arrangements become insolvent, we may not be capable of fully or partially neutralizing the risks associated with the changes in the exchange rate, which would adversely impact our results of operations and financial condition.

We reported negative working capital at year end

We recorded negative working capital as of December 31, 2012 including amounts past due to suppliers. This situation may continue into 2013. If we are not able to generate sufficient positive short term cash flow to cover those payments, we may be forced to sell assets, seek additional equity or debt capital or further restructure our debt. Such measures might be unsuccessful or inadequate in permitting us to meet the short term liabilities.
 
 
We have significant minority interests in some cash generating companies

Although we fully consolidate all our businesses, third parties have significant minority interests in some of our cash generating companies. In particular, third parties hold a 44% minority interest in DTS, a 25% minority interest in the Education business and a 26.51% minority interest in Radio.

Regarding DTS, the parent Company has access to its cash through dividends. The evolution of operations and financial condition of DTS will directly affect the dividends received by the parent company. To the extent the dividend is part of the cash flow of the parent Company, among other sources, in case those dividends were not enough, our consolidated cash flow might be adversely affected and make it more difficult to meet our obligations. Santillana is required to pay a predetermined fixed preferred dividend to its minority shareholders.

In the case of the Spanish operations of Education and Radio, the parent Company has access to their cash through cash pooling contracts, which could adversely be affected by a change in the circumstances of minority shareholders.

 Fluctuations in the price of paper could have an adverse effect on our results of operations and financial condition.

We are exposed to the possibility of fluctuations in our results due to changes in the price of paper, an essential raw material for certain of our production processes. Paper is the main raw material of our printed media. In 2012 and in 2011, paper purchase expenses represented 2.7% and 3.1%, respectively, of our total consolidated operating expenses in those years (without considering charges for depreciation and amortization or impairment losses). We have established a program for strategically monitoring changes in paper prices, the aim of which, bearing in mind the cyclical nature of changes in paper prices, is to hedge the price of a percentage of the volume of paper that we expect to consume in the medium term. However, an increase in those prices or an interruption of supply could adversely affect our press and book publishing businesses and, therefore, adversely impact our businesses, results of operations and financial position.

 We have tax credits for export activities discussed by tax authorities

A significant portion of the tax credits for export activities generated by the Group in the past, totaling €253 million, has been questioned in various tax audits, since the tax authorities considered that the requirements for use of this tax benefit had not been met. We do not agree with the position of the tax authorities and have appealed.

To cover a possible unfavorable ruling on the issues in question, we have recognized a provision of €189.7 million in our consolidated financial statements (including €6.7 million recorded in 2012). The outcome of the current proceedings could adversely affect our results of operations and financial condition.
 
We have significant tax assets (tax losses and tax credits) that we may not be able to use if the company or tax group at which the tax asset arose does not generate sufficient income.

As of December 31, 2012, we have recognized tax assets amounting to €1,344 million in our consolidated financial statements. Of this amount, €906 million relates to tax assets recorded at a 30% rate arising from tax loss carryforwards as a result mainly of prior years’ losses of the Prisa Televisión companies, mainly, DTS, Distribuidora de Televisión, S.A. (€762 million),  of the Prisa consolidated tax group (totaling €132 million) and other minor consolidated tax groups (€12 million). Under the tax law, the deadline for recovering these tax assets by offsetting them against future profits is 18 years from the tax year in which they were generated (or of the year in which the company concerned first earns a profit, which is the case with DTS, whose deadline starts at 2009). This law states that only in 2011, 2012 and 2013, compensation of tax losses is limited to a percentage of the amount of the tax income carryforward which has been generated previously to the compensation (to 50% in 2011 and to 25% in 2012 and 2013). Since these assets were earned mainly by companies outside the scope of the Prisa consolidated tax group, they will have to be recovered outside of this scope, i.e., they will have to be offset against the individual profits of each company at which they arose.  Assets generated inside the scope of the Prisa consolidated tax group, could be recovered inside of this scope, i.e., they could be offset against the profits of the tax group.

Of the remainder, €346 million (including unused tax credits for export activities amounting to €207 million out of the €253 million  mentioned above), relates mainly to investment tax credits which are deducted from the income tax charge.

The deadline for taking these credits against future profits, in accordance with the Corporation Tax Law, is fifteen or eighteen years (for R&D credits) from the date on which they were earned. In addition to this deadline, restrictions apply as to the amount that may be used each year, to the extent that, of the balances available for use, credits corresponding to only 35% (25% during 2012 and 2013 year) of the gross tax payable (resulting, in turn, from 30% of the taxable profit less double taxation tax credits) in that year may be used.

Should our businesses fail to produce sufficient profits in the future against which these tax assets (tax loss carryforwards and tax credits) may be used within the time horizon indicated, such credits would be lost, which could significantly impact our results of operations and financial condition.
 
 
Deferred tax assets and liabilities recognized are reassessed at the end of each reporting period in order to ascertain whether they still exist, and the appropriate adjustments are made on the basis of the findings of the analyses performed and the tax rate then in force.

Prisa consolidated tax group has tax assets for financial expenses that are not deductible for Spanish corporate income tax purposes that it may not be able to use if the tax group does not generate sufficient income.

As a result of a tax reform published on March 31, 2011, the deductibility of financial expenses is limited to 30% of adjusted EBITDA, as calculated for tax purposes. The amount of nondeductible financial expenses can be offset, under the same conditions, and with the same limit, against future profits in the corporate tax of the following eighteen years. Therefore, the amount not deducted could generate a future tax asset.

With the current structure of the Prisa tax group and the financial debt of the Group PRISA, this tax reform has generated a tax asset of €13.2 million that relates to a 30% rate of the nondeductible financial expenses in the tax year.

The measure approved does not mean, in the current situation, any further cash out in the Prisa tax group in year 2012, nor it is expected to have any cash impact in the following tax years, and it is not expected to have an impact on the Profit and loss account either in the next years.

As with other tax assets, should our businesses fail to produce sufficient profits in the future against which these tax assets may be used within the time horizon indicated such credits would be lost, which could significantly impact our results of operations and financial condition.

Risks Relating to our Group and the Industries in which We Operate

Economic conditions may adversely affect our businesses and customers, which could adversely affect our results of operations and financial condition.

Spain and other countries in which we operate have experienced slowdowns and volatility in their economies in recent years. Main consumption indicators in Spain and Portugal have significantly deteriorated and have led to and could lead to further lower spending on our products and services by customers, including advertisers, subscribers to the pay TV platform, licensees, retailers and other consumers of our content offerings and services. In addition, in unfavorable economic environments, our business customers may have difficulties obtaining capital to finance their ongoing businesses and operations and may face insolvency, all of which could impair their ability to make timely payments and continue operations. We cannot predict the duration and severity of weakened economic conditions and such conditions and resultant effects could adversely impact our businesses, results of operations and financial condition.

A further decline in advertising expenditures could cause our revenue and operating results to decline significantly in any given period or in specific markets.

A relevant portion of our operating income (revenues) depends on the revenues generated from the advertising market through our press, radio, audiovisual and digital businesses. The advertising market in Spain and Portugal continued showing significant declines during 2012, in a negative economic environment in which the decrease in consumption continued accelerating. Expenditures by advertisers tend to be cyclical, reflecting overall economic conditions, as well as budgeting and buying patterns. Consequently, a further decline of the macroeconomic situation in Spain and Portugal could alter current or prospective advertisers spending priorities. In view of the significant weight of fixed costs associated with businesses with a high component of advertising revenue (mainly radio and press), a drop in advertising revenues directly impacts operating profit and therefore the Group´s ability to generate cash flow, forcing our business units to conduct frequent checks and adjustmentsto their cost base.

Demand for our products is also a factor in determining advertising rates. For example, ratings points for our radio stations, television audience levels and circulation levels for our newspapers are factors that are weighed when determining advertising rates. A drop in advertising revenue could adversely impact our businesses, results of operations and financial condition.
 
The use of alternative means of delivery for newspapers and magazines may adversely affect our businesses.

Revenue in the newspaper and magazine publishing industry is dependent primarily upon advertising revenue, subscription fees and sale of copies. The use of alternative means of delivery, such as free Internet sites, for news and other content has increased significantly in recent years. Should significant numbers of customers choose to receive content using these alternative delivery sources rather than through our product offerings, we may face a long-term decline in circulation, which may adversely impact our results of operations and financial condition.
 
 
The industries in which we operate are highly competitive and we may not successfully react to competitors’ actions.

The press, radio, education, audiovisual, digital, media distribution, advertising and publishing industries in which we operate are highly competitive. To compete effectively in these industries we must successfully market our products and react appropriately to our competitors’ actions, both by launching new products or services and by adjusting our pricing strategies. Such rigorous competition poses an ongoing challenge to our ability to increase audience share, increase sales, retain our present customers, attract new customers and improve our profit margins.

Furthermore, the regulatory policies of many countries in which we conduct business tend, where possible, to enable increased competition in most of the industries in which we operate. These countries have in the past granted, and can be expected to continue to grant, new licenses enabling the entry of new competitors into the marketplace. Such entries have the potential to reduce our revenues or make our operations less profitable.

We may not be capable of competing successfully with current or future industry participants, and the entry of new competitors into the industries in which we currently operate may reduce our revenue, market share or profitability. Any of these events could have an adverse impact on our businesses, results of operations and financial condition.

We may fail to adequately evolve our business strategy as the industry segments in which we compete further mature.

Our principal lines of business, specifically press, radio, education, audiovisual, media distribution, advertising and publishing, are conducted in mature industry segments typified by moderate growth rates (or, in some cases, declining demand), standardized product offerings, a significant number of competitors and difficulties in developing and offering new products and services to consumers.

Advertising revenues represent a relevant portion of our revenue (21% of our 2012 operating income). According to December 2012 Zenith Optimedia estimates, advertising expenditure in Spain is expected to decline by 5.2% in 2013 and is expected to also decline by 0.4% in 2014 and to grow by 2.5% in 2015, which represents a -1.1% compound annual rate for 2012-2015. This same source estimates that advertising expenditure in television in Portugal will grow by 0.4%, 5.6% and 4.7% in 2013, 2014 and 2015 respectively and advertising expenditure in radio in Latin America will grow by 4.0%, 7.8% and 8.4% in 2013, 2014 and 2015 respectively.

According to the PricewaterhouseCoopers Global Entertainment and Media Outlook 2012-2016 Report, the digital component of newspaper advertising revenue in Spain is estimated to grow at a 7.9% compound annual rate, while newspaper print advertising is expected to decline by 1.4%. Additionally print circulation spending in Spain is expected to decline at a 2.6% compound annual rate, while digital circulation spending is expected to increase by 82.7%.

Regarding Radio, the report states that the introduction of digital radio in a number of countries has the potential to increase radio advertising as it provides a number of advantages over traditional radio, including better sound quality, the ability to broadcast more channels using the same amount of spectrum, and the ability to transmit data streams incorporating information about the songs along with the audio streams.

Sales of books and training represented 27% of our operating income for the year ended December 31, 2012. Regarding the total spending in the print educational book market, the report states that Spain is expected to decline in the period 2012-2016 by 4.3%. In Latin America, the report expects a 3.9% compound annual rate growth over the same period. Electronic educational books include interactive learning tools that give print book an enhanced value. Total spending in the electronic educational book market in Spain is expected to grow in the period 2012-2016 by 23.4% and a 148.3% in Latam, with Brazil totaling a 74% of total spending on educational electronic books in this region in 2016.

Revenue from subscribers represented 34% of our operating income for the year ended December 31, 2012. In relation to the pay television subscription market, the report states that the subscription market in the EMEA (Europe, Middle East and Africa) region competes with free multichannel services and free satellite services in several countries, so even though in terms of penetration there is still room to grow, the market is effectively close to saturation in terms of available households not currently served by multichannel television.  There is also an emerging “over-the-top” market that competes with TV subscription services, as streaming services that allows viewers to watch TV programs over the Internet. Consequently, subscription services are investing in their infrastructure to provide more channels, including HD, enhancing their VOD offerings and attractive sport packages and launching applications to allow subscribers watch programs online or on mobile devices. The report states that subscription TV market is expected to grow in this region at a 5.6% compound annual rate (+0.4% in Spain).

We must adopt new strategies to adequately address the challenges posed by this competitive climate. These new strategies may include capturing the benefits of economies of scale, cost reduction, better use of production capacity, increased employee productivity and achieving product and service differentiation through innovative marketing, product design, customer service and organization, among others, to provide us with a competitive edge over other industry participants and enhance the effectiveness of our response to customer demands.
 
 
Our failure to adapt strategically to the continuing maturity of the industries in which we operate or to adopt appropriate business strategies in the future could result in the loss of our current market share and, consequently, could adversely impact our businesses, results of operations and financial condition.

We are exposed to liability stemming from the content of our publications and programming.

Although we attempt to verify the lawfulness of the content of our publications, programs and broadcasts, we cannot guarantee that third parties will not bring claims against us in connection with our public dissemination of publications and the broadcasting of programs. We could be required to publish corrections to any such broadcasts or publications.

We could be ordered to pay damages, retract statements or restrict the content of our publications or programs if we are found to have infringed third party rights, any of which could adversely impact our businesses, results of operations and financial condition.

We operate in highly regulated industries and are therefore exposed to legislative, administrative and regulatory risks that could adversely impact our businesses.

Our businesses are subject to comprehensive regulations including the requirement to maintain concessions and licenses for our operations in our Audiovisual and Radio segments. Changes in applicable laws or regulations, or in their interpretation, may occur and may substantially impact our business operations, including by requiring changes to our business methods, increasing our costs of doing business or by forcing us to cease conducting business in those segments. There can be no assurance that the regulatory environment in which we operate will not change significantly and adversely in the future.

Television & Radio

Our radio and television operations in both Europe and Latin America are subject to government regulation and are conducted under revocable administrative concessions or licenses. Applicable radio and television regulations cover, among other matters, minimum coverage, necessary technical specifications, program content and permissible advertising. The regulations also cover the ownership and transfer of equity interests in companies engaged in the regulated activities.

We provide a considerable portion of our services under licenses or concessions granted by the governments and administrative bodies of the countries in which we operate. These licenses and concessions require us to comply with the imposed terms and conditions, including with specified investment commitments and established geographic coverage requirements, and to meet established service quality standards. The performance of such obligations is frequently secured by guarantees. In the event of any failure to comply with applicable law or the terms and conditions of a license or a concession, supervising authorities may review or revoke the license or concession or impose penalties on us. The continuity and the terms of the licenses and concessions may be subject to review by the relevant regulatory bodies and the regulators may also construe, amend or terminate a license or a concession. In the event of termination of a concession or license, we may not have access to any meaningful means of redress and termination could significantly adversely affect our business, results of its operations and financial condition.

Our business and our ability to meet the targets established by our strategic plan would be adversely affected in the event that any new legislation or regulations impose more restrictive provisions or more burdensome compliance requirements than those presently in effect or otherwise significantly quantitatively or qualitatively impact any of our licenses or concessions, or if such licenses or concessions were not to be renewed or are revoked, thereby negatively impacting our businesses, results of operations and financial condition.

Publishing

Our book publishing operations are subject to both general legislation applicable to book publishing as well as legislation regulating the publication of educational materials specifically applicable to textbooks. In addition, in Spain, Autonomous Community legislation (legislation by principal governmental bodies responsible for primary and secondary education, universities and higher education and other state-funded education) imposes various obligations on publishers of educational material and textbooks, and the legislation enacted in support of these functions is extensive. Should we breach any of our statutory obligations with respect to the publication of educational materials and textbooks, penalties could be imposed on us and our textbooks and other educational material could be declared unsuitable. Should the adoption of book lending in schools by the Spanish Autonomous Communities increase, the sale of textbooks and other educational material would be reduced. Any of these developments could adversely impact our businesses, results of operations and financial condition.

Our operations in some Latin American countries subject us to certain risks.

For the year ended December 31, 2012 approximately 26.7% of our operating revenues and 45.0% of our Adjusted EBITDA was derived from operations in Latin America.
 
 
Various risks typical to investments in some Latin American countries with emerging economies could adversely affect our operations and investments in Latin America, the most significant of which include:
 
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the possible devaluation of foreign currencies or introduction of exchange restrictions, or other restrictions imposed on the free flow of capital across borders;
 
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the potential effects of inflation and/or the possible devaluation of local currencies, which could lead to equity deficits at our subsidiaries operating in these countries and require us either to recapitalize the affected subsidiaries or wind up the operations of any such affected subsidiary;
 
●
the potential for foreign government expropriation or nationalization of our foreign assets;
 
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the potential for substantial changes in applicable foreign tax levels or the introduction of new foreign taxes or levies;
 
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the possibility of changes in policies and/or regulations affecting the economic climate or business conditions of the foreign markets in which we operate; and
 
●
the possibility of economic crises, economic instability or public unrest, which could have an adverse effect on our operations in those countries.

Any of the above circumstances could adversely impact both our ability to grow our operations in the affected countries and our results of operations and financial position.

If we do not successfully respond to the rapid technological changes that characterize our businesses, our competitive position may be adversely impacted.

In order to maintain and grow our business, we must adapt to technological advances, for which research and development are key factors. Technological changes could give rise to new competitors in our various businesses and provide new opportunities for existing competitors to increase market share at our expense. Consequently, should we fail to keep sufficiently abreast of the current and future technological developments in the industry, this could adversely impact our businesses, results of operations and financial condition, as well as our capacity to achieve our business, strategic and financial objectives.

Losses in excess of insurance, or losses resulting in increases to insurance premiums or failure to renew, could have an adverse effect on our business, financial condition or results of operations.

Although all of our companies maintain insurance policies with scope and coverage which we believe to be consistent with industry practices, our business, financial condition or results of operations could be significantly adversely affected by any exposure to a significant uninsured risk, any incurrence of losses significantly exceeding our insurance coverage, or any considerable increase in our insurance premiums due to claims in any given year significantly exceeding the historical level of claims.

Furthermore, as our insurance policies are subject to annual renewal, we may not be able to renew our existing policies on similar or favorable terms and conditions, if at all.

We are subject to material litigation that, if unfavorably determined, could adversely impact our results of operations or financial condition.

As of the date of this annual report, we are a party to various lawsuits. Since these proceedings are in progress, we cannot reliably anticipate the outcome thereof, nor can we fully assess the consequences of potential judgments. A judgment adverse to our interests could adversely impact our businesses, results of operations and financial condition. Moreover, even if claims brought against us are unsuccessful or without merit, we are required to defend ourselves against such claims. The defense of any such actions may be time-consuming and costly and may distract our management’s attention from executing our business plan.

We depend significantly on our pay television business and negative developments in this market could have an adverse effect on our results of operations.
 
In 2012, revenue from the Spanish pay television market through Canal+ (formerly known as Digital+) accounted for 40.5% of our operating income. Our share of the total pay television market in Spain in terms of revenues is 60.8%, according to the Spanish Telecommunication Market Commission (CMT) 3Q report 2012. The growth and profitability of the Canal+ business are dependent on developments in the pay television industry as a whole, on changes in the film production and distribution industry as well as on significant changes with regards to increases in VAT. Industry developments impact:
 
 
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our ability to stimulate pay television consumption, win new subscribers and increase the rate of penetration of pay television among homes with televisions; and

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our ability to ensure the future continuity of the supply of television programming produced by third parties. In 2012 Canal+ signed a new agreement for the exploitation of football rights in the coming three seasons for the Spanish Liga and the Copa. Additionally, in 2011 Canal+ acquired the broadcast rights to the UEFA Champions League for three seasons starting August, 2012.

Should the market for pay television suffer a downturn or a significant reduction in subscribers or ARPU, this would adversely impact our results of operations and financial condition.

Our business depends on a number of third-party infrastructures and technological systems for the provision of services to subscribers and any breakdown thereof could interrupt those services.

Currently, Prisa Televisión has contracts for the supply of satellite transmission services with the operators Hispasat, S.A. and Société Européenne des Satellites, S.A., or SES ASTRA. The provision by Prisa Televisión of satellite television services through Canal+ depends on these supply contracts remaining in force. The revocation, termination or failure to renew these contracts could prevent Prisa Televisión from providing its subscribers with satellite television services and could lead to an interruption in these services and adversely impact our businesses, results of operations and financial condition.

The ongoing European sovereign debt crisis and the recession in the Eurozone could adversely affect our results of operations and financial condition.

Since late 2009, the sovereign debt markets of the Eurozone have undergone substantial stress, especially with respect to Greece, Ireland, Italy, Portugal and Spain. The sovereign debt crisis has contributed to a weakening of the business environment and financial markets in the Eurozone. Austerity programs introduced by a number of countries across the Eurozone in response to the sovereign debt crisis, including Spain, may also be contributing to a decline in economic growth. If European policymakers are unable to resolve the sovereign debt crisis, our results of operations and financial position would likely be materially and adversely affected.  As described above, weak economic conditions may adversely affect our business and our customers. In addition, efforts by our lenders to preserve capital in the face of sovereign debt write-downs and increased regulatory capital requirements has reduced overall lending and could material adversely affect our ability to refinance our outstanding indebtedness.

Furthermore, one or more members of the Eurozone could leave the common currency, which could have unpredictable financial, legal, political and social consequences, and could result in a widespread loss of investor confidence.
 
Our systems to operate and protect our digital activities may be insufficient to protect against service interruptions or fraudulent activities.
 
Our digital activities generated €60 million in revenues in 2012, a 18.7% increase over 2011.  Our digital activity depends on Internet Service Providers (“ISPs”), online service providers and our system infrastructure to allow users to access the sites we operate, as well as on technologies and network systems to handle transactions and user information securely over the Internet.  Significant system failures, including network, software or hardware failure, which causes a delay or interruption in access to our sites could have a material adverse effect on our results of operations and financial condition. Our security and network systems could also be tested and subject to attack by third parties seeking to commit fraud.  Any such attack could cause delay, interruption or financial loss, which could have a material adverse effect on our results of operations and financial condition.

The failure of our controlling shareholder group to continue to hold, directly or indirectly, at least 30% of our share capital may trigger change of control provisions contained in a material shareholder agreement among shareholders of DTS.

If holders of a sufficient number of Prisa Class B convertible non-voting shares convert their shares into Prisa Class A ordinary shares and our existing controlling shareholder group does not exercise a sufficient number of its warrants to maintain ownership of, directly or indirectly, at least 30% of Prisa’s Class A ordinary shares, then the change of control provision contained in a material agreement may be triggered pursuant to the definition of “change of control” as defined in such agreement. Additionally, given the possibility of paying the minimum Class B dividend in Class A shares, and the possibility of anticipated conversions of mandatory convertible bonds, the exercise of warrants may not ensure the maintenance of control by the existing controlling shareholder group.

The terms of the shareholder agreement among the shareholders of DTS (Prisa Televisión, Telefónica and Mediaset España) provide that, within 15 days of learning of a change of control of Prisa, each of Telefónica and/or Mediaset España may require Prisa Televisión to sell all of its shares in DTS to Telefónica and/or Mediaset España, pro rata, at a purchase price to be determined by internationally recognized investment banks chosen by each party. In the event of a change of control, through Prisa Televisión, we could lose our stake in our pay television business.
 
 
A change of control of Prisa is defined in the shareholder agreement as (i) the Prisa controlling shareholder group ceasing to own at least 30% of Prisa’s share capital or (ii) the existence of an individual Prisa shareholder or a group of Prisa shareholders (acting jointly through one or more voting agreements) holding an ownership interest in Prisa greater than the ownership interest held by the Prisa controlling shareholder group.

Additionally the shareholder agreement provides minority shareholders first refusal and veto rights, among other customary rights.

The loss of our stake in our pay television business would adversely impact our results of operations and financial condition.

Supermajority and other voting provisions in our bylaws, along with the existence of a controlling shareholder group, may have the effect of discouraging potentially interested parties from seeking to acquire us or otherwise influence the outcome of significant matters affecting our shareholders.

Our bylaws require a 75% supermajority shareholder vote to approve bylaw amendments, increases or reductions in our share capital, mergers and similar extraordinary transactions and, in some cases, the election of directors not nominated by our board of directors. Our controlling shareholder group currently controls over 30% of our total voting power. As a result, these bylaw provisions may have the effect of rendering more difficult or discouraging an acquisition of Prisa not supported by the controlling shareholder group or otherwise precluding corporate actions that the controlling shareholder group opposes, even if supported by a majority of our voting shares.
 
Risks Relating to Taxation
 
You may have to pay taxes on constructive distributions without receiving a corresponding distribution of cash or property.

If the conversion ratio of the Prisa Class B convertible non-voting shares into Prisa Class A common shares is increased, as provided in the terms of the Prisa Class B convertible non-voting shares, holders of Prisa ADS-Bs may be treated as having received a constructive distribution if such increase in the conversion ratio has the effect of increasing the proportionate interest of such holders in Prisa’s earnings and profits or assets. In such a case, holders may be required to include an amount in income for U.S. federal income tax purposes, notwithstanding that they do not receive such distributions.
 


Overview

Promotora de Informaciones, S.A., which operates under the commercial name “Prisa,” was incorporated in the city of Madrid on January 18, 1972. We are the leading multimedia group in Spain and Portugal and we believe we are one of the leading multimedia groups in the Spanish-speaking world. We operate in more than 20 countries, including Brazil, Mexico and Argentina as well as many other Latin American countries and the United States.

History

The following are certain significant events in the development of Prisa:

1972

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Prisa founded, but does not begin operations.

1976

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El País first issue.

1980s

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We acquire Cadena SER.

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We acquire Cinco Días.
 
 
1990

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Sogecable (currently Prisa Televisión), 25.0% owned by Prisa, is awarded a television license to operate Canal+, first experience of pay TV in the country.

1996

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We acquire a controlling equity interest in AS and launch websites for El País, Canal+, AS and Cadena SER.

1997

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Sogecable launches Canal Satélite Digital, Spain’s leading multi-channel digital direct-to-home platform.

1999

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We expand our activities into the music market by founding Gran Vía Musical.

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We acquire our equity interest in Caracol, S.A., or “Radio Caracol”—the largest radio group in Colombia—and create Participaciones de Radio Latinoamericana S.L., or “PRL,” through which we carry out our radio operations in Chile, Costa Rica, Panama, the United States and France.

2000

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We launch our initial public offering and our shares begin trading through the Spanish stock market interconnection system.

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We expand our activities to media advertising sales through the acquisition of GDM (currently Prisa Brand Solutions).

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We expand our activities to book publishing and printing through Santillana and Dédalo, respectively.
 
2001

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We establish audiovisual producer Plural Entertainment, to develop and produce audiovisual content.

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We enter the radio market in Mexico through an agreement with Grupo Televisa A.B., or Televisa, to develop the radio market in Mexico, which involved the acquisition of a 50.0% equity interest in Sistema Radiópolis, S.A. de C.V., which is referred to as “Radiópolis.”
 
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We acquire Editora Moderna Ltda., or “Editora Moderna,” in Brazil.
 
2002

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We organize Grupo Latino de Radio S.A., or “GLR,” as a holding company to restructure our radio businesses in Latin America, and our equity interests in PRL, Radiópolis and Grupo Caracol are transferred to GLR.

2005

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We enter the Portuguese media market through the acquisition of 100.0% of the equity of Vertix, which owns 33.0% of the equity of Media Capital.

2006

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We increase our ownership interest in Sogecable to 42.9%.

●
We combine our ratio activities in Latin America and Spain into Unión Radio (currently Prisa Radio).

2007

●
We acquire all of the shares of Iberoamericana Radio Chile, S.A. through GLR Chile, Ltda.

●
We increase our ownership interest in Media Capital to 94.7%
 
 
2008

●
We acquire the remaining outstanding share capital of Sogecable, increasing our ownership interest to 100%.
 
●
3i Group plc enters the shareholder structure of Unión Radio (currently Prisa Radio) with an 8.14% stake.

2010

●
We sign an agreement (“Business Combination Agreement” or “BCA”) on March 5, 2010, with the US company Liberty Acquisition Holdings Corp (which had the legal form of a “special purpose acquisition company”), consolidated into a new text called the “Amended and Restated Business Combination Agreement”, in August 2010.

Under this agreement, we carried out the following capital increases, which were approved by the extraordinary shareholders’ meeting of Prisa of November 27, 2010:

i)  Capital increase by issuance of 241,049,050 Class A ordinary shares, issued in exchange for a cash consideration with preemption rights implemented through warrants.

ii) Capital increase by issuance of 224,855,520 Class A Shares and 402,987,000 non-voting convertible Class B shares, issued by compensation in kind, which was subscribed by contribution of all common shares and warrants of Liberty Acquisition Holdings, Corp., once absorbed by its subsidiary, Liberty Acquisitions Holdings Virginia, Inc.

As a result of these capital increases we obtain €650 million in cash. After this transaction, the investors of Liberty Acquisition Holdings Corp become Prisa shareholders. At the same time, Prisa shareholders before November 23rd are granted Prisa warrants. In connection with this transaction, we list our shares, in the form of American Depositary Shares, on the New York Stock Exchange. Our new shares start trading on the NYSE and on the Spanish stock exchanges in December. Our warrants are also traded on the Spanish stock exchanges.
 
●
We sell a 25% stake in Santillana to DLJ  SAP Publishing Cöoperatief, UA.

●
Through Prisa Televisión (formerly Sogecable), we sell a 44% stake in DTS to Telefónica (22%) and Telecinco (22%) for €976 million in cash, which is mainly used for debt amortization.

●
On December 28, 2010, Prisa Televisión sells 100% of Sociedad General de Televisión Cuatro, S.A. and subsidiaries to Gestevisión Telecinco, S.A. This sale is carried out through the subscription by Prisa Televisión of a 17.336% stake in Gestevisión Telecinco, S.A. in non-cash capital increase approved by the shareholders of Gestevisión Telecinco, S.A. in their general meeting held on December 24, 2010. The market value of this investment on subscription was €590 million. As a result of this transaction, we account for Gestevisión Telecinco, S.A. Group and subsidiaries using the equity method.
 
2011

 
●
We sell a 10% stake of Grupo Media Capital to PortQuay West I B.V., a company which is controlled by Miguel Paes do Amaral.

2012

 
-
We fully consolidate the financial statements of Dédalo Grupo Gráfico, S.L. and subsidiaries in the Group's accounts as from  April 1,  2012, as the option of the reciprocal purchase and sale agreement for the shares of Dédalo Grupo Gráfico signed by Prisa in 2010 with the other shareholders of Dédalo Grupo Gráfico becomes exercisable. In June 2012 we announce our decision to exercise the call option for one euro, which involves the acquisition of the remaining 60% of society, reaching a total participation of 100%.
 
Business areas

Our principal business operations are:

●
Audiovisual, which includes pay television, free-to-air television and television and film production;

●
Education, which includes the sale of general publishing and educational books and education system;

●
Radio, which includes the sale of advertising on our networks and, in addition, the organization and management of events and the provision of other supplementary services; and
 
 
●
Press, which includes the publishing of newspapers and magazines and the sale of advertising in such publications and distribution.

We operate a digital platform that provides services and support to each of these principal business operations. We also sell media advertising and promote and produce musical events. We are the leader in Spain, and we believe we are one of the leaders in the Spanish-speaking world, in daily newspapers through El País, in radio through Cadena SER, and in education and publishing through Santillana. Through Prisa Televisión and its digital platform, Canal+, we are also the leader in pay television in Spain. In specialized press, we are ranked second in sports press through AS and are ranked second in financial press through Cinco Días.

Media Capital, our subsidiary, operates TVI, the leading free-to-air television network in Portugal. Media Capital also operates an audiovisual production business as well as a radio network, produces music recordings and distributes films and video/DVDs.

Prisa is domiciled in Spain, its legal form is a public limited liability company and its activity is subject to Spanish legislation and particularly to the Spanish Companies Act. It has been in continuous operation since its public deed of incorporation was executed, and now has perpetual existence. Our registered office is located at Gran Vía 32, 28013 Madrid, Spain. Our telephone number is +34 (91) 330 10 00.

Capital expenditures and disposals

Our principal capital expenditures during the three years ended December 31, 2012 consisted of additions to property, plant and equipment and additions to intangible assets. In 2012, 2011 and 2010, we made capital expenditures of €169 million, €218 million and €206 million, respectively.

Year ended December 31, 2012

Our capital expenditure decreased by 22.6% to €169 million in 2012 compared to €218 in 2011. This decrease was mainly due to lower investment in decoders compensated with investments made for Santillana in digital developments and learning systems.

Year ended December 31, 2011

Our capital expenditure increased by 5.8% to €218 million in 2011 compared to €206 in 2010. This increase was mainly due to investment in decoders, to investments in digital developments and learning systems in Santillana and to investment in creating a new digital platform.
 
Year ended December 31, 2010

Our capital expenditure increased by 61.0% to €206 million in 2010 compared to €128 million in 2009, mainly as a result of the acquisition of digital set-top boxes and cards by the change in the marketing model iPlus from a sales model to a transfer with licensing fees.
 
The most significant disposals in 2010 were the result of the sale of Prisa Televisión’s headquarters in Tres Cantos and the sale of data processing equipment at its carrying amount to CSI Renting de Tecnología, S.A.U. within the framework of an outsourcing agreement signed with Indra Sistemas, S.A. on December 23, 2009. The agreement provides for the outsourcing of our IT technology management systems and R&D projects for a seven-year period.
 
Financial Investments

Our principal financial investment in 2012 was the acquisition of an additional 7.9% stake in V-me Media Inc, a TV operator in the US Hispanic market.
 
Recent Developments

By virtue of the agreements entered into in 2011, in February 2013, PortQuay West I B.V., a company controlled by Miguel Paes do Amaral, exercised its right to transfer to Vertix, a wholly owned subsidiary of Prisa, 10% of Grupo Media Capital SGPS, S.A.'s share capital.
 

Our activities are organized into the following segments: Audiovisual, Education, Radio and Press, which includes the Distribution business since the third quarter of 2011. This structure is supported by the Digital area, which provides services and support to all business segments. Additionally, we do business in other areas not part of any business segment including an advertising agency, real estate and printing (known as Dédalo).
 
 
The following table describes our organizational structure by segment.

 
Audiovisual
 
Education
 
Radio
 
Press
●
Prisa Televisión
●
●
Education
General Publishing
●
●
Radio in Spain
International Radio
●
●
El País
AS
●
Media Capital
 
 
●
Gran Via Musical
●
Cinco Días
●
Audiovisual Production
 
 
 
 
●
●
Magazines
Distribution

The following table shows our revenues and assets, by business segment, for the previous three fiscal years (in thousands of euros, except for margins).

 
 
Audiovisual (2)
 
 
Education (2)
 
 
 
2012
 
 
2011
    
2010
 
 
2012
 
 
2011
    
2010
 
Revenue
 
 
1,259,845
 
 
 
1,241,185
 
 
 
1,372,401
 
 
 
733,654
 
 
 
720,393
 
 
 
642,252
 
Adjusted EBITDA (1)
 
 
233,167
 
 
 
234,694
 
 
 
308,777
 
 
 
184,190
 
 
 
170,198
 
 
 
166,347
 
Profit from operations
 
 
65,223
 
 
 
121,389
 
 
 
194,437
 
 
 
107,890
 
 
 
103,986
 
 
 
105,461
 
Adjusted EBITDA margin
 
 
18.5
%
 
 
18.9
%
 
 
22.5
%
 
 
25.1
%
 
 
23.6
%
 
 
25.9
%
Profit from operations margin
 
 
5.2
%
 
 
9.8
%
 
 
14.2
%
 
 
14.7
%
 
 
14.4
%
 
 
16.4
%
Total assets
 
 
2,986,065
 
 
 
3,033,287
 
 
 
3,136,159
 
 
 
614,668
 
 
 
573,677
 
 
 
559,885
 

 
 
Radio (2)
 
 
Press (2)
 
 
 
2012
 
 
2011
 
 
2010
 
 
2012
 
 
2011
 
 
2010
 
Revenue
 
 
342,416
 
 
 
376,772
 
 
 
405,522
 
 
 
314,594
 
 
 
390,012
 
 
 
420,347
 
Adjusted EBITDA (1)
 
 
54,319
 
 
 
51,605
 
 
 
108,065
 
 
 
(13,763
)
 
 
40,047
 
 
 
57,859
 
Profit from operations
 
 
23,427
 
 
 
25,184
 
 
 
90,064
 
 
 
(52,647
)
 
 
16,480
 
 
 
42,296
 
Adjusted EBITDA margin
 
 
15.9
%
 
 
13.7
%
 
 
26.6
%
 
 
(4.4
%)
  
 
10.3
%
 
 
13.8
%
Profit from operations margin
 
 
6.8
%
 
 
6.7
%
 
 
22.2
%
 
 
(16.7
%)
  
 
4.2
%
 
 
10.1
%
Total assets
 
 
520,201
 
 
 
533,020
 
 
 
560,617
 
 
 
259,717
 
 
 
345,208
 
 
 
331,000
 
 
 
 
Other (2)(3)
 
 
Total (2)
 
 
 
2012
 
 
2011
 
 
2010
 
 
2012
 
 
2011
 
 
2010
 
Revenue
 
 
14,183
  
 
 
(3,912
)
 
 
(17,791
)
 
 
2,664,692
 
 
 
2,724,450
 
 
 
2,822,731
 
Adjusted EBITDA (1)
 
 
(30,912
 )
 
 
(59,630
)
 
 
(44,717
 )
 
 
427,002
 
 
 
436,914
 
 
 
596,331
 
Profit from operations
 
 
(318,946
 )
 
 
(302,775
)
 
 
(96,106
 )
 
 
(175,054
 ) 
 
 
(35,736
)
 
 
336,152
 
Adjusted EBITDA margin
 
 
—
 
 
 
—
  
 
 
—
  
 
 
16.0
%
 
 
16.0
%
 
 
21.1
%
Profit from operations margin
 
 
—
 
 
 
—
  
 
 
—
  
 
 
(6.6
%)
  
 
(1.3
%)
  
 
11.9
%
Total assets
 
 
3,281,362
 
 
 
3,393,332
 
 
 
3,563,793
 
 
 
7,662,013
 
 
 
7,878,524
 
 
 
8,151,454
 
 
(1)
Adjusted EBITDA is a supplemental measure of performance that is not required by, or presented in accordance with, IFRS. We define “Adjusted EBITDA” as profit from operations, as shown on our financial statements, plus asset depreciation expense, plus changes in operating allowances, plus impairment of assets and plus goodwill deterioration. We use Adjusted EBITDA as a financial measure to assess the performance of our businesses. We present Adjusted EBITDA because we believe Adjusted EBITDA is frequently used by securities analysts, investors and other interested parties in evaluating similar issuers, a significant number of which present Adjusted EBITDA (or a similar measure) when reporting their results.

Although we use Adjusted EBITDA as a financial measure to assess the performance of our businesses, it is not a measurement of financial performance under IFRS and should not be considered as (i) an alternative to operating or net income or cash flows from operating activities, in each case determined in accordance with IFRS, (ii) an indicator of cash flow or (iii) a measure of liquidity. See “—Adjustments to Reconcile Adjusted EBITDA to Profit from Operations” at the end of this section for a reconciliation of Adjusted EBITDA to profit from operations, the most comparable financial measure calculated and presented in accordance with IFRS.

(2)
2012 Figures were impacted by items such as:
a) redundancy expenses (€51.08 million) registered across all business units;
b) Global consolidation of Dédalo as from April 1, 2012 which, prior to this date, was accounted for under the equity method (at Group level and Others);
 
 
 
c) a €54.37 million provision corresponding to an agreement signed with Cableuropa, S.A.U. (ONO), following which €54.37 million of the €108.75 million paid to ONO as a result of several lawsuits that were taking place between them, were recovered by the Company, ending the litigation between Prisa and ONO. As a consequence of this deal, the Company registered an extraordinary €54.37 million provision in its P&L for the amount which has not been recovered (at Group level and Audiovisual).
 
d) Goodwill and other impairments of €305.28 million, of which €294 million corresponded to the Goodwill impairment of Canal+ (DTS, at Group level), €6 million to the deterioration of the music industry in general (impairment of RCM Música in Spain, in Radio and at Group level) and the rest to fixed asset value deterioration in International Radio (in Radio and at Group Level);

2011 operating figures were impacted by items such as redundancies from the efficiency plan (€77 million of expense) registered in all business units and a goodwill impairment of €253 million (Media Capital: €219 million and advertising agency: €34 million). Additionally, the Audiovisual segment included the sale of Canal Viajar (€12.3 million income) and the FC Barcelona Sentence (€16.9 million income).

2010 figures were also impacted by items mainly in the Audiovisual segment to highlight the Mediapro sentence (€33 million income), the sale of headquarters of Canal+ in Tres Cantos (€20 million at the Group level), the sale of Sogecine and Sogepaq (€11 million) and the income resulting from renegotiations with suppliers (€32 million of income). In addition 2010 figures included €50 million of impairment in Media Capital goodwill. See “Operating and Financial Review Prospects- Operating Results”.
 
 
(3)
“Other” includes our digital platform and our advertising, real estate and corporate activities, and the eliminations and adjustments on consolidation. “Other” includes Dédalo, which is accounted for under global consolidation as from April 1, 2012.
 
 
In 2011, the Distribution business which was previously included in “Other” was integrated into the Press division. We have modified figures for that division for 2010 for comparison purposes. In addition, in 2010, due to the restructuring process (spin-off) of the Spanish free-to-air TV business, and after the sale of Sociedad General de Televisión Cuatro, S.A. on December 28, 2010, we present the results of our Spanish free-to-air TV business under “Loss after tax from discontinued operations” on our consolidated income statement.
  
Business Segment

Audiovisual
 
We believe that we are a leading producer and distributor of Spanish and Portuguese audiovisual content, and the largest in the Iberian market (see further discussion in this section concerning the external sources that show this leadership), with operations mainly in Spain and Portugal.

In the distribution area, we have a diversified range of products, and are the leader in pay television in Spain through the satellite platform Canal+.

We also operate Media Capital, the owner of TVI, the leading free-to-air television network in Portugal. In the production area, we believe we lead the Portuguese market with Plural Entertainment Portugal. Additionally, Plural Entertainment España, a producer of film and television, operates in Spain and the United States.

In 2012, the Audiovisual segment accounted for 47.3% of our revenue and 54.6% of our adjusted EBITDA.

The table below sets forth the revenues of the businesses included in our Audiovisual segment (in thousands of euros, except for margins).
 
 
 
Prisa Televisión
 
 
Media Capital
 
 
 
2012
 
 
2011
 
 
2010
 
 
2012
 
 
2011
 
 
2010
 
Revenue
 
 
1,079,923
 
 
 
1,011,278
 
 
 
1,133,989
 
 
 
184,319
 
 
 
224,356
 
 
 
249,008
 
Adjusted EBITDA (1)
 
 
191,337
 
 
 
186,765
 
 
 
269,372
 
 
 
41,831
 
 
 
38,952
 
 
 
48,037
 
Profit from operations (2)
 
 
35,531
 
 
 
95,572
 
 
 
174,064
 
 
 
29,692
 
 
 
16,840
 
 
 
29,005
 
Adjusted EBITDA margin
 
 
17.7
%
 
 
18.5
%
 
 
23.8
%
 
 
22.7
%
 
 
17.4
%
 
 
19.3
%
Profit from operations margin
 
 
3.3
%
 
 
9.5
%
 
 
15.3
%
 
 
16.1
%
 
 
7.5
%
 
 
11.6
%
 
 
 
 
Other (3)
 
 
Total
 
 
 
2012
 
 
2011
 
 
2010
 
 
2012
 
 
2011
 
 
2010
 
Revenue
 
 
(4,397)
 
 
 
5,551
  
 
 
(10,596
)
 
 
1,259,845
 
 
 
1,241,185
 
 
 
1,372,401
 
Adjusted EBITDA (1)
 
 
0
 
 
 
8,977
  
 
 
(8,632
)
 
 
233,167
 
 
 
234,694
 
 
 
308,777
 
Profit from operations (2)
 
 
0
 
 
 
8,977
  
 
 
(8,632
)
 
 
65,223
 
 
 
121,389
 
 
 
194,437
 
Adjusted EBITDA margin
 
 
—
  
 
 
161.7
%
 
 
(81.5
%)
 
 
18.5
%
 
 
18.9
%
 
 
22.5
%
Profit from operations margin
 
 
—
  
 
 
161.7
%
 
 
(81.5
%)
 
 
5.2
%
 
 
9.8
%
 
 
14.2
%
 
(1)
Adjusted EBITDA is a supplemental measure of performance that is not required by, or presented in accordance with, IFRS. It is not a measurement of financial performance under IFRS and should not be considered as (i) an alternative to operating or net income or cash flows from operating activities, in each case determined in accordance with IFRS, (ii) an indicator of cash flow or (iii) a measure of liquidity. See “—Adjustments to Reconcile Adjusted EBITDA to Profit from Operations” at the end of this section for a reconciliation of Adjusted EBITDA to profit from operations, the most comparable financial measure calculated and presented in accordance with IFRS.
 
For both 2012 and 2011, adjusted EBITDA is impacted by redundancy expenses which in 2012 amounted to €1.9 million and in 2011 to €18.89 million.

(2)
In addition to the aforementioned items, Profit from operations for the Audiovisual division includes in 2012 the €54.37 million for the provision of the agreement with ONO, and in 2011 a goodwill impairment of €9.75 million which impacted Media Capital, but did not have an impact at the Group as it corresponded to the goodwill generated with an internal transfer of the investment in the Spanish audiovisual production company Plural.

(3)           “Other” includes adjustments and eliminations on consolidation.
 
Prisa Televisión

Founded in 1989, we believe Prisa Televisión is Spain’s leading pay television group. Prisa Televisión owns various subsidiaries with different operations that are vertically integrated. The subsidiaries provide audiovisual rights and ancillary services in the Spanish market. Prisa Televisión’s main source of revenue is the pay television activities performed through Canal+. It is strongly differentiated from other offers in the Spanish market place given its premium sports content (including full coverage of Spanish football tournaments) and Hollywood films. Prisa Televisión’s other activities include the acquisition and management of audiovisual rights, audiovisual production, channel distribution and marketing.
 
Prisa Televisión pioneered the introduction of high-definition, 3-D television (launched June 2010) and interactive services. The development of audiovisual products for new-generation media has driven Prisa Televisión to begin creating products based on mobile telephony and the internet. Additionally, Canal+ in high definition is accessible to subscribers to the platform through iPlus, a technologically advanced set-top box through which high-definition broadcasts can be received and which can store up to 80 hours of programs on its digital video recorder. Through its new brand Canal+ Yomvi, created in October 2011, Prisa Televisión was also the first to allow the viewer to choose content at his own preferred time and through the device of his choice connected to the Internet (TV, computer, tablet or smartphone). Since its inception, Canal+ Yomvi recorded more than 13.4 million downloads and more than 528,000 users have accessed the platform.
 
Prisa Televisión cooperates on an ongoing basis with technological suppliers with the objective of being at the forefront of service provision to its subscribers and customers. It has also signed an agreement with CISCO to provide iplus decoders.

Prisa Televisión has been operating as a television producer since its inception. Under the Canal+ brand, Prisa Televisión creates and operates several channels. Prisa Televisión produces theme-based channels that deal with a wide variety of content: Canal+ 1, Canal+ 1 HD, Canal+ 1… 30, Canal+ 2, Canal+ 3D, Canal+ Acción, Canal+ Acción ...30, Canal+ Acción HD, Canal+ Comedia, Canal+ Comedia HD, Canal+ Dcine, Canal+ Dcine HD, Canal+ Deportes, Canal+ Deportes 2 HD, Canal+ Deportes HD, Canal+ Fútbol, Canal+ Fútbol HD, Canal+ Golf, Canal+ Liga, Canal+ Liga HD, Canal+ Toros, Canal+ Xtra, Canal+ Xtra HD, Caza y Pesca, Dcine Español and Sportmanía. Some of them in addition to being included in the Canal+ range of services, are marketed to cable and IPTV operators: C+1, C+ fútbol, C+Liga, C+Champions, Sportmania,  Caza y Pesca, Dcine Español, C+ Toros and  40 TV.
 
Our premium sports content includes Tennis (Wimbledon, Australia, US Open, ATP1000, ATP500, ATP250, Roland Garros), Football (Spanish League, UEFA Champions League, Premier League, BundesLiga Football, UEFA Europa League Football –half of 2012-, FA Cup –half of 2012-, Liga Calcio, Argentine League, Champions League), Golf (British Open, PGA European Tour, US PGA Tour, Ryder Cup, US Open, European Tour, Masters Augusta), Basketball (NBA, NCAA), Rugby ("6-Nations"), NFL American Football, Major League Baseball, NHL. Canal+ has exclusive agreements with: MGM, Dreamworks, 20th Century Fox, Paramount, Warner Bros International, Universal, Columbia Tristar, HBO, and Disney.

According to the Spanish Telecommunication Market Commission, or CMT, Canal+ is the leading pay television network in Spain. In 2012, Prisa Televisión generated revenue of €1,080 million and profit from operations of €36 million.
 
 
The number of Canal+ subscribers and the average monthly revenue per user, or ARPU, for each of 2012, 2011, and 2010 are as follows:
 
 
 
Year Ended December 31,
 
 
 
2012
 
 
2011
 
 
2010
 
 
 
 
 
Subscriber breakdown (in thousands)
 
 
1,841
 
 
 
1,838
 
 
 
1,785
 
Satellite (DTH)
 
 
1,720
 
 
 
1,756
 
 
 
1,773
 
Wholesale distribution
 
 
121
 
 
 
82
 
 
 
12
 
DTH ARPU (in euros)
 
 
42.6
 
 
 
41.1
 
 
 
41.7
 

During 2012, the number of net subscribers of Canal+ showed a positive trend, thanks to the impact of the agreements with other operators. The numbers of Satellite subscribers ended the year with a net fall of 36,374 subscribers, but this was more than compensated with the growth of wholesale distribution, which added 38,888 net subscribers, so that the net change in net subscribers in 2011 was an increase 2,514. In addition, the cancellation rate as of December 2012 was 15.4%, showing a deterioration compared to the previous year (13.6% as of December 2011) and practically in line with 2010 (15.8% as of December 2010). We believe this deterioration to be due to the worsening of the economic situation, unemployment growth and the VAT increase in Spain.

Agreements with Jazztel, Telecable, Orange, ONO, Telefónica, Euskaltel, R, Mediapro-Gol T and in mobile with Movistar, Orange, and Vodafone for the sale of content have had a positive impact in the number of subscribers of Canal+ (as described above).

Canal+ subscribers with iPlus set–top box increased from 2011 by close to 85,000, reaching 587,331 subscribers, which implied an increase of 16.7%.

As of December 2012, 244,851 subscribers were using the Multi+ (multiroom) service (an increase of 2.5% in the year), which implies a penetration of 14.2%. The number of subscribers with both iPlus and Multi+ reached 225,725 subscribers, which meant an increase of 26,635 subscribers in the year (+13.4%).

In August 2012, Canal+ signed an important agreement with Mediapro for the exploitation of Spanish football rights for the coming three seasons (2012-2013, 2013-2014, 2014-2015). This agreement, together with the Champions league rights acquired in 2011, has provided Canal+ with what we believe to be the best football content offer in its history.

According to the agreement, Canal+ acquired: Exclusive audiovisual rights for pay TV (except in DTT) for Spain, of the Spanish Liga championship (first and second divisions) as well as the Copa del Rey championship, distribution to other pay TV operators: Telefónica, ONO, Orange… etc, exclusive rights on pay TV through all available technologies such as satellite, internet, cable, mobile, and exclusive rights for public spaces such as bars, hotels etc. On the other hand, through this agreement, Mediapro acquired: audiovisual rights to distribute GolTV in pay DTT. Gol-T will broadcast the same 8 matches as Canal+ Liga (for these rights, Mediapro will pay Canal+ a variable amount with a guaranteed minimum), commercialization of international rights, and commercialization of the FTA match and summaries.

The agreement implied a restructuring of the commercialization of football content, as a result of which, Canal+ distributes the football content through the following packages: In Canal+ 1, the best match of each match day of the first division Liga championship (Liga BBVA), exclusively, 28 match days to include a Real Madrid or Barcelona match, the best match of the second division Liga championship (Liga Adelante), and the best match of each match day of the Copa del Rey. In Canal+ Liga, the following will be broadcast: 8 matches per match day, always a match with Real Madrid or Barcelona, with an increase in the amount of Real Madrid or Barcelona matches (from 37 to 46) and the rest of the Copa del Rey. Finally, Canal+ Yomvi has exclusive distribution through internet of the Liga championship matches (except the FTA match and summaries, which in any case has seen its quality fall and its broadcast limited to Mondays).

Given the little visibility and the uncertainty on the evolution of the Spanish payTV market, the fall in consumption and the potential negative impact of the VAT increase on payTV (from 8% to 21%), Canal+ has undertaken a strong commercialization effort by offering for free the Champions League to all Canal+ subscribers for the 2012/2013 season and auctioning the Champions League rights to a third party to compensate for part of the cost increase.

The impacts of this new agreement are as follows: Canal+ has what we believe to be the best football content offer of its history, which leads it to a unique strategic positioning. The content offered improves qualitatively as all the games of Real Madrid and FC Barcelona (as well as those from all teams participating in European championships) will now be broadcast through pay TV; there is an increase in the cost of football rights for Canal+ mainly due to the inflation derived from the agreements signed with the football clubs for the coming three seasons, and due to the back of the different commercialization which includes distribution to third parties and higher exclusivity. To compensate this increase, together with a growth on the subscriber base along the time, the agreement includes several elements which should help compensate this increase in cost through: guaranteed revenues from the multi-distribution to third parties. Canal+ has signed agreements with most pay TV operators (Telefónica, ONO, Orange, Telecable, Euskaltel and R) to distribute Canal+ Liga through their platforms. These agreements include guaranteed minimums for Canal+, additional revenues from GolTV subscribers (DTT) based on a variable amount with a minimum guaranteed, additional revenues from the price increases from the new commercial offer, additional revenues from advertising and internet, and exclusive revenues from public spaces. Finally the new agreement implies the broadcasting of football content through all the months in the year. Revenues coming from both subscribers and third parties are also generated during 12 months and as a result, the allocation of revenues and expenses has been distributed throughout these same 12 months (correlation between revenues and expenses).
 
 
Media Capital

We believe Media Capital is the leading multimedia group in Portugal. According to Marktest, Media Capital’s subsidiary, TVI, is Portugal’s leading free-to-air television channel in terms of audience. Media Capital also engages in audiovisual production and has a presence in radio, music, film and DVD distribution and internet businesses.
 
In 2012, TVI accounted for 77.0% of Media Capital's total revenue. According to Marktest, TVI maintained its leadership in Portugal with an average 24-hour audience share of 26.7% and 30.1% in prime time. TVI was confirmed for the eighth consecutive year as the most viewed channel in Portugal.
 
Education

The Education segment encompasses our publishing and educational activities through our publishing arm Santillana. In 2012, the Education segment represented 27.5% of our revenue and 43.1% of our adjusted EBITDA.

Santillana operates in more than 20 countries, and its activities cover a wide array of products ranging from the publishing of school textbooks (by Santillana Educación), the publishing of language teaching books (by Richmond, Santillana Français, Español Santillana and Santillana United States), general publishing (under the Alfaguara, Taurus, Suma, Aguilar, El País, Aguilar, Altea, Alamah, Alfaguara infantil y juvenil, Altea and Punto de lectura) and distribution (by Itaca).

In 2012, 76.5% of Santillana’s total Education revenue came from Latin America (€561 million). The largest share came from Brazil (28.2% of Santillana’s 2012 revenue), and the second largest share came from Mexico (14.1% of Santillana’s 2012 revenue). Spain and Portugal represented 22.2% of total Santillana’s 2012 revenue.

Santillana has also continued working to incorporate new technologies in the development of content. The most relevant recent initiatives include:

 
·
The creation of a teachers social network targeting the entire Latin American teaching community to facilitate exchanging ideas among educators, introducing common good practices and sharing educational experiences (IneveryCREA).

 
·
The evolution of Santillana’s Platform for Sistema Uno Internacional, with its Learning Management System and its planning and management tools for schools.

 
·
Digital versions of General Editions, both editorial and new releases, for distribution on the Libranda digital distribution platform. In addition, distribution agreements were reached with Google, Barnes & Noble, Kobo, Overdrive, Baker & Taylor and Booquo.

 
·
The launch of an internal pilot of Edusfera, the educational digital store of Santillana.

 
·
The launch in Spain of Tareas y Más, a site with thousands of digital resources for the easy homework help. Contents are organized around three main subjects: Mathematics, Spanish as first Language, Physics and Chemistry.
 
 
 
·
The launch in Spain of Santillana-Twig, a co-branded portal with one thousand science videos for secondary level students (Physics, Chemistry, Biology).

 
·
InveryCREA, Santillana social network for teachers went on getting registered users in Spain and Argentina. Its technology was also used to create RED UNO, Sistema Uno Internacional social network.
 
 
Radio
 
The Radio segment encompasses our Spanish and international radio business activities (integrated under Prisa Radio (formerly Unión Radio)) and the promotion, production of musical events and the management of artists. In 2012, this segment accounted for 12.9% of our total revenue and 12.7% of our adjusted EBITDA. The Radio segment is divided into Radio in Spain, International Radio and other.

We believe that Prisa Radio is the largest Spanish-language radio group in the world with more than 28 million listeners and more than 1,200 proprietary and affiliated broadcasting stations, distributed in ten countries: Spain, the United States, Mexico, Colombia, Costa Rica, Panama, Argentina, Chile, Guatemala and Ecuador. According to EGM in Spain, ECAR in Colombia and Ipsos in Chile, we are the leader in terms of audience in those countries. In Mexico and Argentina, Prisa Radio is third and fourth in audience share according to the INRA and IBOPE surveys, respectively. Based on these sources, Prisa Radio’s market shares in 2012 were as follows: 51.1% in Spain, 44% in Chile, 41% in Colombia, 13% in Mexico and 10% in Argentina.

In the Digital area, Prisa Radio has 45 websites, with more than 14 million unique users per month and over 5.66 million downloads for mobile devices.

Prisa Radio is also involved in brand leveraging both in Spain and in Latam. Gestión de Marcas Audiovisuales, S.A., or Gema  develop this activity in Spain: Tarjeta 40 (credit card activities, agreements with financial entities), 40 Viajes, (travel activities, agreements with online travel agencies), Café 40, Arte 40, Revista 40, 40 el Musical, Save the Beach, Discos Radio/El País.

The revenues for the past three years for the Radio segment are set forth below (in thousands of euros, except for margins):

 
 
Radio in Spain (2)
 
 
International Radio
 
 
 
2012
 
 
2011
 
 
2010
 
 
2012
 
 
2011
 
 
2010
 
Revenue
 
 
186,664
 
 
 
230,798
 
 
 
252,907
 
 
 
148,063
 
 
 
128,319
 
 
 
118,913
 
Adjusted EBITDA (1)
 
 
8,157
 
 
 
16,173
 
 
 
71,137
 
 
 
45,129
 
 
 
36,142
 
 
 
32,347
 
Profit from operations
 
 
(2,310)
  
 
 
(2,580
)
 
 
61,006
 
 
 
32,226
 
 
 
29,594
 
 
 
26,139
 
Adjusted EBITDA margin
 
 
4.4
%
 
 
7.0
%
 
 
28.1
%
 
 
30.5
%
 
 
28.2
%
 
 
27.2
%
Profit from operations margin
 
 
(1.2
%)
  
 
(1.1
%)
  
 
24.1
%
 
 
21.8
%
 
 
23.1
%
 
 
22.0
%

 
 
Other (3)
 
 
Total
 
 
 
2012
 
 
2011
 
 
2010
 
 
2012
 
 
2011
 
 
2010
 
Revenue
 
 
7,689
 
 
 
17,655
 
 
 
33,702
 
 
 
342,416
 
 
 
376,772
 
 
 
405,522
 
Adjusted EBITDA (1)
 
 
1,034
  
 
 
(711
)
 
 
4,581
 
 
 
54,319
 
 
 
51,605
 
 
 
108,065
 
Profit from operations
 
 
(6,488)
  
 
 
(1,829
)
 
 
2,919
 
 
 
23,427
 
 
 
25,184
 
 
 
90,064
 
Adjusted EBITDA margin
 
 
6.8
%
 
 
(4.0
%)
  
 
13.6
%
 
 
15.9
%
 
 
13.7
%
 
 
26.6
%
Profit from operations margin
 
 
(42.7
%)
  
 
(10.4
%)
  
 
8.7
%
 
 
6.8
%
 
 
6.7
%
 
 
22.2
%
 
(1)
Adjusted EBITDA is a supplemental measure of performance that is not required by, or presented in accordance with, IFRS. It is not a measurement of financial performance under IFRS and should not be considered as (i) an alternative to operating or net income or cash flows from operating activities, in each case determined in accordance with, IFRS, (ii) an indicator of cash flow or (iii) a measure of liquidity. See “—Adjustments to Reconcile Adjusted EBITDA to Profit from Operations” at the end of this section for a reconciliation of Adjusted EBITDA to profit from operations, the most comparable financial measure calculated and presented in accordance with IFRS.

(2)
Includes Gema

(3)
“Other” includes the activities of Gran Vía Musical and eliminations and adjustments on consolidation.
 
Radio in Spain

In 2012, Radio in Spain represented 54% of the total revenue of the Radio segment, or €187 million (down 19.1% from 2011). Most of the revenue from this area is obtained from advertising. According to Infoadex, our Radio segment has a 51.1% market share in Spain.

In Spain, Prisa Radio’s flagship general interest network is Cadena SER. Prisa Radio, through its 510 proprietary and affiliated stations, also has five music networks: 40 Principales, Cadena Dial, M-80, Radiolé and Máxima FM.

According to the 2012 final EGM survey, “Cadena SER”, with 4,914,000 users, maintains its leadership position in 24 hours. This performance includes music radio, in which “40 Principales” reached 3,844,000 users.
 
 
According to the final EGM survey for 2012, the audience of our networks was as follows (in thousands of listeners):

   
2012
    
2011
  
Cadena SER, general interest
    
4,914
      
4,208
  
40 Principales
    
3,844
      
3,850
  
Dial
    
2,444
      
2,354
  
Máxima FM
    
836
      
776
  
M80
    
559
      
491
  
Radiolé
    
493
      
525
  
Total
    
13,090
      
12,204
  

International Radio

International radio revenue represented 43% of Prisa Radio’s total revenue and amounted to €148 million in 2012 (up 15.4% from 2011).

In the United States, our Radio segment carries on its activities through two radio stations broadcasting in Spanish—one in Southern California and one in Miami. Both of these geographical areas have large populations of native Spanish speakers. Additionally, Prisa Radio exploits a content syndication business with national coverage in the United States.
 
In Mexico, Prisa Radio operates through Radiópolis, which is 50% owned by Televisa.

The 40 Principales global format is also broadcast in Panama, Costa Rica, Chile, Argentina, Colombia, Guatemala, Ecuador, Dominican Republic and Mexico.

We believe Radio Caracol is one of the best recognized stations in Latin America and, according to the ECAR’s fourth survey for 2012, the leader in the Colombian radio market in terms of audience.

According to Ipsos survey, we are also leaders in terms of audience in Chile.

In 2012, live events have received support from the inclusion of new technology for producing and streaming broadcasts, increasing their potential profitability. The “Premios Los 40 Principales” awards were broadcast to 198,000 live spectators, 514,000 viewers on TV (Divinity Channel) and the hashtag #divinityLOVESmusic was Global trending topic during the night.

Other

Gran Vía Musical focuses on promoting and producing musical events and tracking the progress of performing artists through Planet Events, and on musical publishing rights through our subsidiaries Nova and Lyrics & Music.

Additionally, Gran Vía Musical includes the performing artists’ agency RLM, which manages popular performers and the music channel 40TV, a natural extension of the Top 40 music brand 40 Principales in television.

In 2012, approximately 99,000 spectators attended the events organized by Planet Events. In 2012, Planet Events promoted the tours of Enrique Iglesias, Fonsi, Franco de Vita, Días Nórdicos, Jay Brannan, Laura Pausini, Pacha, Pitbull, Shakira, MILOW, Veranos de la Villa, Juanes, Diego Martín, Carlos Baute, Ragdog and 84. In 2012, due to difficult economic conditions, attendance was lower than in previous years.

Press

In 2012, the Press segment represented 11.8% of our operating income and had a negative contribution to adjusted EBITDA. The Press segment includes the leading Spanish newspaper El País, the sports newspaper AS, the financial newspaper Cinco Días and the magazine business, which includes, among other titles, Cinemanía, the Spanish version of Rolling Stone, Claves de la Razón Práctica, Car and Gentleman.

The Press segment has made a significant effort to incorporate and adapt the most innovative technologies to content distribution of its main brands. In this sense, we have made new developments in the editorial systems of the newspapers, both in the on-line and off-line versions.
 
 
The following table details the revenues from each of the activities within the Press segment (in thousands of euros, except for margins):

   
El País
    
AS
  
   
2012
    
2011
    
2010
    
2012
    
2011
    
2010
  
Revenue
    
205,056
      
255,265
      
275,251
      
65,809
      
75,154
      
82,292
  
Advertising
    
82,948
      
107,556
      
126,271
      
19,103
      
20,358
      
23,747
  
Circulation
    
97,184
      
111,265
      
116,081
      
40,159
      
46,227
      
51,225
  
Other
    
24,924
      
36,444
      
32,899
      
6,547
      
8,569
      
7,320
  
Adjusted EBITDA(1)
 
 
(21,797)
 
 
 
20,551
 
 
 
38,562
 
 
 
11,829
 
 
 
16,264
 
 
 
15,865
 
Profit from operations
 
 
(54,542)
 
 
 
8,925
 
 
 
28,221
 
 
 
8,122
 
 
 
14,277
 
 
 
14,059
 
Adjusted EBITDA margin
 
 
(10.6%)
  
 
 
8.1
%
 
 
14.0
%
 
 
18.0
%
 
 
21.6
%
 
 
19.3
%
Profit from operations margin
 
 
(26.6%)
  
 
 
3.5
%
 
 
10.3
%
 
 
12.3
%
 
 
19.0
%
 
 
17.1
%

 
 
Cinco Días
 
 
 
 
2012
 
 
 
2011
 
 
 
2010
 
Revenue
 
 
12,607
 
 
 
15,448
 
 
 
15,323
 
Advertising
 
 
6,711
 
 
 
8,111
 
 
 
8,736
 
Circulation
 
 
5,593
 
 
 
5,841
 
 
 
6,092
 
Other
 
 
303
 
 
 
1,496
 
 
 
495
 
Adjusted EBITDA(1)
 
 
(1,789)
 
 
 
58
 
 
 
50
 
Profit from operations
 
 
(2,858)
  
 
 
(542
)
 
 
(399
)
Adjusted EBITDA margin
 
 
(14.2%)
  
 
 
0.4
%
 
 
0.3
%
Profit from operations margin
 
 
(22.7%)
  
 
 
(3.5
%)
 
 
(2.6
%)
 
   
Other (2)
    
Total
  
   
2012
    
2011
    
2010
    
2012
    
2011
    
2010
  
Revenue
     31,122       44,145       47,481       314,594       390,012       420,347  
Adjusted EBITDA (1)
     (2,006 )     3,174       3,382       (13,763 )     40,047       57,859  
Profit from operations (3)
     (3,369 )     (6,180 )     415       (52,647 )     16,480       42,296  
Adjusted EBITDA margin
     (6.4 %)     7.2 %     7.1 %     (4.4 %)     10.3 %     13.8 %
Profit from operations margin
     (10.8 %)     (14.0 %)     0.9 %     (16.7 %)     4.2 %     10.1 %
 
(1)
Adjusted EBITDA is a supplemental measure of performance that is not required by, or presented in accordance with, IFRS. It is not a measurement of financial performance under IFRS and should not be considered as (i) an alternative to operating or net income or cash flows from operating activities, in each case determined in accordance with IFRS, (ii) an indicator of cash flow or (iii) a measure of liquidity. See “—Adjustments to Reconcile Adjusted EBITDA to Profit from Operations” at the end of this section for a reconciliation of Adjusted EBITDA to profit from operations, the most comparable financial measure calculated and presented in accordance with IFRS.

(2)
“Other” includes magazines, distribution and eliminations and adjustments on consolidation.

(3)
The Profit from operations for the Press division includes in 2012 a €19.67 million asset value depreciation for the Pressprint assets in Barcelona, and in 2011 a goodwill impairment of €7.75 million, which corresponds to the goodwill generated with the internal transfer of the participation in Portuguese magazines. Both of there impact the segment but do not have an impact at Group level.

El País

According to Oficina de Justificación de la Difusión, or OJD, El País has, for the last 32 years, been the Spanish daily newspaper with the highest circulation in Spain. El País represented 65.2% of total Press revenue in 2012 and had a negative contribution to the segment’s profit from operations. In 2012, El País had an average daily circulation of 324,814 copies and an average circulation on Sundays of 455,666 copies. Also according to OJD, El País held a 29.5% share of the circulation of the major Spanish national newspapers. According to the final EGM survey for 2012, El País confirmed its leadership position among paid newspapers with an average of 1,929,000 daily readers. According to ComScore ElPaís.com  ended the month of December, 2012 as leader in terms of audience, with nearly 12 million unique users worldwide, out of which 7.0 million were from Spain. In 2012, El País’s revenue was €205 million, of which advertising accounted for 40.5%, amounting to €83 million (down 22.9% from 2011). According to Infoadex, El País held a 10.1% share of the newspaper advertising market in Spain in 2011.
 
 
AS

The AS sports newspaper represented 20.9% of Press revenue in 2012 and had a positive contribution to profit from operations. According to OJD, AS had an average daily circulation of 180,014 copies. According to the final EGM survey for 2012, the number of AS readers increased in 2012 to total 1,480,000 daily readers.

AS has been able to adapt its business model to the current movement from print media to digital media and has been successful in generating online revenue. In 2012, according to ComScore, AS had 7 million unique users

In 2012, AS’s revenue amounted to €66 million (down 12% from 2010), of which 61% was obtained from circulation.

Cinco Días

Cinco Días attained an average daily circulation of 31,120 copies in 2012 according to OJD. According to the final EGM survey for 2011, Cinco Días achieved a readership figure of 58,000 per day.

Other

—Magazines Business

We carry on our Magazines business through Promotora General de Revistas S.A., or Progresa, publishing both its own magazines and those of third parties. We believe it is the leading publisher in terms of number of copies, with more than 30 titles in the Spanish market. Its principal titles include most notably: Cinemanía, Rolling Stone (Spain), Gentleman, Claves de la Razón Práctica, Car. It also publishes the El País Yearbook and the Wine Yearbook.

The revenues of the Magazine business for the past three years are below:

 
 
Magazines
 
 
 
2012
    
2011
 
 
2010
 
 
 
(thousands of euros)
 
Revenue
 
 
23,053
 
 
 
32,006
 
 
 
35,936
 
Adjusted EBITDA(1)
 
 
(2,347)
 
 
 
2,205
 
 
 
2,004
 
Profit from operations
 
 
(2,952)
  
 
 
(6,360
)
 
 
1,274
 
Adjusted EBITDA margin
 
 
(10.2%)
  
 
 
6.9
%
 
 
5.6
%
Profit from operations margin
 
 
(12.8%)
  
 
 
(19.9
%)
  
 
3.5
%
 
(1)
Adjusted EBITDA is a supplemental measure of performance that is not required by, or presented in accordance with, IFRS. It is not a measurement of financial performance under IFRS and should not be considered as (i) an alternative to operating or net income or cash flows from operating activities, in each case determined in accordance with IFRS, (ii) an indicator of cash flow or (iii) a measure of liquidity. See “—Adjustments to Reconcile Adjusted EBITDA to Profit from Operations” at the end of this section for a reconciliation of Adjusted EBITDA to profit from operations, the most comparable financial measure calculated and presented in accordance with IFRS.

—Distribution

 The revenues of the distribution business for the past three years are below:

 
 
Distribution
 
 
 
2012
    
2011
 
 
2010
 
 
 
(thousands of euros)
 
Revenue
 
 
15,882
 
 
 
19,062
 
 
 
18,740
 
Adjusted EBITDA(1)
 
 
640
 
 
 
1,048
 
 
 
1,378
 
Profit from operations
 
 
(87)
 
 
 
296
 
 
 
529
 
Adjusted EBITDA margin
 
 
4.0%
  
 
 
5.5
%
 
 
7.4
%
Profit from operations margin
 
 
(0.5%)
  
 
 
1.6
%
 
2.8
%
 
(1)
Adjusted EBITDA is a supplemental measure of performance that is not required by, or presented in accordance with, IFRS. It is not a measurement of financial performance under IFRS and should not be considered as (i) an alternative to operating or net income or cash flows from operating activities, in each case determined in accordance with IFRS, (ii) an indicator of cash flow or (iii) a measure of liquidity. See “—Adjustments to Reconcile Adjusted EBITDA to Profit from Operations” at the end of this section for a reconciliation of Adjusted EBITDA to profit from operations, the most comparable financial measure calculated and presented in accordance with IFRS.
 
 
Principal Markets

Geographical markets

In 2012, we generated 65.7% of our revenue in Spain and 34.3% of our revenue outside of Spain. 63.2% of revenue from outside of Spain was generated by the Education business, 18.6% by Media Capital and the remainder mainly by international radio.

The following table sets forth, by geographical market, our revenue in the last three years:
 
 
 
Geographical Source of Revenue
 
 
 
2012
 
 
2011
 
 
2010
 
 
 
(thousands of euros)
 
Spain
 
 
1,750,245
 
 
 
1,846,537
 
 
 
2,030,452
 
International
 
 
914,448
 
 
 
877,913
 
 
 
792,279
 
Total revenues
 
 
2,664,692
 
 
 
2,724,450
 
 
 
2,822,731
 
% Spain
 
 
66
%
 
 
68
%
 
 
72
%
% International
 
 
34
%
 
 
32
%
 
 
28
%
 
Pay television market in Spain

In 2012, our pay television revenue from Canal+ amounted to €1,068 million, accounting for 40.1% of our total revenues. The pay television market in Spain is currently made up of satellite, cable and internet operators. As of September 30, 2012, (latest public report available) there were approximately 4.2 million pay television subscribers in Spain.

Canal+ leads this segment, with a market share of 41.% for the first nine months of 2012 based on the number of subscribers and of 61% based on revenue, as detailed below:
 
image 1 image 2
Total subscribers on average  for the first
nine months of 2012: approx. 4.2 million
Total revenue of pay TV in Spain in the first
nine months of 2012: €1,275 million
 
Source: Spanish Telecommunication Market Commission (CMT) 3Q Report 2012
 
 
Education market

Textbooks

The following table shows, by country, for the 2012 textbook sale season, the size of the market (including all children in formal education, from infant school to secondary education) and the target market of Santillana (schools where direct promotional work is carried out), all in thousands of students, and the market share of Santillana (excluding government purchases).
 
Country
 
Market Total
 
 
Target Market
 
 
Santillana
 Market
Share (of
Target
Market)
 
Spain
 
 
6,603
 
 
 
6,603
 
 
 
20.7%
  
Portugal
 
 
1,515
 
 
 
1,301
 
 
 
7.4%
  
Mexico
 
 
29,854
 
 
 
2,079
 
 
 
18.3%
  
Argentina
 
 
8,763
 
 
 
2,172
 
 
 
28.4%
  
Chile
 
 
3,814
 
 
 
323
 
 
 
34.2%
  
Colombia
 
 
10,903
 
 
 
1,377
 
 
 
20.5%
  
Peru
 
 
7,735
 
 
 
1,055
 
 
 
30.3%
  
Dominican Republic
 
 
2,185
 
 
 
419
 
 
 
61.2%
  
Ecuador
 
 
4,028
 
 
 
704
 
 
 
23.9%
  
Costa Rica
 
 
900
 
 
 
102
 
 
 
35.7%
  
Panama
 
 
838
 
 
 
132
 
 
 
44.6%
  
Guatemala
 
 
3,647
 
 
 
641
 
 
 
24.9%
  
El Salvador
 
 
1,774
 
 
 
219
 
 
 
52.4%
  
Honduras
 
 
2,221
 
 
 
210
 
 
 
43.8%
  
Bolivia
 
 
2,895
 
 
 
253
 
 
 
26.4%
  
Paraguay
 
 
1,572
 
 
 
215
 
 
 
22.5%
  
Puerto Rico
 
 
709
 
 
 
134
 
 
 
23.4%
  
Uruguay
 
 
448
 
 
 
71
 
 
 
50.8%
  
Venezuela
 
 
6,789
 
 
 
1,313
 
 
 
39.2%
  
Brazil
 
 
49,795
 
 
 
5,531
 
 
 
13.7%
  
Total
 
 
146,985
 
 
 
24,853
 
 
 
 
 

Source: Prisa internal estimates, excluding USA. Note Mexico data corresponds to 2011
 
In the textbook market, Santillana has a catalog of 17,166 titles. The publishing of textbooks generated revenues of €492 million in 2012 (67% of the total revenue of the business unit).

Based on our internal estimates, we believe that Santillana is the leader in the textbook market in all the countries in which we operate, except for Chile (where the Ministry of Education leads the market) and Portugal (where it is third behind the Porto and Leya Groups).

Santillana competes with local companies or groups, on the one hand, and with a small number of international publishing groups, on the other hand (SM, Macmillan, Anaya, Norma and Pearson, for example).

We estimate that in Spain the market share of Santillana is 20.7%, while Anaya has 15.6% and SM has 12.5%.

In Brazil, Santillana has had a presence since 2001 through Editora Moderna. Since 2001 its market share has increased significantly in both the private-sector and the public-sector market. We estimate the share in the Brazilian public-sector market is currently 19.4%.

General interest books

Santillana has a catalogue of over 13,200 titles in the general publication area and generated revenue of €131 million in 2012 (17.5% of the total revenue of the business unit).

In Spain, Santillana, Planeta and Random House (Bertelsmann) lead the market. In Brazil, the market is led by local groups such as Record, Ediouro and Companhia das Letras. In addition, the Brazilian market is undergoing substantial consolidation.
 
 
Language teaching books

Santillana produces materials for the teaching of English, French and Spanish, with a catalogue of over 4.200 titles and revenues of €95 million in 2012 (€7 million more than in 2011 (8% increase), representing 13% of the total revenues of the business unit).

Santillana’s Languages segment covers English (84% of sales), French (8% predominantly in Spain) and Spanish (8% predominantly in Brazil). Latin America represents 78% of the sales of Santillana’s Language segment, Spain 21% and the rest of the world, 1%.

The materials for teaching English are published under the Richmond brand. We believe that Richmond is the overall market leader in Latin America in ELT (English Language Teaching) in the private schools market and a major player in the state schools market. In Spain, we believe Richmond is in fourth place with a 9,1% market share, behind leaders Oxford University Press, Macmillan and Burlington; we believe Santillana Français is the leader in the Spanish market of teaching French as a foreign language, with a 41,4% market share.

Advertising market

The following table sets forth advertising expenditures in Spain, by segment, for 2012, 2011 and 2010, together with the year-over-year percentage changes.

 
 
Advertising Expenditure in Spain
 
 
Annual Change
 
 
 
2012
 
 
2011
 
 
2010
 
 
Change 12/11
 
 
Change 11/10
 
 
 
(thousands of euros)
 
 
 
 
 
 
 
Press
 
 
818,300
 
 
 
1,034,100
 
 
 
1,196,600
 
 
 
(20.9
%)
 
 
   (13.6
%)
Magazines
 
 
313,700
 
 
 
381,100
 
 
 
397,800
 
 
 
(17.7
%)
 
 
(4.2
%)
Television
 
 
1,815,300
 
 
 
2,237,200
 
 
 
2,471,900
 
 
 
(18.9
%)
 
 
(9.5
%)
Radio
 
 
453,500
 
 
 
524,900
 
 
 
548,500
 
 
 
(13.6
%)
 
 
(4.3
%)
Cinema
 
 
22,500
 
 
 
25,800
 
 
 
24,400
 
 
 
(12.8
%)
 
 
(5.8
%)
Outside
 
 
326,300
 
 
 
394,800
 
 
 
420,800
 
 
 
(19.0
%)
 
 
(6.2
%)
Internet
 
 
880,500
 
 
 
899,200
 
 
 
798,800
 
 
 
(2.1
%)
 
 
12.6
%
Total
 
 
4,630,100
 
 
 
5,497,100
 
 
 
5,858,800
 
 
 
(15.8
%)
 
 
(6.2
%)

Source: Infoadex

In 2012, our advertising revenue in Spain amounted to €300 million, representing a market share of 6.5% (14.3% in press and 37.5% in radio).

The following table sets forth advertising expenditures in Portugal, by segment, for 2012, 2011 and 2010, together with the year-over-year percentage changes.

 
 
Advertising Expenditure in Portugal
 
 
Annual Change
 
 
 
2012
 
 
2011
 
 
2010
 
 
Change
12/11
 
 
Change
11/10
 
 
 
(thousands of euros)
 
 
 
 
 
 
 
Press
 
 
31,963
 
 
 
40,704
 
 
 
45,735
 
 
 
(21.5
%)
 
 
(11.0
%)
Magazines
 
 
67,400
 
 
 
95,289
 
 
 
110,801
 
 
 
(29.3
%)
 
 
(14.0
%)
Television
 
 
358,764
 
 
 
437,347
 
 
 
475,730
 
 
 
(18.0
%)
 
 
(8.1
%)
Radio
 
 
43,734
 
 
 
46,923
 
 
 
45,556
 
 
 
(6.8
%)
 
 
3.0
%
Cinema
 
 
2,488
 
 
 
3,937
 
 
 
3,822
 
 
 
(36.8
%)
 
 
3.0
%
Outside
 
 
74,429
 
 
 
99,813
 
 
 
105,067
 
 
 
(25.4
%)
 
 
(5.0
%)
Internet
 
 
28,440
 
 
 
29,494
 
 
 
24,579
 
 
 
(3.6
%)
 
 
20.0
%
Total
 
 
607,218
 
 
 
753,507
 
 
 
811,290
 
 
 
(19.4
%)
 
 
(7.1
%)

Source: Zenith Optimedia, December 2012
 
In Portugal, our advertising revenue is obtained mainly from TVI. In 2012, we generated €111 million in advertising revenue in Portugal.
 
 
The following table sets forth advertising expenditures in Latin America, by segment, for 2012, 2011 and 2010, together with the year-over-year percentage changes.
 
   
Advertising Expenditure in Latin America
    
Annual Change
  
   
2012
    
2011
    
2010
    
Change
12/11
    
Change
11/10
  
   
(thousands of euros)
              
Press
    
4,692,083
      
3,861,111
      
3,554,226
      
21.5
%
    
8.6
%
Magazines
    
1,698,797
      
1,573,302
      
1,455,497
      
8.0
%
    
8.1
%
Television
    
17,339,470
      
15,374,228
      
14,066,567
      
12.8
%
    
9.3
%
Radio
    
1,744,741
      
1,415,895
      
1,342,558
      
23.2
%
    
5.5
%
Cinema
    
133,799
      
141,204
      
128,646
      
(5.2
%)
    
9.8
%
Outside
    
1,004,691
      
1,010,803
      
903,515
      
(0.6
%)
    
11.9
%
Internet
    
1,275,121
      
844,908
      
695,588
      
50.9
%
    
21.5
%
Total
    
27,888,702
      
24,221,451
      
22,146,597
      
15.4
%
    
9.4%
%

Source: Zenith Optimedia, December 2012
 
In Latin America, our advertising revenue is mainly obtained from our radio business. In 2012, we generated €139 million in advertising revenue in Latin America.
 
Newspaper sales market

The following table sets forth the average daily circulation in Spain, as well as the market share of the principal Spanish newspapers in the general press segment for 2012, 2011 and 2010.

 
 
Circulation of National Newspaper
Number of Daily Copies
 
 
Market Share
(%)
 
 
 
2012
 
 
2011
 
 
2010
 
 
2012
 
 
2011
 
 
2010
 
El País
 
 
324,814
 
 
 
365,118
 
 
 
370,080
 
 
 
29.5
%
 
 
26.4
%
 
 
24.9
%
Mundo
 
 
206,179
 
 
 
252,770
 
 
 
284,901
 
 
 
18.7
%
  
 
18.3
%
 
 
19.1
%
ABC
 
 
171,872
 
 
 
221,351
 
 
 
249,540
 
 
 
15.6
%
  
 
16.0
%
 
 
16.8
%
La Razón
 
 
91,130
 
 
 
103,789
 
 
 
118,465
 
 
 
8.3
%
  
 
7.5
%
 
 
8.0
%
La Vanguardia
 
 
172,263
 
 
 
190,033
 
 
 
200,369
 
 
 
15.6
%
  
 
13.8
%
 
 
13.5
%
El Periódico
 
 
107,514
 
 
 
119,374
 
 
 
133,055
 
 
 
9.8
%
  
 
8.6
%
 
 
8.9
%
Público
    
0
 
 
 
87,058
 
 
 
87,168
 
 
 
___
    
 
6.3
%
 
 
5.9
%
La Gaceta
 
 
27,049
 
 
 
41,196
 
 
 
44,854
 
 
 
2.5
%
  
 
3.1
%
 
 
3.0
%
Total
 
 
1,100,821
 
 
 
1,380,689
 
 
 
1,488,430
 
 
 
100.0
%
  
 
100.0
%
 
 
100.0
%
 
Source: OJD
 
The following table sets forth the average daily circulation in Spain, as well as the market share of the principal Spanish newspapers in the sports press segment for 2012, 2011 and 2010.

 
 
Circulation of Sports Newspaper
Number of Daily Copies
 
 
Market Share
(%)
 
 
 
2012
 
 
2011
 
 
2010
 
 
2012
 
 
2011
 
 
2010
 
Marca
 
 
214,635
 
 
 
244,456
 
 
 
274,580
 
 
 
38.8
%
  
 
38.7
%
 
 
40.1
%
AS
 
 
180,014
 
 
 
198,758
 
 
 
211,553
 
 
 
32.6
%
  
 
31.5
%
 
 
30.9
%
Mundo Deportivo
 
 
81,419
 
 
 
95,907
 
 
 
101,100
 
 
 
14.7
%
  
 
15.3
%
 
 
14.8
%
Sport
 
 
76,638
 
 
 
91,753
 
 
 
96,823
 
 
 
13.9
%
  
 
14.5
%
 
 
14.2
%
Total
 
 
552,705
 
 
 
630,874
 
 
 
684,056
 
 
 
100.0
%
  
 
100.0
%
 
 
100.0
%

Source: OJD
 
 
The following table sets forth the average daily circulation in Spain, as well as the market share of the principal Spanish newspapers in the financial press segment for 2012, 2011 and 2010.

   
Circulation of Financial Newspaper
Number of Daily Copies
    
Market Share
(%)
  
   
2012
    
2011
    
2010
    
2012
    
2011
    
2010
  
Expansión
    
33,765
      
37,495
      
39,565
      
39.6
%
    
41.5
%
    
41.5
%
Cinco Días
    
31,120
      
31,327
      
31,337
      
36.5
%
    
34.7
%
    
32.9
%
El Economista
    
20,323
      
21,574
      
24,388
      
23.9
%
    
23.9
%
    
25.6
%
Total
    
85,208
      
90,396
      
95,290
      
100.0
%
    
100.0
%
    
100.0
%

Source: OJD
 
As of December 31, 2012, the combined market share of El País, AS and Cinco Días was 30.8% of the newspaper market in Spain.

The percentage change in the circulation of press in Spain from 2011 to 2012, based on a December 2012 report published in the “Observatorio de la Prensa” of Deloitte and AEDE, is as follows:

·
General press: -12.06%

·
Sports press: -12.51%

·
Financial press (paid): -10.64%

·
Total press: -11.98%
 
 
Adjustments to Reconcile Adjusted EBITDA to Profit from Operations for Years Ended December 31, 2012, 2011, and 2010

 
 
Grupo Prisa
 
 
Audiovisual
 
 
 
2012
 
 
2011
 
 
2010
 
 
2012
 
 
2011
 
 
2010
 
 
 
(thousands of euros)
 
 
(thousands of euros)
 
Adjusted EBITDA
 
 
427,002
 
 
 
436,914
 
 
 
596,331
 
 
 
233,167
 
 
 
234,694
 
 
 
308,777
 
Depreciation and amortization charge
 
 
(187,998)
  
 
 
(171,331
)
 
 
(170,363
)
 
 
(100,537)
  
 
 
(95,515
)
 
 
(100,112
)
Change in allowances, write downs and provisions
 
 
(100,196)
  
 
 
(45,171
)
 
 
(37,210
)
 
 
(67,575)
  
 
 
(8,036
)
 
 
(11,095
)
Impairment losses of assets
 
 
(12,580)
  
 
 
(3,204
)
 
 
(1,427
)
 
 
168
  
 
 
(4
)
 
 
2,234
 
Impairment losses of goodwill
 
 
(301,282)
  
 
 
(252,944
)
 
 
(51,179
)
 
 
0
  
 
 
(9,750
)
 
 
(5,367
)
Profit from operations
 
 
(175,054)
  
 
 
(35,736
)
 
 
336,152
 
 
 
65,223
 
 
 
121,389
 
 
 
194,437
 
 
 
 
Education
 
 
Radio
 
 
 
2012
 
 
2011
 
 
2010
 
 
2012
 
 
2011
 
 
2010
 
 
 
(thousands of euros)
 
 
(thousands of euros)
 
Adjusted EBITDA
 
 
184,190
 
 
 
170,198
 
 
 
166,347
 
 
 
54,319
 
 
 
51,605
 
 
 
108,065
 
Depreciation and amortization charge
 
 
(51,426)
  
 
 
(44,816
)
 
 
(41,714
)
 
 
(13,856)
    
 
(14,664
)
 
 
(14,328
)
Change in allowances, write downs and provisions
 
 
(21,493)
  
 
 
(18,205
)
 
 
(15,843
)
 
 
(5,023)
    
 
(11,757
)
 
 
(3,673
)
Impairment losses of assets
 
 
(3,381)
  
 
 
(3,191
)
 
 
(3,329
)
 
 
(4,120)
 
 
 
0
 
 
 
0
 
Impairment losses of goodwill
 
 
0
 
 
 
0
 
 
 
0
 
 
 
(7,893)
 
 
 
0
 
 
 
0
 
Profit from operations
 
 
107,890
 
 
 
103,986
 
 
 
105,461
 
 
 
23,427
 
 
 
25,184
 
 
 
90,064
 
 
 
 
Press
 
 
Other
 
 
 
2012
 
 
2011
 
 
2010
 
 
2012
 
 
2011
 
 
2010
 
 
 
(thousands of euros)
 
 
(thousands of euros)
 
Adjusted EBITDA
 
 
(13,763)
 
 
 
40,047
 
 
 
57,859
 
 
 
(30,911)
  
 
 
(59,630
)
 
 
(44,717
)
Depreciation and amortization charge
 
 
(10,216)
    
 
(9,915
)
 
 
(9,957
)
 
 
(11,963)
  
 
 
(6,421
)
 
 
(4,252
)
Change in allowances, write downs and provisions
 
 
(6,133)
    
 
(5,907
)
 
 
(4,255
)
 
 
28
  
 
 
(1,266
)
 
 
(2,343
)
Impairment losses of assets
 
 
(22,535)
    
 
(7,745
)
 
 
0
 
 
 
17,288
  
 
 
7,737
  
 
 
(332
)
Impairment losses of goodwill
 
 
0
    
 
0
 
 
 
(1,350
)
 
 
(293,389)
  
 
 
(243,194
)
 
 
(44,462
)
Profit from operations
 
 
(52,647)
 
 
 
16,480
 
 
 
42,296
 
 
 
(318,947)
  
 
 
(302,774
)
 
 
(96,105
)

Businesses in the Audiovisual segment

 
 
Prisa Televisión
 
 
Media Capital
 
 
 
2012
 
 
2011
 
 
2010
 
 
2012
 
 
2011
 
 
2010
 
 
 
(thousands of euros)
 
 
(thousands of euros)
 
Adjusted EBITDA
 
 
191,337
 
 
 
186,765
 
 
 
269,372
 
 
 
41,831
 
 
 
38,952
 
 
 
48,037
 
Depreciation and amortization charge
 
 
(89,041)
  
 
 
(83,715
)
 
 
(87,938
)
 
 
(11,496)
  
 
 
(11,800
)
 
 
(12,174
)
Change in allowances, write downs and provisions
 
 
(66,967)
  
 
 
(7,478
)
 
 
(9,635
)
 
 
(608)
  
 
 
(558
)
 
 
(1,460
)
Impairment losses of assets
 
 
202
  
 
 
0
 
 
 
2,265
 
 
 
(34)
  
 
 
(4
)
 
 
(31)
 
Impairment losses of goodwill
 
 
0
 
 
 
0
 
 
 
0
 
 
 
0
  
 
 
(9,750
)
 
 
(5,367)
 
Profit from operations
 
 
35,531
 
 
 
95,572
 
 
 
174,064
 
 
 
29,692
 
 
 
16,840
 
 
 
29,005
 
 
 
 
 
Other
 
 
 
2012
 
 
2011
 
 
2010
 
 
 
(thousands of euros)
 
Adjusted EBITDA
 
 
(1)
 
 
 
8,977
  
 
 
(8,632
)
Depreciation and amortization charge
 
 
0
 
 
 
0
 
 
 
0
 
Change in allowances, write downs and provisions
 
 
0
 
 
 
0
 
 
 
0
 
Impairment losses of assets
 
 
0
 
 
 
0
 
 
 
0
 
Impairment losses of goodwill
 
 
0
 
 
 
0
 
 
 
0
 
Profit from operations
 
 
(1)
 
 
 
8,977
  
 
 
(8,632
)

Businesses in the Radio segment

 
 
Radio in Spain
 
 
International Radio
 
 
 
2012
 
 
2011
 
 
2010
 
 
2012
 
 
2011
 
 
2010
 
 
 
(thousands of euros)
 
 
(thousands of euros)
 
Adjusted EBITDA
 
 
8,157
 
 
 
16,173
 
 
 
71,137
 
 
 
45,129
 
 
 
36,142
 
 
 
32,347
 
Depreciation and amortization charge
 
 
(8,209)
  
 
 
(8,905
)
 
 
(7,802
)
 
 
(5,303)
  
 
 
(4,658
)
 
 
(4,868
)
Change in allowances, write downs and provisions
 
 
(2,258)
  
 
 
(9,848
)
 
 
(2,329
)
 
 
(2,600)
  
 
 
(1,889
)
 
 
(1,340
)
Impairment losses of assets
 
 
0
  
 
 
0
 
 
 
0
 
 
 
(4,000)
 
 
 
(1)
 
 
 
0
 
Impairment losses of goodwill
 
 
0
 
 
 
0
 
 
 
0
 
 
 
(1,000)
 
 
 
0
 
 
 
0
 
Profit from operations
 
 
(2,310)
 
 
 
(2,580)
 
 
 
61,006
 
 
 
32,226
 
 
 
29,594
 
 
 
26,139
 
 
 
 
Other
 
 
 
2012
 
 
2011
 
 
2010
 
 
 
(thousands of euros)
 
Adjusted EBITDA
 
 
1,033
 
 
 
(710)
 
 
 
4,581
 
Depreciation and amortization charge
 
 
(344)
  
 
 
(1,101
)
 
 
(1,658
)
Change in allowances, write downs and provisions
 
 
(165)
  
 
 
(20
)
 
 
(4
)
Impairment losses of assets
 
 
(120)
 
 
 
0
 
 
 
0
 
Impairment losses of goodwill
 
 
(6,893)
 
 
 
0
 
 
 
0
 
Profit from operations
 
 
(6,489)
 
 
 
(1,831)
 
 
 
2,919
 
 
Businesses in the Press segment

 
 
El País
 
 
As
 
 
 
2012
 
 
2011
 
 
2010
 
 
2012
 
 
2011
 
 
2010
 
 
 
(thousands of euros)
 
 
(thousands of euros)
 
Adjusted EBITDA
 
 
(21,797)
 
 
 
20,551
 
 
 
38,562
 
 
 
11,829
 
 
 
16,264
 
 
 
15,865
 
Depreciation and amortization charge
 
 
(8,615)
  
 
 
(8,213
)
 
 
(8,443
)
 
 
(698)
  
 
 
(608
)
 
 
(390
)
Change in allowances, write downs and provisions
 
 
(3,578)
  
 
 
(3,413
)
 
 
(1,898
)
 
 
(1,399)
  
 
 
(1,379
)
 
 
(1,416
)
Impairment losses of assets
 
 
(20,551)
 
 
 
0
 
 
 
0
 
 
 
(1,609)
 
 
 
0
 
 
 
0
 
Impairment losses of goodwill
 
 
0
 
 
 
0
 
 
 
0
 
 
 
0
 
 
 
0
 
 
 
0
 
Profit from operations
 
 
(54,541)
 
 
 
8,925
 
 
 
28,221
 
 
 
8,123
 
 
 
14,277
 
 
 
14,059
 
 
 
 
 
Cinco Días
 
 
Other
 
 
 
2012
 
 
2011
 
 
2010
 
 
2012
 
 
2011
 
 
2010
 
 
 
(thousands of euros)
 
 
(thousands of euros)
 
Adjusted EBITDA
 
 
(1,789)
 
 
 
58
 
 
 
50
  
 
 
(2,006)
 
 
 
3,174
 
 
 
3,382
 
Depreciation and amortization charge
 
 
(310)
  
 
 
(285
)
 
 
(228
)
 
 
(593)
  
 
 
(809)
  
 
 
(896
)
Change in allowances, write downs and provisions
 
 
(384)
  
 
 
(315
)
 
 
(221
)
 
 
(772)
  
 
 
(800
)
 
 
(720
)
Impairment losses of assets
 
 
(375)
  
 
 
0
 
 
 
0
 
 
 
0
  
 
 
(7,745
)
 
 
0
 
Impairment losses of goodwill
 
 
0
  
 
 
0
 
 
 
0
 
 
 
0
  
 
 
0
  
 
 
(1,351
)
Profit from operations
 
 
(2,858)
  
 
 
(542
)
 
 
(399
)
 
 
(3,371)
  
 
 
(6,180)
  
 
 
415
  

Regulation

Our television, education, radio and press businesses, activities and investments are subject to various statutes, rules, regulations, policies and procedures in Spain, Portugal and the other countries in which we conduct business. The material Spanish and Portuguese statutes, rules, regulations, policies, procedures and authorizations to which our business, activities and investments are subject are summarized below. These summaries do not purport to be complete and should be read together with the full texts of the relevant statutes, rules, regulations, policies procedures and authorizations described therein. In addition, these laws and regulations are subject to change and, in some cases, new interpretation, any of which could materially change the discussion below.

Legal Framework Governing Television Services in Spain

Terrestrial Television Regulation

Concessions and licenses.

According to past legislation, in order to provide terrestrial, over-the-air television, a service provider was required to obtain a concession under Private Television Law 10/1988, of 3 May (referred to herein as the “Private Television Law”). Prisa Televisión was the holder of an administrative concession granted by a Resolution of the Cabinet on August 25, 1989, which was later amended and extended. Such license and related rights were transferred to Gestevisión Telecinco, S.A. (“Telecinco”) as part of the corporate transactions made at the end of 2010 whereby Prisa sold its free-to-air channel Cuatro to Telecinco and Prisa and, through its affiliate Prisa Televisión, acquired an equity stake of 17.34% in Telecinco. In addition, Telecinco and Telefónica each acquired a 22% stake in Distribuidora de Televisión Digital, S.A. (“DTS”) our affiliate that operates the digital pay TV platform “Canal+.”

On April 1, 2010, Law 7/2010, General Audiovisual Communication Law, of 31 March (the “GAC Law”), was published in the Spanish Official Gazette. The new law became effective on May 1, 2010. The GAC Law regulates public and private television and radio services in Spain, establishing a common framework currently applicable to all television and radio services regardless of the form of transmission and technology used (terrestrial broadcast, cable, satellite, etc.). The GAC Law replaces the existing legislation on television, radio and content regulations, including, among others, the Private Television Law, Law 66/1997 of 30 December, Law 7/2009 of 7 July, Law 37/1995 of 12 December, Law 25/1994 of 12 July, Law 21/1997 of 3 July and Law 31/1987 of 18 December.

According to the GAC Law, terrestrial broadcasting services are subject to obtaining a license but not an administrative concession. Prisa Televisión concession referred to above was transformed into a license to provide over-the-air television broadcasting services. The administrative body issued an express resolution approving the transformation on June 8, 2010 and registered the new license with the new National Registry of Audiovisual Communication Services Providers (created by GAC Law). The term of the new license granted to Prisa Televisión was for 15 years from the transformation date, automatically renewable for additional 15-year periods provided that the licensee is in compliance with the terms and conditions of the license at renewal.

Law 8/2009 of 28 August, related to the funding of Corporación de Radio y Televisión Española (RTVE), establishes certain public service obligations, in addition to those contained in Law 17/2006 of 5 June and prohibits RTVE from obtaining income from advertising or teleshopping activities, in any of their various forms, including sponsorship and media trading of products and programs. Therefore, beginning January 1, 2010, RTVE and its companies that provide public television service may not broadcast any advertising or teleshopping. Additionally, according to Law 8/2009, national television service providers (including over-the-air and satellite television) must contribute to the financing of RTVE by means of an annual contribution ranging from 1.5% through 3% of their global revenues.
 
 
Restrictions on ownership.

The provisions included in the Private Television Law concerning limitations on the ownership of a significant interest (a direct or indirect interest of 5% or more of the capital or voting rights associated with the company’s shares) in various television services providers, have been changed by the new GAC Law. Pursuant to the GAC Law, individuals or legal entities are authorized to hold shares or voting rights simultaneously in different television services providers. However, certain limitations apply to national television services providers:

(i) No individual or legal entity is allowed to acquire a significant interest in more than one national television services provider, unless the average audience of all the channels of the national television services providers involved, taken as a whole, do not exceed 27% of the total audience in the 12 consecutive months prior to the acquisition;

(ii) An individual or legal entity may not acquire a significant interest or voting rights in more than one national television service provider if doing so would entail the accumulation of the rights of use of the radio-electrical spectrum that, as a whole, exceeded the technical capacity corresponding to two multiple channels.

(iii) Neither an individual or legal entity that is a national television services provider, nor an individual or legal entity that holds a stake in a national television services provider, may, in turn, acquire a significant interest or voting rights in another national television services provider if doing so would reduce the number of national private television services providers to less than three.

In addition, the GAC Law contains a limitation regarding the use of the radio electric spectrum public domain by an individual or legal entity who owns a significant interest or voting rights in more than one regional television service provider.

Pursuant to the GAC Law, a significant interest means direct or indirect interest of at least 5% of the capital, or 30% of the voting rights, or less if such lower percentage would entitle the holder to appoint more than half of the members of the board of directors of the provider in the 24 months following the acquisition.

Shares or other securities are considered to be held or acquired by the same individual or legal entity when they are held or acquired by companies belonging to the same group, or held or acquired by other persons acting on their own behalf but for the account of the individual or legal entity, in a concerted manner or forming part of a decision-making unit with such individual or legal entity.

Holders of significant interests in an audiovisual communication services provider, such as television services providers, must be registered with the National Registry of Audiovisual Communication Services Providers.

With regards to foreign investment, pursuant to the GAC Law, individuals or legal entities who are nationals of a country that is not a member of the European Economic Area (the “EEA”) may only own an equity interest in a terrestrial television broadcasting services provider (licensee) in compliance with the reciprocity principle. Under the reciprocity principle, individuals or legal persons who are nationals of a country that is not a member of the EEA may only possess such percentage of equity interest relating to a Spanish terrestrial television broadcasting licensee that is less than or equal to the percentage interest a Spanish person could possess in a terrestrial television broadcasting licensee in such non-EEA country.

The new GAC Law also includes a maximum ownership limitation - direct and indirect - for a non-EEA individual of a 25% equity interest and a non-EEA group limitation of a 49.99% equity interest as relates to terrestrial television broadcasting licensees.

Requirements applicable on transfer of shares.

Under past legislation, any individual or legal entity that wished to directly or indirectly: (i) acquire a significant interest in the share capital of a private television concession holder company; or (ii) increase their interest so that their percentage of the capital or voting rights reaches or exceeds 5%, 10%, 15%, 20%, 25%, 30%, 35%, 40% or 45% must first inform the Ministry of Industry, Tourism and Trade, which had three months in which to reject or accept the proposed acquisition. The new GAC Law replaces the foregoing requirement concerning prior administrative approval with a post-acquisition notification in the case of significant interests.

Penalties.

The penalty framework applicable to the provision of terrestrial television broadcasting services is contained in Article 59 and subsequent articles of the GAC Law. The penalties are graded according to their seriousness, and the applicable penalties are established in each case. Specifically, the penalties range from a fine of up to €50,000 for the most minor infringements to fines of up to €1 million and the termination of the license for most serious infringements.
 
 
Satellite Television Regulation

The provision of satellite television services was governed by the now-repealed Law 37/1995 of 12 December on Satellite Communications, and by the “Technical Regulations of Satellite Broadcast Services” approved by Royal Decree 136/1997 of 31 January, which substantially deregulated the service. As a result of this deregulation, the provision of satellite television services merely required an authorization as opposed to a concession.

There were no restrictions on the number of operators or limitations on ownership interests held by the same person in the capital or voting rights of more than one company providing such services. No authorization was required for the transfer of shares in companies authorized to provide satellite television services. DTS, a subsidiary of Prisa, has the necessary authorizations received by the Spanish Telecommunication Market Commission (the “CMT”) to provide satellite television services, which were renewed for five years by the CMT in February 2008.

The new GAC Law, which repealed Law 37/1995 on Satellite Communications, is also applicable to television and radio services provided by means of satellite technology. According to the GAC Law, the provision of audiovisual communication services, including satellite services (except for terrestrial television and radio broadcasting services), only requires a prior notice to the audiovisual authority. The previous authorizations held by Canal Satélite and DTS, both currently integrated into DTS, to provide satellite television and radio services have been replaced with the registry of DTS with the National Registry of Audiovisual Communication Services Providers, and therefore there is no need to extend the authorizations from the CMT mentioned above.

The GAC Law does not contain any restriction on foreign ownership by non-EEA persons or legal entities regarding satellite television and radio services. There is no express reference in the GAC Law to ownership of more than one satellite television service. However, it is unclear whether the limitation on holding a significant interest in more than one television services provider, unless the average audience of all the channels of the national television services providers does not exceed 27% of the total audience in the 12 consecutive months prior to the acquisition, is applicable to satellite television providers (see “—Legal Framework Governing Television Services in Spain—Terrestrial Television Regulation—Restrictions on Ownership”).

Television content regulation.

The GAC Law contains current legislation on both television and radio content. The GAC Law repeals the provisions of Law 25/1994 of 12 July on the exercise of television broadcasting activities to regulate programming and content provided by Spanish television providers. The GAC Law incorporates into Spanish law Directive 2007/65/EC of 11 December. The new GAC Law simplifies and moderates the prevailing rules on advertising and eliminates certain advertising broadcasting limits, in particular with respect to the time that separates successive commercial breaks. The new GAC Law also opens up the possibility of product placement in television programming.

Under the GAC Law, national and regional television services providers must set aside 51% of their annual broadcast time for European works, and 50% of that time must be dedicated to broadcasting European works originally recorded in any of the official Spanish languages. Furthermore, at least 10% of the 51% reserved for broadcasting European works must be devoted to broadcasting European works from independent producers, and a half of this 10% must have been produced in the last five years.

With regard to funding obligations, according to the GAC Law, national or regional television service providers are obliged to earmark, as a yearly minimum, 5% of the total revenues earned in the prior year to fund European production of movies and films and series for television, as well as documentaries, animation films and series. At least 60% of this funding must be earmarked for movies and at least 40% for films, short films and series for television. In any case, 60% of this funding must be earmarked for productions whose original language is any of the official languages in Spain.

The GAC Law also establishes certain restrictions and limitations regarding advertising, sponsorship and product placement and includes provisions related to programming publication and electronic programming guides. The GAC Law also contains certain provisions concerning minors and disabled people; in this sense, the GAC Law prohibits the free-to-air broadcasting of pornographic and violent contents, and any other contents that may affect physical, moral or mental development of minors must only be broadcast from 10:00 p.m. to 6:00 a.m. Similar restrictions are applicable on games of chance and esoteric programming.

Sports content regulations.

The broadcasting of sporting events is governed by the GAC Law. The audiovisual authority is required to approve a biannual list of sports competitions and events of general interest that must be broadcast free-to-air. The GAC Law attempts to guarantee the rights of the consumers’ access to such broadcasts.
 
 
Except for those sports competitions and events of general interest that must be broadcast free-to-air, audiovisual communication providers, such as television services providers, may purchase exclusive rights to content and broadcast them free-to-air or encrypted. The right to broadcast soccer competitions may be purchased on an exclusive basis, provided that the term of the agreement does not exceed four years. Agreements in place before the new GAC Law must terminate once the four-year period has elapsed. However, the GAC Law also limit the duration of such contracts to the resolutions and decisions of the competition authorities which prior to the publishing of the GAC Law had determined a maximum duration of three years for this type of agreements.

Pay digital terrestrial television (DTT) services and transfer of the licenses.

Under the new GAC Law, pay DTT broadcasting is permitted provided that the radio electric spectrum used by pay DTT channels does not exceed 50% of the total spectrum assigned to the television provider.

Additionally, the GAC Law permits terrestrial television services providers to transfer or lease their licenses under certain conditions and with the prior approval of the audiovisual authority.

Legal Framework Governing Radio Services in Spain

Licenses.
 
The GAC Law repeals all past laws and regulations on radio broadcasting services. Radio broadcasting services are subject to the obtaining of a license. Under the new law, Prisa Radio’s concessions have been transformed or are being transformed into licenses to provide radio broadcasting services. The term of the new licenses is 15 years from the transformation date, automatically renewable for additional 15-year periods provided that the licensee is then in compliance with the terms and conditions at renewal.

According to the GAC Law, the Spanish government approved on July 2011, the technical plan of integral digitalization of terrestrial radio broadcasting services in order to improve the migration to digital technology.
 
Restrictions on the control of radio broadcasting stations.
 
No individual or legal entity may control, directly or indirectly, more than one-third of all the terrestrial radio broadcasting service licenses with total or partial coverage in Spain as a whole. In order to limit the number of licenses over which control may be held simultaneously, in calculating these limits, radio broadcasting stations managed directly by public entities are not counted. The limits are applied separately to the digital broadcasting licenses and to the analog broadcasting licenses. For purposes of these limits, “control” has the meaning established in Article 42 of the Commerce Code.

Restrictions on ownership, transfer of shares and transfer of licenses.

Pursuant to prior legislation, radio broadcasting concessions could be obtained directly through awards in an auction process arranged for such purposes, or by purchasing them directly from the holder, subject to administrative approval. Any change in the ownership of the shares of the entity holding the radio concession required authorization by the relevant authority.

Under the new GAC Law, radio broadcasting licenses can be transferred or leased under certain conditions and with the prior authorization of the audiovisual authority. Also, there are no restrictions on transferring shares or participation units of licensees. Holders of significant interests in an audiovisual communication services provider, such as radio broadcasters, must be registered with the National Registry of Audiovisual Communication Services Providers. See “—Legal Framework Governing Television Services in Spain—Terrestrial Television Regulation—Restrictions on Ownership.”
 
 
With regards to foreign investment, pursuant to the GAC Law, individuals or legal entities who are nationals of a country that is not a member of the European Economic Area (the “EEA”) may only own an equity interest in a radio broadcasting services provider (licensee) in compliance with the reciprocity principle. Under the reciprocity principle, individuals or legal persons who are nationals of a country that is not a member of the EEA may only possess such percentage of equity interest relating to a Spanish radio broadcasting licensee that is less than or equal to the percentage interest a Spanish person could possess in a terrestrial television broadcasting licensee in such non-EEA country.

The GAC Law also includes a maximum ownership limitation-direct and indirect-for a non-EEA individual of a 25% equity interest and a non-EEA group limitation of a 49.99% equity interest as relates to radio broadcasting licensees.
 
Legal Framework Governing the Publishing Business in Spain
 
Our publishing business in Spain is principally carried out through our subsidiary, Santillana, which is subject to both Law 10/2007 of 22 June (the “Book Law”), regarding reading, books and libraries, as well as the provisions on textbooks contained in the applicable rules on education both under Organic Law 2/2006 of 3 May governing education and autonomous government rules on the matter.
 
 
Fixed retail price system.

The Book Law provides a system of fixed retail prices for books published, imported or re-imported. The retail price may fluctuate between 95% and 100% of the fixed price. The fixed-price system does not apply to certain book categories such as textbooks and supplementary teaching materials published mainly for the development and application of the curricula corresponding to compulsory primary and secondary education, or to collectable books, art books, secondhand books and out-of-print books.

Prices below retail price (i.e., between 95% and 100% of the fixed price) are allowed on certain occasions such as el Día del Libro (Book Day), at book fairs, book conferences and trade fairs (with a maximum discount of 10% of the fixed price) or when the end consumers are libraries, archives, museums, schools, universities or institutions or centers whose founding principles are scientific or research-based (with a maximum discount of 15% of the fixed price).

Any breach of the fixed price obligation may give rise, among other penalties, to fines of up to €100,000 per offense.

Oversight of textbook use.

Additional Provision Four of the Education Law regarding the publishing of textbooks and other materials to be used at the various levels of education does not require either the prior authorization of the education authorities or administrative authorization to adopt textbooks and other materials for use. Once a textbook has been adopted for use by an educational establishment, there is an obligation to continue to use it for at least four years. However, education authorities have the power to oversee the use of textbooks and other materials as part of the standard inspection process that they exercise over all the elements of the teaching and learning process to ensure compliance with constitutional principles and values and the Education Law.

In general, in the event of an infringement, the education authorities will require the publisher to remedy the deficiencies detected. If the infringement is not remedied, the education authorities can declare that the book is unsuitable for use in its educational establishments. Also, substantially all of the autonomous communities have issued rules governing these matters that impose other obligations in relation to the activity carried on in the territory in question.

Free textbook systems.

In recent years, certain autonomous communities have implemented systems aimed at ensuring the availability of free textbooks used in compulsory education (primary and secondary). Certain authorities have opted to provide direct subsidies to parents using so-called “book vouchers,” whereas others have preferred to implement systems where the educational establishments, supported by public funds, are the owners of basic or compulsory education books and lend them to students. At the end of the academic year, the student must return the book to the teaching establishment in suitable condition for reuse.

Legal Framework Governing Television Service in Portugal

Similarly to Spain, the Portugal television industry is subject to significant regulation requiring authorization to provide the service, the conditions for the renewal, transfer and ownership of such authorization, the schedule and content of programming and the schedule and maximum times that commercials may be broadcast.

Terrestrial Television Regulation

Television broadcasters such as our subsidiary TVI are governed by Law 27/2007 of 30 July, which incorporates Council and Parliament Directive 2007/65/EC (the “Television Law”) concerning broadcasting activities into Portuguese law. This directive was recently amended as described in “Spanish Television Regulation” regarding advertising placement and broadcasts.

Required authorizations.

The provision of national, terrestrial television services requires a license issued for an initial period of 15 years, subject to successive extensions for equal periods unless there is an infringement of the applicable legislation by the license holder. TVI obtained its license in 1992, which made it one of the two private companies authorized to provide these services in Portugal.

TVI’s license was renewed for a further 15-year period as a result of Resolution 1-L/2006 of the Entidade Reguladora para a Comunicacăo Social (the “ERC”), on June 20, 2006, as subsequently corrected and reaffirmed by the ERC in Resolution 2/LIC-TV/2007. TVI exercised its right to reserve digital broadcasting capacity in the period reserved for television operators that had a license as of the date of approval of the Television Law. Therefore, the license authorizes TVI to provide only digital-based television services from April 26, 2012.
 
 
The ERC has rejected all candidates for a third license to provide nationwide, free-to-air digital terrestrial television services. The candidates are challenging the decision through a court proceeding. The current license holders are not entitled to any compensation for changes in the industry if a third license is approved.

Limits on the transfer of shares and concentration of television operators.

The licenses and authorizations we hold may not be transferred. However, pursuant to Article 4 of the Television Law, notice of any extraordinary transfer of shares of television operators may be provided, if any, under applicable antitrust laws (primarily, Law 18/2003, of 11 June). Notice of extraordinary transactions that affect companies holding licenses to provide terrestrial wave television services must be given to the ERC, so that the ERC may issue a binding decision (30-day period) prior to such transactions. The transactions may be prohibited by the ERC only where a company holds more than 50% of the total free-to-air national services in Portugal, they give rise to material changes to the license or there are any other risks concerning the original authorizations’ terms.

Also, the ERC must be informed of any transaction entailing the acquisition by licensees of shares in other companies authorized to provide the aforementioned services or that have applied for the required license, irrespective of the fact that these transactions must also be reported in accordance with Portuguese competition law. The ERC reviews such transactions to ensure they do not jeopardize the basic principles upon which television regulations are based, including respect for media pluralism and freedom of expression.

The Television Law establishes certain rules aimed at ensuring the transparency of the ownership of the share capital of companies holding licenses. These rules establish, among other requirements, that the ERC be notified of all information regarding the shareholders of companies holding licenses, the directors of such companies, the ownership interests in other companies in the public communications media industry or in the telecommunications industry, the programs broadcast, the persons responsible for programming and the editorial charter. The information must be maintained reasonably up to date, and the ERC may carry out inspections in order to verify the accuracy of the information furnished. In addition, the shares of the licensees must be registered, and the shares or “special rights” (voting rights carried by the shares) that enable the holder to exercise significant influence over the operator must be disclosed in the companies’ annual reports. Also, a list of those holders that are deemed to hold “qualifying holdings,” and those holders with special rights and ownership interests in the share capital of companies engaging in the same activity, must be published in the notes to the financial statements of licensees, with their editorial charter, and also in a high-circulation, nationwide periodic publication. “Qualifying holding,” in accordance with Articles 20 and 20-A of the Securities Code (Decree-Law 486/99, of 13 November), means a direct or indirect, independent or joint ownership interest that in any way enables its holder to exercise a significant influence over the management of a television operator.

Television content requirements.

The Television Law prohibits the broadcasting of programs that are likely to incite hatred for reasons of race, gender, religion or nationality and programs that could seriously harm the physical, mental or moral development of minors (such as those containing scenes of pornography or gratuitous violence). In addition, programs that could seriously harm the physical, mental or moral development of minors may only be broadcast between 10:30 p.m. and 6:00 a.m., and they must be identified through a visual symbol throughout their broadcast.

Television operators that provide national coverage are also required to broadcast at least six hours per day (excluding advertising and teleshopping programs) and must set aside at least 50% of their broadcasts (excluding advertising, teleshopping and teletext (a form of text-based information retrieval service)) to programs originally produced in Portuguese, of which 20% must be reserved for “creative” programs such as films, documentaries, debates, interviews, series, music, art or cultural programs, or educational programs originally produced in Portuguese.

The Television Law also requires service providers to devote more than 50% of their annual broadcast time to European works. In addition, a minimum of 10% of daily broadcast time must be allotted to European works of independent producers produced in the preceding five years. For the purposes of calculating these percentages, the time devoted to the news, sports events, game shows, advertising, teletext services and teleshopping programs is excluded.

The Television Law also sets certain constraints on advertising and sponsorship, including the maximum time that may be allotted to these activities. Additionally, the Advertising Code (Decree-Law 330/90 of 23 October) restricts the content of television advertising and limits, for example, the advertising of certain products such as tobacco, alcohol, medicines and medical treatments. The sponsorship of news programs is also prohibited, and other sponsored programs must identify the sponsor, and under no circumstances may they be influenced by the sponsor.
 
Sports competitions and events.

Each year the government of Portugal publishes a list of the sports events considered to be of public interest. Under the Television Law, pay television service operators holding exclusive rights to these events are required to provide free-to-air access to other nationwide broadcasters. Also, all the operators have the right to broadcast news extracts of these events.
 

Disciplinary framework.

In exercising its supervisory powers, the ERC may impose penalties on television operators ranging from the revocation or suspension of the licenses and the prohibition of rebroadcasting certain programs to fines of up to a maximum of €375,000 per offense, depending on the type and seriousness of the infringement. In extreme cases, the provision of services without authorization constitutes an offense punishable with a prison sentence of up to three years and a fine of €160,000.


Appendix I to our consolidated financial statements contains details regarding the main companies composing the Prisa group of companies (by business unit), indicating, as of December 31, 2012, each company’s registered name, country of incorporation or residence and the proportion of our ownership interest in the company.

As of the date of this annual report, there were no differences between the proportion of voting rights and the par value of the shares at any of the subsidiaries of Prisa, except at the following companies:

·
Editorial Santillana, S.A. (Dominican Republic), for which local legislation limits the number of votes of any one shareholder, regardless of the number of shares it owns, to a minimum of one vote and a maximum of 10 votes per shareholder.

·
Sistema Radiópolis, S.A. de C.V. (Mexico), for which, being a radio broadcasting concession holder and due to regulatory requirements, the shares are neutral and therefore confer limited voting power on their holder.

·
Grupo Media Capital, SGPS, S.A, for which each group of one hundred shares, with a nominal value of €1.06 per share, is entitled to one vote.
 

Details of the cost of our property, plant and equipment and of the related accumulated depreciation and impairment losses recognized for 2012, 2011 and 2010 are as follows:

 
 
For the Years Ended December 31,
 
 
 
2012
 
 
2011
 
 
2010
 
 
 
(thousands of euros)
 
Property, plant and equipment
 
 
296,419
 
 
 
307,441
 
 
 
295,560
 
Land and buildings
 
 
113,433
 
 
 
92,813
 
 
 
90,428
 
Plant and machinery
 
 
529,581
 
 
 
477,529
 
 
 
491,240
 
Digital set-top boxes and cards
 
 
330,989
 
 
 
363,274
 
 
 
367,862
 
Other items of property, plant and equipment
 
 
134,916
 
 
 
120,875
 
 
 
108,231
 
Advances and property, plant and equipment in the course of construction
 
 
2,066
 
 
 
3,664
 
 
 
5,067
 
Accumulated depreciation
 
 
(780,641
)
 
 
(739,602
)
 
 
(754,698
)
Impairment losses
 
 
(33,925
)
 
 
(11,112
)
 
 
(12,570
)

Land and buildings

We own and lease various real properties in Spain, Portugal, the Americas and other locations in which we have operations that are utilized in the conduct of our businesses. Each of these properties is considered to be in good condition, adequate for its purpose and suitably utilized according to the individual nature and requirements of the relevant operations. Our policy is to improve and replace property as considered appropriate to meet the needs of the individual operation.

The line item “Land and Buildings” includes diverse buildings we own in Spain and Latin America that are used as registered offices of our subsidiaries. The most significant buildings are the registered offices of Santillana in Latin America and Dédalo Grupo Gráfico, S.L.

On December 28, 2010, Prisa Televisión sold its headquarters in Tres Cantos (Madrid) for €80 million, which gave rise to a gain of approximately €20 million, and signed a 20-year lease with the purchaser.
 
 
Plant and machinery

“Plant and machinery” includes mainly printing equipment, rotary presses, sealing equipment and installations for the provision of television services.

Digital set-top boxes and cards

“Digital Set-Top Boxes and Cards” are the items required to receive the Canal+ signal.

Other items of property, plant and equipment

This line item mainly includes investments in computer and communications equipment.
 
Property, plant and equipment are carried at cost, net of the related accumulated depreciation and of any impairment loss. Property, plant and equipment held under finance leases are presented in the consolidated balance sheet based on the nature of the leased assets, and are depreciated over the expected useful life using the same method as that used to depreciate owned assets.

At December 31, 2012, “Property, plant, and equipment” on the consolidated balance sheet included assets held under finance leases amounting to EUR 89,821 thousand (December 31, 2011: EUR 68,447 thousand).

The breakdown of the carrying amounts of non-current assets held under finance leases by nature of the leased asset at December 31, 2012 and 2011 is as follows (in thousands of euros):

 
 
12/31/12
 
 
12/31/11
 
 
 
Cost
 
 
Accumulated
depreciation
 
 
Carrying amount
 
 
Cost
 
 
Accumulated
depreciation
 
 
Carrying amount
 
Digital set-top boxes and cards
 
 
90,542
 
 
 
(26,212)
 
 
 
64,330
 
 
 
77,819
 
 
 
(13,797)
 
 
 
64,022
 
Plant and machinery
 
 
8,502
 
 
 
(4,885)
 
 
 
3,617
 
 
 
6,812
 
 
 
(3,389)
 
 
 
3,423
 
Other items of property, plant and equipment
 
 
26,863
 
 
 
(4,989)
 
 
 
21,874
 
 
 
2,413
 
 
 
(1,411)
 
 
 
1,002
 
Total
 
 
125,907
 
 
 
(36,086)
 
 
 
89,821
 
 
 
87,044
 
 
 
(18,597)
 
 
 
68,447
 
 
 
“Other items of property, plant and equipment” mainly include digital developments and learning systems of Santillana under financial leases.

The breakdown of the value of the purchase option, the amount of payments made in the year and the nominal value of outstanding payments in 2012 is as follows:

                Nominal value of outstanding payments  
   
Value of
purchase
option
    
Amount of
payments
made in the
year
    
Total
    
Less than 1
year
    
Between 1
and 5 years
    
More than 5
years
  
Digital set-top boxes and cards
    
132
      
25,770
      
43,388
      
26,569
      
16,819
      
-
  
Plant and machinery
    
35
      
937
      
3,038
      
784
      
2,254
      
-
  
Other items of property, plant and equipment
    
9,245
      
15,365
      
21,948
      
2,991
      
18,957
      
-
  
Total
    
9,412
      
42,071
      
68,374
      
30,344
      
38,030
      
-
  

On June 15, 2011, and for a period of five years, Prisa Televisión signed a master lease agreement with Cisco System Capital Spain, S.L in the amount of USD 80 million, to finance the purchase of iplus set-top boxes, which includes purchases made since May 2010.
 
 
Cisco System Capital Spain, S.L. has reached an agreement with Prisa Televisión to become the exclusive supplier of the iplus set-top boxes required, over the next five years, for the Company’s line of business. The detail of these agreements at December 31, 2012 is as follows:
 
Cost
    
Purchase
option
    
Contract
Duration
(months)
    
Period
elapsed
(months)
    
Amount of
payments
made in the
year
    
Outstanding
payments
  
  43,427       -       36       19       13,098       16,373  
  12,631       -       36       17       4,593       6,888  
  1,742       -       36       16       633       950  
  3,207       -       36       15       1,167       2,040  
  3,476       -       36       14       1,264       2,212  
  3,476       -       36       13       1,264       2,212  
  1,717       -       36       12       624       1,250  
  586       -       36       6       107       532  
  1,707       -       36       4       310       1,552  
  408       -       49       8       86       370  
  2,163       -       49       7       303       2,117  
  2,830       -       49       5       396       2,770  
  2,397       -       49       4       168       2,514  
  905       -       49       3       63       949  
  80,672                               24,076       42,729  

For a discussion of our operating leases, see “Operating and Financial Review and Prospects—Contractual Obligations and Commitments.”

We take out insurance policies to cover the potential risks to which the various items of property, plant and equipment are exposed. We believe the insurance policies in place as of December 31, 2012 were sufficient to cover our property, plant and equipment in accordance with industry practice.

Environmental Issues Affecting Utilization
 
Some of our consolidated Print subsidiaries engage in printing activities, mainly Pressprint, S.L.U. and Dédalo Grupo Gráfico, S.L., and in accordance with current legislation, these companies control the degree of pollution caused by waste and emissions, and have an adequate waste disposal policy in place. The expenses incurred in this connection, which are not significant, are expensed.
 
We do not believe that the radio signal relay antennas or towers owned or operated by our radio and audiovisual companies produce any health-endangering electromagnetic contamination. The relevant environmental impact studies and the checks stipulated in industrial and environmental legislation were performed before they were installed.

The expenses incurred in respect of environmental compliance, which have not been material, are charged to the income statement as they arise.

We believe that we have no environmental responsibilities, expenses, assets, provisions or contingencies that might be material in relation to our equity, financial condition and results of operations.


Not applicable.
 
 
The most significant events in the period from January to December 2012 were as follows:
 
 
·
Total revenue reached €2,664.7 million (-2.2%) and Adjusted EBITDA was €427.0 million (-2.3%). The Group showed a net loss of €255.0 million after having provisioned €305.3 million for goodwill impairments and intangible assets.
 
 
·
Total Latam revenues grew by 7.7% representing 26.7% of the Group’s revenues (24.3% in 2011). Adjusted EBITDA from this region grew by 13.3% reaching 45.0% of total Group Adjusted EBITDA (38.6% in 2011). Latin American advertising of grew14.9% (25.4% of all advertising revenues).
 
 
·
The group continued with a strong cost control efforts in all cost lines and business units. In 2012, total expenses (excluding amortizations and provisions) were reduced by 2.2%. Costs of staff in Spain and Portugal fell a 15.1%.
 
 
·
Pay TV showed strong growth in revenues and Adjusted EBITDA, mainly due to changes in the accounting of the new football model: revenues reached €1,079.9 million and Adjusted EBITDA EUR 181.1 million, with implied a growth of 6.8% and 15.1% respectively.
 
During 2012, key performance indicators for the Audiovisual division were impacted by a series of elements such as the change in the commercialization model of football content, the VAT increase for Pay TV from 8% to 21% and the weakness of the economic environment. The increase in costs associated with the new football agreement will have to be compensated over time with the revenues from the C+ multi-distribution to third parties and a necessary increase in the number of subscribers.

Regarding Media Capital, revenue (€184.3 million) fell by 17.8% while Adjusted EBITDA (€41.8 million) grew by 7.4%, which shows the strong effort in cost control and diversification in added value revenues that was undertaken.
 
 
·
Education showed strong growth in Latin America. Revenues (€733.7 million) grew by 1.8% with Latin America up by +5.4%. Individual country result were: Mexico (+17.6%) (16.3% in local currency), Ecuador (+23.3%) (12.1% in local currency), Puerto Rico (+35.4%) (21.0% in local currency), Dominican Republic (+43.3%) (34.4% in local currency) and USA (+41%) (28.5% in  local currency), as well as Argentina (+20.6%) (22.8% in local currency), Central America (+15.5%) (11.3% in local currency), Colombia (+3.4%) (-6.1% in local currency), Peru (+103.3%) (11.8% in local currency), Bolivia (+16.1%) (11.3% in local currency), Uruguay (+22.2%) (18.2% in local currency) or Chile (+16.5%) (10.4% in local currency), and the lower contribution of Brazil due to its cycle (-17.0%) (-11.8% in local currency). Spain saw a revenue fall of 8.9% mainly due to General Editions and to a lesser extent due to a lower educational campaign. Adjusted EBITDA reached €184.2 million (+8.2%). The operating profit of the business unit included a negative contribution of €11.8 million as a consequence of the launching of new educational systems products.
 
 
·
 Radio showed a strong growth in Latin America and weakness in Spain. Revenues (€342.4 million) fell by 9.1% versus 2011 due mainly tolower advertising in Spain (-17.1%), partly offset by a significant improvement in Latam, where advertising revenues increased by +15.2% (+5.9% in local currency) with a strong performance in Colombia (+19.6%) (+7.3% in local currency), Chile (+11.7%) (+3.5% in local currency) and Mexico (+12.3%) (+9.2% in local currency).
 
 
·
 Press showed the difficult economic situation and demand trends in Spain. Press revenues stood at €314.6 million, 19.3% lower than in 2011. This was due to weakness in advertising (-20.6%), lower circulation (down by -12.7%), as well as the positive impact that promotions and fiscal deductions had in 2011. Adjusted EBITDA was negative at €13.8 million, mainly due to the restructuring process undertaken in the segment.
 
 
·
In Digital area advertising showed growth of 15.1% in 2012. The digital area received a monthly average number of daily browsers of 72 million (December 2012), which represents a growth of 9.4% versus 2011. This is thanks to the strong growth in Prisa Televisión, ElPais.com and CincoDías.com, as well as International Radio.
 
 
·
During 2012 several recapitalization deals were approved in the Annual Shareholders’’ Meeting. Through these the compulsory payment of the preferred divided of non-voting B shares was eliminated, allowing the Group to pay them in shares (at one Euro per share), in cash or a combination of both. In addition three of the Company’s creditor financial entities subscribed for €334 million of mandatory convertible bonds in exchange of existing debt of the company, and Telefónica subscribed for €100 million of mandatory convertible bonds for cash. These deals allowed for the reduction of the Group’s leverage and demonstrated the support of the company’s creditor entities, main shareholders and strategic partner.
 

The information in this section should be read in conjunction with our Consolidated Financial Statements and the notes thereto, included elsewhere in this annual report. Our consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board as adopted by the European Union, taking into account all mandatory accounting policies and rules and measurement bases with a material effect, as well as the Commercial Code (Código de Comercio), the obligatory legislation approved by the Institute of Accounting and Auditors of Accounts (Instituto de Contabilidad y Auditoria de Cuentas, ICAC) and other applicable Spanish legislation.
 
 
The following table provides an overview of our consolidated profit from operations for the periods indicated, together with the period-to-period changes.
 
   
FY 2012
    
FY 2011
    
% Change,
FY ‘11 to
‘12
    
FY 2010
    
% Change,
FY ‘10 to
11
  
         
(thousands of euros)
        
Revenue from subscribers
    
906,843
      
887,092
      
2.2
%
    
913,105
      
(2.8
%)
Advertising sales and sponsorship
    
553,368
      
620,063
      
(10.8
%)
    
673,702
      
(8.0
%)
Sales of books and training
    
718,781
      
697,881
      
3.0
%
    
625,877
      
11.5
%
Newspaper and magazine sales
    
146,219
      
168,744
      
(13.3
%)
    
180,396
      
(6.5
%)
Sales of add-ons and collections
    
20,504
      
23,151
      
(11.4
%)
    
30,953
      
(25.2
%)
Sale of audiovisual rights and programs
    
125,594
      
88,236
      
42.3
%
    
87,739
      
0.6
%
Intermediation services
    
20,069
      
20,985
      
(4.4
%)
    
25,393
      
(17.4
%)
Broadcasting services
    
10,638
      
17,260
      
(38.4
%)
    
19,860
      
(13.1
%)
Other services
    
121,479
      
117,869
      
3.1
%
    
130,748
      
(9.9
%)
Income from fixed assets
    
3,319
      
20,263
      
(83.6
%)
    
32,888
      
(38.4
%)
Other income
    
37,878
      
62,906
      
(39.8
%)
    
102,070
      
(38.4
%)
Operating income
    
2,664,692
      
2,724,450
      
(2.2
%)
    
2,822,731
      
(3.5
%)
Cost of materials used
    
(889,352
)
    
(824,120
)
    
7.9
%
    
(839,223
)
    
(1.8
 %) 
Staff costs
    
(604,957
)
    
(674,322
)
    
(10.3
%)
    
(592,081
)
    
13.9
 % 
Depreciation and amortization charge
    
(187,998
)
    
(171,331
)
    
9,7
%
    
(170,363
)
    
0.6
%
Outside services
    
(742,977
)
    
(788,813
)
    
(5.8%)
      
(794,500
)
    
(0.7%)
  
Changes in allowances, write-downs and provisions
    
(100,196
)
    
(45,171
)
    
—
      
(37,210
)
    
21.4
%
Impairment of goodwill
    
(301,282
)
    
(252,944
)
    
19.1%
      
(51,179
)
    
—
  
Other expenses
    
(12,984
)
    
(3,485
)
    
—
      
(2,023
)
    
72.3
%
Operating expenses
    
(2,839,746
)
    
(2,760,186
)
    
2.9
%
    
(2,486,579
)
    
11.0
%
Adjusted EBITDA (1)
    
427,002
      
436,914
      
(2.3
%)
    
596,331
      
(26.7
%)
Profit from operations
    
(175,054
)
    
(35,736
)
    
—
      
336,152
      
—
  
Adjusted EBITDA margin (%)
    
16.0
%
    
16.0
%
            
21.1
%
        
Profit from operations margin (%)
    
(6.6
%)
    
(1.3
%)
            
11.9
%
        
 
(1)
Adjusted EBITDA is a supplemental measure of performance that is not required by, or presented in accordance with, IFRS. It is not a measurement of financial performance under IFRS and should not be considered as (i) an alternative to operating or net income or cash flows from operating activities, in each case determined in accordance with IFRS, (ii) an indicator of cash flow or (iii) a measure of liquidity. See “—Our Business—Adjustments to Reconcile Adjusted EBITDA to Profit from Operations” for a reconciliation of Adjusted EBITDA to profit from operations, the most comparable financial measure calculated and presented in accordance with IFRS.
 
 
In order to properly interpret changes in our consolidated statement of income for the periods presented in the above table, the following changes to our scope of consolidation should be accounted for:

 
·
In 2010, due to the restructuring process (spin-off) of our Spanish free-to-air TV business, and after the sale of Sociedad General de Televisión Cuatro, S.A. on December 28, 2010, we present the results of our Spanish free-to-air TV business under “Loss after tax from discontinued operations” on our consolidated income statement. Furthermore, our operating results for 2010 do not include Cuatro figures.

 
·
The financial statements of Dédalo Grupo Gráfico, S.L. and subsidiaries are fully consolidated in the Group's accounts since April 1, 2012, as the option of the reciprocal purchase and sale agreement for the shares of Dédalo Grupo Gráfico signed by Prisa in 2010 with the other shareholders of Dédalo Grupo Gráfico was exercisable. In June 2012 Prisa announced its decision to exercise the call option for one euro, which involves the acquisition of the remaining 60% of society, reaching a total participation of 100%.

Operating income (revenues)
 
Our total revenues reached €2,665 million in 2012 compared to €2,724 million in 2011. This figure represents a 2.2% decrease.

The increase in revenue from “Sale of audiovisual rights and programs” derived, mainly, from revenue from other platforms thanks to football rights multi-distribution agreements, have been compensated with a decrease in revenue from advertising.

The comparison of 2011 and 2010 revenue is affected by some items recorded both in 2011 and 2010. In 2011, these items for revenues recorded corresponded mainly to the sale of Canal Viajar, and are registered in the audiovisual division. In 2010 they correspond mainly to the Mediapro sentence and the sales of the Tres Cantos headquarters, Sogecine and Sogepaq. Excluding these effects, our total revenues would have decreased by 1.3%.

In 2012, we obtained 34% of our €2.7 billion total revenues from operations outside of Spain (32% in 2011 and 28% in 2010) of which 9% was generated in Brazil, 7% in Portugal and 4% in each of Mexico and Colombia. Sixty-three percent of our 2012 revenues outside of Spain related to Santillana (63% in 2011 and 59% in 2010), and the remainder to Media Capital and the International Radio businesses.

Revenue from subscribers

Revenue from subscribers refers to our revenue from the subscribers to our pay television business Canal+.
 
Our revenue from subscribers increased by 2.2% from 2011 to 2012, from € 887 million to €907 million. This improvement was due to the increase in the average satellite ARPU (€42.6 in 2012, above the €41.1 in 2011), compensated with the fall in the number of satellite subscribers.
 
Revenue from subscribers decreased by 2.8% from 2010 to 2011, from €913 million to €887 million. This fall was due to a smaller number of satellite subscribers (especially in Q2 and Q4, in which there was a weaker Christmas campaign and Canal+ suffered the impact of the FTA broadcasting of football matches such as the Real Madrid–FC Barcelona), by slight variations in ARPU and by the impact of changes in the commercial model of iPlus.
 
In 2012, net subscribers grew by 2,514 (compared to a growth of 53,858 in 2011). The lower growth was mainly due to the worsening of the economic situation, unemployment growth, and the VAT increase. The number of satellite subscribers fell by 36,374 during the year (compared to a fall of 16,671 in 2011). Net subscribers from other platforms grew by 38,888 (compared to a growth of 70,529 in 2011). The number of subscribers with iPlus and Multiplus grew at a good pace: as at December 2012 the number of subscribers with iPlus stood at 587,331, which implies a growth of 84,129 compared to December 2011, and a penetration of 34.2% (compared to the 28.7% as of December 2011). As for Multiplus subscribers, in December 2012 they reached 244,851, which imply a penetration of 14.2%, above the 13.6% as at December 2011.
 
In 2011, the main operating indicators saw an improvement: net subscribers grew by 53,858 in the year (compared to a fall of -61,231 in 2010). Satellite net subscribers fell by -16,671 (compared to a fall of -72,949 in 2010) and net subscribers from other platforms grew by 70,529 (compared to +11,718 in 2010). DTH ARPU remained on average above 41 euros (41.1 euros compared to the 41.7 euros in 2010). Finally, penetration levels of iPlus continue to grow and reached 28.7% by the end of 2011 (compared with the 17.2% of December 2010).
 
 
Revenues from net subscribers from other platforms are registered under “Sales of audiovisual rights and programs”.
 
Advertising sales and sponsorship

The table below provides a detailed breakdown of our advertising revenue by line of business for fiscal years 2012, 2011 and 2010.

 
 
FY2012
 
 
FY2011
 
 
% Change
FY’11 to’12
 
 
FY2010
 
 
% Change
FY’10 to’11
 
 
 
(thousands of euros)
 
Audiovisual
 
 
133,099
 
 
 
153,554
 
 
 
(13.3
%)
 
 
166,799
 
 
 
(7.9
%)
Prisa Televisión
 
 
22,233
 
 
 
16,478
 
 
 
34.9
%
 
 
17,182
 
 
 
(4.1
%)
Media Capital
 
 
110,866
 
 
 
137,076
 
 
 
(19.1
%)
 
 
149,617
 
 
 
(8.4
%)
Radio
 
 
308,975
 
 
 
325,609
 
 
 
(5.1
%)
 
 
342,936
 
 
 
(5.1
%)
Radio in Spain
 
 
169,660
 
 
 
204,372
 
 
 
(17.0
%)
 
 
225,037
 
 
 
(9.2
%)
International radio
 
 
139,167
 
 
 
120,835
 
 
 
15.2
%
 
 
114,607
 
 
 
5.4
%
Music
 
 
226
 
 
 
633
 
 
 
(64.3
%)
 
 
3,448
 
 
 
(81.6
%)
Consolidation adjustments
 
 
(78
)
 
 
(231
)
 
 
(66.2
%)
 
 
(156
)
 
 
(48.1
%)
Press
 
 
117,405
 
 
 
147,845
 
 
 
(20.6
%)
 
 
172,771
 
 
 
(14.4
%)
El País
 
 
82,948
 
 
 
107,556
 
 
 
(22.9
%)
 
 
126,271
 
 
 
(14.8
%)
AS
 
 
19,103
 
 
 
20,358
 
 
 
(6.2
%)
 
 
23,747
 
 
 
(14.3
%)
Cinco Días
 
 
6,711
 
 
 
8,111
 
 
 
(17.3
%)
 
 
8,736
 
 
 
(7.2
%)
Magazines
 
 
8,792
 
 
 
12,230
 
 
 
(28.1
%)
 
 
14,275
 
 
 
(14.3
%)
Consolidation adjustments
 
 
(149
)
 
 
(410
)
 
 
63.7
%
 
 
(258
)
 
 
(58.9
%)
Digital
 
 
724
 
 
 
2,203
 
 
 
(67.1
%)
 
 
890
 
 
 
147.5
%
Other
 
 
65
 
 
 
57
 
 
 
14.0
%
 
 
292
 
 
 
(80.5
%)
Consolidation adjustments
 
 
(6,900
)
 
 
(9,205
)
 
 
25.0
%
 
 
(9,986
)
 
 
(7.8
%)
Total
 
 
553,368
 
 
 
620,063
 
 
 
(10.8
%)
 
 
673,702
 
 
 
(8.0
%)
 
Our advertising revenue decreased by 10.8% from 2011 to 2012, from €620 million to €553 million and represented 20.8% of total revenue in 2012 (22.8% in 2011). Latin American advertising grew +14.9% (25.4% of all advertising revenues). The advertising market in Spain and Portugal (in Radio, TV and written press) continued showing significant falls during 2012, in a negative economic environment in which consumption decreases continued accelerating. Advertising revenues in Iberia fell by 17.1% year on year and accounted for 15.5% of consolidated revenues.

Radio revenue decreased by 5.1%, mainly due to lower advertising revenues in Spain (-17.0%) which was partly offset by strong growth of advertising revenues in Latam (+15.2%). Advertising revenue grew in Colombia (+19.6%), Chile (+11.7%), and Mexico (+12.3%).

Press revenue decreased by 20.6% (El País -22.9% and AS -6.2%). Advertising in written press fell by 26.5%. Revenues on digital advertising grew by 17.9% in 2012 and represented 19.8% of total advertising revenues in this division.
 
Total advertising revenues coming from our Digital activity increased by 15.1% in 2012 and reached €34.5 million. The Press business grew 17.9%, as.com increased its advertising revenues by 11.3%, and ElPais.com increased by 20.0%. Radio increased by 38.9%.
 
 
Advertising revenue decreased by 8.0% from 2010 to 2011, from €674 million to €620 million and represented 22.8% of total revenue in 2011 (24% in 2010), out of which a 20% come from Latin America.

Radio revenue decreased by 5.1%, international radio advertising grew by 5.4%, partly compensated by worse performance in Spain, which fell by 9.2%.

In 2011, in Spain’s advertising market, Press was the hardest-hit sector. As a reflection of this, advertising revenues for Press fell 14.4% in the year (with El País -14.8% and As -14.3%).

By geography, 2011 advertising revenues coming from the international area decreased by 2.4% (although they increased by 6.3% in Latin America), and advertising revenues coming from Spain decreased by 11.7%.

Advertising revenue in the digital area totaled €31.01 million, a 19.1% increase over 2010 (Press: +11.7%; Radio: +37.4%). Within Spain’s advertising market, the online segment is the only one to have recorded significant growth in 2011.

Sales of books and training materials

Revenue from the sale of books and training materials reached €719 million in 2012;  3.0% growth versus 2011.

As for the geographical contribution, we would highlight:
 
 
-
Growth in the Northern Area (+17.6%), with strong improvements in practically all the countries where Santillana is present: Mexico (+16.3%) (14.8% in local currency) due to good performance of Education Systems (+96.2%) (80.1% in local currency), Ecuador (+24.3%) (12.9% in local currency), Puerto Rico (+34.3%) (19.9% in local currency), Dominican Republic (+44.3%) (35.4% in local currency) and USA (+42.7%) (29.6% in local currency). Venezuela showed some signs of weakness but stood flat compared to 2011 (1.8%), but showed an important improvement in the fourth quarter standalone compared to the first nine months of the year.
 
-
The Southern Area of Latin America remained flat (+1.6%) with the negative consequences of the Education cycle in Brazil (-16.7%) (-11.4% in local currency), offsetting a solid performance of most countries: Argentina (+21.0%) (23.4% in local currency), Central America (+25.4%) (20.2% in local currency), Colombia (+11.5%) (1.1% in local currency), Peru (+133.0%) (121.7% in local currency), Bolivia (+16.3%) (11.3% in local currency), Uruguay (+22.2%) (18.1% in local currency) or Chile (+19.9%) (13.5% in local currency).
 
-
Spain saw its revenues fall by 8.9%, including a fall of revenues in Education (-5.4%) and a fall of 23.6% in Ediciones Generales (General Publishing).

Revenue from the sale of books and training materials increased by 11.5% from 2010 to 2011, from €626 million to €698 million.

All the Southern Area countries (which grew by 19.5%) registered strong growth in their educational campaigns: Brazil (23.2%) (22.1% in local currency), Argentina (17.2%) (30.4% in local currency), Colombia (12.2%) (12.0% in local currency) and Chile (11.8%) (7.3% in local currency).

In the Northern Area, Mexico increased its revenues from the sale of books by 17.6% (22.4% in local currency) and Venezuela by 27.9% (26.0% in local currency). In Spain, revenues from the sale of books declined by 3.0% in 2011, which resulted from the weakness of Ediciones Generales (general publishing) down by 31.7%, mostly offset by the strong Education campaign in Spain (7.5% in 2011).
 
In 2011 revenues from institutional sales increased 22.3% and regular sales increased 8.5%.

Newspaper and magazine sales

The table below presents detailed circulation statistics for each of our three principal newspapers for the years 2010 through 2012:

 
 
FY 2012
 
 
FY 2011
 
 
% change
 
 
FY 2010
 
 
% change
 
El País
 
 
324,814
 
 
 
365,118
 
 
 
(11.0
%)
 
 
370,080
 
 
 
(1.3
%)
AS
 
 
180,014
 
 
 
198,758
 
 
 
(9.4
%)
 
 
211,553
 
 
 
(6.0
%)
Cinco Días
 
 
31,120
 
 
 
31,327
 
 
 
(0.6
%)
 
 
31,337
 
 
 
(0.0
%)
 
Source: OJD. Unaudited OJD as of November 2012 and internal sources
 
 
Revenue from newspaper and magazine sales decreased by 13.3% from 2011 to 2012, from €169 million to €146 million; and by 6.5% from 2010 to 2011, from €180 million to €169 million. The declines in revenue during these periods resulted from a decrease in sales that affected the overall traditional print business.

Circulation in El País fell by 11.0%, AS fell by 9.4% and Cinco Días by 0.6%. In addition to the weakness in circulation shown by the written press sector, circulation at El País during 2011 was supported by a promotion which has not taken place in 2012.

El País saw its circulation figures in 2011 decline by 1.3% (compared to the 5.5% fall in 2010), AS’ circulation fell by 6.0% (compared to a 1.7% fall in 2010), and Cinco Días saw its circulation remain stable (compared to a 6% fall in 2010).

Sales of add-ons and collections

Revenues generated by the sale of add-ons and collections include sales items and additional products, such as books, CDs or DVDs, sold with our newspapers. These items are occasionally provided at no cost to the consumer.

Revenue from add-ons decreased by 11.4% from 2011 to 2012, from €23 million to €21 million, and by 25.2% from 2010 to 2011, from €31 million to €23 million. The market of add-ons and collections is currently saturating due to the fact that all newspaper offer similar promotions.

Sales of audiovisual rights and programs

Our revenues generated by the sale of audiovisual rights and programs increased by 42.3% from 2011 to 2012, from €88 million to €126 million mainly due to the revenue derived from football rights multi-distribution agreements with other operators (See Item 4B “Our Business”).

Audiovisual production revenues remained stable at €88 million in 2011 compared to 2010.

Other services

Revenue from other services increased by 3.1% from 2011 to 2012, from €118 million to €121 million; and decreased by 9.9% from 2010 to 2011, from €131 million to €118 million.

Other services mainly include revenues generated by e-commerce, call tv,  services of telephone marketing, organization of events and printing services  since April 1, 2012 as Dédalo started to fully consolidate.

Income from fixed assets

No material income from the sale of noncurrent assets was generated during 2012.

In 2011, income from non-current assets mainly includes the result of the sale of Canal Viajar and the dissolution of Canal+ Investment Inc. made by Prisa Televisión, amounting to €12 million and €5 million respectively.

Income from the sale of noncurrent assets amounted to €33 million in 2010. This included the capital gains from the sale of the Canal+ building in Tres Cantos (€20 million) and from the sale of Sogecine and Sogepaq (€11 million). The sale price of the Canal+ building amounted to €80 million, and a lease agreement with the buyer was signed for the next 20 years.

Operating expenses

Our operating expenses including depreciation and amortization (€2,840 million) increased by 2.9% compared to 2011.The comparison of 2012 and 2011 was affected by important items such as redundancies due to the efficiency plans undertaken since December 2010 for an amount of €52 million (compared to a €77 million 2011), the provision related to the ONO agreement (€54 million), the consolidation of Dédalo through Global Consolidation since April 1, 2012 (previously accounted for under the equity method) for amount of €18 million and goodwill impairment charges for amount of €301 million (compared to a €253 million in 2011). Excluding these items, our total expenses would have decreased by 1.2%.

In 2011 operating expenses including depreciation and amortization reached €2,760 million compared to €2,487 million in 2010, an 11.0% increase.

Similar to in 2012, the comparison of 2011 and 2010 expenses was affected by some items recorded in both 2011 and 2010. In 2011, this items for expenses corresponded to redundancies from the efficiency plan which hawse have undertaken since December 2010 as well as other items such as the FC Barcelona decision. In 2010 these items mainly related to renegotiations with suppliers which were recorded in the Audiovisual division. Excluding this effect, our total expenses would have decreased by 0.7%.
 
 
Cost of materials used

Cost of materials used mainly includes the cost of audiovisual rights and material for printing activities.

In 2012, cost of materials used (€889 million) increased by 7.9% compared to 2011. Cost of materials used decreased by 1.8% from 2010 to 2011, from €839 million to €824 million.

In 2012, with the new agreement for the exploitation of football rights there was an increase in the cost of football rights for Canal+ mainly due to increased costs derived from the agreements signed with the football clubs for the coming three seasons, and the new method of commercialization which includes distribution to third parties and higher exclusivity (See Item 4B “Our Business”).

Staff costs
 
The table below sets forth staff costs for fiscal years 2012, 2011 and 2010.

 
 
For the Years Ended December 31,
 
 
 
2012
 
 
2011
 
 
2010
 
 
 
(thousands of euros)
 
Wages and salaries
 
 
443,838
 
 
 
483,272
 
 
 
477,213
 
Employee benefit costs
 
 
89,243
 
 
 
93,667
 
 
 
94,524
 
Termination benefits
 
 
52,098
 
 
 
77,213
 
 
 
1,055
 
Share-based payment costs
 
 
—
 
 
 
—
 
 
 
—
 
Other employee benefit costs
 
 
19,778
 
 
 
20,170
 
 
 
19,289
 
Total
 
 
604,957
 
 
 
674,322
 
 
 
592,081
 

We have been undertaking an efficiency plan with the goal of right-sizing the Group, rationalizing resources, and homogenizing and centralizing Group-wide processes. This restructuring plan involves a range of measures, such as outsourcing, a voluntary severance incentive program, and early retirements.

In 2012, redundancies reached € 52.1 million (€77.2 million in 2011), the contribution by business area was Audiovisual: €1.9 million (€18.9 million in 2011), Education: €2.9 million (€3.5 million in 2011), Radio: €8.7 million (€35.4 million in 2011), Press: €29.3 million (€14.8 million in 2011) and Others: €9.3 million (€4.6 million in 2011).
 
Outside services

The table below sets forth outside services for fiscal years 2012, 2011 and 2010.

 
 
For the Years Ended December 31,
 
 
 
2012
 
 
2011
 
 
2010
 
 
 
(thousands of euros)
 
Independent professional services
 
 
130,414
 
 
 
174,877
 
 
 
170,877
 
Leases and fees
 
 
136,345
 
 
 
138,195
 
 
 
126,075
 
Advertising
 
 
99,080
 
 
 
114,768
 
 
 
111,935
 
Intellectual property
 
 
59,774
 
 
 
67,899
 
 
 
55,054
 
Transport
 
 
56,947
 
 
 
63,913
 
 
 
68,919
 
Other outside services
 
 
260,417
 
 
 
229,161
 
 
 
261,640
 
Total
 
 
742,977
 
 
 
788,813
 
 
 
794,500
 
 
 
Change in allowances, write-downs and provisions

The detail of the “Change in allowances, write-downs and provisions” is as follows:
 
   
For the Years Ended December 31,
  
   
2012
    
2011
    
2010
  
     
(thousands of euros)
  
Provision for bad debt
    
80,563
      
27,947
      
24,744
  
Change in inventory write-downs
    
20,016
      
16,723
      
12,480
  
Change in provision for sales returns
    
(385)
      
501
      
(14)
  
Total
    
100,194
      
45,171
      
37,210
  

In May 2012, the Group reached an agreement with Cableuropa, S.A.U. (ONO) pursuant to which €54 million was recovered by the Group (half of the total €108,748 thousand paid) which settled the litigation that Prisa had with ONO (see Item 8A “Consolidated Statements and Other Financial Information”). As a consequence of this deal, we recorded the same amount under the “Changes in allowances, write-downs and provisions” which corresponds to the amount that was not recovered.
 
Impairment of goodwill

In 2012, we recorded €301 million for goodwill impairments which corresponded mainly to the DTS goodwill impairment. This impairment was due to the worse economic environment, the decrease in the Pay TV market in general, the VAT increase, and the change in the commercialization model of football (whose incremental costs we will seek to offset with revenues from multi-distribution agreements and market growth), that imply that more time will be necessary to reach the targeted level of subscriber base implicit in the profitability plan of the company.
 
During 2011, we recorded €253 million for goodwill impairments which corresponded mainly to an increase of country risk and decline of the advertising market of Media Capital and to changes in the management of commercial activities of advertising in Prisa Brand Solutions.

In 2010, an impairment loss of €50 million was recognized on the consolidated income statement for Media Capital's goodwill. This impairment was mainly due to the increase in the applicable discount rate resulting from the increase in country risk for investments in Portugal and the decision to cease video distribution activity.
 
Profit from operations (EBIT)

Profit from operations reached a loss of €175 million compared to a loss of €36 million in 2011. The EBIT margin was -6.6% compared to -1.3% in 2011.

In Audiovisual, EBIT decreased by 46.3%, with a margin of 5.2% mainly due to the  provision related to the ONO agreement. In Education, EBIT improved by 3.8% with a margin of 14.7%. In Radio, EBIT decreased by 7.0%, with a margin of 6.8%. In Press, EBIT reached a loss of €52.65 million compared to a profit of €16.48 million in 2011, mainly due to redundancies.

EBIT amounted to a loss of €36 million in 2011 compared to a profit of €336 million in the previous year, which is mainly explained by the items described above and the impairment of goodwill registered in 2011.

In Audiovisual, EBIT decreased by 37.6% with a margin of 9.8%. In Education, EBIT decreased by 1.4% with a margin of 14.4%. In Radio, EBIT decreased by 72.0% with a margin of 6.7%. In Press, EBIT decreased by 61.0% with a margin of 4.2%.

Adjusted EBITDA

Readers should note that Adjusted EBITDA is a supplemental measure of performance that is not required by, or presented in accordance with IFRS. It is not a measurement of financial performance under IFRS and should not be considered as (i) an alternative to operating or net income or cash flows from operating activities, in each case determined in accordance with IFRS, (ii) an indicator of cash flow or (iii) a measure of liquidity. See “—Our Business—Adjustments to Reconcile Adjusted EBITDA to Profit from Operations” for a reconciliation of Adjusted EBITDA to profit from operations, the most comparable financial measure calculated and presented in accordance with IFRS.

In 2012, our Adjusted EBITDA was €427 million, a decrease of 2.3% compared with the previous year.
 
 
In Audiovisual, Adjusted EBITDA decreased by 0.7% with a margin of 18.5%. In Education, Adjusted EBITDA increased by 8.2% with a margin of 25.1%. In Radio, Adjusted EBITDA increased by 5.3% with a margin of 15.9%. In Press, Adjusted EBITDA decreased by 134.4% with a margin of -4.4%.

In 2011, Adjusted EBITDA was €437 million, a decrease of 26.7% mostly due to the items described above.
 
In Audiovisual, Adjusted EBITDA decreased by 24.0% with a margin of 18.9%. In Education, Adjusted EBITDA increased by 2.3% with a margin of 23.6%. In Radio, Adjusted EBITDA decreased by 52.2% with a margin of 13.7%. In Press, Adjusted EBITDA decreased by 30.8% with a margin of 10.3%.

Net financial results

In 2012, financial results improved by €21.06 million  (-10.8%), mainly due to the fall of interest on debt of €11.02 million (8.8%). Additionally, as a consequence of the elimination of the obligation to pay in cash the preferred dividend of the non-voting B shares, the financial liability recognized in relation with that obligation was reclassified to share premium in June, 2012. Consequently in 2012 there were lower financial expenses registered for the update of that liability compared to 2011.
 
In 2011, net financial results amounted to an expense of €195 million, compared to €159 million in 2010. This result included €125 million of interest on debt and other financial results as the expenses generated from updating the liability registered for the present value of the dividend owed to holders of the convertible non-voting shares.

Result of companies accounted for using the equity method

In 2012, result of companies accounted for using the equity method include the estimate of the 17.34% net result of Mediaset España, as well as the results of V-Me, Le Monde and distributors.
 
In 2011, result of companies accounted for using the equity method mainly included our 17.34% share in the result of Mediaset España, as well as the results of the Printing business and V-Me.

Income tax

Income tax provisions for 2012 reached an income of €20 million.

Income tax provisions for 2010 and 2011 amounted to an expense of €148 million and €73 million, respectively.

In 2011, the income tax expense includes a €183 million provision, which was recorded pursuant to prudential criteria, to face a probable unfavorable resolution in certain fiscal matters still under discussion, mainly the tax deduction for exporting activities. All the necessary legal processes surrounding these claims still remain open.
 
Results from discontinued activities

No material results from discontinued activities were generated during 2012 or 2011.

In 2010, results from discontinued activities included mainly the results of Cuatro (€349 million), adjusted by the goodwill associated to that activity (€377 million) as a consequence of its sale to Telecinco.

Non-controlling interest

Earnings attributable to non-controlling interests are mainly explained by DLJ’s 25% share in Santillana, the 44% minority interest in Canal+ and the 26.51% minority interests in the Radio business.
 
Impact of Foreign Currency Fluctuations

We are exposed to foreign exchange rate risk from assets and liabilities denominated in the currencies of the different countries in which we develop our activities, mainly the U.S. dollar and Brazilian Real. We manage currency exposures with foreign exchange contracts that have maturities of up to 12 months as a maximum. The counterparties to these contracts are highly rated financial institutions (see “Quantitative and Qualitative Disclosures About Market Risk”).

Critical Accounting Policies

The preparation of financial statements in conformity with IFRS requires our management to make estimates and assumptions that affect the amounts reflected in its consolidated financial statements and accompanying notes. We base our estimates on historical experience, where applicable, and other assumptions that we believe are reasonable under the circumstances. Actual results may differ from those estimates under different assumptions or conditions.
 
 
We consider an accounting estimate to be critical if:

 
·
it requires us to make assumptions because information was not available at the time or it included matters that were highly uncertain at the time we were making our estimate; and

 
·
changes in the estimate or different estimates that we could have selected may have had a material impact on our financial condition or results of operations.

The various policies that are important to the portrayal of our financial condition, results of operations and cash flows include:

 
·
goodwill;

 
·
deferred taxes;

 
·
inventories; and

 
·
revenue and expense recognition.
 
Accounting for Goodwill

Any excess of the cost of the investments in the consolidated companies over the corresponding underlying carrying amounts at the date of acquisition or at the date of first time consolidation, provided that the acquisition is not after control is obtained, is allocated as follows:

 
·
if it is attributable to specific assets and liabilities of the companies acquired, by increasing the value of the assets whose market values were higher than the carrying amounts at which they had been recognized in their balance sheets and whose accounting treatment was similar to that of the same assets of the Group.

 
·
if it is attributable to non-contingent liabilities, by recognizing it in the consolidated balance sheet if it is probable that the outflow of resources to settle the obligation embody economic benefits and the fair value can be measured reliably.

 
·
if it is attributable to specific intangible assets, by recognizing it explicitly in the consolidated balance sheet provided that the fair value at the date of acquisition can be measured reliably.
 
 
 
·
the remaining amount is recognized as goodwill.
 
Changes in an ownership interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions. Once control is obtained, additional investments in subsidiaries and decreases in ownership interest without the loss of control do not affect the amount of goodwill. When a parent loses control of a subsidiary, it derecognizes the carrying amount of assets (including any goodwill) and liabilities and the share of non-controlling interests, recognizing the fair value of the consideration received and any residual ownership in the subsidiary. The remaining difference is taken to profit or loss in the income statement for the year.

The assets and liabilities acquired are measured provisionally at the acquisition date, and the provisional amounts are reviewed within a period of year from the acquisition date. Therefore, until the definitive fair value of the assets and liabilities has been established, the difference between the acquisition cost and the carrying amount of the company acquired is provisionally recognized as goodwill.
 
Goodwill is considered to be an asset of the company acquired and, therefore, in the case of a subsidiary with a functional currency other than the euro, it is valued in that subsidiary’s functional currency and is translated to euros using the exchange rate prevailing at the balance sheet date.

Goodwill acquired on or after January 1, 2004 is measured at acquisition cost, and that acquired earlier is recognized at the carrying amount at December 31, 2003 in accordance with Spanish GAAP. In both cases, goodwill has not been amortized since January 1, 2004, and at the end of each reporting period, goodwill is reviewed for impairment (i.e., a reduction in its recoverable amount to below its carrying amount) and any impairment loss is recognized.
 
 
On disposal of a subsidiary, associate or jointly controlled entity, the attributable amount of goodwill is included in the determination of the gain or loss on disposal.

We consider the business lines described below as our primary cash generating units for purpose of goodwill allocation. The business lines were established on the basis of our organizational structure at 2012 year-end, taking into account the nature of the goods and services offered and the customer segments at which they are targeted.

Our operations are divided into four main businesses:

●
Audiovisual, which derives revenue mainly from the subscribers to the Canal+ platform, the broadcasting of advertising and audiovisual production;

●
Education, which includes primarily the sale of general publishing, educational books and education system;

●
Radio, which includes primarily the broadcasting of advertising and the organization and management of events and the provision of other supplementary services; and

●
Press, which groups together mainly the activities relating to the sale of newspapers and magazines, advertising, promotions and distribution.
 
Details, by business segment, of the goodwill relating to our fully and proportionately consolidated companies and of the changes therein in 2012 are as follows.

 
 
Balance at
12/31/11
 
 
Translation
adjustment
 
 
Impairment
 
 
Changes in
scope of
consolidation
 
 
Balance at
12/31/12
 
 
 
(thousands of euros)
 
Radio
 
 
157,205
 
 
 
(449
)
 
 
(6,955)
 
 
 
-
 
 
 
149,801
 
Education
 
 
73,671
 
 
 
20,167
  
 
 
-
 
 
 
-
 
 
 
93,838
 
Audiovisual(1)
 
 
3,408,469
 
 
 
-
 
 
 
(294,327
)
 
 
(3,796)
 
 
 
3,110,346
 
Other
 
 
5,732
 
 
 
-
 
 
 
-
  
 
 
-
 
 
 
5,732
 
Total
 
 
3,645,077
 
 
 
19,718
  
 
 
(301,282
)
 
 
(3,796)
 
 
 
3,359,717
 
 
(1)
Includes the goodwill of Prisa Televisión and Media Capital.
 
Impairment Tests

At the end of each reporting period, or whenever there are indications of impairment, we test goodwill for impairment to determine whether it has suffered any permanent loss in value that reduces its recoverable amount to below its carrying amount.

As defined in paragraph 6 of IAS 36, an asset’s cash-generating unit is the smallest group of assets that includes the asset and generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. As required by the Standard in identifying whether cash inflows from an asset or group of assets are largely independent of the cash inflows from other assets (or groups of assets), we consider various factors, including how management monitors the entity’s operations and businesses, individual locations and districts and how our management makes decisions about continuing or disposing of the entity’s assets and operations.
 
The majority of our goodwill corresponds to the “Audiovisual” operating segment and arose from the acquisitions of Prisa Televisión and Media Capital. After the disposal of Cuatro in 2010, Prisa Televisión only comprises one cash-generating unit, Canal+. The goodwill arising from the Media Capital acquisition has been substantially allocated to a single cash-generating unit, also in the “Audiovisual” operating segment.

The remainder of the goodwill balance has been allocated mainly to a number of cash-generating units that coincide with separate legal entities and that have been tested for impairment individually or in groups of entities. The distribution of these individual cash-generating units/entities by operating segments is as follows:

·
The “Radio” operating segment includes the following cash-generating units/entities: GLR Chile Ltda. and subsidiaries (this entity has a number of cash-generating units that have been grouped for impairment test purposes), Sistema Radiópolis, S.A. de C.V. and subsidiaries (this entity has a number of cash-generating units that have been grouped for impairment test purposes) and Prisa Radio, S.L. (this entity has a number of cash-generating units in Spain that have been grouped for impairment test purposes).
 
 
·
The “Education” operating segment includes the following cash-generating units/entities: Editora Moderna, Ltda. and Editora Objetiva, Ltda.

References in this document to a cash-generating unit to which goodwill is allocated also refer to a group of cash-generating units to which goodwill is allocated.

To perform the aforementioned impairment test, the goodwill is allocated to one or more cash-generating units. The recoverable amount of each cash-generating unit is the higher of value in use and the net selling price that would be obtained from the assets associated with the cash-generating unit. In the case of the main cash-generating units to which goodwill has been allocated, their recoverable amount is their value in use.

Value in use was calculated on the basis of the estimated future cash flows based on the business plans most recently approved by management. These business plans include the best estimates available of income and costs of the cash-generating units using industry projections and future expectations.

These projections cover the following five years and include a residual value that is appropriate for each business, applying a constant expected growth rate ranging from 0% to 2.5% depending on the business analyzed.

In order to calculate the present value of these flows, they are discounted at a rate that reflects the weighted average cost of capital employed adjusted for the country risk and business risk corresponding to each cash-generating unit. Therefore, in 2012 the rates used ranged from 7.2% to 15.4% depending on the business being analyzed. The range used for the most relevant impairment tests was from 8.0% to 10.0%.

If the recoverable amount of a cash-generating unit (group of cash-generating units) is less than its carrying amount, the carrying amount of the cash-generating unit (group of cash-generating units) will be reduced to its recoverable amount. That reduction is an impairment loss.

In case the goodwill of a company with minority interests was fully recognized in the consolidated financial statements of the parent company, the assignment of the corresponding impairment between the parent company and the minority interests is made in accordance with their participation in the profit and losses of the company, that means in accordance with the participation in the share capital of the company. In accordance with IFRS 3, the Group maintains 100% of the goodwill of the pay TV business, as sales of minority stakes in previous years did not imply a loss of control. Consequently, the Group takes into account100% of future cash flows of this business in the analysis of the goodwill impairment test and therefore the potential impairment of the goodwill will be assigned to the parent company (Prisa) and minority interests according with their stakes in DTS share capital, as there is no goodwill corresponding to minority interest not recorded in the consolidated financial statements of the Group.
 
Should any impairment loss arise for a cash-generating unit (group of cash-generating units) in future periods, the loss will first reduce the carrying amount of any goodwill allocated to the cash-generating unit (group of cash-generating units), and any loss in excess of goodwill would be allocated to the other assets of the cash-generating unit (group of cash-generating units) pro rata on the basis of the carrying amount of each asset in the cash-generating unit (group of cash-generating units).

Prisa Televisión

According to five-year forecasts, management has based its value-in-use calculations for Prisa Televisión’s audiovisual business on the following:

Variations in the number of subscribers and ARPU (average revenue per user) – The combination of these variables make up the bulk of revenues from Prisa Televisión’s business (84.6% of the total in 2012). In its assumptions, management factored in any increase in the numbers of subscribers of the offering that DTS is distributing by satellite and internet as a result of not only a recovery in the number of new subscribers, but also a decrease in cancellation rates. In addition, DTS signed content distribution agreements in 2012 with the leading telecommunications operators, allowing it to raise its growth forecasts for other platforms.

Based on the marketing of new pay channels (e.g. soccer, bullfighting), together with the offering of a new, more complete television service with high-definition channels and 3D broadcasts, Prisa Televisión is projecting growth in its revenue.

Increase in programming costs – In its projections, management has estimated the future consequences of commitments acquired with service and content providers, assuming where applicable, that those services will continue to be provided and that it will have access to the same high-quality content as now. In this sense, it will take some time to absorb the initial increase in costs related to the change in the soccer model for the next seasons. Our estimates of operating costs reflect streamlining plans begun in prior years, as well as growth plans that should strengthen and transform certain business areas.
 
 
Media Capital

The main variables used by management to determine the value in use of Media Capital’s audiovisual business were as follows:

Evolution of the audience share and advertising share- management predicts growth, albeit small, in both audience share and advertising share in the future projections of TVI, Media Capital’s free-to- air TV channel and the current market leader, which has maintained its market share in recent years.
 
Variations in the advertising market – management has adjusted its projections for the advertising market to the new macroeconomic environment in Portugal. Consequently, it has estimated a lower market base following the drop in advertising in recent years and modest growth from 2014, in line with the trends highlighted in outside studies.
 
Results of the impairment tests

 
- Prisa Televisión

In 2012, operating indicators for Prisa Televisión’s audiovisual business were affected by a number of factors, mainly the change in the model for marketing soccer for the coming seasons. The new agreement entails high quality pay TV content at the expense of free-to-air broadcasts of soccer matches, which in the medium term should boost penetration of the pay TV service in Spain.

However, it will take some time to absorb the initial increase in costs related to the new soccer model. These incremental costs will be offset by a combination of the wholesale of soccer broadcasting rights to other pay TV operators and a gradual increase in the customer base.

Meanwhile, the economic downturn and decline in demand in Spain, coupled with the increase in the VAT for pay TV from 8% to 21%, have hurt subscriber numbers, meaning it will take longer to reach the subscriber base targets implied in the profitability plan for the new soccer model.

As a result, we recorded an impairment loss of €294 million.
 
 
-
Media Capital

In 2011, it is clear that the economic situation in Portugal has not only brought about a rise in the discount rate, owing to the factoring in of the country risk in that rate, but it has also affected trends in the advertising and other markets and growth prospects of businesses located in the country. Consequently, an impairment loss of €219 million was recognized on the accompanying consolidated income statement. At December 31, 2012, the carrying amount of Media Capital’s goodwill was similar to its value in use.

In 2010, an impairment loss of €50 million was recognized on the accompanying consolidated income statement for Media Capital’s goodwill. This impairment was mainly due to the increase in the applicable discount rate resulting from the increase in country risk for investments in Portugal and the decision to cease video distribution activity.

 
-
Other impairment tests

In 2012, owing to the struggles of the music and record industry in general, an impairment of €5,955 thousand was recognized on RLM, S.A. and Merchandising On Stage, S.L.’s goodwill in the accompanying consolidated income statement.

In 2011, due to new management model of advertising commercialization and the general difficulties in the advertising market, an impairment loss of €33,944 thousand was recognized on the accompanying consolidated income statement for Prisa Brand Solutions’ goodwill.

According to available estimates and projections, the expected future cash flows attributable to the cash-generating units or groups of cash-generating units to which goodwill is allocated indicate that the net value of each goodwill allocated at December 31, 2012 and 2011 may be recovered.
 
 
Sensitivity to changes in key assumptions

- Prisa Televisión

Due to the impairment of goodwill recognized during 2012, the carrying amount is quite similar to value in use.

In case objectives underlying the business plan elaborated by the managers were to take place with a delay of two years, considered in addition to the delay already included in the business plan that lead to register the impairment this year, impairment would increase by €127 million.

Additionally, an adverse change in key valuation assumptions individually considered might lead to recognition of impairment at a later date. Specifically, a 5.0% decrease in ARPU for the following five years would generate an additional impairment of goodwill of approximately €144 million. For a 5.0% decrease in subscriber numbers for the following five years, impairment would increase by €99 million. A 0.5% increase in the discount rate would lead to additional impairment of €258 million.
 
- Media Capital

In order to determine the sensitivity of value in use calculations to changes in the key assumptions, an analysis was carried out on the following changes in the key assumptions without producing additional impairment losses on the goodwill allocated:

 
-
Increase of 0.5% in the discount rate.
 
-
Decrease of 0.5% in the expected growth rate from the fifth year.
 
-
Decrease of 1% in advertising share.
 
Deferred Taxes

Deferred tax assets arise from temporary differences defined as the amounts expected to be payable or recoverable in the future which result from differences between the carrying amounts of assets and liabilities and their tax bases, as well as non-deductible costs which will be deductible later on. These amounts are measured at the tax rates that are expected to apply in the period when the asset is realized or the liability is settled.

Deferred tax assets may also arise from the carryforward of unused tax loss and unused tax credits.

Deferred tax assets are recognized for temporary differences to the extent that it is considered probable that the consolidated companies will have sufficient taxable profits in the future against which the deductible temporary difference can be utilized, and the deferred tax assets do not arise from the initial recognition of an asset or liability that is not a business and, at the time of the transaction, affects neither accounting profit (loss) nor taxable profit (loss). The other deferred tax assets (carryforward of tax losses and unused tax credits) are only recognized if it is considered probable that the consolidated companies will have sufficient future taxable profits against which they can be utilized.

The deferred tax assets and liabilities recognized are reassessed at the end of each reporting period in order to ascertain whether they still exist, and the appropriate adjustments are made on the basis of the findings of the analyses performed and the tax rate then in force.

Our management has a long-term business plan, which it has kept updated and in which, among other things, matters relating to the Group’s future strategy, studies by independent third parties, experiences of other operators similar to the Group in neighboring countries, and the proven experience in recent years of the Prisa Televisión Group in the pay TV market in Spain were taken into account.

We recognized tax loss carryforwards in respect of losses incurred in launching the satellite pay TV business. The most significant losses in this respect were those recognized by DTS Distribuidora de Televisión Digital, S.A. prior to its inclusion in the Prisa Televisión Group. The Group also recognized tax loss carryforwards in respect of losses incurred in the integration of DTS Distribuidora de Televisión Digital, S.A. The recovery thereof is reasonably assured on the basis of the recent performance of the pay TV businesses, the forecasts contained in the Prisa Televisión Group's business plan.
 
Among the deferred tax assets the most significant amounts correspond to (i) tax credits arising from tax losses, (ii) tax credits for investments and (iii) arising from restrictions on the deductibility of financial expenses from Prisa’s tax consolidation group, Prisa Radio’s tax consolidation group and DTS Distribuidora Televisión Digital, S.A.’s tax consolidation group. These deferred assets were recognized in accordance with the criteria set forth in valuation regulations.
 
There are no significant amounts arising from temporary differences associated with retained earnings of subsidiaries in jurisdictions where different tax rates are applied and, therefore, no deferred tax liabilities were recognized in this connection.
 
 
There are no significant temporary differences arising from investments in subsidiaries, branches, associates or joint ventures that generate deferred tax liabilities.
 
The following table shows the origin and amount of the deferred tax assets recognized at 2011 and 2012 year-end.

DEFERRED TAX ASSETS ARISING FROM
 
 
12/31/2012
 
 
Additions
 
 
Transfers
 
 
Disposals
 
 
12/31/2011
 
Advance Payment Tax Assessments
    
26,532
      
26,532
      
-
      
-
          
Non-deductible financial expenses
    
13,209
      
13,209
      
-
      
-
          
Non-deductible provisions
 
 
12,298
 
 
 
11,107
 
 
 
-
 
 
 
(3,247
)
 
 
4,438
 
Non-capitalizable assets
 
 
37
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
37
 
Tax loss carryforwards
 
 
906,126
 
 
 
98,948
 
 
 
(12,017)
 
 
 
(3,435
)
 
 
822,630
 
Unused tax credits recognized
 
 
345,593
 
 
 
37,501
 
 
 
-
  
 
 
(8,494
)
 
 
316,586
 
Other
 
 
40,074
 
 
 
7,265
 
 
 
12,017
  
 
 
(2,211
)
 
 
23,003
 
Total
 
 
1,343,869
 
 
 
194,562
 
 
 
-
 
 
 
(17,387
)
 
 
1,166,694
 

DEFERRED TAX ASSETS ARISING FROM
 
 
12/31/2011
 
 
Additions
 
 
Transfers
 
 
Disposals
 
 
12/31/2010
 
Non-deductible provisions
 
 
4,438
 
 
 
2,218
 
 
 
-
 
 
 
(6,623
)
 
 
8,843
 
Non-capitalizable assets
 
 
37
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
37
 
Tax loss carryforwards
 
 
822,630
 
 
 
44,386
 
 
 
12,936
 
 
 
(4,109
)
 
 
769,417
 
Unused tax credits recognized
 
 
316,586
 
 
 
83,280
 
 
 
(121
)
 
 
(10,886
)
 
 
244,313
 
Other
 
 
23,003
 
 
 
13,218
 
 
 
(12,815
)
 
 
(820
)
 
 
23,420
 
Total
 
 
1,166,694
 
 
 
143,102
 
 
 
-
 
 
 
(22,438
)
 
 
1,046,030
 

Our management has expects that the Prisa Televisión Group will increase taxable profit in the medium term which will enable the recovery of the tax assets recognized by the Prisa Televisión Group.

The Supreme Court petition for review concerning the determination of income tax for 2001 was initially denied leave to proceed on purely formal grounds, and we booked a provision for €183 million in case of an unfavorable court ruling for the items in question, largely the export tax credit, within the proceedings in progress in relation to the tax audits. In 2012, given that the Supreme Court petition for 2002 was denied leave to proceed, we did the same and booked an additional provision of €6.7 million.
 
Inventories

Inventories of raw materials and supplies and inventories of commercial products or finished goods purchased from third parties are measured at the lower of their average acquisition cost and market value.

Work in progress and finished goods produced in-house are measured at the lower of average production cost and market value. Production cost includes the cost of materials used, labor and in-house and third-party direct and indirect manufacturing expenses.

The main inventory item is “Audiovisual rights,” which are stated at acquisition cost and taken to income as follows:
 
1.
Broadcasting rights for the “Canal+” premium pay TV family of channels:
 
·
Film broadcasting rights acquired from third parties (outside productions): the cost of these rights is recognized in the income statement on a straight-line basis from the date of the first showing or commercial release until the expiry of the broadcasting rights.

·
Sporting event broadcasting rights: these rights are taken to income in full at the date of the first showing.
 
·
Acquired series broadcasting rights: the cost of these rights is taken to income on a straight-line basis over the various showings.
 
 
·
Other rights: these relate basically to documentaries, in-house productions and introductory program slots, and are recognized as cost of sales when broadcast.
 
2. 
Broadcasting rights for free-to-air television channels: mainly broadcasting rights acquired from third parties; they are taken to income in accordance with the number of showings.

Obsolete, defective or slow-moving inventories are reduced to their realizable value.

We assess the net realizable value of the inventories at the period end and recognize the appropriate write-down if the inventories are overstated. When the circumstances that previously caused inventories to be written down no longer exist or when there is clear evidence of an increase in net realizable value because of changed economic circumstances, the amount of the write-down is reversed.
 
The net realizable value is calculated differently depending on the type of inventories:

·
Audiovisual rights. If the broadcasting rights have expired or Prisa considers the broadcasting of that right unlikely, according to its experience and market knowledge, 100% of the cost of inventories is registered as expenditure. Prisa’s content and programming management establishes the programming strategy according to the audience and target objectives. The financial management team periodically reviews Prisa’s inventory of broadcasting rights and, together with the content and programming management, decides if the broadcasting of any right is unlikely in order to write it down.

·
Book inventories. Prisa records a write-down when it determines there are market/selling problems according to the following rules:

 
- Discontinued books. the whole cost is provisioned when the book is discontinued.

 
- Current catalogue. the most significant item is the stock of textbooks. The group estimates future copy sales considering the net sales for the year and the remaining useful life of the book, and any amount exceeding these estimates is registered as expenditure. The average useful life of textbooks amounts to three years.

Revenue and Expense Recognition

Revenue and expenses are recognized on an accrual basis, regardless of when the resulting monetary or financial flow arises.

Revenue is measured at the fair value of the consideration received or receivable and represents the amounts receivable for the goods and services provided in the normal course of business, net of discounts, and other sales-related taxes. Revenue associated with the rendering of services is also recognized by reference to the stage of completion of the transaction at the balance sheet date, provided the outcome of the transaction can be estimated reliably. Sales of goods are recognized when substantially all the risks and rewards have been transferred.

The accounting policies applied to recognize the revenue of our main businesses are as follows:

·
Revenue from subscribers arising from the pay TV business is recognized when the subscribers are registered in the system. Subscription revenue is recognized on a monthly basis. Pay-per-view revenue is recognized when the program acquired by the subscriber is screened.

·
Advertising revenue is recognized when the advertisement appears in the media, less the amount of volume rebates offered to the media agencies.

·
Revenue from book sales is recognized on the effective delivery thereof. Where the sales of the copies are subject to sales returns, the actual sales returns are deducted from the revenue recognized. Also, the amounts corresponding to rebates or trade discounts that are not of a financial nature are deducted from revenue.

·
Revenue from the sale of newspapers and magazines is recognized on the effective delivery thereof, net of the related estimated provision for sales returns. Also, the amounts relating to distributors’ fees are deducted from revenue.

·
Revenue and costs associated with audiovisual production agreements are recognized in the income statement by reference to the stage of completion at the balance sheet date, using the percentage of completion method. The stage of completion is determined by reference to the proportion of contract costs incurred for work performed to date over the estimated total contract costs, considering the initial margin estimated for the overall project. Estimates of contract revenue and costs and of the outcome of a contract are reviewed at each balance sheet date, and the changed estimates are used in the determination of the amount of revenue and expenses recognized in income in the period in which the change is made and in subsequent periods. When the final outcome of the agreement cannot be estimated reliably, the revenue must only be recognized to the extent that it is probable that the costs incurred will be recovered, whereas the costs are recognized as an expense for the year in which they are incurred. In any case, the expected future losses would be recognized immediately in the income statement.
 
 
·
Revenue related to intermediation services, which refers to fees obtained for the commercialization of advertising spots in the different media platforms of the Group and of third parties, as well as to services for the distribution of press and magazines, is recognized at the amount of the fees received when the goods or services under the transaction are supplied.
 
·
Other income includes broadcasting services, sales of add-ons and collections, telephone hotline services, music sales, organization and management of events, e-commerce, Internet services, leases and other income.
 
Significant Changes in Accounting Policies

In 2012, the following amendment to accounting standard came into force which, therefore, was taken into account when preparing the accompanying consolidated financial statements:

 
·
Amendment to IFRS 7- Financial Instruments: Disclosures – Transfers of financial assets

The application of these amendments and interpretations did not have a significant effect on the Group’s consolidated financial statements for 2012.

At December 31, 2012, the Prisa Group had not applied the following standards or interpretations published by the IASB, since the effective application thereof was required subsequent to that date.

Standards, amendments and interpretations
Mandatory application for
financial years beginning on or after
Amendment to IAS 1
Presentation on other comprehensive income
July 1, 2012
Amendment to IAS 19
Employee benefits
January 1, 2013
IFRS 10
Consolidated financial statements
January 1, 2013
IFRS  11
Joint arrangements
January 1, 2013
IFRS  12
 Disclosure of interests in other entities
January 1, 2013
IFRS  13
Measuring fair value
January 1, 2013
IAS 27 (Revised)
Individual financial statements
January 1, 2013
IAS 28 (Revised)
Investments in associates and joint ventures
January 1, 2013
IFRIC  interpretation  20
Stripping costs in the production phase of a surface mine
January 1, 2013
Amendment to IFRS  1
First-time Adoption of International Financial Reporting Standards - Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters
January 1, 2013
Amendment to IAS 12
Income Tax - Deferred tax in connection with investment property
  
Amendment to IFRS  7
Disclosures - Offsetting financial assets and financial liabilities
January 1, 2013
Amendment to IAS 32
Presentation - Offsetting financial assets and financial liabilities
January 1, 2014
IFRS  9
Financial Instruments: Classification y valuation
January 1, 2015
Improvements to IFRSs
Cycle 2009-2011
July 1, 2013
Transition Guidance
Amendments to IFRS 10, IFRS 11 and IFRS 12
January 1, 2013
Investment Entities
Amendments to IFRS 10, IFRS 12 and IAS 27
January 1, 2014
 
All the accounting principles and measurement bases with a material effect on the consolidated financial statements were applied.
 
 
The directors are assessing the potential impact of the future application of these standards on the Group’s consolidated financial statements.
 

Cash Flow Analysis

The following table presents consolidated cash flow information for the periods ended December 31, 2012, 2011 and 2010. Positive values refer to cash inflows, and negative values refer to cash outflows.

 
 
For the Years Ended December 31,
 
 
 
2012
 
 
2011
 
 
2010
 
 
 
(thousands of euros)
 
Cash flow from operating activities
 
 
250,395
 
 
 
269,219
 
 
 
271,835
 
Cash flow from investing activities
 
 
(162,786
)
 
 
(244,649
)
 
 
(129,904)
  
Cash flow from financing activities
 
 
(73,809
)
 
 
(176,371
)
 
 
4,946
  
Effect of foreign exchange rate changes
 
 
1,302
 
 
 
4,971
 
 
 
15,301
 
Change in cash flows in the year
 
 
15,102
 
 
 
(146,830
)
 
 
162,178
 

The decline of the advertising market in Spain and Portugal in 2012 negatively impacted our Press and Radio businesses in Spain and our free-to-air TV operations in Portugal, both in terms of operating margins as well as cash position, given the significance of fixed costs for these businesses and in spite of the frequent adjustments made to the cost base. Main market sources point to further falls in the advertising market in Spain and Portugal for 2013, which would lead to additional deterioration of margins and cash generation. If we are not able to generate positive short term cash flow, we may be forced to sell assets or seek additional equity or debt capital (see “Key Information—Risk Factors”).

Cash flow from operating activities

Our cash flow from operating activities decreased by 7.0% to €250 million in 2012, from €269 million in 2011. In 2011, the decrease was 1.0%, from €272 million in 2010.

The following table sets forth information regarding changes in working capital for the periods ended as of the dates indicated.

 
 
For the Years Ended December 31,
 
 
 
2012
 
 
2011
 
 
2010
 
 
 
(thousands of euros)
 
Changes in working capital
 
 
(80,341
)
 
 
(77,855
)
 
 
(181,017
)
Inventories
 
 
11,030
  
 
 
(17,658
)
 
 
21,051
 
Accounts receivable
 
 
(55,904
)
 
 
(81,213
)
 
 
(92,651
)
Accounts payable
 
 
(71,899
)
 
 
(82,750
)
 
 
44,250
 
Other current assets
 
 
36,432
 
 
 
103,766
 
 
 
(153,667
)

Working capital in 2012 was due mainly to Santillana (due to Education campaigns mainly in Brazil) and Canal+ (mainly due to the new football agreements, both for the Spanish Liga and the Champions League), partially offset by the positive impact of the ONO agreement.

In 2011, the investment in working capital of €78 million included payments of €51 million to ONO, €16 million for the canon to the Spanish Public TV and €9 million to the Espanyol Football Club, as well as other delayed payments. Other current assets included cash outflows in 2011 to make payments with the cash excess received for the sale of assets in 2010, after completing the stipulated debt repayments.

In 2010, the change in working capital of €181 million was explained by the decrease in inventories due to Prisa Televisión, S.A.U. (€25 million), the increase in accounts receivable (€93 million) as the reduction in revenues and the increase in accounts payable (€44 million).

Tax payments amounted to €32 million in 2010, €53 million in 2011 and €39 million in 2012.

Cash flow from investing activities

In 2010, 2011 and 2012, capital expenditures totaled €206 million, €218 million and €169 million, respectively. In 2011, capital expenditures increased by 5.8% and included investments made in the Education area for the learning systems which Santillana is commercializing in Latin America and for digital developments. In addition, there were significant investments in the Digital area to create a digital multimedia platform. In 2012 our capital expenditure decreased by 22.6% mainly due to the minor investment in decoders (iplus) compensated with investments made for Santillana in digital developments and learning systems. The Group is optimizing the levels of investment on capital expenditures in order to rationalize resources.
 

Our main financial investments in the period from 2010, 2011 and 2012 relate to the acquisition of equity investments in various companies, particularly V-me. Although we made an initial investment in V-me in 2009, the investment included no cash consideration. In 2010, we increased our interest in V-me to 32.95%, to 40.87% in 2011 and to 48.28% in 2012. We account for the investment using the equity method since 2010. Currently, this investment is fully provisioned.

The funding schedule in V-me established in the purchase agreement of March, 2010 was renegotiated in December 2011, maintaining the total investment committed in that moment. This funding schedule established an additional $3 million cash contribution in 2013. At that moment the Group would hold a 53% of the company.

In March 2013, the stake of Promotora de Informaciones, S.A. in V-me capital has been transferred to Prisa Television, S.A.U. Likewise, Prisa Television’s financing commitments before V-me under the funding schedule have been modified, liberating Prisa Television from any such obligations (which amounted to $2 million at that moment). There has also been a capital increase in V-me that has diluted Prisa Television’s stake to 31.9% of V-me capital and  Prisa Television is currently involved  in advanced  negotiations to sale its stake in V-me.
 
Also, cash flow from investing activities in 2010 included a cash inflow of €90.0 million resulting from the sale of Canal+ headquarters and Sogecine and Sogepaq companies.

In 2011, cash flow from investing activities included dividends received amounting to €26.5 million, mainly corresponding to the 17.3% stake in Mediaset España. Also, it included a €46.9 million cash outflow mainly explained for an increase in €38.3 million of the loan granted to Dédalo Grupo Gráfico and for a loan to Le Monde Libre amounting to €8.4 million.

In 2012, cash flow from investing activities included dividends received amounting to €11.0 million mainly corresponding to the 17.3% stake in Mediaset España.

Regarding Le Monde Libre, in the agreement signed with shareholders of the holding company which controls this newspaper, we have assumed obligations for the future (after having paid an additional amount of approximately €2.5 million in 2012) which could result in additional contributions of €11million.
 
Cash flow from financing activities

In 2012, cash flow from financing activities included a €150.0 million cash inflow corresponding to the exercise of 75 million warrants at a strike price of €2 each. €100million of the proceeds from this capital increase were used to repay our syndicated loan with the remainder retained for working capital purposes.

It also included the issuance of a mandatorily convertible bond in July, 2012 amounting to €434.0 million euros in two tranches: €334 million subscribed by creditor banks via the cancellation of financial debt and €100.0 million paid in cash by Telefónica. Consequently the impact of this bond issuance in the cash flow from financing activities on a net basis is €100.0 million.

In 2011, cash flow from financing activities included a €23.7 million cash inflow corresponding to the sale of a 10% stake of Media Capital, which was used to repay €11.2 million of the syndicated loan and €12.5 million of the bridge loan.

In April 2010, we completed the sale of a 25% ownership interest in Santillana to DLJSAP resulting in a cash inflow of €279 million. We reduced our outstanding debt by €217.43 million. In December 2010, €976 million of cash from the sale of a 44% stake of DTS was mainly used to amortize debt, including the subordinated debt of Prisa Televisión. In December 2010, out of the cash of €650 million from the agreement with Liberty Acquisition Holdings Corp. to reinforce the capital, €420 million was used to amortize debt. The rest of the funds were used for working capital needs, transaction expenses and restructuring costs.

Cash flow from financing activities also included dividend payments to third parties amounting to €25.7 million in 2010, €83.0 million in 2011 and €80.7 million in 2012. The increase in 2011 was due to the payment of dividends to third parties by the Canal+ business and the increase in dividends paid to DLJ (corresponding to the dividend accrued for twelve months compared to nine months in the previous year, as the sale of a 25% stake of the company took place as of April, 2010). Additionally, Prisa paid dividends to the holders of Class B shares amounting to €6.4 million (corresponding to the amount accrued for the month of December, 2010 and the corresponding dividends paid as a consequence of the conversion into ordinary shares).

Interest payments totaled €125 million in 2010, €124 million in 2011 and €105 million in 2012, resulting both from changes in interest rates and changes in our debt levels (relating to the aforementioned transactions).
 
 
Capital Management Policy

The principal objective of the Group’s capital management policy is to optimize the cost of capital and achieve a gearing ratio that enables it achieve its strategic targets and contribute to the growth of the Company. Therefore, in 2012 the Group adopted further measures to restructure its financial debt and strengthen its capital structure.
 
The net financial debt/Adjusted EBITDA ratio as of December 31, 2012 was 6.88 times (6.3 times as of December 31, 2011; 4.9 times as of December 31, 2010).
 
Liquidity Risk

The management of liquidity risk includes the detailed monitoring of the repayment schedule of the Group’s borrowings and the maintenance of credit lines and other financing channels that enable it to cover foreseeable cash needs at short, medium and long term.

The table below details the liquidity analysis of the Prisa Group in 2012 in relation to its bank borrowings, which represent substantially all the non-derivative financial liabilities. The table was prepared using the cash outflows not discounted with respect to their scheduled maturity dates; or earlier when it is expected that the outflows will take place prior to the contractually stipulated dates. The flows include both the expected repayments and interest payments. When the settlement is not fixed, the amount was determined using the underlyings calculated based on the interest rate curves at the end of 2012.

Maturity
  
(thousands of euros)
    
Floating Euribor rates
  
             
Within 3 months
    
121,104
      
0.10
%
From 3 to 6 months
    
79,025
      
0.10
%
From 6 to 9 months
    
53,619
      
0.12
%
From 9 to 12 months
    
32,943
      
0.15
%
From 1 to 2 years
    
1,405,750
      
0.30
%
From 2 to 3 years
    
1,509,031
      
0.65
%
After 3 years
    
13,986
      
1.57
%
Total
    
3,215,458
          
 
Share Options

Financial liabilities arising from the settlement options as part of the mandatory conversion of the Class B shares

At December 31, 2010, as a result of the capital increase transactions, a non-current financial liability amounting to €89 million was recognized; this corresponds to the Company’s potential obligation to deliver additional shares or cash as part of the mandatory conversion of the Class B shares, if during the 20 trading sessions immediately prior to the date of conversion the weighted average price of Class A ordinary shares is below € 2. At December 31, 2012, the fair value of this liability stands at €26million (2011: €75 million) and is recognized under “Non-current financial liabilities” in the accompanying consolidated balance sheet. The Black-Scholes Method was used to determine fair value.

Other share options

At December 31, 2012, the fair value of the cash-settled share options delivered to financial entities participating in the bridge loan, with variable amounts depending on the listed price of Prisa’s ordinary shares, was zero (2011:€2 million).
 
 
Bank Borrowings

Details of our bank borrowings, credit limits and scheduled maturities as of December 31, 2012 are set forth in the table below.

   
Maturity
    
Limit
    
Drawn-
down
amount
 maturing
at
short term
    
Drawn-
down
amount
maturing at
long term
  
   
(thousands of euros)
  
Syndicated loan and credit facility to Prisa
  
2014
      
1,282,544
      
-
      
1,282,544
  
Bridge loan to Prisa
  
2015
      
1,340,882
      
-
      
1,340,882
  
Syndicated loan and credit facility to Dédalo
  
2015
      
80,400
      
39,790
      
40,610
  
Credit facilities
    
2013 – 2015
      
314,246
      
96,651
      
142,102
  
Loans
    
2013 – 2023
      
128,046
      
41,548
      
86,498
  
Finance leases, interest and other
    
2013 – 2015
      
-
      
28,232
      
18,540
  
Loan arrangement costs
    
2013 – 2015
      
-
      
(754
)
    
(44,390
)
Total
            
3,146,118
      
205,467
      
2,866,786
  

Of the total bank borrowings at December 31, 2012, 98.40% were denominated in euros (98.92% at December 31, 2011) and the remainder in foreign currencies.
 
The average interest rates on the Group’s bank borrowings were 3.34% in 2012 and 3.66% in 2011.
 
Syndicated loan and credit facility-
 
In June 2007, Prisa entered into a syndicated loan and credit facility with a group of 39 banks for a maximum amount of €2,050,000 thousand, consisting of a long-term loan amounting to €1,675,000 thousand and a revolving facility of €375,000 thousand drawable throughout the term of the loan.

Repayment of the loan commenced in 2007. With respect to the remaining balance of the loan at December 31, 2010, the proceeds from the sale of 10% of Grupo Media Capital, SGPS, S.A., were used to repay €11,228 thousand in 2011 in advance.

In January 2012, with the proceeds from the capital increase €150,000 thousand €100,000 thousand of the Syndicated Loan was repaid (see Item 5B. “Liquidity and Capital Resources- Cash analysis”). The remainder of outstanding loan at December 31, 2012 amounted to €1,282,544 thousand.

This syndicated loan is tied to Euribor plus a spread negotiated and adapted in accordance with financial market rates.
 
Bridge loan-
 
In December 2007, Prisa entered into a six-month financing agreement (bridge loan) with a bank for a maximum amount of €4,230,000 thousand and bearing interest at a market rate.  The agreement stated that the purpose of this financing was to cover the financial obligations arising from the takeover bid for all the share capital of Prisa Televisión, S.A.U. submitted to the CNMV.

On February 29, 2008, Prisa signed the syndication of this bridge loan initially granted by one bank. On June 20, 2008, the initial maturity date of the bridge loan, and after the result of the takeover bid became known, the amount of the bridge loan was €1,948,935 thousand; the Company also signed a one-month extension for the purpose of finalizing the agreement relating to the novation of this loan until March 2009.

On July 14, 2008, the Parent obtained authorization from the majority of the banks participating in the syndicated financing agreement relating, inter alia, to the additional debt incurred as a result of the takeover bid for Prisa Televisión, S.A.U.

On July 18, 2008, the Parent signed the renewal of the bridge loan amounting to €1,948,935 thousand until March 31, 2009. In August 2008, €113,098 thousand of this bridge loan were repaid.

On March 31, 2009, the term of the loan was extended by one month until April 30, 2009, and was subsequently extended again until May 14, 2009.
 
 
On May 13, 2009, Prisa arranged with the banks that granted the bridge loan for an extension of its term until March 31, 2010, and obtained the authorization of the banks that were party to the syndicated financing agreement for the additional borrowings arising from the aforementioned extension.

On April 19, 2010, Prisa signed a refinancing master agreement with its creditor banks by which the maturity date of the bridge loan was extended until May 19, 2013.

Regarding the bridge loan, and as a result of the mentioned renewals, Prisa agreed with the financial entities participating in the loan to pay a variable amount in cash, depending on the listed price of the ordinary shares from the date of the final agreement (April 19, 2010) until the loan falls due.

During 2011, €12,514 thousand of the bridge loan was paid off, in advance with the proceeds from the sale of 10% of Grupo Media Capital, SGPS, S.A.

In July, 2012, €200,000 thousand was paid with proceeds from the issue of bonds mandatorily convertible into Class A shares (€434,000 thousand) (see Item 5B. “Liquidity and Capital Resources- Cash analysis”),leaving a debt of €1,340,882 thousand.

Subordinated credit facility-

On December 20, 2007, the Parent arranged a subordinated credit facility of €200,000 thousand bearing interest at a market rate.

The balance drawn down at December 31, 2011 was €134,000 thousand, which is the definitive amount of this credit facility after Prisa requested a reduction in its limit.

This facility was paid in July 2012 with proceeds from the issue of bonds mandatorily convertible into Class A shares (see Item 5B “Liquidity and Capital Resources- Cash analysis”).

At year-end 2012, the syndicated loan and credit facility, the bridge loan, some bilateral loans and counterparties of are guaranteed jointly and severally by the following Prisa Group companies: Diario El País, S.L., Grupo Empresarial de Medios Impresos, S.L., Prisa Radio, S.L. and Vertix, SGPS, S.A.

In 2010, the Parent pledged its shares in Prisa Televisión, S.A.U., its shares in Prisa Radio, S.L., the shares it indirectly owns in Grupo Media Capital, SGPS, S.A. and the shares it owns of Grupo Santillana de Ediciones, S.L. On January 27, 2011, Prisa Televisión, S.A.U. pledged its shares in DTS, Distribuidora de Televisión Digital, S.A., representing 56% of its share capital.

The syndicated loan and credit facility, and the bridge loan establish that Grupo Prisa must comply with certain financial ratios which were renewed on December 26, 2011 in order to adapt them to the Group’s new financial position. The Group’s directors consider that the covenants established in these contracts were fulfilled at December 31, 2012.

Refinancing agreement-

On December 26, 2011, Prisa signed an agreement to refinance its bank borrowings, comprising the syndicated loan, the bridge loan, the subordinated credit facility and a series of bilateral loans.

The current conditions for the different bank borrowings after the refinancing are as follows:

 
·
The transformation of the syndicated loan into a bullet loan with a single maturity of March 19, 2014. In addition, subject to the fulfilment of certain targets, such as the issue of a bond, maturity may be deferred to December 19, 2014.

 
·
The maturity of the bridge loan, which does not provide for partial repayments, and of some of the bilateral loans, was extended to January 15, 2015. Also subject to the same targets, the maturity of these loans may be extended to September 19, 2015.
 
 
·
The subordinated credit facility is extended until January 16, 2015 and September 21, 2015, when the milestones for the bridge loan are met. As indicated previously, this bridge loan was paid off in July 2012.
 
 
·
Financial ratios ("covenants") have been reviewed to be adapted to the new financial estimates of the group.
 
 
·
Cost of debt has been maintained tied to Euribor plus a spread negotiated and adapted in accordance with financial market rates.
 
 

Our audiovisual business, through Prisa Televisión, S.A.U., is constantly adapting its services and processes to new technologies, in collaboration with its technological suppliers, to be at the forefront in providing services to its subscribers and customers at all times. Accordingly, in 2007, Canal+ began selling state-of-the-art iPLUS digital set-top boxes exclusively for its subscribers, which can store hours of programming, and which offer a superior Canal+ electronic programming guide (EPG service) and DTT access. It has also pioneered high-definition broadcasts with Canal+HD, the first high-definition television channel in Spain which can be viewed using the iPLUS set-top box.  In recent months it has launched new channels. Innovation in this area continued throughout the year with 3D broadcasts of major events, and more recently, the distribution of content for iPads, iPhones, and computers which will be extended to other devices in the future. Subscribers can now use these devices to directly receive the signal of several channels and access a content catalogue.

We are also constantly adapting applications and management processes to changes occurring in the Group businesses and technological changes. The Group participates in and is a member of various international and domestic associations and forums which enable it to identify any improvements or opportunities to innovate and develop its services, processes and management systems. The Group has also signed an agreement with CISCO to  provide iplus decoders.

Our Press division has focused almost all its research and development activity in the digital area and in ElPais.com and As.com, developing and incorporating the appropriate technology so that the consumer was able to have access to the best information and contents through all digital devices (web, mobile and tablets). Consequently, in 2012 a total renewal of the different web sections of El País was undertaken. The number of downloads of mobile applications of ElPais.com in 2012 was over two million and 927,000 in as.com. Regarding connected TV applications for Smart TV of AS and EL PAÍS are noteworthy and in February 2013 there were over 600 thousand downloads to LG and Samsumg models. Prisa also participates in the European Project Smart City to create real online news channels. The platform EL PAÍS Eskup is used in Santander city, integrated with cameras and microphones.

Turning to our radio business, work continued in 2012 on developing apps for all smartphones and tablets on the market (IOS for iPhone and iPad, Android, BlackBerry and Windows 8).  There are currently over 36 apps for Spain and Latin America, some of which can be used in various countries such as W Radio or Los 40 and which offer users the chance to listen to both talk stations such as Cadena SER, Caracol and ADN and music stations.

During 2012 there were over 5.8 million downloads and users listened to over 50 million hours.

The RadioAdventure project which began in 2011 with the program “La Mar de Noches” as a pioneering radio project for WebTV continued in 2012, offering programs such as “Yu, No te lo pierdas” for Los 40, “Eurocopa 2012” for Cadena SER and “El Mañanero” for W Radio México.  “La Mar de Noches”, which is broadcast on Thursdays, also continues to enjoy high audiences.

Following the acquisition of the music streaming platform Yes FM, the Group now offers new music content including streaming from car radios.  This is still an RDI product for manufacturers and operators in the Spanish market although it has previously been trialed in the US. Prisa Radio aims to participate as a content generator.

Various tests have also been carried out on mobile units using IP technology which will be rolled out in the future. Users with tablets with GPRS, 3G and Wifi connection and apps to edit audio and video are now themselves becoming journalists as they are able to produce multimedia content.

In education, we have also continued working on incorporating new technologies into content development. The most significant initiatives were:

 
·
The creation of a teachers’ social networking site, IneveryCREA. This site, which is aimed at the entire Latin American K-12 teaching community, facilitates the exchange of ideas and the dissemination of best practices and classroom experiences.  It serves as a point of contact between the publisher and teachers by applying the most advanced web2.0 technology (semantic web, data structuring, linking of open source content).

 
·
The development of a Learning Management System (LMS) along with a planning and management tool for schools (Student Information System (SIS) for the K-12 market).  Both products join Santillana’s digital educational line and can be offered either within the traditional line of curricular content, Text and Languages, or within Grupo Santillana’s new line of strategic growth, Sistema UNO Internacional and Santillana Compartir.

 
·
In addition, work continues on developing digital-format educational materials and books for students and teachers. In nearly every country where it operates, we have moved to the forefront of this type of developments with its digital book becoming a standard bearer in the market.  Also, part of the Sistema UNO platform’s catalogue has been designed using iBooks author by Apple.
 
 
 
·
The General Editions Digital Catalogue has been further expanded, in terms of both traditional mainstays as well as new books, for distribution through the Libranda digital distribution platform. Distribution agreements were also reached with major digital distributors. The digitization of Ediciones Generales’ content includes catalogs in Spain, Brazil, the United States, Argentina, Mexico, Colombia, Chile, Peru, Bolivia, Paraguay and Uruguay.

 
·
In 2012 we launched Edusfera, its digital education store, where users can directly access digital products by Santillana and Alfaguara Infantil. The entire digital product lines for the school textbook market and digital products for consumption in the home are incorporated.  Users can post recommendations, opinions and comments on Edusfera which also offers a secure purchasing channel with parental controls.

 
·
Production began on a pilot catalog in app format with products to be sold in mobile phone stores.  To date, nearly 100 apps have been published (in General Publications, Children’s Education and Languages). The “Pupitre” app, available from the Apple Store, was particularly successful with over 100,000 downloads.

 
·
Launch of a homework help site where users can resolve queries. “Tareas y Más” has over 6,000 resources, including 1,200 video-tutorials on basic concepts for math, physics, chemistry and language. This home initiative offers students between 10 and 18 study aids and supplementary help for concepts and skills. Students are also able to assess themselves using with the help of over 4,000 questions.

In addition, during 2012, Prisa Digital, S.L. has continued with its project to analyze user behavior when accessing and using multiplatform digital content as well as advanced technologies to identify, classify, integrate and offer semantic access to digital repositories in the cloud, as well as on integrating and applying new technologies to digital content distribution processes, developing smart and automatic solutions which permit personalized digital-content distribution through multiple channels.

Patents and Licenses

We own various brands under which we market certain products and services in our different areas of operation. Notwithstanding the fact that we believe that our most important brands are protected in Spain under the appropriate methods of brand registration, we make strong efforts and allocate considerable resources to increase our protection by applying for European Union brands for the European Union territory and for trademark protection in the North and South American countries in which we are present.

We consider the following brands to be our most important: Prisa, El País, El País Digital, Cinco Días, AS, Plural, Canal+, TVI, Cadena SER, 40 Principales, Cadena Dial, Caracol Radio, Tropicana, Ke Buena, Santillana, Alfaguara, Richmond English and Sistema UNO.

We supervise our brands centrally with the aim of controlling and monitoring our brand portfolio and capitalizing on the existing portfolio to the extent possible, so that each Prisa company can harness the information held by the others or even obtain user licenses for brands owned by another Prisa company.

With regard to the Internet, we have registered domain names for our most important brands with the “.com” and “.es” extensions, in most cases.


Prisa is undergoing a different behavior between its activities in Spain and Portugal, which have suffered especially from the deterioration of the advertising market in a difficult economic environment, and its activities in Latin America which are showing strong growth and which already account for 45% of adjusted EBITDA. In this environment Prisa has continued undertaking a strong effort in cost reduction and improvement of its operating efficiency in all its business units.

The communication services sector is very sensitive to the evolution of the main macro-economic variables (GDP) and especially to the advertising cycle, which has accentuated its deterioration during 2012 in Spain and Portugal. Despite the fact that Grupo Prisa’s exposure to the evolution of the advertising market is limited given the diversification of its revenue streams (advertising revenues account only for 21% of all revenues), those businesses which are dependent on advertising have a large portion of fixed costs and the reduction of advertising revenues therefore has a larger impact in their operating result, leading to a deterioration of operating margins and cash position. Main market sources point to further falls in the advertising market in Spain and Portugal for 2013.

As a result of these trends, we have taken the following actions to allow us to respond flexibly and efficiently to changes in the business environment:

·
Focusing on businesses with higher growth potential.
 
 
·
Expansion outside of Spain and Portugal, specifically in Latin America.

·
Fostering and development of the digital business.

·
Implementation of cost-cutting programs, including restructuring of printed media, use of cross-selling models and multimedia advertising sales.

·
Approving several recapitalizacion transactions to improve the Group’s financial situation.

Focusing on businesses with higher growth potential

Prisa has solid businesses, which are more independent of the economic cycle, which continue to demonstrate their growth potential. Such is the case of the Education-Editorial business, which in 2012 represented 28% of the Group’s total revenues (26% in 2011, 23% in 2010). This business continues to show good growth potential ahead, especially in Latin America, where revenues have grown by 5.4%, despite 2012 being the lowest year in the education cycle in Brazil.
 
The development of new business lines since 2011, such as the design and commercialization of Education and teaching Systems, is being very successful and opens new growth perspectives in the education sector, especially in countries such as Colombia, Mexico and Brazil.

The other main source of growth for the Group in 2012 has been the Pay TV business; Canal+  whose revenues represented 41% of the consolidated revenues. Following the agreement signed in August 2012 for the exploitation of football rights of Spanish Liga (first and second division) and Copa del Rey for the coming three seasons, together with the Champions League rights which were acquired in February 2011, we believe Canal+ offers the best football content of its history.
 
The new agreement substantially has improved the quality of football content offered, has allowed exclusive multi-distribution of content through other pay TV operators, and has provided exclusivity in bars and public spaces. This agreement has led to a different commercialization of football rights compared to that of previous seasons.

Despite the above, during 2012 the key operating indicators of the business have been negatively affected by the weakness of domestic consumption in Spain, the VAT increase for Pay TV from 8% to 21%, and the change in the commercialization model of football content. Especially impacted have been the number of satellite subscribers (down by 36,364 in 2012), compensated by the good performance of subscribers from other platforms (which grew by 38,888 in 2012).
 
The new exploitation agreement implies an increase of costs which must be compensated going forward by the multi-distribution agreements and a necessary increase in the subscriber base. It is important to highlight that in this scenario, Canal+ has increased its market share by more than two percentage points, reaching 42% (according to internal estimates).

Expansion Outside of Spain

We enhanced our presence outside of Spain in 2012. This sector accounted for 34% of total operating income (revenues) (2011: 32%, 2010: 28%). We seek to continue our expansion outside of Spain in order to diversify country risk.

Latin American revenues showed an increase of 7.7% during 2012, accounting for 27% of total operating income (revenues) (2011: 24%, 2010: 20%), supported by the positive performance of the Radio business, with growth in all the countries where the company is present, and of the Education business, with growth in practically all the countries in which the Group is present, except Brazil, where 2012 was the low year of the Education cycle. Latin America EBITDA also showed an important growth, of 12.8% in 2012, accounting for 45% of total adjusted EBITDA (2011: 39%, 2010: 25%).

Digital Development and Cross-Cutting Synergies

In response to the current trend away from traditional print media and towards digital media, we have implemented a new digital strategy intended to transform our business model so that our various traditional lines of business develop in a technologically advanced environment with a clear personalized focus for our millions of customers. Our digital strategy is based on a consumer-oriented model in which our products are distributed to customers based on their preferences. By improving our knowledge of our customers’ profiles, fostering synergies based on transversal initiatives, and leveraging resources and expertise in all our businesses, we expect to be able to offer value added to our advertisers, improve the effectiveness of our sales strategy and capitalize on our digital assets.

In connection with our ongoing strategic effort, we have taken the following steps:
 
 
 
●
In 2012, Prisa Televisión  consolidated its digital multi-devise experience of its satellite subscribers through Yomvi (explained below). Also, last November, Canal+ launched a new simple and competitive commercial offer, focused on the internet market, aiming at becoming a legal alternative to piracy. Yomvi  offers its clients a flat fee (clients can view as much cinema and series as they wish from the content included in their fee), “Taquilla” or pay-per-view content (clients can pay for what watch),  Live TV on Streaming and new football content which has been added in 2012. This offer is both online and multi-device.

 
●
Prisa Televisión launched Canal+ “a-la-carta” (VOD), making it possible to download Canal+ contents (movies, series, documentaries) in iPlus at the subscribers’ leisure, regardless of whether the show is currently being broadcast.

 
●
In 2011, Prisa Televisión launched a personalized TV platform through Yomvi, which allows the viewer to choose the Canal+ premium content he will watch (movies, series, documentaries, football), at his own preferred time and through the device of his choice (TV, computer, tablet or smartphone).

 
●
The websites of the main brands of our Radio business have been integrated into leading social networks, paving the way for new media communication for and between users, thereby strengthening brand loyalty.

 
●
The international radio presence has boosted the launch of new sites associated with brands, increasing the signal via streaming. Live events have received support from the inclusion of new technology for producing and streaming broadcasts, increasing their potential profitability. The “Premios Los 40 Principales” awards were broadcast to 198,000 live participants with 514,000 viewers on TV (Divinity Channel).

 
●
In 2012, all the web pages of Prisa Press enjoyed significant increases in visitors. We highlight the stabilization of El País as absolute leader in its sector.

 
●
In June 2012, we launched El Huffington Post, born from an agreement between Prisa and AOL to create a place in the Spanish market where users will find the daily news as well as last minute newsflow, scientific, political, activist, cinema and other relevant blogs, from prestigious bloggers. El Huffington Post is present in a niche market, which is not occupied by other web pages, which is confirmed by the constant monthly growth in visitors.

 
●
In 2011, the Press division launched, together with media company Vocento, “Kiosko y Mas”, a subscriber based digital distribution of generalist and specialist, national and regional newspapers and magazines which customers can access from their computers or portable devices (tablets and smartphones).

 
●
In 2010, Santillana launched, in partnership with six other publishers, Libranda, the biggest Spanish distribution platform for books. This initiative has spread to other countries, with Brazil and the United States at the forefront.

 
●
The development of books and educational materials in digital format, designed for students as well as teachers. In almost all the countries in which we operate, we are leaders in this type of development. In 2011, Santillana launched the new Learning Systems (Sistema UNO Internacional), to help teachers and parents follow up on the progress of the students, in Mexico, where we believe it was very successful.. We launched Sistema UNO Internacional in Brazil and Colombia in 2012, with very good acceptance.

 
·
The evolution of Santillana’s  platform for Sistema Uno Internacional with its Learning Management System and its planning and management tools for schools, in 2012 included: Digital versions of General Editions, both editorial and new releases, for distribution on the Libranda digital distribution platform. In addition, distribution agreements were reached with Google, Barnes & Noble, Kobo, Overdrive, Baker & Taylor and Booquo. The launch of an internal pilot of Edusfera, the educational digital store of Santillana. The launch in Spain of Tareas y Más, a site with thousands of digital resources for the easy homework help. Contents are organized around three main subjects: Maths, Spanish as 1st Language, Physics and Chemistry. The launch in Spain of Santillana-Twig, a cobranded portal with one thousand science videos for secondary level students (Physics, Chemistry, Biology). InveryCREA, Santillana social network for teachers went on getting registered users in Spain and Argentina. Its technology was also used to create RED UNO, Sistema Uno Internacional social network.

 
●
In 2011, Prisa launched “Planeo”, a web based discount seller with offers in travel, health and beauty, restaurants and sports events in various different Spanish and Portuguese cities, which can be accessed through computer or portable devices (computers and smartphones). In 2012, Planeo reached close to 1,221,000 registered users

Since the end of 2010, the Prisa Group’s Digital Ecosystem went into development. This will consist of smart technology for analyzing user access and consumer behavior towards multi-platform digital contents, as well as advanced technology designed to identify, automatically categorize, integrate, and provide semantic access to digital cloud-based content storage networks.
 
Activity in the Group’s Digital area grew during 2012, when its revenues increased by 18.7%, with improvements in its advertising results and digital products. Also, as a reflection of the digital development was the important increase in traffic in the web sites of the company’s business lines. The company continues with its digital development in all its business units, with a very consumer-oriented model.
 
 
Cost Containment and Investment Program

In the current economic environment, the effort in cost control and improvement of the operating efficiency are of vital importance to maintain the necessary liquidity and profitability of the Group. Although cost containment began already in 2009, and continued throughout 2010, from December 2010, the Group implemented a restructuring/efficiency plan on which €95 million was spent and which is designed to generate annual savings of €64.5 million. Throughout 2012 and due to the increased deterioration of the economic environment and of consumption in Spain and Portugal, a strong effort in cost control has been undertaken in all of the Group’s business lines. Total expenses excluding amortizations and provisions fell by 2.2%, or by 7.5% if adjusted by one-offs and the impact of the new agreement of football rights. Going forward we expect to undertake the necessary measure to improve their operating efficiency.
 

At December 31, 2012, following the sale of Prisa’s total stake in Iberbanda, S.A. to Telefónica de España, S.A.U. in 2011, Prisa maintained the guarantee solely on certain commitments acquired to Public Administrations by Iberbanda in the amount of €3,384 thousand.

At December 31, 2012, Prisa had furnished bank guarantees amounting to €272,184 thousand and USD 2,863 thousand mainly in relation to the tax assessments issued by the tax authorities that were signed on a contested basis, litigation for football rights and acquisition of football rights.

On June 15, 2011, Prisa furnished a first-call guarantee for up to USD 40,000 thousand regarding payment obligations set forth in two contracts signed between DTS Distribuidora de Televisión Digital, S.A. and Cisco Systems Capital Spain, S.L. The contracts consist in a revolving lease, for USD 80,000 thousand, and a credit agreement, for USD 2,350 thousand, and the payment obligations relate to the lease, development and rental of advanced television-signal decoders for Canal+.

To enforce the guarantee, it shall suffice for Cisco Systems Capital Spain, S.L. to inform Prisa that a breach has taken place and to indicate the amount owed, in which event Prisa undertakes to pay the amount requested within 15 calendar days. The maximum amount guaranteed may be claimed either in whole or in part and on one or more occasions and, if the case should arise, the maximum amount will be reduced in accordance with the payments that have been made, and the guarantee on the amount pending shall remain in effect.

The guarantee is irrevocable and it is furnished in a non-specific manner and irrespective of the legal relationship between Cisco Systems Capital Spain, S.L. and DTS Distribuidora de Televisión Digital, S.A.; hence, it shall be payable upon a simple request, when the first written demand is received, with no need to evidence a prior claim or to bring any action against DTS Distribuidora de Televisión Digital, S.A.  The guarantee shall remain in force until the complete discharge of the obligations covered by it. The amount guaranteed by Prisa at December 31, 2012 was €20,000 thousand.

The guarantee shall be extended and shall cover any extension or broadening of or amendment to the aforementioned guaranteed contracts, and there shall be no need to notify Prisa of such extensions, broadening or amendments.

Lastly, Prisa has provided a joint and several guarantee to Le Monde Libre in the amount of €12,801 thousand covering part of the obligations that it acquired vis–a-vis the holders of the bonds redeemable into shares that were issued by Le Monde, S.A.
 

Our obligations under firm contractual arrangements as of December 31, 2012 are summarized below:

 
 
Total
 
 
Less than 1 year
 
 
1-3 years
 
 
3-5 years
 
 
More than
5 years
 
 
 
(thousands of euros)
 
Financial debt
 
 
3,072,253
 
 
 
205,467
 
 
 
2,853,694
 
 
 
12,573
 
 
 
519
 
Cash interest obligations on financial debt (1)
 
 
143,204
 
 
 
81,224
 
 
 
61,087
 
 
 
856
 
 
 
37
 
Cash receipts/payments on derivative financial instruments (2)
 
 
4,123
 
 
 
2,492
 
 
 
1,631
 
 
 
—
 
 
 
—
 
Operating leases (3)
 
 
1,050,223
 
 
 
80,234
 
 
 
155,284
 
 
 
155,078
 
 
 
659,627
 
Future commitments (4)
 
 
2,152,958
 
 
 
857,642
 
 
 
1,214,248
 
 
 
80,976
 
 
 
92
 
Guarantees (5)
 
 
310,571
 
 
 
12,662
 
 
 
153,373
 
 
 
698
 
 
 
143,838
 
Other long-term liabilities (6)
 
 
201,831
 
 
 
—
 
 
 
—
 
 
 
—
 
 
 
201,831
 
Total
 
 
6,935,163
 
 
 
1,239,721
 
 
 
4,439,317
 
 
 
250,181
 
 
 
1,005,944
 
 
(1)
Interest obligations on long-term debt represent an estimate of future cash interest expenses based on current interest rates, current debt levels and scheduled debt repayments.
 
(2)
Cash receipts and payments on derivative financial instruments represent an estimate of future cash receipts and payments based on current expectations of interest rate levels and foreign exchange rates.

(3)
Operating leases includes the minimum lease payments arising from several assets and services used by us. The most significant ones are the buildings in Gran Vía 32, Miguel Yuste, Caspe and Tres Cantos, the provision of analog, digital terrestrial and satellite broadcasting services and radio broadcasting services (the most significant lease relates to Media Latina).

(4)
Future commitments represent an estimate of contractual commitments of Prisa Televisión and Media Capital with various suppliers and consumers for future program broadcasting rights and the exploitation of image rights and sports rights. In addition, it includes the payments required under the agreement between us and Indra for provision of global IT services by Indra for seven years from December 2009.

(5)
Guarantees with undetermined expiration are included in the more than five years due period.

(6)
Other long-term liabilities includes long-term provisions for taxes related to the estimated amount of tax debts arising from tax audits of various Prisa companies in process as of December 31, 2012. As the expiration date is undetermined, this amount is included in the more than five years due period.

Additionally we have registered a €109 million in liability from the obligation generated by the annual preferred dividend commitment to DLJ, as well as €35 million in liability for the present value of the convertible bond owed to creditors banks that the company issued as part of the operation to reduce debt.


 
Not applicable.



The following tables set forth certain information with respect to the members of our board of directors. The professional address of each of the directors is c/o Grupo Prisa, Gran Vía 32, 28013 Madrid, Spain.

Article 8 of the Prisa Board of Directors Regulations provides that the Company shall adapt the classification of its directors to the definitions included in the Unified Good Governance Code published by the CNMV. Furthermore, Article 17 bis of our bylaws provides as follows with respect to classification of directors:
 
 
●
Executive Directors:those who hold executive or senior management functions within the Company. Executive Directors include those directors that hold delegated, on a permanent basis, general powers of the board and/or are bound by senior management contracts or leases of services relating to the provision of business services on a full-time basis.
 
 
●
External-Proprietary Directors:Directors who (i) have a stake greater than or equal to the legal definition of significant or have been designated due to their status as shareholders holding a lesser amount, or (ii) whose appointment has been proposed by shareholders described in item (i).
 
 
●
External-Independent Directors:those not covered by the two preceding categories, named in regard to their personal and professional prestige and their experience and knowledge to exercise their functions, unrelated to the executive team and shareholders.
 
 
●
Other external Directors: external directors who do not have the status of proprietary directors or independent directors.

In July 2012 Mr Ignacio Polanco Moreno tendered his resignation as Chairman of the Board of Directors and Director of the Company and Mr Diego Hidalgo Schnur also tendered his resignation as Director.  Then the Board of Directors appointed Mr Juan Luis Cebrián, Mr Manuel Polanco and Mr Fernando Abril- Martorell as Executive Chairman, Deputy Chairman and co-Chief Executive Officer, respectively, and delegated all authority of the Board, except non delegable authority, to Mr. Cebrián and Mr. Abril- Martorell.
 
 
Also, in order to fill vacancies on the Board left by the resignation of Mr Ignacio Polanco Moreno and Mr Diego Hidalgo Schnur, the Board of Directors in its meeting held in October 2012 and in its exercise of its powers of co-optation (an ability of the board of directors conferred by law to appoint directors in the case of a vacancy due to the death, resignation or removal of directors) appointed to Mr Jose Luis Leal and Mr Arianna Huffington, as independent directors.
 
Name
Age
Position on the Board
Date of Initial
Appointment
Date
Current
Term Ends(1)
Juan Luis Cebrián Echarri (6)
68
Executive Chairman (executive)
June 15, 1983
November 27, 2015
Manuel Polanco Moreno (6)
51
Deputy Chairman  (executive) (2)
April 19, 2001
November 27, 2015
Fernando Abril-Martorell (6)
50
Co-Chief Executive Officer (executive)
June 24, 2011
June 24, 2016
Juan Arena de la Mora (7)
69
Director (independent)
November 27, 2010
November 27, 2015
Nicolas Berggruen
51
Director (proprietary) (4)
November 27, 2010
November 27, 2015
Matías Cortés Dominguez
74
Director (other external director)
March 25, 1977
November 27, 2015
Martin Franklin (6) (8)
48
Director (proprietary) (5)
November 27, 2010
November 27, 2015
Arianna Huffington (9)
62
Director (independent)
October 24, 2012
Next Shareholders Meeting (11)
Jose Luis Leal Maldonado (9)
73
Director (independent)
October 24, 2012
Next Shareholders Meeting 24, 2017 (11)
Gregorio Marañón y Bertrán de Lis (6) (8)
70
Director (independent)
June 15, 1983
November 27, 2015
Alain Minc (6) (7)
61
Director (independent)
November 27, 2010
November 27, 2015
Agnés Noguera Borel(7) (9)
49
Director (proprietary) (3)
April 20, 2006
November 27, 2015
Borja Jesús Pérez Arauna (8)
43
Director (proprietary) (2)
May 18, 2000
November 27, 2015
Emmanuel Roman (7)
49
Director (independent)
November 27, 2010
November 27, 2015
Harry Sloan
62
Director (independent)
November 27, 2010
November 27, 2015
Ernesto Zedillo Ponce de León (9)
61
Director (independent)
November 27, 2010
November 27, 2015
Antonio García-Mon Marañés (10)
47
Non-Director Secretary
 
 
Carlos Ulecia Palacios
45
Non-Director Deputy Secretary
 
 
 
(1)
Pursuant to Article 18 of our bylaws, directors serve five year terms, or until their earlier resignation. However, pursuant to Article 145.1 of the Spanish Commercial Registry Regulations, a director’s board membership lapses when, subsequent to the expiration of the director’s term, the first of the following events occurs: (i) the general shareholders’ meeting is held, or (ii) when the statutory period for holding the general shareholders’ meeting for the appointment of directors has passed, which is six months following the end of our fiscal year.

(2)
Nominated by Timón, S.A., a controlled entity of Rucandio, which, in turn, is a family company controlled by Ignacio, Maria Jesús and Manuel Polanco Moreno, by their mother, Isabel Moreno Puncel, and by the children of Isabel Polanco Moreno,i.e., Jaime, Lucía, Isabel and Marta López Polanco.
 
 
Mr. Manuel Polanco is an external-proprietary director, having been appointed by Timón, S.A and, likewise, is an executive director.

(3)
Nominated by Promotora de Publicaciones, S.L., a controlled entity of Rucandio, which, in turn, is a family company controlled by Ignacio, María Jesús and Manuel Polanco Moreno, by their mother, Isabel Moreno Puncel, and by the children of Isabel Polanco Moreno, i.e., Jaime, Lucía, Isabel and Marta López Polanco.

(4)
Initially nominated by Berggruen Acquisition Holdings LTD (that is no longer shareholder in Prisa) and currently represents the shareholder BH Stores IV, B.V.

(5)
Initially nominated by Marlin Equities II, LLC (that is no longer shareholder in Prisa) and currently represents the shareholder Mr. Martin Franklin.

(6)
Member of the delegated committee.

(7)
Member of the audit committee.
 
 
(8)
Member of the nomination and compensation committee.

(9)
Member of the corporate governance committee.

(10)
Mr Iñigo Dago Elorza resigned as General Secretary and Secretary of the Board on February 27, 2013. On the same date Mr. Antonio García-Mon Marañes was appointed General Secretary and Secretary of the Board.

(11) 
Ms Huffington and Mr Leal were appointed by co-optation and hold office until the next general shareholders’ meeting.

Juan Luis Cebrián Echarri is Executive Chairman of Grupo Prisa, chairman of its delegated committee and chairman of Diario El País and of Ediciones El País, deputy chairman of Prisa Televisión, and a writer and member of the Spanish Royal Academy. He is a member of the board of Le Monde and Mediaset Spain. He has served as CEO of Grupo Prisa since November 1988. He also served as CEO of Sogecable from its founding in 1989 through 1999. Mr. Cebrián is graduated in Journalism by the Complutense University in Madrid, where he studied also Philosophy, as well as journalism  in the Madrid Official School of Journalism (1960-1963). He was a founding member of the political magazine Cuadernos  para el Diálogo  and worked as senior reporter and deputy editor in chief of the Pueblo and Informaciones de Madrid, daily newspapers, from 1963 to 1975. He also has been head of news for Televisión Española. Mr. Cebrián is the founding editor of the daily newspaper El País, which he edited from 1976 to November 1988, becoming then his publisher. From 1986 to 1988 he was also the chairman of the International Press Institute (I.P.I). He served on the board of Bankinter as advisory member. Honored by the universities of Missouri (Distinguished Services in Journalism), Veracruz (México), La Plata (Argentina) Chile and Dominican Republic, is Chevalier de l’Ordre des Arts et des Lettres de France. A writer and author of fiction and essay, he has published 19 books, in ten different languages.

Manuel Polanco Moreno is Deputy Chairman of Prisa and Chairman of Prisa Televisión. Mr. Polanco holds a degree in Business and Economic Sciences from the Universidad Autónoma de Madrid, where he specialized in International Finance. Mr. Polanco, who has spent his entire professional career at Prisa, has held roles in almost all of our business lines, including publishing, advertising, audiovisual media and written press. In 1991, he was charged with managing Santillana Chile; he also assumed responsibility for Santillana Perú in 1992, which he managed simultaneously until 1993, when he moved to Mexico City to become the general manager of the daily newspaper La Prensa and to establish the American edition of El País. In 1996, Mr. Polanco was named head of international management for the Grupo Editorial Santillana in the United States, based in Miami, with responsibility for the 21 companies located in Latin America and the United States. Upon his return to Spain in 1999, he was appointed chairman of Gerencia de Medios (GDM), the first multimedia sales head office in Spain and a pioneer in advertising sales. Soon thereafter, he was appointed chairman of Grupo Empresarial de Medios Impresos (GMI), the umbrella organization for all regional and specialized press at Prisa. In 2001, upon the consolidation of GMI into the Spanish Media Business Unit, Mr. Polanco became the assistant manager of the consolidated entity, in addition to his other responsibilities. In 2005 he was appointed CEO of the Portuguese media group, Media Capital, a position he left at the beginning of 2009 when he was named general manager of Prisa. Mr. Polanco was the general manager of Prisa in 2009 and 2010,  when he was appointed Chairman of Prisa Televisión.He has been a Prisa Executive Director since 2001 and a member of its delegated committee since 2008. He is Deputy Chairman of the company Timón, and director of Rucandio and the Portuguese media company Media Capital. Since 2010 he is Vice President of Mediaset España and also member of its Executive Committee.

Fernando Abril-Martorell  is co- Chief Executive Officer of Prisa and a member of its delegated committee. He has two degrees in Law and Business Administration from ICADE (Madrid). Mr. Abril-Martorell joined Prisa as Co-Chief Executive Officer and Chief Financial Officer in 2011 and since July 2012 is Co-Chief Executive Officer of Prisa. Prior to his appointment, he worked at Credit Suisse where he was CEO of Credit Suisse Spain and Portugal. Mr. Abril-Martorell joined Telefónica as CFO in 1997 and became CEO in 2000, a post he held until 2003. During his tenure at Telefónica, Mr. Abril-Martorell participated in the company’s privatization and oversaw its evolution into a global powerhouse with international growth in Latin America as well as various successful capital market transactions. Mr. Abril-Martorell has extensive financial experience, as, in addition to his six years heading up Credit Suisse, he held the positions of Managing Director and Treasurer of JP Morgan in Spain over a ten-year period, prior to joining Telefónica.

Juan Arena de la Mora is an independent director of Prisa and serves as chairman of the audit committee. Born in Mexico City in 1943, Mr. Arena holds a doctorate in Electromechanical Engineering from the ICAI, a degree in Business Administration from the ICADE, a diploma in Public Finance Studies, a degree in Developmental Child Psychology, and has completed the Advanced Management Program (AMP) at Harvard Business School. Mr. Arena joined Bankinter in 1970, where he held a number of posts. In 1985 he was appointed Managing Director, in 1987 he joined the board, in 1993 he was appointed Chief Executive Officer and from March 2002 to April 2007 he was the company’s president. During the 2009-2010 academic year he was a professor at Harvard Business School. He currently sits on the boards of Ferrovial, Laboratorios Almirall, Dinamia, Everis, Panda and Sol Meliá. He is chairman of the Advisory Board at Consulnor ,as well as Marsh and a member of the Advisory Board of Spencer Stuart. He is President of the Fundación SERES, a foundation for corporate social responsibility. He is also President of the Professional Council of ESADE, a member of the European Advisory Board of the Harvard Business School and the board of directors of Deusto Business School. He was awarded the Grand Cross of the Order of Civil Merit for his work on the Special Commission for Investigation into the Development of the Information Society (the “Soto Commission”).
 
 
Nicolas Berggruen is a proprietary director of Prisa. Nicolas Berggruen is the Chairman of Berggruen Holdings, a private company, which is the direct investment vehicle of The Nicolas Berggruen Charitable Trust. He is also the Chairman of the Nicolas Berggruen Institute. The firm and its related entities have made well over 100 direct investments during the last 20 years by committing their own capital across diverse industries, both public and private and focusing on building long-term value. These investments are often socially and culturally driven. The Berggruen Group has offices in New York, Berlin, Istanbul, Tel Aviv and Mumbai. Through the Nicolas Berggruen Institute, an independent and nonpartisan think tank, he encourages the study and design of systems of good governance. Mr. Berggruen is a founder of NBI’s 21st Century Council; a member of the Think Long Committee for California; as well as a Director of the Board of the Pacific Council on International Policy and member of the Council on Foreign Relations. Mr. Berggruen sits on the boards of the Museum Berggruen, Berlin, and the Los Angeles County Museum of Arts and is a member of the International Councils for the Tate Museum, London and the Museum of Modern Art, New York.

Matías Cortés Dominguez is qualified as another external director of Prisa. Mr. Cortés holds an undergraduate degree in law from the Universidad de Granada and a doctorate in Law from the Universitá di Bologna (Italy). In addition, he is a Professor of Political Economics and Tax at the Universidad de Granada and a Professor of Finance and Tax Law at the Universidades Autónoma de Madrid and Complutense de Madrid. Mr. Cortés is also a partner at Cortés Abogados, the Spanish law firm. Mr. Cortés has been a director of Prisa since 1977 and is a member of the boards of Diario El País and Ediciones El País. He is also a member of the board of directors of Sacyr Vallehermoso, S.A.

Arianna Huffington is the chair, president, and editor-in-chief of the Huffington Post Media Group, a nationally syndicated columnist, and author of thirteen books. In May 2005, she launched The Huffington Post, a news and blog site that quickly became one of the most widely-read, linked to, and frequently-cited media brands on the Internet. In 2012, the site won a Pulitzer Prize for national reporting. In 2006, and again in 2011, she was named to the Time 100, Time Magazine's list of the world’s 100 most influential people. Originally from Greece, she moved to England when she was 16 and graduated from Cambridge University with an M.A. in economics. At 21, she became president of the famed debating society, the Cambridge Union. In October 2012 Huffington was appointed to serve on the Board of Prisa. She is an independent director of Prisa and is a member of its Corporate Governance Committee.
 
José Luis Leal Maldonado is an independent director of Prisa. He holds a Law degree from the University of Madrid and another in Political Science from the University of Geneva. He is also certified in Statistics by the Statistical Institute of the University of Paris and has a PhD in Economics from the Sorbonne.He is currently President of the Hispano-French Association for Friendship and the Fundación Acción Contra El Hambre  (Action Against Hunger Foundation), the Fundación Trabajadores de la Siderurgia Integral (Steelworkers Foundation), Vice President of the Fernando Abril Martorell Foundation and member of the Board of Tustees of both the Dukes of Soria and Euroamerica Foundations. From 1972 to 1977 he worked at the OECD in Paris. In 1977 he was appointed Director General of Economic Policy in the government of Adolfo Suarez. In 1978 he was made responsible for the State Secretariat for Economic Planning and Coordination. A year later, he was appointed Minister of Finance, a position he held until September 1980. From 1980 to 1990 he was an advisor to the President of the Banco de Vizcaya. From 1986 to 2001 he chaired the Board of the University of Alcalá de Henares. Between 1990 and 2006, was President of the Spanish Banking Association. He joined the board of directors of Prisa in October 2012 and is a member of its Corporate Governance Committee.

Gregorio Marañón y Bertrán de Lis, marqués de Marañón, is an independent director of Prisa. He holds a degree in Law from the Universidad Complutense de Madrid and completed the Executive Management Program at IESE. He has extensive experience in both legal practice and the financial industry. He was general manager of Banco Urquijo from 1975 to 1982, chairman of Banif from 1982 to 1984, a director of Argentaria and a director of BBVA. He is the chairman of the board of directors of Logista, Roche Farma, and Universal Music Spain. He is also a member of the board of directors of Viscofan and Altadis, as well as the chairman of the Advisory Board of Spencer Stuart, and a member of the advisory boards of Vodafone and Aguirre & Newman. Since 1983 he has been a director of Prisa, and is also a member of its delegated committee and chairman of its nomination and compensation committee. He is also a member of the board of directors of Prisa Televisión. He is President of the Teatro Real (National Opera Home of Madrid). He holds the Gran Cruz de Alfonso X el Sabio and is an officer of the French National Order of the Legion of Honor.

Martin Franklin is a proprietary director of Prisa and is a member of its delegated committee and of its compensation and nomination committee. Mr. Franklin has served as Executive Chairman of Jarden Corporation since June 13, 2011. Mr. Franklin was appointed to the board of directors of Jarden Corporation on June 25, 2001 and served as Chairman and Chief Executive Officer from September 24, 2001. Mr. Franklin is also a principal and executive officer of a number of private investment entities. Mr. Franklin served as the Chairman and/or Chief Executive Officer of three public companies, Benson Eyecare Corporation, Lumen Technologies, Inc and Bollé Inc., between 1992 and 2000. Mr. Franklin also serves as a director of Burger King Worldwide Inc.
 
 
Alain Minc is an independent director of Prisa and is a member of its delegated committee and of its audit committee. Mr. Minc was born in Paris on April 15, 1949. Mr Minc is a graduate of the Ecole des Mines de Paris and ENA. After serving as Inspecteur des Finances, he joined Compagnie de Saint-Gobain in 1979 as Chief Financial Officer. In 1986, he became Vice-Chairman of CIR International (Compagnie Industriali Riunite International) and General Manager of Cerus (Compagnies Européennes Réunies). In 1991, Minc founded his own consulting firm, AM Conseil. He has been a board member of numerous companies and the chairman of the supervisory board of Le Monde, (1994 to 2008). Mr. Minc has been a Director and a member of the Audit Committee of CaixaBank since 2007. He has been Chairman of SANEF since December 2011. He is Commandeur de la Légion d’Honneur. Alain Minc has written more than 30 books since 1978.

Agnes Noguera Borel is a proprietary director of Prisa. She holds degrees in Law and Art History from the Universidad de Valencia–Estudi General, a diploma in Gemology from the Universidad de Barcelona and is a chartered financial analyst (member of the Spanish Institute of Financial Analysts). Ms. Noguera has held a number of management positions in various companies and in various industries. In 2005 she was named CEO of Libertas 7, S.A., an investment and real estate development company, where she had been a director since 1988. She also represents Libertas 7, S.A. on the board of directors of  Compañía Levantina de Edificación y Obras Públicas. Ms. Noguera is also a member of the board of Adolfo Domínguez (representing Luxury Liberty). She joined the board of directors of Prisa in 2006 and is a member of its audit committee and of its corporate governance committee. She is a member of Fundación Etnor para la Ética de los Negocios y las Organizaciones. In 1997, she was appointed a trustee of the Valencian foundations Libertas 7.

Borja Jesús Pérez Arauna is a proprietary director of Prisa. He has a degree in Economics and Business Studies from the Universidad Complutense de Madrid and an MBA from the Instituto de Empresa de Madrid. He has been a director of Prisa since 2000 and is a member of its nomination and compensation committee. Mr. Pérez Arauna joined Timón in 1995 as investments manager and currently is the vice-chairman  and General manager of Timón, jont and several director of Promotora de Publicaciones and Asgard Inversiones and director of Otnas Inversiones. Mr Pérez Arauna is also the chairman of Qualitas Equity Partners and a director of Qualitas Venture Capital.
 
Emmanuel Roman is an independent director of Prisa and is a member of its delegated committee and of its audit committee. Emmanuel Roman was awarded an M.B.A. in Finance and Econometrics from the University of Chicago in 1987 and a bachelor’s degree from the University of Paris in 1985. Mr. Roman began his career in 1987 at Goldman Sachs International Limited where, over the years, he worked in the Fixed Income, Investment Banking and Capital Markets areas and where in 1991 he become the co-head of Worldwide Equity Derivatives. In 1996 Emmanuel became a Managing Director of Goldman Sachs International Limited and in 1998 he was elected as a partner. In 2001 he was appointed co-head of Worldwide Global Securities Services and in 2003 he also became co-head of the European Equities Division. In September 2005, after 18 years at Goldman Sachs International Limited, Emmanuel joined GLG Partners LP as a co-CEO where he focuses primarily on expanding the business, marketing, risk management, operations, technology and compliance. In October 2010, on completion of the acquisition of GLG by MAN, Emmanuel also became the COO of MAN, a group-wide role with prime responsibility for integrating the GLG acquisition. He is also the key link between the sales, investment, product development and operational sides of the combined business. He joined the Board of MAN in May 2011 and was appointed President & COO of MAN in July 2012.

Harry Sloan is the Chairman and Chief Executive Officer of Global Eagle Acquisition Corporation, a publicly traded (EAGLU:Nasdaq) special purpose acquisition company ("SPAC") formed for the purpose of making an acquisition of a media or entertainment business. Sloan created the venture in February, 2011 with former CBS and Sony Pictures Entertainment President Jeff Sagansky, who will be the president of the new entity. In the largest initial public offering of a US based SPAC in the last three years, Global Eagle raised $190 million of seed capital to invest and operate media and entertainment businesses that have high growth potential in the US and overseas.  Throughout his career, Sloan's entrepreneurial spirit has guided him in identifying key investment opportunities in entertainment industry. He invested in and headed three US publicly-listed media companies: SBS Broadcasting, S.A., Lions Gate Entertainment Corp., and New World Entertainment Ltd.  Sloan also served as the Chairman and Chief Executive Officer of Metro-Goldwyn-Mayer Studios Inc.  Sloan received his B.A. degree from UCLA and J.D. Degree from Loyola Law School. In November 2010, Sloan was appointed to serve on the board of Prisa. He is an independent director of Prisa.

Ernesto Zedillo has been an independent director of Prisa since 2010 and serves as chairman of our corporate governance committee. He has been a director of Procter& Gamble since 2001, of Alcoa since 2002 and of Citigroup since 2010. He was also a director of Union Pacific from 2001 to 2006 and of EDS from 2007 to 2008. Dr. Zedillo has been Director of the Center for the Study of Globalization and Professor in the Field of International Economics and Politics at Yale University since 2002. He is co-author of a number of books on international economic issues, as well as editor of the volumes Global Warming: Looking Beyond Kyoto and The Future of Globalization: Explorations in Light of Recent Turbulence. He has served as chair of several international commissions such as the United Nations High Level Panel of Financing for Development (2001), the Commission of Eminent Persons on the Role of the International Atomic Energy Agency to 2020 and Beyond (2008), and the International Commission for the Reform of the World Bank (2008-2009). He was chairman of the board of the Global Development Network (2004-2010) and has been a member of the Board of the Fundación Carolina of Spain since 2001 and of the Foundation Board of the World Economic Forum since 2002. Ernesto Zedillo was President of Mexico from December 1, 1994 to November 30, 2000. He previously served his country as Undersecretary of the Budget (1987-1988), Secretary of Economic Programming and the Budget (1988-1992), and Secretary of Education (1992-1993). He earned his Bachelor’s Degree from the School of Economics of the National Polytechnic Institute in Mexico and his M.A., M. Phil. and Ph.D. from Yale University.
 
 
Antonio García-Mon Marañés has served as General Counsel and non-director Secretary of the Board of Prisa since February 2013. He holds a Law Degree by the Complutense University of Madrid and a special degree in European Law by the Institute of European Studies of the University of Brussels. He started his career as a lawyer in Garrigues, where he worked in the competition and EEC law department in Madrid and Brussels. In 1999 he joined Correos as subdirector of the law department. In 2000 he joined the Legal Department in Prisa, where he worked in different areas being responsible in particular of anti-trust and regulatory matters. In 2009 he joined Sogecable (today Prisa Televisión) as Director of the Legal Department. In 2010 he was appointed Secretary of the Board of Prisa Televisión and CANAL+, and in 2011, General Counsel.

Carlos Ulecia Palacios is non-director deputy secretary of the board of directors of Prisa. He holds a Law Degree and a Business Certificate from the Universidad de Zaragoza, and a Master Degree on Corporate and Tax Law from the Instituto de Empresa in Madrid. He served as Lawyer in Landwell (Law Firm of PricewaterhouseCoopers) where he was appointed Senior Associate of the Firm. In 2000 he served as Director of legal services in Indra Sistemas. He joined Prisa in late 2007 as deputy general secretary. Mr. Ulecia is Professor at the CEU San Pablo and the Instituto de Empresa in Madrid.
 
The following table sets forth certain information with respect to the executive officers of Prisa, as of December 31, 2012. The professional address of each of the directors is c/o Grupo Prisa, Gran Vía 32, 28013 Madrid, Spain.
 
Name
  
Position
  
Position Since
Javier Lázaro Rodriguez
  
Chief Financial Officer (CFO) of Prisa
  
September 2012
Fernando Martinez Albacete (1)
  
Director of Strategic Planning, Management Control and Budgeting at Prisa.
  
April 2011
José Luis Sainz (1)
  
Executive Chairman of Prisa Noticias, CEO of El País and CEO of Prisa Radio.
  
April 2011
Miguel Angel Cayuela (1)
 
Chief Executive Officer — Santillana
 
April 2008
Pedro García Guillén (1)
 
Chief Executive Officer — Prisa Televisión
 
March 2009
Antonio García-Mon Marañes (1) (2)
 
General Secretary
 
February 2013
Kamal M. Bherwani (1)
 
Chief Technology Officer
 
January 2010
Andrés Cardó (1)
 
International Managing Director for Prisa Radio
 
September 2012
Bárbara Manrique (1)
 
 Corporate Communications, Marketing and External Relations Director
 
October 2007
Oscar Gómez Barbero
  
Director of Organization, Resources and Technology.
  
February 2009
Virginia Fernández Iribarnegaray
 
Internal Audit Manager
 
May 2007
 
(1)
Member of the Business and Management Committee.
(2)
Mr Iñigo Dago Elorza  resigned as General Secretary and Secretary of the Board on February 27, 2013. In the same date Mr. Antonio García-Mon Marañes was appointed General Secretary and Secretary of the Board.
 
Javier Lázaro serves as Chief Financial Officer (CFO) of Prisa. He is a telecommunications engineering graduate from the Polytechnic University of Madrid (Universidad Politécnica de Madrid) and holds an MBA from Columbia University, New York.
He began his professional career at McKinsey where, from 1994 to 1996, he worked as a financial analyst. He subsequently held various senior positions at Goldman Sachs in London over a nine-year period. In 2006 he joined Credit Suisse as Managing Director of Investment Banking for Spain and Portugal, a position he held until his current appointment as head of financial strategy and fiscal policy of the Group.

Fernando Martinez Albacete  is Director of Strategic Planning, Management Control and Budgeting at Prisa. He holds a degree in Economics and Business Administration from the Universidad Pontificia de Comillas (ICADE). He began his professional career in the Finance Department of Prisa, where he assumed control and investment project evaluation responsibilities. He had previously collaborated with The Santillana Group. In 1998 he was appointed head of Planning and Control at Sogecable, and a year later, became director of Investor Relations following its initial public offering. In 2001 he assumed responsibility for Sogecable’s Finance Department. In 2005 he was appointed Chief Financial Officer of Sogecable. In 2009, after Prisa’s takeover of Sogecable he was appointed Secretary General of Prisa, with responsibility over its M&A activity. From 2011 to September 2012 he has been Director of Corporate Development of Prisa. Since September 2012 he has served as Director of Strategic Planning, Management Control and Budgeting at Prisa. He is member of the board of directors of Prisa Televisión (the former Sogecable) and Digital +.
 
 
Jose Luis Sainz is Executive Chairman of Prisa Noticias, CEO of El País, CEO of PRISA Radio and SER. He holds a degree in Law and Economics from Madrid’s Universidad Autónoma. He began his career at Arthur Andersen in 1985 with responsibilities for media consultancy and distribution. In 1989 he joined El País, where he held various management positions including Deputy Managing Director with direct responsibility for the commercial area until 1997, when he was appointed assistant general manager at Prisa. Mr. Sainz has also headed Cadena Ser and Union Radio. He has been CEO of Prisacom, and he also held the same position in Pretesa and Plural Entertainment, our audiovisual production divisions for film and television. In 2008 he was appointed general manager of national media at Grupo Vocento, a position he held until his return to Prisa in April 2011 as Executive Chairman of Prisa Noticias and CEO of El País. In October 2012 he was appointed CEO of PRISA Radio and SER. Sainz will combine his role as radio chief executive with his current responsibilities as head of PRISA Noticias.

Miguel Angel Cayuela serves as CEO of Santillana. An economics graduate, Miguel Ángel Cayuela began his career at Santillana in 1985 in the area of market research and marketing. In 1991 he was named managing director of Santillana for Mexico. In 2003, he returned to Madrid to take on the post of COO. He was appointed CEO of Santillana in April 2008.

Pedro García Guillén serves as CEO of Prisa Televisión. He holds a degree in Economics and Business Studies from Madrid’s Universidad Complutense. He began his career at Ford España and BMW Ibérica. In 1989, he joined Prisa where he performed a number of roles in the Finance Department. In 1995 he was appointed general manager of Cinco Días, and in 1999 became CEO of the newspapers AS and Cinco Días, the magazine publishing house PROGRESA and Grupo de Medios Impresos (GMI). In September 2000 he was appointed general manager of Diario El País where he remained until May 2009, when he became CEO of Prisa Televisión.

Antonio García-Mon Marañes is general secretary of Prisa and legal department manager of Prisa. His biographical information is described above.

Kamal M. Bherwani serves as Chief Technology Officer of Prisa. Mr. Bherwani has over 25 years of technology, strategy and operational experience in various industries. Prior to his appointment as our Chief Technological Officer, Mr. Bherwani was most recently the CIO of Health and Human Services for the City of New York, where he implemented several award-winning initiatives that have been globally and nationally recognized. He was previously Chairman and CEO of Relativity Development Corporation and CIO of Bridas Corporation. Mr. Bherwani is an Advisor to the Mayor’s Office of the City of New York, on the Board of Advisors of IBM Tivoli, Dell Software, HP´s Print and Image Group, and Stony Brook University’s Center of Excellence in Wireless and Information Technology (CEWIT).
 
Andrés Cardó serves as International Managing Director for Prisa Radio. Mr. Cardó is an Economics and Humanities graduate from the Universidad Pontificia Católica de Perú. He studied Finance under the Business Administration Program at the Escuela Superior de Administración de Negocios (ESAN) in Lima. He also holds an MBA from Madrid’s IESE. He began his career at Prisa in 1990 at Santillana, and in 1994 he was put in charge of launching the company’s operations in Bolivia. In 2001 he became general manager of Santillana in Brazil, a post he held simultaneously after 2002 with that of general manager of Editorial Moderna and, after January 2009, with that of country manager in Brazil. He has represented the Fundación Santillana in Brazil since its foundation there in April 2008. He was appointed director of Corporate Development and Marketing of Prisa in January 2010 and has been Chief Operations Officer since 2011. In October 2012 he was appointed International Managing Director - Prisa Radio. Within Prisa he serves on the boards of: Grupo Santillana de Ediciones, AS, Conelpa (a joint venture between  Condé Nastand El País). He is also president of Prisa Brand Solutions.

Bárbara Manrique de Lara serves as Corporate Communications & External Relations Director. She holds a degree in Spanish Philology from the Universidad Autónoma de Madrid, a Master’s Degree in Publishing from ICADE/Santillana Universidad and a Master’s Degree in Communications and Marketing from ESIC. She began her professional career at the chain of bookstores Crisol, and in 2000 became Press Manager at the publishing houses Taurus and Alfaguara Infantil y Juvenil, owned by Grupo Santillana. In May 2005 she was appointed Communications Director of the Atman Foundation, before becoming Managing Director of the foundation in 2006. In 2007 she became Corporate Communications Director at Prisa. Manrique de Lara is member of the European Association of Communication Directors and, since 2003, she has also  lectured in Communications and Marketing on the Master’s in Publishing program at the Instituto Universitario de Postgrado, , a postgraduate institute in which three prestigious Spanish state universities participate (Universidad de Alicante, Universidad Autónoma de Barcelona y Universidad Carlos III de Madrid) in collaboration with Santillana Formación. In 2011 she was included in the “Top 100 Women Leaders in Spain” in the category of communications, alongside prominent figures from the worlds of politics, culture and business.

Oscar Gómez serves as chief of Organization, Resources and Technology officer of Prisa. He holds a degree in Information Technology and an MBA from the Universidad de Deusto, and has wide-ranging professional experience. He began his career at PriceWaterhouseCoopers as Information Technology Manager and in 1991 was appointed managing partner of Corporación IBV-Landata Telecom. In 1994, he joined Ferrocarriles Vascos as Manager of Operations, and in 1996 was named Director of Organization and Human Resources prior to becoming the general manager of the public-sector company. From 1999 to 2006 he worked in the Business Consulting Services area of PriceWaterhouseCoopers–IBM, as Partner in charge of the industry group for Spain, Portugal, Greece, Israel and Turkey at IBM. Before being appointed manager of Organization, Resources and Technology at Prisa in 2009, he was Corporate Information Systems Manager at Renfe”.
 
 
Virginia Fernández Iribarnegaray serves as Internal Audit Manager for Prisa. She holds a degree in Economics and Business Studies from the Universidad Complutense de Madrid. She began her professional career at Arthur Andersen (currently Deloitte) in 1995 in the Audit and Business Advisory Services Division. In 2000 she was appointed manager in the Transport, Products, Distribution and Services industry group and in 2006 became a senior manager. She has been managing our Internal Audit Department since May 2007.

Familial Relationships

There are no familial relationships among the directors and executive officers.

Director and Executive Officer Conflicts of Interest

With respect to our directors, conflicts of interest are regulated by Article 33 of our Board of Directors Regulations, which require the directors to notify Prisa of any situations which might involve conflicts of interest. Direct or indirect professional or commercial transactions of the directors (or of persons related to them if the amount of the transaction in question is greater than €60,000) with Prisa or with any of our subsidiaries must be authorized by the board of directors subject to a report from the corporate governance committee. Transactions by persons related to the directors, for amounts of up to €60,000, require authorization by the corporate governance committee.

Also, a director must refrain from intervening in any deliberation relating to matters in which he or she has a direct or indirect interest.

Authorization from the board of directors is not required in related party transactions that meet the conditions specified in Article 33 of our Board of Directors Regulations: a) those involving compliance with standard contract conditions applied broadly to multiple customers; b) those involving predetermined prices or fees carried out by the suppliers of the goods and services in question; and c) those which amount to less than 1% of the annual income of the person or entity receiving the service.

With respect to our senior executives, the mechanisms to detect conflicts consist mainly of the obligation of the persons subject to our Stock Market Code of Conduct to declare a conflict of interest (Section V of our Stock Market Code of Conduct). Likewise, Section 7 of our Code of Conduct stipulates the guidelines to be followed in the event of a conflict of interest, which guidelines also apply to the members of the board of directors. See Item 16B. Code of Ethics for a description of our codes of conduct.

In 2012, the detail of the matters regarding which certain directors refrained from intervening and voting on the deliberations of the board of directors or their committees is as follows:

Matías Cortés Dominguez
Approval of his professional services by the board of directors

As of December 31, 2012, the following directors had shareholder relationships with significant shareholders of Prisa:

Director
Significant Shareholder
Description of the Relationship
Nicolas Berggruen
BH Stores IV, B.V
BH Stores IV B.V. (“BH IV") is an indirect subsidiary of Berggruen Holdings Ltd. ("BH Ltd."), a direct, wholly-owned subsidiary of the Nicolas Berggruen Charitable Trust (the "Trust"). The ultimate owner of the shares held by BH IV is the Trust.  Mr. Berggruen is a director of  Berggruen Holdings Ltd
Nicolas Berggruen
Otnas Inversiones, S.L.
The Director has indirect holdings (8.2187%) in the share capital of Otnas Inversiones, S.L., through Berggruen Acquisition Holdings, S.L.
Martin Franklin
Otnas Inversiones, S.L.
The Director has direct holdings (8.2187%) in the share capital of Otnas Inversiones, S.L.
Borja Jesús Pérez Arauna
Promotora de Publicaciones
The director has 0.0081% direct holdings in the share capital of Promotora de Publicaciones
Manuel Polanco Moreno
Rucandio
The director beneficially owns 13.55% and is the owner of a remainder interest (nudo propietario) of 11.45% of the share capital of Rucandio

Spanish law requires us to disclose whether any of our directors or their related parties perform similar duties as an independent professional or employee or hold any shares at other companies that are identical, similar or complementary to the businesses we conduct (excluding the positions they hold at our subsidiaries). To our knowledge, in 2012 no directors (or their related parties) performed duties or held any shares at companies that are identical, similar or complementary to the businesses we conduct, with the following exceptions:
 
 
●
Juan Luis Cebrián Echarri was director of Mediaset España Comunicación, S.L., director of Le Monde Libre and director of Societe Editrice du Monde.
 
●
Likewise, Mr. Cebrián`s daughter held the position of Manager of the film area in Television Española (Corporación RTVE. Radio Televisión Española);
 
●
Manuel Polanco Moreno was Deputy Chairman of Mediaset España Comunicación, S.L. and director of V-Me Media Inc;

●
Fernando Abril-Martorell was director of Telecomunicacoes de Sao Paulo SS-Telesp.
 
●
Arianna Huffington was Chairman of AOL, Inc and Chief of “The Huffington Post Media Group”.
 
●
Jose Luis Maldonado held a 0.050% share of Punto y Seguido, S.A.
 
●
Gregorio Marañón y Bertrán de Lis was chairman of Universal Music Spain, S.L.
 
●
Nicolas Berggruen was director of Societe Editrice du Monde and indirectly through its company Berggruen Holding LTD held a 45% share of LeYa, a holding company of an editorial group which comprises Brazilian, Portuguese and African editorial companies.
 
●
Harry Sloan was director of Zenimax Media Inc and held a 1.910% share of the same.
 
●
Mr. Alain Minc's son held the position of Editor of “Paris Match”, “Journal du Dimanche” and “Versión Femina” (Lagardère Group).

Arrangements with Shareholders, Customers or Suppliers

In order to facilitate the refinancing of the financial debt of Prisa, Timón, S.A., Promotora de Publicaciones, S.L., Asgard Inversiones, S.L.U, Berggruen Acquisition Holdings S.A.R.L and Mr. Martin Franklin, reached an agreement and set up a company named Otnas Inversiones, S.L., indirectly controlled by Rucandio, for the conversion of 75,000,000 warrants, amounting €150 million, into Prisa shares. The transaction was executed in January 2012.

In December 2011 Promotora de Publicaciones, S.L. executed some corporate transactions that allowed its shareholders to replace an indirect shareholding into a direct shareholding in Prisa. Some shareholders who acquired the direct shareholding, entered into a shareholder agreement by virtue of which they maintain the syndicated right to vote in Prisa. The execution of such Reversion Plan was completed in February 2012. Rucandio, S.A. controls the majority of the voting rights in the shareholders' agreement (see “Shareholder Agreements”).
 

Compensation and Benefits

Articles 19, 25 and 28 of our bylaws describe the compensation systems for the directors.

Article 19 of our bylaws stipulates that the compensation for directors shall consist of an annual fixed amount, which is to be approved by the board of directors and must be within the limits established for the annual fixed amount at the general shareholders’ meeting. The compensation of the various directors may vary in accordance with their duties and services for the board committees and shall be compatible with the payment of fees for attending board and committee meetings. The shareholders at the ordinary general shareholders’ meeting may modify the limits of the directors’ remuneration. If the shareholders elect not to modify the limits, the limits that are currently in force will be automatically revised each year in accordance with the consumer price index. The board is responsible for setting the exact amount of the attendance fees and the individual compensation to be received by each director, which must be within the limits established by the general shareholders’ meeting.

Article 19 also stipulates that, in addition to the annual fixed cash amount, directors’ compensation may include shares of Prisa, stock options or other amounts tied to the value of Prisa ordinary shares. Such methods require a resolution of the general shareholders’ meeting, specifying, as applicable, the number of shares to be delivered to the director(s), the exercise price of the stock options, the value of the reference shares and the time period of this compensation system. We may also subscribe a civil liability insurance policy for our directors.
 
 
Article 25 of our bylaws provides that the directors’ compensation provided for in the bylaws must be compatible with and is independent of any wages, compensation, indemnities, pensions and compensation of any other kind established across the board or specifically for the directors who hold a compensated position of responsibility, of an employment nature or otherwise, at Prisa or at any Prisa subsidiary or affiliate.

Article 28 of our bylaws describes the compensation to be earned by the chairman, the deputy chairman or chairmen, where applicable, and the chief executive officer, and establishes that the compensation will be set and determined by the board of directors regardless of the amount payable pursuant to Article 19 of the bylaws.

Likewise, and according to the Board of Directors Regulation, the Board shall seek to ensure that the remuneration of directors is moderate and in line with market conditions. Remuneration provided directors shall be transparent. The Annual Report, as an integral part of the annual accounts, shall contain both legally-required information and any other deemed appropriate regarding the remuneration received by members of the Board of Directors.

The Board of Directors shall adopt all of the measures within its powers to ensure that the remuneration of external directors conforms to the following guidelines:
 
External directors shall be paid based on the amount of time actually devoted to their tasks.

Remuneration for independent directors shall be calculated to offer sufficient incentive for their work, without constituting an obstacle to their independence.

General remuneration policy affecting directors and senior management, shall be submitted to the prior approval of the Board of Directors. Likewise, and as provided in article 25 of the Board of Director Regulation, the Nomination and Compensation Committee:

i.          Propose to the Board of Directors: i) the Compensation Plan for directors, ii) the amounts and/or compensation limits that apply to directors, based on their dedication to the Board and the Committees thereof, iii) the individual remuneration of executive directors and other conditions of their contracts and iv) a statement of compensation policy for Directors and senior management.

ii.         Approve the key objectives linked with the variable compensation for executive directors and/or the management.

iii.        Propose to the Board of Directors the compensation system for senior managers of Prisa and its subsidiaries and report to the Board about the liquidation of the variable compensation for them and to establish other incentive plans for them.

iv.        Ensure compliance with the remuneration policy set by the Company.

By virtue of the Sustainable Economy Act (that added an Article 61 ter of the Securities Market Act, regulating the new regime of annual report on the remuneration of directors), the Company, at the next annual meeting of shareholders, will disseminate and submit to a non-binding vote as a separate item on the agenda, the remuneration policy report for the year 2013.

The General Shareholders Meeting held on June 30, 2012 approved the remuneration policy report for the year 2012.

There are no arrangements with any of the Prisa directors providing for benefits upon termination of service as director.

The following table sets forth the compensation of our directors aggregated for all directors, accrued in the year 2012:

Compensation of our directors accrued from Prisa:
 
Compensation
 
2012
 
 
 
(thousands
of euros)
 
Fixed salaries
 
 
2,447
 
Variable salaries
 
 
0
 
Allowances
 
 
445
 
Compensation stipulated in the bylaws
 
 
1,785
 
Options and/or options on other financial instruments
 
 
0
 
Other
 
 
68
 
Total:
 
 
4,745
 

 
Other Benefits
 
2012
 
 
 
(thousands
of euros)
 
Advances
 
 
—
 
Loans
 
 
—
 
Pension funds and plans: contributions
 
 
—
 
Pension funds and plans: obligations assumed
 
 
—
 
Life insurance premiums
 
 
34
 
Guarantees assumed by Prisa for the benefit of directors
 
 
—
 

The following table sets forth the compensation accrued as a result of our directors also holding positions on subsidiary boards of directors and/or serving as a senior executive of any subsidiary of Prisa, aggregated for all directors for the year 2012:

Compensation of our directors accrued from other subsidiaries of Prisa:
 
Compensation
 
2012
 
 
 
(thousands
of euros)
 
Fixed salaries
 
 
461
 
Variable salaries
 
 
0
 
Allowances
 
 
18
 
Compensation stipulated in the bylaws
 
 
123
 
Stock options and/or options on other financial instruments
 
 
0
 
Other
 
 
11
 
Total:
 
 
613
 
 
Other Benefits
 
2012
 
Advances
 
 
—
 
Loans
 
 
—
 
Pension funds and plans: contributions
 
 
—
 
Pension funds and plans: obligations assumed
 
 
—
 
Life insurance premiums
 
 
2
 
Guarantees assumed by the Company for the benefit of directors
 
 
—
 

Total compensation for each category of director, aggregated for all directors in that category (“Group” refers to payment of compensation by our subsidiaries):

 
 
2012
 
Category
 
By Prisa
 
 
By Group
 
 
 
(thousands of euros)
 
Executive directors
 
 
1,966
      
472
 
Proprietary directors
 
 
1,304
      
0
 
Independent non-executive directors
 
 
1,266
      
141
 
Other External directors
 
 
209
      
0
 
Total
 
 
4,745
      
613
 

Compensation accrued which is tied to profits attributed to the parent company (Promotora de Informaciones):

 
 
2012
 
 
 
(thousands
of euros)
 
Total directors’ compensation
 
 
5,358
 
Total directors’ compensation as a percent of profit attributed to Prisa (as a %)
 
 
0.0*
 

* The percentage that the total directors´ remuneration represent on the profits attributed to the parent company is calculated on the outcome of the consolidated group, that in the year 2012 did not have profits.
 
 
Notes:

i) Additionally, during the year 2012 the Company  recorded an expense of 853 thousand euros relating to the accrual of the compensation already paid in 2011 to the Executive President of the Group (Mr Juan Luis Cebrian), as explained in the financial statements and in the Remuneration Policy Report for 2013.
 
ii) The executive Directors Mr Juan Luis Cebrian, Mr Fernando Abril-Martorell and Mr. Manuel Polanco Moreno have voluntarily agreed with the Company, given the general economic circumstances, that the remuneration for the 2012 fiscal year shall exclusively be the fixed remuneration provided for in their contracts, with no attribution of any kind of variable remuneration.

Breakdown of cash compensation accrued by members of the Board of Directors in 2012 (in euros):

Director
  
Fixed remuneration
    
Bonus
    
Fixed
Compensation
in cash for the
Board of
Directors
    
Per diem
fees
  
Ignacio Polanco Moreno Moreno (Resigned as Chairman and as a director of Prisa, in July 2012).
     540,164       0       --       0  
Juan Luis Cebrián Echarri
     1,116,000       0       --       0  
Fernando Abril-Martorell Hernández
     790,500       0       --       0  
Manuel Polanco Moreno
     460,420       0       --       0  
Agnès Noguera Borel
     0       0       89,833       52,500  
Diego Hidalgo Schnur  (Resigned as director of Prisa, in July 2012).
     0       0       44,333       37,500  
Borja Pérez Arauna
     0       0       72,417       51,500  
Nicolas Berggruen
     0       0       55,000       9,000  
Martin Franklin
     0       0       148,250       30,000  
Gregorio Marañón y Bertrán de Lis
     0       0       197,333       68,500  
Juan Arena de la Mora
     0       0       99,583       40,500  
Alan Minc
     0       0       164,083       51,000  
Emmanuel Roman
     0       0       151,583       30,500  
Harry Sloan
     0       0       70,833       13,500  
Ernesto Zedillo Ponce de León
     0       0       89,833       31,500  
Matías Cortés Domínguez
     0       0       150,000       22,000  
Arianna Huffington
     0       0       9,083       2,500  
Jose Luis Leal Maldonado
     0       0       14,083       5,000  
TOTAL
     2,907,084       0       1,356,247       445,500  

Notes:

In addition, Gregorio Marañón y Bertrán de Lis received a fixed fee of €45,917 and attendance fees of €18,000 for his participation in the Board of Directors and Committees of Prisa Televisión S.A., and Arianna Huffington received a fixed fee of €77,082 for her participation in the Board of Directors of Diario El País S.L.
 
 
Breakdown of compensation in kind, by deliverance of shares, accrued by members of the Board of Directors in 2012 (in euros):

Director
  
Bonus by deliverance of shares
    
Fixed Compensation by deliverance of shares
    
Social Benefits
  
Ignacio Polanco Moreno (Resigned as Chairman and as a director of Prisa, in July 2012).
     0       0       7,668  
Juan Luis Cebrián Echarri
     0       0       48,442  
Fernando Abril-Martorell Hernández
     0       0       11,389  
Manuel Polanco Moreno
     0       0       11,392  
Agnès Noguera Borel
     0       36,667       0  
Diego Hidalgo Schnur (Resigned as director of Prisa, in July 2012).
     0       19,000       0  
Borja Pérez Arauna
     0       36,667       0  
Nicolas Berggruen
     0       36,667       0  
Martin Franklin
     0       36,667       0  
Gregorio Marañón y Bertrán de Lis
     0       36,667       212  
Juan Arena de la Mora
     0       31,667       0  
Alan Minc
     0       36,667       0  
Emmanuel Roman
     0       36,667       0  
Harry Sloan
     0       36,667       0  
Ernesto Zedillo Ponce de León
     0       36,667       0  
Matías Cortés Domínguez
     0       36,667       0  
Arianna Huffington
     0       8,167       0  
Jose Luis Leal Maldonado
     0       3,167       0  
TOTAL
           € 428,671     € 79,103  

Notes:

The remuneration of the nonexecutive directors includes a fixed amount by means of the delivery of shares. The gross amount for all directors is the same, but the number of shares allocated is different as this depends on the withholding percentages applicable to each of them.

Furthermore, the accounts for the 2012 fiscal year include the timing of allocation (annual) of the costs in respect of 220,242 Prisa shares, with a reference value of €2.17/share, which were delivered to the Chairman of the Company in 2011. As explained in the 2012 Remuneration Policy Report, under the contract executed between the Chairman of the Company and the Company itself, in the context of the corporate restructuring and recapitalisation operation, a minimum-stay commitment of three years was agreed to. The Chairman received 660,728 shares, with a reference value of €2.17/share, for his commitment to remain in office for three years. The value of those shares is included in the Company’s accounts as remuneration earned by third parties during the 2011, 2012 and 2013 fiscal years.
 
 
Compensation accrued by members of senior management

Compensation accrued by members of senior management, aggregated for the members listed during the year ended December 31, 2012:

Name
Position
Javier Lázaro Rodriguez
Chief Financial Officer (CFO) of Prisa
Kamal Bherwani
Chief Technological Officer
Andrés Cardó Soria
International Managing Director for Prisa Radio
Pedro Garcia Guillén
Chief Executive Officer of Prisa Televisión
Miguel Angel Cayuela Sebastián
Chief Executive Officer of Grupo Santillana
Virginia Fernández Iribarnegaray
Internal Audit Director
Jose Luis Sainz Diaz
Executive President of Prisa Noticias, CEO of El País, CEO of Prisa Radio
Fernando Martinez Albacete
Director of Strategic Planning, Management Control and Budgeting at Prisa
Bárbara Manrique de Lara
Corporate Communications, Marketing & External Relations Director
Iñigo Dago Elorza
General Secretary
Oscar Gómez Barbero
Director of Organization, Resources and Technology
Total Compensation (thousands of euros):
5,819

Within the 2012 total remuneration of senior management, is also included the remuneration perceived by Ignacio Santillana del Barrio, Augusto Delkáder Teig and Javier Pons Tubio, until September 2012, by their offices of General Manager of Prisa, President of Prisa Radio and CEO of Prisa Radio, respectively In September 2012 there is an internal reorganization in the Company that involves a modification  of the criteria used to determine  senior management.

Obligations Pursuant to Pensions and Retirement Plans

We have not assumed any obligations relating to pensions, retirement or similar benefits for the members of the board of directors or senior executives and, therefore, no amounts have been set aside or accrued for this purpose at Prisa or at any of our subsidiaries.

Severance Obligations

The management team includes 10 members (3 directors and 7 senior executives) whose contracts include a special clause that provides for a general termination benefit for the executive in the event of his or her termination without “just cause.” In this event, the executive is entitled to receive one or two year’s total compensation (i.e., his or her current fixed salary plus the amount of the last bonus received by the executive, if any).

In addition, in 2012 another 3 managers of the Company (not a part of the Management Team) had a clause on the same terms as indicated above, in an amount equivalent to one year of total compensation.

Share/ Stock Options Delivery Plans

At the general shareholders’ meeting of November 27, 2010, Prisa shareholders, pursuant to Article 219 of the Spanish Companies Act and article 19 of the Articles of Association, and within the framework of our compensation policy, resolved to authorize a system of compensation consisting of the delivery of Prisa shares and/or stock options to our directors and managers during the 2010, 2011, 2012 and 2013 fiscal years, to facilitate or increase their shareholdings in Prisa (“2010-2013 Share/Stock Options Delivery Plan”), on the terms indicated below.

General description of the “2010-2013 Share/Stock Options Delivery Plan”

Under the “2010-2013 Share/Stock Options Delivery Plan”, we may deliver a number of Prisa shares or stock options to each of the Participants. The system may be offered to such directors and managers in the Prisa Group as may be determined by the board of directors, on proposal of the corporate governance, nomination and remuneration committee.

For these purposes “Participants” are individuals in any of the following categories: directors, general managers, resource managers, managers of departments and/or business units and other managers in the Company or its group comparable to the foregoing, who meet the conditions established by the board of directors, on proposal of the corporate governance, nomination and remuneration committee.
 
 
The number of shares and stock options that may correspond to each Participant will be determined by the board of directors on proposal of the nomination and compensation committee, based on their responsibilities within the management bodies of the Company or any of the companies in its group or their management functions and responsibilities.

(i)
Delivery of Shares

 
 The total number of shares in no case will exceed 2% of our capital from time to time. The delivery of shares to each Participant will be made within the framework of our compensation policy, using the average closing quotation of the share on the Continuous Market over the 30 working days immediately prior to the delivery as the reference.

(ii)
Delivery of Stock Options

The total number of stock options in no case will exceed 1% of our capital from time to time. The delivery of stock options will give the right to acquire an equivalent number of Prisa shares, during the period from 12 months to 24 months after delivery of the stock options. The stock options will not be transferable, except upon death of the Participant, within the limits established by the board of directors. The deadline for delivery of the stock options will be December 31 of each fiscal year the Plan is in effect. The exercise price of each stock option will be the average closing quotation of the share on the Continuous Market for the 30 working days immediately prior to the delivery.

Execution of the “2010-2013 Share/Stock Options Delivery Plan”

Under this authorization, the board of directors approved the following delivery of Prisa ordinary shares for the directors and certain executives:

·
Executive Chairman of Grupo Prisa: The Company delivered to Mr. Juan Luis Cebrián 2,010,728 ordinary shares of the Company in April 2011 and 1,641,214 ordinary shares of the Company in March 2012.

·
Deputy Chairman of Prisa: The Company delivered to Mr. Manuel Polanco Moreno 21,389 ordinary shares of the Company in July 2012.

·
Co-Chief Executive Officer of Prisa: The Company delivered to Mr. Fernando Abril-Martorell 1,065,211 ordinary shares of the Company in July 2012.

·
Directors of Prisa: All the directors (except Mr. Juan Luis Cebrián Echarri, Mr. Manuel Polanco Moreno and Mr Fernando Abril-Martorell) received 40% of fixed remuneration for their membership in the board of directors in Prisa shares. As from October 2012, it was envisaged that this amount could be paid in full in cash. If a director opts for part payment in Prisa shares, settlement will be made quarterly in arrears, using the average closing quotation of the share on the Continuous Market over the 30 working days immediately prior to the corresponding quarter. Remuneration in cash is paid monthly.

As of the date of this annual report, and in payment of 40% of their fixed remuneration, the directors have received the following number of shares pursuant to this authorization:

2011 fixed remuneration: Mr. Arena, Ms. Noguera, Mr. Cortés, Mr. Pérez Arauna, Mr. Marañón and Mr. Hidalgo (who resigned as director in July 2012)  have each received 24,694 ordinary shares, and Mr. Roman, Mr. Minc, Mr. Sloan, Mr.Franklin and Mr. Breggruen have each received 27,293 ordinary shares, in 2011.

2012 fixed remuneration: Mr. Arena, Ms. Noguera, Mr. Cortés, Mr. Pérez Arauna and Mr. Marañón have each received 52,218 ordinary shares;   Mr. Roman, Mr. Minc, Mr. Sloan, Mr.Franklin and Mr. Breggruen have each received 59,440 ordinary shares; Mr Zedillo has received 77,225 ordinary shares, and Mr. Hidalgo (who resigned as director in July 2012) received 35,182 ordinary shares, in 2012.

·
Executives of Grupo Prisa: a total of 57 executives of the Group (excluding Mr. Cebrián, Mr. Polanco and Mr. Abril-Martorell)  received a total of 426,446 ordinary shares, in 2012.

 Any delivery of shares by Prisa to the directors or officers is reflected in the share ownership tables below.
 
 
Authorization to the Board of Directors

Prisa shareholders at the extraordinary general shareholders’ meeting of November 27, 2010 authorized the board of directors, which may delegate for this purpose to the nomination and compensation committee, to apply, develop and implement the resolution regarding the “2010-2013 Share/Stock Options Delivery Plan.” Merely by way of illustration and not limitation, it in particular is authorized to make such changes as may be necessary for application of the Plan, and to establish anti-dilution rules allowing adaptation of this scheme for the delivery of stock options to preserve their value if the capital of the Company is changed. Authority was also delegated to the board of directors to adopt such resolutions as may be necessary to fulfill the obligations deriving from this scheme for delivery of shares and warrants, in the manner most appropriate to the interests of the Company.


Corporate Governance Best Practices and Compliance with Home Country Regulation

Our corporate governance system substantially complies with the recommendations on corporate governance best practices included in the Unified Good Governance Code published by the CNMV, as Appendix I of the “Report of the Special Working Group on Good Governance of Listed Companies,” dated May 19, 2006.

Board of Directors

Article 17 of our bylaws stipulates that the board of directors is responsible for the management, administration and representation of Prisa. The composition of the board of directors can be found in a table above (see “Directors, Senior Management and Employees”).

Article 17 of our bylaws provides that the board shall be composed of a minimum of three and a maximum of 17 directors, as determined by shareholders at the general shareholders’ meeting, at which the directors shall also be appointed.

At the annual general shareholders’ meeting held on June 24, 2011, the shareholders resolved to establish the number of directors at 16.

Article 8 of the Board of Directors Regulations provides that in the composition of the board of directors independent directors and proprietary directors will represent a majority with respect of the executive directors. To such effect, in exercising its right to fill vacancies and to propose appointments at annual shareholders’ meetings, the board of directors shall procure, in the composition of this body, a majority of external or non-executive directors with respect to executive directors.

The board of directors is required to explain the nature of each director’s relationship to Prisa at the shareholders’ meeting at which his appointment is to be made or ratified, confirming or, if the circumstances of the director have changed, reviewing it annually in the annual report on Corporate Governance, after having been verified by the corporate governance committee. These provisions are without prejudice to the right of representation that is legally recognized to shareholders on a proportional basis.

At the annual meeting, the board shall propose the number of directors required to ensure due representation and its effective functioning, in accordance with the changing circumstances of the Company.

Any director appointed by the board of directors in its exercise of its powers of co-optation (an ability of the board of directors conferred by law to appoint directors in the case of a vacancy due to the death, resignation or removal of directors) must be ratified in his or her appointment by the shareholders at the first general shareholders’ meeting following his or her appointment in order to remain a member of the board of directors.

Directors may also be appointed provisionally by the board of directors pursuant to the Spanish Companies Act and our bylaws. Directors hold office for five years and may be re-elected indefinitely for additional five-year periods. Directors appointed by co-optation hold office until the following general shareholders’ meeting, at which time the shareholders may choose to ratify or not ratify his or her appointment.

Proposals for the appointment of directors submitted by the board of directors for consideration at shareholders’ meetings and resolutions appointing directors that the board adopts by virtue of its legally-attributed powers of co-optation must conform to the provisions of the Board of Directors Regulations, and must be accompanied by a non-binding proposal or advisory opinion issued by the nomination and compensation committee or of the corporate governance committee, as the case may be.

Directors may perform other functions or hold any position at Prisa, compensated or otherwise, but only if these functions or the position do not give rise to any conflicts established by law or as determined at the discretion of the board of directors.

The board of directors is responsible for appointing a chairman from among its members. The chairman is the chief individual responsible for the management of the Company, organizing, monitoring and supervising management and the definition of company strategy and corporate governance initiatives and serves as chairperson of the delegated committee. His appointment entails assuming all powers that the Board can legally delegate him.
 
 
The chairman is our legal representative and exercises the powers delegated to him or her by the board, calls and ensures good order at board meetings.

The board of directors may also appoint one or more deputy chairmen with the same status who, if applicable, shall be delegated all of the powers of the chairman in the event of a temporary absence or incapacity of the chairman or on the express delegation of the chairman.

The board of directors may also appoint, from among its members, a delegated committee or one or more chief executive officers, on whom joint or several powers of attorney may be conferred. The chief executive officer is the main assistant of the Chairman for the  management of the Company. His appointment entails assuming all powers that the Board can legally delegate him. He is responsible for the effective management of the business of the Company, always acting in accordance with the decisions and criteria laid down at the annual shareholders meeting, by the Board of Directors, by the Delegated Committee and by the Chairman, in the framework of their respective competences.

Without prejudice to the powers of the board of directors and of the chairman, the chief executive officer shall be responsible for the day-to-day management of the Company.

The primary duties of each director are set forth in the Board of Directors Regulations, and arise out of the fiduciary duties of care and loyalty. These duties are as follows:
 
●
obtain information and prepare in an adequate manner for meetings of the board of directors and for meetings of the board committees to which he or she may belong (including, if applicable, the delegated committee);
 
●
attend the meetings of the board committees to which he or she may belong (including, if applicable, the delegated committee) and take an active part in the discussions so that his or her input contributes effectively to the taking of board actions;
 
●
perform any specific tasks charged by the board of directors reasonably within the scope of his or her duties;
 
●
foster the investigation of any irregularity in the management of Prisa of which he or she may be apprised and monitor any situation of risk;
 
●
comply with the Code of Conduct, the Stock Market Code of Conduct and Board of Directors Regulations; and
 
●
comply with his or her statutory duties and obligations.

Directors shall also inform us of any situation that could give rise to conflicts of interest; shall abstain from participating in discussions concerning matters in which they have a direct or indirect interest; shall keep the discussions of the board, the committees to which they belong and the delegated committee secret; and, in general, abstain from disclosing information to which they have had access in the performance of their duties (this obligation remains in force even after vacating office). In cases where the conflict of interest is, or is reasonably expected to be, of such nature as to constitute a structural and permanent conflict between the director (or a person related to him/her, or in the case of a proprietary director, the shareholder or shareholders who proposed or made the appointment or persons directly or indirectly related thereto) and the Company and the companies in its group, it is understood that the director has no, or no longer has, the required qualifications for the performance of duties for the purposes of Article 21 of the Board of Directors Regulations and the affected director must resign.

Finally, directors may not provide professional services to our competitors or their subsidiaries or investees, except for the functions that they may discharge at companies that hold a significant long-term ownership interest in our share capital.

Directors are removed on expiration of the period for which they were appointed, or when so resolved by the shareholders at the general shareholders’ meeting in exercise of the powers held by the shareholders in accordance with Spanish law or our bylaws.

Members of board committees shall be removed when they cease to hold the office of director.

In accordance with the Board of Directors Regulations, a director shall also tender his or her resignation in the following situations:
 
●
when he or she is subject to any conflict or prohibition provided for by law;
 
●
when, based on a criminal offense, they are indicted in ordinary felony proceedings (proceedings for offenses punishable by imprisonment for a term in excess of nine years) or have been convicted in a misdemeanor proceeding (proceedings for offenses punishable by imprisonment for a term not exceeding nine years);
 
 
●
when he or she receives a serious warning from the board of directors for failing to comply with his or her fiduciary obligations;
 
●
when the reasons for his or her appointment cease to exist and, in particular, when an independent or proprietary director loses his or her status as such;
 
●
when, in the course of a one-year period, he or she fails to attend physically more than two meetings of the board of directors, of the delegated committee or to the committees which they participate, which one of them must be necessarily of the board, without just cause, in the opinion of the board, the delegated committee or the committees to whom he/she participates, and
 
●
when his/her continued membership on the board, despite lack of fitness, in the manner described in Article 31.5 of the Board of Directors Regulations, may jeopardize directly, indirectly or through related parties, the loyal and diligent exercise of his/her functions in accordance with the corporate interest.

The board of directors shall not propose the removal of any independent directors prior to the expiration of the period for which they had been appointed in accordance with the bylaws, except in the event of just cause determined by the board on the basis of a report from the corporate governance committee. In particular, “just cause” shall be deemed to exist where a director has failed to comply with his or her fiduciary duties.

During 2012, the Prisa board of directors met nine times. Through the date of this annual report, the board of directors met 2 times during 2013.

Committees of the Board

Our bylaws and Board of Directors Regulations provide that the board of directors shall form a delegated committee, an audit committee, a nomination and compensation committee and a corporate governance committee.

Executive (Delegated) Committee

The rules relating to the organization and functioning of the delegated committee are included in Article 17 of our bylaws and in Article 14 of the Board of Directors Regulations and are described below.

The board of directors has expressly delegated all of its authority and power to the delegated committee, except where such delegation is prohibited by Spanish corporation law, by our bylaws or by the Board of Directors Regulations. The delegated committee is made up of a maximum of eight directors, including the chairman of the Board who serves as chairman of the delegated committee. The members of the delegated committee must be proposed by the chairman of the board of directors, and the appointments must be approved by an affirmative vote of two-thirds of the members of the board of directors. The qualitative composition of the executive committee, with regard to the type of directors that compose the committee (i.e., the number and proportion of executive, proprietary, independent and other external directors), must be similar to that of the board of directors.

The members of the delegated committee are removed when they no longer hold the position of director or when agreed upon by the board of directors. The secretary of the board of directors acts as the secretary of the delegated committee. When called upon to do so, members of the board of directors who are not members of the delegated committee, and executives whose reports are desired by the committee, may attend and speak at meetings, but non-members may not vote. The delegated committee meets at least six times a year and whenever, in the opinion of chairman, it is advisable or in the interests of Prisa to do so or when two or more members of the delegated committee request that a meeting be called. The delegated committee is responsible for promptly reporting the business transacted and accounting for the work performed to the board of directors and keeping the board up-to-date on the business transacted and the resolutions adopted by the delegated committee. The delegated committee may engage its own external advisors when it is deemed necessary for the discharge of its duties. Resolutions must be adopted by an absolute majority of the committee members present and represented.

Audit Committee

The rules relating to the organization and function of the audit committee, described below, are included in Article 21 bis of our bylaws and in Article 24 of the Board of Directors Regulations.

The board of directors sets the size of the audit committee, provided that there must be a minimum of three and a maximum of five members. A majority of the members of the audit committee must be non-executive directors without a contractual relationship with Prisa, other than the board directorship to which they have been appointed. The composition of the audit committee must adequately represent the independent directors (at least in proportion to independent representation on the board of directors). At least one member of the committee shall be independent and shall be appointed taking into account his/her knowledge and experience in accounting and/or auditing.
 
 
The board of directors nominates members of the audit committee following a proposal from the chairman, and may also make motions for the removal of members; these nominations and motions must be ratified by the board of directors. The board of directors elects the chairman of the audit committee from among the independent directors; the chairman of the audit committee may not maintain a contractual relationship with Prisa other than the position for which he was appointed. No individual may serve as chairman of the audit committee for a term of longer than four years; following four years of service, a member may be re-elected as chairman only after one year has elapsed since his removal.

The audit committee shall perform all related statutory functions, without prejudice to any other function that may be delegated by the board of directors. The primary function of the audit committee is to assist the board in monitoring our management. However, the powers of the audit committee are in addition to and do not limit the powers and functions exercised by the board of directors.

The audit committee has the following competencies:

a) 
Report at annual shareholders’ meetings on issues related to its competencies raised by shareholders, pursuant to the provisions of law and the Shareholders’ Meeting Regulations.

b) 
In connection with the preparation and publication of the Company’s financial information;

i. 
Review legal compliance requirements and monitor proper application of generally accepted accounting principles, and report on the proposed changes to accounting principles and criteria suggested by management.

ii. 
Know and oversee the effectiveness of internal control systems of the Company, and risk management systems, and discuss with the auditors or audit firms significant weaknesses in internal control, identified in the development of audit.

iii. 
Oversee the preparation and presentation of regulated financial information.

iv. 
Review any admission or trading prospectus, and the information on the financial statements to be filed by the board with the markets and regulators.

c) 
In connection with the external auditor of the Company;

i. 
Propose to the board of directors the appointment of external account auditors pursuant to Section 263 of the Spanish Companies Act, to be submitted at the annual shareholders’ meeting.

ii. 
Report and propose to the board the external auditor engagement conditions, the scope of its charge, and, if is the case, the removal or non renewal of the auditor, and the oversight of the engagement fulfillment.

iii. 
Maintain contact with the external auditors in order to receive information on those issues related to the accounts auditing process, together with any other communication provided for in accounts auditing legislation and rules.

iv. 
Receive from the external auditors any information about all issues that may compromise the auditor’s independence. In any event, the committee shall receive every year written confirmation from the auditor of its independence from the entity or entities linked to auditors, directly or indirectly, and information of any additional services provided to these entities by external auditors, or by persons or entities linked to them in accordance with the provisions of Royal Legislative Decree 1/2011, Audit of Accounts.

v. 
Pre-approve, before execution, any engagement with the Company’s auditor, for any work related with audit services or any other kind of services rendered by the auditor.

vi. 
Issue every year, prior to the issuance of the audit report, a report expressing an opinion on the independence of external auditors. This report shall, in any case, make reference on the provisions of additional services rendered by the auditor.
 
d) 
In connection with the internal audit services;

i. 
Propose the selection, appointment, reappointment or removal of the person in charge of our internal audit service.

ii. 
Oversee internal auditing services and the annual report of the internal audit department.
 
 
e) 
Other competencies;
 
i. 
Analyze and issue opinions concerning specific investment transactions when, owing to their importance, the board so requests.

ii. 
Issue opinions concerning the creation or acquisition of interests in entities domiciled in countries or territories considered as tax havens.

iii. 
Exercise all other competencies granted the committee in the Board of Directors Regulations.

iv. 
Approve annually a report on the performance of the committee and propose to the board of directors its publication, when the annual general meeting is called.

Likewise, the Board of Directors Regulations provide that the audit committee shall establish and oversee a procedure which may allow communication of relevant irregularities, especially regarding financial and accounting matters, in the Company. When these claims are presented by Company or its Group employees, this mechanism will be confidential, and when appropriate, anonymous.

This "Complaint Box" was implemented in 2011 and allows employees and/or third parties to file complaints.

The audit committee meets periodically, as often as deemed necessary, but no fewer than four times per calendar year. The audit committee has the power to require that any member of our management team, or any other Prisa employee, attend audit committee meetings and cooperate and provide access to any requested information. The audit committee may also require the attendance of our auditors at audit committee meetings.

Nomination and Compensation Committee

Article 21 quater of our bylaws and article 25 of our Board of Directors Regulations prescribes the organization and function of the nomination and compensation committee.

The nomination and compensation committee must be comprised of no fewer than three and a maximum of five external directors, nominated by the board of directors following a proposal of the chairman of the board of directors. The board of directors may also vote to remove members of the committee. The board of directors elects the chairman of the committee from among the independent directors.  The committee may request the attendance of the Company’s chief executive officer or any other officer or employee of the Company at its meetings.

The nomination and compensation committee shall have the following core competencies:

a) 
Regarding the composition of the board of directors and board committees of Prisa and management bodies of its subsidiaries:

i. 
Report on proposals for appointment, reappointment and removal of directors.

ii. 
Report, together with the corporate governance committee, on proposals for appointment of chairman and vice chairman, chief executive officer, members of the delegated committee and other committees of the board of directors.

iii. 
Report on the nomination of the secretary and deputy secretary.

iv. 
Review and organize the succession of the chairman and chief executive of the Company and make recommendations to the board of directors to facilitate that such succession occurs in an orderly and well planned.

v. 
Report on proposals for appointment of representatives of the Company in the managing bodies of its subsidiaries.
 
b) 
In connection with the senior management of the Group:

i. 
Propose the definition of senior management.

ii. 
Report the appointment and removal of senior management.

iii. 
Approve contracts for senior management.

iv. 
Information and, where appropriate, issue reports on disciplinary action to senior management of the Company.
 
 
c) 
In relation to the compensation policy:

i. 
Propose to the board of directors: i) the Compensation Plan for directors, ii) the amounts and/or compensation limits that apply to directors, based on their dedication to the board and the committees thereof, iii) the individual remuneration of executive directors and other conditions of their contracts and iv) a statement of compensation policy for directors and senior management.

ii. 
Approve the key objectives linked with the variable compensation for executive directors and/or the management.

iii. 
Propose to the board of directors the compensation system for senior managers of Prisa and its subsidiaries and report to the board about the liquidation of the variable compensation for them and to establish other incentive plans for them.

iv. 
Ensure compliance with the remuneration policy set by the Company.

d) 
Other competencies

i. 
Approve annually a report on the performance of the committee and propose to the board of directors its publication, when the annual general meeting is called.

ii. 
Exercise all other competencies granted to the committee in the Board of Directors Regulations.

The committee shall meet whenever the board of directors of the Company or the delegated committee requests the issuance of a report or the approval of proposals within the scope of its competencies and when, in the opinion of the chairman, it is appropriate for the proper performance of its functions.

Any member of the Company’s management team or staff who may be required for such purpose shall be compelled to attend committee meetings and to provide it with assistance and access to any information at its disposal.

Corporate Governance Committee

Article 21 ter of our bylaws and article 26 of our Board of Directors Regulations prescribes the organization and function of the corporate governance committee.

The corporate governance committee must be comprised of no fewer than three and a maximum of five external directors, nominated by the board of directors following a proposal of the chairman of the board of directors. The board of directors may also vote to remove members of the committee. The board of directors elects the chairman of the committee from among the independent directors.

The corporate governance committee shall have the following core competencies:

a) 
Regarding the composition of the board of directors and board committees:

i. 
Propose the appointment of independent directors.

ii. 
Propose the qualification of directors into the categories of executive, external proprietary, external independent and other directors, when the appointment or renewal of the directors is going to be approved or ratified by the general shareholders’ meeting or when that classification is revised annually in the annual Corporate Governance Report.

iii. 
Inform the board on the removal of executive and independent directors, when the board of directors proposes the decision to the shareholders’ meeting, when there is a breach by a director of the duties inherent in his/her position and in the context of a disciplinary procedure that could mean the removal of a director is carrying out.
 
iv. 
Report, together with the nominations and compensation committee, on proposals for the appointment of the chairman and vice chairman, chief executive officer, and members of the delegated committee and other committees of the board of directors.

v. 
Evaluate the skills, knowledge and experience on the board, and therefore, define functions and capabilities required of candidates to fill each vacancy and evaluate dedication necessary to properly perform their duties.

vi. 
Report to the board on issues of gender diversity in relation to the composition of the board.

vii. 
Submit to the board of directors, a report evaluating the performance and composition of the board and the performance of their duties by the chairman and the chief executive officer of the Company.
 
 
b) 
In connection with the strategy of corporate governance and corporate social responsibility of the Company:

i. 
Promote the corporate governance strategy of the Company.

ii. 
Know, promote, guide and monitor the performance of the Company regarding corporate social responsibility and sustainability and corporate reputation and to report thereon to the board and delegated committee as appropriate.

iii. 
Inform and propose to the board the approval of the annual Corporate Governance Report.

iv. 
Inform and propose to the board the approval of the annual corporate social responsibility report and, in general, issue reports and develop actions in the field of corporate social responsibility and sustainability, in addition, in accordance with corporate governance of the Company and when being asked by the board of directors or its chairman.

c) 
In connection with the internal rules of the Company:

i. 
Propose to the board the approval of a Code of Ethics.

ii. 
Propose to the board the approval of a Code of Conduct for employees.

iii. 
Report on proposals for amending the bylaws, Board of Directors Regulations, Shareholders’ Meetings Regulations, Rules of Operation of the Shareholders Electronic Forum, the Stock Market Code of Conduct, the Code of Ethics and Code of Conduct of the employees and any other rules of governance of the Company.

iv. 
Review the implementation of the Board of Directors Regulations, the Stock Market Code of Conduct, the Code of Conduct of the employees and, in general, the rules of governance of the Company and to make proposals for their improvement.

d) 
In connection to transactions with related parties to the Company and companies of the Group:

i. 
Report transactions of the Company with significant shareholders, prior to approval by the board.

ii. 
Report professional or commercial transactions of directors, prior to approval by the board.

iii. 
Authorize transactions by persons related to directors under the terms provided for in Article 33 of the Board of Directors Regulations.

e) 
Other competencies:

i. 
Review compliance policies and propose all necessary measures for their strengthening.

ii. 
Approve annually a report on the performance of the committee and propose to the board of directors its publication, when the annual general meeting is called.

iii. 
Exercise all other competencies granted to the committee in the Board of Directors Regulations.

 The committee shall meet whenever the board of directors of the Company or the delegated committee requests the issuance of a report or the approval of proposals within the scope of its competencies and when, in the opinion of the chairman, it is appropriate for the proper performance of its functions.

 Any member of the Company’s management team or staff who may be required for such purpose shall be compelled to attend committee meetings and to provide it with assistance and access to any information at its disposal.
 

The table below indicates the number of Prisa employees employed as of December 31 for the years 2012, 2011 and 2010:

Number of Employees
 
2012
 
 
2011
 
 
2010
 
By category:
 
 
 
 
 
 
 
 
 
Executives
 
 
462
 
 
 
486
 
 
 
484
 
Middle management
 
 
1,481
 
 
 
1,526
 
 
 
1,564
 
Other employees
 
 
10,248
 
 
 
11,147
 
 
 
11,837
 
Total
 
 
12,191
 
 
 
13,159
 
 
 
13,885
 
By geographical origin:
 
 
  
 
 
 
 
 
 
 
 
 
Spain
 
 
6,313
 
 
 
7,042
 
 
 
7,750
 
International
 
 
5,878
 
 
 
6,117
 
 
 
6,135
 
Total
 
 
12,191
 
 
 
13,159
 
 
 
13,885
 
 
 
The decrease in the number of employees (Full Time Equivalents) from 13,159 to 12,191 is due to the different restructuring, workers adjustments reductions processes and non-replacement of employees undertaken by all of our companies mainly in Spain. In this sense, in 2012 we have undertaken employment reductions process in Spain negotiated with employee legal representatives and labor unions in Prisa Noticias, Prisa Corporation, Prisa Brand Solutions with an aggregate number of employees of 294 in Spain. Adjustments being undertaken restructuring via collective bargaining with the legal representation of employees and labor unions: 243 in Prisa Noticias, 24 in Prisa Corporation and 27 Prisa Brand Solutions.  The remaining reduction in 2012, 271 derives from adjustment processes in workforce reduction in others group's business units, as well as the previous ones, which were necessary to adapt the cost structure of the company's revenues. The remaining number of full time equivalents employees are due to the restructuration processes accomplished in the fiscal year 2011.
 
All measures have been implemented using suitable channels of negotiation and agreement from the will of the legal representatives of the workers and unions. The Group management commitment to its employees is act with the utmost transparency. The company has launched an extensive communication plan that has come to all the business units companies and where the company explained the strategy to address the profound changes in the market place and the impact of each measure to make. Regulations and adjustments have been undertaken since the responsibility and with a strong commitment to reaching agreement with the legal representation of workers and unions. During this process the company has recognized improved economic rights to the strictly legal to the dismissed employees, established by the new labor Spanish regulation, with the aim of adapting the PRISA practices in the restructuring process to real market practice on the media sector companies whose are also undertaking restructuring process in Spain.


Our Beneficial Ownership

As of the date of this annual report, the nominal value of our issued share capital amounted to €99,310,215,00, represented by 661,608,304 Class A common shares, having a nominal value of €0.10 each, and 331,493,846 Class B convertible non-voting shares, having a nominal value of €0.10 each. The capital is totally subscribed and paid up.

After the last capital increase, carried out on March 7, 2013 as a consequence of the execution of 66 Warrants and the conversion of 3,577,554 class B shares into 3,577,554 Class A shares (and the corresponding payment of the minimum dividend accrued until the conversion by payment of Class A shares), that is pending registration in the Mercantile Register of Madrid, the share capital shall amounted €99,388,437,60 € (represented by 665,968,084 Class A shares and 327,916,292 Class B shares).
 
 
The following tables set forth, to our knowledge, the beneficial ownership as of the date of this annual report of i) each of our current directors and ii) each of our current members of senior management.

Directors
 
Directors
  
Number of
direct and
indirect
Class A
Shares
    
Number of direct
and indirect
preemptive
subscription
rights
implemented as
Warrants
    
Number of
direct and
indirect
Class B
Shares or
ADSs
representing
these
shares
  
Juan Luis Cebrián Echarri (1c)
    
5,159,664
      
1,385,234
      
0
  
Fernando Abril-Martorell
    
1,065,211
      
0
      
0
  
Juan Arena de La Mora
    
83,653
      
16,498
      
0
  
Nicolas Berggruen (2)
    
22,648,531
      
0
      
33,438,840
  
Matías Cortés Dominguez
    
121,865
      
82
      
0
  
Martin Franklin (2)
    
13,789,341
      
0
      
20,314,092
  
Arianna Huffington (2)
    
400
      
0
      
0
  
Jose Luis Leal Maldonado
    
10,000
      
0
      
0
  
Gregorio Marañón y Bertrán de Lis
    
561,817
      
538,774
      
0
  
Alain Minc
    
104,003
      
0
      
0
  
Agnés Noguera Borel
    
69,254
      
660
      
0
  
Borja Jesús Pérez Arauna (4)
    
117,004
      
53,185
      
0
  
Manuel Polanco Moreno (1a) (3)
    
221,706,359
      
46,612,327
      
0
  
Emmanuel Roman
    
77,333
      
0
      
0
  
Harry Sloan (2)
    
127,333
      
0
      
0
  
Ernesto Zedillo Ponce de León
    
77,225
      
0
      
0
  
 
(1)Shareholder Agreements:

 (a)
Shareholder Agreement in Rucandio: On December 23, 2003, in a private document, Mr. Ignacio Polanco Moreno, Ms. Isabel Polanco Moreno (now deceased and succeeded by her estate in this agreement), Mr. Manuel Polanco Moreno, Ms. Maria Jesús Polanco Moreno, their mother Ms. Isabel Moreno Puncel and their now deceased father Mr. Jesús de Polanco Gutiérrez, signed a family protocol, to which a shareholder syndicate agreement was annexed concerning shares in Rucandio and whose object is to preclude the entry of third parties outside the Polanco family as shareholders in Rucandio. The agreement has the following terms: (i) the syndicated shareholders and directors of Rucandio must meet prior to any general and/or extraordinary shareholder or board meeting of Rucandio to determine how they will vote their syndicated shares, and are obliged to vote together at shareholder meetings in the manner determined by all of the syndicated shareholders; (ii) if an express unanimous agreement is not achieved among the syndicated shareholders with respect to any of the proposals made at a shareholder meeting, it will be understood that sufficient agreement does not exist to bind the syndicate and each syndicated shareholder may freely cast his or her vote; (iii) members of the syndicate are obliged to attend syndicate meetings personally or to grant proxy to a person determined by the syndicate, unless the syndicate expressly agrees otherwise, and to vote in accordance with the instructions determined by the syndicate, as well as to refrain from exercising any rights individually unless they have been previously discussed and agreed at a meeting of the syndicate; and (iv) members of the syndicate are precluded from transferring or otherwise disposing of shares in Rucandio until 10 years following the death of Mr. Jesús de Polanco Gutiérrez, and then only with the consent of all other Rucandio shareholders for any type of transfer to a third party. An exception to the aforementioned terms can be made upon the unanimous agreement of the shareholders. This limitation likewise applies specifically to the shares that Rucandio holds directly or indirectly in Promotora de Publicaciones, S.L.
 
 
(b) Shareholder Agreement in Promotora de Publicaciones: On May 21, 1992, and in a document notarized by Madrid Notary Public Mr. Jose Aristonico Sanchez, Timón and a group of shareholders of Prisa entered into an agreement to govern the contribution of their shares in that company to Promotora de Publicaciones and their participation therein. The principal undertakings set forth in the shareholders’ agreement are as follows: (i) each majority shareholder shall have at least one representative on the board of directors of Prisa and, to the extent possible, the governing body of Promotora de Publicaciones shall have the same composition as Prisa’s; (ii) the manner in which Promotora de Publicaciones shares shall be voted at Prisa’s general shareholders’ meetings will be previously determined by the majority members, and Promotora de Publicaciones members who are likewise members of Prisa’s board of directors shall vote in the same manner, following instructions from the majority shareholders; (iii) in the event that Timón sells its holdings in Promotora de Publicaciones, the remaining majority shareholders shall have the right to sell their shares of Promotora de Publicaciones on the same terms and conditions to the proposed buyer, to the extent that the foregoing is possible.

(c)Agreement of shareholders of Promotora de Informaciones S.A. (Prisa):
Regarding the Propu Shareholder agreement referred to in the preceding section,  that company agreed to implement the "Reversion Plan" pursuant to which its shareholders were offered the possibility of direct ownership of Prisa shares. This transaction was structured in the form of a reduction of capital, for which purpose Propu acquired some of its own shares, in exchange delivering shares and warrants of Prisa to the shareholders that had so decided, in the proportion corresponding thereto based on their interests in capital.
 
On December 22, 2011, before Madrid notary Mr. Rodrigo Tena Arregui, a Shareholders agreement was signed by Propu, Timón, S.A. and Asgard Inversiones, S.L.U. (all of them controlled by Rucandio), together with those other individuals and legal persons that, to that date having been shareholders of Propu, had maintained the syndication agreement pursuant to which: (i) without amending the content of principal terms of the existing agreement of shareholders of Propu, the legal relationships under the agreement of shareholders of Propu were adjusted to the fact that the concerted controlling interest in Prisa was held directly and (ii) its term was reduced to September 30, 2014, otherwise maintaining the same terms as in the existing agreement of shareholders of Propu, in such manner that Rucandio would continue to hold its controlling interest in Prisa.

(2)
Of the indirect Class A shares held by Mr. Nicolas Berggruen (22,571,198) and which direct holder is BH Stores IV, B.V, 14,396,544 are represented by way of 3,599,136 ADRs representing Class A shares of Prisa.
 
Of the 127,333 Class A shares held by Mr Harry Sloan, 50,000 are represented by way of 12,500 ADRs representing Class A shares of Prisa.

 
Of the 13,789,341 Class A shares held by Mr Martin Franklin, 3,554,964 are represented by way of 888,741 ADRs representing Class A shares of PRISA.

 
The 400 Class A shares held by Ms Arianna Huffington, are represented by way of 100 ADRs representing Class A shares of Prisa.

Mr. Nicolas Berggruen is indirect owner (through BH Stores IV, B.V.) of 33,438,840 Class B shares of Prisa.

Mr. Martin Franklin is direct owner of 20,314,092 Class B shares of Prisa (documented by way of 5,078,573 ADSs representing those shares).
 
(3)
221,706,359 Class A Shares and 46,612,327 warrants held by Mr. Manuel Polanco include 221,591,841 ordinary shares and 46,509,859 warrants held by Rucandio through the entities and through the Agreement of shareholders of Promotora de Informaciones S.A. as indicated in the table below (see “Major Shareholders”).
 
(4)
Does not include the director’s holdings in the share capital of Promotora de Publicaciones through which the director has an indirect pecuniary interest in Prisa. See “Directors, Senior Management and Employees—Director and Executive Officer Conflicts of Interest.”
 
 
Members of Senior Management
 
 
Officer
 
Number of
 direct and
 indirect
Class A
Ordinary
Shares
 
 
Number of
direct and
indirect
preemptive
subscription
 rights
implemented
as
Warrants
 
 
Number of
direct and
indirect
Class B
shares or
 ADSs
representing
 these
shares
 
Javier Lázaro
    
0
      
0
      
0
  
Kamal M. Bherwani
 
 
8,473
 
 
 
0
 
 
 
0
 
Fernando Martinez
 
 
9,948
 
 
 
0
 
 
 
0
 
Antonio García-Mon
    
2,823
      
0
      
0
  
Andrés Cardó
 
 
9,041
 
 
 
9,036
 
 
 
0
 
Oscar Gómez Barbero
    
18,174
      
0
      
0
  
Pedro García Guillén
 
 
54,484
 
 
 
29,364
 
 
 
0
 
Miguel Angel Cayuela
 
 
26,477
 
 
 
0
 
 
 
0
 
Jose Luis Sainz Diaz
 
 
19,237
 
 
 
0
 
 
 
0
 
Bárbara Manrique
 
 
4,599
 
 
 
0
 
 
 
0
 
Virginia Fernandez Iribarnegaray
 
 
1,453
 
 
 
0
 
 
 
0
 
 


To the extent that our shares are represented by accounts in book-entry form, we do not keep a shareholder registry and our ownership structure cannot be known precisely.

Current Major Shareholders

As of the date of this annual report, the nominal value of our issued share capital amounted to €99,310,215.00, represented by 661,608,304 Class A common shares, having a nominal value of €0.10 each, and 331,493,846 Class B convertible non-voting shares, having a nominal value of €0.10 each. The capital is totally subscribed and paid up.

After the last capital increase, carried out on March 7, 2013 as a consequence of the execution of 66 Warrants and the conversion of 3,577,554 class B shares into 3,577,554 Class A shares (and the corresponding payment of the minimum dividend accrued until the conversion by payment of Class A shares),  that is pending registration in the Mercantile Register of Madrid, the share capital shall amounted €99,388,437.60 (represented by 665,968,084 Class A shares and 327,916,292 Class B shares).
 
As of the date of this annual report, according to information available in the website of the Spanish National Securities Commission (CNMV), the beneficial owners of 3% or more (or 1% if resident in a tax haven) of our voting rights are the following:
 
Shareholder’s Name
 
Number of
 Direct
Voting
 Rights
(Class A
Shares)
 
 
Number of
Indirect
Voting
Rights
(Class A
Shares)
 
 
Total % of
Voting
Rights
(Class A
Shares)
 
 
Number of
 Indirect
Warrants
(2)
 
Rucandio, S.A. (1)
 
 
0
 
 
 
221,591,841
 
 
 
33.49
 
 
 
46,509,859
 
BH Stores IV, B.V
 
 
22,571,198
 
 
 
0
 
 
 
3.41
 
 
 
(
*)
 
 
(1)
Rucandio has declared to the CNMV that it holds 221,591,841Class A shares through the following entities:
 
Through: Direct Shareholder’s Name
  
Number of
Direct Voting
Rights
  
Asgard Inversiones, SLU
    
17,487,164
  
Timón, S.A.
    
7,928,140
  
Promotora de Publicaciones, S.L.
    
77,248,921
  
Rucandio Inversiones Sicav, S.A.
    
339,094
  
Otnas Inversiones, S.L.
    
93,000,000
  
 
 
Furthermore the indirect holding declared by Rucandio includes 25,588,522 voting rights of  Prisa subject to the “Prisa Shareholder agreement” signed on December 22, 2011 (in which Rucandio indirectly holds the majority of votes), which is described under note 2 of section “Our Beneficial Ownership", above.

(2)
Rucandio has declared to the CNMV that it holds 46,509,859 warrants through the following entities. Each Warrant entitles the holder to subscribe one Class A share.

Through: Direct Warrantholder’s Name
 
Number of
Direct
 Warrants
 
Asgard Inversiones, SLU
 
 
9,467,928
 
Timón, S.A.
 
 
8,720,954
 
Promotora de Publicaciones, S.L.
 
 
27,947,974
 
Rucandio Inversiones Sicav, S.A.
 
 
373,003
 

 
Major Shareholders, other than Rucandio, have not declared the warrants that they hold (*), if any.

The Depositary of our American Depositary Receipts has informed us that as of March 4, 2013, there were 12,747,978 ADS-As outstanding held by 7 registered holders  and 49,319,637 ADS-Bs outstanding held by  6 registered holders.
 
Major Shareholders as of December 31, 2012

At December 31, 2012, the par value of our issued share capital was €99,132,289.90, represented by 651,054,490 Class A common shares, having a par value of €0.10 each, and 340,268,409 Class B convertible non-voting shares, having a par value of €0.10 each. The capital was fully subscribed and paid up.

At December 31, 2012, according to information available in the website of the Spanish National Securities Commission (CNMV), beneficial owners of 3% or more of our voting rights were as follows:

Shareholder’s Name
 
Number of
Direct
Voting
 Rights
(Class A
Shares)
 
 
Number of
Indirect
Voting
Rights
 (Class A
Shares)
 
 
Total % of
Voting
Rights
(Class A
Shares)
 
Rucandio, S.A. (1)
 
 
0
 
 
 
221,591,841
 
 
 
34.036
 
BH Stores IV, B.V
    
22,571,198
      
0
      
3.467
  
UBS AG
    
25,872,175
      
4,712
      
3.975
  

 (1)
Rucandio declared to the CNMV that it held 221,591,841Class A shares through the following entities:

Through: Direct Shareholder’s Name
 
Number of
Direct
Voting
Rights
 
 
Total % of
Voting
Rights
 
Asgard Inversiones, SLU
 
 
17,487,164
 
 
 
2.686
 
Timón, S.A.
 
 
7,928,140
      
1.218
 
Promotora de Publicaciones, S.L.
 
 
77,248,921
      
11.865
 
Rucandio Inversiones Sicav, S.A.
 
 
339,094
      
0.052
 
Otnas Inversiones, S.L.
    
93,000,000
      
14.285
  

 
The declared indirect interest of Rucandio, S.A. (221,591,841 voting rights) at December 31, 2012, was through Promotora de Publicaciones, S.L., Timón, S.A., Asgard Inversiones, S.A., Rucandio Inversiones SICAV, Otnas Inversiones, S.L. and, furthermore, included  25,588,522 voting rights subject to the Prisa Shareholder agreement signed on December 22, 2011, which is described under “section E. Share Ownership” of this Report.

(2)           BH Stores IV, B.V. is a subsidiary of Berggruen Holdings LTD, a 100% subsidiary of Nicolas Berggruen Charitable Trust. The ultimate beneficiary of the shares of BH Stores IV, B.V. is Nicolas Berggruen Charitable Trust. Mr. Nicolás Berggruen is a member of the Board of Directors of Berggruen Holdings.  Of the 22,571,198 voting rights declared by BH Stores, 14,396,544 are represented by 3,599,136 ADRs representing Class A ordinary shares.


Significant Changes During the Past Three Years

The most significant changes in our shareholder structure during the past three years are the following:

2012
 
Shareholder’s Name
Date of Transaction
Description of Transaction
HSBC Holdings plc
12/13/2012
crossed below 3% share capital threshold
HSBC Holdings plc
09/24/2012
crossed above 3% share capital threshold
Asset Value Investors Limited
01/05/2012
crossed below 3% share capital threshold
Daiwa Securities Group Inc.
03/15/2012
crossed below 3% share capital threshold
Daiwa Securities Group Inc.
03/01/2012
crossed below 5% share capital threshold
Bank of America Corporation
03/19/2012
crossed below 3% share capital threshold
Bank of America Corporation
03/01/2012
crossed above 3% share capital threshold
Bank of America Corporation
01/04/2012
crossed below 3% share capital threshold
UBS AG
08/10/2012
crossed above 3% share capital threshold
UBS AG
08/13/2012
crossed below 3% share capital threshold
UBS AG
10/25/2012
crossed above 3% share capital threshold
UBS AG
11/02/2012
crossed below 3% share capital threshold
UBS AG
11/16/2012
crossed above 3% share capital threshold
UBS AG
11/21/2012
crossed below 3% share capital threshold
UBS AG
11/23/2012
crossed above 3% share capital threshold
UBS AG
11/28/2012
crossed above 5% share capital threshold
UBS AG
11/30/2012
crossed below 5% share capital threshold
UBS AG
12/17/2012
crossed below 3% share capital threshold
UBS AG
12/20/2012
crossed above 3% share capital threshold
Deutsche Bank AG
10/05/2012
crossed below 3% share capital threshold
Deutsche Bank AG
09/24/2012
crossed above 3% share capital threshold
Deutsche Bank AG
07/09/2012
crossed below 3% share capital threshold
Rucandio, S.A. (1)
01/03/2012
crossed above 40% share capital threshold
Rucandio, S.A.. (1)
07/24/2012
crossed below 40% share capital threshold
Rucandio, S.A. (1)
12/05/2012
crossed below 35% share capital threshold
 
(1) Regarding Rucandio, S.A, it is noted that 35% and 40% decreases in the shareholding occurred by reason of "subsequent updating by reason of a change in the number of voting rights of the issuer".
 
 
101
 
2011

Shareholder’s Name
Date of Transaction
Description of Transaction
Marlin Equities II, LLC
02/28/2011
crossed below 3% share capital threshold
Berggruen Acquisition Holdings Ltd
12/21/2011
crossed below 3% share capital threshold
HSBC Holdings plc
01/19/2011
crossed above 3% share capital threshold
HSBC Holdings plc
02/07/2011
crossed below 3% share capital threshold
HSBC Holdings plc
03/23/2011
crossed above 3% share capital threshold
HSBC Holdings plc
11/14/2011
crossed below 3% share capital threshold
Asset Value Investors Limited
01/28/2011
crossed above 3% share capital threshold
BH Stores IV, B.V
12/21/2011
crossed above 3% share capital threshold
BNP Paribas, Societe Anonyme
01/31/2011
crossed above 3% share capital threshold
BNP Paribas, Societe Anonyme
05/11/2011
crossed below 3% share capital threshold
BNP Paribas, Societe Anonyme
05/25/2011
crossed above 3% share capital threshold
BNP Paribas, Societe Anonyme
06/16/2011
crossed below 3% share capital threshold
BNP Paribas, Societe Anonyme
11/18/2011
crossed above 3% share capital threshold
BNP Paribas, Societe Anonyme
12/19/2011
crossed above 3% share capital threshold
Daiwa Securities Group Inc
08/12/2011
crossed above 3% share capital threshold
Daiwa Securities Group Inc
08/17/2011
crossed above 5% share capital threshold
Inmobiliaria Carso, S.A. De C.V
11/09/2011
crossed above 3% share capital threshold
UBS AG
01/31/2011
crossed below 5% of share capital threshold
UBS AG
03/30/2011
crossed below 3% share capital threshold
UBS AG
06/23/2011
crossed above 3% share capital threshold
UBS AG
07/01/2011
crossed below 3% share capital threshold
UBS AG
07/04/2011
crossed above 3% share capital threshold
UBS AG
07/12/2011
crossed below 3% share capital threshold
UBS AG
07/18/2011
crossed above 3% share capital threshold
UBS AG
07/19/2011
crossed below 3% share capital threshold
UBS AG
07/20/2011
crossed above 3% share capital threshold
UBS AG
08/10/2011
crossed below 3% share capital threshold
UBS AG
08/11/2011
crossed above 3% share capital threshold
UBS AG
08/12/2011
crossed below 3% share capital threshold
UBS AG
08/18/2011
crossed above 3% share capital threshold
UBS AG
08/19/2011
crossed below 3% share capital threshold
Deutsche Bank Ag
05/04/2011
crossed below 3% share capital threshold
Fil Limited
05/24/2011
crossed above 1% share capital threshold
Fil Limited
08/09/2011
crossed below 1% share capital threshold
Rucandio, S.A. (1)
02/18/2011
crossed below 35% of share capital

(1) Regarding Rucandio, S.A, it is noted that the 35% decrease in the shareholding occurred by reason of "subsequent updating by reason of a change in the number of voting rights of the issuer".

2010
 
Shareholder’s Name
Date of Transaction
Description of Transaction
Deutsche Bank AG
12/09/2010
crossed above 3% share capital threshold
UBS AG
12/03/2010
crossed above 5% share capital threshold
Bank of America Corporation
12/03/2010
crossed above 3% share capital threshold
Rucandio, S.A.
11/30/2010
crossed below 40% share capital threshold
Berggruen Acquisition Holdings Ltd
11/30/2010
crossed above 3% share capital threshold
Marlin Equities II, LLC
11/30/2010
crossed above 3% share capital threshold

 

Except as set sort forth below, no significant shareholders of Prisa, members of its board of directors, senior executives of Prisa, close family members of the foregoing, or any company controlled by or over which these persons exercise significant influence (other than the companies in which they hold a directorship representing Prisa as shareholder of these companies), have performed unusual or significant transactions with Prisa that we are aware of, other than dividends received from the ownership of Prisa shares and the remuneration paid to the directors and senior executives as described in this annual report.

Transactions with Current Directors of Prisa:

The following transactions with directors have been carried out under market conditions and have been authorized by Prisa according to the procedure required by Article 33 of the Board of Directors Regulations for conflicts of interest and transactions with directors, as described above under “Director and Executive Officer Conflicts of Interest”:

·
Prisa director Gregorio Marañón y Bertrán de Lis provided legal advisory services to Prisa Televisión, S.A.U. totaling €200,000 in 2010, €100,000 in 2011 and €90,000 in 2012,under a contract dated April 13, 2004, extended annually.

·
Cortés Abogados, of which Prisa director Matías Cortés Dominguez is a partner, provided legal advisory services and legal counsel amounting to  €22,111,000 in 2010 to Prisa and Prisa Televisión, S.A.U., €4,896,000 in 2011 to Prisa Televisión S.A.U,  and €401,000 and  €2,161,000 in 2012 to Prisa and Prisa Televisión, S.A.U., through Tescor Profesionales Asociados, S.L.P, or Tescor Profesionales, a company formed by Cortés Abogados, in several proceedings of various kinds (judicial review, civil, commercial and arbitration) as well as legal consulting services in various matters, including the business combination with Liberty.
 
·
Luis Cortés Dominguez, brother of the director Matías Cortés Dominguez, was hired in 2005 by Diario AS to assist as a lawyer in two lawsuits, a relationship which continues up to the date of this document. The bills for fees paid in this connection amounted to €80,000 in 2010.

·
Lastly, Prisa director Alain Minc provided strategic consulting services to Prisa Televisión S.A.U. amounting €150,000 in 2010, before his appointment as director of Prisa.

The table below sets forth transactions with companies controlled by Prisa or over which Prisa exercises significant influence that occurred in 2012.
 
Name of the Group Entity
Brief Description of the Transaction
  
Amount
(Euros 000)
  
Beralan, S.L.
Distribution, transportation and logistics services rendered by Beralan, S.L. to print media of Prisa Group.
     418  
Beralan, S.L.
Income received by print media of Prisa Group for the purchase of copies and promotions by Beralan, S.L.
     7,879  
Distrimedios, S.L.
Distribution, transportation and logistics services rendered by Distrimedios to print media of Prisa Group.
     1,292  
Distrimedios, S.L.
Income received by print media of Prisa Group for the purchase of copies and promotions by Distrimedios, S.L.
     10,183  
DTS Distribuidora de Television Digital, S.A.
Dividends paid by DTS Distribuidora de Television Digital, S.A. to its shareholder Mediaset España Comunicación, S.A.
     19,933  
Dédalo Grupo Gráfico, S.L.
Provision of printing services by several companies in which Dédalo Grupo Gráfico, S.L. has holdings, to several companies in which Prisa has holdings.
     3,664  
Ediciones Conelpa, S.L.
Purchase of magazines by Ediciones El País, S.L. from Ediciones Conelpa, S.L.
     1,622  
Ediciones Conelpa, S.L.
Loan for a total of €2,268,000, granted by Ediciones El País, S.L. to the company in which it holds holdings, Ediciones Conelpa, S.L.
     2,268  
Gelesa Gestion Logistica, S.L.
Distribution, transport and logistics services rendered by Gelesa Gestion Logistica to the print media of Prisa Group
     7,732  
Gelesa Gestion Logistica, S.L.
Income received by print media of Prisa Group for purchase of copies by Gelesa Gestion Logistica
     33,584  
 
 
Le Monde Libre
Prisa provided a joint and several guarantee to Le Monde Libre, amounting to €12,801,000, corresponding to the amount of the obligations acquired by the company from such holders of obligations reimbursable by shares, issued at the time by Le Monde.
     12,801  
Marina Press Distribuciones, S.L.
Distribution, transport and logistics services rendered by Marina Press Distribuciones, S.L. to the print media of Prisa Group.
     1,330  
Marina Press Distribuciones, S.L.
Income received by print media of Prisa Group for purchase of copies by Marina Press Distribuciones, S.L.
     9,550  
Mediaset España Comunicación, S.A.
Purchases of rights and advertising by several companies in which Prisa has holdings, to Mediaset España Comunicacion, S.A. and Ist participated Companies, as well as technical and administrative services rendered by these companies
     745  
Mediaset España Comunicación, S.A.
Income received by several companies in which Prisa has holdings, for technical and administrative services rendered to Mediaset Comunicaciones España, SA and its participated companies, as well as for sale of advertising space and rights to these companies.
     29,914  
Plural Jempsa, S.L.
Loans for a total of €1,171,000, granted by several companies of Grupo Prisa to Plural Jempsa.
     1,171  
Prisa Televisión, S.A.U
Revenue share of Real Madrid club sponsorship and merchandising, from the company Real Madrid Gestión de Derechos, S.L. in which Prisa Televisión holds an interest.
     12,034  
Prisa Televisión, S.A.U
Costs related to the participation in the income of the company Real Madrid Gestión de Derechos, S.L. in which Prisa Televisión holds an interest, for sponsorship and merchandising of Club Real Madrid
     2,650  
Prisa Televisión, S.A.U
Dividends received by Prisa Televisión, S.A.U for its shareholdings in Mediaset España Comunicación, S.A.
     9,734  
Sociedad Española de Radiodifusión, S.L.
Dividends paid by Sistemas Radiopolis, S.A. de CV to its shareholder Sociedad Española de Radiodifusión, S.L.
     3,993  
Sociedad Española de Radiodifusión, S.L.
Loans granted by Sociedad Española de Radiodifusión, S.L. to the companies in which it holds holdings, W3comm Concesionaria, S.A. de CV and Green Emerald Business Inc.
     4,567  
Val Disme, S.L.
Distribution, transport and logistics services rendered by Val Disme, S.L. to the print media of Prisa Group.
     1,027  
Val Disme, S.L.
Income received by print media of Prisa Group for purchase of copies and promotions by Val Disme, S.L.
     12,942  
 
It should be noted that:

i) Printing services provided by several companies in which Dédalo Grupo Gráfico has holdings to different companies in which Prisa has holdings, correspond to the period January-March 2012. Thereafter Dédalo Grupo Gráfico became part of the consolidated  Prisa Group.

ii) In addition to the transactions described in the table above, there have been the following: i) services provided to  Prisa Group companies by other investee companies, for an aggregate amount of 4,466,000 euros, and ii) services provided by  Prisa Group companies to other investee companies, for an aggregate amount of 19,608,000 euros.
 
 

Not applicable.



 See “Item 18 - Financial Statements.”

Legal Proceedings

In addition to the pending litigation discussed below, Prisa and its subsidiaries and businesses are subject to the assertion of a variety of private litigation claims and damages, primarily related to our use and distribution of content in the ordinary course of our business. We do not reserve for these contingencies as none of them individually is considered to be material to our results of operations or financial condition.

In view of the legal proceedings of which we are aware, we believe that financial provisions for third-party liability recognized in accordance with current legislation were sufficient to cover the amount estimated as of December 31, 2012 as being necessary to meet third-party liability that may arise from existing and potential legal claims and proceedings to which we are party.

Proceedings Brought by Cableuropa, S.A.U.

On December 1, 2009, the Court of First Instance No. 3 of Colmenar Viejo ordered Sogecable (currently known as Prisa Televisión) to pay compensation of approximately €44 million plus interest to Cableuropa, S.A.U., or ONO, with respect to damages resulting from Prisa Televisión’s distribution of certain specialized television channels produced by Prisa Televisión’s subsidiary, Canal Satélite Digital, S.L. We appealed this decision to the Provincial Court of Madrid, and ONO entered into an agreement with Prisa Televisión to not enforce the judgment while the appeal was pending. Pursuant to this agreement (i) ONO paid to Audiovisual Sport, S.L., or AVS, a subsidiary of Prisa Televisión, funds owed by ONO to AVS and (ii) Prisa Televisión paid to ONO €47 million in cash. On May 18, 2012 Prisa Televisión and ONO signed a settlement agreement pursuant to which Prisa Televisión agreed to withdraw its appeal and ONO agreed to reimburse half the amount that Prisa Televisión had paid, thus putting an end to litigation on this issue.

ONO has also sued Audiovisual Sport, S.L., or AVS, a subsidiary of Prisa Televisión, and Prisa Televisión for the reimbursement of approximately €19 million plus an amount to be determined for the 2006/07, 2007/08 and 2008/09 seasons, together with interest paid by ONO. These payments were made in connection with the pay-per-view soccer broadcasting agreements entered into among ONO, the cable operators forming part of Auna (subsequently merged into ONO) and AVS. On March 4, 2010, Madrid Commercial Court No. 7 rendered a decision upholding ONO’s claim in this matter and ordering AVS and Prisa Televisión to jointly and severally pay approximately €30 million, plus an amount to be determined for the 2007/2008 and 2008/2009 seasons (approximately €29 million, including interest). AVS and Prisa Televisión have reached an agreement with ONO to prevent preliminary judicial execution of the ruling and agreed to a payment schedule starting January 2011, which was later delayed to March 2011. The full amount already paid by Prisa Televisión amounts to approximately €59 million. On May 18, 2012 AVS, Prisa Televisión and ONO signed a settlement agreement pursuant to which AVS and Prisa Televisión agreed to withdraw the appeal and ONO to reimburse half the amount that AVS had paid, thus putting an end to litigation on this issue.

Proceedings with Collective Rights Management Associations

As regards to litigation that Prisa Televisión and its subsidiaries have maintained in the past with different collective rights management associations, such as AGEDI, AIE, SGAE and AISGE, all the respective claims have been settled through different agreements and as of the date hereof have been fully terminated.

Proceedings between Audiovisual Sport, S.L. (AVS) and Mediapro Concerning Spanish League Soccer Broadcast Rights

On July 24, 2006, Prisa Televisión, TVC Multimedia, S.L. and Mediapro entered into an agreement to exploit the rights of the Spanish Football League for the 2006/07 and subsequent seasons. Also pursuant to this agreement, Mediapro had the option to become a shareholder of AVS. In consideration for its interest in AVS, Mediapro contributed its contracts for broadcast rights with certain soccer clubs to AVS.
 
 
In July and August of 2007, AVS discontinued transmission of soccer league match broadcasts to Mediapro because of Mediapro’s failure to make payments on more than €50 million of fees due to AVS. AVS subsequently filed a suit against Mediapro on July 3, 2007. Two additional complaints were filed on August 27 and September 12, 2007, alleging Mediapro’s continued breach of the agreement between the parties. The second supplemental suit was accompanied by an application for injunctive relief which was granted by the Madrid Court of First Instance no. 36. The court granted the requested injunction, but required AVS to post a bond of €50 million, secured by Prisa Televisión, to cover damages in the event that the injunction was improperly requested. This injunction was lifted at the end of the season.

Both AVS and Prisa Televisión have filed claims against Mediapro and the other parties to the initial contract that have cooperated with Mediapro. The trial was held on November 17 and 19, 2009. In a decision dated March 15, 2010 the court granted the relief requested by AVS and dismissed the counterclaim filed by Mediapro against AVS, Prisa Televisión and TVC. In addition, the Court awarded AVS more than €95 million for unpaid fees and damages caused by Mediapro’s failure to adhere to the terms of the contract. The court’s order also requires Mediapro to supply AVS with the contracts signed with league soccer clubs that should have been initially assigned to AVS, according to the terms of the disputed contract.

The judgment was appealed by Mediapro, and AVS requested its provisional enforcement. The court agreed to enforce the judgment; however, Mediapro was declared insolvent by Commercial Court No. 7 of Barcelona immediately thereafter. Enforcement has, therefore, been suspended in accordance with Spanish insolvency law. AVS also filed suit in Commercial Court No. 7 of Barcelona claiming €97 million in damages not covered by the complaint discussed above. Mediapro made a proposal of a settlement with, creditors (propuesta anticipada de convenio) consisting of a delay of 35 months of its payment obligations. The proposal was favorably received by the administrators appointed in this proceeding, but was objected to by AVS, Prisa Televisión and DTS who questioned the viability of said agreement as supported by an expert report issued by KPMG.

On December 23, 2011, the Mercantile Court num.7 of Barcelona ruled dismissing the opposition raised by AVS, and approved the proposal of settlement with creditors and ceasing therefore the effects of insolvency. AVS has presented an appeal against the ruling of the Mercantile Court Num.7 of Barcelona, and simultaneously against all the resolutions issued during the procedure, which according to the Insolvency Act, are appealable in the current procedural phase, and which have rejected the incidents issued by AVS and destined to the correct integration of the asset and liability masses in the Insolvency process.

In a judgment dated November 14,  2012 the Provincial Court of Madrid confirmed the substance of the March 15, 2010 judgment of Madrid Court of First Instance num. 36, granting Mediapro’s appeal only as regards the duration of the July 24, 2006 contract, which the resolution declared finished at the end of season 2008/2009. Both Prisa Televisión and AVS have filed appeals against this last decision before the Spanish Supreme Court (Tribunal Supremo).

With regards to the insolvency proceedings, on October 24, 2012, the Provincial Court of Barcelona dismissed the appeal filed against the judgment approving the mentioned creditor’s settlement. The remaining appeals before this court are still pending.

NCC Proceedings Against Various Participants in the Spanish League Soccer Market, Including Prisa Televisión and AVS

On April 8, 2008, the NCC commenced disciplinary proceedings against several companies, including Prisa Televisión, AVS and 39 soccer clubs for anticompetitive activities with regard to the acquisition of broadcasting and exploitation rights for regularly scheduled national soccer events. On August 27, 2008, the NCC filed a statement of the facts as found, summarizing its conclusions in the investigation. On July 10, 2009, the NCC issued its final proposed decision. Prisa Televisión and AVS have filed a response to the proposed decision. Subsequently, on April 14, 2010, the NCC issued a ruling imposing a fine of €150,000 on Prisa Televisión and Mediapro as well as a fine of €100,000 on AVS. The NCC imposed the fines on the basis that agreement reached by the parties obstructed competition. Both Prisa Televisión and AVS have appealed to the administrative courts; these appeals have not yet been resolved.

The April 14, 2010 NCC ruling held that the provisions in the parties’ July 24, 2006 agreement regarding the sharing and joint exploitation of soccer rights were valid through the end of the 2008/2009 season. However, the ruling also declared void clause 5 of the agreement, which provided that agreements for new soccer rights and the renewal of existing soccer rights should be negotiated and signed directly by AVS, except for rights relating to Real Madrid which should be renewed by Prisa Televisión, on the basis that it constituted a noncompete provision prohibited by Spanish antitrust rules.

AVS and Prisa Televisión have appealed the NCC ruling, requesting that the voiding of clause 5 and its finding that the agreement on rights sharing is valid only through the end of the 2008/2009 season be overturned. Furthermore, AVS and Prisa Televisión have requested that the court in which the appeal will be heard declare the NCC ruling unenforceable, and enforcement of the resolution was stayed pending the judicial determination. The Court rejected AVS's request regarding the enforceability of the NCC ruling. However, until the appellate court issues a decision on the main proceedings, there can be no final determination of the effects against AVS and Prisa Televisión.

The civil proceedings described above under “Proceedings between AVS and Mediapro Concerning Spanish League Soccer Broadcast Rights” and the NCC administrative proceedings are separate actions with different scopes, and will be separately resolved in different jurisdictions. The NCC Resolution does not affect the suspended €95 million judgment against Mediapro currently on appeal or the €97 million in additional damage claims brought by AVS discussed earlier, because these relate to the 2008/2009 season or earlier seasons.
 
 
NCC Proceedings against DTS, Mediapro and Telefónica in connection with the channels Canal+ Liga and Canal+ Liga de Campeones.

On December 7, 2012 the Research Division of NCC has opened disciplinary proceedings against DTS, Telefónica and Mediapro for possible anti-competitive practices in the audiovisual sector. This case has its origin in several complaints from cable and telecom operators for possible breaches of competition law in connection with the operation of the channel "Canal + Liga" and "Canal + Champions League". Both channels are produced and marketed by DTS, with Canal+ Liga focused on the broadcasting of regularly scheduled national soccer events (Liga and Copa) and Canal+ Liga de Campeones on the Champions League.

The Research Division believes that there could be evidence of a violation of Article 1 and 2 of Law 15/2007, of 3 July, the Defense of Competition (LDC) and Article 101 and 102 of the Treaty on the Functioning of the European Union (TFEU).

The opening of this proceeding does not prejudge the final outcome of the investigation. A maximum period of 18 months for the investigation and the resolution of the case by the NCC has now been opened.

Proceedings against DTS brought by Spanish Club Real Betis Balompié

On November 7, 2011 DTS was notified of a suit filed by the Bankruptcy Administration of Real Betis Football Club at the Commercial Court No. 1 of Seville (bankruptcy incident num. 1037/2011). The dispute has its origin in the disagreement between DTS and the aforementioned Club on the nature of a prepayment of €10 million, paid to the Club by DTS pursuant to a contract dated October 11, 2007 regarding the grant of broadcasting rights for several seasons. The Club believed that said payment was a signing bonus and DTS an advance payment. DTS answered the complaint on November 22, 2011 and the hearing was held on January 20, 2012. On April 2, 2012 the first instance ruling rejected DTS’s position. On May 24, 2012 DTS, the Club and the Bankruptcy Administration signed a settlement agreement by which the litigation ended. Under this agreement, €2.5 million of the €10 million payment were considered an advance of the license fee for 2011/2012 season. The remaining €7.5 million will be applied proportionately as a higher license fee of the price agreed for seasons 2012/2013 to 2014/2015, for which the Club and DTS have signed a new contract. This settlement agreement was approved by the Court in an order made on June 27, 2012.

Proceedings Against DTS brought by a teleshopping company

A Spanish teleshopping company, European Home Shopping, SL ("EHS") has sued DTS claiming €1.2 million in compensation for discriminatory treatment against a teleshopping channel “Canal Club”, regarding economic conditions of access to the platform Digital + (now named as Canal +), agreed with EHS through an agreement dated July 21, 2005. This claim is rooted in the counterclaim made ​​by EHS against Sogecable Media (now absorbed into Mediaset España) and DTS, following the previous demand against EHS made by Sogecable Media claiming an unpaid amount for advertising contracted by EHS to be broadcast on channel 40 Latino in DTT. The pretrial hearing has been scheduled for December 16, 2013.

Enforcement Actions Against Prisa Televisión and AVS by the Telecommunications Market Commission

On December 12, 2008, the Telecommunications Market Commission, or TMC, issued a disciplinary decision against Prisa Televisión for alleged failure to respond to the TMC’s requests for information in relation to Prisa Televisión compliance with the provisions of the Resolution of the Council of Ministers of November 29, 2002. Compliance with these provisions was a condition of the TMC’s approval of the merger of Vía Digital into Prisa Televisión. The TMC also issued a disciplinary sanction against AVS on the same grounds. Both Prisa Televisión and AVS have filed appeals against those decisions in the administrative courts. In a judgment of April 26, 2012, the High Court dismissed the administrative appeal filed by AVS against the decision of the MTC of December 12, 2008. The appeal filed by Prisa Televisión is pending.

Proceedings brought by Cable Operators regarding Prisa Televisión’s thematic channels

In 2003 and 2004, the cable operators Auna, Telecable, Tenaria, Euskaltel, R Telecomunicaciones de Galicia and R Telecomunicaciones de Coruña filed requests for arbitration with the Spanish Telecommunications Market Commission (CMT), requesting the right to receive an offer to market several channels provided by Prisa Televisión, S.A.U (at the time Sogecable) to its subscribers. The CMT announced its decisions, partially favourable to these requests in 2004 and in 2005. Prisa Televisión filed an appeal at the Madrid Provincial Appellate Court against these decisions, which was rejected. Subsequent to the offer submitted by Prisa Televisión, in January 2008 the Madrid Court of First Instance no. 43 closed the proceeding brought by Auna with respect to the enforcement of the award handed down by the CMT. The legal proceedings filed by the referred cable operators for executing the mentioned CMT’s decision continue its course before the respective courts.
 
 
Action against Prisa and some of its subsidiaries (Ediciones El País, GMI, Progresa and Prisa Brand Solutions)

On November 24, 2011, the National Competition Commission issued a sanctioning resolution against Prisa and some of its subsidiaries (Ediciones El País, GMI, Progresa and Prisa Brand Solutions) for an alleged offence regarding competition, for a project of joint commercialization of advertising space in written press and in a Sunday supplement edited with another editor group. Both Prisa and the aforementioned editor group have filed an administrative contentious appeal against this resolution which remains pending.

Proceeding of Warner Sogefilms, AIE

In 2006, Warner Sogefilms, AIE, an economic interest grouping owned on an equal-footing basis by Prisa Televisión and Warner Bros. Entertainment España, S.L., filed an appeal for judicial review against the penalty imposed by the Spanish Antitrust Agency for the AIE’s purported unfair trade practices, which currently is unresolved. This appeal was conducted by the Competition Court against the distributors of the Majors. Regardless of the appropriate procedural subrogation, the AIE was liquidated in 2006.

Proceeding against the Argentina State

As a result of a statement of claim filed in 2004 by a local radio operator at an Argentine court against the Argentine state, the sale of the shares of Radio Continental, S.A. has not yet been approved by the Argentine government. The claimant also applied for injunctive relief whereby the grant of the approval in question should be stayed during the principal proceedings. In December 2004 the court granted the injunctive relief applied for and processing of the approval was stayed.

The decision was appealed against by the Argentine government and by the buying and selling parties, and in April 2007 the Argentine Federal Judicial Review Chamber confirmed the injunctive relief. The extraordinary appeal filed at the Supreme Court was dismissed by a decision dated March 15, 2011 so that the injunction remains in effect. The principal proceeding which should resolve the merits of the case is still in progress, although the operations of the radio stations involved have thus far not been affected.
 
Dividend Information

Prisa has not paid any dividends per Prisa ordinary share with respect to the past five fiscal years. The table set forth below presents the dividends paid by Prisa in respect of the last five calendar years in euros per share and in dollars per share (calculated using the Bloomberg 5 p.m. euro to dollar exchange rate on the date Prisa paid each dividend):
 
 
 
Dividends Paid to Prisa Class B Shares
 
Fiscal Year
(in respect of)
 
Euros per
share
 
 
€/$
Exchange
 Rate(1)
 
 
Dollars per
share
 
                         
2010 (1)
 
 
0.014583
 
 
 
1.4174
 
 
 
0.020670
 
2011 (2)
 
 
0.175
 
 
_
 
 
_
 
2012 (3)
    
0.175
 
 
_
 
 
_
  
 
 
(1)
Dividend declared by the general shareholders’ meeting held on June 24, 2011, on the basis of the minimum annual dividend provided for in our bylaws (€0.175 per non-voting Class B convertible share), adjusted on a pro rata basis to take into account the date of issuance of the shares (December 1, 2010). Dollars per share amount has been calculated for information purposes only using the Closing Rate on June 24, 2011.The date established for payment of the dividend is September 29, 2011.
 
(2)
The Shareholders Meeting held on June 30, 2012 resolved to modify article 6.2. of the Company`s Bylaws so that the minimum preferred dividend on non-voting Class B shares (€0.175  per share) may be paid, without distinction, at the election of the Company, in cash, in Class A shares or as a combination of both. Authority to choose one or the other manner of payment will correspond to the Company, and may be exercised in its discretion both regarding the annual minimum dividend payment in the amount of €0.175  per share, and regarding payment of the proportional part of the minimum dividend accruing in the event of conversion of the non-voting Class B shares into Class A shares on the initiative of the owners of those Class B shares during each of the time windows established for that purpose. Class A shares the Company delivers in exercise of its discretionary authority will be valued at €1,00 per share. Thus, if payment of the dividend is made in Class A shares, the owners of Class B shares entitled to the minimum dividend will be entitled to the number of Class A shares resulting from dividing the total amount of the cash dividend corresponding to them by the aforesaid amount of €1,00. The number of Class A shares corresponding to each holder of Class B shares will be rounded downward to the nearest whole number, and the difference will be paid by the Company in cash.
 
 
 
In accordance with the provisions of article 6.2(a) of the Company's Bylaws, the Shareholders Meeting held on June 30, 2012 resolved to pay the preferred minimum annual dividend on the Class B shares for the 2011 financial year, by way of delivery of newly-issued Class A shares. For that purpose and not being distributable profits in the aforesaid 2011 financial year, share capital was increased in the amount of € 6,409,711.60 against the issue premium created upon issue of the Class B shares, through the issuance and circulation of 64,097,116 ordinary shares.

Likewise, the Shareholders Meeting held on June 30, 2012 approved a capital increase against the issue premium created upon issue of the Class B shares,  required to pay the Class B preferred dividend with Class A ordinary shares accrued during the 12 months following to June 30, 2012, in twelve tranches corresponding to each of the periods during which the minimum dividend may accrue by reason of conversion (each of them in the amount indicated in the resolution).

 (3) Shareholders Meeting will resolve how to pay the preferred minimum annual dividend on the Class B shares for the 2012 financial year. This Meeting has not been called yet. As referred above, preferred minimum annual dividend on the Class B shares for the 2011 financial year has been paid in full by way of delivery of newly-issued Class A shares. Additionally, Class B preferred dividend accrued by reason of conversion en each tranches following to June 30, 2012, have been also paid in full by way of delivery of newly-issued Class A shares.


There have been no significant changes since the date of the financial statements included in this annual report.



The following table sets forth, on a per share basis for the periods indicated, the high and low sales price of our shares:
 
 
 
 
Price of Prisa Class A
Shares (1)
 
 
 
High
 
 
Low
 
 
 
(Euros per share)
 
Annual Data (Year Ended December 31)
 
 
 
 
 
 
2008
 
 
13.10
 
 
 
2.11
 
2009
 
 
4.62
 
 
 
0.94
 
2010
 
 
4.26
 
 
 
1.39
 
2011
 
 
2.25
 
 
 
0.65
 
2012
 
 
0.87
      
0.22
 
Quarterly Data
 
 
 
 
 
 
 
 
    1Q 2011
 
 
2.16
 
 
 
1.43
 
    2Q 2011
 
 
2.25
 
 
 
1.34
 
    3Q 2011
 
 
1.64
 
 
 
0.76
 
    4Q 2011
 
 
0.95
 
 
 
0.65
 
    1Q 2012
 
 
0.87
      
0.57
 
    2Q 2012
 
 
0.56
      
0.29
 
    3Q 2012
 
 
0.43
      
0.31
 
    4Q 2012
 
 
0.38
      
0.22
 
Monthly Data
                
September 2012
    
0.43
      
0.38
  
October 2012
    
0.38
      
0.32
  
November 2012
    
0.34
      
0.28
  
December 2012
    
0.30
      
0.22
  
January 2013
    
0.33
      
0.24
  
February 2013
    
0.28
      
0.23
  
 
 
     
Price of Prisa
Class B Shares (2)
    
Price of Prisa
ADS-A (3)
    
Price of Prisa
ADS-B (4)
    
Price of Prisa
Warrants (5)
  
     
High
    
Low
    
High
    
Low
    
High
    
Low
    
High
    
Low
  
     
(euros per share)
    
(dollars per ADS)
    
(dollars per ADS)
    
(euros per share)
  
Annual Data (Year Ended December 31)
                    
2011
      
2.25
      
0.65
      
12.86
      
3.58
      
12.85
      
3.88
      
0.48
      
0.06
  
2012
      
0.85
      
0.21
 
 
 
4.47
      
1.06
      
4.71
      
1.06
      
0.09
      
0.01
  
Quarterly Data
                                                                  
1Q 2011      
2.09
      
1.83
      
11.83
      
7.33
      
11.97
      
9.30
      
0.48
      
0.22
  
2Q 2011      
2.09
      
2.00
      
12.86
      
7.78
      
12.85
      
9.07
      
0.48
      
0.28
  
3Q 2011      
2.00
      
1.25
      
9.43
      
3.86
      
10.13
      
4.12
      
0.36
      
0.09
  
4Q 2011      
1.25
      
0.74
      
4.94
      
3.64
      
5.38
      
3.88
      
0.11
      
0.06
  
1Q 2012      
0.85
 
 
 
0.68
 
 
 
4.47
 
 
 
3.21
 
 
 
4.71
 
 
 
3.63
 
 
 
0.09
 
 
 
0.03
  
2Q 2012      
0.69
 
 
 
0.51
 
 
 
3.15
 
 
 
1.52
 
 
 
3.71
 
 
 
2.31
 
 
 
0.03
 
 
 
0.01
  
3Q 2012      
0.55
 
 
 
0.45
 
 
 
2.19
 
 
 
1.58
 
 
 
2.62
 
 
 
2.01
 
 
 
0.02
 
 
 
0.01
  
4Q 2012      
0.45
 
 
 
0.21
 
 
 
1.86
 
 
 
1.06
 
 
 
2.11
 
 
 
1.06
 
 
 
0.01
 
 
 
0.01
  
Monthly Data
                                                                  
September 2012
      
0.50
 
 
 
0.45
 
 
 
2.19
 
 
 
1.85
 
 
 
2.40
 
 
 
2.10
 
 
 
0.01
 
 
 
0.01
  
October 2012
      
0.45
 
 
 
0.34
 
 
 
1.86
 
 
 
1.56
 
 
 
2.11
 
 
 
1.60
 
 
 
0.01
 
 
 
0.01
  
November 2012
      
0.34
 
 
 
0.32
 
 
 
1.63
 
 
 
1.33
 
 
 
1.76
 
 
 
1.36
 
 
 
0.01
 
 
 
0.01
  
December 2012
      
0.31
 
 
 
0.21
 
 
 
1.47
 
 
 
1.06
 
 
 
1.50
 
 
 
1.06
 
 
 
0.01
 
 
 
0.01
  
January 2013
      
0.23
 
 
 
0.22
 
 
 
1.63
 
 
 
1.20
 
 
 
1.58
 
 
 
1.18
 
 
 
0.01
 
 
 
0.01
  
February 2013
      
0.26
 
 
 
0.23
 
 
 
1.47
 
 
 
1.15
 
 
 
1.44
 
 
 
1.25
 
 
 
0.01
 
 
 
0.01
  
 
(1)
Prisa Class A shares are ordinary shares trading on the Spanish Market (Mercado Continuo).

(2)
Prisa Class B shares are non-voting convertible shares trading on the Spanish Market (Mercado Continuo).

(3)
Prisa ADS-A represent ordinary shares and trade on the NYSE.

(4)
Prisa ADS-B represent non-voting convertible shares and trade on the NYSE.

(5)
Warrants trading on the Spanish Market (Mercado Continuo).

Article 33 of the Spanish Securities Market Law permits the CNMV to suspend trading of a financial instrument on the Spanish official secondary markets on which it is listed when special circumstances exist that may distort the normal course of trading in the financial instrument or that may make that measure advisable for the protection of investors. The CNMV has exercised this power to suspend trading in Prisa ordinary shares on the following occasions over the course of the past three years:

·
February 23, 2010, due to reports in various news outlets concerning the proposed business combination between Prisa and Liberty.

The CNMV lifted the trading suspension and allowed trading of Prisa shares to resume within 24 hours of the initial suspension.

See “Additional Information—Memorandum and Articles of Association—Description of Share Capital.”
 

Not applicable.

C.

See “—Offer and Listing Details.”


Not applicable.


Not applicable.
 
 

Not applicable.



Not applicable.


Corporate Purpose:

Article 2 of our bylaws provides that:

1. The Company’s corporate purpose includes:

a)
Managing and operating all types of owned or third-party news and social communications media, regardless of format, including the publication of printed newspapers, among others.

b)
Promoting, planning, and executing on behalf of the Company or for other entities, either directly or through third parties, of all types of communications media, industrial, commercial and service projects, transactions or businesses.

c)
Incorporating businesses or companies, participating in already existing companies, even with a controlling interest, and entering into association with third parties in transactions and businesses through collaboration agreements.

d)
Acquiring, holding either directly or indirectly, leasing or otherwise exploiting and disposing of all types of personal or real property or rights therein.

e)
Contracting and providing advisory, acquisition and management services to third parties, either through intermediation, representation or any other type of collaboration method on the Company’s behalf or for third parties.

f)
Involvement in capital and money markets through the management, purchase and sale of fixed income or equity securities or any other type of securities on behalf of the Company.

2. The aforementioned activities are understood to refer to national or international companies and businesses, operations or transactions, complying with their respective legal requirements.

3. The Company may engage in all or part of the activities comprising the corporate purpose indirectly through holdings in other companies having a similar corporate purpose.

Description of Our Share Capital

Class A ordinary Shares, Non- voting convertible Class B Shares and Warrants (Extraordinary shareholders’ meeting of Prisa of November 27, 2010):

As indicated in Item 4, we signed an agreement (“Business Combination Agreement” or “BCA”) on March 5, 2010, with the US company Liberty Acquisition Holdings Corp (which had the legal form of a “special purpose acquisition company”), consolidated into a new text called the “Amended and Restated Business Combination Agreement”, in August 2010.
 
Under this agreement, Prisa carried out the following capital increases, which were approved by the extraordinary shareholders’ meeting of Prisa of November 27, 2010:

i) Capital increase by issuance of 241,049,050 Class A ordinary shares, issued in exchange for a cash consideration with preemption rights implemented through warrants (the “Warrants”). Prisa Warrants quote on the platform of the Spanish Stock Warrants, the Warrants have Prisa Class A shares as underlying titles, their exercise price amounts 2 euros and they may be exercised on a monthly basis for 42 windows (up to the date of their expiration on June 5, 2014).

ii) Capital increase by issuance of 224,855,520 Class A Shares and 402,987,000 non-voting convertible Class B shares, issued by compensation in kind, which was subscribed by contribution of all common shares and warrants of Liberty Acquisition Holdings, Corp., once absorbed by its subsidiary, Liberty Acquisitions Holdings Virginia, Inc. (the company resulting from the merger, hereinafter “Liberty”).
 
 
Ordinary Class A Shares and non-voting convertible Class B shares quote in the Stock Exchanges of Madrid, Barcelona, Bilbao and Valencia, through the Spanish Automated Quotation System (“Sistema de Interconexión Bursátil Español”, SIBE) and also as American Depositary Shares (ADS) on the New York Stock Exchange.

Holders of ADS that represent Class A and Class B shares have the right to apply to the Depositary of such ADS (Citibank NA) the direct delivery of the corresponding Class A and Class B shares and their consequent trading on the Spanish Stock Exchanges.

Likewise, each Class B convertible non-voting share may be transformed into a Class A common share, at any time, at the election of its holder. Forty-two months after the date of issue of the Class B convertible non-voting shares (that took place on November 27, 2010), those shares mandatorily will be transformed into Class A common shares.

Convertible Bonds ( Ordinary shareholders´ meeting of Prisa of June 30, 2012):

The shareholders meeting held on June 30, 2012 approved an issuance of bonds mandatorily convertible into newly-issued Class A common shares of the Company (the “Bonds”), which was carried out in two tranches:

 
i)
Tranche A (amounted to 334,000,000 Euros). This tranche was subscribed by the following creditor Institutions: (i) Banco Santander , S.A. amounting 100 million euros through partial exchange of credits (bridge loan), (ii) Caixabank, S.A., amounting 100 million euros through partial exchange of credits (bridge loan) and, (iii) HSBC, Bank Plc, Office in Spain, amounting 134 million euros through partial exchange of credits (subordinated loan).

Both, the bridge loan and the subordinated loan, are described in “Bank Borrowings”.

 
ii)
Tranche B (amounted to 100,000,000 Euros) was subscribed by Telefónica, S.A. by cash contribution.

The Bonds were issued at par value, have a unit face value of 100,000 Euros, accrue monthly interest from their issuance which is usually settled and have a term of 2 years.

The bondholders may request their conversion into Class A shares at any time before the final maturity date (July 2014). In this case, the Company shall issue Class A shares resulting from the conversion price within the month following the request of early conversion.

The Bonds shall be mandatorily converted into Class A common shares on the final maturity date. The interest accrued and not paid until the conversion date will be paid in cash. The price of the Prisa shares for purposes of conversion will be 1.03 Euros and will be adjusted under certain circumstances provided in the resolution.

At the same shareholders meeting (June 30, 2012) was approved an increase of capital by the amount necessary to cover the conversion of convertible Bonds issued by the Company, up to an initially contemplated maximum of 421,359,223 Class A shares.

Amendments of the Share Capital during 2012

Both the share capital and the number of shares of each class have been amended several times, during the year 2012, on the occasion of the following transactions:

 
i)
Capital increases corresponding to windows 13 to 24 for execution of PRISA Warrants. The execution of Warrants resulted in subscription of an equivalent number of newly-issued Class A common shares.

 
ii)
In addition to the execution of Warrants in the above windows, on January 3, 2012 was formalized the exercise of 75,000,000 Warrants by OTNAS INVESTMENTS, SL (OTNAS), in an amount of 150,000,000 euros. OTNAS is a company indirectly owned by RUCANDIO, S.A. through TIMON, S.A., ASGARD INVERSIONES, S.L.U, PROMOTORA de PUBLICACIONES, S.L. and the Prisa Shareholder agreement to the extent of 83.58%, by BERGGRUEN ACQUISITION HOLDINGS to the extent of 8.21%, and by Mr. Martin Franklin to the extent of 8.21%. (See “Current Major Shareholders”)

 
iii)
Holders of Class B shares have exercised, on several occasions, the conversion rights into Class A shares.

 
iv)
Likewise in 2012 the following capital increases have been carried out, through the issuance of Class A shares, for the payment of:
 
 
o     The minimum annual dividend of Class B shares for the year 2011 (by virtue of the resolution passed at the shareholders meeting held on June 30, 2012): For purposes of covering payment of the annual minimum dividend on Class B shares for the 2011 financial year, there not being distributable profits in the aforesaid 2011 financial year, share capital was increased in the amount of€ 6,409,711.60 against the share premium reserved created upon issuance of the Class B shares, through the issuance and circulation of 64,097,116 ordinary shares.

o     The minimum dividend accrued up to the time of conversion of class B shares into class A shares. The General Shareholders Meeting held on June 30, 2012 approved a capital increase against the share premium reserve created upon issuance of the Class B shares,  required to pay the Class B preferred dividend with Class A ordinary shares accrued during the 12 months following to June 30, 2012, in twelve tranches corresponding to each of the periods during which the minimum dividend may be accrued by reason of conversion (each of them in the amount indicated in the resolution).

As of December 31, 2012, the par value of the share capital issued by Prisa was €99,132,289.00, represented by 651,054,490 Class A common shares, having a par value of €0.10 each, and 340,268,409 Class B convertible non-voting shares, having a par value of €0.10 each.

 Share Capital as of the date of this report

As of the date of this annual report, the nominal value of our issued share capital amounted to €99,310,215,00, represented by 661,608,304 Class A common shares, having a nominal value of €0.10 each, and 331,493,846 Class B convertible non-voting shares, having a nominal value of €0.10 each. The capital is totally subscribed and paid up.

After the last capital increase, carried out on 7 March 2013 as a consequence of the execution of 66 Warrants and the conversion of 3,577,554 class B shares into 3,577,554 Class A shares (and the corresponding payment of the minimum dividend accrued until the conversion by payment of Class A shares),  that is pending registration in the Mercantile Register of Madrid, the share capital shall amounted €99,388,437,60 € (represented by 665,968,084 Class A shares and 327,916,292 Class B shares).

Description of Prisa Class A Ordinary Shares

Voting Rights

Under our bylaws, holders of the Prisa Class A ordinary shares are entitled to one vote per share on all matters to be voted upon by shareholders.

Dividends

Under the Spanish Companies Act, shareholders at our general shareholders’ meeting approve the annual financial statements of the Company and the allocation of profits or losses in accordance with these accounts. Once all payments and allocations for reserves or other accounts required by the bylaws and applicable law have been made, general dividends may be paid from the profits of the Company for the fiscal year in respect of which the dividend is made or against appropriate reserves, but only to the extent of the excess of the book value of the Company’s net assets over the total share capital. Before any dividends may be paid out of the Company’s profits, profits must be allocated to offset any accumulated losses from prior fiscal years to the extent such losses had the effect of reducing the book value of net assets below the total share capital.

Redemption

Under the Spanish Companies Act, holders of Prisa Class A ordinary shares that vote against a proposed bylaw amendment that replaces the Company’s corporate purpose have the right to require us to redeem their shares in connection with such amendment for a price prescribed by law based on then-prevailing market prices.

Under the Spanish Companies Act, any shareholder that votes against a cross-border merger in which the surviving company would be domiciled in any jurisdiction other than Spain, or votes against any proposal to change the domicile of Prisa to any jurisdiction other than Spain, has the right to require us to redeem their shares in connection with such merger or change in domicile for a price prescribed by law based on then-prevailing market prices.

Liquidation Rights

According to the Spanish Companies Act, upon any dissolution of Prisa, after payment of all debts and liabilities, the remaining assets must be used to the extent possible to reimburse the stated value of the Prisa Class B convertible non-voting shares prior to any distribution to the holders of the Prisa Class A ordinary shares, to the extent provided for under Article 101 of the Spanish Companies Act. In the event that the balance sheet prior to the liquidation contained distributable profits or share premium reserve created as a result of the issuance of the Prisa Class B convertible non-voting shares, Prisa Class B convertible non-voting shares would have the right to receive the minimum dividend corresponding to the preceding year and the then-current year before any distribution is made to the rest of the shareholders.
 
 
Preemptive Rights

Each holder of Prisa Class A ordinary shares is entitled to preemptive rights in proportion to its shareholding with respect to each new issuance of (i) Prisa Class A ordinary shares pursuant to an increase in capital for cash (aumento con aportaciones dinerarias) and (ii) convertible debt. However, preemptive rights of shareholders may be excluded under certain circumstances by specific approval at the general shareholders’ meeting (or upon board action pursuant to authorization from the general shareholders’ meeting) and preemptive rights are deemed excluded by operation of law in respect of certain issuances.

Registration and Transfers

Under our bylaws, all ordinary shares are represented in book-entry form of ownership and their registration in the corresponding accounting ledger, which shall also reflect the terms included in the documents under which the shares were issued and whether or not the shares have been fully paid up.

Book-entry registration in our accounting ledger of a holder’s ownership of shares constitutes legitimate title to the shares so registered, enables the holder to require us to recognize the holder as a shareholder, and evidences the holder’s entitlement to exercise its rights as a shareholder, including the transfer of shares. Our bylaws provide that we are entitled to rely on the accounting ledger for purposes of determining the identity of shareholders entitled to exercise the rights of share ownership.

If a person or entity is listed as a holder of shares on the share ledger by virtue of a nominee shareholder appointment or similar document, we may require the registered shareholder to disclose the identity of the beneficial owner of the shares, as well as any transfer of beneficial ownership of, or encumbrance over, the shares.

Description of Prisa Class B Convertible Non-Voting Shares

Article 8 of our bylaws provides that non-voting shares shall be governed by the provisions of the bylaws, the Spanish Companies Act and by the resolution adopted at the shareholders’ meeting in which the issue of non-voting shares is approved.

The Class B convertible non-voting shares have the following characteristics:

(a)
Right to minimum dividend:

In accordance with the Class B Shares Issue Resolution (approved at the extraordinary shareholders’ meeting held on November 27, 2010), the holders thereof were entitled to receive a minimum dividend in cash of 0.175 euros per share and, in the case of early conversion of the Class B shares, the proportional part of the minimum dividend accrued during the voluntary conversion windows until the time of its conversion. In both cases, the dividend was to be paid in cash, against distributable profits and, in the absence thereof, against the special reserve from issue premium established for that purpose.

At the shareholders’ meeting held on June 30, 2012, the scheme for payment of the minimum dividend corresponding to the Class B shares was modified, allowing payment thereof in cash, Class A shares or a combination of both.

Currently, the holders of the Class B convertible non-voting shares will be entitled to receive, from the date of their issue until their transformation into Class A common shares, a minimum annual  dividend of 0.175 euros per share, provided that there are distributable profits, in accordance with the terms and limitations set forth in article 273 of the Spanish Companies Act, or provided that there is a positive balance of the issue premium reserve, which reserve was created upon issue of the Class B convertible non-voting shares, in accordance with the provisions of the issue resolution, provided that there are no legal restrictions on such payment.

The aforesaid dividend will be paid, at the election of the Company, in cash, in Class A shares or as a combination of both. If the Company decides to pay it in cash, it will pay the amount of 0.175 euros per Class B share. If it decides to pay it in Class A common shares, it will deliver shares corresponding to that amount based on valuing each Class A common share at 1 euro. Thus, if payment of the dividend is made in Class A shares, the holders of Class B shares with the right to the minimum dividend will be entitled to the number of Class A shares resulting from dividing the total amount of the cash dividend that would have corresponded to them by the aforesaid amount of 1 euro (irrespective of the share market price).

The Company's discretionary authority to pay the minimum dividend on the non-voting Class B shares in cash, in Class A shares or as a combination of both also will apply, using the same rules for calculation and valuation, to the proportional part of the dividend accruing in the event of conversion of the non-voting Class B shares into Class A common shares using the procedure contemplated in section c) below (Conversion).
 
 
Payment of the dividend in Class A shares may be made using Class A shares already issued by the Company and held as treasury stock, or using newly-issued Class A shares. In the latter case, the Class A shares will be issued by way of a capital increase against the profits that would have corresponded to the Class B shares and, in the absence thereof, against the issue premium reserve created upon issue of the non-voting convertible Class B shares, which will be restricted except for payment of the minimum dividend and payment of the par value of the Class A common shares in excess of the number of non-voting convertible Class B shares that are converted, if the conversion ratio is other than 1 to 1 based on the provisions of section b) below. The restricted nature of the aforesaid reserve will be maintained until all of the non-voting convertible Class B shares have been converted into Class A common shares and the minimum dividends referred to in this article have been fully paid.

To that end, the Company submits such resolutions for capital increases against reserves as may be necessary for approval of the General Meeting.

All of the foregoing is without prejudice to such possible reclassification of liability accounts, if any, as must be made for accounting purposes regarding all or a part of the balance of the issue premium reserve for Class B convertible non-voting shares.

When there are sufficient distributable profits in a given fiscal year, the Company is required to declare payment of the minimum dividend referred to in the preceding paragraph. If the Company has distributable profits during a fiscal year but they are not sufficient to distribute the full amount of the minimum dividend on the Class B convertible non-voting shares, the available amount of the distributable profit must be fully used for payment of the dividend corresponding to the Class B convertible non-voting shares, pro rata over them.

The minimum dividends that are not distributed, by reason of insufficient distributable profits, will be distributed, as to the remainder, against the issue premium reserve constituted upon issue of the Class B convertible non-voting shares. If the issue premium reserve created upon issue of the Class B convertible non-voting shares also is not sufficient to distribute the full amount of the minimum dividend on the Class B convertible non-voting shares, the full amount of that reserve will be used for payment of the dividend corresponding to the Class B convertible non-voting shares, pro rata over them.

Minimum dividends not distributed, in whole or in part, by reason of insufficient distributable profits or issue premium reserve created upon issue of the Class B convertible non-voting shares, will be cumulative.

The minimum dividend corresponding to the Class B convertible non-voting shares, either in cash, Class A Shares, or a combination of both,  must be paid as soon as possible, after holding the ordinary general shareholders’ meeting for each fiscal year, and in any event before 30 September of each year. The minimum dividends will be paid in respect of the completed fiscal year to which the annual accounts approved at the ordinary general meeting resolving payment of the minimum dividend relate.

At the shareholders’ meeting held on June 30, 2012 was approved to pay the full amount of the annual minimum dividend for the 2011 financial year in Class A Shares, and for purposes of covering such payment (there not being distributable profits in the aforesaid 2011 financial year), it was approved to increase the Company's capital against the issue premium created upon issue of the Class B shares, to the extent allocated to this purpose.

In the event of conversion, the holders of the Class B convertible non-voting shares will be entitled to receive , on or before the day they are delivered the common shares resulting from the conversion, any minimum dividend not paid before that date (including the proportional part of the minimum dividend corresponding to the number of days elapsed from the beginning of the year in which the conversion occurred), provided and to the extent that there are distributable profits or issue premium reserve created upon issue of the Class B convertible non-voting shares.

For these purposes, the general shareholders’ meeting resolves from this time to distribute the issue premium reserve for Class B convertible non-voting shares, to cover payment of the dividends corresponding to the shareholders choosing to convert their Class B convertible non-voting shares into Class A common shares on the aforesaid terms, in the event that it is not possible to pay them by way of declaration of an interim dividend. And without prejudice to the fact that, if at the end of the Company’s fiscal year we have distributable profits, the meeting may resolve to use those profits to replace the amount delivered against the issue premium reserve by establishing a voluntary reserve dedicated to the same purposes as the issue premium reserve for the Class B convertible non-voting shares.

Once the minimum dividend has been decided, the holders of Class B convertible non-voting shares will be entitled to the same dividend, if any, as corresponds to Class A common shares.

At the shareholders’ meeting held on June 30, 2012 it was also resolved to consider the possibility of payment in Class A shares of the dividend accrued by reason of voluntary conversion of Class B shares during the 12 months following adoption of that resolution. In order to pay such minimum dividends as may accrue by reason of early conversion of the Class B shares in Class A shares, was resolved to increase capital against the issue premium reserve created upon issuance of the Class B shares, to the extent allocated to this purpose, in twelve tranches corresponding to each of the periods during which the minimum dividend may accrue by reason of conversion.
 
 
Other rights:
 
The Class B convertible non-voting shares will have no voting rights. Nevertheless, those shares will have voting rights when the Company has not fully paid the minimum dividend. In this case, the voting right of the Class B convertible non-voting shares will be given in proportion to their par value.

Class B convertible non-voting shares will enjoy a right of pre-emptive subscription for capital increases against cash contributions and issues of debentures convertible into shares of the Company, on the same terms as the Class A common shares, in proportion to the par values thereof. Nevertheless, that right may be excluded in accordance with the provisions of article 308 of the Spanish Companies Act and the pertinent corporate resolutions.

Subsequent issues of non-voting shares will require approval, by separate vote or special meeting, of the Class B convertible non-voting shares.

Class B convertible nonvoting shares will give their holders the same rights as contemplated by law, and the rights of Class A common shares except as provided in the foregoing sections and by law, including the rights of information and attendance at the Company’s general shareholders’ meeting.
 
(c) 
Conversion
 
I. Transformation:

The Class B convertible non-voting shares will be transformed into Class A common shares on the following conditions:

(i)
Each Class B convertible non-voting share will be transformed into a Class A common share, at any time, at the election of its holder. The resolution of the board of directors effectuating the transformation of capital will determine the terms and procedures for receiving and documenting the shareholder elections and the issue and delivery of the Class A shares by conversion of Class B shares.
 
(ii)
42 months after the date of issue of the Class B convertible non-voting shares (hereinafter the “Mandatory Conversion Date”), those shares mandatorily will be transformed into Class A common shares, at a ratio of one Class A common share for each Class B convertible non-voting share.

Nevertheless, if the average of the weighted average prices on the Spanish Continuous Market for the Class A common share of the Company over the 20 trading sessions immediately prior to the Mandatory Conversion Date is less than 2.00 euros, the conversion ratio will be changed as follows: The number of Class A common shares to be issued upon conversion of each Class B convertible non-voting share will be equal to a fraction (stated as a decimal) the numerator of which is 2.00 euros and the denominator of which is the average of the weighted average prices of the Company’s Class A common share over the 20 trading sessions immediately prior to the Mandatory Conversion Date, with a maximum of 1.33 Class A common shares, for which purpose, if necessary, capital will be increased against reserves after satisfying the appropriate legal requirements. If the conversion ratio is not 1 to 1, the Company may organize a system to adjust for fractions.

Alternatively the Company may choose not to apply this adjustment and the related capital increase, either by distribution to the holders of each Class B convertible non-voting share of an extraordinary cash dividend against the issue premium reserve created upon issue of the Class B convertible non-voting shares, in the amount of the difference between 2 euros and the average of the indicated prices, with a maximum of 0.5 euros per Class B convertible non-voting share, or by any other procedure permissible in law, in these cases maintaining the conversion ratio at 1 to 1.

As a result, the issue premium reserve created upon issue of the Class B convertible non-voting shares will be available not only for purposes of payment of the minimum dividend, but also, as indicated above, for mandatory conversion of the shares when the conversion ratio is higher than the 1 to 1 referred to above for purposes of repaying the par value of the newly issued Class A common shares when appropriate.

The board of directors, with the possibility of delegation to its executive committee or any director, is expressly authorized to specify, clarify or complement the conversion mechanism and take all such actions as may be necessary for implementation of the conversion.

The Company may not undertake reorganizations, recapitalizations, reclassifications, splits, groupings or similar changes by reference to the Class A shares, unless the conversion ratio is correspondingly adjusted (as described above).

As a general matter, without prejudice to the following provisions, once the election to convert has been announced or 42 months have passed after the date of issue, computed on a date to date basis, implementation of the conversion must be undertaken as quickly as possible.
 
 
II. Conversion procedure:

(i)
Voluntary conversion at election of holder of Class B convertible non-voting shares: The holders of Class B convertible non-voting shares will be entitled to request conversion of those shares of the Company’s board of directors at any time. For this purpose, the Company will publish a form of application for conversion on its webpage from the date of issue of those shares.
 
 
During the first five business days of each month (with a business day for purposes of this resolution meaning working days, excluding Saturdays, Sundays and holidays in the municipality of Madrid), the Company will adopt the necessary resolutions and take the necessary actions to convert the Class B convertible non-voting shares into Class A common shares. The application for conversion must be effectively received by the Company before 5:30 p.m. on the last business day of the prior month, in the Spanish peninsular time zone. To this end the board of directors is expressly authorized to proceed to take all necessary actions, including registration no later than the last day of each month in the Commercial Register and with Sociedad de Gestión de los Sistemas de Gestión, Registro y Compensación de Valores, S.A.U. (Iberclear) of the new Class A common shares, and to deliver the new Class A common shares through the securities account specified by the holder of the Class B convertible non-voting shares or, if applicable, through the depositary, if they are incorporated in ADSs. Also, the Company will exert its best efforts so that the recently created Class A common shares are admitted to trading on the Barcelona, Madrid, Bilbao and Valencia exchanges and included within the Spanish Automated Quotation System (SIBE) and the New York Stock Exchange (NYSE) before the end of the month of registration in the Commercial Register.
 
(ii)
Mandatory conversion: At the time of mandatory conversion, the board of directors is authorized to take all actions indicated in the preceding section to convert the Class B convertible non-voting shares into Class A common shares during the month following the month the term for mandatory conversion expires.
 
III. Conversion ratio other than 1 to 1:

In the case of mandatory conversion as referred to above, if the conversion ratio of the Class B convertible non-voting shares into Class A common shares is other than 1 to 1, it is resolved to increase capital in the amount of €13,298,571 to cover the issue of the additional number of Class A common shares resulting from application of the new conversion ratio, with a maximum of 132,985,710 Class A common shares, expressly contemplating the possibility of incomplete subscription.

That resolution is conditioned not only on existence of the circumstances referred to above in order for the conversion ratio to be other than 1 to 1, but also on the Company, at the time of implementation of the conversion, not having chosen to pay the aforesaid difference in cash.

The issue of the new shares covered by this capital increase will be at par value, without issue premium.

The par value of these shares will be paid up by application of the corresponding amount of the positive balance of the issue premium created upon issue of the Class B convertible non-voting shares, established as a reserve frozen except for these purposes and for purposes of payment of the minimum dividend, without the then remaining holders of Class A common shares being entitled to allotment of new Class A common shares issued to cover the conversion.

For purposes of compliance with the provisions of article 303 of the Spanish Companies Act, the Company’s general shareholders’ meeting will ratify the foregoing resolution to the extent necessary, and will approve the audited balance sheet referred to in that article.
 
(d)
Rights of Class B shares upon liquidation

For purposes of liquidation, the paid up value of the Class B shares will be deemed to be the issue price thereof.

Class B convertible non-voting shares generally will have the same liquidation share as the other shares.

Notwithstanding the foregoing, the holders of Class B convertible non-voting shares will, on the terms set forth in article 101 of the Spanish Companies Act, be entitled to receive repayment of the paid-up value, before any amount is distributed to the other shares, if the liquidation share of all shares is less than the paid-up value of the Class B convertible non-voting shares.

If the balance sheet prior to liquidation shows distributable profits or issue premium reserve created upon issue of the Class B convertible non-voting shares, the minimum dividend for the prior and then-current fiscal years will be distributed to the holders of the Class B convertible non-voting shares, prior to distributing any amount to the remaining shareholders.
 
 
Registration and Transfer

Under our bylaws, the Prisa Class B convertible non-voting shares exist by virtue of their book-entry notation of ownership and their registration in the corresponding accounting ledger, which shall also reflect the terms included in the documents under which the shares were issued and whether or not the shares have been fully paid up.

Book entry registration in our accounting ledger of a holder’s ownership of shares constitutes legitimate title to the shares so registered, enables the holder to require us to recognize the holder as a shareholder, and evidences the holder’s entitlement to exercise its rights as a shareholder, including the transfer of shares. Our bylaws provide that we are entitled to rely on the accounting ledger for purposes of determining the identity of shareholders entitled to exercise the rights of share ownership.

If a person or entity is listed as a holder of shares on the share ledger by virtue of a nominee shareholder appointment or similar document, we may require the registered holder to disclose the identity of the beneficial owner of the share of the shares, as well as any transfer of beneficial ownership of, or encumbrance over, the shares.

Reduction of Capital

Under the Spanish Companies Act, so long as the part of share capital corresponding to the Prisa Class B convertible non-voting shares does not exceed half of the aggregate nominal value of the capital in respect of all shares of the Company, a reduction in our capital as a result of losses would not affect the Prisa Class B convertible non-voting shares. If, as a consequence of the reduction in capital, the nominal value of the Prisa Class B convertible non-voting shares would exceed half of our capital, Prisa would be required to restore the portion of total share capital represented by our Class B convertible non-voting shares to 50% or less within two years, otherwise Prisa would be required to liquidate.

Upon any reduction in capital that results in all of our Class A ordinary shares being cancelled, the Prisa Class B convertible non-voting shares would acquire voting rights in proportion to the nominal value of the shares, and would retain these rights until such time as the legally required proportion between the Prisa Class A ordinary shares and the Prisa Class B convertible non-voting shares is restored.

Shareholders’ Meetings

Under our bylaws and the Spanish Companies Act, general shareholders’ meetings are either ordinary or extraordinary meetings.

We must hold an ordinary general shareholders’ meeting annually within the first six months after the end of each fiscal year, on a date to be set by our board of directors. An extraordinary general shareholders’ meeting may be held when deemed warranted by the board of directors of Prisa or at the written request of shareholders holding at least 5% of our share capital, which request must state the matters to be considered at the meeting. In the case of a meeting called at the request of shareholders, we must hold the meeting within two months after the requesting shareholder(s) has submitted a notarized request for the meeting to our board of directors.

Attendance at shareholder meetings

Any record shareholder that owns a minimum of 60 shares of Prisa capital stock, irrespective of class, on the date that is five days prior to the date of a shareholder meeting, and that has obtained the corresponding attendance card, may attend a general shareholders’ meeting, in person or by proxy.

Voting rights

Under our bylaws, holders of the Prisa Class A ordinary shares are entitled to one vote per share on all matters to be voted upon by shareholders.

Quorum

The published notice of a general shareholders’ meeting may contain two proposed dates and times for the meeting, known as the initial call and the second call. The standard for quorum differs between the first and second call, and depending on the content of the proposals submitted to the shareholders.

On the initial call, quorum is generally satisfied if shareholders representing at least 25% of the subscribed share capital entitled to vote at the meeting are present or represented by proxy. On the second call, quorum is satisfied regardless of the share of our capital represented. At both the initial and second call, the affirmative vote of the majority of the shares entitled to vote and present or represented at the meeting is sufficient to pass a resolution by shareholder action, unless the matter being considered requires a 75% vote, as discussed below.
 
 
A higher standard for quorum applies at any general shareholders’ meeting where the following issues are to be considered: the issuance of debt securities (obligaciones), the elimination of preemptive rights, transfer of domestic domicile to any jurisdiction outside of Spain, any increase or reduction of our share capital, or any transformation, merger, spin-off or dissolution or any amendment to our bylaws. At the initial call of such a meeting, quorum requires the presence (in person or by proxy) of shareholders representing 50% of our share capital entitled to vote at the meeting, and the affirmative vote of the majority of the shares entitled to vote and present or represented at the meeting is sufficient to pass a resolution by the shareholders, unless the matter being considered requires a 75% vote, as discussed below. At the second call, quorum is satisfied by the presence of shareholders representing 25% of our share capital entitled to vote at the meeting; however, if less than 50% of the share capital entitled to vote is represented in person or by proxy, the affirmative vote of two-thirds of the shares entitled to vote and present or represented at the meeting is required to pass a resolution of the shareholders, unless the matter being considered requires a 75% vote, as discussed below. The interval between the first and the second call for a shareholders’ meeting must be at least 24 hours.
 
A resolution passed in a shareholders’ meeting is binding on all shareholders. However, in the case of resolutions contrary to Spanish law or the Company’s bylaws, the right to contest is extended to all shareholders, directors and interested third parties. In the case of resolutions prejudicial to the interests of the Company or contrary to the Company’s bylaws, such right is extended to shareholders who attended the shareholders’ meeting and recorded their opposition in the minutes of the meeting, to shareholders who were absent and to those unlawfully prevented from casting their vote as well as to members of the board of directors. In certain circumstances (such as a modification of corporate purpose or change of the corporate form), Spanish corporate law gives dissenting or absent shareholders the right to withdraw from the Company. If this right were exercised, the Company would be obliged to purchase the relevant shareholding(s) at a price equal to the average market value of the ordinary shares for the quarter preceding the date of exercise of this right.

Supermajority voting rights

Our bylaws require the affirmative vote of at least 75% of the total voting power of our issued shares, present or represented at a shareholders’ meeting, to approve any proposal submitted to shareholders with the respect to any of the following actions:
 
 
● 
amendments to our bylaws, including any change to our corporate purpose, and any increase or decrease in the share capital of Prisaexcept for such transactions as are imposed by mandate of law or, in the case of capital increases, are the result of resolutions adopted for purposes of undertaking distribution of the minimum dividend corresponding to the non-voting convertible Class B shares.

● 
any merger, consolidation or similar extraordinary transaction involving Prisa;
 
●
the winding up, liquidation or dissolution of Prisa;
 
●
elimination of shareholders’ preemptive rights to subscribe for share capital in connection with any increase in capital for cash;

●
change in the management structure of Prisa from a board of directors to a one- or two-person management structure (in the case Prisa were to cease to be a public company); and
 
●
the election by shareholders of any director other than those proposed by the board of directors.

Reporting Requirements

Because the Company’s shares are listed on the Spanish Stock Exchanges, agreements with respect to the acquisition or disposition of the Company’s shares with voting rights must be reported within four trading days from the date on which the person obliged to report is or should have been aware of such acquisition or disposal, to the CNMV (and where the person or group effecting the transaction is a non-Spanish resident, to the Spanish Registry of Foreign Investments), where:

 
·
in the case of an acquisition, the acquisition results in that person or group holding 3%, 5%, 10%, 15%, 20%, 25%, 30%, 35%, 40%, 45%, 50%, 60%, 70%, 75%, 80% and 90% or more of the Company’s voting rights; or
 
·
in the case of a disposal, the disposal takes any existing holding of that person or group below the same thresholds of the Company’s voting rights outlined above.

Under Spanish regulations, a person is presumed to have been aware of the transaction within two trading days from the date of the transaction.
 
 
Should the number of the voting rights vary, shareholders with voting rights up to, above or below the 3% and successive thresholds indicated above must report their voting rights after such variation.

Similar disclosure obligations apply in the event of:

 
·
an acquisition or disposal of any financial instruments entitling the holder the right to acquire the Company’s shares with voting rights (such as options, futures, swaps, etc.) in which case the transaction should be reported to the CNMV and to the issuer of the underlying shares;
 
·
voting, transfer or usufruct agreements related to the shares, among parties holding 3% or more in the aggregate of the voting rights;
 
·
custodians or representatives holding shares in their capacity, provided they exercise discretion with respect to the voting rights attached to such shares;
 
·
the first admission to trading of shares in a secondary market; or
 
·
share capital increases resulting in an increase in the percentage of voting rights.

Should the individual or legal entity effecting the transaction be resident in a tax haven (as defined by applicable Spanish regulations), the threshold that triggers the obligation to disclose the acquisition or disposition of our shares is reduced to 1% (and successive multiples thereof).

 We will also be required to report any acquisition of treasury stock exceeding 1% of the Company’s voting rights to the CNMV within four trading days from the acquisition.

Any member of the board of directors must report to both the Company and the CNMV within five trading days the percentage, number of shares, number of voting rights and stock options held by them at the time of becoming or ceasing to be a member of the board of directors.

Furthermore, any member of the board of directors must similarly report any acquisition or disposal of the Company’s shares with voting rights, regardless of the size or amount, as well as any acquisition, transfer or exercise of option rights over our shares and any other interest or right that enables the director to acquire or subscribe for the Company’s shares, within five trading days. In addition, directors and senior managers of the Company (defined as those persons having regular access to relevant information (información privilegiada) related, directly or indirectly, to the Company and having the power to adopt management resolutions that affect the Company’s future performance and the prospects) must also report any stock-based compensation that they may receive pursuant to any of the compensation plans.

In addition, pursuant to Royal Decree 1333/2005 of November11 (implementing European Directive 2004/72/EC), any member of our board of directors and any of the Company’s senior managers, or any parties related to any of them, as defined therein, must report to the CNMV any transactions carried out with respect to our shares or derivatives or other financial instruments relating to our shares within five trading days of such transaction. The notification of the transaction must include particulars such as, among others, the type of transaction, the date of the transaction and the market in which the transaction was carried out, the number of shares traded and the price paid.

Under Spanish law, parties must disclose certain types of shareholders’ agreements concerning the exercise of voting rights at a general shareholders’ meeting or containing restrictions or conditions on the free transferability of shares or bonds that are convertible or exchangeable into shares. If our shareholders enter into such agreements with respect to our shares, they must disclose the execution, amendment or extension of such agreements to us and the CNMV and file such agreements with the appropriate commercial registry. Failure to comply with these disclosure obligations renders any such shareholders’ agreement unenforceable and constitutes a violation under Spanish law.

Members of the board of directors of a listed company must inform the CNMV of their voting interest in an issuer’s securities upon joining the board and, thereafter, must notify the CNMV of any transaction by them involving the shares or other securities of the issuer, or financial instruments which are linked to the issuer’s shares. Senior executives of a listed company must report any such transactions as well.


For a description of our principal loan agreements, see “—Bank Borrowings.”
 

 Under current Spanish regulations, foreign investors may transfer invested capital, capital gains and dividends out of Spain without limitation as to amount, other than with respect to applicable taxes. In some circumstances, however, investors must inform the proper Spanish authorities of such capital movements.
 
 
Law 19/2003 (July 4, 2003) updated Spanish international exchange controls by recognizing the principle of freedom of the movement of capital between Spanish residents and non-residents. This law establishes procedures for the declaration of capital movements for purposes of administrative or statistical information and authorizes the Spanish Government to take measures that are justified on grounds of public policy or public security. It also provides the mechanism to take exceptional measures with regard to third countries if such measures have been approved by the European Union or by an international organization to which Spain is a party. Royal Decree 664/1999, on Foreign Investments (April 23, 1999), established a framework for the regulation of foreign investments in Spain which, on a general basis, no longer requires the prior consent or authorization of authorities in Spain (without prejudice to specific regulations for several specific sectors, such as television, radio, mining and telecommunications, among others, discussed below). Royal Decree 664/1999 requires notification of all foreign investments in Spain and liquidations of such investments upon completion of such investments to the Investments Registry of the Ministry of Economy, strictly for administrative statistical and economical purposes. Only investments from “tax haven” countries (as they are defined in Royal Decree 1080/1991), require notice before and after execution of the investment, except that no prior notice is required for: (1) investments in securities or participations in collective investment schemes that are registered with the CNMV, and (2) investments that do not increase the foreign ownership of the share capital of a Spanish company to over 50%. In specified circumstances, the Council of Ministers may agree to suspend all or part of Royal Decree 664/1999 when proposed by the Minister of Economy, or, in some cases, by the head of the government department with authority for such matters and a report of the Foreign Investment Body. These requirements include a determination that the investment, due to its nature, form or condition, affects, or may potentially affect, activities relating to the exercise of public powers, national security or public health. Whenever Royal Decree 664/1999 is suspended, the affected investor must obtain prior administrative authorization in order to carry outh the investment.


The following is a discussion of certain material Spanish and U.S. federal income tax consequences to “U.S. holders” (as defined below) of the ownership and disposition of Prisa ADS-Bs and Prisa ADS-Bs representing Prisa Class A ordinary shares and Prisa Class B convertible non-voting shares, respectively. This summary is based upon Spanish and United States tax laws (including the United States Internal Revenue Code of 1986, as amended (the “Code”), final, temporary and proposed Treasury regulations, rulings, judicial decisions and administrative pronouncements), and the Convention Between the United States of America and the Kingdom of Spain for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income, signed February 22, 1990, (the “Treaty”), all as of the date hereof and all of which are subject to change or changes in interpretation, possibly with retroactive effect. In addition, the summary is based in part on representations of the Depositary and assumes that each obligation provided for in or otherwise contemplated by the Deposit Agreement or any other related agreements will be performed in accordance with its terms.

For purposes for this discussion, a “United States holder” is a beneficial owner of Prisa ADSs, that is, for United States federal income tax purposes: (i) an individual who is a citizen or resident of the United States; (ii) a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States or any state thereof or the District of Columbia; (iii) an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or (iv) a trust if (1) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more “United States persons” (within the meaning of the Code) have the authority to control all substantial decisions of the trust, or (2) it has a valid election in effect under applicable Treasury regulations to be treated as a “United States person.”

This discussion does not discuss all aspects of U.S. federal income taxation of ownership of Prisa ADSs that might be relevant to U.S. holders in light of their particular circumstances, or those U.S. holders that may be subject to special rules, such as dealers in securities or currencies, brokers, banks, financial institutions, insurance companies, mutual funds, tax-exempt organizations, U.S. holders subject to the alternative minimum tax, persons whose functional currency is not the U.S. dollar, or U.S. holders who hold Prisa ADSs as part of a hedge, straddle, constructive sale or conversion transaction or other integrated investment. In addition, it does not address any aspect of foreign, state, local, estate, gift or other tax law that may be applicable to a U.S. holder.
 
 
The U.S. Treasury has expressed concerns that parties to whom American Depositary Receipts are released before delivery of shares to the depositary, or a pre-release, or intermediaries in the chain of ownership between U.S. holders and the issuer of the security underlying the American Depositary Receipts, may be taking actions that are inconsistent with the claiming of foreign tax credits for U.S. holders of American Depositary Receipts. These actions would also be inconsistent with the claiming of the reduced rate of tax, described below, applicable to qualified dividend income received by certain non-corporate holders. Accordingly, the creditability of Spanish taxes and the availability of the reduced tax rate for qualified dividends received by certain non-corporate holders, each described below, could be affected by actions taken by these parties or intermediaries.

This discussion of certain material U.S. federal income tax consequences is for general information only and is not tax advice. Holders are urged to consult their tax advisors with respect to the application of U.S. federal income tax laws to their particular situations as well as any tax consequences arising under the U.S. federal estate or gift tax rules, or under the laws of any state, local, foreign or other taxing jurisdiction or under any applicable tax treaty.

U.S. Federal Income Tax Considerations

Taxation of distributions on Prisa ADSs

Subject to the discussion of the passive foreign investment company, or PFIC, rules below, to the extent paid out of Prisa’s current or accumulated earnings and profits (as determined in accordance with U.S. federal income tax principles), distributions (including constructive distributions, if any, and any distributions in lieu of an adjustment to the conversion ratio of the Prisa Class B convertible non-voting shares) made with respect to Prisa ADSs will constitute dividends for U.S. federal income tax purposes. In addition, cefrtain distributions of Prisa stock or ADSs paid to a U.S. Holder may be taxable to the extent of the value of the stock or ADSs distributed depending on what distributions made to other classes during prior to, at the same time as or subsequent to the stock distribution. The gross amount of dividends that a U.S. holder receives will be includible in the income of a U.S. holder as foreign source ordinary dividend income. Because Prisa does not maintain calculations of its earnings and profits under U.S. federal income tax principles, it is expected that distributions generally will be reported to U.S. holders as dividends. These dividends will not be eligible for the “dividends received deduction” generally allowed to U.S. corporations.

The amount of dividend income paid in euros that a U.S. Holder will be required to include in income will equal the U.S. dollar value of the distributed euros, calculated by reference to the exchange rate in effect on the date the payment is received by the Depositary (in the case of ADSs) or by the U.S. Holder (in the case of shares), regardless of whether the payment is converted into U.S. dollars on the date of receipt. If the dividend is converted to U.S. dollars on the date of receipt, a U.S. Holder will generally not be required to recognize foreign currency gain or loss in respect of the dividend income. A U.S. Holder may have foreign currency gain or loss if the dividend is converted into U.S. dollars after the date of its receipt. Gain or loss that a U.S. Holder realizes on a sale or other disposition of euros will be U.S.-source ordinary income or loss.

Subject to applicable limitations, including the discussion above regarding concerns expressed by the U.S. Treasury, certain non-corporate U.S. holders (including individuals) are eligible for reduced rates of U.S. federal income tax (currently a maximum of 20%) in respect of “qualified dividend income”. For this purpose, qualified dividend income generally includes dividends paid by a non-U.S. corporation with respect to stock represented by American Depositary Receipts if, among other things, the U.S. holders meet certain minimum holding period and other requirements and the non-U.S. corporation satisfies certain requirements, including that (i) the American Depositary Receipts are readily tradable on an established securities market in the United States, or (ii) the non-U.S. corporation is eligible for the benefits of a comprehensive U.S. income tax treaty (such as the Treaty) that provides for an exchange of information program. Although we currently believe that distributions on the Prisa ADSs that are treated as dividends for U.S. federal income tax purposes should constitute qualified dividends, no assurance can be given that this will continue to be the case.

The Health Care and Education Reconciliation Act of 2010 added Section 1402 of the Code. Section 1402 generally imposes a tax of 3.8% on the net investment income of taxpayers with adjusted gross incomes in excess of $250,000 in the case of married persons filing joint returns, $100,000 in the case of married persons filing separate returns and $200,000 in any other case, effective for tax years commencing after December 31, 2012. The computation of “net investment income” includes dividends and net gain from the sale of stock. U.S. holders of ADSs are urged to consult their own tax advisors regarding the availability to them of the reduced qualified dividend tax rate in light of their own particular situation and regarding the computations of their foreign tax credit limitation with respect to any qualified dividends paid to them, as applicable.

Subject to certain generally applicable limitations that may vary depending upon a U.S. holder’s circumstances and subject to the discussion above regarding concerns expressed by the U.S. Treasury, a U.S. holder will be entitled to a credit against its U.S. federal income tax liability for Spanish withholding taxes, if any, which may be limited to the rate provided by the Treaty if the U.S. holder is eligible to claim the lower Treaty rate. The limitation on foreign taxes eligible for credit is calculated separately with regard to specific classes of income. Instead of claiming a credit, a U.S. holder may, at its election, deduct such otherwise creditable Spanish taxes in computing taxable income, subject to generally applicable limitations under U.S. law. A U.S. holder must satisfy minimum holding period requirements in order to be eligible to claim a foreign tax credit for foreign taxes withheld on dividends. The rules governing foreign tax credits are complex and, therefore, U.S. holders are urged to consult their own tax advisors to determine whether they are subject to any special rules that limit their ability to make effective use of foreign tax credits.

Constructive distributions

The terms of the Prisa Class B convertible non-voting shares provide that the conversion ratio of the shares into Prisa Class A common shares will be increased, under certain circumstances and subject to certain limitations, to take into account a decrease of the trading price of the Prisa Class A ordinary shares below €2.00. Pursuant to Treasury Regulations promulgated under Section 305 of the Code, a U.S. holder of Prisa ADS-Bs could be treated, under certain circumstances, as having received a constructive distribution includable in such U.S. holder’s income in the manner described above under “— Taxation of Distributions on Prisa ADSs” if and to the extent that an increase in the conversion ratio of the Prisa Class B convertible non-voting shares has the effect of increasing the proportionate interest of such U.S. holder in Prisa’s earnings and profits or assets. Thus, under certain circumstances, U.S. holders may recognize income in the event of a constructive distribution even though they may not receive any cash or property. The terms of the Prisa Class B convertible non-voting shares also provide that we may elect to pay in cash, up to an amount of €0.50, the amount of the difference between €2.00 and the trading price of the Prisa Class A ordinary shares in lieu of increasing the conversion ratio of the Prisa Class B convertible non-voting shares. Any such distributions should be treated as dividend distributions includable in a U.S. holder’s income in the manner described above under “— Taxation of Distributions on Prisa ADSs.” U.S. holders are urged to consult their own tax advisors to determine whether they are required to include any amounts in income as a result of an increase in the conversion ratio of the Prisa Class B convertible non-voting shares.
 
 
Sale and other disposition of Prisa ADSs

Subject to the discussion of the PFIC rules below, gain or loss realized by a U.S. holder on the sale or exchange of Prisa ADSs will be subject to U.S. federal income tax as capital gain or loss (and will be long-term capital gain or loss if the U.S. holder held the Prisa ADSs for more than one year) in an amount equal to the difference, if any, between the U.S. holder’s tax basis in the Prisa ADSs and the gross amount realized on the disposition. Gain or loss, if any, will generally be U.S. source for foreign tax credit purposes. The deductibility of capital losses is subject to limitations. Long-term capital gain of a non-corporate U.S. holder is generally taxed at a preferential rate.

Passive Foreign Investment Company rules

In general, a non-U.S. corporation, such as Prisa, will be classified as a PFIC during a given year if (1) 75% or more of its gross income consists of “passive income” or (2) 50% or more of the average value of its assets (determined on the basis of a quarterly average) produce (or are held for the production of) passive income. For purposes of PFIC classification, passive income generally includes interest, dividends, annuities, certain gains from the sale of stock and securities, and certain other investment income. Prisa believes that it is not currently a PFIC for U.S. federal income tax purposes and does not expect to become a PFIC for the foreseeable future. However, because Prisa’s PFIC status will depend upon the composition of Prisa’s income and assets and the market value of Prisa’s assets (including, among others, less than 25% owned equity investments) from time to time there can be no assurance that Prisa will not be classified as a PFIC for any taxable year.

If Prisa were classified as a PFIC for any taxable year, such classification would have adverse tax consequences to U.S. holders of Prisa ADSs, and U.S. federal income tax consequences different from those described above may apply. These consequences may include having dividends treated as ordinary income rather than “qualified dividends,” and having gains realized on a sale or disposition of Prisa ADSs treated as ordinary income rather than capital gain and being subject to punitive interest charges on such gains. U.S. holders should consult their own tax advisors about the PFIC rules, including the availability of certain elections that may mitigate the adverse consequences resulting from PFIC status.

Backup withholding and information reporting

A U.S. holder may be subject to backup withholding (currently at a rate of 28%) on payments of dividends and sales proceeds with respect to Prisa ADSs made within the United States or through certain U.S. related financial intermediaries, unless the U.S. holder properly establishes an exemption or provides a taxpayer identification number and otherwise complies with the backup withholding rules. Such delivery or payment may also be subject to information reporting. Each U.S. holder should complete and sign the Internal Revenue Service, or IRS, Form W-9 that will be included as part of the letter of transmittal and return it to the exchange agent, in order to provide the information and certification necessary to avoid backup withholding. Any amounts withheld under the backup withholding rules generally will be allowable as a refund or a credit against a U.S. holder’s U.S. federal income tax liability, provided the required information is timely furnished to the IRS.

Material Spanish Tax Considerations

The following is a discussion of certain material Spanish tax consequences of the acquisition, ownership and disposition of Prisa Class A ordinary shares and Prisa Class B convertible non-voting shares by a Qualifying Shareholder (as defined below). This discussion is based on current Spanish law and practice, which are subject to change, possibly with retroactive effect. In addition, this discussion is based on the Treaty. For purposes of this discussion, the Spanish tax consequences to holders of Prisa ADS-As and Prisa ADS-Bs will be the same as if such holders held the underlying Prisa Class A ordinary shares and Prisa Class B convertible non-voting shares, respectively.

For purposes of this discussion a Qualifying Shareholder is a beneficial owner of Prisa shares that (i) is a resident of the United States for purposes of the Treaty and entitled to its benefits, (ii) does not carry on business activities through a permanent establishment (as defined in the Treaty) located in Spain with respect to which their holdings of Prisa shares are effectively connected, and (iii) owns, and, at any given time, owned during the preceding 12-month period, directly or indirectly, less than 25% of the voting stock of Prisa. Holders of Prisa shares who are not Qualifying Shareholders may be subject to different tax consequences than those described below and are urged to consult their tax advisors regarding their tax treatment under Spanish and non-Spanish tax laws.
 
 
This discussion does not discuss all aspects of Spanish taxation of the acquisition, ownership and disposition of Prisa Class A ordinary shares and Prisa Class B convertible non-voting shares and does not address all tax consequences that may be relevant to Qualifying Shareholders subject to special rules. This discussion does not address any aspect of foreign, state, local, estate, wealth, inheritance, gift or other tax law that may be applicable to Qualifying Shareholders. In addition, this discussion does not address the Spanish tax consequences applicable to “look-through” entities.

This discussion of certain material Spanish taxation considerations is for general information only and is not tax advice. Qualifying Shareholders are urged to consult their tax advisors with respect to the application of Spanish tax law to their particular situations as well as any tax consequences arising under the laws of any foreign or other taxing jurisdiction or under any applicable tax treaty, and are advised that Spanish tax authorities may, in certain circumstances, charge interest or impose penalties or surcharges for a failure to comply with the requirements of Spanish tax law. Such costs may, in certain cases, be based on the amount of taxes due.

Law 19/2003 of 4th July on Foreign Capital and Financial Transactions and on certain Measures to prevent money laundering (“Ley 19/2003, de 4 de Julio, sobre el Régimen Jurídico de los Movimientos de Capitals y de las Transacciones Económicas con el Exterior y sobre determinadas medidas del blanqueo de capitales”), or the Act, which came into force in Spain on July 6, 2003, established new rules with respect to transfers of cash in order to avoid the use of illegal funds.

In the event Prisa becomes aware of any action that is subject to provisions of the Act, Prisa will act in accordance with the Act.

Taxation of dividends on Prisa Shares

Dividends paid on Prisa Class A ordinary shares and Prisa Class B convertible non-voting shares to a Qualifying Shareholder will generally be subject to Spanish withholding tax on the gross amount of the dividend, currently at a rate of 21%.

Qualifying Shareholders may be eligible for a reduced rate of withholding tax of 15% on the gross amount of dividends, provided that such Qualifying Shareholders provide in a timely manner (before the tenth day following the end of the month in which the dividends are payable) to the depositary of the Prisa shares a certificate of U.S. residency issued by the IRS certifying that the Qualifying Shareholder is a resident of the United States for Treaty purposes. For Spanish tax purposes, such United States residency certification is valid for one year from the date it is issued.

Qualifying Shareholders who do not provide the required residency certification in a timely manner may alternatively obtain a refund of the difference between the domestic and Treaty withholding tax rates, as further discussed below.

Qualifying Shareholders who are individuals will be exempt from Spanish tax liability with respect to dividends and similar distributions of income up to an annual amount of €1,500 for all such Qualifying Shareholder’s Spanish-sourced dividend income. Qualifying Shareholders seeking to benefit from such exemption are required to claim a refund of any taxes withheld with respect to dividends and similar distributions of income, up to the amount of the exemption, in the manner described below. The current practice of the Spanish tax authorities is that such refund cannot be claimed prior to the end of the calendar year in which the dividends are paid. The exemption with respect to dividends up to €1,500 is subject to limitations, and Qualifying Shareholders are urged to consult their tax advisors with respect to their eligibility for the exemption and any claim for refunds.

In order to claim a refund (in both cases mentioned above), Qualifying Shareholders must file (i) the applicable Spanish tax return (currently, Form 210), (ii) a valid United States residency certification issued by the IRS certifying that such Qualifying Shareholder is a resident of the United States for purposes of the Treaty, and (iii) a certificate from Prisa establishing that Spanish tax was withheld with respect to dividends paid to such Qualifying Shareholder (i.e., the relevant dividend statement). A refund claim must be filed within four years of the date on which the withholding tax was collected by the Spanish tax authorities. Qualifying Shareholders should consult their own tax advisor regarding refund procedures.

Qualifying Shareholders will not be required to file a Spanish tax return in respect of dividends received on Prisa shares from which tax is withheld as described above.

Taxation of capital gains

Subject to the discussion of the Treaty, below, income recognized upon the sale or other disposition of Prisa Class A ordinary shares and Prisa Class B convertible non-voting shares will be treated as capital gains and will generally be Spanish-sourced income subject to Spanish tax at a rate of 21%. Capital gains and losses are calculated separately for each transaction and losses cannot be offset against capital gains.

Under the Treaty, capital gains realized upon the sale or other disposition of Prisa Class A ordinary shares and Prisa Class B convertible non-voting shares by a Qualifying Shareholder will be exempt from taxation in Spain. Qualifying Shareholders seeking to qualify for relief under the Treaty are required to provide a certificate of U.S. residency issued by the IRS, certifying that such Qualifying Shareholder is a resident of the United States for purposes of the Treaty, together with the appropriate Spanish tax return (currently, Form 210), no later than 30 days following the date on which such capital gain was realized.
 
 
Qualifying Shareholders are encouraged to apply for United States residency certification in advance of a sale or other disposition of Prisa shares and are advised that such residency certification may not be received prior to the deadline for filing the applicable Spanish tax return.

For Spanish tax purposes Qualifying Shareholders of Prisa ADSs will generally be treated as owning the underlying shares represented by those ADSs.

Taxation for Spanish Individual shareholders

Individual shareholders who cease to be U.S. tax residents and become Spanish residents for Spanish tax purposes will be subject to Spanish tax at progressive tax rates, during 2013, of up to 27% on any dividends (after taking into account the €1,500 exempted amount) and capital gains due to the transfer of Prisa Shares that would have been more than one year in the Individual shareholders patrimony, that exceed, in the aggregate, €24,000 in any taxable year. The specific tax rates are contained in the table below:
 
Dividends and capital gains (Euro)
 
Tax rate (%)
 
From 0 to 6,000
 
 
21
  
From 6,001 to 24,000
 
 
25
  
24,001 Onwards
 
 
27
  

However, the capital gains and losses that arise due to the transfer of Prisa Shares that would have been less than one year in the Individual shareholders patrimony are taxed at general tax rate.

Spanish VAT and Transfer Tax

The subscription for, and acquisition and transfer of, Prisa ADSs or Prisa Class A ordinary shares and Prisa Class B convertible non-voting shares are each exempt from Spanish value added tax and Transfer Tax (Impuesto sobre Transmisiones Patrimoniales). Additionally, no stamp duty or registration tax is levied on a qualifying shareholder with respect to such subscription, acquisition and transfers.


Not applicable.


Not applicable.


Where You Can Find More Information

We file annual reports on Form 20-F and furnish periodic reports on Form 6-K to the SEC. You may read and copy any of these reports at the SEC’s public reference room in Washington, D.C. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. Our SEC filings are also available to the public from commercial document retrieval services. Some of our SEC filings are also available at the website maintained by the SEC at http://www.sec.gov.

As a foreign private issuer, we are exempt from the rules under the Exchange Act which prescribe the furnishing and content of proxy statements, and our officers, directors and principal shareholders are exempt from the reporting and “short-swing” profit recovery provisions contained in Section 16 of the Exchange Act.

We are subject to the informational requirements of the Spanish securities commission and the Spanish stock exchanges, and we file reports and other information relating to our business, financial condition and other matters with the Spanish securities commission and the Spanish stock exchanges. You may read such reports, statements and other information, including our annual and biannual financial statements, at the public reference facilities maintained in Madrid and Barcelona. Some of our Spanish securities commission filings are also available at the website maintained by the Spanish securities commission at http://www.cnmv.es.
 
 
We have appointed Citibank, N.A. to act as Depositary for the Prisa ADSs. Citibank will, as provided in the Deposit Agreement, arrange for the mailing of summaries in English of such reports and communications to all record holders of our ADSs. Any record holder of Prisa ADSs may read such reports and communications or summaries thereof at Citibank’s office located at 388 Greenwich Street, New York, New York 10013.


Not applicable.
 

Market risk is the risk of unexpected losses in earnings relating to our assets and liabilities from unfavorable changes in both interest rates and foreign exchange rates. The primary market risk to which we are exposed is interest rate risk from interest-bearing liabilities. We are also exposed, to a lesser extent, to the exchange rate risk associated with operations conducted using currencies other than the euro.

Interest Rate Risk

We are exposed to interest rate risk from our interest-bearing debt obligations, which are undertaken in variable interest rates. The interest rate on these instruments is mostly based on a rate of one-month Euribor plus the applicable margins. We manage certain specific exposures to both long and short term liabilities using interest rate derivatives to limit the impact of interest rate increases. These contracts mature between the second half of 2012 and 2015.

The following tables provide information about our derivative financial instruments and other financial instruments that are sensitive to changes in interest rates. For interest rate derivatives the table presents notional amounts and weighted average interest rates by expected (contractual) maturity dates. Their corresponding fair value as of December 31, 2012 is also indicated. The information is presented in euros, which is our reporting currency. Information on the following contract terms is provided:

·
For swaps: notional amounts and characteristics of payments made and received.

·
For debt obligations: principle amounts and characteristics of the interest payments.
 
As of December 31, 2012
 
2013
 
 
2014
 
 
2015 and
Thereafter
 
 
Total
 
 
Fair Value
12/31/12
 
Interest rate options
 
(thousands of euros)
 
Swap in EUROS (1)
 
 
134,000
 
 
 
—
 
 
 
—
 
 
 
134,000
 
 
 
(855)
  
Swap in EUROS (2)
    
100,000
      
100,000
      
100,000
      
100,000
      
(1,296)
  
Swap in EUROS (3)
    
50,000
      
50,000
      
50,000
      
50,000
      
(702)
  
Swap in EUROS (4)
 
 
50,000
 
 
 
50,000
 
 
 
50,000
 
 
 
50,000
 
 
 
(638)
  
Swap in EUROS (5)
    
100,000
      
100,000
      
100,000
      
100,000
      
(601)
  
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
434,000
 
 
 
(4,092
)
(1)
Pursuant to the Swap contract, we currently pay a fixed rate of 1.745% on the notional amount of the swap. In exchange, we receive, each month the current 1-month Euribor floating rate.

(2)
Pursuant to the Swap contract, we currently pay a fixed rate of 0.759% on the notional amount of the swap. In exchange, We receive each month the current 1-month Euribor floating rate.

(3)
Pursuant to the Swap contract, we currently pay a fixed rate of 0.750% on the notional amount of the swap. In exchange, We receive each month the current 1-month Euribor floating rate.

(4)
Pursuant to the Swap contract, we currently pay a fixed rate of 0.6975% on the notional amount of the swap. In exchange, We receive each month the current 1-month Euribor floating rate.

(5)
Pursuant to the Swap contract, we currently pay a fixed rate of 0.420% on the notional amount of the swap. In exchange, We receive each month the current 1-month Euribor floating rate.

 
The following table presents a sensitivity analysis showing changes in the fair value of our derivatives, as of December 31, 2012, to changes in the euro interest rate curve that we consider reasonable:

Sensitivity (before tax)
  
12/31/12
  
   
(thousands of euros)
  
+0.5% (increase in interest rate curve)
    
4,046
  
- 0.5% (decrease in interest rate curve)
    
(4,046
)

The sensitivity analysis reveals that the negative fair value of the interest rate derivatives decreases in response to an increase in the interest rate curve, partially reducing the projected higher cost of borrowings. For floating-rate financial debt, a 0.5% increase in interest rates would increase borrowing costs by €15.2 million in 2013.

 
 
Liabilities Maturing During Fiscal Year
 
 
 
 
 
 
2013
 
 
2014
 
 
2015
 
 
2016 and
Thereafter
 
 
Total
 
 
As of
 December
31, 2012
 
 
 
(thousands of euros except for percents)
 
Liabilities long term
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Prisa Syndicated Loan and Credit Facility (EUR)
 
 
-
 
 
 
1,282,544
 
 
 
-
 
 
 
-
 
 
 
 
 
 
 
Syndicated Loan Arrangement Costs
 
 
-
 
 
 
(1,937)
 
 
 
-
 
 
 
-
 
 
 
1,280,607
 
 
 
1,276,905
 
Interest Rate - Euribor 1m + spread
 
 
-
 
 
Eur 1m + 2.35
%
 
-
 
 
 
-
 
 
 
 
 
 
 
 
 
Bridge Loan Agreement (EUR)
 
 
-
 
 
 
-
 
 
 
1,340,882
 
 
 
-
 
 
 
 
 
 
 
 
 
Bridge Loan Agreement Costs
 
 
-
 
 
 
-
 
 
 
(42,173)
 
 
 
-
 
 
 
1,298,709
 
 
 
1,288,363
 
Interest Rate - Euribor 1m + spread
 
 
-
 
 
Eur 1m + 2.75
%
 
Eur 1m + 2.75
%
 
 
-
 
 
 
 
 
 
 
 
 
Dédalo  Syndicated Loan and Credit Facility (EUR)
 
 
-
 
 
 
26,510
 
 
 
14,100
 
 
 
-
 
 
 
          
 
Dédalo Syndicated Loan Arrangement Costs
 
 
-
 
 
 
(240)
 
 
 
(40)
 
 
 
-
 
 
 
40,330
 
 
 
40,142
 
Interest Rate - Euribor 1m + spread
 
 
-
 
 
Eur 6m + 2.00
%
 
Eur 6m + 2.00
%
 
-
 
 
 
 
 
 
 
 
 
Bilateral Loans (EUR)
 
 
-
 
 
 
-
 
 
 
128,345
 
 
 
-
 
 
 
128,345
 
 
 
127,322
 
Average Interest Rate - ref.Euribor
 
 
-
 
 
 
-
 
 
 
(1)
 
 
 
-
 
 
 
 
 
 
 
 
 
Bilateral Loans (USD)
 
 
-
 
 
 
-
 
 
 
13,757
 
 
 
-
 
 
 
13,757
 
 
 
13,647
 
Average Interest Rate - ref.Euribor
 
 
-
 
 
 
-
 
 
 
(1)
 
 
 
-
 
 
 
 
 
 
 
 
 
Loans (EUR)
 
 
-
 
 
 
28,191
 
 
 
47,179
 
 
 
11,107
 
 
 
86,477
 
 
 
85,578
 
Average Interest Rate - ref.Euribor
 
 
-
 
 
 
(1
)
 
 
(1
)
 
 
(1
)
 
 
 
 
 
 
 
 
Loans (COP)
 
 
-
 
 
 
21
 
 
 
-
 
 
 
-
 
 
 
21
 
 
 
21
 
Leasing and other debt.
 
 
-
 
 
 
12,958
 
 
 
3,597
 
 
 
1,985
 
 
 
18,540
 
 
 
18,398
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities short term
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dédalo Syndicated Loan and Credit Facility (EUR)
 
 
39,790
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
          
 
Dédalo  Syndicated Loan Arrangement Costs
 
 
(240)
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
39,550
 
 
 
39,540
 
Interest Rate - Euribor 1m + spread
 
Eur 6m + 2.00
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bilateral Loans (EUR)
 
 
73,755
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
73,755
 
 
 
73,737
 
Average Interest Rate - ref.Euribor
 
 
(1
)
 
 
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bilateral Loans (USD)
 
 
14,946
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
14,946
 
 
 
14,942
 
Bilateral Loans (CLP)
 
 
5,354
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
5,354
 
 
 
5,351
 
Bilateral Loans (MXN)
 
 
853
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
853
 
 
 
853
 
Bilateral Loans (ARS)
 
 
759
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
759
 
 
 
759
 
Bilateral Loans (COP)
 
 
984
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
984
 
 
 
984
 
Loans (EUR)
 
 
30,394
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
  
 
 
 
  
 
Loan Arrangement Costs
 
 
(514
)
 
 
-
 
 
 
-
 
 
 
-
 
 
 
29,880
  
 
 
29,871
 
Average Interest Rate - ref.Euribor
 
 
(1
)
 
 
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans (BRL)
 
 
11,145
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
11,145
 
 
 
11,143
 
Loans (COP)
 
 
9
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
9
 
 
 
9
 
Leasing and other debt
 
 
28,232
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
28,232
 
 
 
28,217
 
Total
 
 
205,467
 
 
 
1,348,047
 
 
 
1,505,647
 
 
 
13,092
 
 
 
3,072,253
 
 
 
3,055,782
 
(1)
“Eur 1m” refers to the one-month Euribor rate. The rates provided in this table are the reference rates at which we pay interest under each of our respective lending arrangements.
 

 Foreign Currency Risk

We are exposed to foreign exchange rate risk from assets and liabilities denominated in the currencies of the different countries in which we develop our activities, mainly the Chilean peso and Brazilian real. We manage our currency exposures with foreign exchange contracts that have maturities of up to 12 months as a maximum. The counterparties to these contracts are highly-rated financial institutions.

The following tables provide information about our derivative financial instruments and other financial instruments that are sensitive to changes in foreign currency exchange rates. For material foreign exchange derivatives the table presents notional amounts and weighted average exchange rates by expected (contractual) maturity dates. These contracts mature in 2013. Their corresponding fair value as of December 31, 2012 is also indicated.

 
 
  
Notional Value of Contracts
    
 
  
 
 
  
Maturing During Fiscal Year
    
Fair Value
  
As of December 31,2012
 
  
2013
    
Thereafter
    
Total
    
12/31/12
  
 
 
  
(thousands of dollars)
    
(thousands of euros)
  
Forward
 
  
 
    
 
    
 
    
 
  
sell CLP / buy USD
Chilean peso / USD
  
 
    
 
    
 
    
 
  
 
Contract amount (USD)
     1,200       –       1,200       (31 )
Total
 
                     1,200       (31 )

The sensitivity analysis shows that the positive fair value of the foreign currency derivatives increases in the event of increases in exchange rates, whereas the fair value of the derivatives decreases in the event of decreases in exchange rates.

Country Risk

We are exposed to “country risk” (which overlaps with market and liquidity risks). This refers to the possible decline in the value of assets, cash flows generated or cash flows returned to the parent company as a result of political, economic or social instability in the countries where we operate, especially in Latin America, to highlight the repatriation of funds from Venezuela and Argentina, which establish a very complex administrative procedure.
 


Not applicable.


Not applicable.


Not applicable.


The Depositary of our ADR program is Citibank, N.A., and the address of its principal executive office is 388 Greenwich Street, 14th Floor, New York, New York 10013.

Each Class A ADS represents the right to receive four Class A ordinary shares of capital stock of €0.10 nominal value each, of Promotora de Informaciones, S.A. and each Class B ADS represents the right to receive four Class B convertible non-voting shares of €0.10 nominal value each. The Depositary issues ADSs in form of certificated ADSs (American Depositary Receipts, or ADRs) or uncertificated ADSs pursuant to the Deposit Agreement.

Under the terms of the respective deposit agreements governing the ADS-A and ADS-B, holders of ADS-A and ADS-B may have to pay the following services fees to the Depositary.
 
 
Service
  
Rate
By Whom Paid
       
Issuance of ADSs upon deposit of shares
  
Up to U.S. $5.00 per 100 ADSs (or fraction thereof) issued.
Person depositing Shares or person receiving ADSs. (1)
Delivery of deposited securities against surrender of ADSs.
  
Up to U.S. $5.00 per 100 ADSs (or fraction thereof) surrendered.
Person surrendering ADSs for the purpose of withdrawal of deposited securities or person to whom deposited securities are delivered.
Distribution of cash dividends or other cash distributions (i.e., sale of rights and other entitlements).
  
Up to U.S. $5.00 per 100 ADSs (or fraction thereof) held.
Person to whom distribution is made.(2)
Distribution of ADSs pursuant to (i) stock dividends or other free stock distributions, or (ii) exercise of rights to purchase additional ADSs.
  
Up to U.S. $5.00 per 100 ADSs (or fraction thereof) held.
Person to whom distribution is made.
Distribution of securities other than ADSs or rights to purchase additional ADSs (i.e., spin-off shares).
  
Up to U.S. $5.00 per 100 ADSs (or fraction thereof) held.
Person to whom distribution is made.
Depositary Services.
  
Up to U.S. $5.00 per 100 ADSs (or fraction thereof) held on the applicable record date(s) established by the Depositary.
Person holding ADSs on the applicable record date(s) established by the Depositary.

Holders, beneficial owners, persons depositing shares and persons surrendering ADSs for cancellation and for the purpose of withdrawing deposited securities are responsible for the following charges:

·
taxes (including applicable interest and penalties) and other governmental charges;

·
such registration fees as may from time to time be in effect for the registration of shares or other deposited securities on the share register and applicable to transfers of shares or other deposited securities to or from the name of the custodian, the depositary or any nominees upon the making of deposits and withdrawals, respectively;

·
such cable, telex and facsimile transmission and delivery expenses as are expressly provided in the relevant deposit agreement to be at the expense of the person depositing or withdrawing shares or holders and beneficial owners of ADSs;

·
the expenses and charges incurred by the Depositary in the conversion of foreign currency;

·
such fees and expenses as are incurred by the Depositary in connection with compliance with exchange control regulations and other regulatory requirements applicable to shares, deposited securities, ADSs and ADRs; and

·
the fees and expenses incurred by the Depositary, the custodian, or any nominee in connection with the servicing or delivery of deposited securities.

The Depositary has agreed to reimburse or pay on our behalf certain reasonable expenses related to our ADS program and incurred by us in connection with the program (such as certain legal and other fees in connection with our SEC filings, investor relations expenses and expenses attributable to any secondary offering of ADSs). The amounts the Depositary reimbursed or paid are not necessarily related to the fees collected by the depositary from ADS holders. The Depositary reimbursed and paid on our behalf an amount of $248 thousand in 2012.
 

PART II
 

None.
 

Not applicable.
 

Disclosure Controls and Procedures

As of December 31, 2012, Prisa, under the supervision of our Executive Chairman, Co-Chief Executive Officer and Chief Financial Officer, performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). There are, as described below, inherent limitations to the effectiveness of any control system, including disclosure controls and procedures. Accordingly, even effective disclosure controls and procedures can provide only reasonable assurance of achieving their control objectives.

Based on such evaluation,  Prisa´s Executive Chairman, Co-Chief Executive Officer and Chief Financial Officer concluded that Prisa´s disclosure controls and procedures were effective at the reasonable assurance level to ensure that information relating to Prisa, required to be disclosed in the reports that it files under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the management,  to allow timely decisions regarding required disclosure.

Management’s Annual Report on Internal Control over Financial Reporting

The management of Prisa is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule13a-15(f) under the Securities Exchange Act. Prisa’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the preparation of financial statements for external purposes under generally accepted accounting principles. Prisa´s internal control over financial reporting includes those policies and procedures that:
 
 
·
Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of Prisa;
 
 
·
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of Prisa are being made only in accordance with authorizations of Prisa´s management and directors; and
 
 
·
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
 
Because of its inherent limitations, any system of internal control over financial reporting, no matter how well designed, may not prevent or detect misstatements, due to the possibility that a control can be circumvented or overridden or that misstatements due to error or fraud may occur that are not detected. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

Under the supervision of our Executive Chairman, Co-Chief Executive Officer and Chief Financial Officer, our management assessed the effectiveness of our internal control over financial reporting based on the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this assessment and those criteria, our management concluded that, as of December 31, 2012, our internal control over financial reporting was effective.

Report of the Independent Registered Public Accounting Firm

Prisa’s independent registered public accounting firm, Deloitte, S.L., has issued a report on the effectiveness of the company’s internal control over financial reporting. The report is included on page F-2.
 
 
Changes in Internal Control Over Financial Reporting

There has been no change in Prisa’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the period covered by this annual report on Form 20-F that has materially affected or is reasonably likely to materially affect, internal control over financial reporting.


Our board of directors does not have an “audit committee financial expert,” within the meaning of such phrase under applicable regulations of the Securities and Exchange Commission, serving on its audit committee. The board of directors considers that all members of its audit committee are financially literate and experienced in business matters, and that one or more members of the audit committee are capable of (i) understanding IFRS and financial statements; (ii) assessing the general application of IFRS principles in connection with our accounting for estimates, accruals and reserves; (iii) analyzing and evaluating our financial statements; (iv) understanding our internal controls and procedures for financial reporting; and (v) understanding audit committee functions, all of which are attributes of an audit committee financial expert. However, under applicable Spanish law and regulations, the board of directors is not required to identify one or more members of its audit committee as having developed these attributes through the experience specified in the SEC’s definition of “audit committee financial expert.” The board believes that its current audit committee is able to fulfill its role under SEC regulations despite not having a designated “audit committee financial expert.”
 
Item 16B.

The board of directors in its meeting held on December 16, 2011, and on proposal of the corporate governance committee, approved a Code of Conduct generally applicable to all employees of the Prisa Group (the "Code of Conduct").

Likewise we have an internal code of conduct in matters relating to the stock market (our “Stock Market Code of Conduct”), according to the Spanish “Securities Market Act” (Ley del Mercado de Valores), adopted by the board of directors in June 2000, which applies to our directors, executive officers and those employees whose tasks might be related to the scope of application of the Stock Market Code of Conduct. We revised our Stock Market code of conduct in July 2003 and June 2006. Our Stock Market code of conduct governs conduct relating to matters such as the treatment of material non-public information, securities trading, conflicts of interest, confidentiality, and trading by Prisa in its own shares. The Code of Conduct and Stock Market Code of Conduct together address the topics included under the "code of ethics" as defined in Form 20-F and are available on our website at www.prisa.com.

Additionally, and in accordance with Section 301 of the Sarbanes Oxley Act, the audit committee has adopted a whistleblower policy to establish procedures for: (a) the receipt, retention and treatment of complaints received by us regarding accounting, internal controls or auditing matters; and (b) the submission by employees of Prisa, on a confidential and anonymous basis, of good faith concerns regarding questionable accounting or auditing matters.
 

The fees for services relating to our 2012 and 2011 consolidated financial statements provided by Deloitte, S.L. and by other entities related to the auditor are as follows:

 
 
Year ended December 31
 
 
 
2012
 
 
2011
 
 
 
(thousands of euros)
 
Audit fees
 
 
2,345
 
 
 
2,441
 
Audit related fees
 
 
277
 
 
 
281
 
Tax fees
 
 
519
 
 
 
405
 
Other fees
 
 
213
 
 
 
447
 
Total fees
 
 
3,354
 
 
 
3,574
 

Audit fees in 2012 include €495 thousand for the Group integrated audit in accordance with the standards of PCAOB (€639 thousand in 2011).

Audit-related fees include services provided by Deloitte that are reasonably related to the performance of the audit as reports on covenants compliance, limited reviews, due diligence services and agreed –upon procedures reports.

Tax fees are fees billed for tax advice, tax compliance and transfer pricing services.

Other fees include different kinds of services as consultancy on strategic projects.
 

Audit Committee’s pre-approval policy

The pre-approval policy, as stated in our Board of Directors Regulations, sets forth the procedures by which the audit committee of the board of directors fulfils its responsibilities with respect to the engagement of our independent auditor to perform audit and non-audit services for us. The engagement of any service rendered by the independent auditor, or its affiliates, must always have the prior approval of the audit committee.

There are two different approaches to pre-approve services:

·
General pre-approval: services pre-approved by the audit committee without consideration of specific case-by-case services.

·
Specific pre-approval: services pre-approved by the audit committee on a specific case-by-case basis.

Unless a service has received general pre-approval in accordance with the policy, specific pre-approval by the committee is required. Any proposed services exceeding pre-approved cost levels or budgeted amounts will also require specific pre-approval.

Since the listing of our ADSs on the NYSE, in accordance with this pre-approval policy, all services performed by Deloitte, or any other entities related to the principal accountants, were pre-approved by the audit committee, in order to assure that the provision of such services were compatible with the auditor’s independence, in accordance with de Spanish audit law and the Sarbanes-Oxley Act.


Not applicable.
 

The number of shares of treasury stock at December 31, 2012 amounted to 3,101,235. These treasury shares are directly owned by Prisa.

 
 
Year ended December 31, 2012
Period of Fiscal Year
 
Total
Number of
 Shares
Purchased
 
 
Average
Price Paid
 per Share
(euros)
 
Total Number
of Shares (or
Units)
 Purchased as
 Part of
Publicly
Announced
Plans or
Programs(1)
 
 
 
 
 
 
 
 
January 1 to January 31
 
 
 
 
 
 
 
February 1 to February 28
 
 
 
 
 
 
 
March 1 to March 31
 
300,000
*
 
0.69
 
 
April 1 to April 30
  
1,220,000
*
 
0.38
 
 
May 1 to May 31
 
567,501
*
 
0.38
 
 
               
July 1 to July 31
 
 
 
 
 
 
 
August 1 to August 31
 
 
    
 
 
  
 
 
September 1 to September 30
 
 
    
 
 
  
 
 
October 1 to October 31
 
 
    
 
 
  
 
 
November 1 to November 30
 
 
    
 
 
  
 
 
December 1 to December 31
 
 
    
 
 
  
 
 
Total
 
 
2,087,501
  
 
 
0.42
 
 

*March 1 to March 31: 150,000 shares were purchased at the price of €0.68, 50,000 shares were purchased at the price of €0.70, 100,000 shares were purchased at the price of €0.72.
 
 
Additionally, 1,959,188 shares were acquired as a consequence of a conversion of 1,959,188 Class B shares into 1,959,188 Class A shares, so there is no price.

*April 1 to April 30: 150,000 shares were purchased at the price of €0.43, 400,000 shares were purchased at the price of €0.40, 150,000 shares were purchased at the price of €0.39, 520,000 shares were purchased at the price of €0.36

*May 1 to May 31: 25,000 shares were purchased at the price of €0.36, 275,000 shares were purchased at the price of €0.38, 67,501 shares were purchased at the price of €0.37, 135,000 shares were purchased at the price of €0,40, 65,000 shares were purchased at the price of €0.39

*June 1 to June 30: 57,102 shares were purchased at the price of €0.70, 3,937 shares were purchased at the price of €2.04, 5,081 shares were purchased at the price of €1.58, 8,767 shares were purchased at the price of €0.91, 9,400 shares were purchased at the price of €0.85, 10,832 shares were purchased at the price of €0.70
 

During the years ended December 31, 2011 and 2012 and through the date of this annual report, the principal independent accountant engaged to audit our financial statements, Deloitte, S.L., has not resigned, indicated that it has declined to stand for re-election after the completion of its current audit or been dismissed. For each of the years ended December 31, 2011 and 2012, Deloitte, S.L. has not expressed reliance on another accountant or accounting firm in its report on our audited annual accounts for such periods.
 

Significant Differences in Corporate Governance Practices

The following is a summary of the significant differences between our corporate governance practices and those applicable to domestic issuers under the NYSE Listed Company Manual.

Independence of the Board

Under the NYSE corporate governance rules applicable to domestic issuers, a majority of the board of directors must be independent, determined as set forth in the NYSE Listed Company Manual. Spanish law does not contain any such requirements, although there is a non-binding recommendation for listed companies in Spain that the number of independent directors be at least one third of the total size of the board.

Our board of directors assesses the independence of our board members in accordance with criteria set forth in the Unified Code of Good Governance, a code assumed by the Spanish securities market regulator in 2006 on the basis of the “comply or explain” principle, but binding for the issuers as far as the directors definitions are concerned. In order to be classified as independent in accordance with this code, a director, among other things, (i) shall not be a former employee or executive director of Prisa or any of our subsidiaries, unless three or five years have elapsed, respectively, from the end of the relationship (ii) shall not receive any payment or other form of compensation from us or our group in addition to their directors’ fees, unless the amount involved is not significant, (iii) shall not be a partner, now or in the past three years, of our external auditor, (iv) shall not be an executive director or senior officer of another company where one of our executive directors or senior officers is an external director, (v) shall not have material business dealings with us or any other company in our group, or have had such dealings in the preceding year (vi) shall not be a spouse, domestic partner in a similar relationship, nor close relative of any of our executive directors or senior officers, (vii) shall not be significant shareholders or executive directors of an entity that receives donations from the Company, (viii) shall not be any person not proposed for appointment or renewal by the nominations and compensation committee, and (ix) shall not stand have any of the relationships described in (i), (v) or (vi) above in relation with a significant shareholder or a shareholder with board representation. This individual independence assessment is explained to the shareholders at the general shareholders’ meeting appointing such director, and is reviewed annually by our board of directors. We also make publicly available an annual report on corporate governance and publish corporate governance information on our website.

Under the NYSE corporate governance rules applicable to domestic issuers, non-management directors must meet on a regular basis outside of the presence of management. Under Spanish law, this practice is neither required nor expressly recommended and as such, the non-executive members of our board of directors do not meet as a group outside of the presence of the directors who also serve in a management capacity. Meetings of our audit committee, corporate governance committee, and nomination and compensation committee are regularly held outside of the presence of management.
 
 
Independence of the directors on the audit committee
 
Our board of directors has determined that the members of our audit committee meet the SEC audit committee independence requirements as set forth in Rule 10A-3 under the Securities Exchange Act of 1934, as amended. The functions, composition and competencies of our audit committee are regulated by our Board of Directors’ Regulations, mainly in its sections 23 and 24, and are similar to those required by the NYSE. Under the NYSE corporate governance rules applicable to domestic issuers, all members of the audit committee must be independent, determined in accordance with the NYSE Listed Company Manual. Under Spanish law, a majority of the members and the chairman of the audit committee must be non-executive. Our board has determined that a majority of the members of our audit committee, including the chairman is independent in accordance with the Unified Code of Good Governance. These independence standards may not necessarily be always identical to, or as stringent as, the director independence standards established by the NYSE. Our board has not affirmatively determined that our audit committee members meet the independence criteria set forth in the NYSE Listed Company Manual.

Independence of the directors on the corporate governance committee and on the nomination and compensation committee

The functions, composition and competencies of our corporate governance committee and nomination and compensation committee are regulated by the Board of Directors’ Regulations, mainly in its sections 23, 25 and 26, and are substantially similar to those required by the NYSE. Under the NYSE corporate governance rules applicable to domestic issuers, all members of listed companies compensation committee and nominating/corporate governance committee must be independent, determined in accordance with the NYSE Listed Company Manual.  In accordance with the Spanish Unified Code of Good Governance, all members of both committees are external directors (the corporate governance committee is composed by three independent directors and one proprietary director and the nomination and compensation committee is composed by two proprietary directors and one independent directors) and the chairmen of both committees are independent directors.  Our board has not affirmatively determined that such members meet the independence criteria set forth in the NYSE Listed Company Manual.

Code of Business Conduct

The NYSE corporate governance rules applicable to domestic issuers require companies to adopt a code of business conduct for directors, officers and employees, and promptly disclose any waivers of the code. We have adopted an internal code of conduct in matters relating to the stock market that applies to our directors and executive officers and also a Code of Conduct generally applicable to all employees of the Prisa Group . See “—Code of Ethics.” In addition, our Board of Directors Regulations set out in detail our directors’ principal obligations relating to conflicts of interest concerning director qualification standards and responsibilities, business opportunities, safeguarding of corporate assets, confidentiality and non-competition. In accordance with Spanish law, we produce and make publicly available an annual report on corporate governance and publish corporate governance information on our website.
 

Not applicable.

PART III
 
 
 We have provided our financial statements under Item 18.
 

Please see the financial statements beginning on page F-1.
 
Item 19.
 
Exhibit
Number
 
Description
Bylaws (Estatutos) of Promotora de Informaciones, S.A.
8.1
List of Subsidiaries (see Appendix I to the Consolidated Financial Statements).
Section 302 Certification by the Executive Chairman.
Section 302 Certification by the Co-Chief Executive Officer.
12.3 Section 302 Certification by the Chief Financial Officer. 
Section 906 Certification.
 

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

PROMOTORA DE INFORMACIONES, S.A.
 
By:
/s/  Fernando Abril-Martorell
 
 
Name: Fernando Abril-Martorell
 
 
Title: Co-Chief Executive Officer
 
Date:  March 22, 2013
 
 
 
INDEX TO FINANCIAL STATEMENTS
 
Promotora de Informaciones, S.A. and Subsidiaries — Financial Statements
 
F-2
F-4
F-5
F-7
F-7
F-8
F-9
F-75
 
 
Dédalo Grupo Gráfico, S.L. and Subsidiaries – Financial Statements
 
F-87
Condensed Consolidated Income Statements for the three months ended March 31, 2012 and 2011 F-88
F-89
F-90
F-91
F-92
F-93
   
F-102
F-103
F-104
F-105
F-106
F-107
F-108
F-149


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Promotora de Informaciones, S.A.:

Madrid, Spain

We have audited the internal control over financial reporting of Promotora de Informaciones, S.A. and subsidiaries (the "Company") as of December 31, 2012, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
 
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2012, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended December 31, 2012, of the Company and our report dated March 22, 2013, expressed an unqualified opinion on those financial statements.

DELOITTE, S.L.
/s/ Deloitte, S.L.

Madrid, Spain
March 22, 2013
 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Promotora de Informaciones, S.A.:

Madrid, Spain

We have audited the accompanying consolidated balance sheets of Promotora de Informaciones, S.A. and subsidiaries (the “Company”) as of December 31, 2012 and 2011, and the related consolidated income statements, consolidated statements of comprehensive income, consolidated statements of changes in equity, and the consolidated statements of cash flows for each of the three years in the period ended December 31, 2012. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Promotora de Informaciones, S.A. and subsidiaries as of December 31, 2012 and 2011, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2012, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2012, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 22, 2013 expressed an unqualified opinion on the Company’s internal control over financial reporting.

DELOITTE, S.L.
/s/ Deloitte, S.L.

Madrid, Spain
March 22, 2013
 
PROMOTORA DE INFORMACIONES, S.A. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS AT DECEMBER 31, 2012 AND 2011
(Thousands of Euros)

ASSETS
 
Notes
 
 
12/31/12
 
 
12/31/11
 
EQUITY AND LIABILITIES
 
Notes
 
 
12/31/12
 
 
12/31/11
 
A)  NON-CURRENT ASSETS
 
 
 
 
 
6,003,095
 
 
 
 6,178,703
 
A)   EQUITY
 
11
 
 
 
2,611,627
 
 
 
2,218,035
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
I.    PROPERTY, PLANT AND EQUIPMENT
 
5
 
 
 
296,419
 
 
 
307,441
 
I.     SHARE CAPITAL
 
 
 
 
 
99,132
 
 
 
84,786
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
II.      GOODWILL
 
6
 
 
 
3,359,717
 
 
 
3,645,077
 
II.    OTHER RESERVES
 
 
 
 
 
1,299,881
 
 
 
1,152,640
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
III.     INTANGIBLE ASSETS
 
7
 
 
 
320,232
 
 
 
331,260
 
III.  ACCUMULATED PROFIT
 
 
 
 
 
769,583
 
 
 
380,282
 
 
 
 
 
 
 
 
 
 
 
 
 
- From prior years
 
 
 
 
 
1,024,616
 
 
 
831,500
 
IV.   NON-CURRENT FINANCIAL ASSETS
 
8
 
 
 
64,639
 
 
 
121,688
 
- For the year: Profit attributable to the Parent
 
 
 
 
 
(255,033)
 
 
 
(451,218)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
V.  INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
 
9
 
 
 
612,214
 
 
 
604,082
 
IV.  TREASURY SHARES
 
 
 
 
 
(727)
 
 
 
(2,505
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
VI. DEFERRED TAX ASSETS
 
20
 
 
 
1,343,869
 
 
 
1,166,694
 
V.   EXCHANGE DIFFERENCES
 
 
 
 
 
17,805
 
 
 
9,755
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
VII.OTHER NON-CURRENT ASSETS
 
 
 
 
 
6,005
 
 
 
2,461
 
VI.  NON- CONTROLLING INTERESTS
 
 
 
 
 
425,953
 
 
 
593,077
 
 
 
 
 
 
 
 
 
 
 
 
 
B)   NON-CURRENT LIABILITIES
 
 
 
 
 
3,331,781
 
 
 
3,882,329
 
B)  CURRENT ASSETS
 
 
 
 
 
1,655,647
 
 
 
1,699,696
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
I.    NON-CURRENT BANK BORROWINGS
 
12
 
 
 
2,866,786
 
 
 
3,176,491
 
I.    INVENTORIES
 
10
 
 
 
270,309
 
 
 
275,403
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
II.   NON-CURRENT FINANCIAL LIABILITIES
 
12-13
 
 
 
158,655
 
 
 
302,864
 
II.  TRADE AND OTHER RECEIVABLES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1. Trade receivables for sales and services
 
 
 
 
 
981,268
 
 
 
940,067
 
III.  DEFERRED TAX LIABILITIES
 
20
 
 
 
22,177
 
 
 
30,409
 
2. Receivable from associates
 
 
 
 
 
22,269
 
 
 
29,500
 
 
 
 
 
 
 
 
 
 
 
 
 
3. Receivable from public authorities
 
20
 
 
 
55,661
 
 
 
61,374
 
IV.   LONG-TERM PROVISIONS
 
14
 
 
 
254,018
 
 
 
356,520
 
4. Other receivables
 
 
 
 
 
266,615
 
 
 
309,776
 
 
 
 
 
 
 
 
 
 
 
 
 
5. Allowances
 
 
 
 
 
(73,798
)
 
 
(71,076
)
V.   OTHER NON-CURRENT LIABILITIES
 
 
 
 
 
30,145
 
 
 
16,045
 
 
 
 
 
 
 
1,252,015
 
 
 
1,269,641
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
C)   CURRENT LIABILITIES
 
 
 
 
 
1,718,605
 
 
 
1,778,160
 
III. CURRENT FINANCIAL ASSETS
 
 
 
 
 
20,063
 
 
 
56,494
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
I.     TRADE PAYABLES
 
 
 
 
 
1,151,739
 
 
 
1,180,075
 
IV.CASH AND CASH EQUIVALENTS
 
 
 
 
 
113,260
 
 
 
98,158
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
II.   PAYABLE TO ASSOCIATES
 
 
 
 
 
10,870
 
 
 
13,870
 
 
 
 
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
III.  OTHER NON-TRADE PAYABLES
 
 
 
 
 
97,228
 
 
 
115,865
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
IV.  CURRENT BANK BORROWINGS
 
12
 
 
 
205,467
 
 
 
223,625
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
V.   CURRENT FINANCIAL LIABILITIES
 
12-13
 
 
 
43,291
 
 
 
88,853
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
VI.   PAYABLE TO PUBLIC AUTHORITIES
 
20
 
 
 
129,219
 
 
 
114,814
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
VII.   PROVISIONS FOR RETURNS
 
 
 
 
 
7,577
 
 
 
8,686
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
VIII.  OTHER CURRENT LIABILITIES
 
 
 
 
 
73,214
 
 
 
32,372
 
C)  ASSETS HELD FOR SALE
 
 
 
 
 
3,271
 
 
 
125
 
 
 
 
 
 
 
 
 
 
 
 
 
TOTAL ASSETS
 
 
 
 
 
7,662,013
 
 
 
7,878,524
 
TOTAL EQUITY AND LIABILITIES
 
 
 
 
 
7,662,013
 
 
 
7,878,524
 

The accompanying Notes 1 to 29 and Appendix I and II are an integral part of the Consolidated Balance Sheets at December 31, 2012 and 2011
 

PROMOTORA DE INFORMACIONES, S.A. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2012, 2011 AND 2010
(Thousands of Euros)
 
 
 
Notes
 
 
12/31/12
 
 
12/31/11
 
 
12/31/10
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
2,623,495
 
 
 
2,641,281
 
 
 
2,687,773
 
Other income
 
 
 
 
 
 
41,197
 
 
 
83,169
 
 
 
134,958
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OPERATING INCOME
 
 
15
 
 
 
2,664,692
 
 
 
2,724,450
 
 
 
2,822,731
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of materials used
 
 
 
 
 
 
(889,352)
 
 
 
(824,120)
 
 
 
(839,223
)
Staff costs
 
 
16
 
 
 
(604,957)
 
 
 
(674,322)
 
 
 
(592,081
)
Depreciation and amortization charge
 
 
5-7
 
 
 
(187,998)
 
 
 
(171,331)
 
 
 
(170,363
)
Outside services
 
 
16
 
 
 
(742,977)
 
 
 
(788,813)
 
 
 
(794,500
)
Change in allowances, write downs and provisions
 
 
16
 
 
 
(100,196)
 
 
 
(45,171)
 
 
 
(37,210
)
Impairment of goodwill
 
 
6
 
 
 
(301,282)
 
 
 
(252,944)
 
 
 
(51,179
)
Other expenses
 
 
 
 
 
 
(12,984)
 
 
 
(3,485)
 
 
 
(2,023
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OPERATING EXPENSES
          
 
(2,839,746)
 
 
 
(2,760,186)
 
 
 
(2,486,579
)
           
 
 
 
 
 
 
 
 
 
 
 
PROFIT FROM OPERATIONS
          
 
(175,054)
 
 
 
(35,736)
 
 
 
336,152
 
Finance income
          
 
5,469
 
 
 
7,296
 
 
 
8,765
 
Finance costs
          
 
(177,601)
 
 
 
(205,153)
 
 
 
(178,769
)
Changes in value of financial instruments
          
 
(2,241)
 
 
 
6,586
 
 
 
8,677
 
           
 
281
 
 
 
(3,881)
 
 
 
2,116
 
Exchange differences (net)
 
 
 
 
 
                      
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FINANCIAL LOSS
 
 
17
 
 
 
(174,092)
 
 
 
(195,152)
 
 
 
(159,211
)
Result of companies accounted for using the equity method
 
 
9
 
 
 
(6,275
)
 
 
(19,694
)
 
 
(99,553
)
Loss from other investments
 
 
8
 
 
 
2
 
 
 
5,867
 
 
 
(4,302
)
PROFIT BEFORE TAX FROM CONTINUING OPERATIONS
 
 
 
 
 
 
(355,419)
 
 
 
(244,715)
 
 
 
73,086
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax
 
 
20
 
 
 
20,436
 
 
 
(147,973)
 
 
 
(73,024
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PROFIT FROM CONTINUING OPERATIONS
 
 
 
 
 
 
(334,983)
 
 
 
(392,688)
 
 
 
62
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss after tax from discontinued operations
 
 
18
 
 
 
(3,496)
 
 
 
(2,646)
 
 
 
(35,011
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CONSOLIDATED PROFIT FOR THE YEAR
 
 
 
 
 
 
(338,479)
 
 
 
(395,334)
 
 
 
(34,949
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PROFIT ATTRIBUTABLE TO NON-CONTROLLING INTERESTS
 
 
 
 
 
 
83,446
 
 
 
(55,884)
 
 
 
(37,921
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PROFIT ATTRIBUTABLE TO THE PARENT
 
 
 
 
 
 
(255,033)
 
 
 
(451,218)
 
 
 
(72,870
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
BASIC EARNINGS PER SHARE (in euros)
 
 
22
 
 
 
(0.27)
 
 
 
(0.62)
 
 
 
(0.28
)
 
The accompanying Notes 1 to 29 and Appendix I and II are an integral part of the Consolidated Income Statements for 2012, 2011 and 2010.
 
 
PROMOTORA DE INFORMACIONES, S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED DECEMBER 31, 2012, 2011 AND 2010
(Thousands of Euros)
 
 
 
12/31/12
 
 
12/31/11
 
 
12/31/10
 
CONSOLIDATED PROFIT FOR THE YEAR
 
 
(338,479)
 
 
 
(395,334)
 
 
 
(34,949)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income recognized directly in equity
 
 
20,058
 
 
 
(23,248)
 
 
 
40,639
 
Arising from translation differences
 
 
20,058
 
 
 
(23,248)
 
 
 
40,639
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TOTAL RECOGNIZED INCOME AND EXPENSE
 
 
(318,421)
 
 
 
(418,582)
 
 
 
5,690
 
Attributable to the parent company
 
 
(241,355)
 
 
 
(467,413)
 
 
 
(45,817)
 
Attributable to non- controlling interests
 
 
(77,066)
 
 
 
48,831
 
 
 
51,507
 

The accompanying Notes 1 to 29 and Appendix I and II are an integral part of the Consolidated Statements of Comprehensive Income for 2012, 2011 and 2010.
 

PROMOTORA DE INFORMACIONES, S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR 2012, 2011 AND 2010
(Thousands of Euros)
 
 
 
Shares
Capital
 
 
Premium
Share
 
 
Reserves
 
 
Reserves
for
First-
Time
Application
Of
IFRSs
 
 
Prior
Years’
Accumulated
Profit
 
 
Treasury
Shares
 
 
Exchange
Differences
 
 
Accumulated
Profit
for the
year
 
 
Equity
Attributable
to
The
Parent
 
 
Minority
Interests
 
 
Total
Equity
 
Balance at December 31, 2009
 
 
21,914
 
 
 
112,665
 
 
 
793,370
 
 
 
(72,338
)
 
 
352,999
 
 
 
(3,044
)
 
 
(1,561
)
 
 
50,479
 
 
 
1,254,484
 
 
 
118,535
 
 
 
1,373,019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capital increases (Note 11a and 11b)
 
 
62,784
 
 
 
296,363
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
359,147
 
 
 
 
 
 
 
359,147
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Treasury share transactions (Note 11g)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
- Delivery of treasury shares
 
 
 
 
 
 
 
 
 
 
-
 
 
 
 
 
 
 
 
 
 
 
510
 
 
 
 
 
 
 
 
 
 
 
510
 
 
 
 
 
 
 
510
 
- Sale of treasury shares
 
 
 
 
 
 
 
 
 
 
-
 
 
 
 
 
 
 
 
 
 
 
3,291
 
 
 
 
 
 
 
 
 
 
 
3,291
 
 
 
 
 
 
 
3,291
 
- Purchase of treasury shares
 
 
 
 
 
 
 
 
 
 
-
 
 
 
 
 
 
 
 
 
 
 
(5,723
)
 
 
 
 
 
 
 
 
 
 
(5,723
)
 
 
 
 
 
 
(5,723
)
- Reserves for treasury shares
 
 
 
 
 
 
 
 
 
 
(162
)
 
 
 
 
 
 
 
 
 
 
162
 
 
 
 
 
 
 
 
 
 
 
-
 
 
 
 
 
 
 
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Distribution of 2009 profit
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
-  Directors' remuneration
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
-
 
 
 
 
 
 
 
-
 
-  Dividends
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
-
 
 
 
 
 
 
 
-
 
-  Reserves
 
 
 
 
 
 
 
 
 
 
(7,683
)
 
 
 
 
 
 
58,162
 
 
 
 
 
 
 
 
 
 
 
(50,479
)
 
 
-
 
 
 
 
 
 
 
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income and expense recognized in equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
- Translation differences (Note 11i)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5,279
 
 
 
 
 
 
 
21,774
 
 
 
 
 
 
 
27,053
 
 
 
13,586
 
 
 
40,639
 
- Profit for 2010
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(72,870
)
 
 
(72,870
)
 
 
37,921
 
 
 
(34,949
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other
 
 
 
 
 
 
 
 
 
 
(1,353
)
 
 
(323
)
 
 
455,306
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
453,630
 
 
 
(25,506
)
 
 
428,124
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Changes in non- controlling interests
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
-  Dividends paid during the year
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(18,222
)
 
 
(18,222
)
- Due to changes in scope of consolidation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(713
)
 
 
(713
)
- Due to changes in percentage of ownership
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
503,538
 
 
 
503,538
 
- Due to capital increases
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,524
 
 
 
1,524
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2010
 
 
84,698
 
 
 
409,028
 
 
 
784,172
 
 
 
(72,661
)
 
 
871,746
 
 
 
(4,804
)
 
 
20,213
 
 
 
(72,870
)
 
 
2,019,522
 
 
 
630,663
 
 
 
2,650,185
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capital increases (Note 11a and 11b)
 
 
88
 
 
 
1,022
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,110
 
 
 
 
 
 
 
1,110
 
Conversion of financial liabilitie into equity
 
 
 
 
 
 
27,829
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
27,829
 
 
 
 
 
 
 
27,829
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Treasury share transactions
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
- Delivery of treasury shares
 
 
 
 
 
 
 
 
 
 
-
 
 
 
 
 
 
 
 
 
 
 
3,425
 
 
 
 
 
 
 
 
 
 
 
3,425
 
 
 
 
 
 
 
3,425
 
- Purchase of treasury shares
 
 
 
 
 
 
 
 
 
 
-
 
 
 
 
 
 
 
 
 
 
 
(2,082)
 
 
 
 
 
 
 
 
 
 
 
(2,082)
 
 
 
 
 
 
 
(2,082)
 
- Reserves for treasury shares
 
 
 
 
 
 
 
 
 
 
(956)
 
 
 
 
 
 
 
 
 
 
 
956
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Distribution of 2010 profit
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
-  Dividends
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(5,990)
 
 
 
(5,990)
 
 
 
 
 
 
 
(5,990)
 
-  Reserves
 
 
 
 
 
 
 
 
 
 
3,292
 
 
 
 
 
 
 
(82,152)
 
 
 
 
 
 
 
 
 
 
 
78,860
 
 
 
 
 
 
 
 
 
 
 
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income and expense recognized
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
- Translation differences (Note 11i)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(5,737)
 
 
 
 
 
 
 
(10,458)
 
 
 
 
 
 
 
(16,195)
 
 
 
(7,053)
 
 
 
(23,248)
 
- Result for 2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(451,218)
 
 
 
(451,218)
 
 
 
55,884
 
 
 
(395,334)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other
 
 
 
 
 
 
 
 
 
 
914
 
 
 
 
 
 
 
47,643
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
48,557
 
 
 
(13,609)
 
 
 
34,948
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Changes in non- controlling interests
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
-  Dividends paid during the year
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(73,021)
 
 
 
(73,021)
 
-  Due to changes in scope of consolidation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(2,343)
 
 
 
(2,343)
 
- Due to capital increases
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,556
 
 
 
2,556
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2011
 
 
84,786
 
 
 
437,879
 
 
 
787,422
 
 
 
(72,661)
 
 
 
831,500
 
 
 
(2,505)
 
 
 
9,755
 
 
 
(451,218)
 
 
 
1,624,958
 
 
 
593,077
 
 
 
2,218,035
 
                                                                                         
Capital increases (Note 11a and 11b)
  
 
14,346
 
 
 
201,239
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
215,585
 
 
 
 
 
 
 
215,585
  
Conversion of financial liabilitie into equity (Note 13)
  
 
 
 
 
 
164,855
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
164,855
 
 
 
 
 
 
 
164,855
  
Issuance of financial instruments (Note 11c)
  
 
 
 
 
 
 
 
 
 
  400,316
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  400,316
 
 
 
 
 
 
 
  400,316
  
Treasury share transactions (Note 11g)
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
- Delivery of treasury shares
  
 
 
 
 
 
 
 
 
 
-
 
 
 
 
 
 
 
 
 
 
 
3,786
 
 
 
 
 
 
 
 
 
 
 
3,786
 
 
 
 
 
 
 
3,786
  
- Purchase of treasury shares
  
 
 
 
 
 
 
 
 
 
-
 
 
 
 
 
 
 
 
 
 
 
(2,515)
 
 
 
 
 
 
 
 
 
 
 
(2,515)
 
 
 
 
 
 
 
(2,515)
  
- Reserves for treasury shares
  
 
 
 
 
 
 
 
 
 
(507)
 
 
 
 
 
 
 
 
 
 
 
507
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
-
  
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
Distribution of 2011 profit
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
-  Dividends
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
    
-  Reserves
  
 
 
 
 
 
 
 
 
 
(616,903)
 
 
 
 
 
 
 
165,685
 
 
 
 
 
 
 
 
 
 
 
451,218
 
 
 
 
 
 
 
 
 
 
 
-
  
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
Income and expense recognized
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
- Translation differences (Note 11i)
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5,628
 
 
 
 
 
 
 
8,050
 
 
 
 
 
 
 
13,678
 
 
 
6,380
 
 
 
20,058
  
- Result for 2012
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(255,033)
 
 
 
(255,033)
 
 
 
(83,446)
 
 
 
(338,479)
  
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
Other
  
 
 
 
 
 
 
 
 
 
(1,759)
 
 
 
 
 
 
 
21,803
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
20,044
 
 
 
(14,310)
 
 
 
5,734
  
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
Changes in non- controlling interests
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
-  Dividends paid during the year
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(75,639)
 
 
 
(75,639)
  
-  Due to changes in scope of consolidation
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
14
 
 
 
14
  
- Due to capital increases
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(123)
 
 
 
(123)
  
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
Balance at December 31, 2012
  
 
99,132
 
 
 
803,973
 
 
 
568,569
 
 
 
(72,661)
 
 
 
1,024,616
 
 
 
(727)
 
 
 
17,805
 
 
 
(255,033)
 
 
 
2,185,674
 
 
 
425,953
 
 
 
2,611,627
  
 
The accompanying Notes 1 to 29 and Appendix I and II are an integral part of the Consolidated Statements of Changes in Equity for 2012, 2011 and 2010.
 

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED 31 DECEMBER 2012,
2011 AND 2010
(Thousands of Euros)
 
 
 
 
12/31/12
 
 
12/31/11
 
 
12/31/10
 
 
 
 
 
 
 
 
 
 
 
PROFIT BEFORE TAX FROM CONTINUING OPERATIONS
 
 
(355,419)
 
 
 
(244,715)
 
 
 
73,086
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization charge
 
 
602,056
 
 
 
472,648
 
 
 
260,179
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Changes in working capital
 
 
(80,341)
 
 
 
(77,855)
 
 
 
(181,017
)
Inventories
 
 
11,030
 
 
 
(17,658)
 
 
 
21,051
 
Accounts receivable
 
 
(55,904)
 
 
 
(81,213)
 
 
 
(92,651
)
Accounts payable
 
 
(71,899)
 
 
 
(82,750)
 
 
 
44,250
 
Other current assets
 
 
36,432
 
 
 
103,766
 
 
 
(153,667
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax recovered (paid)
 
 
(39,210)
 
 
 
(52,991)
 
 
 
(31,537
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Other profit adjustments
 
 
123,309
 
 
 
172,132
 
 
 
151,124
 
Sale of assets
 
 
-
 
 
 
-
 
 
 
(30,665
)
Financial results
 
 
174,092
 
 
 
195,152
 
 
 
159,211
 
Other adjustments
 
 
(50,783)
 
 
 
(23,020)
 
 
 
22,578
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
250,395
 
 
 
269,219
 
 
 
271,835
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Recurrent investments
 
 
(168,760)
 
 
 
(217,978)
 
 
 
(206,009
)
Investments in intangible assets
 
 
(122,496)
 
 
 
(141,025)
 
 
 
(126,285
)
Investments in property, plant and equipment
 
 
(46,264)
 
 
 
(76,953)
 
 
 
(79,724
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in non-current financial assets
 
 
(6,956)
 
 
 
(11,951)
 
 
 
(16,158
)
Proceeds from disposals
 
 
1,947
 
 
 
5,706
 
 
 
90,000
 
Other cash flows from investing activities
 
 
10,983
 
 
 
(20,426)
 
 
 
2,263
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES
 
 
(162,786)
 
 
 
(244,649)
 
 
 
(129,904
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Proceeds and payments relating to equity instruments
 
 
151,291
 
 
 
2,951
 
 
 
573,652
 
Proceeds relating to financial liability  instruments
 
 
149,645
 
 
 
209,286
 
 
 
47,461
 
Payments relating to financial liability  instruments
 
 
(43,509)
 
 
 
(151,469)
 
 
 
(1,651,978
)
Dividends and returns on other equity instruments paid
 
 
(80,721)
 
 
 
(83,032)
 
 
 
(25,668
)
Interest paid
 
 
(105,191)
 
 
 
(124,392)
 
 
 
(124,787
)
Other cash flow from financing activities
 
 
(145,324)
 
 
 
(29,715)
 
 
 
1,186,266
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
(73,809)
 
 
 
(176,371)
 
 
 
4,946
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effect of foreign exchange rate changes
 
 
1,302
 
 
 
4,971
 
 
 
15,301
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CHANGE IN CASH FLOWS IN THE YEAR
 
 
15,102
 
 
 
(146,830)
 
 
 
162,178
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents at beginning of year
 
 
98,158
 
 
 
244,988
 
 
 
82,810
 
-Cash
    
94,288
      
206,580
      
63,768
  
-Cash equivalents
    
3,870
      
38,408
      
19,042
  
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents at end of year
 
 
113,260
 
 
 
98,158
 
 
 
244,988
 
-Cash
    
97,256
      
94,288
      
206,580
  
-Cash equivalents
    
16,004
      
3,870
      
38,408
  

The accompanying Notes 1 to 29 and Appendix I and II are an integral part of the Consolidated Statements of Cash Flow for 2012, 2011 and 2010.
 

PROMOTORA DE INFORMACIONES, S.A. (PRISA)
AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2012 AND 2011 AND CONSOLIDATED STATEMENTS OF INCOME AND EXPENSES, COMPREHENSIVE INCOME AND CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2012, 2011 AND 2010
 
(1)
GROUP ACTIVITIES AND PERFORMANCE
 
a) 
Group activities

Promotora de Informaciones, S.A. (“Prisa” or “the Company”) was incorporated on January 18, 1972, and has its registered office in Madrid, at Gran Vía, 32. Its business activities include, inter alia, the exploitation of printed and audiovisual media, the holding of investments in companies and businesses and the provision of all manner of services.

In addition to the business activities carried on directly by the Company, Prisa heads a group of subsidiaries, joint ventures and associates which engage in a variety of business activities and which compose the Group (“the Prisa Group” or “the Group”). Therefore, in addition to its own separate financial statements, Prisa is obliged to present consolidated financial statements for the Group including its interests in joint ventures and investments in associates.

The Group’s consolidated financial statements for 2011 were approved by the shareholders at the Annual General Meeting held on June 30, 2012.

The consolidated financial statements for 2012 were authorized for issue by the Company’s directors on February 27, 2013.

These consolidated financial statements are presented in thousands of euros as this is the currency of the main economic area in which the Group operates. Foreign operations are accounted for in accordance with the policies described in Note 2d.

Shares of Prisa are admitted to trading on continuous market of the Spanish Stock Exchanges (Madrid, Barcelona, Bilbao and Valencia), and since November 29, 2010, on the New York Stock Exchange.
 
b) 
Evolution of the financial structure of the Group

The Group adopted further measures in 2012 to restructure its debt and strengthen its capital structure.
 
In January 2012, principal shareholders converted 75 million warrants worth EUR 150 million into Prisa shares. In addition, in July 2012, it issued EUR 434 million of bonds with mandatory conversion into shares in two tranches, one for EUR 334 million, subscribed by creditor banks via conversion of outstanding debt, and one for EUR 100 million subscribed in cash by Telefónica, S.A. (see Note 11c).
 
On June 30, 2012, shareholders at the General Meeting of Prisa agreed to amend the minimum preferred dividend payment system for non-voting Class B shares, whereby these shares may be paid by the Company in cash, in Class A  shares (at a fixed ratio of EUR 1 per share) or a combination of both (see Notes 11a and 13).
 
These measures come on top of others adopted in prior years, which include the partial disposal of some assets, capital increases or refinancing agreements entered into with bank creditors (see Note 12).
 
(2)
BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
 
a)
Application of International Financial Reporting Standards (IFRSs)

The Group’s consolidated financial statements were prepared in accordance with International Financial Reporting Standards (“IFRSs”) as issued by the International Accounting Standards Board, which do not differ from IFRS as adopted by the European Union taking into account all mandatory accounting policies and rules and measurement bases with a material effect, as well as with the Commercial Code, the obligatory legislation approved by the Institute of Accounting and Auditors of Accounts, and other applicable Spanish legislation.

In accordance with IFRSs, the following should be noted in connection with the scope of application of International Financial Reporting Standards and the preparation of these consolidated financial statements of the Group:
 
●
IFRSs are applied in the preparation of the consolidated financial information for the Group. The separate financial statements of the companies composing the Group are prepared and presented in accordance with the accounting principles and standards of each country.
 
 
●
In accordance with IFRSs, these consolidated financial statements include the following consolidated statements of the Group:
 
 
-
Consolidated balance sheets
 
 
-
Consolidated income statements
 
 
-
Consolidated statements of comprehensive income
 
 
-
Consolidated statements of changes in equity
 
 
-
Consolidated statements of cash flows
 
●
As required by IAS 8, uniform accounting policies and measurement bases were applied by the Group for all transactions, events and items in 2012, 2011 and 2010.

In 2012, the following amendment to accounting standard came into force which, therefore, was taken into account when preparing the accompanying consolidated financial statements:

 
·
Amendment to IFRS 7- Financial Instruments: Disclosures – Transfers of financial assets

The application of these amendments and interpretations did not have a significant effect on the Group’s consolidated financial statements for 2012.
 

At December 31, 2012, the Prisa Group had not applied the following standards or interpretations published by the IASB, since the effective application thereof was required subsequent to that date.
 
 
Standards, amendments and interpretations
Mandatory application for
financial years beginning on or after
     
Amendment to IAS 1
Presentation on other comprehensive income
July 1, 2012
Amendment to IAS 19
Employee benefits
January 1, 2013
IFRS 10
Consolidated financial statements
January 1, 2013 (*)
     
IFRS  11
Joint arrangements
January 1, 2013 (*)
IFRS  12
Disclosure of interests in other entities
January 1, 2013 (*)
IFRS  13
Measuring fair value
January 1, 2013
     
IAS 27 (Revised)
Individual financial statements
January 1, 2013 (*)
IAS 28 (Revised)
Investments in associates and joint ventures
January 1, 2013 (*)
IFRIC  interpretation  20
Stripping costs in the production phase of a surface mine
January 1, 2013
Amendment to IFRS  1
First-time Adoption of International Financial Reporting Standards - Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters
January 1, 2013
Amendment to IAS 12
Income Tax - Deferred tax in connection with investment property
January 1, 2013
Amendment to IFRS  7
Disclosures - Offsetting financial assets and financial liabilities
January 1, 2013
Amendment to IAS 32
Presentation - Offsetting financial assets and financial liabilities
January 1, 2014
IFRS  9
Financial Instruments: Classification y valuation
January 1, 2015
     
Improvements to IFRSs
Cycle 2009-2011
July 1, 2013
     
Transition Guidance
Amendments to IFRS 10, IFRS 11 and IFRS 12
January 1, 2013
Investment Entities
Amendments to IFRS 10, IFRS 12 and IAS 27
January 1, 2014

All the accounting principles and measurement bases with a material effect on the consolidated financial statements were applied.

As at the date of authorization of the accompanying financial statements, the directors are assessing the potential impact of the future application of these standards on the Group’s consolidated financial statements.
 
b)
Fair presentation and accounting principles

The consolidated financial statements were obtained from the separate financial statements of Prisa and its subsidiaries and, accordingly, they present fairly the Group’s consolidated equity and financial position at December 31, 2012, and the consolidated results of its operations, the changes in consolidated equity and the consolidated cash flows in the year then ended. The Group prepared its financial statements on a going concern basis. Also, with the exception of the consolidated statement of cash flows, these consolidated financial statements were prepared in accordance with the accrual basis of accounting.

Given that the accounting policies and measurement bases applied in preparing the Group’s consolidated financial statements for 2012 may differ from those applied by some of the Group companies, the necessary adjustments and reclassifications were made on consolidation to unify these policies and bases and to make them compliant with IFRSs as issued by the International Accounting Standards Board.
 
c)
Responsibility for the information and use of estimates

The information in these financial statements is the responsibility of the Group’s directors.

In the consolidated financial statements for 2012 estimates were occasionally made by executives of the Group and of the entities in order to quantify certain of the assets, liabilities and obligations reported herein. These estimates relate basically to the following:
 
 
-
The measurement of assets, deferred tax assets and goodwill to determine the possible existence of impairment losses (see Note 4f,4d and 4n).
 
 
 
-
The useful life of property, plant, and equipment, and intangible assets (see Notes 4b and 4e).

 
-
The hypothesis used to calculate the fair value of financial instruments (see Note 4g).

 
-
The assessment of the likelihood and amount of undetermined or contingent liabilities.

 
-
Estimated sales returns received after the end of the reporting period.

Although these estimates were made on the basis of the best information available at the date of preparation of these consolidated financial statements on the events analyzed, events that take place in the future might make it necessary to change these estimates (upwards or downwards) in the coming years. Changes in accounting estimates would be applied prospectively, with the effects recognized in the future related consolidated income statements.

In 2012, there were no significant changes in the accounting estimates made at the end of 2011, apart from those used to determine goodwill (see Note 6).
 
d)
Basis of consolidation

The consolidation methods applied were as follows:

Full consolidation-

Subsidiaries are fully consolidated and all their assets, liabilities, income, expenses and cash flows are included in the consolidated financial statements after making the corresponding adjustments and eliminations. Subsidiaries are companies in which the Parent controls a majority of the voting power or, if this is not the case, has the power to govern their financial and operating policies. The fully consolidated companies are listed in Appendix I.

The results of subsidiaries which are acquired or sold during the year are included in the consolidated income statement from the effective date of acquisition or until the effective date of disposal, as appropriate.

On acquisition, the assets, liabilities and contingent liabilities of a subsidiary are measured at their fair values. Any excess of the cost of the subsidiary’s acquisition over the Parent Company’s share of the net fair value of its assets and liabilities is recognized as goodwill. Any deficiency is credited to the consolidated income statement.

The share of third parties of the equity of Group companies is presented under “Equity – Non- controlling interests” in the consolidated balance sheet and their share of the profit for the year is presented under “Profit attributable to non-controlling interests” in the consolidated income statement.

The interest of non-controlling shareholders is stated at those shareholders’ proportion of the fair values of the assets and liabilities recognized.

All balances and transactions between the fully consolidated companies were eliminated on consolidation.
 

Proportionate consolidation-
 
Under this consolidation method, the Group combines the balances and eliminations are made in proportion to the Group’s ownership interest in the capital of these entities. The assets and liabilities consolidated under proportional consolidation are classified in the consolidated balance sheet according to their nature. Similarly, the Group’s share of the income and expenses of these entities is recognized in the consolidated income statement on the basis of the nature of the related items. The fully consolidated companies are listed in Appendix I. The effect of proportionate consolidation on the Group’s consolidated financial statements is not significant.

Equity method -

Associates are accounted for using the equity method. Associates are companies in which Prisa holds direct or indirect ownership interests of between 20% and 50%, or even if the percentage of ownership is less than 20%, it has significant influence over their management. The companies accounted for using the equity method are listed in Appendices I and II, together with their main financial aggregates.

Under the equity method, investments are recognized in the balance sheet at the Group’s share of net assets of the investee, adjusted, if appropriate, for the effect of transactions performed with the Group, plus any unrealized gains relating to the goodwill paid on the acquisition of the company.

Dividends received from these companies are recognized as a reduction in the value of the Group’s investment. The Group’s share of the profit or loss of these companies is included, net of the related tax effect, in the consolidated income statement under “Result of companies accounted for using the equity method.”

Other matters -

The items in the balance sheets and income statements of the foreign companies included in the scope of consolidation were translated to euros using the closing rate method, i.e. all assets, rights and obligations were translated at the exchange rates prevailing at the end of the reporting period. Income statement items were translated at the average exchange rates for the year. The difference between the value of the equity translated at historical exchange rates and the net equity position resulting from the translation of the other items as indicated above is recognized under “Equity - Exchange differences” in the accompanying consolidated balance sheet.

Balances and transactions in currencies of hyperinflationary economies are translated at the closing exchange rate. At December 31, 2012, the only country in which the Group operates that pursuant to IAS 21 should be considered to be a hyperinflationary economy is Venezuela.

In keeping with standard practice, these consolidated financial statements do not include the tax effect of transferring to Prisa’s accounts the accumulated reserves and retained earnings of the other consolidated companies, since it is considered that these balances will be used as equity by said companies.

The data relating to Sociedad Española de Radiodifusión, S.L., Prisa Radio, S.L., Grupo Santillana de Ediciones, S.L., Prisa Brand Solutions, S.L.U., Dédalo Grupo Gráfico, S.L., Promotora de Emisoras de Televisión, S.A., Gran Vía Musical de Ediciones, S.L., Grupo Latino de Radiodifusión Chile, Ltda., Sistema Radiópolis, S.A. de C.V., Grupo Media Capital SGPS, S.A., Antena 3 de Radio, S.A. and Prisa Televisión, S.A.U. contained in these notes were obtained from their respective consolidated financial statements.
 
 
(3) 
CHANGES IN THE GROUP STRUCTURE

The most significant changes in the scope of consolidation in 2012 and 2011 were as follows:

2012-

Subsidiaries
 
In May 2012, Rede Teledifusora Independente, S.A. (RETI), belonging to Grupo Media Capital, SGPS, S.A., was sold.
 
Also in May 2012, Promotora de Emisoras de Televisión, S.A. absorbed Localia TV Madrid, S.A.U.
 
Also in July 2012, Ediciones Aguilar Venezolana, S.A, disolved.
 
Also in July 2012, Productora de Televisión de Córdoba, S.A.U, Televisión Digital de Baleares, S.A.U, Promotora Audiovisual de Zaragoza, S.L.U and Legal Affairs Consilium, S.L.U. were absorbed by Promotora de Emisoras de Televisión, S.A.
 
In September 2012, Lúdicodrome – Editora Unipessoal, Lda, which belongs to the Media Capital Group, merged with Media Capital Editora Multimedia, S.A.
 
Also, in September 2012, TV Ciudad Real, S.L.U was absorbed by Promotora de Emisoras de Televisión, S.A.
 
In December 2012, Desenvolvimento e Comercialização de Sistemas de Comunicação, S.A was absorbed by Media Capital Servicios de Consultoria y Gestao, S.A.
 
Associates
 
In January 2012, 35% of Factoría Plural, S.L., belonging to Grupo Media Capital, SGPS, S.A., was sold. As a result, Factoría Plural, S.L. is now accounted for using the equity method, rather than the full consolidation method.
 
In May 2012, Uniao de Leira, SAD., belonging to Grupo Media Capital, SGPS, S.A., was sold.
 
In June 2012, Distribuidora Cordobesa de Medios Editoriales, S.L. was absorbed by Distrimedios, S.L
 
In October 2012,   Souto S.L.U, is absorbed by Distribuidora de Publicaciones Boreal, S.L. Also that month, Suscripciones de Medios Editoriales, S.L was absorbed by Distrimedios, S.L.
 
In November 2012, Prensa Serviodiel, S.L. was absorbed by Distrimedios, S.L.
 
Significant operations
 
The financial statements of Dédalo Grupo Gráfico, S.L. and subsidiaries are fully consolidated in the Group's accounts since 1 April 2012, as the option of the reciprocal purchase and sale agreement for the shares of Dédalo Grupo Gráfico signed by Prisa in 2010 with the other shareholders of Dédalo Grupo Gráfico was exercisable. Also in June 2012 Prisa has announced its decision to exercise the call option for one euro, which involves the acquisition of the remaining 60% of society, reaching a total participation of 100%.
 
Additionally, in June 1, 2012 Dédalo Grupo Gráfico, S.L. sold 100% of Dédalo Offset, S.L., Macrolibros, S.L., Dédalo Heliocolor, S.A. y Gráficas Integradas, S.A.
 
 
The main impacts of the full integration of Dédalo Grupo Gráfico in the consolidated balance sheets at December 31, 2012 is as follows:
 
   
Thousands of
euros
  
Non current asests
     32,249  
Current financial assets and cash and cash equivalents
     467  
Other current assets
     3,355  
Current and non-current liabilities
     (127,353 )
 
At December 31, 2011 the Group registered provisions which correspond to the estimated risks in this investment. Therefore, the aforementioned operations have had no impact in the accompanying consolidated income statement (see Notes 8 and 14).
 
The fully consolidation of Dédalo Grupo Gráfico has not had a significant impact in the equity of the Group, which contemplated the risks associated with Dédalo Grupo Gráfico through the provision created on loans granted to this group and the provision of the printing business (see note 14).
 
Prisa was the guarantor of all the debt and the underlying hedges of Dédalo Grupo Gráfico until the company started to be fully consolidated.
 
From April 1, 2012, Dédalo Grupo Gráfico has contributed to consolidated revenues with EUR 12,411 thousand and with losses of EUR 5,607 thousand to profit from operations.
 
In case Dédalo Grupo Gráfico had been fully consolidated since January 1, 2012, its contribution to total consolidated revenues would have amounted to EUR 23,895 thousand and it would have impacted to the profit from operations with a loss of EUR 11,080 thousands.
 
2011-
 
Subsidiaries

In January 2011, Prisa Digital Inc. was incorporated, 50% owned by Prisa Digital, S.L., and 50% owned by Prisa Inc.
 
In March 2011, Radio Lleida, S.L. issued equity to its existing shareholders: Radio España de Barcelona, S.A. (22.17%), Sociedad Española de Radiodifusión, S.L. (44.33%) and Prensa Leridiana, S.A. (33.50%) - in proportion to their percentage stakes in exchange for non-cash consideration. The contribution by Prensa Leridiana, SA was 100% of Comunicacions Pla, S.L., which became a wholly owned subsidiary of Radio Lleida, S.L.

In June 2011, Prisa Noticias, S.L. and Prisa Gestión de Servicios, S.L. were incorporated, 100% owned by Promotora de Informaciones, S.A.

Also in June 2011, Promotora de Emisoras de Televisión, S.A. acquired 60% of Televisión Digital de Baleares, S.L. This company ceased to be consolidated by the equity method to become fully consolidated.

In addition in June 2011, Algarra, S.A., Onda la Finojosa, S.A. and Sociedad de Radiodifusión Aragonesa, S.A. merged with Sociedad Española de Radiodifusión, S.L.

In July 2011, Emissões de Radiodifusão, S.A. acquired 100% of Rádio Litoral Centro Empresa de Radiodifusão, Lda., and Radio Comercial, S.A. acquired 100% of Rádio Nacional- Emissões De Radiodifusão, Lda.

Also in July 2011, Sistemas de Ensino UNO, Ltda., was incorporated, a wholly owned subsidiary of Santillana Sistemas Educativos, S.L. of which Ítaca, S.L. holds one share.

In August 2011, Kimberley Trading, S.A. merged with Media Global, SGPS, S.A.
 
 
In September 2011, Inevery DPS, S.L., was incorporated, 99.9996% owned by Grupo Santillana de Ediciones, S.L. and 0.0004% owned by Ítaca, S.L.

In November 2011, Produções Audiovisuais, S.A. acquired 100% of Rádio Voz Alcanena, Lda., Comunicações Sonoras, S.A. and Radiodifusão, Lda.

Jointly controlled entities

In November 2011, My Major Company Spain, S.L., was incorporated, 50% owned by Gran Vía Musical de Ediciones, S.L.

Associates

In April 2011, Ediciones Conelpa, S.L was incorporated, 50% owned by Ediciones El País, S.L.

In July 2011, Macrolibros, S.L. was incorporated, wholly owned by Dédalo Offset, S.L., as a result of the partial spin-off of the latter.

In October 2011, Canal+ Investments (U.S), Inc, 60% owned by Prisa TV, S.A.U., was dissolved.
 
In November 2011, Prisa Noticias, S.L. acquired 50% of Kioskoymás, sociedad gestora de la plataforma tecnológica, S.L.

Significant agreements entered into by the Group

During 2011, Prisa reached an agreement with PortQuay West I B.V., a company which is controlled by Miguel Paes do Amaral to sell 10% of Grupo Media Capital SGPS, S.A.’s share capital for approximately EURO 35 million. This agreement was formalized during February 2012 and will allow the buyer the option to purchase up to an additional 19.69% (see note 13).

When comparing the information for 2012 and 2011, these changes, the effect of which is presented separately in these notes to the consolidated financial statements in the “Changes in the consolidation scope" column, should be taken into account.
 
 
(4) 
ACCOUNTING POLICIES

The principal accounting policies used in preparing the accompanying consolidated financial statements for 2012 and comparative information were as follows:
 
a) 
Presentation of the consolidated financial statements
 
In accordance with IAS 1, the Group opted to present the assets in its consolidated balance sheet on the basis of a current/non-current assets distinction. Also, income and expenses are presented in the consolidated income statement according to the nature of the related item. The statement of cash flows was prepared using the indirect method.
 
b) 
Property, plant, and equipment

Property, plant and equipment are carried at cost, net of the related accumulated depreciation and of any impairment losses.

Property, plant and equipment acquired prior to December 31, 1983, are carried at cost, revalued pursuant to applicable legislation. Subsequent additions are stated at cost, revalued pursuant to Royal Decree-Law 7/1996 in the case of Agrupación de Servicios de Internet y Prensa, A.I.E., Pressprint, S.L.U., Sociedad Española de Radiodifusión, S.L., Ítaca, S.L. and Algarra, S.A.
 
The costs of expansion, modernization or improvements leading to increased productivity, capacity or efficiency or to a lengthening of the useful lives of the assets are capitalized.

Period upkeep and maintenance expenses are charged directly to the consolidated income statement.

Property, plant and equipment are depreciated by the straight-line method at annual rates based on the years of estimated useful life of the related assets, the detail being as follows:
 
 
  
Years of estimated useful life
  
 
  
 
  
Buildings and structures
     30 - 50  
Plant and machinery
     5 – 10  
Digital set-top boxes
     7  
Digital access cards
     5  
Other items of property, plant and equipment
     4 – 20  

The gain or loss arising on the disposal or derecognition of an asset is determined as the difference between the selling price and the carrying amount of the asset and is recognized in the consolidated income statement.

c)
Finance leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee.  All other leases are classified as operating leases.
 
Items of property, plant and equipment held under finance lease are recognized in the balance sheet according to the nature of the leased asset. A liability is recognized simultaneously for the same amount, which is the lower of the fair value of the leased asset or the sum of the present values of the lease payables and, where appropriate, the price of any purchase option.
 
The finance charge on these leases is allocated to the income statement so as to produce a constant periodic rate of interest over the lease term.

Assets held under finance leases are depreciated over the same estimated useful life as owned assets.
 
 
d) 
Goodwill
 
Any excess of the cost of the investments in the consolidated companies over the corresponding underlying carrying amounts at the date of acquisition or at the date of first time consolidation, provided that the acquisition is not after control is obtained, is allocated as follows:
 
 
-
If it is attributable to specific assets and liabilities of the companies acquired, by increasing the value of the assets whose market values were higher than the carrying amounts at which they had been recognized in their balance sheets and whose accounting treatment was similar to that of the same assets of the Group.

 
-
If it is attributable to non-contingent liabilities, by recognizing it in the consolidated balance sheet if it is probable that the outflow of resources to settle the obligation embody economic benefits and the fair value can be measured reliably.

 
-
If it is attributable to specific intangible assets, by recognizing it explicitly in the consolidated balance sheet provided that the fair value at the date of acquisition can be measured reliably.

 
-
The remaining amount is recognized as goodwill.

Changes in an ownership interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions. Once control is obtained, additional investments in subsidiaries and decreases in ownership interest without the loss of control do not affect the amount of goodwill. When a parent loses control of a subsidiary, it derecognizes the carrying amount of assets (including any goodwill) and liabilities and the share of non-controlling interests, recognizing the fair value of the consideration received and any residual ownership in the subsidiary. The remaining difference is taken to profit or loss in the income statement for the year.

The assets and liabilities acquired are measured provisionally at the acquisition date, and the provisional amounts are reviewed within a period of year from the acquisition date. Therefore, until the definitive fair value of the assets and liabilities has been established, the difference between the acquisition cost and the carrying amount of the company acquired is provisionally recognized as goodwill.

Goodwill is considered to be an asset of the company acquired and, therefore, in the case of a subsidiary with a functional currency other than the euro, it is valued in that subsidiary’s functional currency and is translated to euros using the exchange rate prevailing at the reporting date.

Goodwill acquired on or after January 1, 2004 is measured at acquisition cost and that acquired earlier is recognized at the carrying amount at December 31, 2003, in accordance with Spanish GAAP. In both cases, since January 1, 2004, goodwill has not been amortized and at the end of each reporting period goodwill is reviewed for impairment (i.e. a reduction in its recoverable amount to below its carrying amount) and any impairment loss is recognized (see Note 4f).
 
e)
Intangible assets

The main items included under “Intangible assets” and the measurement bases used were as follows:

Computer software-

“Computer software” includes the amounts paid to develop specific computer programs and the amounts incurred in acquiring from third parties the licenses to use programs. Computer software is amortized using the straight-line method over a period ranging from three to six years, depending on the type of program or development, from the date on which it is brought into service.

Prototypes-

This account includes basically prototypes for the publication of books, which are measured at the costs incurred in materials and work performed by third parties to obtain the physical medium required for industrial mass reproduction. The prototypes are amortized using the straight-line method over three years from the date on which they are launched on the market, in the case of textbooks, atlases, dictionaries and major works, and over two years in the case of other publications. The cost of the prototypes of books that are not expected to be published is charged to the income statement for the year in which the decision not to publish is taken.
 

New subscribers - Installation and connection-

This item includes the direct costs incurred in the installation of equipment and the connection of new subscribers to digital satellite pay TV, net of accumulated amortization. These costs are amortized over a useful life of seven years, which is the estimated average subscription period. The Group writes off the carrying amount of the installation and connection costs relating to subscriptions canceled during the year. These costs are individually identifiable for each subscriber, by DTS, and future economic benefits will flow from them for the digital satellite pay TV business.

This item also includes certain costs incurred in installing community digital satellite TV receivers (required to complete the satellite TV signal reception system), net of the related accumulated amortization. These costs are also amortized over an estimated useful life of seven years.

These costs are amortized using the method described above by crediting directly the related asset account in the balance sheet.

Advances on copyrights-

This account includes the advances paid to authors for the acquisition of book publishing rights. These advances are taken to expenses in the income statement from the date on which the book is launched on the market, at the rate established in each contract, which is applied to the book cover price. These items are presented in the balance sheet at cost, less the portion charged to income. This cost is reviewed each year and, where necessary, an allowance is recognized based on the projected sales of the related publication.
 
Audiovisual rights-

”Audiovisual rights” in the accompanying consolidated balance sheet includes the cost of various long-term audiovisual rights and rights of publicity (including both the cost of rights currently being exploited and the cost of the options to exploit these rights in the future). These rights are amortized on the basis of the income obtained therefrom over the term of the related contracts. At the date of preparation of these consolidated financial statements no decision had been taken not to exercise these options, which were recognized at their expected recoverable amount.

Other intangible assets-

“Other intangible assets” includes basically the amounts paid to acquire administrative concessions for the operation of radio frequencies, which are subject to temporary administrative concessions. These concessions are generally granted for renewable ten-year periods and are amortized using the straight-line method over the term of the arrangement, except in cases where the renewal costs are not significant, in which case they are deemed to be assets with an indefinite useful life.
 
f)
Impairment losses

At each reporting date, or whenever it is considered necessary, the Group reviews the carrying amounts of its assets to determine whether there is any indication that those assets might have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the amount of the impairment loss (if any). In the case of identifiable assets that do not generate cash flows that are largely independent of those from other assets or groups of assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Cash-generating units to which goodwill has been assigned and intangible assets with an indefinite useful life are systematically tested for impairment at the end of each reporting period or when the circumstances so warrant.

Recoverable amount is the higher of fair value less costs to sell and value in use. Value in use is taken to be the present value of the estimated future cash flows to derive from the asset based on most recent budgets approved by management. These budgets include the best estimates available of the income and costs of the cash-generating units based on industry projections and future expectations.

These projections cover the following five years and include a residual value that is appropriate for each business. These cash flows are discounted to their present value at a rate that reflects the weighted average cost of capital employed adjusted by the country risk and business risk corresponding to each cash-generating unit. Therefore, in 2012 the rates used ranged from 7.2% to 15.4%, depending on the business analyzed. The range used for the most relevant impairment tests was from 8.0% to 10.0%.
 

If the recoverable amount is lower than the asset’s carrying amount, the related impairment loss is recognized in the consolidated income statement for the difference. In case the goodwill of a company with minority interests was fully recognized in the consolidated financial statements of the parent company, the assignment of the corresponding impairment between the parent company and the minority interests is made in accordance with their participation in the profit and losses of the company, that means in accordance with the participation in the share capital of the company. According to IFRS 3, the Group maintains the 100% of the goodwill of the pay TV business, as sales of minority stakes in previous years did not imply a loss of control. Consequently, the Group is considering a 100% of future cash flows of this business in the analysis of the goodwill impairment test and therefore the potential impairment of the goodwill will be assigned to the parent company (Prisa) and minority interests according with their stakes in DTS share capital, as there is no goodwill corresponding to minority interest not recorded in the consolidated financial statements of the Group.
 
 Impairment losses recognized on an asset in previous years are reversed when there is a change in the estimate of its recoverable amount by increasing the carrying amount of the asset up to the limit of the carrying amount that would have been determined had no impairment loss been recognized for the asset. The reversal of the impairment loss is recognized immediately as income in the consolidated income statement. An impairment loss recognized for goodwill must not be reversed.
 
g)
Financial instruments

Non-current financial assets-

“Non-current financial assets” includes the following categories:
 
 
-
Loans and receivables: these assets are recognized at amortized cost, i.e. cash delivered less principal repayments, plus accrued interest receivable, in the case of loans, and the present value of the related consideration in the case of receivables. The Group records the related allowance for the difference between the recoverable amount of the receivables and their carrying amount.
 
 
-
Held-to-maturity investments: investments that the Group has the positive intention and ability to hold to the date of maturity. They are carried at amortized cost.
 
 
-
Available-for-sale financial assets: this category includes the remaining assets not included in the two categories above. These are almost entirely equity investments. These assets are carried on the consolidated balance sheet at fair value when this can be measured reliably. If the market value of investments in unlisted companies cannot be determined reliably, which is generally the case, these investments are measured at acquisition cost or at a lower amount if there is any indication of impairment.

Cash and cash equivalents-

“Cash and cash equivalents” in the consolidated balance sheet includes cash on hand and at banks, demand deposits and other short-term highly liquid investments that are readily convertible into cash and are not subject to a risk of changes in value.

Financial liabilities-
 
 
1.
Financial liabilities

Loans, bonds and other similar liabilities are carried at the amount received, net of transaction costs. Interest expenses, including premiums payable on settlement or redemption and transaction costs, are recognized in the consolidated income statement on an accrual basis using the effective interest method. The amount accrued and not paid is added to the carrying amount of the instrument if settlement is not made in the accrual period.

Accounts payable are recognized initially at market value and are subsequently measured at amortized cost using the effective interest method.
 
 
2.
Compound financial instruments

Compound financial instruments are non-derivative instruments that have both a liability and an equity component.

The Group recognizes measures and presents separately the liability and equity components created by a single financial instrument.

The Group distributes the value of its instruments in accordance with the following criteria which, barring error, will not be subsequently reviewed.
 
 
a.
The liability component is recognized by measuring the fair value of a similar liability that does not have an associated equity component.

 
 
b.
The equity component is measured at the difference between the initial amount and the amount assigned to the liability component.
 
 
c.
The transaction costs are distributed in the same proportion.
 
 

Derivative financial instruments and hedge accounting-

The Group is exposed to fluctuations in the exchange rates of the various countries in which it operates. In order to mitigate this risk, foreign currency hedges are used, on the basis of its projections and budgets, when the market outlook so requires.

Similarly, the Group is exposed to foreign currency risk as a result of potential fluctuations in the various currencies in which its bank borrowings and debts to third parties are denominated. Accordingly, it uses hedging instruments for transactions of this nature when they are material and the market outlook so requires.

The Group is also exposed to interest rate risk since all of its bank borrowings bear interest at floating rates. In this regard, the Group arranges interest rate hedges, basically through contracts providing for interest rate caps.

Changes in the value of these financial instruments are recognized as finance costs or finance income for the year pursuant to IFRSs, since by their nature they do not qualify for hedge accounting under IFRSs.

For instruments settled at a variable amount of shares or in cash, the Company recognizes a derivative financial liability when measuring these financial instruments using the Black-Scholes model.
 
h)
Investments accounted for using the equity method
 
As discussed in Note 2d, investments in companies over which the Group has significant influence are accounted for using the equity method. The goodwill arising on the acquisition of these companies is also included under this heading.

Investments in companies accounted for using the equity method whose carrying amount is negative at the end of the reporting period are recognized under Non-current liabilities - Long-term provisions” (see Notes 9 and 14) at their negative excluding the financial effect given the nature of the investments.
 
i)
Inventories

Inventories of raw materials and supplies and inventories of commercial products or finished goods purchased from third parties are measured at the lower of their average acquisition cost and market value.

Work in progress and finished goods produced in-house are measured at the lower of average production cost and market value. Production cost includes the cost of materials used, labor and in-house and third-party direct and indirect manufacturing expenses.

The main inventory item is “Audiovisual rights,” which are stated at acquisition cost and taken to income as follows:
 
 
1.
Broadcasting rights for the “Canal+” premium pay TV family of channels:
 
 
-
Film broadcasting rights acquired from third parties (outside productions): the cost of these rights is recognized in the income statement on a straight-line basis from the date of the first showing or commercial release until the expiry of the broadcasting rights.

 
-
Sporting event broadcasting rights: these rights are taken to income in full at the date of the first showing.
 
 
-
Acquired series broadcasting rights: the cost of these rights is taken to income on a straight-line basis over the various showings.
 
 
-
Other rights: these relate basically to documentaries, in-house productions and introductory program slots, and are recognized as cost of sales when broadcast.
 
 
2.
Broadcasting rights for free-to-air television channels: mainly broadcasting rights acquired from third parties; they are taken to income in accordance with the number of showings.
 
 
Obsolete, defective or slow-moving inventories are reduced to their realizable value.

The Group assesses the net realizable value of the inventories at the period and recognizes the appropriate write-down if the inventories are overstated. When the circumstances that previously caused inventories to be written down no longer exist or when there is clear evidence of an increase in net realizable value because of changed economic circumstances, the amount of the write-down is reversed.
 
j)
Assets classified as held for sale

Assets classified as held for sale are considered to be groups of assets directly associated with them, to be disposed of together as a group in a single transaction that is expected to be realized within twelve months from the date of their classification under this heading.

Assets classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell.
 
k)
Long-term provisions

Present obligations at the consolidated balance sheet date arising from past events which are considered to probably give rise to a loss for the Group, which are uncertain as to amount and timing, are recognized in the consolidated balance sheet as provisions at the present value of the most probable amount that it is considered the Group will have to pay to settle the obligation.

Provisions for taxes-

The provisions for taxes relate to the estimated amount of the tax debts whose exact amount or date of payment has not yet been determined, since they depend on the fulfillment of certain conditions.

Provisions for third-party liability-

At the end of 2012, certain litigation and claims were in process against the Group companies arising from the ordinary course of their operations.
 
“Provisions for third-party liability” also includes the estimated amount required to cover potential claims arising from obligations assumed by the consolidated companies in the course of their commercial operations and the estimated termination benefits payable to employees whose contracts will foreseeably be terminated.
 
l)
Recognition of income and expenses

Revenue and expenses are recognized on an accrual basis, regardless of when the resulting monetary or financial flow arises.
 
Revenue is measured at the fair value of the consideration received or receivable and represents the amounts receivable for the goods and services provided in the normal course of business, net of discounts, and other sales-related taxes. Revenue associated with the rendering of services is also recognized by reference to the stage of completion of the transaction at the balance sheet date, provided the outcome of the transaction can be estimated reliably. Sales of goods are recognized when substantially all the risks and rewards have been transferred.

The accounting policies applied to recognize the revenue of the Group’s main businesses are as follows:
 
 
-
Revenue from subscribers arising from the pay TV business is recognized when the subscribers are registered in the system. Subscription revenue is recognized on a monthly basis. Pay per view revenue is recognized when the program acquired by the subscriber is screened.
 
 
-
Advertising revenue is recognized when the advertisement appears in the media, less the amount of volume rebates offered to the media agencies.
 
 
-
Revenue from book sales is recognized on the effective delivery thereof. Where the sales of the copies are subject to sales returns, the actual sales returns are deducted from the revenue recognized. Also, the amounts corresponding to rebates or trade discounts that are not of a financial nature are deducted from revenue.
 
 
 
-
Revenue from the sale of newspapers and magazines is recognized on the effective delivery thereof, net of the related estimated provision for sales returns. Also, the amounts relating to distributors’ fees are deducted from revenue.
 
 
-
The revenue and the costs associated with audiovisual production agreements are recognized in the income statement by reference to the stage of completion at the balance sheet date, using the percentage of completion method. The stage of completion is determined by reference to the ratio of contract costs incurred to date for work already performed to the estimated total contract costs, considering the initial margin estimated for the overall project. Estimates of contract revenue and costs and of the outcome of a contract are reviewed at each balance sheet date, and the revised estimates are used in the determination of the amount of revenue and expenses recognized in income for the period in which the change is made and in subsequent periods. When the final outcome of the agreement cannot be estimated reliably, the revenue must only be recognized to the extent that it is probable that the costs incurred will be recovered, whereas the costs are recognized as an expense for the year in which they are incurred. In any case, the expected future losses would be recognized immediately in the income statement.
 
 
-
The revenue related to intermediation services, which refers to fees obtained for the commercialization of advertising spots in the different media platforms of the Group and of third parties, as well as to services for the distribution of press and magazines, is recognized at the amount of the fees received when the goods or services under the transaction are supplied.
 
 
-
Other income: this item includes broadcasting services, sales of add-ons and collections, telephone hotline services, music sales, organization and management of events, e-commerce, Internet services, leases and other income.
 
m)
Offsetting

Assets and liabilities are offset and the net amount presented in the consolidated balance sheet when, and only when, they arise from transactions in which the Group has a contractual or legally enforceable right to set off the recognized amounts and its intends to settle them on a net basis, or to realize the asset and settle the liability simultaneously.
 
 
n)
Tax matters

The current income tax expense or receipt represents the sum of the current tax expense and the deferred tax assets and liabilities.  The current income tax expense, which determines the payment obligation to the tax authorities, is calculated by applying the tax rate in force to the taxable profit, after deducting the tax relief and tax credits generated and taken in the year.

Deferred tax assets and liabilities arise from temporary differences defined as the amounts expected to be payable or recoverable in the future which result from differences between the carrying amounts of assets and liabilities and their tax bases, as well as non-deductible costs which will be deductible later on. These amounts are measured at the tax rates that are expected to apply in the period when the asset is realized or the liability is settled.

Deferred tax assets may also arise from the carryforward of unused tax loss and unused tax credits.

Deferred tax liabilities are recognized for all taxable temporary differences, unless the temporary difference arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit (loss) nor taxable profit or loss.

Deferred tax assets are recognized for temporary differences to the extent that it is considered probable that the consolidated companies will have sufficient taxable profits in the future against which the deductible temporary difference can be utilized, and the deferred tax assets do not arise from the initial recognition of an asset or liability that is not a business and, at the time of the transaction, affects neither accounting profit (loss) nor taxable profit (loss). The other deferred tax assets (carryforward of tax losses and unused tax credits) are only recognized if it is considered probable that the consolidated companies will have sufficient future taxable profits against which they can be utilized.

The deferred tax assets and liabilities recognized are reassessed at the end of each reporting period in order to ascertain whether they still exist, and the appropriate adjustments are made on the basis of the findings of the analyses performed and the tax rate then in force.

o)
Loss after tax from discontinued operations

A discontinued operation is a line of business that the Group has decided to abandon and/or sell and whose assets, liabilities and net profit or loss can be distinguished physically, operationally and for financial reporting purposes.

The income and expenses of the discontinued operations are presented separately in the consolidated income statement under “Loss after tax from discontinued operations.”
 
 
p)
Foreign currency transactions

Foreign currency transactions are translated to euros (the Group’s functional currency) at the exchange rates ruling at the transaction date. During the year, differences arising between the result of applying the exchange rates initially used and that of using the exchange rates prevailing at the date of collection or payment are recognized as finance income or finance costs in the consolidated income statement.

Also, balances receivable or payable at December 31 each year in currencies other than the functional currency in which the consolidated companies’ financial statements are denominated are translated to euros at the closing exchange rates. Any resulting translation differences are recognized as finance income or finance costs in the consolidated income statement.

Balances and transactions in currencies of hyperinflationary economies are translated at the closing exchange rate. At December 31, 2012, the only country in which the Group operates that pursuant to IAS 21 should be considered to be a hyperinflationary economy is Venezuela. Prisa has not been affected materially by the hyperinflation effect.
 
q)
Current/non-current classification

Debts are recognized at their effective amount and debts due to be settled within twelve months from the balance sheet date are classified as current items and those due to be settled within more than twelve months as non-current items.
 
r)
Consolidated statements of cash flows

The following terms are used in the consolidated statements of cash flows with the meanings specified:
 
 
-
Changes in cash flows in the year: inflows and outflows of cash and cash equivalents, which are short-term, highly -liquid investments that are subject to an insignificant risk of changes in value.
 
 
-
Operating activities: the principal revenue-producing activities of the Group and other activities that are not investing or financing activities.
 
 
-
Investing activities: the acquisition and disposal of long-term assets and other investments not included in cash and in cash equivalents. For transactions between the parent and non-controlling interests, these only include those representing a change of control, in accordance with IAS 27.
 
 
-
Financing activities: activities that result in changes in the size and composition of equity and borrowings, as well as transactions between the parent and non-controlling interests which do not represent a change of control in accordance with IAS 27.
 
s)
Environmental impact

In view of the printing activities carried on by certain consolidated Group companies, mainly Pressprint, S.L.U. and Dédalo Grupo Gráfico, S.L., and in accordance with current legislation, these companies control the degree of pollution caused by waste and emissions, and have an adequate waste disposal policy in place. The expenses incurred in this connection, which are not significant, are expensed currently.

The evaluation carried out indicates that the Group does not have any environmental liability, expenses, assets, provisions or contingencies that might be material with respect to its equity, financial position or results.
 
 
(5)
PROPERTY, PLANT, AND EQUIPMENT

2012
 
The changes in 2012 in “Property, plant and equipment” in the consolidated balance sheet were as follows:
 
 
 
Thousands of euros
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance
at
12/31/11
 
 
Monetary
 adjustment
 
 
Translation
adjustment
 
 
Changes
in
scope of
consolidation
 
 
Additions
 
 
Disposals
 
 
Transfers
 
 
Balance
at
12/31/12
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lands and buildings
 
 
92,813
 
 
 
782
 
 
 
1,454
  
 
 
17,928
 
 
 
912
 
 
 
(488
)
 
 
32
 
 
 
113,433
 
Plant and machinery
 
 
477,529
 
 
 
507
 
 
 
3,063
  
 
 
52,010
  
 
 
8,939
 
 
 
(15,325
)
 
 
2,858
 
 
 
529,581
 
Digital set-top boxes and cards
 
 
363,274
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
10,970
 
 
 
(43,255
)
 
 
-
 
 
 
330,989
 
Other items of property, plant and equipment
 
 
120,875
 
 
 
538
 
 
 
185
  
 
 
1,199
  
 
 
24,048
 
 
 
(13,231
)
 
 
1,302
 
 
 
134,916
 
Advances and property, plant and equipment in the course of construction
 
 
3,664
 
 
 
-
 
 
 
(137
)
 
 
370
 
 
 
1,395
 
 
 
(177
)
 
 
(3,049
)
 
 
2,066
 
Total cost
 
 
1,058,155
 
 
 
1,827
 
 
 
4,565
  
 
 
71,507
  
 
 
46,264
 
 
 
(72,476
)
 
 
1,143
 
 
 
1,110,985
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated depreciation:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Buildings
 
 
(28,931
)
 
 
(310
)
 
 
(364)
 
 
 
(3,353
)
 
 
(2,919
)
 
 
168
 
 
 
-
 
 
 
(35,709
)
Plant and machinery
 
 
(349,394
)
 
 
(800
)
 
 
(2,680)
 
 
 
(29,376)
 
 
 
(30,825
)
 
 
13,964
 
 
 
(223
)
 
 
(399,334
)
Digital set-top boxes and cards
 
 
(268,515
)
 
 
-
 
 
 
-
 
 
 
-
 
 
 
(26,042
)
 
 
42,245
 
 
 
-
  
 
 
(252,312
)
Other items of property, plant and equipment
 
 
(92,762
)
 
 
(451
)
 
 
89
 
 
 
(489)
 
 
 
(11,254
)
 
 
11,710
 
 
 
(129
)
 
 
(93,286
)
Total accumulated depreciation
 
 
(739,602
)
 
 
(1,561
)
 
 
(2,955)
 
 
 
(33,218)
 
 
 
(71,040
)
 
 
68,087
 
 
 
(352
)
 
 
(780,641
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Impairment losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Buildings
 
 
(182
)
 
 
-
 
 
 
-
 
 
 
-
 
 
 
(1,798)
 
 
 
182
 
 
 
(6,783)
 
 
 
(8,581
)
Plant and machinery
 
 
(195
)
 
 
-
 
 
 
-
 
 
 
-
 
 
 
-
  
 
 
938
 
 
 
(20,436)
 
 
 
(19,693
)
Digital set-top boxes and cards
 
 
(9,643
)
 
 
-
 
 
 
-
 
 
 
-
 
 
 
4,086
 
 
 
1,001
 
 
 
(1)
 
 
 
(4,557
)
Other items of property, plant and equipment
 
 
(1,092
)
 
 
-
 
 
 
(10)
 
 
 
-
 
 
 
(35
)
 
 
42
 
 
 
1
  
 
 
(1,094
)
Total impairment losses
 
 
(11,112
)
 
 
-
 
 
 
(10)
 
 
 
-
 
 
 
2,253
  
 
 
2,163
 
 
 
(27,219
)
 
 
(33,925
)
Property, plant and equipment, net
 
 
307,441
 
 
 
266
 
 
 
(1,600
)
 
 
38,289
 
 
 
(22,523)
 
 
 
(2,226
)
 
 
(26,428)
 
 
 
296,419
 

Changes in the scope of consolidation-

The main change in the scope of consolidation in 2012 was the change in the consolidation method used for Dédalo Grupo Gráfico from the equity to the full consolidation method (see Note 3).

Additions-

The most significant additions in 2012 were as follows:
 
 
-
“Digital set-top boxes and cards,” in the amount of EUR 10,970 thousand, from     investments made by DTS Distribuidora de Televisión Digital, S.A. in iPlus, a next-generation decoder.
 
 
 
-
“Plant and machinery,” in the amount of EUR 8,939 thousand, primarily from investments made by Prisa Televisión, S.A.U. refurbishment of its headquarters and equipment for VOD (video on demand) and Canal+ Yomvi, and by Gruoi Media Capital, SGPS, S.A. for the acquisition of electronic and audiovisual equipment.
 
 
-
“Other items of property, plant and equipment,” in the amount of EUR 24,048 thousand, from investments made for Santillana in digital developments and learning systems.
 
Disposals-

In 2012, the Prisa Televisión Group derecognized the cost, accumulated depreciation and impairment losses relating to digital set-top boxes and cards that were not in an adequate condition to be used.
 
Impairment losses-

In 2012, impairment losses of EUR 18,354 thousand were recognized for the printing plant in Barcelona due to its closure in December and EUR 8,868 thousand for the printing plants in Lugo and Valencia. The provision recognized in 2010 was released in this connection (see Note 14).
 
There are no restrictions on holding title to the property, plant and equipment other than those indicated in Note 12.

There are no future property, plant and equipment purchase commitments.

2011

The changes in 2011 in “Property, plant and equipment” in the consolidated balance sheet were as follows:
 
 
 
Thousands of euros
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance
at
12/31/10
 
 
Monetary
 adjustment
 
 
Translation
adjustment
 
 
Changes in
scope
of
consolidation
 
 
Additions
 
 
Disposals
 
 
Transfers
 
 
Balance
at
12/31/11
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lands and buildings
 
 
90,428
 
 
 
941
 
 
 
(1,694
)
 
 
63
 
 
 
3,910
 
 
 
(1,195
)
 
 
360
 
 
 
92,813
 
Plant and machinery
 
 
491,240
 
 
 
689
 
 
 
(664
)
 
 
(6,902
)
 
 
12,016
 
 
 
(20,058
)
 
 
1,208
 
 
 
477,529
 
Digital set-top boxes and cards
 
 
367,862
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
44,235
 
 
 
(48,823
)
 
 
-
 
 
 
363,274
 
Other items of property, plant and equipment
 
 
108,231
 
 
 
609
 
 
 
(261
)
 
 
(483
)
 
 
13,001
 
 
 
(10,004
)
 
 
9,782
 
 
 
120,875
 
Advances and property, plant and equipment in the course of construction
 
 
5,067
 
 
 
-
 
 
 
(1,258
)
 
 
6
 
 
 
3,791
 
 
 
(261
)
 
 
(3,681
)
 
 
3,664
 
Total cost
 
 
1,062,828
 
 
 
2,239
 
 
 
(3,877
)
 
 
(7,316
)
 
 
76,953
 
 
 
(80,341
)
 
 
7,669
 
 
 
1,058,155
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated depreciation:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Buildings
 
 
(27,743
)
 
 
(280
)
 
 
444
 
 
 
(34
)
 
 
(2,308
)
 
 
919
 
 
 
71
 
 
 
(28,931
)
Plant and machinery
 
 
(350,776
)
 
 
(485
)
 
 
840
 
 
 
6,939
 
 
 
(27,130
)
 
 
21,255
 
 
 
(37
)
 
 
(349,394
)
Digital set-top boxes and cards
 
 
(291,279
)
 
 
-
 
 
 
-
 
 
 
-
 
 
 
(24,774
)
 
 
47,538
 
 
 
-
 
 
 
(268,515
)
Other items of property, plant and equipment
 
 
(84,900
)
 
 
(368
)
 
 
201
 
 
 
524
 
 
 
(7,988
)
 
 
6,996
 
 
 
(7,227
)
 
 
(92,762
)
Total accumulated depreciation
 
 
(754,698
)
 
 
(1,133
)
 
 
1,485
 
 
 
7,429
 
 
 
(62,200
)
 
 
76,708
 
 
 
(7,193
)
 
 
(739,602
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Impairment losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Buildings
 
 
(182
)
 
 
-
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
(182
)
Plant and machinery
 
 
(195
)
 
 
-
 
 
 
-
 
 
 
-
 
 
 
(7
)
 
 
7
 
 
 
-
 
 
 
(195
)
Digital set-top boxes and cards
 
 
(11,901
)
 
 
-
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
1,320
 
 
 
938
 
 
 
(9,643
)
Other items of property, plant and equipment
 
 
(292
)
 
 
-
 
 
 
2
 
 
 
-
 
 
 
(5
)
 
 
163
 
 
 
(960
)
 
 
(1,092
)
Total impairment losses
 
 
(12,570
)
 
 
-
 
 
 
2
 
 
 
-
 
 
 
(12
)
 
 
1,490
 
 
 
(22
)
 
 
(11,112
)
Property, plant and equipment, net
 
 
295,560
 
 
 
1,106
 
 
 
(2,390
)
 
 
113
 
 
 
14,741
 
 
 
(2,143
)
 
 
454
 
 
 
307,441
 
 

Additions-

The most significant additions in 2011 were as follows:
 
 
-
“Digital set-top boxes and cards,” in the amount of EUR 44,235 thousand, from investments made by DTS Distribuidora de Televisión Digital, S.A. in iPlus, a next-generation decoder.
 
 
-
“Plant and machinery,” in the amount of EUR 12,016 thousand, primarily from investments made by Prisa Televisión, S.A.U. in new IT projects for the rendering of TV services and VOD (video on demand), and by Grupo Media Capital, SGPS, S.A. for the upgrade of its TV studios and for program production equipment.
 
 
-
“Other items of property, plant and equipment,” in the amount of EUR 13,001 thousand, from the investment by Santillana in material for digital classrooms (iPads, MacBooks, etc.), as well as the investment to prepare the new offices in Colombia and Mexico for use.

Disposals-

In 2011, the Prisa Televisión Group derecognized the cost, accumulated depreciation and impairment losses relating to digital set-top boxes and cards that were not in an adequate condition to be used.

In addition, Ediciones El País, S.L., derecognized fully depreciated plant and machinery in the amount of EUR 17,640 thousand.

There are no restrictions on holding title to the property, plant and equipment other than those indicated in Note 12.

There are no future property, plant and equipment purchase commitments.

The Prisa Group’s fully depreciated property, plant and equipment in use amounted to EUR 469,992 thousand at December 31, 2012 (December 31, 2011: EUR 441,964 thousand).

Non-current assets held under leases-

At December 31, 2012, “Property, plant, and equipment” on the consolidated balance sheet included assets held under finance leases amounting to EUR 89,821 thousand (December 31, 2011: EUR 68,447 thousand).

The breakdown of the carrying amounts of non-current assets held under finance leases by nature of the leased asset at December 31, 2012 and 2011 is as follows (in thousands of euros):

 
 
12/31/12
 
 
12/31/11
 
 
 
Cost
 
 
Accumulated
depreciation
 
 
Carrying
amount
 
 
Cost
 
 
Accumulated
depreciation
 
 
Carrying
amount
 
Digital set-top boxes and cards
 
 
90,542
 
 
 
(26,212)
 
 
 
64,330
 
 
 
77,819
 
 
 
(13,797)
 
 
 
64,022
 
Plant and machinery
 
 
8,502
 
 
 
(4,885)
 
 
 
3,617
 
 
 
6,812
 
 
 
(3,389)
 
 
 
3,423
 
Other items of property, plant and equipment
 
 
26,863
 
 
 
(4,989)
 
 
 
21,874
 
 
 
2,413
 
 
 
(1,411)
 
 
 
1,002
 
Total
 
 
125,907
 
 
 
(36,086)
 
 
 
89,821
 
 
 
87,044
 
 
 
(18,597)
 
 
 
68,447
 

“Other items of property, plant and equipment” mainly include digital developments and learning systems of Santillana under financial leases.
 

The breakdown of the value of the purchase option, the amount of payments made in the year and the nominal value of outstanding payments in 2012 is as follows:
 
               
Nominal value of outstanding payments
  
   
Value of
purchase
option
    
Amount of
payments
made in the
year
    
Total
    
Less than 1
year
    
Between 1
and 5 years
    
More than 5
years
  
Digital set-top boxes and cards
    
132
      
25,770
      
43,388
      
26,569
      
16,819
      
-
  
Plant and machinery
    
35
      
937
      
3,038
      
784
      
2,254
      
-
  
Other items of property, plant and equipment
    
9,245
      
15,365
      
21,948
      
2,991
      
18,957
      
-
  
Total
    
9,412
      
42,071
      
68,374
      
30,344
      
38,030
      
-
  

On June 15, 2011, and for a period of five years, Prisa TV signed a master lease agreement with Cisco System Capital Spain, S.L in the amount of USD 80 million, to finance the purchase of iplus set-top boxes, which includes purchases made since May 2010.

Cisco System Capital Spain, S.L. has reached an agreement with Prisa TV to become the exclusive supplier of the set-top boxes required, over the next five years, for the Company’s line of business. The detail of these agreements at December 31, 2012 is as follows:

Cost
 
  
Purchase
option
 
    
Contract
Duration
(months)
 
    
Period
elapsed
(months)
 
    
Amount of
payments
made in the
year
 
    
Outstanding
payments
 
  
43,427
     -       36       19       13,098       16,373  
12,631
     -       36       17       4,593       6,888  
1,742
     -       36       16       633       950  
3,207
     -       36       15       1,167       2,040  
3,476
     -       36       14       1,264       2,212  
3,476
     -       36       13       1,264       2,212  
1,717
     -       36       12       624       1,250  
586
     -       36       6       107       532  
1,707
     -       36       4       310       1,552  
408
     -       49       8       86       370  
2,163
     -       49       7       303       2,117  
2,830
     -       49       5       396       2,770  
2,397
     -       49       4       168       2,514  
905
     -       49       3       63       949  
80,672
                             24,076       42,729  

The Group companies take out insurance policies to cover the potential risks to which the various items of property, plant, and equipment are exposed. At December 31, 2012 and 2011, the insurance policies taken out sufficiently covered the related risks.
 
 
(6) 
GOODWILL

2012

The detail of the goodwill relating to fully and proportionately consolidated Group companies and of the changes therein in 2012 is as follows:
 
 
 
Thousands of euros
 
 
 
Balance at
12/31/11
 
 
Translation
adjustment
 
 
Impairment
 
 
Changes in
scope of
 consolidation
 
 
Balance at
12/31/12
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Antena 3 de Radio, S.A.
 
 
6,115
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
6,115
 
Editora Moderna, Ltda.
 
 
60,565
 
 
 
21,403
 
 
 
-
 
 
 
-
 
 
 
81,968
 
Editora Objetiva, Ltda.
 
 
12,237
 
 
 
(1,196)
 
 
 
-
 
 
 
-
 
 
 
11,041
 
Grupo Latino de Radiodifusión Chile, Ltda.
 
 
60,286
 
 
 
4,465
 
 
 
-
 
 
 
-
 
 
 
64,751
 
Grupo Media Capital, SGPS, S.A.
 
 
420,881
 
 
 
-
 
 
 
-
 
 
 
(3,796)
 
 
 
417,085
 
Propulsora Montañesa, S.A.
 
 
8,608
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
8,608
 
Sistema Radiópolis, S.A. de C.V.
 
 
28,787
 
 
 
(4,787)
 
 
 
-
 
 
 
-
 
 
 
24,000
 
Sociedad Española de Radiodifusión, S.L.
 
 
29,470
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
29,470
 
Prisa Televisión, S.A.U.
 
 
2,987,587
 
 
 
-
 
 
 
(294,327)
 
 
 
-
 
 
 
2,693,260
 
Other companies
 
 
30,541
 
 
 
(167)
 
 
 
(6,955)
 
 
 
-
 
 
 
23,419
 
Total
 
 
3,645,077
 
 
 
19,718
 
 
 
(301,282)
 
 
 
(3,796)
 
 
 
3,359,717
 

The detail, by business segment, of the goodwill relating to fully and proportionately consolidated Group companies and of the changes therein in 2012 is as follows:
 
 
 
Thousands of euros
 
 
 
Balance at
12/31/11
 
 
Translation
adjustment
 
 
Impairment
 
 
Changes in
scope of
 consolidation
 
 
Balance at
12/31/12
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Radio
 
 
157,205
 
 
 
(449)
 
 
 
(6,955)
 
 
 
-
 
 
 
149,801
 
Education
 
 
73,671
 
 
 
20,167
 
 
 
-
 
 
 
-
 
 
 
93,838
 
Audiovisual
 
 
3,408,469
 
 
 
-
 
 
 
(294,327)
 
 
 
(3,796)
 
 
 
3,110,346
 
Other
 
 
5,732
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
5,732
 
Total
 
 
3,645,077
 
 
 
19,718
 
 
 
(301,282)
 
 
 
(3,796)
 
 
 
3,359,717
 

Changes in scope of consolidation in audiovisual segment were due mainly to elimination the goodwill of Rede Teledifusora Independente, S.A belonging to Grupo Media Capital, SGPS, S.A., derived from its sale (EUR 3.8 million), and to exchange rate variations.
 
2011
 
The detail of the goodwill relating to fully and proportionately consolidated Group companies and of the changes therein in 2011 is as follows:
 
   
Thousands of euros
  
   
Balance at
12/31/10
    
Translation
adjustment
    
Impairment
    
Changes in
scope of
 consolidation
    
Balance at
12/31/11
  
                               
Antena 3 de Radio, S.A.
    
6,115
      
-
      
-
      
-
      
6,115
  
Editora Moderna, Ltda.
    
60,565
      
-
      
-
      
-
      
60,565
  
Editora Objetiva, Ltda.
    
13,543
      
(1,306)
      
-
      
-
      
12,237
  
Prisa Brand Solutions, S.L.U.
    
33,944
      
-
      
(33,944)
      
-
      
-
  
GLR Chile, Ltda.
    
65,020
      
(4,734)
      
-
      
-
      
60,286
  
Grupo Media Capital, SGPS, S.A.
    
639,881
      
-
      
(219,000)
      
-
      
420,881
  
Propulsora Montañesa, S.A.
    
8,608
      
-
      
-
      
-
      
8,608
  
Sistema Radiópolis, S.A. de C.V.
    
28,787
      
-
      
-
      
-
      
28,787
  
Sociedad Española de Radiodifusión, S.L.
    
29,470
      
-
      
-
      
-
      
29,470
  
Prisa Televisión, S.A.U.
    
2,987,587
      
-
      
-
      
-
      
2,987,587
  
Other companies
    
29,994
      
(71)
      
-
      
618
      
30,541
  
Total
    
3,903,514
      
(6,111)
      
(252,944)
      
618
      
3,645,077
  

The detail, by business segment, of the goodwill relating to fully and proportionately consolidated Group companies and of the changes therein in 2011 is as follows:
 
 
 
Thousands of euros
 
 
 
Balance at
12/31/10
 
 
Translation
adjustment
 
 
Impairment
 
 
Changes in
scope of
 consolidation
 
 
Balance at
12/31/11
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Radio
 
 
161,967
 
 
 
(4,762)
 
 
 
-
 
 
 
-
 
 
 
157,205
 
Education
 
 
75,020
 
 
 
(1,349)
 
 
 
-
 
 
 
-
 
 
 
73,671
 
Audiovisual
 
 
3,627,469
 
 
 
-
 
 
 
(219,000)
 
 
 
-
 
 
 
3,408,469
 
Other
 
 
39,058
 
 
 
-
 
 
 
(33,944)
 
 
 
618
 
 
 
5,732
 
Total
 
 
3,903,514
 
 
 
(6,111)
 
 
 
(252,944)
 
 
 
618
 
 
 
3,645,077
 

 
Impairment tests

At the end of each reporting period, or whenever there are indications of impairment, the Group tests goodwill for impairment to determine whether it has suffered any permanent loss in value that reduces its recoverable amount to below its carrying amount.

To perform the aforementioned impairment test, the goodwill is allocated to one or more cash-generating units. The recoverable amount of each cash- generating unit is the higher of value in use and the net selling price that would be obtained from the assets associated with the cash-generating unit. In the case of the main cash-generating units to which goodwill has been allocated, their recoverable amount is their value in use.
 
Value in use was calculated on the basis of the estimated future cash flows based on the business plans most recently approved by management. These business plans include the best estimates available of income and costs of the cash-generating units using industry projections and future expectations.

These projections cover the following five years and include a residual value that is appropriate for each business, applying a constant expected growth rate ranging from 0% to 2.5% depending on the business analyzed.

In order to calculate the present value of these flows, they are discounted at a rate that reflects the weighted average cost of capital employed adjusted for the country risk and business risk corresponding to each cash-generating unit. Therefore, in 2012 the rates used ranged from 7.2% to 15.4% depending on the business being analyzed. The range used for the most relevant impairment tests was from 8.0% to 10.0%.
 
Prisa Televisión-
 
According to 5-year forecasts, management has based its value-in-use calculations for Prisa Televisión’s audiovisual business on the following:

Variations in the number of subscribers and ARPU (average revenue per user) – The combination of these variables make up the bulk of revenues from Prisa TV’s business (84.6% of the total in 2012). In its assumptions, management factored in any increase in the numbers of subscribers of the offering that DTS is distributing by satellite and internet as a result of not only a recovery in the number of new subscribers, but also a decrease in cancellation rates. In addition, DTS signed content distribution agreements in 2012 with the leading telecommunications operators, allowing it to raise its growth forecasts for other platforms.
 
Based on the marketing of new pay channels (e.g. soccer, bullfighting), together with the offering of a new, more complete television service with high-definition channels and 3D broadcasts, Prisa TV is projecting growth in its revenue.
 
Increase in programming costs – In its projections, management has estimated the future consequences of commitments acquired with service and content providers, assuming where applicable, that those services will continue to be provided and that it will have access to the same high-quality content as now. In this sense, it will take some time to absorb the initial increase in costs related to the change in the soccer model for the next seasons. Estimates operating costs reflect streamlining plans begun in prior years, as well as growth plans that should strengthen and transform certain business areas.
 
Media Capital-
 
The main variables used by management to determine the value in use of Media Capital’s audiovisual business were as follows:
 
Evolution of the audience share and advertising share- management predicts growth, albeit small, in both audience share and advertising share in the future projections of TVI, Media Capital’s free-to- air TV channel and the current market leader, which has maintained its market share in recent years.
 
Variations in the advertising market – management has adjusted its projections for the advertising market to the new macroeconomic environment in Portugal. Consequently, it has estimated a lower market base following the drop in advertising in recent years and modest growth from 2014, in line with the trends highlighted in outside studies.
 
 
Results of the impairment tests-
 
- Prisa Televisión
 
In 2012, operating indicators for Prisa Televisión’s audiovisual business were affected by a number of factors, mainly the change in the model for marketing soccer for the coming seasons. The new agreement entails high quality pay TV content at the expense of free-to-air broadcasts of soccer matches, which in the medium term should boost penetration of the pay TV service in Spain.

However, it will take some time to absorb the initial increase in costs related to the new soccer model. These incremental costs will be offset by a combination of the wholesale of soccer broadcasting rights to other pay TV operators and a gradual increase in the customer base.

Meanwhile, the economic downturn and waning consumption in Spain, coupled with the hike in the VAT for pay TV from 8% to 21%, have hurt subscriber numbers, meaning it will take longer to reach the subscriber base targets implied in the profitability plan for the new soccer model.

As a result, an impairment loss of EUR 294 million.

 
-
Media Capital

In 2011, it is clear that the economic situation in Portugal has not only brought about a rise in the discount rate, owing to the factoring in of the country risk in that rate, but it has also affected trends in the advertising and other markets and growth prospects of businesses located in the country. Consequently, an impairment loss of EUR 219 million was recognized on the accompanying consolidated income statement. At December 31, 2012, the carrying amount of Media Capital’s goodwill was similar to its value in use.

In 2010, an impairment loss of EUR 50 million was recognized on the accompanying consolidated income statement for Media Capital’s goodwill. This impairment was mainly due to the increase in the applicable discount rate resulting from the increase in country risk for investments in Portugal and the decision to cease video distribution activity.

 
-
Other impairment tests

In 2012, owing to the struggles of the music and record industry in general, an impairment of EUR 5,955 thousand was recognized on RLM, S.A. and Merchandising On Stage, S.L.’s goodwill in the accompanying consolidated income statement.

In 2011, due to new management model of advertising commercialization and the general difficulties in the advertising market, an impairment loss of EUR 33,944 thousand was recognized on the accompanying consolidated income statement for Prisa Brand Solutions’ goodwill.

According to the estimates and projections available to the Group’s directors, the expected future cash flows attributable to the cash-generating units or groups of cash-generating units to which goodwill is allocated indicate that the net value of each goodwill allocated at December 31, 2012, may be recovered.

Sensitivity to changes in key assumptions-
 
 
-
Prisa Televisión

Due to the impairment of goodwill recognized during 2012, the carrying amount is quite similar to value in use.
 
In case objectives underlying the business plan elaborated by the managers were to take place with a delay of two years, considered in addition to the delay already included in the business plan that lead to register the impairment this year, impairment would increase by EUR 127 million.
 
Additionally, an adverse change in key valuation assumptions individually considered might lead to recognition of impairment at a later date. Specifically, a 5.0% decrease in ARPU for the following five years would generate an additional impairment of goodwill of approximately EUR 144 million. For a 5.0% decrease in subscriber numbers for the following five years, impairment would increase by EUR 99 million. A 0.5% increase in the discount rate would lead to additional impairment of EUR 258 million.
 
 
-
Media Capital
 
In order to determine the sensitivity of value in use calculations to changes in the key assumptions, an analysis was carried out on the following changes in the key assumptions without producing additional impairment losses on the goodwill allocated:
 
 
F-32
 
 
-
Increase of 0.5% in the discount rate.
 
-
Decrease of 0.5% in the expected growth rate from the fifth year.
 
-
Decrease of 1% in advertising share.
 
(7)
INTANGIBLE ASSETS

2012

The changes in 2012 in “Intangible assets” in the consolidated balance sheet were as follows:
 
 
 
Thousands of euros
 
 
 
Balance
at
12/31/11
 
 
Monetary
adjustment
 
 
Translation
adjustment
 
 
Changes in
scope of
consolidation
 
 
Additions
 
 
Disposals
 
 
Transfers
 
 
Balance
at
12/31/12
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Computer software
 
 
222,570
 
 
 
262
 
 
 
(453)
 
 
 
90
 
 
 
32,031
 
 
 
(7,461)
 
 
 
9,606
 
 
 
256,645
 
Prototypes
 
 
223,276
 
 
 
866
 
 
 
(8,864)
 
 
 
-
 
 
 
38,919
 
 
 
(17,505)
 
 
 
(25,830)
 
 
 
210,862
 
New subscribers - Installation and connection
 
 
109,528
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
41,749
 
 
 
(45,814)
 
 
 
-
 
 
 
105,463
 
Advances on copyrights
 
 
71,024
 
 
 
(9)
 
 
 
(3,575)
 
 
 
-
 
 
 
8,432
 
 
 
(1,592)
 
 
 
(160)
 
 
 
74,120
 
Audiovisual rights
 
 
52,792
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
250
 
 
 
(3,897)
 
 
 
27,668
 
 
 
76,813
 
Other intangible assets
 
 
121,836
 
 
 
496
 
 
 
1,444
 
 
 
(101)
 
 
 
1,115
 
 
 
(4,087)
 
 
 
(9,644)
 
 
 
111,059
 
Total cost
 
 
801,026
 
 
 
1,615
 
 
 
(11,448)
 
 
 
(11)
 
 
 
122,496
 
 
 
(80,356)
 
 
 
1,640
 
 
 
834,962
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated depreciation:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Computer software
 
 
(155,136)
  
 
 
(272)
 
 
 
261
 
 
 
(63)
 
 
 
(24,106)
 
 
 
7,318
 
 
 
(309)
 
 
 
(172,307)
 
Prototypes
 
 
(153,540)
  
 
 
(764)
 
 
 
7,746
 
 
 
-
 
 
 
(34,427)
 
 
 
32,609
 
 
 
-
 
 
 
(148,376)
 
Advances on copyrights
 
 
(45,302)
  
 
 
-
 
 
 
516
 
 
 
-
 
 
 
(4,855)
 
 
 
1,342
 
 
 
559
 
 
 
(47,740)
 
Audiovisual rights
 
 
(40,840)
  
 
 
-
 
 
 
3
 
 
 
-
 
 
 
(3,960)
 
 
 
(12,877)
 
 
 
-
 
 
 
(57,674)
 
Other intangible assets
 
 
(45,534)
  
 
 
(371)
 
 
 
(1,111)
 
 
 
171
 
 
 
(49,599)
 
 
 
49,432
 
 
 
662
 
 
 
(46,350)
 
Total accumulated depreciation
 
 
(440,352)
  
 
 
(1,407)
 
 
 
7,415
 
 
 
108
 
 
 
(116,947)
 
 
 
77,824
 
 
 
912
 
 
 
(472,447)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Impairment losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Computer software
    
-
      
-
              
-
      
(3,356)
      
-
      
(17)
      
(3,373)
  
Prototypes
 
 
(13,363)
  
 
 
-
 
 
 
5
 
 
 
-
 
 
 
(54)
 
 
 
50
 
 
 
12,833
 
 
 
(529)
 
Advances on copyrights
 
 
(16,051)
  
 
 
-
 
 
 
184
 
 
 
-
 
 
 
(7,328)
 
 
 
1,017
 
 
 
50
 
 
 
(22,128)
 
Other intangible assets
      
-
    
-
      
-
      
-
      
(4,003)
      
1,255
      
(13,505)
      
(16,253)
  
Total impairment losses
 
 
(29,414)
  
 
 
-
 
 
 
189
 
 
 
-
 
 
 
(14,741)
 
 
 
2,322
 
 
 
(639)
 
 
 
(42,283)
 
Intangible assets, net
 
 
331,260
 
 
 
208
 
 
 
(3,844)
 
 
 
97
 
 
 
(9,192)
 
 
 
(210)
 
 
 
1,913
 
 
 
320,232
 

Additions-
 
The most significant additions in 2012 were as follows:
 
 
-
“New subscribers – Installation and connection” amounting to EUR 41,749 thousand which included the costs incurred by Prisa Televisión Group in connection with the installation of equipment and the connection of new subscribers to digital satellite pay TV.
 
 
-
“Prototypes,” amounting to EUR 38,919 thousand, relating to new prototypes for the publication of books at Grupo Santillana de Ediciones, S.L.
 
 
-
“Computer software,” amounting to EUR 32,031 thousand, relating to the computer software acquired and/or developed by third parties for Group companies.
 
 
 
-
“Advances on copyrights,” amounting to EUR 8,432 thousand, relating mainly to the amounts paid to authors by Grupo Santillana de Ediciones, S.L. for the acquisition of book publishing rights.
 
Disposals-
 
Grupo Santillana de Ediciones, S.L. derecognized EUR 17,294 thousand of fully depreciated prototypes.
 
 “Other intangible assets” includes administrative concessions amounting to EUR 48,882 thousand, which are considered to be intangible assets with indefinite useful lives because it is highly probable that they will be renewed and the related costs are not material.
 
At the end of each reporting period, the residual useful life of these concessions is analyzed in order to ensure that it continues to be indefinite; if this is not the case, the concessions are amortized.
 
There are no restrictions on holding title to the intangible assets other than those indicated in Note 12.

There are no future intangible asset purchase commitments other than those indicated in Note 27.
2011

The changes in 2011 in “Intangible assets” in the consolidated balance sheet were as follows:
 
 
 
Thousands of euros
 
 
 
Balance
at
12/31/10
 
 
Monetary
adjustment
 
 
Translation
adjustment
 
 
Changes
in scope of
consolidation
 
 
Additions
 
 
Disposals
 
 
Transfers
 
 
Balance
at
12/31/11
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Computer software
 
 
206,105
 
 
 
337
 
 
 
(564)
 
 
 
1,559
 
 
 
32,872
 
 
 
(18,182)
 
 
 
443
 
 
 
222,570
 
Prototypes
 
 
195,093
 
 
 
1,388
 
 
 
(8,434)
 
 
 
-
 
 
 
39,680
 
 
 
(3,972)
 
 
 
(479)
 
 
 
223,276
 
New subscribers - Installation and connection
 
 
103,837
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
47,262
 
 
 
(41,571)
 
 
 
-
 
 
 
109,528
 
Advances on copyrights
 
 
66,827
 
 
 
(2)
 
 
 
(2,722)
 
 
 
-
 
 
 
8,137
 
 
 
(640)
 
 
 
(576)
 
 
 
71,024
 
Audiovisual rights
 
 
136,003
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
750
 
 
 
(29,368)
 
 
 
(54,593)
 
 
 
52,792
 
Other intangible assets
 
 
110,983
 
 
 
777
 
 
 
(1,168)
 
 
 
(1,649)
 
 
 
12,324
 
 
 
(203)
 
 
 
772
 
 
 
121,836
 
Total cost
 
 
818,848
 
 
 
2,500
 
 
 
(12,888)
 
 
 
(90)
 
 
 
141,025
 
 
 
(93,936)
 
 
 
(54,433)
 
 
 
801,026
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated depreciation:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Computer software
 
 
(151,470
)
 
 
(356)
 
 
 
303
 
 
 
295
 
 
 
(19,903)
 
 
 
16,006
 
 
 
(11)
 
 
 
(155,136)
 
Prototypes
 
 
(131,223
)
 
 
(1,076)
 
 
 
5,688
 
 
 
-
 
 
 
(30,202)
 
 
 
2,915
 
 
 
358
 
 
 
(153,540)
 
Advances on copyrights
 
 
(40,466
)
 
 
-
 
 
 
716
 
 
 
-
 
 
 
(5,965)
 
 
 
(15)
 
 
 
428
 
 
 
(45,302)
 
Audiovisual rights
 
 
(66,721
)
 
 
-
 
 
 
-
 
 
 
-
 
 
 
(3,497)
 
 
 
29,378
 
 
 
-
 
 
 
(40,840)
 
Other intangible assets
 
 
(40,500
)
 
 
(529)
 
 
 
946
 
 
 
1,665
 
 
 
(49,556)
 
 
 
41,778
 
 
 
662
 
 
 
(45,534)
 
Total accumulated depreciation
 
 
(430,380
)
 
 
(1,961)
 
 
 
7,653
 
 
 
1,960
 
 
 
(109,123)
 
 
 
90,062
 
 
 
1,437
 
 
 
(440,352)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Impairment losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Prototypes
 
 
(13,405
)
 
 
(4)
 
 
 
(1)
 
 
 
-
 
 
 
(750)
 
 
 
755
 
 
 
42
 
 
 
(13,363)
 
Advances on copyrights
 
 
(14,551
)
 
 
-
 
 
 
135
 
 
 
-
 
 
 
(2,441)
 
 
 
824
 
 
 
(18)
 
 
 
(16,051)
 
Total impairment losses
 
 
(27,956
)
 
 
(4)
 
 
 
134
 
 
 
-
 
 
 
(3,191)
 
 
 
1,579
 
 
 
24
 
 
 
(29,414)
 
Intangible assets, net
 
 
360,512
 
 
 
535
 
 
 
(5,101)
 
 
 
1,870
 
 
 
28,711
 
 
 
(2,295)
 
 
 
(52,972)
 
 
 
331,260
 
 
Additions-

The most significant additions in 2011 were as follows:

 
-
“New subscribers – Installation and connection” amounting to EUR 47,262 thousand which included the costs incurred by Prisa Televisión Group in connection with the installation of equipment and the connection of new subscribers to digital satellite pay TV.
 
 
 
-
“Prototypes,” amounting to EUR 39,680 thousand, relating to new prototypes for the publication of books at Grupo Santillana de Ediciones, S.L.

 
-
“Computer software,” amounting to EUR 32,872 thousand, relating to the computer software acquired and/or developed by third parties for Group companies.

 
-
“Advances on copyrights,” amounting to EUR 8,137 thousand, relating mainly to the amounts paid to authors by Grupo Santillana de Ediciones, S.L. for the acquisition of book publishing rights.

Disposals-

In 2011, Ediciones El País, S.L. derecognized fully amortized computer applications and licenses from the “Computer software” account in the amount of EUR 14,696 thousand.

In addition, Grupo Prisa Televisión, S.A.U. derecognized the fully amortized sports rights from “Audiovisual rights,” in the amount of EUR 29,368 thousand.

Transfers-

“Audiovisual rights” have been transferred to inventories in the amount of EUR 54,593 thousand (see Note 10).

“Other intangible assets” includes administrative concessions amounting to EUR 48,076 thousand, which are considered to be intangible assets with indefinite useful lives because it is highly probable that they will be renewed and the related costs are not material.

At the end of each reporting period, the residual useful life of these concessions is analyzed in order to ensure that they continue to be indefinite; if this is not the case, the concessions are amortized.

There are no restrictions on holding title to the intangible assets other than those indicated in Note 12.

There are no future intangible asset purchase commitments other than those indicated in Note 27.

At December 31, 2012, the Prisa Group’s assets included fully amortized intangible assets amounting to EUR 223,966 thousand (December 31, 2011: EUR 158,466 thousand).
 
(8)
NON- CURRENT FINANCIAL ASSETS

2012

Non-current financial assets

The changes in “Non-current financial assets” in the consolidated balance sheet in 2012, by type of transaction, were as follows:

 
 
Thousands of euros
 
 
 
Balance at
12/31/11
 
 
Translation/
monetary
adjustment
 
 
Changes
in scope of
consolidation
 
 
Additions/
allowances
 
 
Disposals/
Transfers
 
 
Balance at
12/31/12
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans and receivables
 
 
84,733
 
 
 
382
 
 
 
-
 
 
 
24,849
 
 
 
(68,828)
 
 
 
41,136
 
Loans to associates
 
 
144,493
 
 
 
(18)
 
 
 
-
 
 
 
23,566
 
 
 
(149,258)
 
 
 
18,783
 
Long-term loans to third parties
 
 
30,778
 
 
 
-
 
 
 
-
 
 
 
1,283
 
 
 
(12,253)
 
 
 
19,808
 
Other non-current financial assets
 
 
5,305
 
 
 
400
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
5,705
 
Allowance
 
 
(95,843)
  
 
 
-
 
 
 
-
 
 
 
-
 
 
 
92,683
 
 
 
(3,160)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Held-to-maturity investments
 
 
20,680
 
 
 
(24)
 
 
 
6
 
 
 
2,123
 
 
 
(1,666)
 
 
 
21,119
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Available-for-sale financial assets
 
 
16,275
 
 
 
8
 
 
 
16
 
 
 
483
 
 
 
(14,398)
 
 
 
2,384
 
Non-controlling equity interests
 
 
40,608
 
 
 
31
 
 
 
-
 
 
 
459
 
 
 
(32,287)
 
 
 
8,811
 
Other non-current financial assets
 
 
33
 
 
 
-
 
 
 
16
 
 
 
22
 
 
 
(9)
 
 
 
62
 
Allowance
 
 
(24,366)
  
 
 
(23)
 
 
 
-
 
 
 
2
 
 
 
17,898
 
 
 
(6,489)
 
Total
 
 
121,688
 
 
 
366
 
 
 
22
 
 
 
27,455
 
 
 
(84,892)
 
 
 
64,639
 


Disposals/transfers-
 
The movement in “Loans and receivables” was mainly due to the elimination the loans granted to Dédalo Grupo Gráfico, S.L, net of provisions, amounting to EUR 44,110 thousand, as the group is being fully consolidated from April 1, 2012 (see Note 3).
 
2011

Non-current financial assets

The changes in “Non-current financial assets” in the consolidated balance sheet in 2011, by type of transaction, were as follows:

 
 
Thousands of euros
 
 
 
Balance at
12/31/10
 
 
Translation/
monetary
adjustment
 
 
Changes
in scope of
consolidation
 
 
Additions/
allowances
 
 
Disposals/
Transfers
 
 
Balance at
12/31/11
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans and receivables
 
 
31,052
 
 
 
217
 
 
 
-
 
 
 
49,493
 
 
 
3,971
 
 
 
84,733
 
Loans to associates
 
 
100,830
 
 
 
13
 
 
 
-
 
 
 
38,692
 
 
 
4,958
 
 
 
144,493
 
Long-term loans to third parties
 
 
18,768
 
 
 
1
 
 
 
-
 
 
 
10,879
 
 
 
1,130
 
 
 
30,778
 
Other non-current financial assets
 
 
7,240
 
 
 
203
 
 
 
-
 
 
 
-
 
 
 
(2,138)
 
 
 
5,305
 
Allowance
 
 
(95,786
)
 
 
-
 
 
 
-
 
 
 
(78)
 
 
 
21
 
 
 
(95,843)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Held-to-maturity investments
 
 
19,568
 
 
 
(115)
 
 
 
1
 
 
 
1,367
 
 
 
(141)
 
 
 
20,680
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Available-for-sale financial assets
 
 
19,991
 
 
 
5
 
 
 
-
 
 
 
(3,963)
 
 
 
242
 
 
 
16,275
 
Non-controlling equity interests
 
 
86,697
 
 
 
16
 
 
 
-
 
 
 
5
 
 
 
(46,110)
 
 
 
40,608
 
Other non-current financial assets
 
 
-
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
33
 
 
 
33
 
Allowance
 
 
(66,706
)
 
 
(11)
 
 
 
-
 
 
 
(3,968)
 
 
 
46,319
 
 
 
(24,366)
 
Total
 
 
70,611
 
 
 
107
 
 
 
1
 
 
 
46,897
 
 
 
4,072
 
 
 
121,688
 

Additions/allowances-

The movement in “Loans and receivables- long term loans to associates” was due mainly to the increase in loans granted to Dédalo Grupo Gráfico, S.L.

Additions in “Loans and receivables- long term loans to third parties” included a loan to Le Monde Libre amounting to EUR 8,384 thousands.

Disposals/transfers-

In September 2011, the 15.38% stake in Iberbanda, S.A. was sold, giving rise to the derecognition of this ownership interest from “Non-controlling equity interests” and of the corresponding allowance of EUR 45,394 thousand, with a neutral effect on “Non-current financial assets.”

The carrying amount of the financial assets does not vary significantly from their fair value.
 

(9)
INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

2012

The changes in 2012 in “Investments accounted for using the equity method” in the consolidated balance sheet were as follows:
 
 
 
Thousands of euros
 
 
 
Balance at
12/31/11
 
 
Additions/
Chanes in
scope of
consolidation
 
 
Share of
results/
Impairment
losses
 
 
Transfers
 
 
Disposals
 
 
Balance at
12/31/12
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investments accounted for using the equity method:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dédalo Grupo Gráfico, S.L. and subsidiaries
 
 
-
 
 
 
905
 
 
 
(905)
 
 
 
-
 
 
 
-
 
 
 
-
 
Distributors (*)
 
 
11,047
 
 
 
2
 
 
 
94
 
 
 
2,898
 
 
 
(611)
 
 
 
13,430
 
Mediaset España Comunicación, S.A.
 
 
586,379
 
 
 
4,342
 
 
 
7,829
 
 
 
-
 
 
 
(9,758)
 
 
 
588,792
 
V-me Media, Inc.
 
 
-
 
 
 
-
 
 
 
(4,270)
 
 
 
4,270
 
 
 
-
 
 
 
-
 
Le Monde Libre Société en Commandite Simple
      
-
    
14,388
      
(8,194)
        
-
    
-
      
6,194
  
Other companies
 
 
6,656
 
 
 
195
 
 
 
(829)
 
 
 
(2,224)
 
 
 
-
 
 
 
3,798
 
Total
 
 
604,082
 
 
 
19,832
 
 
 
(6,275)
 
 
 
4,944
 
 
 
(10,369)
 
 
 
612,214
 
(*) Val Disme, S.L., Cirpress, S.L., Beralán, S.L., Dima Distribución Integral, S.L., Distrimedios, S.L., Distribuidora de Publicaciones Boreal, S.L., Marina Bcn Distribucions, S.L., Distribuciones Papiro S.L. and subsidiaries.

The Group has valued its stake in Mediaset España Comunicación, S.A. considering its value in use, according to future projections available. As a result of this analysis, no impairment has to be registered.
 
2011

The changes in 2011 in “Investments accounted for using the equity method” in the consolidated balance sheet were as follows:
 
 
 
Thousands of euros
 
 
 
Balance at
12/31/10
 
 
Additions
 
 
Share of
results/
Impairment
losses
 
 
Transfers
 
 
Disposals
 
 
Balance at
12/31/11
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investments accounted for using the equity method:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dédalo Grupo Gráfico, S.L. and subsidiaries
 
 
-
 
 
 
-
 
 
 
(12,246)
 
 
 
12,246
 
 
 
-
 
 
 
-
 
Distributors (*)
 
 
10,421
 
 
 
491
 
 
 
672
 
 
 
1,803
 
 
 
(2,340)
 
 
 
11,047
 
Promotora de Emisoras de Televisión, S.A.
 
 
399
 
 
 
-
 
 
 
(6)
 
 
 
194
 
 
 
(587)
 
 
 
-
 
Prisa Televisión, S.A.U. and subsidiaries
 
 
582,214
 
 
 
-
 
 
 
20,040
 
 
 
-
 
 
 
(15,875)
 
 
 
586,379
 
V-me Media, Inc.
 
 
15,854
 
 
 
7,039
 
 
 
(27,019)
 
 
 
4,126
 
 
 
-
 
 
 
-
 
Other companies
 
 
4,654
 
 
 
2,432
 
 
 
(1,141)
 
 
 
752
 
 
 
(41)
 
 
 
6,656
 
Total
 
 
613,542
 
 
 
9,962
 
 
 
(19,700)
 
 
 
19,121
 
 
 
(18,843)
 
 
 
604,082
 
(*) Val Disme, S.L., Cirpress, S.L., Beralán, S.L., Dima Distribución Integral, S.L., Distrimedios, S.L., Distribuidora de Publicaciones Boreal, S.L., Marina Bcn Distribucions, S.L., Distribuciones Papiro S.L. and subsidiaries.

In 2011 the Group has written off its investment in V-me Media Inc., (EUR 21,291 thousand), as the value in use of the investment, calculated considering the estimated projections for the following five years and a residual value appropriated for the business, is not expected to cover it.
 
At December 31, 2012 and at December 31, 2011, the Group had ownership interests in companies accounted for using the equity method, the net negative value of which is recognized under “Long-term provisions” (see Note 14).
 
 
(10) 
INVENTORIES

The detail of “Inventories,” in thousands of euros, at December 31, 2012 and 2011 is as follows:
 
 
 
12/31/12
 
 
12/31/11
 
 
 
Cost
 
 
Write-downs
 
 
Carrying
amount
 
 
Cost
 
 
Write-downs
 
 
Carrying
amount
 
Goods held for resale
 
 
26,693
 
 
 
(8,646)
 
 
 
18,047
 
 
 
3,820
 
 
 
(1,917)
 
 
 
1,903
 
Finished goods
 
 
269,376
 
 
 
(35,133)
 
 
 
234,243
 
 
 
289,379
 
 
 
(34,654)
 
 
 
254,725
 
Work in progress
 
 
3,992
 
 
 
-
 
 
 
3,992
 
 
 
2,005
 
 
 
-
 
 
 
2,005
 
Raw materials and other supplies
 
 
15,832
 
 
 
(1,805)
 
 
 
14,027
 
 
 
17,862
 
 
 
(1,092)
 
 
 
16,770
 
Total
 
 
315,893
 
 
 
(45,584)
 
 
 
270,309
 
 
 
313,066
 
 
 
(37,663)
 
 
 
275,403
 

“Finished goods” includes publications amounting to a net EUR 62,208 thousand (2011: EUR 81,442 thousand) and audiovisual rights amounting to a net EUR 172,035 thousand (2011: EUR 173,283 thousand).
 
“Raw materials and other supplies” includes mainly paper and printing machinery spare parts.
 
(11) 
EQUITY
 
a) 
Share capital

On January 3, 2012, Prisa executed the capital increase corresponding to Otnas Inversiones, S.L.’s exercise of 75,000,000 warrants. Otnas is a company indirectly owned by Rucandio, S.A.- through Timón, S.A., Asgard Inversiones, S.L.U., Promotora de Publicaciones, S.L. and the Shareholder Contract of Prisa-, by Berggruen Acquisition Holdings and by Martin Franklin .
 
The exercise of the 75,000,000 warrants gave rise to the subscription of the same number of newly issued Class A ordinary shares, at a strike price of EUR 2 each, increasing the Company’s capital by EUR 150,000 thousand.
 
On June 30, 2012, shareholders at the General Meeting of Prisa agreed to amend the aforementioned dividend payment system, whereby the Company may pay cash, Class A shares (at a fixed rate of EUR 1 per share) or a combination of both.  In September 2012, Prisa raised capital by issuing 64,097,105 Class A shares to pay the minimum annual dividend of Class B shares for 2011.  In December 2012, Prisa raised capital by issuing 26,000,823 Class A shares for payment of the minimum annual dividend of Class B shares for 2012 up to the moment of the conversion.
 
In addition, during 2012, due to the capital increase against cash contributions with recognition of pre-emptive subscription rights through warrants, which was approved by Prisa's shareholders in general meeting on November 27, 2010, Prisa executed the public deed for the capital increase corresponding to the warrants’ 13 to 24 exercise windows. A total of 10,109 warrants were exercised, with a total of 10,109 new Class A ordinary shares were issued at the price of EUR 2 each.
 
Also, in 2012, 47,942,019 Class B non-voting shares were converted into Class A ordinary shares.
 
Prisa’s share capital, at December 31, 2012 after such increases and conversions of shares totals EUR 99,132 thousand, represented by 651,054,490 Class A ordinary shares and 340,268,409 Class B non-voting shares, with a par value of EUR 0.1 each.
 
Share capital is fully subscribed and paid in.
 
 
At year-end 2012, according to information published by the CNMV, the holders of a significant number of Prisa shares are the following:
 
   
Number of voting rights
        
   
Direct
    
Indirect
    
% of voting
rights
  
Rucandio, S.A. (*)
    
-
      
221,591,841
      
34.036
  
BH Stores IV, B.V.
    
22,571,198
      
-
      
3.467
  
BNP Paribas, Societe Anonyme
    
15,143,403
      
-
      
2.326
  
Inmobiliaria Carso, S.A. de CV
    
8,665,000
      
  6,030,000
      
2.257
  
UBS AG
    
25,872,175
      
  4,712
      
3.975
  

(*) Rucandio, S.A.’s indirect ownership interest is instrumented through the following direct holdings:
 
 
·
Promotora de Publicaciones, S.L., holder of 77,248,921 voting rights, representing 11.865% of the subscribed share capital with voting rights.
 
·
Timón, S.A., holder of 7,928,140 voting rights, representing 1.218% of the subscribed share capital with voting rights.
 
·
Asgard Inversiones, S.L.U., holder of 17,487,164 voting rights, representing 2.686% of the subscribed share capital with voting rights.
 
·
Otnas Inversiones, S.L. holder of 93,000,000 voting rights, representing 14.285% of the subscribed share capital with voting rights.
 
·
Rucandio Inversiones SICAV, S.A., holder of 339,094 voting rights, representing 0.052% of the subscribed share capital with voting rights.

In addition, Rucandio, S.A.’s declared indirect stake includes 25,588,522 voting rights of the Company, linked by the Shareholder Contract of Prisa signed on December 22, 2011 (in which Rucandio indirectly holds a voting majority), the terms of which have been notified to the CNMV.
 
b) 
Share premium

The Consolidated Text of the Corporate Enterprises Act expressly permits the use of the share premium account balance to increase capital with a charge to reserves and does not establish any specific restrictions as to its use.
 
The share premium includes the amount exceeding the par value of the shares issued. It also includes the amount corresponding to the obligation to pay a minimum annual dividend on the Class B shares, as well as value adjustments as a result of the Company’s potential obligation to deliver additional shares as part of the mandatory conversion of the Class B shares (see Notes 12 and 13). This share premium at December 31, 2012, amounted to EUR 803,973 thousand (December 31, 2011: EUR 437,879 thousand).
 
The share premium corresponding to the Class B shares issued in 2010 in accordance with the commitments assumed in the issue of the shares is non-distributable so as to cover future related commitments stemming from this class of shares (see Note 4g), until they have been converted into Class A shares and the minimum associated dividend of the Class B shares has been paid in full. This non-distributable share premium at December 31, 2012, amounted to EUR 277,108 thousand (December 31, 2011: EUR 125,131 thousand).
 
c) 
Issue of financial instrument

A resolution was passed at the Ordinary Shareholders Meeting of Prisa held on  June 30, 2012 to issue bonds mandatorily convertible into newly-issued Class A common shares with exclusion of pre-emption rights at a fixed conversion rate (1 share per EUR 1.03). This issue was carried out in July and entailed two tranches: Tranche A for EUR 334 million aimed at creditor banks via the cancellation of financial debt and Tranche B for EUR 100 million to be paid in cash by Telefónica, S.A.
 
This is treated as a compound financial instrument with a liability component, recognized at the present value of the guaranteed coupon under “Financial liabilities” in the accompanying consolidated balance sheet (see Note 13), and an equity component, with the difference between the amount of the bond and the value assigned to the liability component recognized under “Other reserves” in the accompanying consolidated balance sheet.
 
 
d) 
Reserves

Revaluation reserve 1983-

Pursuant to the legislation on the revaluation of property, plant and equipment and intangible assets published in 1983, the cost and accumulated depreciation and amortization of these assets were increased by a net amount of EUR 3,289 thousand, recognized under “Revaluation Reserve 1983”. This reserve is unrestricted.

Revaluation reserve Royal Decree-Law 7/1996-

Under Royal Decree 2607/1996, of December 20, approving the regulations for asset revaluations pursuant to Royal Decree-Law 7/1996, of June 7, the surpluses arising from the revaluations must be charged to “Revaluation reserve Royal Decree-Law 7/1996.” The balance of this account amounts to EUR 10,650 thousand and has been unrestricted since January 1, 2007, except for the portion of the assets not yet depreciated.

Legal reserve-

Under the Consolidated text of the Corporate Enterprises Act, 10% of net profit for each year must be transferred to the legal reserve until the balance of this reserve reaches at least 20% of the share capital.

The legal reserve can be used to increase capital by the amount exceeding 10% of the new capital after the increase.

Except as indicated above, until the legal reserve exceeds 20% of share capital, it can only be used to offset losses, provided that sufficient other reserves are not available for this purpose.

Reserve for treasury shares-

Section 142 of the Consolidated text of the Corporate Enterprises Act states that when a company acquires treasury shares, it must record on the liability side of the balance sheet a restricted reserve equal to the carrying amount of the treasury shares. This reserve must be maintained until the shares are sold or cancelled.

Bylaw-stipulated reserves-

Under Article 32 of the Parent’s bylaws, at least 10% of the profit after tax must be transferred to a reserve each year until the balance of this reserve reaches at least 20% and does not exceed 50% of the paid-in share capital.

e) 
Reserves for first-time application of IFRS

As a result of the first-time application of IFRSs to the Group’s consolidated financial statements, certain assets and liabilities arose at January 1, 2004, the effect on equity of which is included in this account.
 
 
f) 
Accumulated profit – From prior years

The breakdown, by company, of “Accumulated profit – From prior years” at December 31, 2012 and 2011, is as follows:

 
 
Thousands of euros
 
 
 
12/31/12
 
 
12/31/11
 
 
 
 
 
 
 
 
Audiovisual
 
 
389,929
 
 
 
371,004
 
Education
 
 
231,915
 
 
 
285,259
 
Radio
 
 
183,713
 
 
 
201,323
 
Radio in Spain
 
 
158,627
 
 
 
183,908
 
International radio
 
 
25,086
 
 
 
17,415
 
Press
 
 
47,959
 
 
 
39,155
 
País
 
 
39,685
 
 
 
42,164
 
Spanish press
 
 
8,238
 
 
 
(3,009)
  
Other
    
36
        
-
Other
 
 
174,833
 
 
 
23,987
 
Prisa
 
 
651,036
 
 
 
162,024
 
Other
 
 
(476,203)
 
 
 
(138,037)
  
Total accumulated profit of fully consolidated companies
 
 
1,028,349
 
 
 
920,728
 
Radio
 
 
(2,947)
 
 
 
(2,857)
  
International radio
 
 
(2,947)
 
 
 
(2,857)
  
Audiovisual
 
 
(7,286)
 
 
 
(2,562)
 
Other
 
 
6,500
 
 
 
(83,809)
  
Total accumulated loss of companies accounted for using the equity method
 
 
(3,733)
 
 
 
(89,228)
  
Total accumulated profit from prior years
 
 
1,024,616
 
 
 
831,500
 

Accumulated profit for the audiovisual segment includes an after-tax capital gain of EUR 453 million generated by the sale of 44% of DTS, Distribuidora de Televisión Digital, S.A. on December 28, 2010.

Accumulated product in the education segment included capital gains of EUR 168 million generated by the sale of 25% of Grupo Santillana de Ediciones, S.L.’s share capital to DLJSAP, which was adjusted by the initial measurement of the financial liability generated by the obligation to pay a minimum annual dividend of USD 25.8 million to the holders of the preferred shares delivered to DLJSAP (see Note 13).
 
g) 
Treasury shares

The changes in “Treasury shares” in 2012 and 2011 were as follows:
 
 
 
Thousands of euros
 
 
 
2012
 
 
2011
 
 
Number of
shares
 
 
Amount
 
 
Number of
shares
 
 
Amount
 
At beginning of year
 
 
2,879,503
 
 
 
2,505
 
 
 
3,150,000
 
 
 
4,804
 
Purchases
 
 
4,046,689
 
 
 
2,515
 
 
 
1,928,312
 
 
 
2,802
 
Deliveries
 
 
(3,824,957)
 
 
 
(3,786)
 
 
 
(2,198,809)
 
 
 
(3,425)
 
Reserve for treasury shares
 
 
-
 
 
 
(507)
 
 
 
-
 
 
 
(956)
 
At end of year
 
 
3,101,235
 
 
 
727
 
 
 
2,879,503
 
 
 
2,505
 

At December 31, 2012, Promotora de Informaciones, S.A. held a total of 3,101,235 treasury shares, representing 0.31% of its share capital.
 
Treasury shares are valued at market price at December 31, 2012 (0.235 euros per share). The average acquisition price stood at 0.762 euros per share.
 
Deliveries of shares are detailed in note 16 of this Annual Report.
 
At December 31, 2012 and at December 31, 2011, the Company did not hold any shares on loan.
 
 
h) 
Exchange differences
 
Exchange gains at December 31, 2012, amounted to EUR 17,805 thousand (December 31, 2011: exchange gains of EUR 9,755 thousand). Exchange gains generated at Grupo Santillana de Ediciones, S.L. companies in Brazil and Prisa Radio, S.L. companies in Colombia are offset with exchange losses at companies in US and Mexico.
 
i) 
Translation differences

The detail, by company, of the translation differences in 2012 and 2011 is as follows:

 
 
Thousands of euros
 
 
 
12/31/12
 
 
12/31/11
 
 
 
 
 
 
 
 
GLR Chile, Ltda.
 
 
5,250
 
 
 
(6,323)
 
Grupo Santillana de Ediciones, S.L. and subsidiaries
 
 
263
 
 
 
515
  
Other
 
 
115
 
 
 
71
 
Total
 
 
5,628
 
 
 
(5,737)
 

j) 
Capital management policy

The principal objective of the Group’s capital management policy is to optimize the cost of capital and achieve a gearing ratio that enables it achieve its strategic targets and contribute to the growth of the Company. Therefore, in 2012 the Group adopted further measures to restructure its financial debt and strengthen its capital structure.
 
The net financial debt/Ebitda ratio at December 31, 2012 was 6.88 times.
 
(12)
FINANCIAL DEBT

Bank borrowings

The detail, in thousands of euros, of the bank borrowings at December 31, 2012 and at December 31, 2011, of the credit limits and of the scheduled maturities is as follows:

2012

 
 
Maturity
 
 
Limit
 
 
Drawn-
down
amount
maturing at
short term
 
 
Drawn-
down
amount
maturing at
long term
 
Syndicated loan and credit facility to Prisa
 
2014
 
 
 
1,282,544
 
 
 
-
 
 
 
1,282,544
 
Bridge loan to Prisa
 
2015
 
 
 
1,340,882
 
 
 
-
 
 
 
1,340,882
 
Syndicated loan and credit facility to Dédalo
 
2015
 
 
 
80,400
 
 
 
39,790
 
 
 
40,610
 
Credit facilities
 
 
2013-2015
 
 
 
314,246
 
 
 
96,651
 
 
 
142,102
 
Loans
 
 
2013-2023
 
 
 
128,046
 
 
 
41,548
 
 
 
86,498
 
Finance leases, interest and other
 
 
2013-2015
 
 
 
-
 
 
 
28,232
 
 
 
18,540
 
Loan arrangement costs
 
 
2013-2015
 
 
 
-
 
 
 
(754
)
 
 
(44,390
)
Total
 
 
 
 
 
 
3,146,118
 
 
 
205,467
 
 
 
2,866,786
 


2011

   
Maturity
    
Limit
    
Drawn-
down amount
maturing at
short term
    
Drawn-
down
amount
maturing at
long term
  
Syndicated loan and credit facility to Prisa
  
2014
      
1,382,544
      
100,000
      
1,282,544
  
Bridge loan to Prisa
  
2015
      
1,540,882
      
-
      
1,540,882
  
Subordinated credit facility to Prisa
  
2015
      
134,000
      
-
      
134,000
  
Credit facilities
    
2012-2015
      
296,869
      
72,063
      
156,047
  
Loans
    
2012-2023
      
110,838
      
29,132
      
81,706
  
Finance leases, interest and other
    
2012-2015
      
55,647
      
24,148
      
31,497
  
Loan arrangement costs
    
2012-2015
      
-
      
(1,718
)
    
(50,185
)
Total
            
3,520,780
      
223,625
      
3,176,491
  

Bank borrowings are adjusted in the consolidated balance sheet by the loan origination and arrangement costs.

Of the total bank borrowings at December 31, 2012, 98.40% were denominated in euros (98.92% at December 31, 2011) and the remainder in foreign currencies.

The average interest rates on the Group’s bank borrowings were 3.34% in 2012 and 3.66% in 2011.

The Group considers that the current fair value of the bank borrowings amounts to EUR 3,055,782 thousand.

Syndicated loan and credit facility-

In June 2007, Prisa entered into a syndicated loan and credit facility with a group of 39 banks for a maximum amount of EUR 2,050,000 thousand, consisting of a long-term loan amounting to EUR 1,675,000 thousand and a revolving facility of EUR 375,000 thousand drawable throughout the term of the loan.

Repayment of the loan commenced in 2007. With respect to the remaining balance of the loan at December 31, 2010, the proceeds from the sale of 10% of Grupo Media Capital, SGPS, S.A., were used to repay EUR 11,228 thousand in 2011 in advance.

In January 2012, with the proceeds from the capital increase EUR 150,000 thousand (see Note 11a) were repayed EUR 100,000 thousand of the Syndicated Loan. The remainder of outstanding loan at December 31, 2012 amounted to EUR 1,282,544 thousand.
 
This syndicated loan is tied to Euribor plus a spread negotiated and adapted in accordance with financial market rates.

Bridge loan-

In December 2007, Prisa entered into a six-month financing agreement (bridge loan) with a bank for a maximum amount of EUR 4,230,000 thousand and bearing interest at a market rate.  The agreement stated that the purpose of this financing was to cover the financial obligations arising from the takeover bid for all the share capital of Prisa Televisión, S.A.U. submitted to the CNMV.

On February 29, 2008, Prisa signed the syndication of this bridge loan initially granted by one bank. On June 20, 2008, the initial maturity date of the bridge loan, and after the result of the takeover bid became known, the amount of the bridge loan was EUR 1,948,935 thousand; the Company also signed a one-month extension for the purpose of finalizing the agreement relating to the novation of this loan until March 2009.

On July 14, 2008, the Parent obtained authorization from the majority of the banks participating in the syndicated financing agreement relating, inter alia, to the additional debt incurred as a result of the takeover bid for Prisa Televisión, S.A.U.

On July 18, 2008, the Parent signed the renewal of the bridge loan amounting to EUR 1,948,935 thousand until March 31, 2009. In August 2008, EUR 113,098 thousand of this bridge loan were repaid.

On March 31, 2009, the term of the loan was extended by one month until April 30, 2009, and was subsequently extended again until May 14, 2009.

On May 13, 2009, Prisa arranged with the banks that granted the bridge loan for an extension of its term until March 31, 2010, and obtained the authorization of the banks that were party to the syndicated financing agreement for the additional borrowings arising from the aforementioned extension.
 

On April 19, 2010, Prisa signed a refinancing master agreement with its creditor banks by which the maturity date of the bridge loan was extended until May 19, 2013.

Regarding the bridge loan, and as a result of the mentioned renewals, Prisa agreed with the financial entities participating in the loan to pay a variable amount in cash, depending on the listed price of the ordinary shares from the date of the final agreement (April 19, 2010) until the loan falls due.

During 2011, EUR 12,514 thousand of the bridge loan was paid off, in advance with the proceeds from the sale of 10% of Grupo Media Capital, SGPS, S.A.

In July, 2012, EUR 200,000 thousand was paid with proceeds from the issue of bonds mandatorily convertible into Class A shares (EUR 434,000 thousand) (see Note 11c), leaving a debt of EUR 1,340,882 thousand.
 
Subordinated credit facility-

On December 20, 2007, the Parent arranged a subordinated credit facility of EUR 200,000 thousand bearing interest at a market rate.
 
The balance drawn down at December 31, 2011 was EUR 134,000 thousand, which is the definitive amount of this credit facility after Prisa requested a reduction in its limit.
 
This facility was paid in July 2012 with proceeds from the issue of bonds mandatorily convertible into Class A shares (see Note 11c).
 
Credit facilities-

“Credit facilities” includes mainly the amounts drawn down against credit facilities used to finance the Prisa Group companies’ operating requirements in Spain through cash-pooling. The total amount of borrowing facilities with maturities exceeding one year is EUR 142,102 thousand, and is recognized under "Non-current bank borrowings" on the accompanying consolidated balance sheet. Borrowing facilities maturing in 2013 total EUR 96,651 thousand, and are recognized under "Current bank borrowings" on the accompanying consolidated balance sheet. The interest rate applicable to these credit facilities is Euribor plus a market spread.
 
At year-end 2012, the syndicated loan and credit facility, the bridge loan, some bilateral loans and counterparties of hedges are guaranteed jointly and severally by the following Prisa Group companies: Diario El País, S.L., Grupo Empresarial de Medios Impresos, S.L., Prisa Radio, S.L. and Vertix, SGPS, S.A.
 
In 2010, the Parent pledged its shares in Prisa Televisión, S.A.U., its shares in Prisa Radio, S.L., the shares it indirectly owns in Grupo Media Capital, SGPS, S.A. and the shares it owns of Grupo Santillana de Ediciones, S.L. On January 27, 2011, Prisa Televisión, S.A.U. pledged its shares in DTS, Distribuidora de Televisión Digital, S.A., representing 56% of its share capital.
 
The syndicated loan and credit facility, and the bridge loan establish that Grupo Prisa must comply with certain financial ratios which were renewed on December 26, 2011 in order to adapt them to the Group’s new financial position. The Group’s directors consider that the covenants established in these contracts were fulfilled at December 31, 2012.
 
Refinancing agreement-

On December 26, 2011, Prisa signed an agreement to refinance its bank borrowings, comprising the syndicated loan, the bridge loan, the subordinated credit facility and a series of bilateral loans.

The current conditions for the different bank borrowings after the refinancing are as follows:

 
-
The transformation of the syndicated loan into a bullet loan with a single maturity of March 19, 2014. In addition, subject to the fulfilment of certain targets, such as the issue of a bond, maturity may be deferred to December 19, 2014.
 
-
The maturity of the bridge loan, which does not provide for partial repayments, and of some of the bilateral loans, was extended to January 15, 2015. Also subject to the same targets, the maturity of these loans may be extended to September 19, 2015.
 
 
 
-
The subordinated credit facility is extended until January 16, 2015 and September 21, 2015, when the milestones for the bridge loan are met. As indicated previously, this bridge loan was paid off in July 2012.
                -
Financial ratios ("covenants") have been reviewed to be adapted to the new financial estimates of the group.
 
-
Cost of debt has been maintained tied to Euribor plus a spread negotiated and adapted in accordance with financial market rates.
 
Conditions of these loans have been analyzed at that moment and there are no significant changes with respect to the previous situation.

Derivative financial instruments

The Prisa Group arranges derivative financial instruments with Spanish and international banks with high credit ratings.

In 2012, the Prisa Group held interest rate derivatives, foreign currency hedges and share options.

The objective of these interest rate hedges is to mitigate, by arranging swaps and option combinations, the fluctuations in cash outflows in respect of payments tied to floating interest rates (Euribor) on borrowings.

“Non-current financial liabilities” and “Current financial liabilities” on the accompanying consolidated balance sheet include at year-end the market value of the various financial instruments.

The fair value of the outstanding derivatives at December 31, 2012 was a negative EUR 4,123 thousand (December 31, 2011: negative EUR 3,327 thousand), of which EUR 4,092 thousand related to the negative fair value of interest rate derivatives and EUR 31 thousand to the negative fair value of foreign currency hedges.
 
Interest rate derivatives-

In order to determine the fair value of the derivatives, the Prisa Group uses valuations provided by financial entities.

The interest rate derivatives arranged by the Prisa Group at December 31, 2012 and at December 31, 2011, and their fair values at that dates are as follows (in thousands of euros):

2012-
 
 
 
 
 
 
 
 
 
 
 
Nominal value
Company
Instrument
Expiry
 
Nominal value
 
 
Fair value
 
 
Outstanding
at 2013
 
 
Outstanding
at 2014
 
Outstanding
at 2015
Prisa
IRS
2013
 
 
134,000
 
 
 
(855
)
 
 
134,000
 
 
 
-
 
-
Prisa
IRS
2015
 
 
300,000
 
 
 
(3,237
)
 
 
300,000
 
 
 
300,000
 
300,000
 
 
  Total
 
 
434,000
 
 
 
(4,092
)
 
 
434,000
 
 
 
300,000
 
300,000

2011-
 
 
 
 
 
 
 
 
 
 
 
Nominal value
 
Company
Instrument
Expiry
 
Nominal value
 
 
Fair value
 
 
Outstanding
at 2012
 
 
Outstanding
at 2013
 
Prisa
Swap
2013
 
 
134,000
 
 
 
(1,317
)
 
 
134,000
 
 
 
134,000
 
Media Global SGPS
Collar
2012
 
 
50,000
 
 
 
(1,183
)
 
 
50,000
 
 
 
-
 
 
 
  Total
 
 
184,000
 
 
 
(2,500
)
 
 
184,000
 
 
 
134,000
 

The outstanding interest rate derivatives at December 31, 2012 and 2011, had negative fair values of EUR 4,092 thousand and EUR 2,500 thousand, respectively.
 
Pursuant to IFRSs, changes in the fair value of these financial instruments are recognized as finance income or finance costs, since by their nature they do not qualify for hedge accounting under IFRSs.

Analysis of sensitivity to interest rates

The fair value of the interest rate derivatives arranged by the Prisa Group depends on the changes in the Euribor and long-term swap interest rate curves.
 
 
 
Following is a detail, in thousands of euros, of the analysis of the sensitivity of the fair values of derivatives to changes in the euro interest rate curve that the Group considers to be reasonable:
 
Sensitivity (before tax)
 
12/31/12
 
 
12/31/11
 
+0.5% (Increase in interest rate curve)
 
 
4,046
 
 
 
936
 
-0.5% (Decrease in interest rate curve)
 
 
(4,046)
  
 
 
(936
)
The sensitivity analysis shows that the negative fair value of the interest rate derivatives decreases in the event of upward shifts in the interest rate curve, partially reducing the projected higher cost of borrowings.

The Group considers that interest rates will probably fluctuate by 0.5% over the period analyzed. An increase in interest rates by the aforementioned percentage would lead to an increase in finance costs of EUR 15,213 thousand during 2013, based on the expected maturities and the Group’s intention to renew certain bank credit facilities.
 
Foreign currency derivatives-

In 2012 and 2011, the Group arranged foreign currency hedges in order to mitigate exposure to exchange rate fluctuations.

In order to determine the fair value of the derivatives, the Prisa Group uses valuations provided by financial entities.

2012-

 
 
 
 
Nominal value
 
 
 
 
Company
Instrument
Expiry
 
Thousands
of USD
 
 
Thousands
of euros
 
 
Fair value
(thousands
of euros)
 
 
 
 
 
 
 
 
 
 
 
 
 
Santillana del Pacífico, S.A. de Ediciones
Forward
2013
 
 
1,200
 
 
 
910
 
 
 
(31)
 
Total
      
 
1,200
 
 
 
910
 
 
 
(31)
  

2011-

 
 
 
 
Nominal value
 
 
 
 
Company
Instrument
Expiry
 
Thousands
of USD
 
 
Thousands
of euros
 
 
Fair value
(thousands
of euros)
 
 
 
 
 
 
 
 
 
 
 
 
 
Editora Moderna, Ltda.
Forward
2012
 
 
4,200
 
 
 
3,246
 
 
 
385
 
Editora Moderna, Ltda.
Forward
2012
 
 
4,000
 
 
 
3,091
 
 
 
367
 
Editora Moderna, Ltda.
Forward
2012
 
 
3,000
 
 
 
2,319
 
 
 
275
 
Santillana del Pacífico, S.A. de Ediciones
Forward
2012
 
 
400
 
 
 
309
 
 
 
-
 
Santillana del Pacífico, S.A. de Ediciones
Forward
2012
 
 
400
 
 
 
309
 
 
 
-
 
Total
      
 
12,000
 
 
 
9,274
 
 
 
1,027
 

The Prisa Group recognized finance cost of EUR 31 thousand in this connection in the consolidated income statement for 2012 (a finance cost of EUR 1,027 thousand in 2011).
 
Analysis of sensitivity to exchange rates

 The changes in the fair value of the foreign currency hedges arranged by the Prisa Group depend on fluctuations in the EUR/USD and USD/BRL exchange rates.
 

 Following is a detail, in thousands of euros, of the sensitivity (changes in fair value) of the foreign currency hedges:

Sensitivity (before tax)
 
12/31/12
 
 
12/31/11
 
+10% (increase in USD exchange rate)
 
 
(29)
 
 
 
2,634
 
-10% (increase in USD exchange rate)
 
 
(34
)
 
 
(918
)

The sensitivity analysis shows that the positive fair value of the foreign currency derivatives increases in the event of increases in exchange rates, whereas the fair value of the derivatives decreases in the event of decreases in exchange rates.

Liquidity and interest rate risk tables

The following table shows an analysis of the Prisa Group’s liquidity in 2012 for its derivative financial instruments. The table was prepared on the basis of undiscounted net cash flows. When the related settlement (receivable or payable) is not fixed, the amount was determined using the implicit values calculated on the basis of the interest rate curve and forward exchange rates.
 
 Liquidity risk-
 
 
Thousands of euros
 
Maturity
 
Interest
rate
derivatives
 
 
Foreign
currency
derivatives
 
Within 3 months
 
 
(910
)
 
 
-
 
From 3 to 6 months
 
 
(740
)
 
 
(31)
 
From 6 to 9 months
 
 
(424
)
 
 
-
 
From 9 to 12 months
 
 
(387
)
 
 
-
 
From 1 to 2 years
 
 
(1,232
)
 
 
-
 
From 2 to 3 years
 
 
(399)
 
 
 
-
 
After 3 years
 
 
-
 
 
 
-
 

The management of liquidity risk includes the detailed monitoring of the repayment schedule of the Group’s borrowings and the maintenance of credit lines and other financing channels that enable it to cover foreseeable cash needs at short, medium and long term.

The table below details the liquidity analysis of the Prisa Group in 2012 in relation to its bank borrowings, which represent substantially all the non-derivative financial liabilities. The table was prepared using the cash outflows not discounted with respect to their scheduled maturity dates; when it is expected that the outflows will take place prior to the contractually stipulated dates. The flows include both the expected repayments and interest payments. When the settlement is not fixed, the amount was determined using the underlyings calculated based on the interest rate curves at the end of 2012.

Maturity
 
Thousands
of euros
 
 
Floating
euro rates
 
Within 3 months
 
 
121,104
 
 
 
0.10
%
From 3 to 6 months
 
 
79,025
 
 
 
0.10
%
From 6 to 9 months
 
 
53,619
 
 
 
0.12
%
From 9 to 12 months
 
 
32,943
 
 
 
0.15
%
From 1 to 2 years
 
 
1,405,750
 
 
 
0.30
%
From 2 to 3 years
 
 
1,509,031
 
 
 
0.65
%
After 3 years
 
 
13,986
 
 
 
1.57
%
Total
 
 
3,215,458
 
 
 
 
 

Share options-

Financial liabilities arising from the settlement options as part of the mandatory conversion of the Class B shares

At December 31, 2010, as a result of the capital increase transactions, a non-current financial liability amounting to EUR 89,317 thousand was recognized; this corresponds to the Company’s potential obligation to deliver additional shares or cash as part of the mandatory conversion of the Class B shares, if during the 20 trading sessions immediately prior to the date of conversion the weighted average price of Class A ordinary shares is below EUR 2. At December 31, 2012, the fair value of this liability stands at EUR 26,385 thousand (2011: EUR 74,758 thousand) and is recognized under “Non-current financial liabilities” in the accompanying consolidated balance sheet. The Black-Scholes Method was used to determine fair value.
 
 
Other share options

At December 31, 2012, the fair value of the cash-settled share options delivered to financial entities participating in the bridge loan, with variable amounts depending on the listed price of Prisa’s ordinary shares, was zero.
 
Fair value of financial instruments: applicable valuation techniques and assumptions for measuring fair value

The financial instruments are grouped together on three levels based on the degree to which the fair value is observable.

-
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
 
-
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
 
-
Level 3: those determinable on the basis of valuation techniques, which include inputs for the asset and liability that are not based on observable market data (unobservable inputs).

The Prisa Group’s interest rate and foreign currency derivatives are classified as level-2 derivatives.

(13) 
FINANCIAL LIABILITIES

“Financial liabilities” includes the amount of the derivatives described in Note 12, as well as the following:

Financial liability from the minimum Class B dividend

In 2010, the Company carried out a capital increase, issuing 402,987,000 non-voting convertible Class B shares; their holders had the right to receive a minimum annual dividend per share amounting to EUR 0.175 from the date of their issue until they are converted. Therefore, at year-end 2010, the Company recognized a financial liability net of arrangement expenses totaling EUR 165,200 thousand related to the obligation to pay the dividend with a charge to the issue premium for the Class B shares. The obligation was calculated as the present value of the payments due discounted at the interest rate which would have been applicable to Prisa if it had issued a debt instrument with similar characteristics and credit rating, but without the conversion option.

On June 30 2012, the Annual General Meeting approved a modification in the conditions of the minimum preferred dividend of the non- voting convertible B shares, through which this dividend can be paid in cash, in A shares (at a fixed conversion ratio of 1 Euro – 1 share) or a combination of both. This has resulted in the reclassification of the financial liability by the minimum dividend of Class B shares for an amount of EUR 191,527 thousand to share premium (EUR 184,279 thousands net of costs associated to the capital increase).
 
Financial liability from the minimum annual dividend from DLJSAP’s investment in Grupo Santillana de Ediciones, S.L

The sale of 25% of Grupo Santillana de Ediciones, S.L.’s share capital in 2010 included the obligation to pay a preferential dividend of at least USD 25.8 million per year. Therefore, at December 31, 2012, the Group recognized a financial liability of EUR 108,772 thousand (December 31, 2011: EUR 110,916 thousand), calculated as the present value of the preferential  annual dividends discounted at the interest rate applicable to credit instruments with similar characteristics. These liabilities are in USD, and therefore, differences arising from exchange rate fluctuations are recognized as finance income or cost in the consolidated income statement.
 
Financial liability from the sale of 10% of Grupo Media Capital, SGPS, S.A.

In February 2011, the Group recognized a financial liability for the cash inflow from the sale of 10% of Grupo Media Capital, SGPS, S.A., for EUR 23,742 thousand. The sale was not produced for accounting purposes since Prisa has not transferred to the buyer the risks and rewards of ownership. This transaction has been reversed in February, 2013 (see Note 23).
 

Financial liability for measurement of the coupon paid to bondholders
 
The bonds mandatorily convertible into Class A shares (see Note 11c), subscribed in July 2012, were treated as a compound financial instrument, with a liability component at the present value of the guaranteed coupon at a the 1-month Euribor rate plus a spread of 4.15%, which led to the recognition of EUR 16,866 thousand under “Non-current financial liabilities” and EUR 18,508 thousand under “Current financial liabilities” in accordance with their payment dates. The bond matures in 2014 and coupons are paid annually.
 
(14) 
LONG-TERM PROVISIONS

The detail of the changes in 2012 and 2011 in “Non- Current Liabilities – Provisions” is as follows:
 
 
2012-
 
Thousands of euros
 
 
 
Balance at
12/31/11
 
 
Translation
adjustment
 
 
Changes
in scope of
consolidation
 
 
Charge for
the year
 
 
Amounts
used/Disposals
 
 
Transfers
 
 
Balance at
12/31/12
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For taxes
 
 
187,762
 
 
 
3
 
 
 
-
 
 
 
15,763
 
 
 
(514)
 
 
 
(1,183)
 
 
 
201,831
 
For third-party liability and other
 
 
168,758
 
 
 
(203)
 
 
 
(64,178)
 
 
 
25,040
 
 
 
(7,333)
 
 
 
(69,897)
 
 
 
52,187
 
Total
 
 
356,520
 
 
 
(200)
 
 
 
(64,178)
 
 
 
40,803
 
 
 
(7,847)
 
 
 
(71,080)
 
 
 
254,018
 
 
 
2011-
 
Thousands of euros
 
 
 
Balance at
12/31/10
 
 
Translation
adjustment
 
 
Changes
in scope of
consolidation
 
 
Charge for
the year
 
 
Amounts
used/Disposals
 
 
Transfers
 
 
Balance
at 12/31/11
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For taxes
 
 
11,408
 
 
 
(6)
 
 
 
-
 
 
 
184,547
 
 
 
(8,132)
 
 
 
(55)
 
 
 
187,762
 
For third-party liability and other
 
 
174,184
 
 
 
(251)
 
 
 
30
 
 
 
3,959
 
 
 
(13,942)
 
 
 
4,778
 
 
 
168,758
 
Total
 
 
185,592
 
 
 
(257)
 
 
 
30
 
 
 
188,506
 
 
 
(22,074)
 
 
 
4,723
 
 
 
356,520
 

The “Provision for taxes” relates to the estimated amount of tax debts arising from the tax audit carried out at various Group companies. (See Note 20).

The “Provision for third-party liability” relates to the estimated amount required to meet possible claims and litigation brought against Group companies.

In 2012 Dédalo Grupo Gráfico has started to be fully consolidated (see Note 3). Therefore the provision related to this company amounting to EUR 64,178 thousand euros has been eliminated.

Additionally, in 2012 the restructuring provided for in the printing business has been undertaken. As a result, the provision created for this concept has been applied in an amount of approximately EUR 40 million. Impairment losses of EUR 18 million were recognized in the year in relation to the printing plant in Barcelona and EUR 9 million for the printing plants in Lugo and Valencia. The amounts were also used from this provision (see Note 5).

Meanwhile, a provision for EUR 20 million was recognized in relation to termination benefits arising from employee reduction procedures payable to official bodies.
 
In view of the nature of the contingencies covered by these provisions, it is not possible to determine a reasonable payment schedule, if indeed there is one, or their financial effect. However, the Prisa Group’s legal advisers and directors consider that the outcome of these procedures and claims will not have a significant effect on the consolidated financial statements for the years in which they come to an end additional to the amount provisioned in the accounting records.

The breakdown of the total additions to long- term provisions charged to the consolidated income statement for 2012, 2011 and 2010 is as follows:


 
 
Thousands of euros
 
 
 
2012
 
 
2011
 
 
2010
 
 
 
 
 
 
 
 
 
 
 
Termination benefits
 
 
22,106
 
 
 
1,412
 
 
 
446
 
Other staff costs
 
 
662
 
 
 
1,213
 
 
 
1,591
 
Taxes
 
 
15,762
 
 
 
184,547
 
 
 
1,366
 
Other
 
 
2,273
 
 
 
1,334
 
 
 
3,095
 
Total
 
 
40,803
 
 
 
188,506
 
 
 
6,498
 

At December 31, 2012 and December 31, 2011, the Group had ownership interests in companies accounted for using the equity method, the net negative value of which is recognized under “Non-current liabilities - Provisions” in the accompanying consolidated balance sheet, the detail being as follows (see Note 9):
 
 
 
Thousands of euros
 
 
 
2012
 
 
2011
 
Dédalo Grupo Gráfico, S.L. and subsidiaries
 
 
-
 
 
 
64,178
 
V-me Media Inc
 
 
1,257
 
 
 
4,126
 
WSUA Broadcasting Corporation
 
 
1,065
 
 
 
1,072
 
Distributors (*)
 
 
3,444
 
 
 
3,467
 
Green Emerald Business, Inc.
 
 
780
 
 
 
784
 
Ediciones Conelpa, S.L.
    
1,040
      
-
  
Other
 
 
1,146
 
 
 
81,637
 
Total
 
 
8,732
 
 
 
155,264
 

(*) Distrimedios, S.L., Gelesa Gestión Logística, S.L., Comercial de Prensa Siglo XXI, S.A. y Distribución de Prensa por Rutas, S.L.

(15) 
OPERATING INCOME

The breakdown of income from the Group’s main business lines is as follows:
 
 
 
Thousands of euros
 
 
 
12/31/2012
 
 
12/31/2011
 
 
12/31/2010
 
 
 
 
 
 
 
 
 
 
 
Revenue from subscribers
 
 
906,843
 
 
 
887,092
 
 
 
913,105
 
Advertising sales and sponsorship
 
 
553,368
 
 
 
620,063
 
 
 
673,702
 
Sales of books and training
 
 
718,781
 
 
 
697,881
 
 
 
625,877
 
Newspaper and magazine sales
 
 
146,219
 
 
 
168,744
 
 
 
180,396
 
Sales of add-ons and collections
 
 
20,504
 
 
 
23,151
 
 
 
30,953
 
Sale of audiovisual rights and programs
 
 
125,594
 
 
 
88,236
 
 
 
87,739
 
Intermediation services
 
 
20,069
 
 
 
20,985
 
 
 
25,393
 
Broadcasting services
 
 
10,638
 
 
 
17,260
 
 
 
19,860
 
Other services
 
 
121,479
 
 
 
117,869
 
 
 
130,748
 
Revenue
 
 
2,623,495
 
 
 
2,641,281
 
 
 
2,687,773
 
Income from non-current assets
 
 
3,319
 
 
 
20,263
 
 
 
32,888
 
Other income
 
 
37,878
 
 
 
62,906
 
 
 
102,070
 
Other income
 
 
41,197
 
 
 
83,169
 
 
 
134,958
 
Total operating income
 
 
2,664,692
 
 
 
2,724,450
 
 
 
2,822,731
 

The most significant barter transactions occurred under “Advertising sales and sponsorship” and the most significant segments were radio, press and audiovisual, whose exchanges with third parties amounted to EUR 8,982 thousand in 2012 (2011: EUR 8,936 thousands; 2010: EUR 9,022 thousands).

In 2011“Income from non-current assets” mainly includes the result of the sale of Canal Viajar and the dissolution of Canal+ Investment Inc. made by Prisa Televisión, amounting to EUR 12,288 thousands and EUR 5,378 thousands respectively.

 
(16) 
OPERATING EXPENSES

Staff costs

The detail of “Staff costs” is as follows:
 
 
 
Thousands of euros
 
 
 
12/31/2012
 
 
12/31/2011
 
 
12/31/2010
 
 
 
 
 
 
 
 
 
 
 
Wages and salaries
 
 
443,838
 
 
 
483,272
 
 
 
477,213
 
Employee benefit costs
 
 
89,243
 
 
 
93,667
 
 
 
94,524
 
Termination benefits
 
 
52,098
 
 
 
77,213
 
 
 
1,055
 
Other employee benefit costs
 
 
19,778
 
 
 
20,170
 
 
 
19,289
 
Total
 
 
604,957
 
 
 
674,322
 
 
 
592,081
 

Cost of termination benefits corresponds to the restructuring plan addressed by the group in all business segment and geographical areas during 2012 and 2011.
 
The average number of employees at the Group, by professional category, was as follows:

 
 
12/31/2012
 
 
12/31/2011
 
 
12/31/2010
 
 
 
 
 
 
 
 
 
 
 
Executives
 
 
462
 
 
 
486
 
 
 
484
 
Middle management
 
 
1,481
 
 
 
1,526
 
 
 
1,564
 
Other employees
 
 
10,248
 
 
 
11,147
 
 
 
11,837
 
Total
 
 
12,191
 
 
 
13,159
 
 
 
13,885
 

The breakdown of the workforce, by gender, was as follows:
 
 
 
12/31/2012
 
 
12/31/2011
 
 
12/31/2010
 
 
 
Women
 
 
Men
 
 
Women
 
 
Men
 
 
Women
 
 
Men
 
Executives
 
 
127
 
 
 
335
 
 
 
142
 
 
 
344
 
 
 
137
 
 
 
347
 
Middle management
 
 
544
 
 
 
937
 
 
 
561
 
 
 
965
 
 
 
574
 
 
 
990
 
Other employees
 
 
4,973
 
 
 
5,275
 
 
 
5,583
 
 
 
5,564
 
 
 
5,839
 
 
 
5,998
 
Total
 
 
5,644
 
 
 
6,547
 
 
 
6,286
 
 
 
6,873
 
 
 
6,550
 
 
 
7,335
 

Share-based payments

Share option plan of Promotora de Informaciones, S.A.-

The Extraordinary General Shareholders’ Meeting held on November 27, 2010, authorized the 2010-2013 Share/Stock Options Delivery Plan, consisting of the delivery of Prisa shares and/or share options to the directors and executives of the Prisa Group, for 2010, 2011, 2012 and 2013.
 
As part of that remuneration policy, and in accordance with the resolutions adopted by the Board of Directors, the Company directors would receive 40% of their fixed remuneration for belonging to the Board in Company shares. On October 24, 2012, after the reduction of the remuneration, the Board of Directors passed a motion allowing directors to choose whether to receive 40% of their fixed annual remuneration in shares of the Company or cash. Shares would be delivered to directors four times a year, once each quarter.
 
The Company has recognized an expense for this plan in the income statement for 2012 in the amount of EUR 429 thousand. The number of shares delivered is 664,701 (see Note 11g).
 
In addition, approval was given for the delivery of shares to certain members of the executive team as part of their variable remuneration, with the corresponding amount having been provisioned in the accompanying consolidated income statement.
 
During 2011, the now Executive Chairman of Prisa has received EUR 5,014 thousands by delivery of shares (1,350,000 shares), according to a reference value of 2.08 euros per share. This extraordinary compensation is linked to the success of the recapitalization of the Company and was communicated to the CNMV at the time of the delivery, being also reported in the financial information of the first half of 2011 (see Note 11g).
 
 
Additionally, during 2011, 660,728 shares have also been delivered to the Executive Chairman, amounting to EUR 2,560 thousands, at a reference price of 2.17 euros per share, for his commitment to continue at the Company for a period of three years, according to the contract signed with Prisa in October 2010 as part of the restructuring and corporate recapitalization. Out of this total amount, EUR 853 thousands were registered in the accompanying consolidated income statement as a personal expense, equivalent to 220,242 shares. In 2012, an expense of EUR 853 thousand was recognized in this connection, equivalent to 220,242 shares (see Note 25).
 
In June 2011, the Nomination and Remuneration Committee approved a multiyear, Long-Term Incentive Scheme, consisting of the delivery of shares of Prisa or of some of its listed subsidiaries, subject to the fulfillment of certain goals.
 
Prisa has recognized an expense on the income statement for 2012 in the amount of EUR 3,100 thousand (2011: EUR 1,845 thousand).
 
Outside services
 
The detail of “Outside services” in 2012, 2011 and 2010 is as follows:
 
 
 
Thousands of euros
 
 
 
12/31/2012
 
 
12/31/2011
 
 
12/31/2010
 
 
 
 
 
 
 
 
 
 
 
Independent professional services
 
 
130,414
 
 
 
174,877
 
 
 
170,877
 
Leases and fees
 
 
136,345
 
 
 
138,195
 
 
 
126,075
 
Advertising
 
 
99,080
 
 
 
114,768
 
 
 
111,935
 
Intellectual property
 
 
59,774
 
 
 
67,899
 
 
 
55,054
 
Transport
 
 
56,947
 
 
 
63,913
 
 
 
68,919
 
Other outside services
 
 
260,417
 
 
 
229,161
 
 
 
261,640
 
Total
 
 
742,977
 
 
 
788,813
 
 
 
794,500
 

Fees paid to auditors

The fees for financial audit services relating to the 2012 financial statements of the various companies composing the Prisa Group and subsidiaries provided by Deloitte, S.L. and by other entities related to the auditor amounted to EUR 2,345 thousand (2011: EUR 2,441 thousand; 2010: EUR 2,170 thousand), of which EUR 438 thousand relate to Prisa (2011: EUR 482 thousand ;2010: EUR 486 thousand); this amount includes EUR 255 thousand for the 2012 audit of the consolidated group (2011: EUR 279 thousand; 2010: EUR 350 thousands), in keeping with PCAOB audit procedures. Additionally, during 2010, Deloitte conducted the 2007, 2008, and 2009 audits of the consolidated group in accordance with PCAOB audit procedures; the fees for this service totaled EUR 1,580 thousand.

Also, the fees relating to other auditors involved in the 2012 audit of the various Group companies amounted to EUR 339 thousand (2011: EUR 343 thousand; 2010: EUR 383 thousand).

In addition, the fees for other professional services provided to the various Group companies by the principal auditor and by other entities related to the auditor, and fees paid in this connection to other auditors participating in the audit of the various Group companies are as follows (in thousands of euros):
 
 
 
2012
 
 
2011
 
 
2010
 
 
 
Principal
auditor
 
 
Other
audit firms
 
 
Principal
auditor
 
 
Other audit
firms
 
 
Principal
auditor
 
 
Other
audit firms
 
Other verification services
 
 
277
 
 
 
240
 
 
 
281
 
 
 
-
 
 
 
444
 
 
 
261
 
Tax advisory services
 
 
519
 
 
 
257
 
 
 
405
 
 
 
170
 
 
 
264
 
 
 
65
 
Other services
 
 
213
 
 
 
284
 
 
 
447
 
 
 
2,802
 
 
 
1,691
 
 
 
927
 
Other professional services
 
 
1,009
 
 
 
781
 
 
 
1,133
 
 
 
2,972
 
 
 
2,399
 
 
 
1,253
 
 
 
 
Operating leases

Various assets and services used by the Group are held under operating leases, the most significant of which are the buildings in Gran Vía 32, Miguel Yuste, Tres Cantos and Caspe, the provision of analogue, digital terrestrial and satellite broadcasting services and the radio frequencies. The most significant lease relates to Media Latina. The schedule for the minimum lease payments arising from these leases is as follows:

Year
  
Thousands of
euros
  
       
2013
    
80,234
  
2014
 
 
77,569
 
2015
 
 
77,715
 
2016
 
 
76,954
 
2017
 
 
78,124
 
2018 and beyond
 
 
659,627
 
 
 
 
1,050,223
 
 
The main characteristic of the leases for the buildings on Gran Vía 32, Miguel Yuste and Caspe are lease terms that range from 18 months to 15 years which, in the case of the buildings leased at 15 years, include the possibility of extending the lease by two consecutive five-year periods. The duration of the Tres Cantos lease is 20 years, which is renewable for four consecutive periods of five years each. In 2012, the lease expense relating to these buildings amounted to EUR 31,836 thousand (2011: EUR 30,826 thousands; 2010: EUR 22,748 thousands) and was recognized under “Outside services - Leases and fees.”

Radio frequencies are leased from Media Latina for a term of ten years, renewable for a consecutive period of a further ten years. The lease expense for 2012 in this connection amounted to EUR 6,822 thousand (2011: EUR 7,272 thousands; 2010: EUR 5,838 thousands) recognized under “Outside services - Leases and fees.”

The lease for the provision of satellite broadcasting services expires in 2017. The expense relating to these services amounted to EUR 42,812 thousand in 2012 (2011: EUR 52,940 thousands; 2010: EUR 43,936 thousands), which is recognized under “Outside services - Leases and fees”.

Change in allowances, write-downs and provisions

The detail of the “Change in allowances, write-downs and provisions” is as follows:
 
 
 
Thousands of euros
 
 
 
12/31/2012
 
 
12/31/2011
 
 
12/31/2010
 
 
 
 
 
 
 
 
 
 
 
Provision for bad debt
 
 
80,563
 
 
 
27,947
 
 
 
24,744
 
Change in inventory write-downs
 
 
20,016
 
 
 
16,723
 
 
 
12,480
 
Change in provision for sales returns
 
 
(385)
 
 
 
501
 
 
 
(14)
 
Total
 
 
100,194
 
 
 
45,171
 
 
 
37,210
 

In May 2012, the Group has reached an agreement with Cableuropa, S.A.U. (Ono) by means of which EUR 54,374 thousand have been recovered by the Company (half of the total EUR 108,748 thousand paid) which ends the lawsuits that Prisa had with Ono (see note 29). As a consequence of this deal, the Group has registered the same amount under the “Variation in operating allowances” of the consolidated income statement, which corresponds to the amount that has not been recovered.
 
 
(17) 
FINANCIAL LOSS
 
The detail of “Financial Loss” in the consolidated income statements is as follows:
 
   
Thousands of euros
  
   
12/31/2012
    
12/31/2011
    
12/31/2010
  
                   
Income from current financial assets
    
1,045
      
839
      
835
  
Finance income from hedging transactions
    
-
      
705
      
-
  
Income from equity investments
    
287
      
395
      
284
  
Other finance income
    
4,137
      
5,357
      
7,646
  
Finance income
    
5,469
      
7,296
      
8,765
  
Interest on debt
    
(113,636)
      
(124,653)
      
(123,559)
  
Finance costs on hedging transactions
    
(1,739)
      
(8,445)
      
(16,374)
  
Adjustments for inflation
    
(3,895)
      
(699)
      
(990)
  
Other finance costs
    
(58,331)
      
(71,356)
      
(37,846
)
Finance costs
    
(177,601)
      
(205,153)
      
(178,769
)
Exchange gains
    
24,031
      
24,186
      
25,821
  
Exchange losses
    
(23,750)
      
(28,067)
      
(23,705
)
Exchange differences (net)
    
281
      
(3,881)
      
2,116
  
Change in fair value of financial instruments
    
(2,241)
      
6,586
      
8,677
  
Financial loss
    
(174,092)
      
(195,152)
      
(159,211
)

“Other finance costs” mainly included the updating of the financial liability registered for the minimum Class B dividend and loan arrangement costs.

(18) 
DISCONTINUED OPERATIONS

2010-

In 2010, the loss from discontinued operations includes mainly the sale of Sociedad General de Televisión Cuatro, S.A., less the derecognition of the goodwill allocated to the company, as well as the results of its activity, as the sale took place on December 28, 2010.
 
 
 
Thousands
of euros
 
 
 
 
 
Operating income
 
 
379,627
 
Operating expenses
 
 
(392,157
)
Loss from operations
 
 
(12,530
)
Financial loss
 
 
(587
)
Result of companies accounted for using the equity method
 
 
(5
)
Loss before tax from continuing operations
 
 
(13,122
)
Income tax
 
 
6,268
 
Result attributable to non-controlling interests
 
 
(12
)
Loss after tax
 
 
(6,866
)
Gain on sale of Sociedad General de Televisión Cuatro, S.A.
 
 
349,022
 
Derecognition of goodwill allocated to Sociedad General de Televisión Cuatro, S.A.
 
 
(377,167
)
Loss after tax from discontinued operations
 
 
(35,011
)
 
(19) 
BUSINESS SEGMENTS

Segment reporting is structured on a primary basis by business segment and on a secondary basis by geographical segment.

The business segments were determined based on the Prisa Group’s organizational structure at year-end 2012 considering the nature of the products and services offered, and the customer segments which they target.
 
Prisa’s operations are divided into four main businesses:
 
 
-
Audiovisual, which obtains revenue mainly from the subscribers to the Canal+ platform, the broadcasting of advertising and audiovisual production;
 
-
Education, which includes primarily the sale of general publishing and educational books and education system;
 

 
 
-
Radio, the main source of revenue from which is the broadcasting of advertising and, in addition, the organization and management of events and the provision of other supplementary services; and
 
-
Press, which groups together mainly the activities relating to the sale of newspapers and magazines, advertising, promotions and distribution;

Segment information about these businesses for 2012, 2011 and 2010 is presented below:
 
   
AUDIOVISUAL
  
EDUCATION
  
RADIO
  
PRESS
  
OTHERS
  
ELIMINATIONS AND ADJUSTMENTS
  
PRISA GROUP
  
   
2012
  
2011
  
2010
  
2012
  
2011
  
2010
  
2012
  
2011
  
2010
  
2012
  
2011
  
2010
  
2012
  
2011
  
2010
  
2012
  
2011
  
2010
  
2012
  
2011
  
2010
  
                                                                                       
Operating income
  
1,259,845
  
1,241,185
  
1,372,401
  
733,654
  
720,393
  
642,252
  
342,416
  
376,772
  
405,522
  
314,594
  
390,012
  
420,347
  
119,976
  
101,598
  
96,926
  
(105,793)
  
(105,510)
  
(114,717)
  
2,664,692
  
2,724,450
  
2,822,731
  
- External sales
  
1,250,276
  
1,206,862
  
1,321,866
  
732,623
  
715,553
  
638,884
  
333,403
  
368,469
  
395,176
  
281,437
  
358,633
  
315,398
  
73,666
  
41,762
  
120,737
  
(6,713)
  
33,171
  
30,670
  
2,664,692
  
2,724,450
  
2,822,731
  
- Inter-segment sales
  
9,569
  
34,323
  
50,535
  
1,031
  
4,840
  
3,368
  
9,013
  
8,303
  
10,346
  
33,157
  
31,379
  
104,949
  
46,310
  
59,836
  
(23,811)
  
(99,080)
  
(138,681)
  
(145,387)
  
0
  
0
  
0
  
                                                                                       
Operating expenses
  
(1,194,621)
  
(1,119,796)
  
(1,177,964)
  
(625,765)
  
(616,407)
  
(536,791)
  
(318,990)
  
(351,588)
  
(315,458)
  
(367,241)
  
(373,532)
  
(378,051)
  
(1,167,947)
  
(668,617)
  
(198,031)
  
834,818
  
369,754
  
119,716
  
(2,839,746)
  
(2,760,186)
  
(2,486,579)
  
- Cost of materials used
  
(619,927)
  
(533,690)
  
(564,527)
  
(188,354)
  
(187,198)
  
(160,101)
  
(2,069)
  
(2,401)
  
(3,412)
  
(84,801)
  
(105,067)
  
(111,830)
  
(5,200)
  
(842)
  
(4,007)
  
10,999
  
5,078
  
4,654
  
(889,352)
  
(824,120)
  
(839,223)
  
- Staff costs
  
(135,408)
  
(182,160)
  
(173,950)
  
(165,812)
  
(161,837)
  
(148,212)
  
(122,514)
  
(153,281)
  
(119,054)
  
(114,916)
  
(105,117)
  
(100,843)
  
(65,681)
  
(71,852)
  
(49,540)
  
(626)
  
(75)
  
(482)
  
(604,957)
  
(674,322)
  
(592,081)
  
- Depreciations and amortisation charge
  
(100,537)
  
(95,515)
  
(100,112)
  
(51,426)
  
(44,816)
  
(41,714)
  
(13,856)
  
(14,664)
  
(14,328)
  
(10,216)
  
(9,915)
  
(9,957)
  
(12,271)
  
(6,621)
  
(5,034)
  
308
  
200
  
782
  
(187,998)
  
(171,331)
  
(170,363)
  
- Outside services
  
(271,323)
  
(290,541)
  
(325,108)
  
(195,299)
  
(201,160)
  
(167,336)
  
(163,411)
  
(169,469)
  
(174,918)
  
(128,507)
  
(139,749)
  
(149,816)
  
(78,763)
  
(89,161)
  
(66,841)
  
94,326
  
101,267
  
89,519
  
(742,977)
  
(788,813)
  
(794,500)
  
- Change in operating provisions
  
(67,575)
  
(8,036)
  
(11,095)
  
(21,493)
  
(18,205)
  
(15,844)
  
(5,023)
  
(11,757)
  
(3,673)
  
(6,133)
  
(5,907)
  
(4,255)
  
(995)
  
(1,267)
  
(2,343)
  
1,023
  
1
  
0
  
(100,196)
  
(45,171)
  
(37,210)
  
- Other expenses
  
149
  
(9,854)
  
(3,172)
  
(3,381)
  
(3,191)
  
(3,584)
  
(12,117)
  
(16)
  
(73)
  
(22,668)
  
(7,777)
  
(1,350)
  
(1,005,037)
  
(498,874)
  
(70,266)
  
728,788
  
263,283
  
25,243
  
(314,266)
  
(256,429)
  
(53,202)
  
                                                                                       
Profit from operations
  
65,224
  
121,389
  
194,437
  
107,889
  
103,986
  
105,461
  
23,426
  
25,184
  
90,064
  
(52,647)
  
16,480
  
42,296
  
(1,047,971)
  
(567,019)
  
(101,105)
  
729,025
  
264,244
  
4,999
  
(175,054)
  
(35,736)
  
336,152
  
                                                                                       
Finance income
  
876
  
2,302
  
6,566
  
3,343
  
3,948
  
2,913
  
707
  
1,003
  
809
  
1,996
  
1,494
  
963
  
291,956
  
150,429
  
144,222
  
(291,693)
  
(145,048)
  
(137,095)
  
7,185
  
14,128
  
18,378
  
Finance costs
  
(21,965)
  
(18,793)
  
(23,849)
  
(31,668)
  
(27,035)
  
(22,416)
  
(4,650)
  
(2,186)
  
(3,685)
  
(2,824)
  
(499)
  
(704)
  
(156,417)
  
(189,090)
  
(162,735)
  
35,965
  
32,204
  
33,683
  
(181,559)
  
(205,399)
  
(179,706)
  
Exchange differences (net)
  
(1,579)
  
1,424
  
(4,516)
  
2,176
  
(5,137)
  
9,393
  
(346)
  
(153)
  
1,885
  
(187)
  
(210)
  
(27)
  
218
  
101
  
(142)
  
0
  
94
  
(4,476)
  
282
  
(3,881)
  
2,117
  
                                                   
0
  
0
  
0
                          
Financial profit (loss)
  
(22,668)
  
(15,067)
  
(21,799)
  
(26,149)
  
(28,224)
  
(10,110)
  
(4,289)
  
(1,336)
  
(991)
  
(1,015)
  
785
  
232
  
135,757
  
(38,560)
  
(18,659)
  
(255,728)
  
(112,750)
  
(107,888)
  
(174,092)
  
(195,152)
  
(159,211)
  
                                                                                       
Result of companies accounted for using the equity method
  
4,157
  
(2,215)
  
(594)
  
(129)
  
(236)
  
(164)
  
(97)
  
(181)
  
(25)
  
(8,687)
  
(123)
  
996
  
0
  
0
  
0
  
(1,519)
  
(16,939)
  
(99,766)
  
(6,275)
  
(19,694)
  
(99,553)
  
                                                   
0
                                  
Loss from other investments
  
0
  
0
  
0
  
0
  
0
  
0
  
2
  
(6)
  
(42)
  
0
  
0
  
(4,361)
  
68,254
  
(17,659)
  
(105,275)
  
(68,254)
  
23,532
  
105,376
  
2
  
5,867
  
(4,302)
  
                                                                                       
Profit before tax from continuing operations
  
46,713
  
104,107
  
172,044
  
81,611
  
75,526
  
95,187
  
19,042
  
23,661
  
89,006
  
(62,349)
  
17,142
  
39,163
  
(843,960)
  
(623,238)
  
(225,039)
  
403,524
  
158,087
  
(97,279)
  
(355,419)
  
(244,715)
  
73,086
  
                                                   
0
  
0
  
0
                          
                                                   
0
  
0
  
0
                          
Income tax
  
(1,190)
  
1,927
  
(49,028)
  
(26,689)
  
(22,041)
  
(30,382)
  
(8,009)
  
(7,771)
  
(22,027)
  
16,679
  
(3,117)
  
(10,925)
  
80,977
  
(121,714)
  
(36,113)
  
(41,332)
  
4,743
  
75,451
  
20,436
  
(147,973)
  
(73,024)
  
                                                                                       
Profit from continuing operations
  
45,523
  
106,034
  
123,016
  
54,922
  
53,485
  
64,805
  
11,033
  
15,890
  
66,979
  
(45,670)
  
14,025
  
28,238
  
(762,983)
  
(744,952)
  
(261,152)
  
362,192
  
162,830
  
(21,828)
  
(334,983)
  
(392,688)
  
62
  
                                                                                       
Profit after tax from discontinued operations
  
0
  
0
  
336,160
  
(1,793)
  
(2,428)
  
(2,105)
  
0
  
0
  
0
  
(3)
  
(758)
  
(608)
  
(70,854)
  
0
  
0
  
69,154
  
540
  
(368,458)
  
(3,496)
  
(2,646)
  
(35,011)
  
                                                                                       
Consolidated profit for the year
  
45,523
  
106,034
  
459,176
  
53,129
  
51,057
  
62,700
  
11,033
  
15,890
  
66,979
  
(45,673)
  
13,267
  
27,630
  
(833,837)
  
(744,952)
  
(261,152)
  
431,346
  
163,370
  
(390,286)
  
(338,479)
  
(395,334)
  
(34,949)
  
                                                                                       
Non-controling interests
  
(19,758)
  
(25,523)
  
(1,444)
  
442
  
439
  
738
  
(4,543)
  
(3,976)
  
(4,619)
  
(1,421)
  
(3,093)
  
(2,929)
  
(35)
  
(46)
  
(36)
  
108,761
  
(23,685)
  
(29,631)
  
83,446
  
(55,884)
  
(37,921)
  
                                                                                       
Profit atributable to the Parent
  
25,765
  
80,511
  
457,732
  
53,571
  
51,496
  
63,438
  
6,490
  
11,914
  
62,360
  
(47,094)
  
10,174
  
24,701
  
(833,872)
  
(744,998)
  
(261,188)
  
540,107
  
139,685
  
(419,917)
  
(255,033)
  
(451,218)
  
(72,870)
  
                                                                                       
BALANCE SHEET
                                                                                      
                                                                                       
Assets
  
2,986,065
  
3,033,287
  
3,136,159
  
614,668
  
573,677
  
559,885
  
520,201
  
533,020
  
560,617
  
259,717
  
345,208
  
331,000
  
5,410,152
  
5,894,539
  
6,269,004
  
(2,128,790)
  
(2,501,207)
  
(2,705,211)
  
7,662,013
  
7,878,524
  
8,151,454
  
- Non- current except investments accounted for using the equity method
  
1,291,888
  
1,339,216
  
1,393,537
  
277,470
  
226,774
  
206,074
  
350,799
  
365,052
  
363,615
  
92,021
  
121,533
  
111,812
  
4,898,286
  
5,434,806
  
5,742,313
  
(1,519,584)
  
(1,912,760)
  
(2,137,404)
  
5,390,880
  
5,574,621
  
5,679,947
  
- Investments accounted for using the equity method
  
593,845
  
587,667
  
594,409
  
11
  
96
  
168
  
906
  
(1,721)
  
(1,498)
  
16,351
  
11,334
  
12,159
  
0
  
0
  
0
  
1,101
  
6,706
  
8,304
  
612,214
  
604,082
  
613,542
  
- Current
  
1,100,332
  
1,106,404
  
1,148,213
  
337,187
  
346,807
  
350,110
  
168,363
  
169,564
  
198,380
  
151,345
  
212,341
  
207,029
  
508,728
  
459,733
  
526,691
  
(610,307)
  
(595,153)
  
(576,111)
  
1,655,648
  
1,699,696
  
1,854,312
  
- Assets classified as held for sale
  
0
  
0
  
0
  
0
  
0
  
3,533
  
133
  
125
  
120
  
0
  
0
  
0
  
3,138
  
0
  
0
  
0
  
0
  
0
  
3,271
  
125
  
3,653
  
                                                                                       
Equity and liabilities
  
2,986,065
  
3,033,287
  
3,136,159
  
614,668
  
573,677
  
559,885
  
520,201
  
533,020
  
560,617
  
259,717
  
345,208
  
331,000
  
5,410,152
  
5,894,539
  
6,269,004
  
(2,128,790)
  
(2,501,207)
  
(2,705,211)
  
7,662,013
  
7,878,524
  
8,151,454
  
- Equity
  
1,818,850
  
1,910,879
  
1,824,407
  
158,315
  
144,778
  
162,114
  
338,576
  
369,527
  
402,467
  
120,372
  
165,320
  
162,533
  
1,061,555
  
1,118,863
  
1,837,163
  
(886,041)
  
(1,491,332)
  
(1,738,499)
  
2,611,627
  
2,218,035
  
2,650,185
  
- Non-current
  
114,402
  
124,169
  
149,355
  
170,006
  
158,792
  
150,825
  
17,125
  
10,979
  
10,104
  
18,867
  
2,076
  
1,063
  
3,623,976
  
3,954,604
  
3,603,689
  
(612,595)
  
(368,291)
  
(388,540)
  
3,331,781
  
3,882,329
  
3,526,496
  
- Current
  
1,052,813
  
998,239
  
1,162,397
  
286,347
  
270,107
  
246,946
  
164,500
  
152,514
  
148,046
  
120,478
  
177,812
  
167,404
  
724,621
  
821,072
  
828,152
  
(630,154)
  
(641,584)
  
(578,172)
  
1,718,605
  
1,778,160
  
1,974,773
  
- Liabilities classified as held for sale
  
0
  
0
  
0
  
0
  
0
  
0
  
0
  
0
  
0
  
0
  
0
  
0
  
0
  
0
  
 
  
0
  
0
  
0
  
0
  
0
  
0
  
                                                                                       
 
*Others includes:  Prisa Brand Solutions, Digital, Promotora de Informaciones, S.A., Prisaprint, S.L., Promotora de Actividades América 2010, S.L., Prisa División Inmobiliaria, S.L., Prisa Inc., Prisa División Internacional, S.L.; Prisa Finance (Netherlands) BV, GLP Colombia, Ltda., Dédalo Grupo Gráfico, S.L. and Vertix, SGPS, S.A.
 

The detail of capex in 2012, 2011 and 2010 by business segment is as follows (in thousands of euros):

 
 
Thousands of euros
 
 
 
2012
 
 
2011
 
 
2010
 
 
 
Property,
plant and
equipment
 
 
Intangible
assets
 
 
Total
 
 
Property,
plant and
equipment
 
 
Intangible
assets
 
 
Total
 
 
Property,
plant and
equipment
 
 
Intangible
assets
 
 
Total
 
Audiovisual
 
 
16,404
 
 
 
48,038
 
 
 
64,442
 
 
 
57,421
 
 
 
58,958
 
 
 
116,379
 
 
 
64,363
 
 
 
57,670
 
 
 
122,033
 
Education
 
 
24,009
 
 
 
54,351
 
 
 
78,360
 
 
 
11,926
 
 
 
55,524
 
 
 
67,450
 
 
 
4,647
 
 
 
50,590
 
 
 
55,237
 
Radio
 
 
4,582
 
 
 
2,684
 
 
 
7,266
 
 
 
5,765
 
 
 
2,360
 
 
 
8,125
 
 
 
7,690
 
 
 
10,932
 
 
 
18,622
 
Press
 
 
859
 
 
 
2,420
 
 
 
3,279
 
 
 
529
 
 
 
3,183
 
 
 
3,712
 
 
 
2,460
 
 
 
4,804
 
 
 
7,264
 
Other
 
 
410
 
 
 
15,003
 
 
 
15,413
 
 
 
1,312
 
 
 
21,000
 
 
 
22,312
 
 
 
564
 
 
 
2,289
 
 
 
2,853
 
TOTAL
 
 
46,264
 
 
 
122,496
 
 
 
168,760
 
 
 
76,953
 
 
 
141,025
 
 
 
217,978
 
 
 
79,724
 
 
 
126,285
 
 
 
206,009
 

In relation to the audiovisual segment, the breakdown, by business line, of the main items under “Profit/(loss) from operations” is as follows:
 
 
 
Thousands of euros
 
 
 
2012
 
 
2011
 
 
2010
 
 
 
Pay
television
 
 
Free-to-
air
television
 
 
Other
 
 
Pay
television
 
 
Free-to-
air
television
 
 
Other
 
 
Pay
television
 
 
Free-to-
air
television
 
 
Other
 
Revenue
 
 
1,071,549
 
 
 
106,252
 
 
 
67,900
 
 
 
988,563
 
 
 
149,024
 
 
 
76,524
 
 
 
1,035,733
 
 
 
155,983
 
 
 
78,066
 
Other income
 
 
8,375
 
 
 
4,174
 
 
 
1,595
 
 
 
22,715
 
 
 
1,165
 
 
 
3,194
 
 
 
98,256
 
 
 
886
 
 
 
3,477
 
TOTAL OPERATING INCOME
 
 
1,079,924
 
 
 
110,426
 
 
 
69,495
 
 
 
1,011,278
 
 
 
150,189
 
 
 
79,718
 
 
 
1,133,989
 
 
 
156,869
 
 
 
81,543
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of materials used
 
 
(596,875)
 
 
 
(21,261)
 
 
 
(1,791)
 
 
 
(506,699)
 
 
 
(23,122)
 
 
 
(3,869)
 
 
 
(535,772
)
 
 
(16,364
)
 
 
(12,391
)
Staff costs
 
 
(82,944)
 
 
 
(20,926)
 
 
 
(31,538)
 
 
 
(114,138)
 
 
 
(25,067)
 
 
 
(42,955)
 
 
 
(108,509
)
 
 
(23,468
)
 
 
(41,973
)
Other operating expenses
 
 
(364,573)
 
 
 
(39,940)
 
 
 
(34,774)
 
 
 
(294,869)
 
 
 
(34,181)
 
 
 
(74,896)
 
 
 
(315,644
)
 
 
(33,952
)
 
 
(89,891
)
TOTAL OPERATING EXPENSES
 
 
(1,044,392)
 
 
 
(82,127)
 
 
 
(68,103)
 
 
 
(915,706)
 
 
 
(82,370)
 
 
 
(121,720)
 
 
 
(959,925
)
 
 
(73,784
)
 
 
(144,255
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PROFIT/(LOSS) FROM OPERATIONS
 
 
35,532
 
 
 
28,299
 
 
 
1,392
 
 
 
95,572
 
 
 
67,819
 
 
 
(42,002)
 
 
 
174,064
 
 
 
83,085
 
 
 
(62,712
)

At December 31, 2012 and 2011, the non-current and current assets and liabilities directly related to the free-to-air TV business, as well as the current assets and liabilities directly allocable to that business, correspond to the free-to-air Grupo Media Capital “TVI.” The related amounts are as follows:
 
 
 
12/31/2012
 
 
12/31/2011
 
Non-current assets
 
 
16,308
 
 
 
22,748
 
Current assets
 
 
107,402
 
 
 
97,735
 
Current liabilities
 
 
(66,450)
 
 
 
(81,480)
 


The other assets and liabilities are either allocable to the pay TV and audiovisual production businesses or are deemed to be shared by the various business lines of the audiovisual segment.
 
The Group’s activities are located in Europe and America. Operations in Europe are carried out mainly in Spain, although since 2005 the Group has expanded into Portugal. The activities in America are located mainly in Brazil, Mexico and Colombia.
 
The breakdown of certain of the Group’s consolidated balances based on the geographical location of the companies that gave rise to them is as follows:
 
 
Thousands of euros
 
 
 
Revenue
 
 
Other income
 
 
Profit/(loss) before non-
controlling interests and tax
 
 
 
2012
 
 
2011
 
 
2010
 
 
2012
 
 
2011
 
 
2010
 
 
2012
 
 
2011
 
 
2010
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Europe
 
 
1,899,046
 
 
 
1,975,446
 
 
 
2,106,231
 
 
 
35,570
 
 
 
73,960
 
 
 
128,561
 
 
 
(468,246)
 
 
 
(359,625)
 
 
 
(29,949)
 
Spain
 
 
1,720,562
 
 
 
1,776,041
 
 
 
1,905,259
 
 
 
29,683
 
 
 
70,496
 
 
 
125,193
 
 
 
(489,251)
 
 
 
(395,847)
 
 
 
(41,623)
 
Rest of Europe
 
 
178,484
 
 
 
199,405
 
 
 
200,972
 
 
 
5,887
 
 
 
3,464
 
 
 
3,367
 
 
 
21,005
 
 
 
36,222
 
 
 
11,674
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
America
 
 
724,449
 
 
 
665,835
 
 
 
581,542
 
 
 
5,627
 
 
 
9,209
 
 
 
6,397
 
 
 
112,827
 
 
 
114,910
 
 
 
103,035
 
Total
 
 
2,623,495
 
 
 
2,641,281
 
 
 
2,687,773
 
 
 
41,197
 
 
 
83,169
 
 
 
134,958
 
 
 
(355,419)
 
 
 
(244,715)
 
 
 
73,086
 
 
 
 
Thousands of euros
 
 
 
Non-current assets (*)
 
 
Total assets
 
 
 
2012
 
 
2011
 
 
2010
 
 
2012
 
 
2011
 
 
2010
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Europe
 
 
4,355,234
 
 
 
4,676,153
 
 
 
4,966,425
 
 
 
7,052,320
 
 
 
7,305,629
 
 
 
7,577,468
 
Spain
 
 
4,169,221
 
 
 
4,483,084
 
 
 
4,715,976
 
 
 
6,735,632
 
 
 
6,988,294
 
 
 
7,258,263
 
Rest of Europe
 
 
186,013
 
 
 
193,069
 
 
 
250,449
 
 
 
316,688
 
 
 
317,335
 
 
 
319,205
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
America
 
 
239,353
 
 
 
214,168
 
 
 
210,423
 
 
 
609,693
 
 
 
572,895
 
 
 
573,986
 
Total
 
 
4,594,587
 
 
 
4,890,321
 
 
 
5,176,848
 
 
 
7,662,013
 
 
 
7,878,524
 
 
 
8,151,454
 

(*) Include property, plant and equipment, goodwill, intangible assets, investment accounted for using the equity method and other non-current assets.
 
 
(20) 
TAX MATTERS

As indicated under “Accounting Policies,” Promotora de Informaciones, S.A. files consolidated income tax returns in Spain, in accordance with the Spanish Corporation Tax Law, and is the Parent of consolidated tax group 2/91, which includes all its subsidiaries (see Appendix I) that meet the requirements provided for in Spanish legislation regulating the taxation of the consolidated profits of corporate groups.
 
Dts Distribuidora Television Digital, S.A. is the parent of tax group 136/11 which includes all the subsidiaries that meet the statutory requirements (see Appendix I) .
 
Also, on January 1, 2009, Prisa Radio, S.L. created its own consolidated tax group in Spain, identified with number 194/09, which also includes all the subsidiaries that meet the statutory requirements (see Appendix I).
 
In addition, on January 1, 2011 Grupo Cronos Distribución Integral, S.L. created its own consolidated tax group in Spain, identified with number 445/11, which also includes the subsidiaries that meet the statutory requirements (see Appendix I).
 
Dédalo Grupo Gráfico, S.L., created its own consolidated tax group in Spain, identified with number 225/04, which includes the subsidiaries that meet the statutory requirements for application of this special consolidated tax regime.
 
Lanza, S.A. de C.V. (Mexico) files consolidated tax returns in Mexico together with its Mexican subsidiaries.
 
GLR Services, Inc. also files consolidated tax returns in the United States together with its subsidiaries that meet the requirements for application of this special consolidated tax regime.
 
Media Global, SGPS, S.A. and the companies in which it directly or indirectly holds at least 90% of the share capital and which also meet the conditions required under Portuguese law constitute a consolidated tax group in Portugal.
 
The other Group subsidiaries file individual tax returns in accordance with the tax legislation prevailing in each country.
 
In prior years, certain Group companies performed or participated in corporate restructuring transactions under the special tax neutrality regime regulated in Chapter VIII of Title VII of the Consolidated Spanish Corporation Tax Law approved by Legislative Royal Decree 4/2004, of March 5. The disclosures required by this legislation are included in the notes to the financial statements of the related Group companies for the year in which these transactions were carried out.
 
Also, in prior years, several tax group companies availed themselves of tax credits for the reinvestment of extraordinary income under Article 21 of the repealed Spanish Corporation Tax Law 43/1995. The disclosures required by this Law are made in the notes to the financial statements of the corresponding companies.
 
In the financial statements for 2009, 2010 and 2011, several Group companies availed themselves of the tax credit for reinvestment of extraordinary income envisaged in Article 42 of the Spanish Corporation Tax Law amounting to EUR 1,226 thousand, EUR 41,805 thousand and EUR 559,498 thousand, respectively. The disclosures required by current legislation were included in the notes to the financial statements of the companies involved.
 
At the time of filing of the 2011 income tax statement, in July 2012, several companies availed themselves of the tax credit for the reinvestment of extraordinary income amounting to EUR 42,363 thousand, having fulfilled, in the year in which the income was obtained, the obligation to reinvest the sale price in the acquisition of property, plant and equipment, intangible assets, and financial assets, in accordance with the terms established by the tax legislation.
 
During the year, certain companies within the tax group deducted, for tax purposes excluding the recognition of impairment losses on equity interests from taxable income provided for under article 12.3 of the Spanish Corporation Tax Law. The disclosure requirements of this Law were met in the notes to the financial statements of these companies.
 
 
a) 
Reconciliation of the accounting profit to the taxable profit

The following table shows a reconciliation of the result of applying the current standard tax rate in Spain to consolidated net accounting profit, calculated under International Financial Reporting Standards, to the consolidated Group’s income tax expense for 2012, 2011 and 2010.
 
 
 
Income statement
 
 
 
2012
 
 
2011
 
 
2010
 
CONSOLIDATED NET PROFIT UNDER IFRSs*
 
 
(355,419
)
 
 
(244,715
)
 
 
73,086
 
Tax charge at 30%**
 
 
(106,626
)
 
 
(73,415
)
 
 
21,926
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidation adjustments
 
 
61,782
 
 
 
74,804
 
 
 
17,534
 
Permanent differences (1)
 
 
(22,704
)
 
 
(4,499
)
 
 
34,961
 
Tax loss carryforwards
 
 
(399)
 
 
 
-
 
 
 
(780
)
Tax credits and tax relief (2)
 
 
(2,133
)
 
 
(1,952
)
 
 
(4,566
)
Effect of applying different tax rates (3)
 
 
3,258
 
 
 
1,247
 
 
 
(8,178
)
INCOME TAX
 
 
(66,822
)
 
 
(3,815
)
 
 
60,897
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ADJUSTMENT OF PRIOR YEARS' TAX (4)
 
 
5,700
 
 
 
146,171
 
 
 
6,611
 
FOREIGN TAX EXPENSE (5)
 
 
3,392
 
 
 
4,092
 
 
 
3,820
 
EMPLOYEE PROFIT SHARING (6)
 
 
2,721
 
 
 
1,525
 
 
 
1,696
 
ADJUSTMENTS TO CONSOLIDATED TAX
    
34,573
      
-
        
-
TOTAL INCOME TAX
 
 
(20,436)
 
 
 
147,973
 
 
 
73,024
 
*Loss
** The parentheses mean income

(1) The permanent differences are due mainly to different accounting and tax criteria of certain provisions and non-computable income and non-deductible expenses. Also included is the effect of those companies with losses which do not generate deferred tax.
 
(2) The Spanish Prisa reporting Group companies took a domestic dividend double taxation tax credit on dividends not eliminated on consolidation, an international double taxation credit and a tax credit provided for in Article 20 of Law 49/2002, of December 23, on the Tax Regime of Not-for-Profit-Entities and Tax Incentives for Patronage.
 
(3) Relating to the effect of taxation of profits from American and European subsidiaries at different rates.
 
(4) Refers to the impact on the income statement of the adjustment of income tax from prior years.
(5) This relates to the expense for taxes paid abroad and arose from withholdings at source on the income from exports of services provided by the Group's Spanish companies abroad and dividends.
 
(6) This is an additional component of the income tax expense in countries such as Mexico.
 

b) 
Deferred tax assets and liabilities

The following table shows the origin and amount of the deferred tax assets and liabilities recognized at year-end 2011 and 2012 (in thousands of euros):

2012-

DEFERRED TAX ASSETS ARISING FROM
 
 
12/31/2012
 
 
Additions
 
 Transfers
 
Disposals
 
 
12/31/2011
 
Advance Payment Tax Assessments
    
26,532
      
26,532
    
-
    
-
      
-
  
Non- deductible financial expenses
    
13,209
      
13,209
    
-
    
-
      
-
  
Non-deductible provisions
 
 
12,298
 
 
 
11,107
 
  
-
 
 
(3,247)
 
 
 
4,438
 
Non-capitalizable assets
 
 
37
 
 
 
-
 
  
-
 
 
-
 
 
 
37
 
Tax loss carryforwards
 
 
906,126
 
 
 
98,948
 
  
(12,017)
 
 
(3,435)
 
 
 
822,630
 
Unused tax credits recognized
 
 
345,593
 
 
 
37,501
 
  
-
 
 
(8,494)
 
 
 
316,586
 
Other
 
 
40,074
 
 
 
7,265
 
  
12,017
 
 
(2,211)
 
 
 
23,003
 
Total
 
 
1,343,869
 
 
 
194,562
 
  
-
 
 
(17,387)
 
 
 
1,166,694
 

DEFERRED TAX LIABILITIES ARISING FROM
 
 
 
12/31/2012
 
 
Additions
 
 
Disposals
 
 
12/31/2011
 
Impairment losses on equity investments and goodwill
 
 
12,601
 
 
 
158
 
 
 
(7,194)
 
 
 
19,637
 
Deferral for reinvestment of extraordinary income
 
 
5,176
 
 
 
-
 
 
 
(918)
 
 
 
6,094
 
Accelerated depreciation and amortization
 
 
957
 
 
 
486
 
 
 
(17)
 
 
 
488
 
Other
 
 
3,443
 
 
 
29
 
 
 
(776)
 
 
 
4,190
 
Total
 
 
22,177
 
 
 
673
 
 
 
(8,905)
 
 
 
30,409
 

2011-

DEFERRED TAX ASSETS ARISING FROM
 
 
12/31/2011
 
 
Additions
 
 Transfers
 
Disposals
 
 
12/31/2010
 
Non-deductible provisions
 
 
4,438
 
 
 
2,218
 
  
-
 
 
(6,623)
 
 
 
8,843
 
Non-capitalizable assets
 
 
37
 
 
 
-
 
  
-
 
 
-
 
 
 
37
 
Tax loss carryforwards
 
 
822,630
 
 
 
44,386
 
  
12,936
 
 
(4,109)
 
 
 
769,417
 
Unused tax credits recognized
 
 
316,586
 
 
 
83,280
 
  
(121)
 
 
(10,886)
 
 
 
244,313
 
Other
 
 
23,003
 
 
 
13,218
 
  
(12,815)
 
 
(820)
 
 
 
23,420
 
Total
 
 
1,166,694
 
 
 
143,102
 
  
-
 
 
(22,438)
 
 
 
1,046,030
 

DEFERRED TAX LIABILITIES ARISING FROM
 
 
 
12/31/2011
 
 
Additions
 
 
Disposals
 
 
12/31/2010
 
Impairment losses on equity investments and goodwill
 
 
19,637
 
 
 
125
 
 
 
(549)
 
 
 
20,061
 
Deferral for reinvestment of extraordinary income
 
 
6,094
 
 
 
-
 
 
 
(150)
 
 
 
6,244
 
Accelerated depreciation and amortization
 
 
488
 
 
 
-
 
 
 
(17)
 
 
 
505
 
Other
 
 
4,190
 
 
 
2,582
 
 
 
(137)
 
 
 
1,745
 
Total
 
 
30,409
 
 
 
2,707
 
 
 
(853)
 
 
 
28,555
 


The tax assets and liabilities on the consolidated balance sheet at December 31, 2012 and at December 31, 2011 are recognized at their estimated recoverable amount.
 
There are no significant temporary differences arising from investments in subsidiaries, branches, associates or joint ventures that generate deferred tax liabilities.
 
There are no significant amounts arising from temporary differences associated with retained earnings of subsidiaries in jurisdictions where different tax rates are applied and, therefore, no deferred tax liabilities were recognized in this connection.
 
Among the deferred tax assets the most significant amounts correspond to (i) tax credits arising from tax losses, tax credits for investments and arising from restrictions on the deductibility of financial expenses from Prisa’s 2/91 tax consolidation group, Prisa Radio’s 194/09 tax consolidation group and DTS Distribuidora Televisión Digital, S.A.’s 136/11 tax consolidation group. These deferred assets were recognized in accordance with the criteria set forth in valuation regulations.
 
Following is a detail, in thousands of euros, of the prior years' tax losses of Spanish companies available for offset against future profits, showing the year in which the tax losses were incurred and the last years for offset.
 
Year
incurred
 
Amount
 
 
Recognized
 
 
Not
recognized
 
 
Last year for
offset
 
 
Amount for
offset
 
1996
 
 
628
 
 
 
  
 
 
 
628
 
 
2014
 
 
 
628
 
1997
 
 
78,221
 
 
 
77,185
 
 
 
1,036
 
 
2015
  
 
 
1,036
 
1998
 
 
242,124
 
 
 
225,065
 
 
 
17,059
 
 
 
2016
  
 
 
1,537
 
1999
 
 
371,719
 
 
 
296,335
 
 
 
75,384
 
 
 
2017
  
 
 
7,144
 
2000
 
 
474,333
 
 
 
408,775
 
 
 
65,558
 
 
 
2018
  
 
 
17,222
 
2001
 
 
479,574
 
 
 
422,260
 
 
 
57,314
 
 
 
2019
  
 
 
3,503
 
2002
 
 
551,142
 
 
 
465,576
 
 
 
85,566
 
 
 
2020
  
 
 
18,451
 
2003
 
 
598,011
 
 
 
545,023
 
 
 
52,988
 
 
 
2021
  
 
 
84,293
 
2004
 
 
160,651
 
 
 
95,283
 
 
 
65,368
 
 
 
2022
  
 
 
20,945
 
2005
 
 
7,040
 
 
 
267
 
 
 
6,773
 
 
 
2023
  
 
 
7,040
 
2006
 
 
12,498
 
 
 
6,348
 
 
 
6,150
 
 
 
2024
  
 
 
390,992
 
2007
 
 
5,682
 
 
 
56
 
 
 
5,626
 
 
 
2025
  
 
 
5,682
 
2008
 
 
13,433
 
 
 
238
 
 
 
13,195
 
 
 
2026
  
 
 
2,436,583
 
2009
 
 
8,690
 
 
 
67
 
 
 
8,623
 
 
 
2027
  
 
 
8,690
 
2010
 
 
4,388
 
 
 
591
 
 
 
3,797
 
 
 
2028
  
 
 
4,388
 
2011
 
 
145,301
 
 
 
141,549
 
 
 
3,752
 
 
 
2029
  
 
 
145,301
 
2012
    
402,526
      
314,881
      
87,645
      
2030
      
402,526
  
Total
 
 
3,555,961
 
 
 
  2,999,499
 
 
 
556,462
 
 
 
    
 
 
3,555,961
 

The Group recognized tax loss carryforwards in respect of losses incurred in launching the satellite pay TV business. The most significant losses in this respect were those recognized by DTS Distribuidora de Televisión Digital, S.A. prior to its inclusion in the Prisa Televisión Group. The Group also recognized tax loss carryforwards in respect of losses incurred in the integration of DTS Distribuidora de Televisión Digital, S.A. The recovery thereof is reasonably assured on the basis of the recent performance of the pay TV businesses, the forecasts contained in the Prisa Televisión Group's business plan and the Notes to the Group’s consolidated financial statements.
 
In this respect, the management of Prisa Televisión Group has a long-term business plan, which it has kept updated and in which, among other things, matters relating to the Group's future strategy, studies by independent third parties, experiences of other operators similar to the Group in neighboring countries, and the proven experience in recent years of the Prisa Televisión Group in the pay TV market in Spain were taken into account.
 
The assumptions used in this business plan are conservative and relate to matters such as the penetration of pay TV in Spain, Prisa Televisión Group's share of this penetration, the trend in the number of subscribers and in the prices of the services offered by the Group and the general trend in costs, in particular programming costs within the current technological and right exploitation framework in which the Prisa Televisión Group operates. In this respect, the projection for the long-term penetration of pay TV in Spain is several points below the current penetration rates in neighboring countries. In addition, these rates are generally below the forecasts of independent third-party consultants. Consequently, the estimated annual increases at short and medium term in the net subscriber figures are lower than the annual increases achieved in recent years by certain other European operators. This business plan also includes sensitivity studies of the most significant assumptions in order to situate them in pessimistic scenarios.
 

The main conclusion of the aforementioned business plan is that the Prisa Televisión Group will report rising earnings figures at medium term which, together with its legal restructuring and the transactions described in the Notes to the Group's consolidated financial statements, will enable the tax assets recognized by it to be recovered.
 
The breakdown, by country, of the tax loss carryforwards of the Group's foreign companies is shown below (in thousands of euros):
 
Year generated
 
USA
 
 
MEXICO
 
 
BRAZIL
 
 
CHILE
 
 
ARGENTINA
 
 
COLOMBIA
 
 
PORTUGAL
 
 
TOTAL
 
1997
 
 
1,749
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,749
 
1998
 
 
1,719
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,719
 
1999
 
 
2,930
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,930
 
2000
 
 
3,857
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3,857
 
2001
 
 
3,243
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3,243
 
2002
 
 
1,879
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,879
 
2003
 
 
2,898
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,898
 
2004
 
 
3,128
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3,128
 
2005
 
 
3,085
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
3,085
 
2006
 
 
7,341
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,947
 
 
 
9,288
 
2007
 
 
5,433
 
 
 
 
 
 
 
 
 
 
 
 
177
 
 
 
 
 
 
2,395
 
 
 
8,005
 
2008
 
 
4,234
 
 
 
292
 
 
 
  
 
 
 
 
 
 
204
 
 
 
 
 
 
 
 
 
 
4,730
 
2009
 
 
5,345
 
 
 
65
 
 
 
  
 
 
 
  
 
 
 
315
 
 
 
  
 
 
 
 
 
 
 
5,725
 
2010
 
 
3,423
 
 
 
  465
 
 
 
  
 
 
 
9,971
 
 
 
  627
 
 
 
 
 
 
 
 
 
 
 
14,486
 
2011
    
5,549
      
57
      
2,019
              
403
                      
8,028
  
2012
 
 
2,300
 
 
 
4
 
 
 
5,654
 
 
 
 
 
 
 
  376
 
 
 
1,091
 
 
 
  361
 
 
 
9,786
 
TOTAL
 
 
58,113
 
 
 
883
 
 
 
7,673
 
 
 
9,971
 
 
 
2,102
 
 
 
1,091
 
 
 
4,703
 
 
 
84,536
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
RECOGNIZED
 
 
 
 
 
 
  294
 
 
 
  7,673
 
 
 
 9,971
 
 
 
 2,102
 
 
 
  1,091
 
 
 
 2,092
 
 
 
 23,223
 
NOT RECOGNIZED
 
 
58,113
 
 
 
589
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
2,611
 
 
 
61,313
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PERIOD FOR OFFSET
 
20 years
 
 
10 years
 
 
No limit
 
 
No limit
 
 
5 years
 
 
5 years
 
 
6 and 4 years
 
 
 
 
 
 
c) 
Years open for review by the tax authorities
 
The years open for review by the tax authorities for the main taxes vary from one consolidated company to another, although they are generally the last four years, with the exceptions discussed below.

The revenue authorities audited certain companies within the consolidated tax and accounting scope of Promotora de Informaciones, S.A., and several statutory notices of deficiency were issued for the following: personal income tax withholdings and payments (1994-1996), VAT (1994-1996), single revaluation tax, and income tax (1990-1996). At the date of preparation of these financial statements, the procedural status of the cases is as follows:
 
Company
Tax
Years
Procedural status
Subsidiaries
 
 
 
Diario El País, S.L.
Personal income tax withholdings
1994 to 1996
In 2012, payment was made to comply with the order to enforce the partly favorable decision

The Antena 3 de Radio, S.A. consolidated tax group was audited by the revenue authorities in 2005. The revenue authorities reviewed the following years and taxes: 2000, 2001, and 2002 for income tax, and January 2001 to December 2002 for VAT, personal income tax withholdings and payments (employees and professionals) and tax on property income. As a result of the audit, notice of deficiency amounting to EUR 3,499 thousand was issued in respect of the consolidated income tax, which was signed on a contested basis. The appropriate motions for review were filed against these notices and a decision upholding the final tax determinations was issued. The related appeal was filed at the Madrid Regional Board of Tax Appeals against the decision, the execution of which was stayed in return for the posting of a guarantee. The Board handed down a decision, partially upholding the appeal filed in respect of substantially all of the deficiency and interest and reversed the penalty.  To comply with the decision issued by the Regional Board of Tax Appeals, during 2010 the revenue authorities reopened the 2001-2002 income tax audit. During the year, this audit concluded with a determination that the entity has a tax liability of EUR 528 thousand. An appeal was filed at the Central Board of Tax Appeals against this determination.
 

During 2011 verification and inquiry actions were initiated with regard to the tax on raffles, draws, wagers and games of chance for 2007 to 2010 at Sociedad Prisa Televisión, S.A. The actions concluded with a contested statutory notice of deficiency resulting in a proposed determination in the amount of EUR 8,570 thousand (deficiency plus interest). An appeal was filed at the Central Board of Tax Appeals against this decision. Despite the appeal having been filed, the corresponding tax liability was settled in the year and recognized as a tax credit as the procedure has not yet ended and as there is no final ruling which rejects the company’s claim.
 
During 2012 verification and inquiry actions were initiated with regard to the tax on raffles, draws, wagers and games of chance for 2007 to 2010 at Promotora de Emisoras de Televisión, S.A. The actions concluded with a contested statutory notice of deficiency resulting in a proposed determination in the amount of EUR 544 thousand (deficiency plus interest). An appeal was filed at the Central Board of Tax Appeals against the decision. The amount owed by the company has been paid and recognized as an expense.
 
In 2006, the revenue authorities completed their audit of the Prisa tax group for consolidated income tax for 1999, 2000, 2001, and 2002 and for VAT, personal income tax withholdings and repayments (employees and professionals), tax on property income, investment income tax and non-resident income tax for the following companies and years:

Company
Years
Parent -
Promotora de Informaciones, S.A.
 
June 2000 to May 2004
Subsidiaries
 
Diario El País, S.L.
June 2000 to May 2004
Sociedad Española de Radiodifusión, S.L.
June 2000 to May 2004
Prisa Brands Solutions, S.L.U.
January 2001 to December 2003
Ítaca, S.L.
January 2001 to December 2002
Mateu Cromo Artes Gráficas, S.A.
January 2001 to December 2002
Promotora de Emisoras de Televisión, S.A.
January 2001 to December 2003
Grupo Empresarial de Medios Impresos, S.L.
January 2001 to December 2003
Grupo Santillana de Ediciones, S.L.
January 2001 to December 2003
Santillana Educación, S.L.
January 2001 to December 2003
Santillana Ediciones Generales, S.L.
January 2001 to December 2003

The decisions handed down on the motions for review filed against the determinations arising from the statutory notices issued for each year (1999 to 2002) for income tax (which were partially upheld) affirmed determinations totaling EUR 34,867 thousand (deficiency plus late-payment interest). Appeals against these decisions were filed at the Central Board of Tax Appeals. The decisions handed down by the aforementioned Board, partially upholding the Group’s claims and overturning the determinations relating to all those years, formed the subject matter of a petition for review at the National Appellate Court. Payment of this amount was stayed and the related guarantee was posted. The National Appellate Court dismissed the petitions and the company filed the corresponding petitions to the Supreme Court.
 
The petitions for 2001 and 2002 were both deemed inadmissible on formal grounds. Similarly, motions for annulment were filed and rejected; the Parent then filed petitions for review with the Constitutional Court.
 
As a result, in 2012 the company received the order to enforce the decision of the National Appellate Court concerning income tax for 2001; an objection to the form of enforcement was filed. Similarly, this enforcement entailed a new tax determination of EUR 17,069 thousand against which the Parent has filed a motion for review and the corresponding appeal to the Board of Tax Appeals upon failure of the motion. This administrative act has required the posting of a guarantee.
 
The other taxes audited did not give rise to any determination or the amount of the determination was immaterial and has been paid or appealed.
 
In 2010, the tax audit of consolidated income tax for 2003 to 2005 was completed and the corresponding statutory notice was issued stating a deficiency of approximately EUR 16,960 thousand, which was signed on a contested basis. During the year, the negative decision concerning the appeal to the Board of Tax Appeals was received and a petition for judicial review was filed. Despite the petition having been filed, the corresponding tax liability was settled in the year and recognized as a tax credit as the procedure has not yet ended and as there is no final ruling which rejects the Company’s claim.
 
Also, the audits of personal income tax withholdings and repayments (employees and professionals), tax on property income and investment income tax for 2004 and 2005 were completed, which gave rise to uncontested notices of deficiency that were paid in the year and a contested notice of deficiency amounting to EUR 326 thousand which was also paid. At the date of the preparation of these financial statements, the petitions for judicial review have been rejected, and all of the tax debts arising from the regularization have been fully paid.
 

 
Also, the VAT audit for June 2004 to December 2006 was completed with uncontested notices of deficiency amounting to EUR 909 thousand paid in 2010 and contested notices amounting to EUR 75 thousand and EUR 5,416 thousand respectively, which are under review at the National Appellate Court and the Central Board of Tax Appeals, respectively.
 
In 2012, the revenue authorities continued their audits of tax consolidation group 2/91 whose parent is Promotora de Informaciones, for income tax for 2006 to 2008.
 
This audit also includes VAT, personal income tax withholdings and repayments (employees and professionals) and non-resident income tax for the following years:
 
Company
Years
PIT/Non-resiednts year
Parent -
2008
June 2007 to December 2008
Promotora de Informaciones, S.A.
    
Subsidiaries
    
Ítaca, S.L.
2008
April 2008 to December 2008
Sociedad Española de Radiodifusión, S.L.
2008
March 2008 to December 2008
Grupo Santillana de Ediciones, S.L.
2008
April 2008 to December 2008
Santillana Educación, S.L.
2008
March 2008 to December 2008
 
The Supreme Court petition for review concerning the determination of income tax for 2001 was initially denied leave to proceed on purely formal grounds, and, on a prudential basis, the Company booked a provision for EUR 183,000 thousand in case of an unfavorable court ruling for the items in question, largely the export tax credit, within the proceedings in progress in relation to the tax audits. In 2012, given that the Supreme Court petition for 2002 was denied leave to proceed, the Company did the same and booked an additional provision of EUR 6,700 thousand (Note 14).
 
The Company considers that no additional material contingencies would arise from a tax review of the years open to examination.
 
(21) 
DISTRIBUTION OF RESULT

The proposal for the distribution of the loss of Promotora de Informaciones, S.A. for 2012 and 2011 is as follows (in thousands of euros):

   
2012
  
2011
  
 
  
Amount
  
Amount
 
Basis of appropriation
      
 
 
Loss for the year
  
(685,793)
  
 
(616,903)
 
Distribution-
      
 
 
 
Prior year losses
  
(685,793)
  
 
(616,903)
 

The proposal for the distribution of the profit of Promotora de Informaciones, S.A. for 2010 is as follows (in thousands of euros):
 
 
 
Amount
 
Basis of appropriation
 
 
 
Profit for the year
 
 
9,282
 
Distribution-
 
 
 
 
Legal reserve
 
 
928
 
Bylaw-stipulated reserves
 
 
928
 
Dividends
 
0.014583€ per Class B share
 
Voluntary reserves
 
Remaining balance
 

 
(22)
EARNINGS PER SHARE

Basic earnings/(loss) per share was calculated by dividing the profit/(loss) for the year attributable to equity holders of the Parent by the weighted average number of ordinary shares in circulation during the period.
 
The impact on the number of ordinary shares of the share subscription rights (warrants) and the conversion of Class B shares is antidilutive. Therefore, basic and diluted earnings per share amounts are the same.
 
The basic earnings (loss) per share attributed to equity holders of the Parent corresponding to continuing and discontinued operations in 2012, 2011 and 2010 were the following:
 
 
 
Thousands of euros
 
 
 
12/31/2012
 
 
12/31/2011
 
 
12/31/2010
 
 
 
 
 
 
 
 
 
 
 
Profit/(loss) for the year from continuing operations attributable to the Parent (*)
 
 
(256,761)
 
 
 
(518,773)
 
 
 
(43,364
)
Loss after tax from discontinued operations
 
 
(3,496)
 
 
 
(2,646)
 
 
 
(35,011
)
Profit/(loss) for the year attributable to the Parent
 
 
(260,257)
 
 
 
(521,419)
 
 
 
(78,375
)
Weighted average number of ordinary shares outstanding (thousands of shares)
 
 
947,991
 
 
 
845,309
 
 
 
277,279
 
Basic earnings/(loss) per share of continuing operations (euros)
 
 
(0.27)
 
 
 
(0.61)
 
 
 
(0.16
)
Basic loss per share of discontinued operations (euros)
 
 
(0.00)
 
 
 
(0.00)
 
 
 
(0.13
)
Basic earnings/(loss) per share (euros)
 
 
(0.27)
 
 
 
(0.62)
 
 
 
(0.28
)

(*) In 2011, in order to calculate basic earnings/(loss) per share, the loss from continuing operations attributable to the Parent amounting to EUR 448,572 thousand (2010: EUR 37,859 thousand) were adjusted by EUR 70,201 thousand (2010: EUR 5,505 thousand), the amount corresponding to preferential dividends of 2011.

Weighted average number of ordinary shares outstanding in 2012, 2011 and 2010:

 
 
Thousands of shares
 
 
 
2012
 
 
2011
 
 
2010
 
Ordinary shares prior to capital increase
 
 
847,861
 
 
 
846,978
 
 
 
219,135
 
Share capital increases
 
 
103,976
 
 
 
693
 
 
 
58,484
 
Weighted average of treasury shares
 
 
(3,846)
 
 
 
(2,362)
 
 
 
(340)
 
Weighted average number of ordinary shares outstanding for basic earnings per share
 
 
947,991
 
 
 
845,309
 
 
 
277,279
 
 
(23) 
EVENTS AFTER THE REPORTING PERIOD

By virtue of the agreements entered into in 2011, in February 2013, PortQuay West I B.V., company controlled by Miguel Paes do Amaral, has exercised its right to transmit to Vertix, 100% subsidiary of Prisa, the 10% of Grupo Media Capital SGPS, S.A.'s share capital.
 
 
(24)
RELATED PARTY TRANSACTIONS

The detail of the balances receivable from and payable to associates and related parties in 2012 and 2011 is as follows:
 
 
 
Thousands of euros
 
 
 
12/31/2012
 
 
12/31/2011
 
 
 
 
 
 
 
 
Receivable
 
 
 
 
 
 
Trade receivables
 
 
21,023
 
 
 
27,510
 
-Associates
 
 
20,922
 
 
 
27,468
 
-Related parties
 
 
101
 
 
 
42
 
Long-term loans
 
 
18,783
 
 
 
144,493
 
Short-term loans
 
 
5,483
 
 
 
4,901
 
Total
 
 
45,289
 
 
 
176,904
 
Payable
 
 
 
 
 
 
 
 
Trade payables
 
 
9,854
 
 
 
12,102
 
-Associates
 
 
9,854
 
 
 
12,102
 
-Related parties
 
 
-
 
 
 
-
 
Other payables
 
 
5
 
 
 
-
 
-Associates
 
 
5
 
 
 
-
 
-Related parties
 
 
-
 
 
 
-
 
Total
 
 
9,859
 
 
 
12,102
 

The transactions performed with related parties in 2012, 2011 and 2010 were as follows (in thousands of euros):

 
 
12/31/2012
 
 
12/31/2011
 
 
12/31/2010
 
 
 
Directors
and
executives
 
 
Group
employees,
companies or
entities
 
 
Directors
and
executives
 
 
Group
employees,
companies or
entities
 
 
Directors
and
executives
 
 
Group
employees,
companies or
entities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Services received
 
 
2,652
 
 
 
22,673
 
 
 
4,996
 
 
 
33,277
 
 
 
22,541
 
 
 
30,998
 
Other expenses
 
 
11,177
 
 
 
3,588
 
 
 
27,393
 
 
 
2,328
 
 
 
16,955
 
 
 
-
 
Total expenses
 
 
13,829
 
 
 
26,261
 
 
 
32,389
 
 
 
35,605
 
 
 
39,496
 
 
 
30,998
 
Finance income
 
 
-
 
 
 
156
 
 
 
-
 
 
 
180
 
 
 
-
 
 
 
425
 
Dividend received
 
 
-
 
 
 
13,727
 
 
 
-
 
 
 
24,688
 
 
 
-
 
 
 
-
 
Services rendered
 
 
-
 
 
 
123,660
 
 
 
-
 
 
 
85,826
 
 
 
-
 
 
 
-
 
Other income
 
 
-
 
 
 
12,034
 
 
 
-
 
 
 
9,875
 
 
 
-
 
 
 
8,319
 
Total income
 
 
-
 
 
 
149,577
 
 
 
-
 
 
 
120,569
 
 
 
-
 
 
 
8,744
 

All related party transactions have taken place under market conditions.

The aggregate amount of EUR 11,177 thousand relates to the accrued salaries of directors (see Note 25) and executives.
 
 
Remuneration of senior executives-

The total remuneration earned by the senior executives of Promotora de Informaciones, S.A. in 2012 and of the Group companies other than it amounted to EUR 5,819 thousand (EUR 6,784 thousand in 2011 and EUR 7,109 thousand in 2010), which will be paid at short term.
 
At December 31, 2012, remuneration of senior executives of the Prisa Group is the one accrued by those persons who are members of the Business Management Committee and the Corporate Committee who are not executive directors, in addition to the internal audit director of Promotora de Informaciones, S.A. During 2012 these senior executives were: Javier Lázaro, Fernando Martínez Albacete, Miguel Ángel Cayuela Sebastián, Iñigo Dago Elorza, Pedro García Guillén, Kamal M. Bherwani, Andrés Cardo Soria, Bárbara Manrique de Lara, Jose Luis Sainz, Óscar Gómez and Virginia Fernández Iribarnegaray.
 
In addition, this remuneration includes for 2012 the amounts corresponding to Ignacio Santillana del Barrio, Augusto Delkader Teig y Javier Pons Tubio until September, under General Manager of Prisa, Chairman of Prisa Radio and Chief Exective Officer of Prisa Radio. As of September, 2012 an internal reorganization was undertaken and lead to a change of senior executives.
 
Transactions between Group employees, companies or entities-

The aggregate amount of EUR 22,673 thousands correspond to the printing services provided by various investees of Dédalo Grupo Gráfico, S.L. up to March 31, 2012, after which the company was fully consolidated (see Note 3), distribution, transport and logistics services provided by Gelesa Gestión Logística and other companies belonging to the distribution business and advertising and technical and administrative services provided by Mediaset España Comunicación, S.A.
 
The aggregate amount of EUR 13,727 thousands correspond to dividends received by Prisa Televisión, S.A.U. as a result of the investment in Mediaset España Comunicación, S.A. (EUR 9,734 thousand) and dividends received by Sociedad Española de Radiodifusión, S.L. as a result of the investment in Sistema Radiópolis, S.A. de C.V. (EUR 3,993 thousand).
 
Finally the aggregate amount of EUR 123,660 thousands correspond to income received for technical and administrative services and for sale of advertising space and rights to Grupo Mediaset España Comunicación, S.A., as well as to income received for the sale of copies and add-ons to Gelesa Gestión Logística and other companies belonging to the distribution business.
 
The detail of other transactions performed with related parties in 2012 and 2011 is as follows (in thousands of euros):

 
 
12/31/2012
 
 
12/31/2011
 
 
 
Significant
shareholders
 
 
Group
employees,
companies or
entities
 
 
Other
related
parties
 
 
Significant
shareholders
 
 
Group
employees,
companies or
entities
 
 
Other
related
parties
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financing agreements: loans
 
 
-
 
 
 
8,006
 
 
 
-
 
 
 
-
 
 
 
141,755
 
 
 
-
 
Guarantees provided (Note 26)
 
 
-
 
 
 
-
 
 
 
12,801
 
 
 
-
 
 
 
105,200
 
 
 
36,550
 
Commitments/guarantees cancelled (Note 26)
 
 
-
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
-
 
Dividends and other distributed profits
 
 
-
 
 
 
19,933
 
 
 
-
 
 
 
-
 
 
 
18,338
 
 
 
-
 
Other transactions
 
 
-
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
-
 

At December 31, 2011, the aggregate amount of EUR 141,755 thousand (EUR 99,682 thousand in 2010) included the EUR 136,792 thousand (EUR 92,625 thousand in 2010) credit facility granted to Dédalo Grupo Gráfico, S.L. (see Note 8).

The aggregate amount of EUR 19,933 thousand correspond to dividends distributed by DTS Distribuidora de Televisión Digital, S.A. to its shareholder Mediaset España Comunicación, S.A. (EUR 18,338 thousand in 2011).
 
 
(25) 
REMUNERATION AND OTHER BENEFITS OF DIRECTORS

In 2012, 2011 and 2010, the consolidated companies accrued the following amounts in respect of remuneration to Prisa’s Board members:
 
 
Thousands of euros
 
 
 
12/31/2012
 
 
12/31/2011
 
 
12/31/2010
 
 
 
 
 
 
 
 
 
 
 
Fixed remuneration
 
 
2,908
 
 
 
3,333
 
 
 
2,478
 
Variable remuneration
 
 
-
 
 
 
7,272
 
 
 
1,811
 
Attendance fees
 
 
463
 
 
 
561
 
 
 
1,833
 
Bylaw-stipulated directors’ emoluments
 
 
1,908
 
 
 
2,000
 
 
 
1,609
 
Share options
 
 
-
 
 
 
-
 
 
 
74
 
Other
 
 
79
 
 
 
7,443
 
 
 
2,041
 
Total
 
 
5,358
 
 
 
20,609
 
 
 
9,846
 

No credits, advances or loans have been granted to the members of the Board of Directors, and there are no pension obligations to them.

In addition, during 2012 an expense of EUR 853 thousands was registered due to the accrual of the remuneration already paid in 2011 to the current executive president of the Group (see Note 16).
 
Due to current general economic conditions, executive directors Mr. Juan Luis Cebrián, Mr. Manuel Polanco Moreno and Mr. Fernando Abril-Martorell have voluntarily agreed with the Company to have only the fixed remuneration stipulated in their contracts for 2012 and not to receive any variable remuneration.

Pursuant to Section 229 of the Corporate Enterprises Act, approved by Legislative Royal Decree 1/2010 dated July 2, following is a detail for 2011 of the companies with the same, analogous or similar corporate purpose as that of Promotora de Informaciones, S.A. (PRISA) in which directors and their affiliates, as defined in Section 231 of this Act, have stakes, and of the duties, if any, that they perform therein:
 
Owner
Company
  
Percentage of
ownership (%)
    
Functions
  
Juan Luis Cebrián Echarri
Le Monde Libre
     -    
Director
  
Juan Luis Cebrián Echarri
Société Editrice du Monde
     -    
Director
  
Juan Luis Cebrián Echarri
Mediaset España Comunicación, S.A.
     -    
Director
  
Manuel Polanco Moreno
Mediaset España Comunicación, S.A.
     -    
Deputy Chairman
  
Manuel Polanco Moreno
V-me Media Inc
     -    
Director
  
Fernando Abril-Martorell
Telecomunicaciones de Sao Paulo SS-Telesp
     -    
Director
  
Nicolas Berggruen
Société Editrice du Monde
     -    
Director
  
Arianna Huffington
AOL, Inc
     -    
Chairman and Director of
“The Huffington Post media Group”
  
Jose Luis Leal Maldonado
Punto y Seguido, S.A.
     0.05     -  
Gregorio Marañón y Bertrán de Lis
Universal Music Spain, S.L
     -    
Chairman
  
Harry Sloan
Zenimax Media Inc
     1.91    
Director
  

It is also hereby stated that:
 
 
i)
a daughter of Director Mr. Juan Luis Cebrián is Director of the Spanish TV Film Area of Corporación RTVE (Radio Televisión Española);
 
ii)
a son of Director Mr. Alain Minc’s is the Editor of  “Paris Match”, “Journal du Dimanche” and  “Version Femina” (a magazine edited by the Lagardère Group), and
 
iii)
Director Mr. Nicolas Berggruen owns 45% of the share capital of LeYa, the holding company of the editorial group composed of Brazilian, Portuguese and African editors, through his company Berggruen Holding LTD.

This list does not include Prisa Group companies. However, it is hereby stated that the following directors of Promotora de Informaciones, S.A. are part of the managing body of certain Prisa Group companies, as disclosed in the Company’s Annual Corporate Governance Report: Juan Luis Cebrián Echarri, Fernando Abril-Martorell, Matías Cortés Dominguez, Manuel Polanco Moreno, Arianna Huffington and Gregorio Marañón y Bertrán de Lis.
 

Also, in accordance with Section 230 of the above-mentioned Law, it is hereby stated that there is no record that any of the Board members have been engaged in 2012, or are currently engaged, for their own account or the account of others, in a business that is the same as or analogous or supplementary to the business constituting the corporate purpose of Promotora de Informaciones, S.A.
 
(26) 
GUARANTEE COMMITMENTS TO THIRD PARTIES

At December 31, 2012, following the sale of Prisa’s total stake in Iberbanda, S.A. to Telefónica de España, S.A.U. in 2011, Prisa maintained the guarantee solely on certain commitments acquired to Public Administrations by Iberbanda in the amount of EUR 3,384 thousand.
 
At December 31, 2012, Prisa had furnished bank guarantees amounting to EUR 272,184 thousand and USD 2,863 thousand mainly in relation to the tax assessments issued by the tax authorities that were signed on a contested basis, litigation for football rights and acquisition of football rights (see Note 29).

On June 15, 2011, Prisa furnished a first-call guarantee for up to USD 40,000 thousand regarding payment obligations set forth in two contracts signed between DTS Distribuidora de Televisión Digital, S.A. and Cisco Systems Capital Spain, S.L. The contracts consist in a revolving lease, for USD 80,000 thousand, and a credit agreement, for USD 2,350 thousand, and the payment obligations relate to the lease, development and rental of advanced television-signal decoders for Canal+.
 
To enforce the guarantee, it shall suffice for Cisco Systems Capital Spain, S.L. to inform Prisa that a breach has taken place and to indicate the amount owed, in which event Prisa undertakes to pay the amount requested within 15 calendar days. The maximum amount guaranteed may be claimed either in whole or in part and on one or more occasions and, if the case should arise, the maximum amount will be reduced in accordance with the payments that have been made, and the guarantee on the amount pending shall remain in effect.
 
The guarantee is irrevocable and it is furnished in a non-specific manner and irrespective of the legal relationship between Cisco Systems Capital Spain, S.L. and DTS Distribuidora de Televisión Digital, S.A.; hence, it shall be payable upon a simple request, when the first written demand is received, with no need to evidence a prior claim or to bring any action against DTS Distribuidora de Televisión Digital, S.A.  The guarantee shall remain in force until the complete discharge of the obligations covered by it. The amount guaranteed by Prisa at December 31, 2012 was EUR 20,000 thousand.
 
The guarantee shall be extended and shall cover any extension or broadening of or amendment to the aforementioned guaranteed contracts, and there shall be no need to notify Prisa of such extensions, broadening or amendments.
 
Lastly, Prisa furnishes a joint and several guarantee to Le Monde Libre in the amount of EUR 12,801 thousand covering part of the obligations that it acquired vis–a-vis the holders of the bonds redeemable into shares that were issued by Le Monde, S.A. at that moment.

The Company’s directors consider that the possible effect of the guarantees provided on the accompanying consolidated income statements would in no case be material.
 
(27) 
FUTURE COMMITMENTS

The Prisa Televisión Group and the Media Capital Group have entered into purchase and sale agreements with various suppliers and consumers for future program broadcasting rights and the exploitation of image rights and sports rights. These commitments partially cover the Prisa Televisión Group and Media Capital Group companies’ programming needs in the years indicated.
 
In addition, by virtue of an agreement entered into with Indra on December 23, 2009, Prisa assumed payment commitments totalling EUR 267,225 thousand with the aforementioned company for the coming seven years. In 2012, the scope of the project changed, affecting the Latin America and Spain service, and certain criteria for the invoicing of services were modified, while the straight-line in arrears model was replaced with a consumption-based model.  As a result of these changes, the amount of the future commitments initially agreed on has also changed. The amount corresponding to services rendered in 2010, 2011 and 2012 stood at EUR 77,782 thousand and the estimated future commitments for the remainder of the contract amount to EUR 155,615 thousands.
 
 
At December 31, 2012, the Group had euro and foreign currency payment obligations and collection rights for a net amount payable of approximately EUR 2,152,958 thousand. The net amounts payable in relation to these obligations fall due as follows:
 
Year
 
Thousands of
euros
 
 
 
 
 
2013
 
 
857,642
 
2014
 
 
815,465
 
2015
 
 
398,783
 
2016
 
 
49,218
 
2017
 
 
31,758
 
2018 and subsequent years
 
 
92
 
 
 
 
2,152,958
 

The obligation to pay the amounts agreed upon in the purchase agreements arises only if the suppliers fulfill all the contractually established terms and conditions.

These future payment obligations were estimated taking into account the agreements in force at the present date. As a result of the renegotiation of certain agreements, these obligations might differ from those initially estimated.

Past-due payments to creditors-

Creditors who are paid after the maximum legal period are Spanish creditors (excluding suppliers of non-current financial assets or finance-lease creditors) with whom contracts have been signed for periods over the maximum 75-day period (85 days in 2011). This also includes payables to suppliers with which certain Group companies are involved in unresolved litigation.

At December 31, 2012, trade payables over 75 days past due for the Spanish Group companies amounted to EUR 215,648 thousand (Trade payables over 85 past due amounted at December 31, 2011: EUR 229,916 thousand and at December 31, 2010: EUR 180,268 thousand).

The detail of payments made in 2012 and in 2011 is as follows:
 
   
2012
  
2011
 
 
Thousands of
euros
 
 
(%)
  
Thousands of
euros
(%)
Past- due more than 75 days in 2012 and 85 days in 2011
 
 
465,571
 
 
 
31.96
  
398,188
31.59
Others
 
 
991,186
 
 
 
68.04
  
862,113
68.41
Total payments
 
 
1,456,757
 
 
 
100
  
1,260,301
100
Weighted Average Number of Days Past- Due (DSO)
 
 
110
 
 
 
 
  
88
  

The increase in total payments is mainly due to the change in the model for marketing soccer.
 
(28) 
LEGAL MATTERS

As a result of a statement of claim filed in 2004 by a local radio operator at an Argentine court against the Argentine state, the sale of the shares of Radio Continental, S.A. has not yet been approved by the Argentine government. The claimant also applied for injunctive relief whereby the grant of the approval in question should be stayed during the principal proceedings. In December 2004 the court granted the injunctive relief applied for and processing of the approval was stayed.
 
The decision was appealed against by the Argentine government and by the buying and selling parties, and in April 2007 the Argentine Federal Judicial Review Chamber upheld the decision to grant injunctive relief. The appeal to the Supreme Court was dismissed in a ruling handed down on March 15, 2011; hence, the injunctive relief remains in effect. The principal proceeding which should resolve the merits of the case is still in progress, although the operations of the radio stations involved have thus far not been affected.
 
 
(29) 
ONGOING LITIGATIONS AND CLAIMS

In 2003 and 2004, the cable operators Auna, Telecable, Tenaria, Euskaltel, R Telecomunicaciones de Galicia and R Telecomunicaciones de Coruña filed requests for arbitration with the Spanish Telecommunications Market Commission (CMT), requesting the right to receive an offer to market several channels provided by Prisa Televisión S.A.U. (Sogecable at the time) to its subscribers. The CMT ruled partially in favor of these claims in 2004 and 2005. Prisa Televisión filed an appeal at the Madrid Provincial Appellate Court against these decisions, which were rejected. Subsequent to the offer submitted by Prisa Televisión, in January 2008 the Madrid Court of First Instance no. 43 closed the proceeding brought by Auna with respect to the enforcement of the award handed down by the CMT.
 
Cableuropa, S.A.U. (Ono) also filed a claim for damage and loss against Prisa Televisión, S.A.U. at the Colmenar Viejo Court of First Instance nº. 3. In its judgment of December 1, 2009, the Court ordered Prisa Televisión to pay approximately EUR 44 million plus the legal interest from when the claim was filed. An appeal against this judgment was filed at the Madrid Provincial Appellate Court. On May 18, 2012, Prisa Televisión and Ono reached an out-of-court settlement, whereby Prisa Televisión withdrew its appeal and Ono repaid half of the amount that, according to the rulings, Prisa Televisión had paid, thereby ending the lawsuits between these two companies on this matter.
 
The proceedings initiated at the behest of the other operators requesting the execution of the aforementioned awards are still in progress at the respective courts.
 
Ono filed a claim against AVS and Prisa Televisión relating to the “guaranteed minimum” of the pay-per-view soccer broadcasting agreements entered into by the members of AUNA and AVS. Even though prior claims by cable operators relating to the “guaranteed minimums” have always proved fruitless, in its decision of March 4, 2010, Mercantile Court nº. 7 of Madrid which was hearing the case upheld the claim of Ono, and obliged AVS and Prisa Televisión to jointly and severally pay approximately EUR 30 million, plus an amount not yet determined for the 2007/2008 and 2008/2009 seasons (approximately EUR 29 million including interest). Regardless of the appeal that AVS and Prisa Televisión filed against this judgment, AVS and Prisa Televisión reached an agreement with Ono to avoid the negative effects of a potential provisional execution of this resolution and settled on a payment calendar which began in March 2011.  The total amount, with interest, paid by Prisa Televisión was EUR 59,737,192. As with the suit over the theme channels, on May 18, 2012, AVS, Prisa Televisión S.A.U. and Ono reached an out-of-court settlement whereby Prisa Televisión, S.A.U., AVS and Ono withdrew their respective appeals and Ono repaid half of the amount that, according to the rulings, AVS had paid, thereby ending the lawsuits between these companies on this matter.
 
Past lawsuits between Prisa Televisión and subsidiaries with different joint intellectual property rights management companies, AGEDI, AIE, SGAE and AISGE, have also been settled out of court and are all closed.
 
In 2006, Warner Sogefils, AIE, an economic interest grouping owned on an equal-footing basis by Prisa Televisión and Warner Bros. Entertainment España, S.L., filed an appeal for judicial review against the penalty imposed by the Spanish Antitrust Agency for the AIE’s purported unfair trade practices, which currently is unresolved. This appeal was conducted by the Competition Court against the distributors of the Majors. Regardless of the appropriate procedural subrogation, the AIE was liquidated in 2006.
 
On July 24, 2006, Audiovisual Sport, S.L. (AVS), Prisa Televisión, S.A.U., TVC Multimedia, S.L. and Mediaproducción, S.L. (Mediapro) entered into an agreement to exploit the rights of the Spanish Soccer League for the 2006/07 and subsequent seasons. The main purpose of the agreement was to maintain the model of exploiting televised soccer that has prevailed in Spain since 1997. After filed a complaint against Mediapro on July 3, 2007, and supplementary pleadings on July 31, August 27, and September 12, 2007, the latter accompanied by a request for injunctive relief which was fully upheld by the Madrid Court of First Instance no. 36 in an Order dated October 8, 2007. In compliance with this order, Audiovisual Sport, S.L. deposited EUR 50,000 thousand, secured by Prisa Televisión, to guarantee the fulfillment of the contractual obligations. The Order dated October 8, 2007 was revoked by the Madrid Provincial Appellate Court in July 2008. AVS presented a new application for injunctive relief at the Madrid Court of First Instance nº. 36 for the 2008-2009 seasons which was dismissed by Order of September 12, 2008.
 
The Court’s decision of March 15, 2010, upheld the claim filed by AVS in its entirety, dismissing the counterclaim filed by Mediapro against AVS, Prisa Televisión and Televisión de Cataluña. The Court also ordered Mediapro to pay more than EUR 95 million for the amounts that should have been paid to AVS under the agreement of July 24, 2006, as well as for the damage and loss arising from the aforementioned breaches. The Court also ordered Mediapro to provide AVS with the agreements entered into by Mediapro and the football clubs and to notify them of the assignment of the agreements to AVS.
 
The sentence was appealed by Mediapro, and AVS requested its provisional execution on June 9, 2010. The court handed down its ruling on June 21, 2010 on the request, which was suspended as a result of Mediapro's subsequent application and filing for bankruptcy proceedings, which are still underway before Barcelona Mercantile Court number 7 (Bankruptcy case no. 490/2010).
 
 
In a ruling of November 14, 2012, the Madrid Provincial Court upheld for the most part the ruling of March 15, 2010, accepting Mediapro’s appeal only with respect to the duration of the agreement of July 24, 2006, ruling it closed at the end of the 2008/2009 season. AVS and Prisa Televisión, S.A.U. have filed appeals for judicial review against this ruling.
 
AVS also filed a new claim against Mediapro before Barcelona Mercantile Court number 7 demanding EUR 97 million in damages not covered by the sentence handed down on March 15, 2010. This proceeding was suspended after the judge declared the existence of a preliminary judgment via ruling of September 22, 2010, which was appealed by AVS.
 
On July 15, 2011, Mercantile Court nº. 7 of Barcelona handed down a ruling indicating that, given that more votes were cast in favor than against the proposed settlement submitted by Mediapro (consisting of a delay of 35 months in its payment obligations, without acquittance), the court would approve it if no statement of opposition was filed in ten days.
 
AVS filed an incidental claim challenging the court approval of the settlement, which was granted leave to proceed on September 19, 2011. The statement of opposition was submitted along with an expert report issued by KPMG. Based on the events occurred since date of the issue of the report by the bankruptcy trustees, the expert report questioned the viability of the proposed settlement with creditors. Mediapro contested the statement of opposition on October 7, 2011.
 
The hearing on the statement of opposition that had been filed was scheduled for October 28, 2011. It was postponed and then rescheduled for December 21.
 
On December 23, 2011, Mercantile Court nº 7 of Barcelona handed down a ruling dismissing the opposition filed by AVS and approving the proposed settlement with creditors, thereby bringing the effects of the bankruptcy proceedings to an end. The bankruptcy trustees and Mediapro, in a statement issued on June 29, 2012, notified Mercantile Court nº 7 that, under the terms of the agreement, the waiting period would be calculated from April 23, 2012.
 
AVS filed an appeal against the ruling of Mercantile Court No. 7 of Barcelona and all judgments issued throughout the proceedings that could be appealed under the Bankruptcy Law rejecting the actions undertaken by AVS designed to achieve an appropriate inclusion of the assets and liabilities in bankruptcy.
 
On October 24, 2012, the Provincial Court of Barcelona rejected the appeal against the ruling accepting the settlement and in which AVS requested the termination of the bankruptcy trustees be suspended.
 
The rest of the appeals are still awaiting decisions by the Provincial Court of Barcelona.
 
This primary proceeding against Mediapro was not affected by the agreement dated August 16, 2012 between DTS And Mediapro for the exploitation of audiovisual rights for soccer during the 2012/2013, 2013/2014 and 2014/2015 seasons.
 
On November 7, 2011, DTS was notified of a claim filed by the bankruptcy trustees of Real Betis Balompié being heard by Mercantile Court nº 1 in Seville (bankruptcy incident 1037/2011). This litigation stemmed from a dispute between DTS and the aforementioned Club on the nature of an advance payment of EUR 10 million that DTS made to the Club pursuant to a contract dated October 11, 2007, regarding the assignment of audiovisual rights for several seasons. The Club considered that the payment was a signing bonus and DTS considered that it was an advance payment. DTS responded to the claim on November 22, 2011 and the hearing was held on January 20, 2012.  In a ruling dated April 2, 2012, the courts accepted the request from the bankruptcy trustees, prohibiting DTS from discounting the advance payment of EUR 10 million made by DTS from the payments to the Club. However, on May 24, 2012, DTS, the Club and the bankruptcy trustees reached an out-of-court settlement putting an end to this litigation. Under this agreement, DTS may allocate EUR 2.5 million to the price for the 2011/2012 season of the EUR 10 million under dispute. The remaining EUR 7.5 million will be applied proportionately to the 2012/2013, 2013/2014 and 2014/2015 seasons over which the Club and DTS have entered into a new agreement. In addition, in a ruling dated June 27, 2012, the Courts certified the agreement reached between the parties.
 
Elsewhere, European Home Shoping, S.L. (“EHS”) has filed a suit against DTS claiming EUR 1.2 million in indemnity for discrimination by EHS against Canal Club regarding the economic terms of access to the Digital+ platform (now Canal+) agreed upon with EHS on July 21, 2005. This suit stems from the counterclaim lodged by EHS against Sogecable Media (now absorbed in Mediaset España) and DTS related to Sogecable Media’s prior suit against EHS claiming an amount for failure to pay advertising contracted by EHS for its broadcast on TDT channel 40 Latino. EHS responded to DTS’s counterclaim and the preliminary hearing was set for December 16, 2013.
 
On April 8, 2008, the Investigation Unit (“IU”) of the Spanish Competition Authority (CNC) resolved to initiate disciplinary proceedings, ex oficio, against different companies (including Prisa Televisión, S.A.U. and AVS) and 39 soccer clubs due to restrictive competitive practices which would affect the market for the acquisition of audiovisual rights relating to Spanish soccer events held on a regular basis and the market for the audiovisual exploitation of such rights. On April 14, 2010, the CNC handed down its ruling, by virtue of which it fined Prisa Televisión and Mediapro EUR 150 thousand, and AVS EUR 100 thousand. The CNC based the fines on the finding that the contract between the two parties restricted competition. Prisa Televisión and AVS filed an administrative appeal which has not yet been ruled upon.
 
 
On December 12, 2008, the CMT issued a resolution imposing a sanction against Prisa Televisión for alleged repeated breaches of the requirements relating to the information prepared by the aforementioned company in relation to compliance with the terms and conditions of the Spanish Cabinet Resolution dated November 29, 2002, on which the integration of Vía Digital with Prisa Televisión was conditional. The CMT also handed down a decision imposing a similar penalty against AVS. Both Prisa Televisión and AVS filed the corresponding appeals for judicial review against these decisions. In a ruling dated April 26, 2012, the National Appellate Court rejected the appeal for judicial review filed by AVS against the CMT resolution of December 12, 2008. AVS has filed an administrative appeal against this ruling. The appeal submitted by Prisa Televisión is pending resolution.
 
In addition, on December 7, 2012, the IU of the CNC resolved to initiate disciplinary proceedings for conduct prohibited under articles 1 and 2 of the anti-trust law (LDC) and articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU) against DTS, Telefónica, S.A. and Mediapro regarding the marketing of Canal+ Liga and Canal+ Liga de Campeones under case number S/0436/12. The proceedings are in the initial stages and there is no specification of facts document as yet. DTS has requested that certain documentation provided in the stage of undisclosed information prior to the proceedings remain confidential and has inspected the file before presenting any statement of allegations. The initiation of these proceedings does not prejudice the outcome of this investigation. The CNC will have up to 18 months to examine the file and issue a resolution.
 
On November 24, 2011, CNC issued a resolution penalizing Prisa and some of its subsidiaries (Ediciones El País, GMI, Progresa and Prisa Brand Solutions) for an alleged offence regarding competition, for a project of joint commercialization of advertising space in written press and in a Sunday supplement edited with another editor group. Both Prisa and the editor group have filed administrative appeals, which have not yet been ruled upon.
 
The Group’s directors and the internal and external legal advisers do not expect any material liabilities not already recognized to arise for the Group as a result of the outcome of these lawsuits.
 
 
F-73
 
 
COMPANIES INCLUDED IN THE SCOPE OF CONSOLIDATION: DECEMBER 2012
 
APPENDIX I
 
 
 
 
 
 
December 2012
 
COMPANY
REGISTERED OFFICE
 
LINE OF BUSINESS
COMPANY
HOLDING THE
OWNERSHIP
INTEREST
 
PERCENTAGE
OF OWNERSHIP
 
 
TAX
GROUP (*)
 
 
 
 
 
 
 
 
 
 
 
EDUCATION
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Full consolidation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Aguilar A.T.A., S.A. de Ediciones
Leandro N. Alem. 720. Buenos Aires. 1001. Argentina
Publishing
Santillana Ediciones Generales, S.L.
 
 
95.81
%
 
 
 
 
 
 
Ítaca, S.L.
 
 
4.19
%
 
 
 
 
 
 
Ediciones Santillana, S.A. (Argentina)
 
1 share
 
 
 
 
Aguilar Chilena de Ediciones, S.A.
Dr. Aníbal Ariztía 1444. Providencia. Santiago de Chile. Chile
Publishing
Santillana Ediciones Generales, S.L.
 
 
99.97
%
 
 
 
 
 
 
Ítaca, S.L.
 
 
0.03
%
 
 
 
Avalia Qualidade Educacional Ltda.
Rua Padre Adelino, 758. Belezinho. Sao Paulo. Brazil
Publishing
Santillana Educación, S.L.
 
 
95.93
%
 
 
 
Santillana Infantil y Juvenil, S.L. (formerly Canal de Editoriales, S.A.)
Av. De los Artesanos, 6 Tres Cantos. Madrid
Publishing
Santillana Educación, S.L.
 
 
100
%
 
 
2/91
 
Distribuidora y Editora Aguilar A.T.A,  S.A.
Edificio Punto 99, Carrera 11° N°98-50 Oficina 501. Bogotá. Colombia
Publishing
Santillana Ediciones Generales, S.L.
 
 
94.97
%
 
 
 
 
 
 
 
Ítaca, S.L.
 
 
5.01
%
 
 
 
 
 
 
 
Edicions Voramar, S.A.
 
 
0.01
%
 
 
 
 
 
 
 
Edicions Obradoiro, S.L.
 
 
0.01
%
 
 
 
 
 
 
 
Ediciones Grazalema, S.L.
 
 
0.01
%
 
 
 
 
Distribuidora y Editora Richmond, S.A.
Edificio Punto 99, Carrera 11° N°98-50 Oficina 501. Bogotá. Colombia
Publishing
Santillana Educación, S.L.
 
 
94.90
%
 
 
 
 
 
 
 
Ítaca, S.L.
 
 
4.80
%
 
 
 
 
 
 
 
Edicions Voramar, S.A.
 
 
0.10
%
 
 
 
 
 
 
 
Edicions Obradoiro, S.L.
 
 
0.10
%
 
 
 
 
 
 
 
Ediciones Grazalema, S.L.
 
 
0.10
%
 
 
 
 
Ediciones Grazalema, S.L.
Rafael Beca Mateos, 3. Seville
Publishing
Santillana Educación, S.L.
 
 
99.98
%
 
 
2/91
 
 
 
 
Ítaca, S.L.
 
 
0.02
%
 
 
 
 
Ediciones Santillana Inc.
1506 Roosevelt Avenue. Guaynabo. Puerto Rico
Publishing
Santillana Educación, S.L.
 
 
100.00
%
 
 
 
 
Ediciones Santillana, S.A. (Argentina)
Leandro N. Alem. 720. Buenos Aires. 1001. Argentina
Publishing
Santillana Educación, S.L.
 
 
95.00
%
 
 
 
 
 
 
 
Ítaca, S.L.
 
 
5.00
%
 
 
 
 
Ediciones Santillana, S.A. (Uruguay)
Juan Manuel Blanes 1132 Montevideo Uruguay
Publishing
Santillana Educación, S.L.
 
 
100.00
%
 
 
 
 
Edicions Obradoiro, S.L.
Ruela de Entrecercos. 2 2° B. 15705. Santiago de Compostela
Publishing
Santillana Educación, S.L.
 
 
99.99
%
 
 
2/91
 
 
 
 
Ítaca, S.L.
 
 
0.01
%
 
 
 
 
Edicions Voramar, S.A.
Valencia, 44. 46210. Pincaya. Valencia
Publishing
Santillana Educación, S.L.
 
 
99.99
%
 
 
2/91
 
 
 
 
Ítaca, S.L.
 
 
0.01
%
 
 
 
 
Editora Altea, Ltda. (Fomerly, Uno Educação, Ltda.)
Rua Urbano Santos. 755. Sala 4. Bairro Cumbica. Cidade de Guarulhos. Sao Paulo. Brazil
Publishing
Editora Moderna, Ltda.
 
 
100%
 
 
 
 
 
 
 
 
Ítaca, S.L.
 
1 share
 
 
 
 
 
Editora Fontanar, Ltda.
Rua Cosme Velho, 103. Bairro Cosme Velho. Municipio do Rio de Janeiro. Brazil
Publishing
Editora Objetiva, Ltda.
 
 
99.96
%
 
 
 
 
 
 
 
Editora Moderna Ltda.
 
3 shares
 
 
 
 
 
Editora Moderna Ltda.
Rua Padre Adelino, 758. Belezinho. Sao Paulo. Brazil
Publishing
Santillana Educación, S.L.
 
 
100.00
%
 
 
 
 
 
 
 
Ítaca, S.L.
 
1 share
 
 
 
 
 
Editora Objetiva Ltda.
Rua Cosme Velho, 103. Bairro Cosme Velho. Municipio do Rio de Janeiro. Brazil
Publishing
Santillana Ediciones Generales, S.L.
 
 
76.00
%
 
 
 
 
Editorial Nuevo México, S.A. de C.V.
Avenida Rio Mixcoac 274 Col Acacias. Mexico City. Mexico
Publishing
Lanza, S.A. de C.V.
 
 
100.00
%
 
 
 
 
 
 
 
Editorial Santillana, S.A. de C.V.  (México)
 
 
0.00
%
 
 
 
 
Editorial Santillana, S.A. (Colombia)
Edificio Punto 99, Carrera 11° N°98-50 Oficina 501. Bogotá. Colombia
Publishing
Santillana Educación, S.L.
 
 
94.90
%
 
 
 
 
 
 
 
Ítaca, S.L.
 
 
5.10
%
 
 
 
 
 
 
 
Edicions Voramar, S.A.
 
 
0.00
%
 
 
 
 
 
 
 
Edicions Obradoiro, S.L.
 
 
0.00
%
 
 
 
 
 
 
 
Ediciones Grazalema, S.L.
 
 
0.00
%
 
 
 
 
Editorial Santillana, S.A. (Guatemala)
26 Avenida 2-20  zone 14 . Guatemala - Guatemala
Publishing
Santillana Educación, S.L.
 
 
99.99
%
 
 
 
 
 
 
 
Ítaca, S.L.
 
 
0.01
%
 
 
 
 
Editorial Santillana, S.A. (Honduras)
Colonia Lomas de Tepeyac. Casa No. 1626, contiguo al Autobanco Cuscatlan. Boulevard Juan Pablo II. Tegucigalpa. Honduras
Publishing
Santillana Educación, S.L.
 
 
99.00
%
 
 
 
 
 
 
 
Ítaca, S.L.
 
 
1.00
%
 
 
 
 
Editorial Santillana, S.A. (Rep. Dominicana)
Juan Sánchez Ramírez, 9. Gazcue. Santo Domingo. Dominican Republic.
Publishing
Santillana Educación, S.L.
 
 
99.95
%
 
 
 
 
 
 
 
Others companies Grupo Santillana de Ediciones, S.L.
 
 
0.05
%
 
 
 
 
Editorial Santillana, S.A. (Venezuela)
Avenida Rómulo Gallegos. Edificio Zulia 1°. Caracas. Venezuela
Publishing
Santillana Educación, S.L.
 
 
100.00
%
 
 
 
 
Editorial Santillana, S.A. de C.V. (El Salvador)
Siemens, 48 Zona Industrial Santa Elena. La Libertad. El Salvador
Publishing
Santillana Educación, S.L.
 
 
99.95
%
 
 
 
 
 
 
 
Ítaca, S.L.
 
 
0.05
%
 
 
 
 
Editorial Santillana, S.A. de C.V.  (México)
Avenida Rio Mixcoac 274 Col Acacias. Mexico City. Mexico
Publishing
Lanza, S.A. de C.V.
 
 
100.00
%
 
 
 
 
 
 
 
Editorial Nuevo México, S.A. de C.V.
 
1 share
 
 
 
 
 
Grup Promotor D'Ensenyement i Difussió en Catalá, S.L.
Frederic Mompou, 11. V. Olímpica. Barcelona
Publishing
Santillana Educación, S.L.
 
 
99.99
%
 
 
2/91
 
      Ítaca, S.L.     0.01 %         
 
 
 
 
 
 
 
 
 
 
 
 
(*)
Consolidated tax group Promotora de Informaciones, S.A.: 2/91
 
 
COMPANIES INCLUDED IN THE SCOPE OF CONSOLIDATION: DECEMBER 2012
 
APPENDIX I
 
 
 
 
 
 
December 2012
 
 
COMPANY
 
REGISTERED OFFICE
 
LINE OF BUSINESS
COMPANY
HOLDING THE
OWNERSHIP
INTEREST
 
PERCENTAGE OF
 OWNERSHIP
 
 
TAX
GROUP (*)
 
 
 
 
 
 
 
 
 
 
 
Grupo Santillana de Ediciones, S.L.
Av. De los Artesanos, 6 Tres Cantos. Madrid
Publishing
Promotora de Informaciones, S.A.
 
 
75.00
%
 
 
2/91
 
Instituto Universitario de Posgrado, S.A.
Av. De los Artesanos, 6 Tres Cantos. Madrid
Complementary educational services
Santillana Formación, S.L.
 
 
61.42
%
 
 
 
 
Inevery DPS, S.L.
Av. De los Artesanos, 6 Tres Cantos. Madrid
Editorial, cultural, educational, leisure and entertainment services; and
development and commercialization of educational content.
Grupo Santillana de Ediciones, S.L.
 
 
100.00
%
 
 
2/91
 
 
 
 
Ítaca, S.L.
 
 
0.00
%
 
 
 
 
Ítaca, S.L.
Av. De los Artesanos, 6 Tres Cantos. Madrid
Book distribution
Grupo Santillana de Ediciones, S.L.
 
 
99.99
%
 
 
2/91
 
 
 
 
Santillana Educación, S.L.
 
 
0.02
%
 
 
 
 
Lanza, S.A. de C.V.
Avenida Rio Mixcoac 274 Col Acacias. Mexico City. Mexico
Creation, development and management of companies
Santillana Educación, S.L.
 
 
100.00
%
 
 
 
 
 
 
 
Editorial Santillana, S.A. de C.V. (México)
 
 
0.00
%
 
 
 
 
Richmond Educação, Ltda.
Rua Padre Adelino, 758. Sala 3- Sao Paulo. Brazil
Publishing
Editora Moderna, Ltda.
 
 
100.00
%
 
 
 
 
 
 
 
Ítaca, S.L.
 
1 share
 
 
 
 
 
Richmond Publishing, S.A. de C.V.
Avenida Rio Mixcoac 274 Col Acacias. Mexico City. Mexico
Publishing
Lanza, S.A. de C.V.
 
 
99.98
%
 
 
 
 
 
 
 
Editorial Santillana, S.A. de C.V. (México)
 
 
0.02
%
 
 
 
 
Salamandra Editorial, Ltda.
Rua Urbano Santos 755, Sala 2- Sao Paulo. Brazil
Publishing
Editora Moderna, Ltda.
 
 
100.00
%
 
 
 
 
 
 
 
Ítaca, S.L.
 
1 share
 
 
 
 
 
Santillana, S.A. (Costa Rica)
La Uruca. 200 m Oeste de Aviación Civil. San José. Costa Rica
Publishing
Santillana Educación, S.L.
 
 
99.99
%
 
 
 
 
 
 
 
Ítaca, S.L.
 
 
0.01
%
 
 
 
 
Santillana, S.A. (Ecuador)
Avenida Eloy Alfaro. N33-347 y 6 de Diciembre. Quito. Ecuador
Publishing
Santillana Educación, S.L.
 
 
100.00
%
 
 
 
 
 
 
 
Ítaca, S.L.
 
1 share
 
 
 
 
 
Santillana, S.A. (Paraguay)
Avenida Venezuela. 276. Asunción. Paraguay
Publishing
Santillana Educación, S.L.
 
 
99.89
%
 
 
 
 
 
 
 
Ediciones Santillana, S.A. (Argentina)
 
 
0.11
%
 
 
 
 
Santillana, S.A. (Perú)
Avenida Primavera 2160. Santiago de Surco. Lima. Peru
Publishing
Santillana Educación, S.L.
 
 
95.00
%
 
 
 
 
Santillana Canarias, S.L.
Urbanización El Mayorazgo. Parcela 14, 2-7B. Santa Cruz de Tenerife
Publishing
Santillana Educación, S.L.
 
 
99.00
%
 
 
2/91
 
 
 
 
Ítaca, S.L.
 
 
1.00
%
 
 
 
 
Santillana de Ediciones, S.A. (Bolivia)
Calle 13, N° 8078. Zona de Calacoto. La Paz. Bolivia
Publishing
Santillana Educación, S.L.
 
 
99.70
%
 
 
 
 
 
 
 
Santillana Ediciones Generales, S.L.
 
 
0.15
%
 
 
 
 
 
 
 
Ítaca, S.L.
 
 
0.15
%
 
 
 
 
Santillana del Pacífico, S.A. de Ediciones.
Dr. Aníbal Ariztía 1444. Providencia. Santiago de Chile. Chile
Publishing
Santillana Educación, S.L.
 
 
100.00
%
 
 
 
 
 
 
 
Ítaca, S.L.
 
1 share
 
 
 
 
 
Santillana Ediciones Generales, S.L.
Av. De los Artesanos,6 Tres Cantos. Madrid
Publishing
Grupo Santillana de Ediciones, S.L.
 
 
100.00
%
 
 
2/91
 
 
 
 
Ítaca, S.L.
 
1 share
 
 
 
 
 
Santillana Ediciones Generales, S.A. de C.V.
Avenida Rio Mixcoac 274 Col Acacias. Mexico City. Mexico
Publishing
Santillana Ediciones Generales, S.L.
 
 
99.92
%
 
 
 
 
Santillana Editores, S.A. (Fomerly, Constancia Editores, S.A.)
Estrada da Outurela 118, 2795. Carnaxide Linda a Velha. Portugal
Publishing
Santillana Educación, S.L.
 
 
100.00
%
 
 
 
 
 
 
 
Ítaca, S.L.
 
 
0.00
%
 
 
 
 
Santillana Educación, S.L.
Av. De los Artesanos,6 Tres Cantos. Madrid
Publishing
Grupo Santillana de Ediciones, S.L.
 
 
100.00
%
 
 
2/91
 
 
 
 
Ítaca, S.L.
 
1 share
 
 
 
 
 
Santillana Formación, S.L.
Av. De los Artesanos,6 Tres Cantos. Madrid
Complementary educational services
Grupo Santillana de Ediciones, S.L.
 
 
100.00
%
 
 
2/91
 
 
 
 
Ítaca, S.L.
 
 
0.00
%
 
 
 
 
Santillana Sistemas Educativos, Ltda. (Colombia) (Fomerly;
Edificio Punto 99, Carrera 11° N°98-50 Oficina 501. Bogotá
Consultancy services for the obtainment of quality certification by schools
Santillana Sistemas Educativos, S.L.
 
 
94.45
%
 
 
 
 
Santillana Formación, S.L. (Colombia))
 
 
Distribuidora y Editora Richmond S.A.
 
 
5.55
%
 
 
 
 
Santillana Sistemas Educativos, S.L. (Fomerly, N. Editorial, S.L.)
Av. De los Artesanos,6 Tres Cantos. Madrid
Publishing
Grupo Santillana de Ediciones, S.L.
 
 
99.99
%
 
 
2/91
 
 
 
 
Ítaca, S.L.
 
 
0.01
%
 
 
 
 
Santillana USA Publishing Co. Inc.
2023 NW 84th Avenue. Doral. Florida. US.
Publishing
Grupo Santillana de Ediciones, S.L.
 
 
100.00
%
 
 
 
 
Sistemas de Ensino Uno, Ltda.
Rua Padre Adelino n.° 758, Térreo - Fundos, Sala 1- Quarta Parada, CEP 03303-904. Sao Paulo. Brazil
Publishing
Santillana Sistemas Educativos, S.L.
 
 
100.00
%
 
 
 
 
   
 
Ítaca, S.L.
 
1 share
 
 
 
 
 
                     
Sistemas Educativos de Enseñanza, S.A. de C.V.
Avenida Rio Mixcoac 274 Col Acacias. Mexico City, Mexico
Publishing
Santillana Sistemas Educativos, S.L.
 
 
99.95
%
 
 
 
 
 
 
 
Lanza, S.A. de C.V.
 
 
0.05
%
 
 
 
 
 
 
 
Nuevo México, S.A. de C.V.
 
1 share
 
 
 
 
 
Zubia Editoriala, S.L.
Polígono Lezama Leguizamon. Calle 31. Etxebarri. Vizcaya
Publishing
Santillana Educación, S.L.
 
 
99.90
%
 
 
2/91
 
 
 
 
Ítaca, S.L.
 
 
0.10
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Proportionate consolidation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Historia para Todos, S.A. de C.V.
Avenida Rio Mixcoac 274 Col Acacias. Mexico City. Mexico
Worldwide publishing in any language (mainly Spanish), of works preferably related to the history of Mexico and its main figures, particularly the Centenary of the Mexican Revolution and the Bicentenary of Independence, in any format or medium
Santillana Ediciones Generales, S.A. de C.V.
 
 
50.00
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity method
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Distribuidora Digital de Libros, S.A.
Calle Vía Augusta, 48-50. Planta 2, Puerta 5. 08006. Barcelona
Services for marketing of digital content
Santillana Ediciones Generales, S.L.
 
 
26.66
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
DLD Editora e Distibuidora de Livros Digitais, S.A. (Brasil)
Rua Voluntários da Pátria. 45. Sala 1001. Botafogo. Río de Janeiro. 22270-000. Brazil
Distribution of books and literary content in digital format for electronic devices connected to internet
Editora Objetiva Ltda.
 
 
20.01
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(*)
Consolidated tax group Promotora de Informaciones, S.A.: 2/91
 

COMPANIES INCLUDED IN THE SCOPE OF CONSOLIDATION: DECEMBER 2012
APPENDIX I
 
 
 
 
 
 
December 2012
 
 
COMPANY
 
REGISTERED OFFICE
 
LINE OF BUSINESS
COMPANY
HOLDING THE
OWNERSHIP
INTEREST
 
PERCENTAGE OF
OWNERSHIP
 
 
TAX
 GROUP (*)
 
 
 
 
 
 
 
 
 
 
 
PRESS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Full consolidation
 
 
 
 
 
 
 
 
 
Prisa Noticias, S.L.
Gran Vía, 32. Madrid
Operation of press media
Promotora de Informaciones, S.A.
 
 
100.00
%
 
 
2/91
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity method
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Kioskoymás, Sociedad Gestora de la Plataforma Tecnológica, S.L.
Juan Ignacio Luca de Tena, 7. Madrid
Publication and operation of newspapers, magazines in digital format
Prisa Noticias, S.L.
 
 
50.00
%
 
 
 
 
Le Monde Libre
17, Place de la Madeleine. París
  
Prisa Noticias, S.L.
 
 
20.00
%
 
 
    
 
 
 
 
 
 
 
 
 
 
 
 
EL PAÍS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Full consolidation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agrupación de Servicios de Internet y Prensa, S.L.
Valentín Beato, 44. Madrid
Administrative, technological and legal services and the distribution of written and digital media
Diario El País, S.L.
 
 
93.60
%
 
 
2/91
 
 
 
 
Grupo Empresarial de Medios Impresos, S.L.
 
 
5.90
%
 
 
 
 
 
 
 
Prisa Digital, S.L.
 
 
0.50
%
 
 
 
 
Diario El País, S.L.
Miguel Yuste, 40. Madrid
Publication and operation of El País newspaper
Prisa Noticias, S.L.
 
 
100.00
%
 
 
2/91
 
Diario El País Argentina, S.A.
Leandro N. Alem. 720. Buenos Aires. 1001. Argentina
Operation of El País newspaper in Argentina
Diario El País, S.L.
 
 
87.74
%
 
 
 
 
 
 
 
Diario El País México, S.A. de C.V.
 
 
12.26
%
 
 
 
 
Diario El País Do Brasil Distribuidora de
Rua Padre Adelino. 758 Belezinho. CEP 03303-904. Sao Paulo. Brazil
Operation of El País newspaper in Brazil
Diario El País, S.L.
 
 
99.99
%
 
 
 
 
Publicaçoes, LTDA.
 
 
Prisa División Internacional, S.L.
 
 
0.01
%
 
 
 
 
Diario El País México, S.A. de C.V.
Avenida Universidad 767. Colonia del Valle. Mexico City. Mexico
Operation of El País newspaper in Mexico
Diario El País, S.L.
 
 
92.56
%
 
 
 
 
 
 
 
Promotora de Informaciones, S.A.
 
 
7.44
%
 
 
 
 
 
 
 
Lanza, S.A. de C.V.
 
1 share
 
 
 
 
 
Ediciones El País, S.L.
Miguel Yuste, 40. Madrid
Publication, operation and sale of El País newspaper
Diario El País, S.L.
 
 
99.99
%
 
 
2/91
 
Ediciones El País (Chile) Limitada.
Eliodoro Yáñez 1783, Providencia. Santiago. Chile
Publication, operation and sale of El País newspaper in Chile
Ediciones El País, S.L.
 
 
100.00
%
 
 
 
 
 
 
 
Grupo Empresarial de Medios Impresos, S.L.
 
 
0.00
%
 
 
 
 
Pressprint, S.L.U.
Valentín Beato, 44. Madrid
Production, printing, publication and distribution of products
Diario El País, S.L.
 
 
100.00
%
 
 
2/91
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity method
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ediciones Conelpa, S.L.
Paseo de la Castellana. 9-11. Madrid
Publication and operation of magazines in physical and digital format
Ediciones El País, S.L.
 
 
50.00
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TRADE PRESS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Full consolidation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diario As, S.L.
Valentín Beato, 44. Madrid
Publication and operation of As newspaper
Grupo Empresarial de Medios Impresos, S.L.
 
 
75.00
%
 
 
2/91
 
Espacio Digital Editorial, S.L. (formerly Espacio Editorial Andaluza Holding, S.L.)
Gran Vía, 32. Madrid
Publication and operation of digital Huffinton Post in Spain
Prisa Noticias, S.L.
 
 
100.00
%
 
 
2/91
 
Estructura, Grupo de Estudios Económicos, S.A.
Miguel Yuste, 42 Madrid
Publication and operation of Cinco Días newspaper
Grupo Empresarial de Medios Impresos, S.L.
 
 
100.00
%
 
 
2/91
 
 
 
 
Promotora de Informaciones, S.A.
 
 
0.00
%
 
 
 
 
Grupo Empresarial de Medios Impresos, S.L.
Gran Vía, 32. Madrid
Ownership of shares of publishing companies
Prisa Noticias, S.L.
 
 
100.00
%
 
 
2/91
 
Gestión de Medios de Prensa, S.A.
Gran Vía, 32. Madrid
Provision of shared services for regional and local newspapers
Grupo Empresarial de Medios Impresos, S.L.
 
 
52.63
%
 
 
 
 
Promotora General de Revistas, S.A.
Valentín Beato, 44. Madrid
Publication production and operation of magazines
Grupo Empresarial de Medios Impresos, S.L.
 
 
99.96
%
 
 
2/91
 
 
 
 
Promotora de Informaciones, S.A.
 
 
0.04
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(*)
Consolidated tax group Promotora de Informaciones, S.A.: 2/91
 

COMPANIES INCLUDED IN THE SCOPE OF CONSOLIDATION: DECEMBER 2012
APPENDIX I
 
 
 
 
 
 
December 2012
 
COMPANY
 
REGISTERED OFFICE
 
LINE OF BUSINESS
COMPANY HOLDING THE
OWNERSHIP INTEREST
 
PERCENTAGE OF
OWNERSHIP
 
 
TAX
GROUP (*)
 
 
 
 
 
 
 
 
 
 
 
DISTRIBUTION
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Full consolidation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Aldipren, S.L.
Polígono Campollano. Calle de Distribución. Número 34-38. 02006 Albacete
Storage and distribution of publishing products
Grupo Cronos Distribución Integral, S.L.
 
 
65.00
%
 
 
 
Cronodís Logística Integral, S.L.
Calle El Rayo. Parcela 2,4,2. Polígono Industrial La Quinta /R2. 19171. Cabanillas del Campo.
Storage and distribution of publishing products
Grupo Cronos Distribución Integral, S.L.
 
 
95.00
%
 
 
445/11
 
 
Guadalajara
 
 
 
 
 
 
 
 
 
 
Districuen, S.L.
Polígono La Cerrajera. Parcela 36. Cuenca
Storage and distribution of publishing products
Grupo Cronos Distribución Integral, S.L.
 
 
65.00
%
 
 
 
 
Distritoledo, S.L.
Polígono Industrial de Toledo II Fase. Calle Arrollo Gadea, 9. 45007. Toledo
Distribution and sale of publishing products
Grupo Cronos Distribución Integral, S.L.
 
 
79.50
%
 
 
445/11
 
Grupo Cronos  Distribución Integral, S.L.
Almanaque N° 5. Polígono Fin de Semana. 28022. Madrid.
Distribution and sale of publishing products
Redprensa, S.L.U.
 
 
50.00
%
 
 
 
 
Redprensa, S.L.U.
Gran Vía, 32. Madrid
Holdings
Prisa Noticias, S.L.
 
 
100.00
%
 
 
2/91
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity method
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beralán, S.L.
Igarategi Industrialdea. N° 58. 20130-Urnieta. Guipúzcoa
Distribution of publishing products
Redprensa, S.L.U.
 
 
22.25
%
 
 
 
 
Cirpress, S.L.
Polígono Tazaba II. Parcela 31. Logrezana - Carreño. 33438. Asturias
Distribution of publishing products
Redprensa, S.L.U.
 
 
27.88
%
 
 
 
 
Comercial de Prensa Siglo XXI, S.A.
Calle Confianza, 1. Polígono Industrial Los Olivos. 28065-Getafe. Madrid
Distribution and sale of publishing products
Dima Distribución Integral, S.L.
 
 
100.00
%
 
 
198/11
 
Dima Distribución Integral, S.L.
Calle Confianza, 1. Polígono Industrial Los Olivos. 28065. Getafe. Madrid
Distribution of publishing products
Redprensa, S.L.U.
 
 
33.66
%
 
 
 
 
Distribución de Prensa por Rutas, S.L.
Avenida de la Industria, 22. Nave A. Coslada. Madrid
Distribution of publications
Dima Distribución Integral, S.L.
 
 
100.00
%
 
 
198/11
 
Distribuciones Papiro, S.L.
Polígono Industrial el Montalbo, C/Pasteur 6, parcela 15, Nave 1,2,3 y 4. 37008. Salamanca
Distribution of publishing products
Redprensa, S.L.U.
 
 
26.35
%
 
 
 
 
Distribuciones Ricardo Rodríguez, S.L.
Polígono Asegra. Calle Córdoba. 18-20. 18210. Peligros. Granada
Distribution of publishing products
Distrimedios, S.L.
 
 
70.00
%
 
 
 
 
Distribuidora Almeriense de Publicaciones, S.L.
Sierra Cabrera, 7. Polígono Industrial La Juaida. 04240, Viator. Almería
Distribution of publishing products
Distrimedios, S.L.
 
 
70.00
%
 
 
 
 
Distribuidora de Publicaciones Boreal, S.L.
Rua Alcalde Ramón Añón. Parcela 16,18,19. 15189-Culleredo. A Coruña
Distribution of publishing products
Redprensa, S.L.U.
 
 
29.00
%
 
 
 
 
Distribuidora Extremeña de Publicaciones, S.L.
Polígono Industrial El Nevero, C/Nevero quince, n° 30-32. 06006. Badajoz
Distribution of publishing products
Distrimedios, S.L.
 
 
70.00
%
 
 
 
 
Distrigalicia, S.L.
Carretera de Catabais Km. 3,300 de Ferrol. A Coruña
Storage and distribution of publishing products
Distribuidora de Publicaciones Boreal, S.L.
 
 
100.00
%
 
 
 
 
Distrimedios, S.L.
Calle de la Agricultura, Parque Empresarial Parcela D10. 11407-Jeréz de la Frontera. Cádiz
Distribution of publishing products
Redprensa, S.L.U.
 
 
29.00
%
 
 
 
 
Gelesa Gestión Logística, S.L.
Almanaque N° 5. Polígono Fin de Semana. 28022. Madrid.
Distribution of publications
Dima Distribución Integral, S.L.
 
 
100.00
%
 
 
198/11
 
Grupo Distribución Editorial Revistas, S.L.
Calle de la Agricultura, Parque Empresarial Parcela D10. 11407-Jeréz de la Frontera. Cádiz
Distribution of publications
Distrimedios, S.L.
 
 
20.93
%
 
 
 
 
 
 
 
Marina BCN Distribucions, S.L.
 
 
12.79
%
 
 
 
 
 
 
 
Beralán, S.L.
 
 
12.21
%
 
 
 
 
 
 
 
Val Disme, S.L.
 
 
12.21
%
 
 
 
 
 
 
 
Distribuidora de Publicaciones Boreal, S.L.
 
 
10.47
%
 
 
 
 
 
 
 
Distribuciones Papiro, S.L.
 
 
6.98
%
 
 
 
 
 
 
 
Cirpress, S.L.
 
 
5.81
%
 
 
 
 
 
 
 
Grupo Cronos  Distribución Integral, S.L.
 
 
5.81
%
 
 
 
 
Logística Ciudad Real, S.L.
Polígono Industrial La Estrella, Calle Herreros N° 10 de Miguelturra. 13170.  Ciudad Real
Storage and distribution of publishing products
Distrimedios, S.L.
 
 
70.00
%
 
 
 
 
Marina BCN Distribucions, S.L.
Calle E. N° 1 con Esquina Calle 6 (Sector E), Zona Franca. 08040. Barcelona
Distribution of publishing products
Redprensa, S.L.U.
 
 
30.00
%
 
 
 
 
Nuevo Distrigades, S.L.
Calle Francia, s/n. Polígono Industrial El Trocadero. Puerto Real. Cádiz
Distribution of publications
Distrimedios, S.L.
 
 
70.00
%
 
 
 
 
Trecedis, S.L.
Calle Avenida de Bruselas, 5. Arrollo de la Vega. 28108. Alcobendas. Madrid
Distribution of publications
Beralán, S.L.
 
 
8.14
%
 
 
 
 
 
 
 
Cirpress, S.L.
 
 
8.14
%
 
 
 
 
 
 
 
Distribución de Prensa por Rutas, S.A.
 
 
2.36
%
 
 
 
 
 
 
 
Distribuciones Papiro, S.L.
 
 
8.14
%
 
 
 
 
 
 
 
Distribuidora de Publicaciones Boreal, S.L.
 
 
8.14
%
 
 
 
 
 
 
 
Distrimedios, S.L.
 
 
8.14
%
 
 
 
 
 
 
 
Grupo Cronos Distribución Integral, S.L.
 
 
8.14
%
 
 
 
 
 
 
 
Marina BCN Distribucions, S.L.
 
 
8.14
%
 
 
 
 
 
 
 
Val Disme, S.L.
 
 
8.14
%
 
 
 
 
Val Disme, S.L.
Calle Dels Argenters 4. P.I. Vara de Quart. 46014. Valencia
Distribution of publishing products
Redprensa, S.L.U.
 
 
23.75
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(*)
Consolidated tax group Promotora de Informaciones, S.A.: 2/91
(*)
Consolidated tax group Cronos Distribución Integral, S.L.: 445/11
(*)
Consolidated tax group Dima Distribución Integral, S.L.: 198/11
 

COMPANIES INCLUDED IN THE SCOPE OF CONSOLIDATION: DECEMBER 2012
APPENDIX I
 
 
 
 
 
 
December 2012
 
 
COMPANY
 
REGISTERED OFFICE
 
LINE OF BUSINESS
 
COMPANY HOLDING THE
OWNERSHIP INTEREST
 
PERCENTAGE OF
OWNERSHIP
 
 
TAX
 GROUP (*)
 
 
 
 
 
 
 
 
 
 
 
PRISA RADIO
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
RADIO IN SPAIN
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Full consolidation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Antena 3 de Radio, S.A.
Gran Vía, 32. Madrid
Operation of radio broadcasting stations
Sociedad Española de Radiodifusión, S.L.
 
 
64.64
%
 
 
194/09
 
 
 
 
Unión Radio Servicios Corporativos, S.A.
 
 
34.78
%
 
 
 
 
Antena 3 de Radio de León, S.A.
Gran Vía, 32. Madrid
Operation of radio broadcasting stations
Antena 3 de Radio, S.A.
 
 
99.56
%
 
 
194/09
 
Antena 3 de Radio de Melilla, S.A.
Gran Vía, 32. Madrid
Operation of radio broadcasting stations
Antena 3 de Radio, S.A.
 
 
100.00
%
 
 
194/09
 
Avante Radio, S.A.
Gran Vía, 32. Madrid
Operation of radio broadcasting stations
Sociedad Española de Radiodifusión, S.L.
 
 
93.34
%
 
 
194/09
 
 
 
 
Radio Murcia, S.A.
 
 
3.33
%
 
 
 
 
 
 
 
Radio Club Canarias, S.A.
 
 
3.33
%
 
 
 
 
Cantabria de Medios, S. A.
Pasaje de Peña. N° 2. Interior. 39008. Santander
Operation of radio broadcasting stations
Propulsora Montañesa, S. A.
 
 
100.00
%
 
 
194/09
 
Compañía Aragonesa de Radiodifusión, S.A.
Paseo de la Constitución, 21. Zaragoza
Operation of radio broadcasting stations
Sociedad Española de Radiodifusión, S.L.
 
 
97.03
%
 
 
194/09
 
Comunicacions Pla, S.L.
Avenida Negrals, 41. Mollerusa. Lleida.
Operation of radio broadcasting stations
Radio Lleida, S.L.
 
 
100.00
%
 
 
 
 
Corporación Canaria de Información y Radio, S.A.
General Balmes s/n. Las Palmas de Gran Canaria
Operation of radio broadcasting stations
Prisa Radio, S.L.
 
 
100.00
%
 
 
194/09
 
Ediciones LM, S.L.
Plaza de Cervantes, 6. Ciudad Real
Operation of radio broadcasting stations
Prisa Radio, S.L.
 
 
50.00
%
 
 
 
 
Frecuencia del Principado, S.A.
Jovellanos 1, Gijón
Operation of radio broadcasting stations
Prisa Radio, S.L.
 
 
100.00
%
 
 
194/09
 
Gestión de Marcas Audiovisuales, S.A.
Gran Vía, 32. Madrid
Production and recording of sound media
Prisa Radio, S.L.
 
 
100.00
%
 
 
194/09
 
Gran Vía Musical de Ediciones, S.L.
Gran Vía, 32. Madrid
Provision of music services
Prisa Radio, S.L.
 
 
100.00
%
 
 
194/09
 
Iniciativas Radiofónicas, S.A.
Gran Vía, 32. Madrid
Operation of radio broadcasting stations
Sociedad Española de Radiodifusión, S.L.
 
 
93.42
%
 
 
194/09
 
Iniciativas Radiofónicas de Castilla La Mancha, S.A.
Carreteros, 1. Toledo
Operation of radio broadcasting stations
Ediciones LM, S.L.
 
 
40.00
%
 
 
 
 
 
 
 
Prisa Radio, S.L.
 
 
50.00
%
 
 
 
 
La Palma Difusión, S.A.
Almirante Díaz Pimienta, 10. Los Llanos de Aridane. Santa Cruz de Tenerife
Operation of radio broadcasting stations
Antena 3 de Radio, S.A.
 
 
100.00
%
 
 
194/09
 
Onda Musical, S.A.
Gran Vía, 32. Madrid
Operation of radio broadcasting stations
Antena 3 de Radio, S.A.
 
 
49.01
%
 
 
194/09
 
 
 
 
Unión Radio Servicios Corporativos, S.A.
 
 
34.30
%
 
 
 
 
 
 
 
Sociedad Española de Radiodifusión, S.L.
 
 
16.68
%
 
 
 
 
Ondas Galicia, S.A.
San Pedro de Mezonzo, 3. Santiago de Compostela
Operation of radio broadcasting stations
Sociedad Española de Radiodifusión, S.L.
 
 
46.25
%
 
 
 
 
Prisa Radio, S.L.
Gran Vía, 32. Madrid
Provision of services to radio broadcasting companies
Promotora de Informaciones, S.A.
 
 
73.49
%
 
 
 
 
Propulsora Montañesa, S. A.
Pasaje de Peña. N° 2. Interior. 39008. Santander
Operation of radio broadcasting stations
Sociedad Española de Radiodifusión, S.L.
 
 
95.57
%
 
 
194/09
 
Radio 30, S.A.
Radio Murcia, 4. Murcia
Operation of radio broadcasting stations
Radio Murcia, S.A.
 
 
100.00
%
 
 
194/09
 
Radio Club Canarias, S.A.
Avenida Anaga, 35. Santa Cruz de Tenerife
Operation of radio broadcasting stations
Sociedad Española de Radiodifusión, S.L.
 
 
95.00
%
 
 
194/09
 
Radio España de Barcelona, S.A.
Caspe, 6. Barcelona
Operation of radio broadcasting stations
Sociedad Española de Radiodifusión, S.L.
 
 
99.32
%
 
 
194/09
 
Radio Lleida, S.L.
Calle Vila Antonia. N° 5. Lleida
Operation of radio broadcasting stations
Sociedad Española de Radiodifusión, S.L.
 
 
44.33
%
 
 
 
 
 
 
 
Radio España de Barcelona, S.A.
 
 
22.17
%
 
 
 
 
Radio Murcia, S.A.
Radio Murcia, 4. Murcia
Operation of radio broadcasting stations
Sociedad Española de Radiodifusión, S.L.
 
 
83.33
%
 
 
194/09
 
Radio Zaragoza, S.A.
Paseo de la Constitución, 21. Zaragoza
Operation of radio broadcasting stations
Compañía Aragonesa de Radiodifusión, S.A.
 
 
66.00
%
 
 
194/09
 
 
 
 
Sociedad Española de Radiodifusión, S.L.
 
 
24.00
%
 
 
 
 
Radiodifusora de Navarra, S.A.
Polígono Plazaola. Manzana F - 2°A. Pamplona
Operation of radio broadcasting stations
Antena 3 de Radio, S.A.
 
 
100.00
%
 
 
194/09
 
Sociedad Española de Radiodifusión, S.L.
Gran Vía, 32. Madrid
Operation of radio broadcasting stations
Prisa Radio, S.L.
 
 
99.99
%
 
 
194/09
 
Sociedad Independiente Comunicación Castilla La Mancha, S.A.
Avenida de la Estación, 5 Bajo. Albacete
Operation of radio broadcasting stations
Antena 3 de Radio, S.A.
 
 
74.60
%
 
 
 
 
Societat de Comunicacio i Publicidat, S.L.
Parc. de la Mola, 10 Torre Caldea, 6° Escalde. Engordany. Andorra
Operation of radio broadcasting stations
Sociedad Española de Radiodifusión, S.L.
 
 
100.00
%
 
 
 
 
Sonido e Imagen de Canarias, S.A.
Caldera de Bandama, 5. Arrecife. Lanzarote
Operation of radio broadcasting stations
Antena 3 de Radio, S.A.
 
 
50.00
%
 
 
 
 
Talavera Visión, S.L.
Plaza Cervantes 6 4°. Ciudad Real
Operation of radio broadcasting stations
Valdepeñas Comunicación, S.L.
 
 
100.00
%
 
 
 
 
Teleser, S.A.
Gran Vía, 32. Madrid
Operation of radio broadcasting stations
Sociedad Española de Radiodifusión, S.L.
 
 
72.59
%
 
 
194/09
 
 
 
 
Compañía Aragonesa de Radiodifusión, S.A.
 
 
4.14
%
 
 
 
 
 
 
 
Radio España de Barcelona, S.A.
 
 
1.58
%
 
 
 
 
 
 
 
Propulsora Montañesa, S. A.
 
 
0.95
%
 
 
 
 
Teleradio Pres, S.L.
Avenida de la Estación, 5 Bajo. Albacete
Media management
Antena 3 de Radio, S.A.
 
 
75.10
%
 
 
 
 
Unión Radio Digital, S.A.
Gran Vía, 32. Madrid
Operation of digital radio broadcasting concession
Sociedad Española de Radiodifusión, S.L.
 
 
60.00
%
 
 
194/09
 
 
 
 
Antena 3 de Radio, S.A.
 
 
40.00
%
 
 
 
 
Unión Radio Online, S.A.
Gran Vía, 32. Madrid
Production and organisation of shows and events
Prisa Radio, S.L.
 
 
99.97
%
 
 
194/09
 
 
 
 
Nova Ediciones Musicales, S.A.
 
 
0.03
%
 
 
 
 
Unión Radio Servicios Corporativos, S.A.
Gran Vía, 32. Madrid
Holdings in radio broadcasting companies
Prisa Radio, S.L.
 
 
100.00
%
 
 
194/09
 
Valdepeñas Comunicación, S.L.
Plaza de Cervantes, 6. Ciudad Real
Operation of radio broadcasting stations
Prisa Radio, S.L.
 
 
50.00
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity method
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Radio Jaén, S.L.
Obispo Aguilar, 1. Jaén
Operation of radio broadcasting stations
Prisa Radio, S.L.
 
 
35.99
%
 
 
 
 
Unión Radio del Pirineu, S.A.
Carrer Prat del Creu, 32. Andorra
Operation of radio broadcasting stations
Prisa Radio, S.L.
 
 
33.00
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(*)
Consolidated tax group Prisa Radio, S.L.: 194/09
 

COMPANIES INCLUDED IN THE SCOPE OF CONSOLIDATION: DECEMBER 2012
APPENDIX I
 
 
 
 
 
 
December 2012
COMPANY
REGISTERED OFFICE
LINE OF BUSINESS
COMPANY
HOLDING THE
OWNERSHIP
INTEREST
 
PERCENTAGE OF
OWNERSHIP
 
TAX
 GROUP (*)
 
 
 
 
 
 
 
 
INTERNATIONAL RADIO
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Full consolidation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Abril, S.A.
Eliodoro Yañez. N° 1783. Providencia Santiago. Chile
Commercial radio broadcasting services and operation of radio stations
Iberoamericana Radio Chile, S.A.
 
 
100.00
%
 
 
 
 
Comercializadora Iberoamericana Radio Chile, S.A.
 
 
0.00
%
 
Aurora, S.A.
Eliodoro Yañez. N° 1783. Providencia Santiago. Chile
Commercial radio broadcasting services and operation of radio stations
Iberoamerican Radio Holding Chile, S.A.
 
 
99.98
%
 
 
 
 
Comercializadora Iberoamericana Radio Chile, S.A.
 
 
0.02
%
 
Blaya y Vega, S.A.
Eliodoro Yañez. N° 1783. Providencia Santiago. Chile
Commercial radio broadcasting services and operation of radio stations
Radiodifusion Iberoamerican Chile S.A.
 
 
100.00
%
 
 
 
 
Comercializadora Iberoamericana Radio Chile, S.A.
 
 
0.00
%
 
Caracol, S.A.
Calle 67 N° 7-37 Piso 7 Bogotá. Colombia
Commercial radio broadcasting services
Sociedad Española de Radiodifusión, S.L.
 
 
77.05
%
 
Caracol Broadcasting Inc.
2100 Coral Way - Miami 33145 - Florida, US.
Operation of radio broadcasting stations
GLR Broadcasting LLC
 
 
100.00
%
 
Caracol Estéreo, S.A.
Calle 67 N° 7-37 Piso 7 Bogotá. Colombia
Commercial radio broadcasting services
Sociedad Española de Radiodifusión, S.L.
 
 
77.04
%
 
CHR, Cadena Hispanoamericana de Radio, S.A.
Calle 67 N° 7-37 Piso 7 Bogotá. Colombia
Commercial radio broadcasting services
Caracol, S.A.
 
 
48.15
%
 
 
 
 
Caracol Estéreo, S.A.
 
 
46.79
%
 
 
 
 
Promotora de Publicidad Radial, S.A.
 
 
5.06
%
 
 
 
 
Compañía de Comunicaciones C.C.C. Ltda.
 
 
0.00
%
 
 
 
 
Radio Mercadeo, Ltda.
 
 
0.00
%
 
Comercializadora Iberoamericana Radio Chile, S.A.
Eliodoro Yañez. N° 1783. Providencia Santiago. Chile
Prodution and sale of CD's, advertising, promotions and events
GLR Chile Ltda .
 
 
99.84
%
 
 
 
 
Sociedad Española de Radiodifusión, S.L.
 
 
0.16
%
 
Compañía de Comunicaciones C.C.C. Ltda.
Calle 67 N° 7-37 Piso 7 Bogotá. Colombia
Commercial radio broadcasting services
Caracol, S.A.
 
 
43.45
%
 
 
 
 
Promotora de Publicidad Radial, S.A.
 
 
19.27
%
 
 
 
 
Sociedad Española de Radiodifusión, S.L.
 
 
16.72
%
 
 
 
 
Caracol Estéreo, S.A.
 
 
11.13
%
 
 
 
 
Ecos de la Montaña Cadena Radial Andina, S.A.
 
 
4.42
%
 
Compañía de Radios, S.A.
Eliodoro Yañez. N° 1783. Providencia Santiago. Chile
Commercial radio broadcasting services
Iberoamerican Radio Holding Chile, S.A.
 
 
99.92
%
 
 
 
 
Comercializadora Iberoamericana Radio Chile, S.A.
 
 
0.08
%
 
Comunicaciones del Pacífico, S.A.
Eliodoro Yañez. N° 1783. Providencia Santiago. Chile
Operation and management of TV channels
Comercializadora Iberoamericana Radio Chile, S.A.
 
 
66.67
%
 
 
 
and radio stations
Iberoamericana Radio Chile, S.A.
 
 
33.33
%
 
Comunicaciones Santiago, S.A.
Eliodoro Yañez. N° 1783. Providencia Santiago. Chile
Operation and management of TV channels
Sociedad Radiodifusora del Norte, Ltda.
 
 
75.00
%
 
 
 
and radio stations
Iberoamericana Radio Chile, S.A.
 
 
25.00
%
 
Consorcio Radial de Panamá, S.A
Urbanización Obarrio, Calle 54 Edificio Caracol. Panama
Advisory services and commercialisation of services and products
Sociedad Española de Radiodifusión, S.L.
 
 
100.00
%
 
Corporación Argentina de Radiodifusión, S.A.
Beazley 3860. Buenos Aires. Argentina
Operation of radio broadcasting stations
GLR Services Inc.
 
 
98.40
%
 
 
 
 
Ediciones Santillana, S.A. (Argentina)
 
 
1.60
%
 
Ecos de la Montaña Cadena Radial Andina, S.A.
Calle 67. N° 7-37. Piso 7. Bogotá. Colombia
Commercial radio broadcasting services
Sociedad Española de Radiodifusión, S.L.
 
 
76.80
%
 
Emisora Mil Veinte, S.A.
Calle 67. N° 7-37. Piso 7. Bogotá. Colombia
Commercial radio broadcasting services
Sociedad Española de Radiodifusión, S.L.
 
 
75.72
%
 
Fast Net Comunicaciones, S.A.
Eliodoro Yañez. N° 1783. Comuna Providencia Santiago. Chile
Commercial radio broadcasting services and operation of radio stations
Comunicaciones Santiago, S.A.
 
 
99.00
%
 
 
 
 
Iberoamericana Radio Chile, S.A.
 
 
1.00
%
 
GLR Broadcasting, LLC
Baypoint Office Tower, 4770 Biscayne Blvd. Suite 700 Miami. FL 33137. US.
Operation of radio broadcasting stations
GLR Services Inc.
 
 
100.00
%
 
 
 
 
 
 
 
 
 
 
GLR Chile, Ltda.
Eliodoro Yañez. N° 1783. Comuna Providencia Santiago. Chile
Operation of radio broadcasting stations
Sociedad Española de Radiodifusión, S.L.
 
 
100.00
%
 
 
 
 
Caracol, S.A.
 
 
0.00
%
 
GLR Colombia, Ltda.
Calle 67. N° 7-37. Piso 7. Bogotá. Colombia
Provision of services to radio broadcasting companies
Sociedad Española de Radiodifusión, S.L.
 
 
99.00
%
 
 
 
 
Prisa División Internacional, S.L.
 
 
1.00
%
 
GLR Midi France, S.A.R.L.
Immeuble Le Periscope, 83-87 Av. d'Italie. Paris. France
Radio broadcasting
Sociedad Española de Radiodifusión, S.L.
 
 
40.00
%
 
 
 
 
Prisa División Internacional, S.L.
 
 
20.00
%
 
GLR Networks, LLC
Baypoint Office Tower, 4770 Biscayne Blvd. Suite 700 Miami. FL 33137. US.
Provision of services to radio broadcasting companies
GLR Services Inc.
 
 
100.00
%
 
 
 
 
 
 
 
 
 
 
GLR Services Inc.
Baypoint Office Tower, 4770 Biscayne Blvd. Suite 700 Miami. FL 33137. US.
Provision of services to radio broadcasting companies
Sociedad Española de Radiodifusión, S.L.
 
 
100.00
%
 
 
 
 
 
 
 
 
 
 
GLR Southern California, LLC
3500 Olive Avenue Suite 250 Burbank, CA 91505. US.
Provision of services to radio broadcasting companies
GLR Broadcasting LLC
 
 
100.00
%
 
Iberoamericana Radio Chile, S.A.
Eliodoro Yañez. N° 1783. Comuna Providencia Santiago. Chile
Commercial radio broadcasting services and operation of radio stations
Grupo Latino de Radiodifusion Chile Ltda .
 
 
100.00
%
 
 
 
 
Sociedad Española de Radiodifusión, S.L.
 
 
0.00
%
 
Iberoamerican Radio Holding Chile, S.A.
Eliodoro Yañez. N° 1783. Comuna Providencia Santiago. Chile
Commercial radio broadcasting services and operation of radio stations
Iberoamericana Radio Chile, S.A.
 
 
100.00
%
 
 
 
 
Comercializadora Iberoamericana Radio Chile, S.A.
 
 
0.00
%
 
La Voz de Colombia
Calle 67. N° 7-37. Piso 7. Bogotá. Colombia
Commercial radio broadcasting services
Sociedad Española de Radiodifusión, S.L.
 
 
75.64
%
 
 
 
 
Caracol, S.A.
 
 
0.01
%
 
LS4 Radio Continental, S.A
Rivadavia 835. Ciudad Autónoma de Buenos Aires. Argentina
Radio broadcasting and advertising services
GLR Services Inc.
 
 
70.00
%
 
 
 
 
Corporación Argentina de Radiodifusión, S.A.
 
 
30.00
%
 
Promotora de Publicidad Radial, S.A.
Calle 67. N° 7-37. Piso 7. Bogotá. Colombia
Commercial radio broadcasting services
Sociedad Española de Radiodifusión, S.L.
 
 
77.04
%
 
Publicitaria y Difusora del Norte Ltda.
Eliodoro Yañez. N° 1783. Providencia Santiago. Chile
Radio broadcasting
Comercializadora Iberoamericana Radio Chile, S.A.
 
 
99.00
%
 
 
 
 
Iberoamericana Radio Chile, S.A.
 
 
1.00
%
 
Radiodifusion Iberoamerican Chile S.A.
Eliodoro Yañez. N° 1783. Providencia Santiago. Chile
Holding
Iberoamericana Radio Chile S.A.
 
 
100.00
%
 
 
 
 
Sociedad Española de Radiodifusión, S.L.
 
 
0.00
%
 
Radio Estéreo, S.A
Rivadavia 835. Ciudad Autónoma de Buenos Aires. Argentina
Radio broadcasting and advertising services
GLR Services Inc.
 
 
70.00
%
 
 
 
 
Corporación Argentina de Radiodifusión, S.A.
 
 
30.00
%
 
 
 
 
 
 
 
 
 
 
 

COMPANIES INCLUDED IN THE SCOPE OF CONSOLIDATION: DECEMBER 2012
APPENDIX I
 
 
 
 
 
 
December 2012
 
 
COMPANY
 
REGISTERED OFFICE
 
LINE OF BUSINESS
 
COMPANY
HOLDING THE
OWNERSHIP
INTEREST
 
PERCENTAGE OF
OWNERSHIP
 
 
TAX
GROUP (*)
 
 
 
 
 
 
 
 
 
 
 
Radio Mercadeo, Ltda.
Calle 67. N° 7-37. Piso 7. Bogotá. Colombia
Commercial radio broadcasting services
Sociedad Española de Radiodifusión, S.L.
 
 
48.40
%
 
 
 
 
 
 
Caracol, S.A.
 
 
29.85
%
 
 
 
 
 
 
Caracol Estéreo, S.A.
 
 
0.35
%
 
 
 
 
 
 
Emisora Mil Veinte, S.A.
 
 
0.35
%
 
 
 
 
 
 
Promotora de Publicidad Radial, S.A.
 
 
0.35
%
 
 
 
 
 
 
Ecos de la Montaña Cadena Radial Andina, S.A.
 
 
0.01
%
 
 
 
Sociedad Radiodifusora del Norte, Ltda.
Eliodoro Yañez. N° 1783. a Providencia, Santiago. Chile
Operation of radio broadcasting stations
Comercializadora Iberoamericana Radio Chile, S.A.
 
 
80.00
%
 
 
 
 
 
 
Iberoamericana Radio Chile S.A
 
 
20.00
%
 
 
 
Sociedad de Radiodifusión El Litoral, S.A.
Eliodoro Yañez. N° 1783. a Providencia, Santiago. Chile
Rental of equipment and advertising sales
Iberoamericana Radio Chile, S.A.
 
 
99.90
%
 
 
 
 
 
 
Comercializadora Iberoamericana Radio Chile, S.A.
 
 
0.10
%
 
 
 
W3 Comm Inmobiliaria, S.A. de C.V.
Carretera Libre Tijuana. Ensenada 3100. Rancho Altamira Blvd Popotla y Camino al FRACC Misión del Mar. Playas de Rosarito. Baja California. US.
Real estate development services
Sociedad Española de Radiodifusión, S.L.
 
 
99.99
%
 
 
 
 
 
 
Prisa División Internacional, S.L.
 
1 share
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Proportionate consolidation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cadena Radiodifusora Mexicana, S.A. de C.V.
Calzada de Tlalpan 3000 col Espartaco México D.F. 04870. Mexico
Operation of radio broadcasting stations
Sistema Radiуpolis, S.A. de C.V.
 
 
99.99
%
 
 
 
 
 
 
Radio Comerciales, S.A. de C.V.
 
 
0.01
%
 
 
 
GLR Costa Rica, S.A.
Llorente de Tibás. Edifico La Nación. San José. Costa Rica
Operation of radio broadcasting stations
Sociedad Española de Radiodifusión, S.L.
 
 
50.00
%
 
 
 
Radio Comerciales, S.A. de C.V.
Rubén Darío n° 158. Guadalajara. Mexico
Operation of radio broadcasting stations
Sistema Radiуpolis, S.A. de C.V.
 
 
99.97
%
 
 
 
 
 
 
Cadena Radiodifusora Mexicana, S.A. de C.V.
 
 
0.03
%
 
 
 
Radio Melodía, S.A. de C.V.
Rubén Darío n° 158. Guadalajara. Mexico
Operation of radio broadcasting stations
Cadena Radiodifusora Mexicana, S.A. de C.V.
 
 
99.00
%
 
 
 
 
 
 
Radio Comerciales, S.A. de C.V.
 
 
1.00
%
 
 
 
Radio Tapatía, S.A. de C.V.
Rubén Darío n° 158. Guadalajara. Mexico
Operation of radio broadcasting stations
Cadena Radiodifusora Mexicana, S.A. de C.V.
 
 
99.00
%
 
 
 
 
 
 
Radio Comerciales, S.A. de C.V.
 
 
1.00
%
 
 
 
Radiotelevisora de Mexicali, S.A. de C.V.
Avenida Reforma 1270. Mexicali Baja California. Mexico
Operation of radio broadcasting stations
Sistema Radiópolis, S.A. de C.V.
 
 
99.99
%
 
 
 
 
 
 
Radio Comerciales, S.A. de C.V.
 
 
0.01
%
 
 
 
Servicios Radiópolis, S.A. de C.V.
Calzada de Tlalpan 3000 col Espartaco Mexico City. 04870. Mexico
Operation of radio broadcasting stations
Sistema Radiópolis, S.A. de C.V.
 
 
100.00
%
 
 
 
 
 
 
Radio Comerciales, S.A. de C.V.
 
 
0.00
%
 
 
 
Servicios Xezz, S.A. de C.V.
Calzada de Tlalpan 3000 col Espartaco Mexico City. 04870. Mexico
Operation of radio broadcasting stations
Xezz, S.A. de C.V.
 
 
100.00
%
 
 
 
 
 
 
Radio Comerciales, S.A. de C.V.
 
 
0.00
%
 
 
 
Sistema Radiópolis, S.A. de C.V.
Avenida Vasco de Quiroga 2000. Mexico City. Mexico
Operation of radio broadcasting stations
Sociedad Española de Radiodifusión, S.L.
 
 
50.00
%
 
 
 
Xezz, S.A. de C.V.
Rubén Darío n° 158. Guadalajara. México
Operation of radio broadcasting stations
Cadena Radiodifusora Mexicana, S.A. de C.V.
 
 
99.00
%
 
 
 
 
 
 
Radio Comerciales, S.A. de C.V.
 
 
1.00
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity method
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
El Dorado Broadcasting Corporation
2100 Coral Way. Miami. Florida. US.
Development of the Latin radio market in the US
GLR Services INC.
 
 
25.00
%
 
 
 
Green Emerald Business Inc.
Calle 54. Obarrio N° 4. Ciudad de Panama. Panama
Development of the Latin radio market in Panama
Sociedad Española de Radiodifusión, S.L.
 
 
34.95
%
 
 
 
WSUA Broadcasting Corporation
2100 Coral Way. Miami. Florida. US.
Radio broadcasting
El Dorado Broadcasting Corporation
 
 
100.00
%
 
 
 
W3 Comm Concesionaria, S.A. de C.V.
Carretera Libre Tijuana. Ensenada 3100. Rancho Altamira Blvd Popotla y Camino al FRACC Misión del Mar. Playas de Rosarito. Baja California. US.
Advisory services on business administration and organisation
Sociedad Española de Radiodifusión, S.L.
 
 
48.98
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MUSIC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Full consolidation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Compañía Discográfica Muxxic Records, S.A.
Gran Vía, 32. Madrid
Production and recording of sound media
Gran Vía Musical de Ediciones, S.L.
 
 
100.00
%
 
 
194/09
 
 
 
 
Nova Ediciones Musicales, S.A.
 
1 share
 
 
 
 
 
Gran Vía Musical, S.A.S.
Calle 67. N° 7 - 37. Piso 7°. Bogotá. Colombia.
Provision of music services
Gran Vía Musical de Ediciones, S.L.
 
 
100.00
%
 
 
 
 
Lirics and Music, S.L.
Gran Vía, 32. Madrid
Music publishing
Gran Vía Musical de Ediciones, S.L.
 
 
100.00
%
 
 
194/09
 
Merchandising On Stage, S.L.
Ulises, 49. 28043. Madrid
Production and/or import of textile articles, jewellery, graphic materials, phonographic and/or audiovisual media and the related silkscreen printing,  embossing or printing by any means or process
Gran Vía Musical de Ediciones, S.L.
 
 
70.00
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nova Ediciones Musicales, S.A.
Gran Vía, 32. Madrid
Music publishing
Gran Vía Musical de Ediciones, S.L.
 
 
100.00
%
 
 
194/09
 
 
 
 
Promotora de Informaciones, S.A.
 
1 share
 
 
 
 
 
Planet Events, S.A.
Gran Vía, 32. Madrid
Production and organisation of shows and events
Gran Vía Musical de Ediciones, S.L.
 
 
70.00
%
 
 
 
 
 
 
 
Nova Ediciones Musicales, S.A.
 
 
0.01
%
 
 
 
 
RLM, S.A.
Puerto de Santa María, 65. 28043. Madrid
Production and organisation of shows and events
Gran Vía Musical de Ediciones, S.L.
 
 
70.00
%
 
 
 
 
RLM Colombia, S.A.S.
Calle 67. N° 7 - 37. Piso 7°. Bogotá. Colombia.
Production and organisation of shows and events
RLM, S.A.
 
 
100.00
%
 
 
 
 
Sogecable Música, S.L.
Gran Vía, 32. Madrid
Creation, broadcasting, distribution and operation of thematic television channels
Gran Vía Musical de Ediciones, S.L.
 
 
100.00
%
 
 
194/09
 
 
 
 
 
 
 
 
 
 
 
 
 
Proportionate consolidation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
My Major Company Spain, S.L.
Gran Vía, 32. Madrid
Music publishing
Gran Vía Musical de Ediciones, S.L.
 
 
50.00
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(*)
Consolidated tax group Prisa Radio, S.L. (Sociedad de Servicios Radiofónicos Unión Radio, S.L.): 194/09
 

COMPANIES INCLUDED IN THE SCOPE OF CONSOLIDATION: DECEMBER 2012
APPENDIX I
 
 
 
 
 
 
December 2012
 
COMPANY
REGISTERED OFFICE
LINE OF BUSINESS
COMPANY
HOLDING THE
OWNERSHIP
INTEREST
 
PERCENTAGE OF
 OWNERSHIP
 
 
TAX
 GROUP (*)
 
 
 
 
 
 
 
 
 
 
 
AUDIOVISUAL
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PRISA TELEVISION
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Full consolidation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Audiovisual Sport, S.L
Calle Diagonal, 477. Barcelona
Management and distribution of audiovisual rights
Prisa Televisión, S.A.U.
 
 
80.00
%
 
 
2/91
 
Centro de Asistencia Telefónica, S.A.
Campezo,1.  Madrid
Provision of services
DTS, Distribuidora de Televisión Digital, S.A.
 
 
99.61
%
 
 
136/11
 
 
 
 
Compañía Independiente de Televisión, S.L.
 
 
0.39
%
 
 
 
 
Compañía Independiente de Televisión, S.L.
Avenida de los Artesanos, 6. Tres Cantos. Madrid
Management and explotation of audiovisual rights
DTS, Distribuidora de Televisión Digital, S.A.
 
 
99.95
%
 
 
136/11
 
Cinemanía, S.L.
Avenida de los Artesanos, 6. Tres Cantos. Madrid
Operation of thematic television channels
Compañía Independiente de Televisión, S.L.
 
 
90.00
%
 
 
136/11
 
 
 
 
DTS, Distribuidora de Televisión Digital, S.A.
 
 
10.00
%
 
 
 
 
DTS, Distribuidora de Televisión Digital, S.A.
Avenida de los Artesanos, 6. Tres Cantos. Madrid
Television services
Prisa Televisión, S.A.U.
 
 
56.00
%
 
 
 
 
Prisa Televisión, S.A.U.
Avenida de los Artesanos, 6. Tres Cantos. Madrid
Operation of TV activities
Promotora de Informaciones, S.A.
 
 
100.00
%
 
 
2/91
 
Vía Atención Comunicación, S.L.
Avenida de los Artesanos, 6. Tres Cantos. Madrid
Provision of digital TV services
DTS, Distribuidora de Televisión Digital, S.A.
 
 
100.00
%
 
 
136/11
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity method
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agencia de Televisión Latino-Americana de Servicios y Noticias País Vasco, S.A.U.
Ribera de Elorrieta. Pab. 7-9. Vizcaya
News agency and producer of broadcast news
Mediaset España Comunicación, S.A.
 
 
100.00
%
 
 
 
 
Atlas Media, S.A.U.
Sant Just Desvern. Calle Bullidor, s/n.
 
Mediaset España Comunicación, S.A.
 
 
100.00
%
 
 
 
 
Bigbang Media, S.L.
Calle Almagro. 3. 28010. Madrid
Production, distribution and exploitation of audiovisual rights;exploitation of industrial and intelectual property rights.Management and financial intermediation of audiovisual companies
Mediaset España Comunicación, S.A.
 
 
30.00
%
 
 
 
 
Canal Club de Distribución de Ocio y Cultura, S.A.
Calle Hermosilla, 112. Madrid
Catalogue sales
Prisa Televisión, S.A.U.
 
 
25.00
%
 
 
 
 
Canal Factoría de Ficción, S.A.U.
Carretera de Fuencarral a Alcobendas. Km 12, 450. 28049. Madrid
Exploitation and distribution of audiovisual products
Mediaset España Comunicación, S.A.
 
 
100.00
%
 
 
 
 
Conecta 5 Telecinco, S.A.U.
Carretera de Fuencarral a Alcobendas. 4. 28049. Madrid
Exploitation of audiovisual content on the internet
Mediaset España Comunicación, S.A.
 
 
100.00
%
 
 
 
 
Edam Acquisition Holding I Cooperative, E.A.
Flevolaan 41 a 1411 KC Naarden Amsterdam
Channelling of the investment in Endemol N.V., a company engaging in the creation, production and exploitation of content for television and other audiovisual platforms
Mediacinco Cartera, S.L.
 
 
33.00
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mediaset España Comunicación, S.A.
Carretera de Fuencarral a Alcobendas. 4. 28049. Madrid
Indirect management of public service television
Prisa Televisión, S.A.U.
 
 
17.34
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Grupo Editorial Tele 5, S.A.U.
Carretera de Fuencarral a Alcobendas. 4. 28049. Madrid
Exploitation of rights: production and distribution of publications
Mediaset España Comunicación, S.A.
 
 
100.00
%
 
 
 
 
La Fábrica de la Tele, S.L.
Calle Ángel Gavinet. 18. 28007. Madrid
Creation, development, production and commercial exploitation of audiovisual content
Mediaset España Comunicación, S.A.
 
 
30.00
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mediacinco Cartera, S.L.
Carretera de Fuencarral a Alcobendas. 4. 28049. Madrid
Intermediation and financial management
Mediaset España Comunicación, S.A.
 
 
75.00
%
 
 
 
 
Mi Cartera Media, S.A.U.
Carretera de Fuencarral a Alcobendas. 4. 28049. Madrid
Multimedia exploitation of economic and financial formats and content
Mediaset España Comunicación, S.A.
 
 
100.00
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pegaso Televisión Inc. (EE.UU.)
Brickell Avenue. 1401. Suite 3311. Miami, Florida. EE.UU.
Television stations and production of television content
Mediaset España Comunicación, S.A.
 
 
44.00
%
 
 
 
 
Premiere Megaplex, S.A.
Calle Enrique Jardiel Poncela. 4 . 28016. Madrid
Operation of cinemas (film and video distribution)
Mediaset España Comunicación, S.A.
 
 
50.00
%
 
 
 
 
Producciones Mandarina, S.L.
Calle María Tobau. 3. 28050. Madrid
Creation, development, production and commercial exploitation of audiovisual content
Mediaset España Comunicación, S.A.
 
 
30.00
%
 
 
 
 
Promotora Audiovisual de Colombia PACSA, S.A.
Calle 70. N° 4-60. 11001. Bogotá. Colombia
Audiovisual and communication activities
Prisa Televisión, S.A.U.
 
 
53.00
%
 
 
 
 
 
 
 
Promotora de Actividades Audiovisuales de Colombia, Ltda.
 
 
1.00
%
 
 
 
 
 
 
 
Grupo Latino de Publicidad Colombia, Ltda.
 
 
1.00
%
 
 
 
 
Publiespaña, S.A.U.
Carretera de Fuencarral a Alcobendas. 4. 28049. Madrid
Exclusive advertising concessionaire of Telecinco
Mediaset España Comunicación, S.A.
 
 
100.00
%
 
 
 
 
Publimedia Gestión, S.A.U.
Carretera de Fuencarral a Alcobendas. 4. 28049. Madrid
Implementation and execution of advertising projects
Publiespaña, S.A.U.
 
 
100.00
%
 
 
 
 
Sogecable Editorial, S.L.U.
Avenida de los Artesanos, 6. Tres Cantos. Madrid
Management of intellectual property rights
Mediaset España Comunicación, S.A.
 
 
100.00
%
 
 
 
 
Sogecable Media, S.L.U.
Avenida de los Artesanos, 6. Tres Cantos. Madrid
Sale of advertising space
Mediaset España Comunicación, S.A.
 
 
100.00
%
 
 
 
 
Telecinco Cinema, S.A.U.
Carretera de Fuencarral a Alcobendas. 4. 28049. Madrid
Television broadcasting services and intermediation in the markets for audiovisual rights
Mediaset España Comunicación, S.A.
 
 
100.00
%
 
 
 
 
V-Me Media Inc.
450 West 33rd Street, 11th Floor. New York, NY 10001 . EE.UU.
Television broadcasting services
Promotora de Informaciones, S.A.
 
 
7.59
%
 
 
 
 
 
 
 
Prisa Televisión, S.A.U.
 
 
40.69
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(*)
Consolidated tax group Promotora de Informaciones, S.A.: 2/91
(*)
Consolidated tax group DTS, Distributre de Television Digitial, S.A.: 136/11
 
 
COMPANIES INCLUDED IN THE SCOPE OF CONSOLIDATION: DECEMBER 2012
APPENDIX I
 
 
 
 
 
 
December 2012
 
 
COMPANY
 
REGISTERED OFFICE
 
LINE OF BUSINESS
COMPANY
HOLDING THE
OWNERSHIP
INTEREST
 
PERCENTAGE OF
OWNERSHIP
 
 
TAX
 GROUP (*)
 
 
 
 
 
 
 
 
 
 
 
LOCAL TELEVISION
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Full consolidation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Axarquía Visión, S.A.U.
Paseo de Reding, 7. Málaga
Provision of local television services
Málaga Altavisión, S.A.
 
 
100.00
%
 
 
2/91
 
Canal 4 Navarra, S.L.U.
Avenida Sancho el Fuerte, 18. Pamplona
Production and broadcasting of videos and TV programmes
Promotora de Emisoras de Televisión, S.A.
 
 
100.00
%
 
 
2/91
 
Canal 4 Navarra Digital, S.A.U.
Polígono Industrial Cordovilla. Navarra
Provision of local television services
Canal 4 Navarra, S.L.U.
 
 
100.00
%
 
 
2/91
 
Collserola Audiovisual, S.L. (in liquidation)
Plaza Narcis Oller. N° 6 1°. 1°. 08006. Barcelona
Provision of local television services
Promotora de Emisoras de Televisión, S.A.
 
 
92.00
%
 
 
2/91
 
Málaga Altavisión, S.A.
Paseo de Reding, 7. Málaga
Production and broadcasting of videos and TV programmes
Promotora de Emisoras de Televisión, S.A.
 
 
87.24
%
 
 
2/91
 
Marbella Digital Televisión, S.A.U.
Paseo de Reding, 7. Málaga
Provision of local television services
Málaga Altavisión, S.A.
 
 
100.00
%
 
 
2/91
 
Productora Asturiana de Televisión, S.A.
Asturias, 19. Oviedo
Provision of local television services
Promotora de Emisoras de Televisión, S.A.
 
 
59.99
%
 
 
 
 
Productora Audiovisual  de Badajoz, S.A.
Ramón Albarrán, 2. Badajoz
Provision of local television services
Promotora de Emisoras de Televisión, S.A.
 
 
61.45
%
 
 
 
 
Productora Extremeña de Televisión, S.A.
J. M. R. "Azorín". Edificio Zeus. Polígono La Corchera. Mérida. Badajoz
Provision of local television services
Promotora de Emisoras de Televisión, S.A.
 
 
66.00
%
 
 
 
 
Promoción de Actividades Audiovisuales en Canarias, S.A.U.
Avenida Anaga, 35. Santa Cruz de Tenerife
TV communication activities in the Canary Islands
Promotora de Emisoras de Televisión, S.A.
 
 
100.00
%
 
 
2/91
 
Promotora de Emisoras, S.L
Gran Vía, 32. Madrid
Radio broadcasting services
Promotora de Informaciones, S.A.
 
 
100.00
%
 
 
2/91
 
Promotora de Emisoras de Televisión, S.A.
Gran Vía, 32. Madrid
Operation of TV channels
Promotora de Emisoras, S.L.
 
 
75.00
%
 
 
2/91
 
 
 
 
Promotora de Informaciones, S.A.
 
 
25.00
%
 
 
 
 
Telecomunicaciones Antequera, S.A.U.
Aguardenteros, 15. Antequera. Málaga
Provision of local television services
Málaga Altavisión, S.A.
 
 
100.00
%
 
 
2/91
 
TV Local Eivissa, S.L.U.
Avenida San Jordi s/n. Edificio Residencial. Ibiza
Provision of television services
Promotora de Emisoras de Televisión, S.A.
 
 
100.00
%
 
 
2/91
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity method
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Riotedisa, S.A.
Avenida de Portugal, 12. Logroño
Audiovisual productions for TV
Promotora de Emisoras de Televisión, S.A.
 
 
49.00
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(*)
Consolidated tax group Promotora de Informaciones, S.A.: 2/91
 

COMPANIES INCLUDED IN THE SCOPE OF CONSOLIDATION: DECEMBER 2012
APPENDIX I
 
 
 
 
 
 
December 2012
 
 
COMPANY
 
REGISTERED OFFICE
LINE OF BUSINESS
COMPANY
HOLDING THE
OWNERSHIP
INTEREST
 
PERCENTAGE OF
 OWNERSHIP
 
 
TAX
GROUP (*)
 
 
 
 
 
 
 
 
 
 
 
MEDIA CAPITAL
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Full consolidation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Argumentos para Audiovisual, Lda. (CASA DA CRIAÇAO)
Avenida Liberdade. N° 144/156 - 6° Dto. 1250-146. Lisboa. Portugal
Creation, development, translation and adaptation of texts and ideas for television programmes, films, entertainment, advertising and theatre
Plural Entertainment Portugal, S.A.
 
 
100.00
%
 
 
 
Editora Multimédia, S.A. (MULTIMÉDIA)
Rua Mário Castelhano. N° 40. 2734-502. Barcarena. Portugal
Publication, multimedia production, distribution, consultancy, sales (mail order, telephone and other) of goods and services as well as the acquisition, supply, preparation and dissemination of journalism by any means
Media Global, SGPS, S.A. (MEGLO)
 
 
100.00
%
 
 
 
Emissoes de Radiodifusao, S.A. (RADIO REGIONAL DE LISBOA)
Rua Sampaio e Pina. 24/26. 1099-044. Lisboa. Portugal
Radio broadcasting
Media Capital Rádios, S.A  (MCR II)
 
 
100.00
%
 
 
 
Empresa de Meios Audiovisuais, Lda. (EMAV)
Quinta Do Olival Das Minas. Lote 9. Vialonga. 2625-577. Vialonga. Portugal
Purchase, sale and rental of audiovisual media (cameras, videos, special filming and lighting equipment, cranes, rails, etc. )
Plural Entertainment Portugal, S.A.
 
 
100.00
%
 
 
 
Empresa Portuguesa de Cenários, Lda. (EPC)
Quinta Do Olival Das Minas. Lote 9. Vialonga. 2625-577. Vialonga. Portugal
Design, construction and installation of decorating accessories
Plural Entertainment Portugal, S.A.
 
 
100.00
%
 
 
 
Grupo Media Capital, SGPS, S. A.
Rua Mário Castlhano n° 40. Queluz de Baixo. Portugal
Holdings
Vertix, SGPS, S.A
 
 
84.69
%
 
 
 
Media Capital Música e Entretenimento, S.A (MCME)
Rua Mário Castelhano. N° 40. 2734-502. Barcarena. Portugal
Publication, graphic arts and the reproduction of recorded media: magazines, audio publication, video reproduction and the provision of services related to music, the radio, television, film, theatre and literary magazines
Media Global, SGPS, S.A. (MEGLO)
 
 
100.00
%
 
 
 
Media Capital Produçoes, S.A. (MCP)
Rua Mário Castelhano. N° 40. 2734-502. Barcarena. Portugal
Design, development, production, promotion, sale, acquisition, exploitation rights, recording, distribution and dissemination of audiovisual media
Media Global, SGPS, S.A. (MEGLO)
 
 
100.00
%
 
 
 
Media Capital Produçoes - Investimentos, SGPS, S.A.
Rua Mário Castelhano. N° 40. 2734-502. Barcarena. Portugal
Holdings
Media Capital Produçoes, S.A. (MCP)
 
 
100.00
%
 
 
 
Media Capital Rádios, S.A  (MCR II)
Rua Mário Castelhano. N° 40. 2734-502. Barcarena. Portugal
Provision of services in the areas of accounting and financial consultancy; performance of radio broadcasting activities in the areas of the production and transmission of radio programmes
Media Global, SGPS, S.A. (MEGLO)
 
 
100.00
%
 
 
 
Media Global, SGPS, S.A. (MEGLO)
Rua Mário Castelhano. N° 40. 2734-502. Barcarena. Portugal
Holdings
Grupo Media Capital, SGPS, S. A.
 
 
100.00
%
 
 
 
Multimedia, S.A. (CLMC)
Rua de Santo Amaro а  Estrela. N° 17 A. 1249-028. Lisboa. Portugal
Distribution of film activities, video, radio, television, audiovisual and multimedia
Media Global, SGPS, S.A.(MEGLO)
 
 
100.00
%
 
 
 
Plural Entertainment Canarias, S.L.
Dársena Pesquera. Edificio Platу del Atlántico. San Andrés 38180. Santa Cruz de Tenerife
Production and distribution of audiovisual content
Plural Entertainment España, S.L.
 
 
100.00
%
 
 
2/91
 
Plural Entertainment España, S.L.
Gran Vía, 32. Madrid
Production and distribution of audiovisual content
Media Capital Produçoes - Investimentos, SGPS, S.A.
 
 
100.00
%
 
 
2/91
 
Plural Entertainment Inc.
1680 Michigan Avenue. Suite 730. Miami Beach. US.
Production and distribution of audiovisual content
Plural Entertainment España, S.L.
 
 
100.00
%
 
 
 
 
Plural Entertainment Portugal, S.A.
R. José Falcao. 57 - 3° Dt. 1000-184. Lisboa. Portugal
Production of video and film, organisation of shows, rental of sound and lighting, advertising, sales and representation of registered videos
Media Capital Produçoes - Investimentos, SGPS, S.A.
 
 
100.00
%
 
 
 
 
Produçao de Eventos, Lda. (MEDIA CAPITAL ENTERTAINMENT)
Rua Mário Castelhano. N° 40. 2734-502. Barcarena. Portugal
Publication, graphic art and reproduction of recorded media: magazines, audio publication, video reproduction; and provision of services related to music, radio, television, film, theatre and literary magazines
Media Capital Música e Entretenimento, S.A (MCME)
 
 
100.00
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(*)
Consolidated tax group Promotora de Informaciones, S.A.: 2/91
 
 
COMPANIES INCLUDED IN THE SCOPE OF CONSOLIDATION: DECEMBER 2012
APPENDIX I
 
 
 
 
 
 
December 2012
 
 
COMPANY
 
REGISTERED OFFICE
 
LINE OF BUSINESS
COMPANY
HOLDING THE
OWNERSHIP
INTEREST
 
PERCENTAGE OF
OWNERSHIP
 
 
TAX
 GROUP (*)
 
 
 
 
 
 
 
 
 
 
 
Producciones Audiovisuales, S.A. (NBP IBÉRICA)
Almagro 13. 1° Izquierda. 28010. Madrid
Inactive
Plural Entertainment Portugal, S.A.
 
 
100.00
%
 
 
 
Produçoes Audiovisuais, S.A. (RADIO CIDADE)
Rua Sampaio e Pina. 24/26. 1099-044. Lisboa. Portugal
Radio broadcasting, production of audio or video advertising spots Advertising, production and recording of discs. Development and production of radio programmes
Media Capital Rádios, S.A  (MCR II)
 
 
100.00
%
 
 
 
Projectos de Media e Publicidade Unipessoal, Lda. (PUPLIPARTNER)
Rua Mário Castelhano. N° 40. 2734-502. Barcarena. Portugal
Design, preparation and performance of advertising projects (advisory services, promotion, supply, marketing and the distribution of media goods and services)
Serviços de Consultoria e Gestao, S.A. (MEDIA CAPITAL SERVIÇOS)
 
 
100.00
%
 
 
 
Radio Comercial, S.A. (COMERCIAL)
Rua Sampaio e Pina. 24/26. 1099-044. Lisboa. Portugal
Radio broadcasting in the areas of programme production and transmission
Media Capital Rádios, S.A  (MCR II)
 
 
100.00
%
 
 
 
Rádio Litoral Centro, Empresa de Radiodifusao, Lda.
Avenida Fernao de Magalhaes. N° 153, 6. Andar Sala 15. Coimbra. Portugal
Radio broadcasting in the areas of programme production and transmission
Emissoes de Radiodifusao, S.A. (RADIO REGIONAL DE LISBOA)
 
 
100.00
%
 
 
 
Rádio Nacional - Emissoes de Radiodifusao,Unipessoal Lda
Rua Capitao Tenente Oliveira e Carmo. 10-3. Quita Da Lomba. Barreiro. Portugal
Radio broadcasting in the areas of programme production and transmission
Radio Comercial, S.A. (COMERCIAL)
 
 
100.00
%
 
 
 
Radiodifusão, Lda. (FLOR DO ÉTER)
Avenida Fernao de Magalhaes. N° 153, 6. Andar Sala 15. Coimbra. Portugal
Production, realization and commercialization of cultural programmes sports and news by radio and audiovisual promotion of exhibitions and cultural conferences and artistic
Produçoes Audiovisuais, S.A. (RADIO CIDADE)
 
 
100.00
%
 
 
 
Comunicaçхes Sonoras, Unipessoal, Ltda (DRUMS)
Rua Tenente Valadim, n° 181, Porto Portugal
Radio broadcasting in the areas of programme production and transmission
Produçoes Audiovisuais, S.A. (RADIO CIDADE)
 
 
100.00
%
 
 
 
Rádio Voz de Alcanena, Lda. (RVA)
Praceta Pedro Escuro, 10 , 4° dt. Santarém Portugal
Radio broadcasting in the areas of programme production and transmission
Produçoes Audiovisuais, S.A. (RADIO CIDADE)
 
 
100.00
%
 
 
 
RADIO XXI, Lda. (XXI)
Rua Sampaio e Pina. 24/26. 1099-044. Lisboa. Portugal
Radio broadcasting in the areas of programme production and transmission
Radio Comercial, S.A. (COMERCIAL)
 
 
100.00
%
 
 
 
Serviços de Consultoria e Gestao, S.A. (MEDIA CAPITAL SERVIÇOS)
Rua Mário Castelhano. N° 40. 2734-502. Barcarena. Portugal
Advisory services, guidance services and operational assistance to public relations companies and organisations
Media Global, SGPS, S.A. (MEGLO)
 
 
100.00
%
 
 
 
Serviços de Internet, S.A. (IOL NEGУCIOS)
Rua Tenente Valadim. N° 181. 4100-479. Porto. Portugal
Services, publication and sale of electronic goods and services
Editora Multimédia, S.A. (MULTIMÉDIA)
 
 
100.00
%
 
 
 
Sociedade de Produçao e Ediçao Audiovisual, Lda. (FAROL MÚSICA)
Rua Mário Castelhano. N° 40. 2734-502. Barcarena. Portugal
Production of multimedia, audiovisual and phonogram storage media
Media Capital Música e Entretenimento, S.A (MCME)
 
 
100.00
%
 
 
 
Televisao Independente, S.A. (TVI)
Rua Mário Castelhano. N° 40. 2734-502. Barcarena. Portugal
Performance of any TV-related activity such as the installation, management and operation of any TV channel or infrastructure
Media Global, SGPS, S.A. (MEGLO)
 
 
100.00
%
 
 
 
Tesela Producciones Cinematográficas, S.L.
Gran Vía, 32. Madrid
Production and distribution of audiovisual content
Plural Entertainment España, S.L.
 
 
100.00
%
 
 
2/91
 
Vertix, SGPS, S.A.
Rua de las Amoreiras, 107. Lisboa. Portugal
Holdings
Promotora de Informaciones, S.A.
 
 
100.00
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity method
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Plural - Jempsa, S.L.
Gran Vía, 32. Madrid
Production and distribution of audiovisual content
Plural Entertainment España, S.L.
 
 
19.00
%
 
 
 
 
Plural Entertainment Brasil Produçao de Vídeo, Ltda.
Rua Padre Adelino. N° 758, 3° andar, Quarta Parada. CEP 03303-904.
Inactive
Media Capital Produçoes - Investimentos, SGPS, S.A.
 
 
49.00
%
 
 
 
 
Productora Canaria de Programas, S.A.
Enrique Wolfson, 17. Santa  Cruz de Tenerife
Development of a promotional TV channel for the Canary Islands
Plural Entertainment España, S.L.
 
 
40.00
%
 
 
 
 
Sociedad Canaria de Televisión Regional, S.A.
Avenida de Madrid s/n. Santa Cruz de Tenerife
Audiovisual productions for TV
Plural Entertainment España, S.L.
 
 
40.00
%
 
 
 
 
Chip Audiovisual, S.A.
Coso, 100 . Planta 3ª puerta 4-50001. Zaragoza
Audiovisual productions for TV
Plural Entertainment España, S.L.
    
50.00%
  
 
 
 
 
Factoría Plural, S.L.
Calle Biarritz, 2 50017 Zaragoza
 Production, realization  and distribution of audio-visual
 Plural Entertaiment España, S.L.
 
 
15.00%
 
 
 
 
 
(*)
Consolidated tax group Promotora de Informaciones, S.A.: 2/91
 

COMPANIES INCLUDED IN THE SCOPE OF CONSOLIDATION: DECEMBER 2012
APPENDIX I
 
 
 
 
 
December 2012
 
 
COMPANY
 
REGISTERED OFFICE
 
LINE OF BUSINESS
COMPANY
HOLDING THE
 OWNERSHIP
INTEREST
PERCENTAGE OF
OWNERSHIP
 
 
TAX
GROUP (*)
 
 
 
 
 
 
 
 
 
 
DIGITAL
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Full consolidation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Infotecnia 11824, S.L.
Ronda de Poniente 7. Tres Cantos. Madrid
Provision of telecommunication services
Prisa Digital, S.L.
60.00
%
 
 
 
 
 
 
 
 
 
 
 
 
Meristation Magazine, S.L.
Almogavers 12. Llagostera. Girona
Provision of documentation services
Prisa Digital, S.L.
100.00
%
 
 
2/91
 
Prisa Digital Inc.
2100 Coral Way. Suite 200. Miami. Florida. 33145. US.
Provision of internet services
Prisa Digital, S.L.
99.99
%
 
 
 
 
 
 
 
Prisa Inc.
1 share
  
 
 
 
 
Prisa Digital, S.L.
Gran Vía, 32. Madrid
Provision of internet services
Promotora de Informaciones, S.A.
100.00
%
 
 
2/91
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PRINTING
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Full consolidation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Prisaprint, S.L.
Gran Vía, 32. Madrid
Management of printing companies
Promotora de Informaciones, S.A.
100.00
%
 
 
2/91
 
 
 
 
Grupo Empresarial de Medios Impresos, S.L.
0.00
%
 
 
 
 
Bidasoa Press, S.L.
Calle Malilla N° 134. 46026. Valencia
Printing of publishing products
Dédalo Grupo Gráfico, S.L.
100.00
%
 
 
225/04
 
Dédalo Grupo Gráfico, S.L.
Carretera de Pinto a Fuenlabrada, Km. 20,8. Madrid
Printing of publishing products
Prisaprint, S.L.
100.00
%
 
 
 
 
Distribuciones Aliadas, S.A.
Polígono Industrial La Isla. Parcela 53. 41700 Dos Hermanas. Sevilla
Printing of publishing products
Dédalo Grupo Gráfico, S.L.
100.00
%
 
 
225/04
 
Norprensa, S.A.
Parque Empresarial IN-F. Calle Costureiras. s/n 27003. Lugo
Printing of publishing products
Dédalo Grupo Gráfico, S.L.
100.00
%
 
 
225/04
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MEDIA ADVERTISING SALES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Full consolidation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Prisa Brand Solutions, S.L.U.
Gran Vía, 32. Madrid
Contracting of advertising exclusives
Promotora de Informaciones, S.A.
100.00
%
 
 
2/91
 
Prisa Innova, S.L.
Gran Vía, 32. Madrid
Management of promotional products and services
Prisa Brand Solutions, S.L.U.
99.95
%
 
 
2/91
 
 
 
 
Diario El País, S.L.
0.05
%
 
 
 
 
Solomedios, S.A.
Gran Vía, 32. Madrid
Advertising management
Prisa Brand Solutions, S.L.U.
99.97
%
 
 
2/91
 
 
 
 
Promotora de Informaciones, S.A.
0.03
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OTHER
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Full consolidation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GLP Colombia, Ltda
Carrera 9, 9907 Oficina 1200. Bogotá. Colombia
Operation and sale of all manner of advertising
Prisa División Internacional, S.L.
100.00
%
 
 
 
 
Liberty Acquisition Holdings Virginia, Inc.
Gran Vía, 32. Madrid
Holdings
Promotora de Informaciones, S.A.
100.00
%
 
 
 
 
Prisa División Inmobiliaria, S.L.
Gran Vía, 32. Madrid
Lease of commercial and industrial premises
Promotora de Informaciones, S.A.
100.00
%
 
 
2/91
 
Prisa División Internacional, S.L.
Gran Vía, 32. Madrid
Holdings in foreign companies
Promotora de Informaciones, S.A.
100.00
%
 
 
2/91
 
 
 
 
Grupo Empresarial de Medios Impresos, S.L.
0.00
%
 
 
 
 
Prisa Finance (Netherlands) BV
Gran Vía, 32. Madrid
Holdings in and financing of companies
Promotora de Informaciones, S.A.
100.00
%
 
 
 
 
Prisa Inc.
5300 First Union Finacial Centre. Miami. Florida. US.
Management of companies in the US and North America
Prisa División Internacional, S.L.
100.00
%
 
 
 
 
Promotora de Actividades América 2010, S.L.
Gran Vía, 32. Madrid
Production and organisation of activities and projects
Promotora de Informaciones, S.A.
100.00
%
 
 
2/91
 
 
 
marking the bicentenary of American Independence
 
 
 
 
 
 
 
Promotora de Actividades América 2010 - México, S.A. de C.V.
Avenida Paseo de la Reforma 300. Piso 9. Col. Juárez. 06600. MExico. City. Mexico
Development, co-ordination and management of all manner of international and national projects marking the bicentenary of American Independence
Promotora de Actividades América 2010, S.L.
100.00
%
 
 
 
 
 
 
 
Prisa División Internacional, S.L.
1 share
 
 
 
 
 
Promotora de Actividades Audiovisuales de Colombia, Ltda.
Calle 80, 10 23 . Bogotá. Colombia
Production and distribution of audiovisual content
Prisa División Internacional, S.L.
99.00
%
 
 
 
 
 
 
 
Promotora de Informaciones, S.A.
1.00
%
 
 
 
 
Prisa Gestión de Servicios, S.L.
Gran Vía, 32. Madrid
Management and development of administrative,
Promotora de Informaciones, S.A.
100.00
%
 
 
2/91
 
 
 
financial, personnel, resource selection services
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity method
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
V-Me Media Inc.
450 West 33rd Street, 11th Floor. New York, NY 10001 . US.
Television broadcasting services
Prisa Televisión, S.A.U.
40.68
%
 
 
 
 
 
 
 
Promotora de Informaciones, S.A.
7.59
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(*)
Consolidated tax group Promotora de Informaciones, S.A.: 2/91
(*)
Consolidated tax group Dédalo Grupo Gráfico, S.L.: 225/04
 
 
KEY FINANCIAL AGGREGATES OF THE COMPANIES ACCOUNTED FOR USING THE EQUITY METHOD
APPENDIX II
 
 
 
December 2012
 
INVESTEE
 
TOTAL
ASSETS
 
 
EQUITY
 
 
OPERATING
 INCOME
 
 
NET PROFIT
 (LOSS)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EDUCATION
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Distribuidora Digital de Libros, S.A.
 
 
N/D
 
 
 
N/D
 
 
 
655
 
 
 
(252
)
DLD Editora e Distibuidora de Livros Digitais, S.A. (Brasil)
 
 
121
 
 
 
16
 
 
 
254
 
 
 
(329
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PRESS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Kioskoymás, Sociedad Gestora de la Plataforma Tecnológica, S.L.
 
 
881
 
 
 
(186)
 
 
 
281
 
 
 
(230
)
Le Monde Libre
    
N/D
      
30,966
      
N/D
      
(3,800)
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EL PAÍS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ediciones Conelpa, S.L.
 
 
4,902
 
 
 
(2,082
)
 
 
8,763
 
 
 
(861
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
DISTRIBUTION
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beralán, S.L.
 
 
12,678
 
 
 
3,944
 
 
 
127,960
 
 
 
704
 
Cirpress, S.L.
 
 
6,132
 
 
 
2,602
 
 
 
23,592
 
 
 
335
 
Comercial de Prensa Siglo XXI, S.A.
 
 
6,588
 
 
 
(7,305
)
 
 
23,542
 
 
 
(2,185
)
Dima Distribución Integral, S.L.
 
 
20,018
 
 
 
4,609
 
 
 
21,041
 
 
 
148
 
Distribución de Prensa por Rutas, S.L.
 
 
372
 
 
 
(114
)
 
 
1,259
 
 
 
46
  
Distribuciones Papiro, S.L.
 
 
4,561
 
 
 
1,541
 
 
 
40,149
 
 
 
534
 
Distribuciones Ricardo Rodríguez, S.L.
 
 
3,134
 
 
 
329
 
 
 
19,275
 
 
 
90
 
Distribuidora Almeriense de Publicaciones, S.L.
 
 
1,524
 
 
 
410
 
 
 
10,959
 
 
 
(8)
 
Distribuidora de Publicaciones Boreal, S.L.
 
 
16,442
 
 
 
8,954
 
 
 
35,306
 
 
 
589
 
Distribuidora Extremeña de Publicaciones, S.L.
 
 
7,924
 
 
 
2,332
 
 
 
24,574
 
 
 
237
 
Distrigalicia, S.L.
 
 
6,627
 
 
 
3,728
 
 
 
20,576
 
 
 
393
 
Distrimedios, S.L.
 
 
25,963
 
 
 
4,019
 
 
 
74,401
 
 
 
206
 
Gelesa Gestión Logística, S.L.
 
 
21,641
 
 
 
(1,594
)
 
 
134,348
 
 
 
874
  
Grupo Distribución Editorial Revistas, S.L.
 
 
9,384
 
 
 
1,123
 
 
 
38,154
 
 
 
288
 
Logística Ciudad Real, S.L.
 
 
4,099
 
 
 
951
 
 
 
10,664
 
 
 
35
 
Marina BCN Distribucions, S.L.
 
 
23,895
 
 
 
6,752
 
 
 
99,077
 
 
 
292
 
Nuevo Distrigades, S.L.
 
 
325,963
 
 
 
326
 
 
 
23,596
 
 
 
199
 
Trecedis, S.L.
 
 
8,031
 
 
 
2,788
 
 
 
97,300
 
 
 
(192
)
Val Disme, S.L.
 
 
21,304
 
 
 
8,426
 
 
 
121,731
 
 
 
100
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
RADIO
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
RADIO IN SPAIN
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Radio Jaén, S.L.
 
 
1,361
 
 
 
1,128
 
 
 
871
 
 
 
(153
)
Unión Radio del Pirineu, S.A.
 
 
584
 
 
 
365
 
 
 
387
 
 
 
(23
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
INTERNATIONAL RADIO
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
El Dorado Broadcasting Corporation
 
 
455
 
 
 
(1,303
)
 
 
0
 
 
 
(3
)
Green Emerald Business Inc.
 
 
1,584
 
 
 
(2,233
)
 
 
1,811
 
 
 
(17
)
WSUA Broadcasting Corporation
 
 
3,961
 
 
 
(4,258
)
 
 
488
 
 
 
(55
)
W3 Comm Concesionaria, S.A. de C.V.
 
 
840
 
 
 
(864
)
 
 
495
 
 
 
(29
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AUDIOVISUAL
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PRISA TELEVISION
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Canal Club de Distribución de Ocio y Cultura, S.A.
 
 
4,861
 
 
 
4,808
 
 
 
3,845
 
 
 
118
 
Gestevisión Telecinco, S.A. y sociedades dependientes
 
 
N/A
 
 
 
N/A
 
 
 
N/A
 
 
 
N/A
 
Promotora Audiovisual de Colombia PACSA, S.A.
 
 
N/A
 
 
 
N/A
 
 
 
N/A
 
 
 
N/A
 
V-Me Media Inc.
 
 
762
 
 
 
(2,765)
 
 
 
1,775
 
 
 
(6,940
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LOCAL TELEVISION
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Riotedisa, S.A.
 
 
N/A
 
 
 
N/A
 
 
 
N/A
 
 
 
N/A
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MEDIA CAPITAL
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Plural - Jempsa, S.L.
 
 
4,475
 
 
 
303
 
 
 
0
 
 
 
(42
)
Plural Entertainment Brasil Produçao de Vídeo, Ltda.
 
 
33
 
 
 
(351
)
 
 
N/A
 
 
 
(319)
 
Productora Canaria de Programas, S.A.
 
 
1,557
 
 
 
1,365
 
 
 
N/A
 
 
 
43
 
Sociedad Canaria de Televisión Regional, S.A.
 
 
2,338
 
 
 
1,902
 
 
 
1,478
 
 
 
4
 
Factoría Plural, S.L.
 
 
3,868
 
 
 
1,514
 
 
 
6,705
 
 
 
586
 
Chip Audiovisual, S.A.
 
 
 2,888
 
 
 
 1,362
 
 
 
 5,716
 
 
 
461
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
DÉDALO GRUPO GRÁFICO, S.L. AND SUBSIDIARIES
(Thousands of euros)
 
                                       
ASSETS
  
Notes
    
03/31/2012
(*)
    
12/31/2011
(*)
  
EQUITY AND LIABILITIES
  
Notes
    
03/31/2012
(*)
    
12/31/2011
(*)
  
                                       
A) NON-CURRENT ASSETS
           97,919       101,173  
A) EQUITY
           (159,586 )     (154,026 )
                                               
I.  PROPERTY, PLANT AND EQUIPMENT
   3       95,547       98,774  
I.   SHARE CAPITAL
   6       28,458       28,458  
1. Land
           5,345       5,345                          
2. Buildings and structures
           26,516       26,741  
II. SHARE PREMIUM
           91,085       91,085  
3. Plant
           8,550       8,891                          
4. Machinery and tools
           53,410       55,999  
III.PRIOR YEARS LOSSES
           (279,401 )     (235,390 )
5. Other fixtures and furniture
           403       424                          
6. Other items of property, plant and equipment
           920       971  
IV. CONSOLIDATION RESERVES
           6,938       6,938  
7. Advances and property, plant and equipment in the course of construction
           403       403                          
                       
V. RESERVES FOR FIRST TIME APLLICATION OF IFRSs
           (1,106 )     (1,106 )
                                               
II. INTANGIBLE ASSETS
           175       202  
VI. LOSS FOR THE YEAR
           (5,560 )     (44,011 )
1. Computer Software
           175       202                          
                                               
III. NON-CURRENT FINANCIAL ASSETS
   5       314       314  
B) NON-CURRENT LIABILITIES
           211,523       209,842  
1. Other Financial Assets
           314       314                          
                       
I. NON-CURRENT PAYABLES RELATED PARTIES
   7 and 11       154,210       139,192  
IV. DEFERRED TAX ASSETS
           1,883       1,883                          
                       
II. NON-CURRENT PAYABLES
   7       55,250       68,581  
                       
1. Bank borrowings
           52,540       64,881  
                       
2. Derivatives
           2,710       3,700  
B) CURRENT ASSETS
           28,665       32,528                          
                       
III. DEFERRED TAXES LIABILITIES
           1,883       1,883  
I.   NON-CURRENT ASSETS HELD FOR SALE
           3,138       3,138                          
                       
IV. DEFERRED REVENUE
           180       186  
II.   INVENTORIES
   4       5,936       5,591                          
                       
C) CURRENT LIABILITIES
           74,647       77,885  
III.  TRADE AND OTHER RECEIVABLES
   5 and 11       17,293       22,173                          
1. Trade receivables for sales and services
           10,418       12,963  
I. CURRENT PAYABLES TO RELATED PARTIES
   7 and 11       577       988  
2. Receivable from associates
           4,539       6,804                          
3. Receivable from public authorities
           1,731       2,396  
II. CURRENT PAYABLES
   7       40,025       41,727  
4. Other receivables
           605       10  
1. Bank Borrowings
           39,947       41,593  
                       
2. Other financial liabilities
           78       134  
                                               
IV. CURRENT FINANCIAL ASSETS
   5       496       496                          
                       
III.TRADE AND OTHER PAYABLES
   7       34,045       35,170  
V. CASH AND CASH EQUIVALENTS
           1,781       1,116  
1. Payable to suppliers and sundry accounts payable
           20,320       22,050  
                       
2.  Payable to suppliers-related parties
           1,326       2,309  
VI.  CURRENT PREPAYMENTS AND ACCRUED INCOME
           21       14  
3. Other accounts payable to public authorities
           9,871       9,042  
                       
4. Remuneration payable
           2,528       1,769  
                                               
                                               
                                               
TOTAL ASSETS
           126,584       133,701  
TOTAL EQUITY AND LIABILITIES
           126,584       133,701  
(*) Unaudited financial statements
 
The accompanying Notes 1 to 13 are an integral part of the condensed consolidated balance sheets at March 31, 2012 and December 31, 2011.
 
 
DÉDALO GRUPO GRÁFICO, S.L. AND SUBSIDIARIES
(Thousands of euros)

   
Notes
    
03/31/2012
(*)
    
03/31/2011
(*)
  
                   
                   
Revenue
   9       15,638       22,967  
Other operating income
           560       560  
                       
OPERATING INCOME
           16,198       23,527  
                       
Cost and expenses
           (4,859 )     (9,258 )
Staff costs
   8       (8,877 )     (10,627 )
Depreciation and amortisation charge
           (3,286 )     (3,419 )
Change in allowances, write-downs and provisions
           -       4  
Other expenses
   8       (4,649 )     (4,409 )
                       
OPERATING EXPENSES
           (21,671 )     (27,709 )
                       
LOSS FROM OPERATIONS
           (5,473 )     (4,182 )
                       
Finance income
           861       1  
Finance costs
           (948 )     (1,763 )
                       
FINANCIAL LOSS
           (87 )     (1,762 )
                       
LOSS BEFORE TAX FROM CONTINUING OPERATIONS
           (5,560 )     (5,944 )
                       
LOSS FOR THE YEAR
   9       (5,560 )     (5,944 )
(*) Unaudited financial statements
 
The accompanying Notes 1 to 13 are an integral part of the condensed consolidated income statements for three months ended March 31, 2012 and 2011.

 
DÉDALO GRUPO GRÁFICO, S.L. AND SUBSIDIARIES
 
   
03/31/2012
(*)
    
03/31/2011
(*)
  
CONSOLIDATED PROFIT FOR THE YEAR
     (5,560 )     (5,944 )
                 
Income and expense recognized directly in equity
     -       -  
Translation differences
     -       -  
                 
TOTAL RECOGNIZED INCOME AND EXPENSE
     (5,560 )     (5,944 )
Attributable to the Parent
     (5,560 )     (5,944 )
Attributable to non-controlling interests
                
(*) Unaudited financial statements
 
The accompanying Notes 1 to 13 are an integral part of the condensed consolidated statements of other comprehensive income for the three months ended  March 31, 2012 and 211.
 
 
DÉDALO GRUPO GRÁFICO

(Thousands of euros)

                     
Reserves for
                                            
                     
first-time
    
Prior years´
                
Accumulated
    
Equity
              
   
Share
    
Share
          
application
    
accumulated
    
Treasury
    
Exchange
    
profit
    
attributable to
    
Non-controlling
        
   
capital
    
premium
    
Reserves
    
of IFRSs
    
profit
    
shares
    
differences
    
for the Year
    
the Parent
    
interests
    
Equity
  
                                                                   
Balance at December 31, 2010
     28,458       91,085       5,659       (1,106 )     (206,982 )     -       -       (22,009 )     (104,895 )     -       (104,895 )
                                                                                         
Income and expense recognised
                                                                                        
- Profit for 2011
     -       -       -       -       -       -       -       (5,944 )     (5,944 )     -       (5,944 )
                                                                                         
Others
     -       -       1,277       -       (28,407 )     -       -       22,009       (5,121 )     -       (5,121 )
                                                                                         
Balance at March 31, 2011 (*)
     28,458       91,085       6,936       (1,106 )     (235,389 )     -       -       (5,944 )     (115,960 )     -       (115,960 )
(*) Unaudited financial statements

The accompanying Notes 1 to 13 are an integral part of the condensed consolidated statements of changes in equity for the three months ended March 31, 2011 and 2010.
 
 
DÉDALO GRUPO GRÁFICO

(Thousands of euros)

                     
Reserves for
                                            
                     
first-time
    
Prior years´
                
Accumulated
    
Equity
              
   
Share
    
Share
          
application
    
accumulated
    
Treasury
    
Exchange
    
profit
    
attributable to
    
Non-controlling
        
   
capital
    
premium
    
Reserves
    
of IFRSs
    
profit
    
shares
    
differences
    
for the Year
    
the Parent
    
interests
    
Equity
  
                                                                   
Balance at December 31, 2011 (*)
     28,458       91,085       6,938       (1,106 )     (235,390 )     -       -       (44,011 )     (154,026 )     -       (154,026 )
                                                                                         
Income and expense recognised
                                                                                        
- Profit for 2012
     -       -       -       -       -       -       -       (5,560 )     (5,560 )     -       (5,560 )
                                                                                         
Others
     -       -       -       -       (44,011 )     -       -       44,011       -       -       -  
                                                                                         
Balance at March 31, 2012 (*)
     28,458       91,085       6,938       (1,106 )     (279,401 )     -       -       (5,560 )     (159,586 )     -       (159,586 )

(*) Unaudited financial statements
 
The accompanying Notes 1 to 13 are an integral part of the condensed consolidated statements of changes in equity for the three months ended March 31, 2012 and 2011.
 
 
DÉDALO GRUPO GRÁFICO, S.L. AND SUBSIDIARIES
(Thousands of euros)

             
   
03/31/2012
(*)
    
03/31/2011
(*)
  
             
PROFIT BEFORE TAX FROM CONTINUING OPERATIONS
     (5,560 )     (5,944 )
                 
Depreciation and amortisation charge and provisions
     3,487       3.409  
                 
Changes in working capital
     3,196       (4,061 )
Inventories
     (345 )     (632 )
Accounts receivable
     4,673       (191 )
Accounts payable
     (1,125 )     (3,428 )
Other current assets
     (7 )     190  
                 
CASH FLOWS FROM OPERATING ACTIVITIES
     1,123       (6,596 )
                 
Recurrent investments
     (32 )     (51 )
Investments in property, plant and equipment
     (32 )     (51 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES
     (32 )     (51 )
                 
Proceeds relating to financial liability instruments
     14,607       20,625  
Payments relating to financial liability instruments
     (14,085 )     (12,864 )
Interest paid
     (948 )     (1,763 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES
     (426 )     5,998  
                 
Effect of foreign exchange rate changes
     -       -  
                 
CHANGE IN CASH FLOWS IN THE YEAR
     665       (649 )
                 
Cash and cash equivalents at beginning of year
     1,116       1,482  
                 
Cash and cash equivalents at end of year
     1,781       833  
 
(*) Unaudited financial statements

The accompanying Notes 1 to 13 are an integral part of the condensed consolidated statements of cash flows for the three months ended March 31, 2012 and 2011.

 
DÉDALO GRUPO GRÁFICO, S.L. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2012
 
(1)
BASIS OF PRESENTATION OF THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2012

The condensed consolidated financial statements of Dédalo Grupo Gráfico, S.L. and Subsidiaries (the Group) for the first quarter of 2012 have been prepared in accordance with International Financial Reporting Standards (“IFRSs”) as issued by IASB, in conformity with Regulation (EC) no. 1606/2002 of the European Parliament and of the Council, taking into account all mandatory accounting policies and rules and measurement bases with a material effect, as well as with the Commercial Code, the obligatory legislation approved by the Institute of Accounting and Auditors of Accounts, and other applicable Spanish legislation.
 
The condensed consolidated financial statements for the three months ended March 31, 2012 and the notes have been prepared by the Company and are presented in accordance with IAS 34 Interim Financial Reporting.
 
The Group’s consolidated financial statements for the year 2011 were approved by the shareholders on June 28, 2012.
 
Securities and Exchange Comision (SEC) Regulation S-X sets forth the requirements for financial statements to be included in the filings made with the SEC based on the criteria established in Rule 3-09, “Separate financial Statements of Subsidiaries not consolidated and 50 percent or less owned persons”. Based upon these criteria Dédalo is considered to be significant equity investment of Prisa for the year ended 2010.
 
As stated in Note 10 “Events after the balanced sheet date”, the financial statements of Dédalo Grupo Gráfico, S.L. and Subsidiaries are fully consolidated in the Promotora de Informaciones, S.A. ("Prisa") Group's accounts since April 1, 2012, as the option of the reciprocal purchase and sale agreement for the shares of Dédalo Grupo Gráfico signed by Prisa in 2010 with the other shareholders of Dédalo Grupo Gráfico was exercisable. Also in June 2012 exercised the call option for one euro, which involves the acquisition of the remaining 60% of the shares of the company, reaching a total participation of 100%. Additionally, on June 1, 2012 Dédalo Grupo Gráfico, S.L. sold 100% of Dédalo Offset, S.L., Macrolibros, S.L., Dédalo Heliocolor, S.A. and Gráficas Integradas, S.A.
 
Therefore, Prisa must include the separate financial statements of the Group for 2011 (unaudited) and 2010 (audited) in Prisa´s Annual Report on Form 20-F to be filed with the SEC ,and, with respect to 2012, the condensed consolidated financial statements for the three month period ended March 31, 2012 (unaudited).
 
At the request of Prisa the Group`s financial statements for the two years ended 2011, and for the three months ended March 31, 2012 to be included in the Form 20F have been prepared in accordance with IFRS issued by IASB.
 
 
In accordance with IAS 34, the interim financial reporting is prepared in order to update the latest approved consolidated financial statements, highlighting the new activities, events and circumstances that have taken place during the first three months of the year and avoiding the repetition of information previously reported in the consolidated financial statements for 2011. Therefore, the interim financial statements do not contain all the information and disclosures required for a complete set of consolidated financial statements in accordance with IFRSs as issued by IASB. In order to correctly understand the information included in these condensed consolidated financial statements for the three months ended March 31, 2012, they must be read in conjunction with the consolidated financial statements for 2011.
 
The IFRSs are applied in the preparation of the consolidated financial information of the Group.
 
In accordance with IAS 8, the accounting principles and measurement bases applied by the Group are applied uniformly in all transactions, events and concepts, in the first quarter of 2012 and 2011.
 
During the first three months of 2012 new accounting standards have come into force, therefore, were taken into account when preparing the consolidated financial statements. From January 1, 2012 is implementing the following new standard:

 
- 
Amendment to IFRS 7: Financial Instruments: Disclosures – Transfers of financial assets.

The content of this amendment is explained in Note 2.a. to the 2011 consolidated financial statements. The application of this amendment did not have a significant impact on the condensed interim consolidated financial statements.
 
The Group has elected not to early adopt other IFRSs issued but not yet effective.
 
There is no accounting principle or measurement bases having a significant effect on the consolidated financial statements that the Group has failed to apply.
 
Use of estimates
 
Consolidated earnings and the determination of consolidated equity are subject to the accounting policies and standards, measurement bases and estimates applied by the Group’s executives in the preparation of the condensed interim consolidated financial statements. The accounting policies and standards and measurement bases are explained in Note 2 to the consolidated financial statements for 2011.
 
In the condensed interim consolidated financial statements, estimates were occasionally made by management of the Group to quantify certain assets, liabilities, income, expenses and obligations reported herein. These estimates, based on the best information available, refer mainly to:
 

 
1.
Income tax expense, which in accordance with IAS 34 is recognized in each interim period based on the best estimate of the weighted average annual income tax rate the Group expects for the full year;
 
2.
The measurement of assets and deferred taxes to determine the possible existence of impairment losses;
 
3.
The useful life of property, plant and equipment and intangible assets;
 
4.
The assumptions used to calculate the fair value of financial instruments;
 
5.
The likelihood and amount of undetermined or contingent liabilities;
 
6.
Provisions for unissued and outstanding invoices;

Although these estimates were made on the basis of the best information available to date on the events analyzed, events that take place in the future might make it necessary to change these estimates (upwards or downwards) at the end of 2012 or future reporting periods. The effects of changes in accounting estimates are applied prospectively in profit and loss in the periods affected by the change.
 
In the three months ended March 31, 2012, there were no significant changes in the estimates made at the end of 2011.
 
Comparative information
 
The information contained in these condensed consolidated financial statements for the three months ended March 31, 2011 is presented only for comparison purposes with the information relating to the three months ended March 31, 2012.
 
Seasonality of the Group’s operations
 
Given the businesses carried out by Group companies, operations are not considered highly cyclical or seasonal. Accordingly, these explanatory notes to the condensed consolidated financial statements for the three months ended March 31, 2012 do not include specific disclosures in this connection.
 
Materiality
 
In accordance with IAS 34 the Group assessed materiality in relation to the condensed interim consolidated financial statements in determining the information to disclose in these explanatory notes regarding the different line items in the financial statements.
 
Correction of errors
 
No errors were corrected in the condensed consolidated financial statements for the three months ended March 31, 2012.
 
Going concern principle of accounting
 
Dédalo Group is a printing group whose activities encompass the areas of Offset, Books, Gravure and Press. Specifically, the Offset business has been affected by stiffer competition in the market, making it necessary to undertake an in-depth reorganization of operating and production activities.
 
 
As a consequence of the restructuring measures taken in place during 2011, at March 31, 2012, the Group has reduced significantly the personnel costs. However, the companies of the Group have incurred ongoing losses from operations as a result of increased competition in the printing markets in which they operate and have an accumulated deficit of EUR 159,586 thousand to March 31, 2012. In view of these matters, realization of a major portion of the assets in the accompanying balance sheet is dependent upon the continued operations of the Company, which in turn is dependent under the Company’s ability to meet its financing requirements, and the success of its future operations.
 
The Company may seek additional equity in order to support existing operations and expand the range of its business. These circumstances raise substantial doubts about the fact that such additional funds will be available for the Company on acceptable terms.

(2)
CHANGES IN THE GROUP STRUCTURE

During the three first months of 2012 there have been no significant changes in the Group structure.

(3)
PROPERTY, PLANT AND EQUIPMENT

Decreases to the Group’s consolidated financial statements under "Property, plant and equipment" during the first three months of 2012 totaled EUR 3,227 thousand, corresponding mainly to:

 
a)
The depreciation of machinery and tools charged to the consolidated income statement in the first three months of 2012 amounted to EUR 2,589 thousand.

 
b)
The depreciation of buildings and structures charged to the consolidated income statement in the first three months of 2012 amounted to EUR 225 thousand.
 
(4)
INVENTORIES

The detail of “Inventories” is as follows:
 
   
Thousands of euros
  
   
03/31/2012 (*)
    
12/31/2011(*)
  
   
Cost
    
Writte-down
    
Net
    
Cost
    
Writte-down
    
Net
  
Raw materials and supplies
     6,045       (1,105 )     4,940       5,700       (1,105 )     4,595  
Goods and work in progress
     994       -       994       994       -       994  
Advances to suppliers
     2       -       2       2       -       2  
Total
     7,041       (1,105 )     5,936       6,696       (1,105 )     5,591  
 
*Unaudited figures
The movement in “Inventories” was mainly due to the purchase of paper and spare parts for printing presses.
 
 
(5)
FINANCIAL ASSETS

The detail of “Non- current financial assets” and “Current financial assets” is as follows:
 
   
Thousands of euros
  
   
Non-current financial assets
    
Current financial assets
    
Total Financial assets
  
   
03/31/2012 (*)
    
12/ 31/11 (*)
    
03/31/ 2012 (*)
    
12/ 31/11 (*)
    
03/31/2012 (*)
    
12/ 31/11 (*)
  
Loans and receivables
     314       314       11,519       13,469       11,833       13,783  
Loans and receivables from related parties
     -       -       4,539       6,804       4,539       6,804  
Total
     314       314       16,058       20,273       16,372       20,587  
*Unaudited financial statements
 
The movement in “Loans and receivables” was mainly due to the normal operations of the Group during the first three months of 2012 (mainly new sales and collection of outstanding invoices).

(6)
EQUITY: SHARE CAPITAL

At March 31, 2012 the Company’s share capital amounted to EUR 28,458 thousand and was represented by 284,580 fully subscribed and paid ordinary shares of EUR 100 par value each.
 
The percentage of ownership of the shareholders is as follows:
 
   
03/31/2012
  
Prisaprint, S.L.
     40 %
Viking Business, S.L.
     40 %
Cérmides, S.A.R.L.
     18.01 %
Other shareholders
     1.99 %
Total
     100 %
 
During the first three months of 2012 there have been no changes in the Share Capital of the Company.
 
At December 31, 2011, the Company’s equity was less than half of its share capital and, therefore, pursuant to Article 363 of the Consolidated Spanish Companies Law, the share capital of the Company must be reduced in the event that equity is not recovered within one year. In order to remedy this situation, the Company will propose to the shareholders at the General Meeting called within two months of the approval of the financial statements that the necessary measures provided by law have to be taken. At this date, the Company has recorded participating loans amounting EUR 130,803 thousand which, in accordance with the Consolidated Spanish Companies Law, is included in equity for legal purposes in respect of the capital reductions and company liquidations provided for in corporate legislation.
 
(7)
FINANCIAL LIABILITIES

The detail of “Non-current financial liabilities” and “Current financial liabilities,” including bank borrowings, is as follows:
 

   
Thousands of euros
  
   
Non-current financial liabilities
    
Current financial liabilities
    
Total Financial liabilities
  
   
03/31/2012 (*)
    
12/31/11 (*)
    
03/31/2012 (*)
    
12/31/11 (*)
    
03/31/2012 (*)
    
12/31/11 (*)
  
Bank Borrowings
     52,540       64,881       39,947       41,593       92,487       106,474  
Derivatives
     2,710       3,700       -       -       2,710       3,700  
Other financial liabilities with related parties
     154,210       139,192       1,903       3,297       156,113       142,489  
Other financial liabilities
     -       -       22,926       23,953       22,926       23,953  
Deferred Revenue
     180       186       -       -       180       186  
Total
     209,640       207,959       64,776       68,843       274,416       276,802  
* Unaudited figures

Bank Borrowings:

The detail of “Bank Borrowings” by period of amortization, in thousands of euros, at March 31, 2012 is as follows:
 
   
03/31/2013 (*)
    
03/31/2014 (*)
    
03/31/2015 (*)
    
Total
  
Syndicated Loans and credit facilities
     40,197       24,800       28,200       93,197  
Syndicated fees and commissions
     (250 )     (250 )     (210 )     (710 )
Total
     39,947       24,550       27,990       92,487  
 
(*) Unaudited figures

The main movement in “Bank Borrowings” from December, 2011 was due to the Syndicated payment made in February amounting EUR 12,400 thousands.
 
On February 8, 2013 the Company signed with a group of banks formed by Banco Español de Crédito, S.A., Banco Santander, S.A., HSBC Bank Plc, Branch in Spain, Banco Bilbao Vizcaya Argentaria, S.A., Banco de Sabadell, S.A., Bankia and La Caixa D'Estalvis y Pensions de Barcelona an adhesion and novation contract of the agreement signed on February 8, 2008 which modifies the amortization schedule.
 
Derivative financial instruments
 
The main change in the value of these financial instruments is due to the payment of EUR 786 thousands on February, 2012.  Also, the Group has recognized a finance income of EUR 204 thousands for the changes in the value of the outstanding derivative financial instrument.
 
Fair value of financial instruments
 
From December 31, 2011, the Group has not changed the classification of its financial instruments, which continue to be classified as level-2.
 
(8)
OPERATING EXPENSES

Staff costs

The average number of employees at the Group is as follows:
 
   
Employees
  
   
03/ 31/ 2012 (*)
    
03/ 31/ 2011 (*)
  
             
Managers
     8       11  
Supervisors
     466       502  
Other
     311       376  
Total
     785       889  
*Unaudited figures
 
 
During 2011, the Group has executed a 77 employee restructuring, under a Collective Dismissal Procedure, in Dédalo Heliocolor, S.A.U., and additionally the Group has cancelled its business unit of daily press in Dédalo Offset, S.L.U. with a 16 employees redundancy.

Other expenses

The detail of “Other expenses” for the three months ended March 31, 2012 and March 31, 2011 is as follows:
 
   
Thousands of euros
  
   
03/31/12 (*)
    
03/31/11 (*)
  
Independent professional services
     197       100  
Leases and fees
     622       682  
Repairs
     639       795  
Supplies
     1,871       1,770  
Transport
     85       (48 )
Other outside services
     1,235       1,110  
Total
     4,649       4,409  
* Unaudited figures
 
(9)
BUSINESS SEGMENTS

The breakdown of the consolidated revenues of the Group based on the geographical location of the companies that gave rise to them is as follows:
 
Line of business
  
03/31/2012 (*)
    
03/31/2011 (*)
  
   
Domestic Sales
    
Export Sales
    
Domestic Sales
    
Export Sales
  
Offset
     4,371       738       6,719       2,646  
Gravure
     5,885       1,000       8,511       873  
Press
     3,644       -       4,218       -  
Total
     13,900       1,738       19,448       3,519  
* Unaudited figures
 
Domestic sales relate to the provision of services for printing press, books, magazines and sales brochures. Export sales, all of which are to European Union countries, relate mainly to the provision of book printing services.

Results by company

The contribution of each company included in the scope of consolidation to the consolidated loss for 2012 and 2011, in thousands of Euros, is as follows:
 
 
 
Line of business
  
03/31/2012 (*)
    
03/31/2011 (*)
  
Dédalo Grupo Gráfico, S.L.
Corporate
     94       (359 )
Dédalo Offset, S.L.U.
Offset
     (3,027 )     (2,389 )
Macrolibros, S.L.U.
Offset
     (537 )     -  
Dédalo Heliocolor, S.A.U.
Gravure
     (1,924 )     (3,150 )
Gráficas Integradas, S.A.U.
Gravure
     (115 )     (73 )
Distribuciones Aliadas, S.A.U.
Press
     30       41  
Norprensa, S.A.U.
Press
     100       113  
Bidasoa Press, S.L.U.
Press
     (181 )     (127 )
Total
       (5,560 )     (5,944 )
*Unaudited figures
 
(10)
EVENTS AFTER THE BALANCE SHEET DATE

The financial statements of Dédalo Grupo Gráfico, S.L. and subsidiaries are fully consolidated in the Prisa Group's accounts since April 1, 2012, as the option of the reciprocal purchase and sale agreement for the shares of Dédalo Grupo Gráfico signed by Prisa in 2010 with the other shareholders of Dédalo Grupo Gráfico was exercisable. Also in June 2012 Prisa exercised the call option for one euro, which involves the acquisition of the remaining 60% of society, reaching a total participation of 100%.
 
Additionally, in June 1, 2012 Dédalo Grupo Gráfico, S.L. sold 100% of Dédalo Offset, S.L., Macrolibros, S.L., Dédalo Heliocolor, S.A. y Gráficas Integradas, S.A.
 
(11)
RELATED PARTY TRANSACTIONS

The detail of the balances with related parties at March 31, 2012 and 2011, in thousands of Euros is as follows:
 
   
Balance Receivables
    
Non-current balance payables
    
Current balance payable
  
   
03/31/2012 (*)
    
12/31/2011 (*)
    
03/31/2012 (*)
    
12/31/2011 (*)
    
03/31/2012 (*)
    
12/31/2011 (*)
  
Shareholders
     -       -       154,210       139,192       -       -  
Related entities
     4,539       6,804       -       -       1,903       3,297  
Total
     4,539       6,804       154,210       139,192       1,903       3,297  
* Unaudited figures
 
The main movement in “non-current balance payables” from December, 2011 was due to the Syndicated payment made in February amounting EUR 12,400 thousands by Promotora de Informaciones, S.A., which increased the amount owed to the parent company.
 
The transactions performed with related parties in the three months ended March 31, 2012 and in 2011 were as follows (in thousands of euros):
 
 
   
Income
    
Expenses
  
   
03/31/2012 (*)
    
12/31/2011 (*)
    
03/31/2012 (*)
    
12/31/2011 (*)
  
Shareholders
     -       -       -       50  
Related entities
     4,651       5,975       11       38  
Total
     4,651       5,975       11       88  
*Unaudited figures
 
(12)
REMUNERATION AND OTHER BENEFITS OF DIRECTORS

In the three months ended March 31, 2012 and 2011, the consolidated companies registered the remuneration received by the Group’s Board members of EUR 6 thousand in March 31, 2012 (December 31, 2011: EUR 24 thousand). The Group has not granted any loans to its Directors and it does not have any pension or insurance obligation to them.

(13)
GUARANTEE COMMITMENTS TO THIRD PARTIES AND OTHER CONTINGENT LIABILITIES

At March 31, 2012 the Group has guarantees amounting 624 thousand euros. From this amount, 613 thousand euros are due to endorsement give to the City of Pinto in relation with the construction works in progress at the urbanization where is located Dédalo Offset, S.L.U. Of this endorsement Promotora de Informaciones, S.A. guarantees an amount of 419 thousand euros. The subsidiary Dédalo Offset, S.L.U. has attended the liabilities associated with the above warranty. Management estimates that any additional liability that may occur would not be significant.
 
 
INDEPENDENT AUDITORS’ REPORT
 
To the Shareholders of
Dédalo Grupo Gráfico, S.L.
Madrid, Spain
 
We have audited the accompanying consolidated balance sheet of Dédalo Grupo Gráfico, S.L. and subsidiaries (the “Company”) as of December 31, 2010, and the related consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity, and consolidated statement of cash flow for the year then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
 
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
 
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2010, and the results of their operations and their cash flows for the year then ended in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.
 
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2(h) to the consolidated financial statements, the Company’s recurring losses from operations and stockholders’ capital deficiency raise substantial doubt about its ability to continue as a going concern. Management’s plans concerning these matters are also discussed in Note 2(h) to the consolidated financial statements. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
/s/ Deloitte, S.L.
 
Deloitte, S.L.
 
Madrid, Spain
June 30, 2011
 
 
F-102
 
 
DÉDALO GRUPO GRÁFICO, S.L. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS AT DECEMBER 31, 2011 AND 2010
(Thousands of euros)
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
ASSETS
Notes
 
12/31/11 (*)
 
 
12/31/10
 
  
EQUITY AND LIABILITIES
Notes
 
12/31/11 (*)
 
 
12/31/10
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
A) NON-CURRENT ASSETS
 
 
 
101,173
 
 
 
132,855
 
  
A) EQUITY
10
 
 
(154,026
)
 
 
(110,015
)
 
 
 
 
 
 
 
 
 
 
    
 
 
 
 
 
 
 
 
 
I. INTANGIBLE ASSETS
5
 
 
 
 
 
 
 
 
  
A-1) SHAREHOLDERS' EQUITY
 
 
 
(154,026
)
 
 
(110,015
)
1. Industrial Property
  
 
 
-
 
 
 
-
 
    
 
 
 
 
 
 
 
 
 
2. Computer software
  
 
 
202
 
 
 
331
 
  
I. SHARE CAPITAL
 
 
 
28,458
 
 
 
28,458
 
   
 
 
202
 
 
 
331
 
    
 
 
 
 
 
 
 
 
 
II. PROPERTY, PLANT AND EQUIPMENT
6
 
 
 
 
 
 
 
 
  
II. SHARE PREMIUM
 
 
 
91,085
 
 
 
91,085
 
1. Land
  
 
 
5,345
 
 
 
5,345
 
    
 
 
 
 
 
 
 
 
 
2. Buildings and structures
  
 
 
26,741
 
 
 
27,527
 
  
III. PRIOR YEARS' LOSSES
 
 
 
(235,390
)
 
 
(206,982
)
3. Plant
  
 
 
8,891
 
 
 
10,300
 
    
 
 
 
 
 
 
 
 
 
4. Machinery and tools
  
 
 
55,999
 
 
 
66,364
 
  
IV. CONSOLIDATION RESERVES
 
 
 
6,938
 
 
 
539
 
5. Other fixtures and furniture
  
 
 
424
 
 
 
529
 
    
 
 
 
 
 
 
 
 
 
6. Other items of property, plant and equipment
  
 
 
971
 
 
 
1,212
 
  
V. RESERVES FOR FIRST-TIME APPLICATION OF IFRSs
 
 
 
(1,106
)
 
 
(1,106
)
7. Advances and property, plant and equipment in the course of construction
  
 
 
403
 
 
 
503
 
    
 
 
 
 
 
 
 
 
 
   
 
 
98,774
 
 
 
111,780
 
  
VI. LOSS FOR THE YEAR
 
 
 
(44,011
)
 
 
(22,009
)
   
 
 
 
 
 
 
 
 
    
 
 
 
 
 
 
 
 
 
III. NON-CURRENT FINANCIAL ASSETS
  
 
 
 
 
 
 
 
 
  
B) NON-CURRENT LIABILITIES
 
 
 
209,842
 
 
 
196,554
 
1. Other financial assets
9
 
 
314
 
 
 
314
 
    
 
 
 
 
 
 
 
 
 
   
 
 
314
 
 
 
314
 
  
I. NON-CURRENT PAYABLES TO RELATED PARTIES
11 and 14
 
 
139,192
 
 
 
95,758
 
 
 
 
 
 
 
 
 
 
 
    
 
 
 
 
 
 
 
 
 
IV. DEFERRED TAX ASSETS
12
 
 
1,883
 
 
 
20,430
 
  
II. NON-CURRENT PAYABLES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
1. Bank borrowings
11
 
 
64,881
 
 
 
89,431
 
 
 
 
 
 
 
 
 
 
 
  
2. Derivatives
11
 
 
3,700
 
 
 
5,000
 
B) CURRENT ASSETS
 
 
 
32,528
 
 
 
36,543
 
    
 
 
 
68,581
 
 
 
94,431
 
 
 
 
 
 
 
 
 
 
 
    
 
 
 
 
 
 
 
 
 
I. NON-CURRENT ASSETS HELD FOR SALE
 
 
 
3,138
 
 
 
3,588
 
  
III. DEFERRED TAX LIABILITIES
12
 
 
1,883
 
 
 
6,151
 
 
 
 
 
 
 
 
 
 
 
    
 
 
 
 
 
 
 
 
 
II. INVENTORIES
7
 
 
5,591
 
 
 
6,315
 
  
IV. DEFERRED REVENUE
11
 
 
186
 
 
 
214
 
 
 
 
 
 
 
 
 
 
 
    
 
 
 
 
 
 
 
 
 
III. TRADE AND OTHER RECEIVABLES
 
 
 
 
 
 
 
 
 
    
 
 
 
 
 
 
 
 
 
1. Trade receivables for sales and services
9
 
 
12,963
 
 
 
17,162
 
  
C) CURRENT LIABILITIES
 
 
 
77,885
 
 
 
82,859
 
2. Receivable from related parties
9 and 14
 
 
6,804
 
 
 
6,608
 
    
 
 
 
 
 
 
 
 
 
3. Loans to employees
9
 
 
2
 
 
 
4
 
  
I. CURRENT PAYABLES TO RELATED PARTIES
11 and 14
 
 
988
 
 
 
8,228
 
4. Sundry accounts receivable
9
 
 
8
 
 
 
40
 
    
 
 
 
 
 
 
 
 
 
5. Other accounts receivable from public authorities
12
 
 
2,396
 
 
 
1,315
 
  
II. CURRENT PAYABLES
 
 
 
 
 
 
 
 
 
 
 
 
 
22,173
 
 
 
25,129
 
  
1. Bank borrowings
11
 
 
41,593
 
 
 
42,748
 
IV. CURRENT FINANCIAL ASSETS
 
 
 
 
 
 
 
 
 
  
2. Obligations under finance leases
8
 
 
-
 
 
 
72
 
1. Other financial assets
9
 
 
496
 
 
 
-
 
  
3. Other financial liabilities
11
 
 
134
 
 
 
209
 
 
 
 
 
496
 
 
 
-
 
    
 
 
 
41,727
 
 
 
43,029
 
 
 
 
 
 
 
 
 
 
 
    
 
 
 
 
 
 
 
 
 
V. CURRENT PREPAYMENTS AND ACCRUED INCOME
 
 
 
14
 
 
 
29
 
  
III. TRADE AND OTHER PAYABLES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
1. Payable to suppliers and sundry accounts payable
11
 
 
22,050
 
 
 
21,513
 
VI. CASH AND CASH EQUIVALENTS
 
 
 
 
 
 
 
 
 
  
2. Payable to suppliers - related parties
11 and 14
 
 
2,309
 
 
 
872
 
1. Cash
 
 
 
1,116
 
 
 
1,482
 
  
3. Other accounts payable to public authorities
12
 
 
9,042
 
 
 
7,480
 
2. Cash equivalents
 
 
 
-
 
 
 
-
 
  
4. Remuneration payable
11
 
 
1,769
 
 
 
1,737
 
 
 
 
 
1,116
 
 
 
1,482
 
    
 
 
 
35,170
 
 
 
31,602
 
 
 
 
 
 
 
 
 
 
 
    
 
 
 
 
 
 
 
 
 
TOTAL ASSETS
 
 
 
133,701
 
 
 
169,398
 
  
TOTAL EQUITY AND LIABILITIES
 
 
 
133,701
 
 
 
169,398
 
 
The accompanying Notes 1 to 15 and Appendix I are an integral part of the consolidated balance sheets at December 31, 2011 and 2010.
(*) Unaudited figures
 
 
F-103
 
 
DÉDALO GRUPO GRÁFICO, S.L. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS FOR 2011 AND 2010
(Thousands of euros)
 
 
 
 
 
 
 
 
 
 
Notes
 
 
2011 (*)
 
 
 
2010
 
 
 
 
 
 
 
 
 
 
 
A) CONTINUING OPERATIONS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1. Revenue
13
 
 
84,945
 
 
 
94,923
 
 
 
 
 
 
 
 
 
 
 
2. Cost and expenses
 
 
 
(30,825
)
 
 
(34,557
)
 
 
 
 
 
 
 
 
 
 
3. Other operating income
 
 
 
 
 
 
 
 
 
a) Non-core and other current operating income
 
 
 
29
 
 
 
72
 
 
 
 
 
29
 
 
 
72
 
4. Staff costs
 
 
 
 
 
 
 
 
 
a) Wages, salaries and similar expenses
 
 
 
(36,454
)
 
 
(32,483
)
b) Employee benefit costs
13
 
 
(9,064
)
 
 
(9,932
)
 
 
 
 
(45,518
)
 
 
(42,415
)
5. Other operating expenses
 
 
 
 
 
 
 
 
 
a) Outside services, taxes other than income tax and other current operating expenses
8 and 13
 
 
(18,051
)
 
 
(18,462
)
b) Losses on, impairment of and change in allowances for trade receivables
 
 
 
(1,252
)
 
 
(631
)
 
 
 
 
(19,303
)
 
 
(19,093
)
6. Depreciation and amortization charge
 
 
 
 
 
 
 
 
 
a) Intangible assets
5
 
 
(130
)
 
 
(160
)
b) Property, plant and equipment
6
 
 
(13,356
)
 
 
(13,880
)
 
 
 
 
(13,486
)
 
 
(14,040
)
7. Impairment and gains or losses on disposals of non-current assets
6
 
 
(304
)
 
 
1
 
 
 
 
 
 
 
 
 
 
 
A.1) LOSS FROM OPERATIONS
 
 
 
(24,462
)
 
 
(15,109
)
 
 
 
 
 
 
 
 
 
 
8. Finance income
 
 
 
 
 
 
 
 
 
a) From marketable securities and other financial instruments
 
 
 
1,316
 
 
 
604
 
 
 
 
 
1,316
 
 
 
604
 
9. Finance costs
 
 
 
 
 
 
 
 
 
a) On debts to related parties
14
 
 
(91
)
 
 
(354
)
b) On debts to third parties
 
 
 
(6,495
)
 
 
(7,150
)
c) Loss on derivatives
 
 
 
-
 
 
 
-
 
 
 
 
 
(6,586
)
 
 
(7,504
)
10. Exchange differences
 
 
 
-
 
 
 
-
 
 
 
 
 
 
 
 
 
 
 
A.2) FINANCIAL LOSS
 
 
 
(5,270
)
 
 
(6,900
)
 
 
 
 
 
 
 
 
 
 
A.3) LOSS BEFORE TAX
 
 
 
(29,732
)
 
 
(22,009
)
 
 
 
 
 
 
 
 
 
 
11. Income tax
12
 
 
(14,279
)
 
 
-
 
 
 
 
 
 
 
 
 
 
 
A.4) LOSS FOR THE YEAR
 
 
 
(44,011
)
 
 
(22,009
)
 
The accompanying Notes 1 to 15 and Appendix I are an integral part of the consolidated income statements for 2011 and 2010.
(*) Unaudited figures
 
 
F-104
 
 
DÉDALO GRUPO GRÁFICO, S.L. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR 2011 AND 2010
(Thousands of euros)
 
 
 
 
 
 
 
 
 
 
 
2011 (*)
 
 
 
2010
 
 
 
 
 
 
 
 
 
 
A) Consolidated loss per income statement
 
 
(44,011
)
 
 
(22,009
)
 
 
 
 
 
 
 
 
 
B) Total income and expense recognized directly in consolidated equity
 
 
-
 
 
 
-
 
 
 
 
 
 
 
 
 
 
C) Total transfers to profit or loss
 
 
-
 
 
 
-
 
TOTAL RECOGNIZED INCOME AND EXPENSE
 
 
(44,011
)
 
 
(22,009
)
 
The accompanying Notes 1 to 15 and Appendix I are an integral part of the consolidated statements of comprehensive income for 2011 and 2010.
(*) Unaudited figures
 
 
F-105
 
 
DÉDALO GRUPO GRÁFICO, S.L. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR 2011 AND 2010
(Thousands of euros)
 
 
 
Share
capital
 
 
Share
premium
 
 
Consolidation
reserves
 
 
Reserves
for first-
time
application
of
IFRSs
 
 
Prior years'
losses
 
 
Loss for the
year
 
 
TOTAL
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
B. BALANCE AT DECEMBER 31, 2009 (*)
 
 
28,458
 
 
 
91,085
 
 
 
844
 
 
 
(1,106
)
 
 
(176,483
)
 
 
(30,804
)
 
 
(88,006
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
I. Total recognized income and expense
 
 
-
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
(22,009
)
 
 
(22,009
)
II. Other changes in equity
 
 
-
 
 
 
-
 
 
 
(305
)
 
 
-
 
 
 
(30,499
)
 
 
30,804
 
 
 
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
C. BALANCE AT DECEMBER 31, 2010
 
 
28,458
 
 
 
91,085
 
 
 
539
 
 
 
(1,106
)
 
 
(206,982
)
 
 
(22,009
)
 
 
(110,015
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
I. Total recognized income and expense
 
 
-
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
(44,011
)
 
 
(44,011
)
II. Other changes in equity
 
 
-
 
 
 
-
 
 
 
6,398
 
 
 
-
 
 
 
(28,407
)
 
 
22,009
 
 
 
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
D. BALANCE AT DECEMBER 31, 2011 (*)
 
 
28,458
 
 
 
91,085
 
 
 
6,937
 
 
 
(1,106
)
 
 
(235,389
)
 
 
(44,011
)
 
 
(154,026
)
 
The accompanying Notes 1 to 15 and Appendix I are an integral part of the consolidated statements of changes in equity for 2011 and 2010.
(*) Unaudited figures
 
 
F-106
 
 
DÉDALO GRUPO GRÁFICO, S.L. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR 2011 AND 2010
(Thousands of euros)
 
 
 
 
2011 (*)
 
 
 
2010
 
A) CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
 
 
 
 
 
1. Loss for the year before tax
 
 
(29,732
)
 
 
(22,009
)
2. Adjustments for:
 
 
 
 
 
 
 
 
a) Depreciation and amortization charge
 
 
13,486
 
 
 
14,040
 
b) Impairment losses on goodwill
 
 
-
 
 
 
-
 
c) Impairment losses
 
 
-
 
 
 
1,467
 
d) Changes in provisions
 
 
1,252
 
 
 
(367
)
e) Gains/Losses on derecognition and disposal of non-current assets
 
 
304
 
 
 
(1
)
f) Finance income
 
 
(1,316
)
 
 
(604
)
g) Finance costs
 
 
6,586
 
 
 
7,504
 
h) Exchange differences
 
 
-
 
 
 
-
 
i) Recognition of grants in profit or loss
 
 
(28
)
 
 
(32
)
 
 
 
20,284
 
 
 
22,007
 
3. Changes in working capital
 
 
 
 
 
 
 
 
a) Inventories
 
 
724
 
 
 
451
 
b) Trade and other receivables
 
 
1,704
 
 
 
(670
)
c) Trade and other payables
 
 
3,557
 
 
 
1,176
 
d) Other non-current assets and liabilities
 
 
175
 
 
 
13
 
 
 
 
6,160
 
 
 
970
 
4. Other cash flows from operating activities
 
 
 
 
 
 
 
 
a) Interest paid
 
 
(6,799
)
 
 
(5,760
)
b) Interest received
 
 
16
 
 
 
4
 
 
 
 
(6,783
)
 
 
(5,756
)
Cash flows from operating activities
 
 
(10,071
)
 
 
(4,788
)
B) CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
 
 
 
 
 
5. Payments due to investment
 
 
 
 
 
 
 
 
a) Intangible assets
 
 
(1
)
 
 
(2
)
b) Property, plant and equipment
 
 
(436
)
 
 
(790
)
c) Other financial assets
 
 
(496
)
 
 
(15
)
 
 
 
(933
)
 
 
(807
)
6. Proceeds from disposal
 
 
 
 
 
 
 
 
a) Property, plant and equipment
 
 
8
 
 
 
1
 
b) Other financial assets
 
 
-
 
 
 
14
 
 
 
 
8
 
 
 
15
 
Cash flows from investing activities
 
 
(925
)
 
 
(792
)
C) CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
 
 
 
 
 
7. Proceeds and payments relating to financial liability instruments
 
 
 
 
 
 
 
 
a) Issue of
 
 
 
 
 
 
 
 
1. Bank borrowings
 
 
-
 
 
 
-
 
2. Borrowings from Group companies and associates
 
 
36,194
 
 
 
6,033
 
 
 
 
36,194
 
 
 
6,033
 
b) Repayment of
 
 
 
 
 
 
 
 
1. Bank borrowings
 
 
(25,564
)
 
 
(385
)
2. Borrowings from Group companies and associates
 
 
 
 
 
 
-
 
 
 
 
(25,564
)
 
 
(385
)
Cash flows from financing activities
 
 
10,630
 
 
 
5,648
 
D) NET INCREASE/DECREASE IN CASH AND CASH EQUIVALENTS
 
 
(366
)
 
 
68
 
Cash and cash equivalents at beginning of year
 
 
1,482
 
 
 
1,414
 
Cash and cash equivalents at end of year
 
 
1,116
 
 
 
1,482
 
 
The accompanying Notes 1 to 15 and Appendix I are an integral part of the consolidated statements of cash flows for 2011 and 2010.
(*) Unaudited figures
 
 
F-107
 
 
DÉDALO GRUPO GRÁFICO, S.L.
AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2011 (UNAUDITED) AND 2010 (AUDITED).
 
1. SUBSIDIARIES AND ASSOCIATES
 
Dédalo Grupo Gráfico, S.L. was incorporated on November 26, 2003 and its registered office is located in Pinto (Madrid), at Pinto to Fuenlabrada road, km 20.800. Its business activities include, inter alia, the management of printing companies.
 
In addition to the business activities carried on directly by the Company, Dédalo Grupo Gráfico, S.L. heads a group of subsidiaries. Therefore, in addition to its own individual financial statements, Dédalo presents consolidated financial statements for the Group.
 
The subsidiaries of Dédalo Grupo Gráfico, S.L. carry on the following activities, in accordance with their company object: (i) printing of texts, (ii) copying of texts, and (iii) mechanical binding.
 
These consolidated financial statements are presented in thousands of Euros as this is the currency of the main economic area in which the Group operates. Foreign operations are accounted for in accordance with the policies described in Note 4-k.
 
2. BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
 
a)
Application of International Financial Reporting Standards (IFRSs)
 
The Group’s consolidated financial statements were prepared in accordance with International Financial Reporting Standards (“IFRSs”) as issued by the International Accounting Standards Board, which do not differ from IFRSs as adopted by the European Union according to Regulation (EC) No 1606/2002 of the European Parliament and Council taking into account all mandatory accounting policies and rules and measurement bases with a material effect, as well as with the Commercial Code, the obligatory legislation approved by the Institute of Accounting and Auditors of Accounts, and other applicable Spanish legislation.
 
 
 
F-108
 

In accordance with IFRSs, the following should be noted in connection with the scope of application of International Financial Reporting Standards and the preparation of these consolidated financial statements of the Group:
 
 
·
IFRSs are applied in the preparation of the consolidated financial information for the Group. In accordance with IFRSs, the consolidated financial statements of the Group include the following:
 
 
-
Consolidated balance sheet.
 
 
-
Consolidated income statement.
 
 
-
Consolidated statement of comprehensive income.
 
 
-
Consolidated statement of changes in equity.
 
 
-
Consolidated statement of cash flows.
 
 
·
As required by IAS 8, uniform accounting policies and measurement bases were applied by the Group for like transactions, events and items in 2011and 2010.
 
In 2011, the following amendments to accounting standards came into force which, therefore, were taken into account when preparing the accompanying consolidated financial statements:
 
 
·
Amendments to IAS 32 Financial Instruments: Presentation - Classification of Rights Issues
 
·
Revised IAS 24 Related Party Disclosures
 
·
Improvements to IFRSs
 
·
Amendment to IFRIC 14 Prepayments of a Minimum Funding Requirement
 
·
IFRIC 19 Extinguishing Financial Liabilities with Equity
 
The application of these amendments and interpretations did not have a significant impact on the Group’s consolidated financial statements for this year.
 
At December 31, 2011, the Dédalo Group had not applied the following standards or interpretations published by the IASB, since the effective application thereof was required subsequent to that date.
 
 
F-109
 

Standards, amendments, and interpretations
Mandatory application for financial
years beginning on or after
Amendment to IFRS 7-
Financial Instruments: Disclosures – Transfers of financial assets
July 1, 2011
IFRS 9
Financial Instruments: Classification and measurement
January 1, 2015 (*)
Amendment to IAS 12
Income Tax - Deferred tax in connection with investment property
January 1, 2012
IFRS 9 and IFRS 7
Effective date and disclosures on transition
N/A
IFRS 10
Consolidated financial statements
January 1, 2013
IFRS 11
Joint arrangements
January 1, 2013
IFRS 12
Disclosure of interests in other entities
January 1, 2013
IFRS 13
Measuring fair value
January 1, 2013
IAS 27 (Revised)
Individual financial statements
January 1, 2013
IAS 28 (Revised)
Investments in associates and joint ventures
January 1, 2013
Amendment to IAS 1
Presentation on other comprehensive income
July 1, 2012
Amendment to IAS 19
Employee benefits
January 1, 2013
Amendment to IAS 32
Offsetting financial assets and financial liabilities
January 1, 2014
Amendment to IFRS 7
Offsetting financial assets and financial liabilities
January 1, 2013
IFRIC interpretation 20
Stripping costs in the production phase of a surface mine
January 1, 2013

(*) The original date of application was January 1, 2013. On December 16, 2011, the IASB approved deferring the date to January 1, 2015.
 
All the accounting principles and measurement basis with a material effect on the consolidated financial statements were applied.
 
The Company has assessed the potential impact of the future application of the aforementioned standards, amendments and interpretations and concluded that their entry into force will not have a material effect on the consolidated financial statements.
 
b)
Fair Presentation and accounting principles
 
The consolidated financial statements were obtained from the individual financial statements of Dédalo Grupo Gráfico, S.L. and its Subsidiaries and, accordingly, they present fairly the Group’s consolidated equity and financial position at December 31, 2011 and the consolidated results of its operations, the changes in consolidated equity and the consolidated cash flows in the year then ended. The Group prepared its financial statements on a going concern basis. Also, with the exception of the consolidated statement of cash flows, these consolidated financial statements were prepared in accordance with the accrual basis of accounting.
 
 
F-110
 
 
The Group's consolidated annual financial statements for the year 2010 were approved by the shareholders on July 22 and deposited in the Mercantile Registry of Madrid. The consolidated financial statements for the year ended December 31, 2011, were prepared in accordance with Spanish GAAP and, therefore, may differ from the amounts included in these financial statements, which were prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.
 
Securities Exchange Commision (SEC) Regulation S-X sets forth the requirements for financial statements to be included in filings made with the SEC based on the criteria established in Rule 3-09. Separate Financial Statements of Subsidiaries Not Consolidated and 50 Percent or Less Owned Persons. Based upon these criteria Dédalo is considered to be a significant equity investment of Prisa for the year ended 2010. Therefore, Prisa must include the separate financial statements of the Group for 2011 (unaudited) and 2010 (audited) in Prisa's form 20F to be filed with the SEC. At the request of Prisa the Group´s financial statements for the two years ended 2011 to be included in the Form 20F have been prepared in accordance with IFRS issued by IASB. The Group will continue to prepare its annual consolidated financial statements in accordance with Spanish GAAP.
 
c)
Responsibility for the information and use of estimates
 
The information in these financial statements is the responsibility of the Company.
 
In the consolidated financial statements estimates were occasionally made by executives of the Group and of the entities in order to quantify certain assets, liabilities and obligations reported herein. These estimates relate basically to the following:
 
 
-
The measurement of assets and deferred tax assets to determine the possible existence of impairment losses (see Note 4-d).
 
 
-
The useful life of the property, plant and equipment and intangible assets (see Notes 4-b and 4-c).
 
 
-
The assumptions used in calculating the fair value of financial instruments (see Note 4-h).
 
 
-
The assessment of the likelihood and amount of undetermined or contingent liabilities.
 
 
-
The calculation of provisions.
 
 
F-111
 
 
Although these estimates were made on the basis of the best information available at the date of preparation of these consolidated financial statements on the events analyzed, events that take place in the future might make it necessary to change these estimates (upwards or downwards) in the coming years. Changes in accounting estimates would be applied prospectively, recognizing the effects of the change in estimates in the related consolidated income statements.
 
In 2011 there were no significant changes in the estimates made at the end of 2010, apart from those used to determine deferred tax assets.
 
d)
Comparative information
 
In addition to the figures for 2011, the consolidated financial statements show those relating to 2010.
 
The figures included in the documents composing these consolidated financial statements are expressed in thousands of Euros.
 
e)
Grouping of items
 
Certain items in the consolidated balance sheet, consolidated income statement, consolidated statement of changes in equity and consolidated statement of cash flows are grouped together to facilitate their understanding; however, if the amounts involved are material, the information will be broken down in the related notes to the consolidated financial statements.
 
f)
Changes in accounting policies
 
In 2011 there were no significant changes in accounting policies with respect to those applied in 2010.
 
g) 
Correction of errors
 
In preparing the consolidated financial statements no significant errors were detected that would have made it necessary to restate the amounts included in the consolidated financial statements for 2010.
 
h)
Going concern principle of accounting
 
The Dédalo Group is a printing group whose activities encompass the areas of Offset, Books, Gravure and Press.
 
 
F-112
 
 
The Offset business (rotary press and flat plate) has been affected by stiffer competition in the market, which has given rise to a demand stagnation and pressure on prices due to excess capacity, hindering the attraction of new customers and making it necessary to undertake an in-depth reorganization of operating and production activities. The restructuring of the Company’s operations continued in 2011 with the derecognition of inefficient or uncompetitive operating assets, the optimization of the work centers’ resources in order to achieve greater specialization and cost reductions, and the enhancement of commercial efficiency by concentrating on the Group’s most profitable customers in the medium and long term.
 
In 2011, the Group has executed a 77 employee restructuring, under a Collective Dismissal Procedure approved by the Consejería de Trabajo y Empleo de Castilla La Mancha, Labour Department of the regional Government in Castilla La Mancha, in Dédalo Heliocolor, S.A.U, the gravure technique company, with severance payments and other related operating expenses amounting 6,465 thousand Euros. The goal of this measure is promoting a competitive cost structure. Apart of the this action, the Group has restructured its business line of daily press in Dédalo Offset, S.L.U. with the exit of 17 employee and a cost due to severance amounting 633 thousand Euros.
 
At December 31, 2011, the Company’s equity was less than half of its share capital and, therefore, pursuant to Article 363 of the Consolidated Spanish Companies Law, the share capital of the Company must be reduced in the event that equity is not recovered within one year. In order to remedy this situation, the Company will propose to the shareholders at the General Meeting called within two months of the approval of the financial statements that the necessary measures provided by law have to be taken. At this date, the Company has recorded participating loans amounting EUR 130,803 thousand which, in accordance with the Consolidated Spanish Companies Law, is included in equity for legal purposes in respect of the capital reductions and company liquidations provided for in corporate legislation (see Note 14).
 
These financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRSs”) as issued by the International Accounting Standards Board, which contemplate continuation of the Group as a going concern. However, the companies of the Group have incurred ongoing losses from operations as a result of increased competition in the printing markets in which they operate and have an accumulated deficit of EUR 277,429 thousand to December 31, 2011. In view of these matters, realization of a major portion of the assets in the accompanying balance sheet is dependent upon the continued operations of the Company, which in turn is dependent upon the Company's ability to meet its financing requirements, and the success of its future operations.
 
 
F-113
 
 
The Company may seek additional equity in order to support existing operations and expand the range of its business. There is no assurance that such additional funds will be available for the Company on acceptable terms.
 
i)
Working capital
 
At December 31, 2011, the Group had a working capital deficiency of EUR 45,357 thousand. The Company’s activities consist mainly of the provision of printing services and, therefore, its financial structure is conditioned by agreements with customers and suppliers based generally on long-term relationships and contracts. The Company considers that the current payment and collection periods could be improved in the future.
 
j)
Basis of consolidation
 
The consolidated financial statements were prepared using the full consolidation method since Dédalo Grupo Gráfico, S.L. holds a direct or indirect ownership interest of over 50% in the companies, thereby exercising control.
 
Subsidiaries are fully consolidated and all their assets, liabilities, income, expenses and cash flows are included in the consolidated financial statements after making the corresponding adjustments and eliminations. Subsidiaries are companies in which the Parent controls a majority of the voting power or, if this is not the case, has the power to govern their financial and operating policies. The companies accounted for using this method are listed in Appendix I.
 
The results of subsidiaries which are acquired or sold during the year are included in the consolidated income statement from the effective date of acquisition or until the effective date of disposal, as appropriate.
 
On acquisition, the assets, liabilities and contingent liabilities of a subsidiary are measured at their fair values. Any excess of the cost of acquisition of the subsidiary over the fair value of its assets and liabilities corresponding to the Parent's ownership interest is recognized as goodwill. Any deficiency is credited to the consolidated income statement.
 
All of the companies included in the scope of consolidation are fully consolidated since they are wholly owned –directly or indirectly- by the Parent of the Dédalo Group. Consequently, these consolidated financial statements do not include non-controlling interests.
 
All balances and transactions between fully consolidated companies were eliminated on consolidation.
 
 
F-114
 
 
In 2011, Dédalo Offset, S.L.U. has been demerged into a new company Macrolibros, S.L.U.. In 2010 Altamira, S.A.U. was merged by absorption by Dédalo Heliocolor, S.A.U.
 
3. DISTRIBUTION OF RESULT
 
The proposal for the distribution of the result of Dédalo Grupo Gráfico, S.L. for 2011 and 2010, proposed by the Board of Directors is to allocate it in “Prior years’ losses” and “Consolidation reserves”.
 
4. ACCOUNTING POLICIES
 
The principal accounting policies used in preparing the accompanying consolidated financial statements for 2011 and comparative information were as follows:
 
a)
Presentation of the consolidated financial statements
 
In accordance with IAS 1, the Group opted to present the assets in its consolidated balance sheet on the basis of a current/non-current assets distinction. Also, income and expenses are presented in the consolidated income statement on the basis of their nature. The cash flow statement was prepared using the indirect method.
 
b)
Intangible assets
 
Intangible assets are recognized initially at acquisition or production cost and are subsequently measured at cost less any accumulated amortization and any accumulated impairment losses. Only assets whose cost can be estimated objectively and from which the Group considers probable that future economic benefits will be generated, are recognized. Intangible assets are amortized over their estimated useful life.
 
The main item included under “Intangible Assets” and the measurement bases used is “Computer Software”. This account includes the amounts paid to develop specific computer programs and the amounts incurred in acquiring from third parties the licenses to use programs. Computer software is amortized by the straight-line method over a period ranging from three to six years, depending on the type of program or development, from the date on which it is brought into service.
 
 
F-115
 
 
c)
Property, plant and equipment
 
Property, plant and equipment are carried at cost, revalued pursuant to Royal Decree-Law 7/1996 in the case of Dédalo Heliocolor, S.A.U., net of the related accumulated depreciation and of any impairment losses.
 
The costs of expansion, modernization or improvements leading to increased productivity, capacity or efficiency or to a lengthening of the useful lives of the assets are capitalized.
 
Items of property, plant and equipment are derecognized when they are disposed of or when they are not expected to generate future profits. The difference between the amount, if any, obtained from an item of property, plant and equipment, less costs to sell and its carrying amount, will determine the profit or loss when the aforementioned item is derecognized, which will be allocated to the consolidated income statement in the year in which derecognition takes place.
 
Period upkeep and maintenance expenses are charged directly to the consolidated income statement.
 
Property, plant and equipment are depreciated by the straight-line method at annual rates based on the years of estimated useful life of the related assets, the detail being as follows:
 
 
  
Years of
estimated
useful life
  
 
  
 
  
Buildings and structures
     33  
Plant and machinery
     12  
Other fixtures and furniture
     8-12  
Computer hardware
     3-4  
Transport equipment
     6  
 
        
 
The gain or loss arising on the disposal or derecognition of an asset is determined as the difference between the selling price and the carrying amount of the asset and is recognized in the income statement.

d) 
Impairment losses
 
At each balance sheet date, or whenever it is considered necessary, the Group reviews the carrying amounts of its assets to determine whether there is any indication that those assets might have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the amount of the impairment loss (if any). In the case of identifiable assets that do not generate independent cash flows, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
 
Recoverable amount is the higher of fair value less costs to sell and value in use. Value in use is taken to be the present value of the estimated future cash flows before tax based on the budgets most recently approved by the directors. These budgets include the best estimates available of the income and costs of the cash-generating units based on industry projections and future expectations.
 
These projections cover the following five years and include a residual value that is appropriate for each business. These cash flows are discounted to their present value using a pre-tax discount rate that reflects the weighted average cost of capital employed.
 
If the recoverable amount is lower than the asset's carrying amount, the related impairment loss is recognized in the consolidated income statement for the difference.
 
Impairment losses recognized on an asset in previous years are reversed when there is a change in the estimate of its recoverable amount by increasing the carrying amount of the asset up to the limit of the carrying amount that would have been determined had no impairment loss been recognized for the asset. The reversal of the impairment loss is recognized immediately as income in the consolidated income statement.
 
 
F-116
 
 
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset in prior years. Such a reversal of an impairment loss would be recognized as income.
 
Due to the Company has not any goodwill amount, it has not been necessary to perform any impairment test this year.
 
e)
Leases
 
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership of the leased asset to the lessee. All other leases are classified as operating leases.
 
Finance leases
 
When the consolidated companies act as the lessee, they present the cost of the leased assets in the consolidated balance sheet, based on the nature of the leased asset, and simultaneously, recognize a liability for the same amount. This amount is the lower of the fair value of the leased asset and the present value at the inception of the lease of the agreed minimum lease payments, including the purchase option, when no doubts exist in relation to the exercise thereof. The calculation does not include contingent rent, the service cost or the taxes that can be charged by the lessor. The total finance charge on the lease is recognized in the consolidated income statement for the year in which it is incurred, using the effective interest method. Contingent rent is recognized as an expense in the year in which it is incurred.
 
The assets recognized for transactions of this kind are depreciated on the basis of their nature using similar criteria to those applied to the items of property, plant and equipment taken as a whole.
 
At December 31, 2011 “Property, Plant and Equipment” in the consolidated balance sheet doesn´t include assets held under finance leases because the Group has paid the last installments as lease-purchase option, (December 31, 2010 : EUR937 thousand), (see Notes 6 and 8).
 
Operating leases
 
Operating lease costs are charged to the consolidated income statement in the year in which they are incurred.
 
 
F-117
 
 
Any collection or payment that might be made when arranging an operating lease will be treated as a prepaid lease collection or payment which will be allocated to profit or loss over the lease term in accordance with the time pattern in which the benefits of the leased asset are provided or received.
 
f)
Assets classified as held for sale
 
Assets classified as held for sale are considered to be groups of assets, and liabilities directly associated with them, to be disposed of together as a group in a single transaction that is expected to be carried out in a maximum period of twelve months from the date of their classification under this heading.
 
Assets classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell.
 
Liabilities associated with assets classified as held for sale are measured at their expected redemption or repayment value and are not depreciated from the date on which they are recognized under this heading.
 
Income and expenses arising from these assets are recognized in the consolidated income statement in accordance with their nature.
 
g)
Financial instruments
 
Financial assets-
 
Loans and receivables
 
These financial assets are initially recognized at the fair value of the consideration given, plus any directly attributable transaction costs, and are subsequently measured at amortized cost, i.e. cash delivered less principal repayments, plus accrued interest receivable, in the case of loans, and the present value of the consideration paid in the case of receivables.
 
The Group recognizes the corresponding valuation adjustments as the difference between the recoverable amount of the accounts receivable and the carrying amount at which they are recognized, according to tax bases.
 
The consolidated companies derecognize a financial asset when, and only when, an individualized analysis has concluded that:
 
 
F-118
 
 
 
·
If the risks and rewards associated with the asset are not substantially transferred or retained, the financial asset is derecognized if the control over it is transferred.
 
 
·
The contractual rights on the cash flows of the asset in question have expired.
 
 
·
The aforementioned rights have been transferred and substantially all the risks and rewards of ownership have been transferred.
 
 
·
The financial assets derecognized in the year are not exposed to any type of risk or benefit inherent to their ownership nor does the Group retain any ongoing involvement therein. Also, there were no transfers of financial assets that were not derecognized in the balance sheet.
 
The Company also recognizes the held-for-trading financial assets in “Financial assets at fair value through profit or loss”.
 
Cash and cash equivalents-
 
The Group includes in this consolidated balance sheet cash on hand and at banks, demand deposits and other short-term, highly liquid investments that are readily convertible into cash and are not subject to risk of changes in value.
 
Financial liabilities-
 
Accounts payable
 
Accounts payable by the consolidated companies that have arisen from the purchase of goods and services in the normal course of their business and those which, their origin is not commercial transaction, cannot be considered to be derivative financial instruments, are financial liabilities.
 
Accounts payable are initially recognized at the fair value of the consideration received, adjusted by the directly attributable transaction costs. Subsequently, the aforementioned liabilities are measured at their amortized cost using the effective interest method and the aforementioned costs relating to the issue of the financial liability instrument, insofar as a difference exists between the amount initially recognized and that which will have to be paid to settle the obligation, are recognized as an expense in the consolidated income statement. Similarly, interest accrued on a time proportion basis over the life of the liability increases the carrying amount to the extent that it is not settled in the period in which it arises.
 
 
F-119
 
 
The consolidated companies derecognize financial liabilities when the obligations they generate are extinguished.
 
h)
Derivative financial instruments and hedge accounting
 
The Group is exposed to changes in the yield curve because all its bank borrowings are at floating interest rates. Consequently, the Group enters into interest rate hedges, mainly through agreements providing for interest rate caps that do not qualify for hedge accounting.
 
The changes in the value of these financial instruments are recognized as finance income or finance costs for the year as required by IFRSs.
 
i)
Inventories
 
All inventories are raw material and supplies and are measured at the lower of their average acquisition cost and market value.
 
Work in progress and finished goods produced in-house are measured at the lower of average production cost and market value. Production cost includes the cost of materials used, labor and in-house and third-party direct and indirect manufacturing expenses.
 
Obsolete, defective or slow-moving inventories have been reduced to their realizable value.
 
The Group assesses the net realizable value of the inventories at the end of each period and recognizes the appropriate write-down if the inventories are overstated. When the circumstances that previously caused inventories to be written down no longer exist or when there is clear evidence of an increase in net realizable value because of changed economic circumstances, the amount of the write-down is reversed.
 
j)
Foreign currency transactions
 
Foreign currency transactions are translated to Euros (the Group's functional currency) at the exchange rates ruling at the transaction date. During the year, differences arising between the result of applying the exchange rates initially used and that of using the exchange rates prevailing at the date of collection or payment are recognized as finance income or finance costs in the consolidated income statement.
 
Also, balances receivable or payable at December 31 each year in currencies other than the functional currency in which the consolidated companies' financial statements are denominated are translated to euros at the year-end exchange rates. Any resulting translation differences are recognized as finance income or finance costs in the consolidated income statement.
 
 
F-120
 
 
k)
Current / Non-current classification
 
Debts are recognized at their effective amount and debts due to be settled within twelve months from the balance sheet date are classified as current items and those due to be settled within more than twelve months as non-current items.
 
l)
Tax matters
 
The current income tax expense or benefit is calculated as the sum of the current tax expense or benefit and the deferred tax assets and liabilities. The current income tax expense, which determines the payment obligation to the tax authorities, is calculated by applying the tax rate in force to the taxable profit, after deducting the tax relief and tax credits generated and taken in the year.
 
Current income tax is the amount that the consolidated companies pay as a result of the tax settlement of the income tax corresponding to the fiscal year. Tax relieves and other tax advantages in the tax payable, after deducting withholdings and prepayments, and tax losses carryforward from previous years applicable in the current year, generates a lower amount of current income tax.
 
The expense or revenue from the deferred tax corresponds to the recognition and the write off of the deferred tax assets and liabilities.
 
Deferred tax assets and liabilities arise from temporary differences defined as the amounts expected to be recoverable or payable in the future which result from differences between the carrying amounts of assets and liabilities and their tax bases. These amounts are measured at the tax rates that are expected to apply in the period when the asset is realized or the liability is settled.
 
Deferred tax assets are only recognised when it is considered probable that the consolidated entities will generate future taxable profit against which they can be applied and do not result from the initial recognition of other assets and liabilities in a transaction that affects neither accounting profit (loss) nor taxable profit (tax loss).
 
The recognized deferred tax assets are reassessed at each balance sheet date, recording the necessary adjustments when their future recovery is doubtful. Furthermore, at each balance sheet date the not recorded deferred tax assets are evaluated considering if they are recoverable with future profits.
 
The tax rate in Spain is 30%.
 
 
F-121
 
 
Deferred tax liabilities are recognized for all taxable temporary differences, unless the temporary difference arises from the initial recognition of goodwill or other assets and liabilities in a transaction that affects neither taxable profit (tax loss) nor accounting profit (loss) and neither is a business combination. Deferred tax liabilities are also recognized in respect of taxable temporary differences associated with investments in subsidiaries, associates and joint ventures, except when the Group is able to control the timing of the reversal and it is probable that they will not reverse in the foreseeable future.
 
The deferred tax assets and liabilities recognized are reassessed at each balance sheet date in order to ascertain whether they still exist, and the appropriate adjustments are made on the basis of the findings of the analyses performed and the tax rate then in force.
 
Dédalo Grupo Gráfico, S.L. and subsidiaries, file consolidated tax returns as permitted by the Spanish Corporation Tax Law, approved by Legislative Royal Decree 4/2004, of March 5, being the Parent of the tax group. The companies belonging to the consolidated tax group are the subsidiaries as listed in Appendix I.
 
m)
Revenue and expense recognition
 
Revenue and expenses are recognized on an accrual basis, regardless of when the resulting monetary or financial flow arises.
 
Revenue is measured at the fair value of the consideration received or receivable and represents the amounts receivable for the services provided in the normal course of business, net of discounts, and other sales-related taxes.
 
Revenue associated with the rendering of services is also recognized by reference to the stage of completion of the transaction at the balance sheet date, provided the outcome of the transaction can be estimated reliably. Revenue is recognized when services are performed.
 
Interest income from financial assets is recognized using the effective interest method and dividend income is recognized when the shareholder's right to receive payment is established.
 
n)
Government grants (Deferred income)
 
The grants received by the consolidated companies are measured at the amount received are recognized under “Deferred Revenue in non-current liabilities” in the accompanying consolidated balance sheet. They are allocated to income in proportion to the depreciation over the estimated useful life of the subsidized assets.
 
 
F-122
 
 
o)
Provisions and contingencies
 
Present obligations at the consolidated balance sheet date arising from past events which could give rise to a loss for the Group, which is uncertain as to its amount and/or timing, are recognized in the consolidated balance sheet as provisions at the present value of the most probable amount that it is considered the Group will have to pay to settle the obligation.
 
 
●
Provisions: credit balances covering present obligations arising from past events, the settlement of which is likely to give rise to an outflow of resources, the amount and/or timing of which cannot be determined.
 
 
●
Contingent liabilities: possible obligations that arise from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more future events not wholly within the Company's control.
 
The consolidated financial statements include all the provisions with respect to which it is considered probable that the obligation will have to be settled. Contingent liabilities are not recognized in the consolidated financial statements, but rather are disclosed in the notes to the consolidated financial statements, unless the possibility of an outflow in settlement is considered to be remote.
 
Provisions are measured at the present value of best possible estimate of the amount required to settle or transfer the obligation, taking into account the information available on the event and its consequences. Where discounting is used, adjustments made to provisions are recognized as interest cost on an accrual basis.
 
The compensation to be received from a third party on settlement of the obligation is recognized as an asset, provided that there are no doubts that the reimbursement will take place, unless there is a legal relationship whereby a portion of the risk has been externalized as a result of which the Company is not liable; in this situation, the compensation will be taken into account for the purpose of estimating the amount of the related provision that should be recognized.
 
p)
Related party transactions
 
The transactions performed by Dédalo Grupo Gráfico, S.L. and subsidiaries with related parties form part of the Company’s normal business activities in terms of their purpose and terms and conditions.
 
Sales to related parties are carried out on an arm’s length basis (see Note 14).
 
 
F-123
 
 
q)
Environmental impact
 
In view of the activities carried on, the consolidated companies, in accordance with current legislation, control the degree of pollution caused by waste and emissions and have an adequate waste disposal policy in place. The consolidated companies also comply with the regulations applicable to environmental risks by establishing policies and meeting mandatory requirements. The expenses incurred in this connection, which are not material, are charged to income as they are incurred. In any event, the assessment performed indicates that the consolidated companies do not have any environmental liability, expenses, assets, provisions or contingencies that might be material with respect to their equity, financial position or results.
 
Therefore, no further disclosures relating to environmental issues are included in these notes to the consolidated financial statements.
 
r)
Factoring
 
The Group derecognizes the balances recognized under “Trade Receivables for Sales and Services” and “Current Bank Borrowings” in relation to trade receivables assigned to factors because the receivables are factored without recourse by the factor in the event of non-payment by the customer and the Group transfers title to the receivables. These agreements are subject to compliance by the Group with certain conditions, which the Company consider were met satisfactorily at the date of preparation of these consolidated financial statements.
 
s)
Consolidated cash flow statements
 
The following terms are used in the consolidated cash flow statements with the meanings specified:
 
 
-
Changes in cash flows in the year: inflows and outflows of cash and cash equivalents, which are short-term, highly liquid investments that are subject to an insignificant risk of changes in value.
 
 
-
Operating activities: the principal revenue-producing activities of the Group and other activities that are not investing or financing activities.
 
 
-
Investing activities: the acquisition and disposal of long-term assets and other investments not included in cash and cash equivalents.
 
 
-
Financing activities: activities that result in changes in the size and composition of equity and borrowings.
 
 
F-124
 
 
5. INTANGIBLE ASSETS
 
The changes in the intangible asset accounts and in the related accumulated amortization in 2011 and 2010, in thousands of Euros, are as follows:
 
2011
 
 
 
Balance at
12/31/10
 
 
Additions
 
 
Disposals
 
 
Balance at
12/31/11 (*)
 
Cost
 
 
 
 
 
 
 
 
 
 
 
 
Industrial property
 
 
28
 
 
 
-
 
 
 
-
 
 
 
28
 
Computer software
 
 
2,833
 
 
 
1
 
 
 
(5
)
 
 
2,829
 
Total cost
 
 
2,861
 
 
 
1
 
 
 
(5
)
 
 
2,857
 
Accumulated amortization
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Industrial property
 
 
(28
)
 
 
-
 
 
 
-
 
 
 
(28
)
Computer software
 
 
(2,502
)
 
 
(130
)
 
 
5
 
 
 
(2,627
)
Total accumulated amortization
 
 
(2,530
)
 
 
(130
)
 
 
5
 
 
 
(2,655
)
Intangible assets, net
 
 
331
 
 
 
 
 
 
 
 
 
 
 
202
 
 
(*) Unaudited figures
 
2010
 
 
 
Balance at
12/31/09 (*)
 
 
Additions
 
 
Disposals
 
 
Balance at
12/31/10
 
Cost
 
 
 
 
 
 
 
 
 
 
 
 
Industrial property
 
 
28
 
 
 
-
 
 
 
-
 
 
 
28
 
Computer software
 
 
2,854
 
 
 
2
 
 
 
(23
)
 
 
2,833
 
Total cost
 
 
2,882
 
 
 
2
 
 
 
(23
)
 
 
2,861
 
Accumulated amortization
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Industrial property
 
 
(27
)
 
 
(1
)
 
 
-
 
 
 
(28
)
Computer software
 
 
(2,366
)
 
 
(159
)
 
 
23
 
 
 
(2,502
)
Total accumulated amortization
 
 
(2,393
)
 
 
(160
)
 
 
23
 
 
 
(2,530
)
Intangible assets, net
 
 
489
 
 
 
 
 
 
 
 
 
 
 
331
 
 
(*) Unaudited figures
 
The amortization of intangible assets charged to the consolidated income statement in 2011 amounted to EUR 130 thousand (2010: EUR 160 thousand).
 
There are no restrictions on ownership of the intangible assets or any firm commitments for future purchases.
 
At December 31, 2011, fully amortized intangible assets in use amounted to EUR 2,314 thousand (December 31, 2010: EUR 2,171 thousand).
 
 
F-125
 
 
6. PROPERTY, PLANT AND EQUIPMENT
 
The changes in the property, plant and equipment accounts and in the related accumulated amortization in 2011 and 2010, in thousands of Euros, are as follows:
 
2011
 
 
 
Balance at
12/31/10
 
 
Additions
 
 
Disposals
 
 
Transfers
 
 
Balance at
12/31/11 (*)
 
Cost
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Land
 
 
5,345
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
5,345
 
Buildings and structures
 
 
34,525
 
 
 
107
 
 
 
-
 
 
 
-
 
 
 
34,632
 
Plant
 
 
29,983
 
 
 
15
 
 
 
(106
)
 
 
-
 
 
 
29,892
 
Machinery and tools
 
 
211,786
 
 
 
241
 
 
 
(104
)
 
 
100
 
 
 
212,023
 
Other fixtures and furniture
 
 
1,721
 
 
 
8
 
 
 
(15
)
 
 
-
 
 
 
1,714
 
Other items of property, plant and equipment
 
 
4,487
 
 
 
1
 
 
 
(4
)
 
 
-
 
 
 
4,484
 
Property, plant and equipment in progress
 
 
503
 
 
 
-
 
 
 
-
 
 
 
(100
)
 
 
403
 
Total cost
 
 
288,350
 
 
 
372
 
 
 
(229
)
 
 
-
 
 
 
288,493
 
Accumulated depreciation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Buildings and structures
 
 
(6,998
)
 
 
(893
)
 
 
-
 
 
 
-
 
 
 
(7,891
)
Plant
 
 
(19,683
)
 
 
(1,411
)
 
 
93
 
 
 
-
 
 
 
(21,001
)
Machinery and tools
 
 
(145,422
)
 
 
(10,706
)
 
 
104
 
 
 
-
 
 
 
(156,024
)
Other fixtures and furniture
 
 
(1,192
)
 
 
(104
)
 
 
6
 
 
 
-
 
 
 
(1,290
)
Other items of property, plant and equipment
 
 
(3,275
)
 
 
(242
)
 
 
4
 
 
 
-
 
 
 
(3,513
)
Total accumulated depreciation
 
 
(176,570
)
 
 
(13,356
)
 
 
207
 
 
 
-
 
 
 
(189,719
)
Property, plant and equipment, net
 
 
111,780
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
98,774
 
 
(*) Unaudited figures
 
2010
 
 
 
Balance at
12/31/09 (*)
 
 
Additions
 
 
Disposals
 
 
Transfers
 
 
Balance at
12/31/10
 
Cost
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Land
 
 
5,345
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
5,345
 
Buildings and structures
 
 
34,507
 
 
 
18
 
 
 
-
 
 
 
-
 
 
 
34,525
 
Plant
 
 
29,647
 
 
 
169
 
 
 
(19
)
 
 
186
 
 
 
29,983
 
Machinery and tools
 
 
211,869
 
 
 
69
 
 
 
(5
)
 
 
(147
)
 
 
211,786
 
Other fixtures and furniture
 
 
1,721
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
1,721
 
Other items of property, plant and equipment
 
 
4,487
 
 
 
11
 
 
 
(11
)
 
 
-
 
 
 
4,487
 
Property, plant and equipment in progress
 
 
442
 
 
 
100
 
 
 
-
 
 
 
(39
)
 
 
503
 
Total cost
 
 
288,018
 
 
 
367
 
 
 
(35
)
 
 
-
 
 
 
288,350
 
Accumulated depreciation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Buildings and structures
 
 
(6,106
)
 
 
(892
)
 
 
-
 
 
 
-
 
 
 
(6,998
)
Plant
 
 
(18,201
)
 
 
(1,460
)
 
 
19
 
 
 
(41
)
 
 
(19,683
)
Machinery and tools
 
 
(134,341
)
 
 
(11,127
)
 
 
5
 
 
 
41
 
 
 
(145,422
)
Other fixtures and furniture
 
 
(1,072
)
 
 
(120
)
 
 
-
 
 
 
-
 
 
 
(1,192
)
Other items of property, plant and equipment
 
 
(3,005
)
 
 
(281
)
 
 
11
 
 
 
-
 
 
 
(3,275
)
Total accumulated depreciation
 
 
(162,725
)
 
 
(13,880
)
 
 
35
 
 
 
-
 
 
 
(176,570
)
Property, plant and equipment, net
 
 
125,293
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
111,780
 
 
(*) Unaudited figures
 
 
F-126
 
 
“Land” and “Buildings and Structures” include buildings with a cost of EUR 19,055 thousand, which have been mortgaged to secure the loan and syndicated credit agreements entered into by Dédalo Grupo Gráfico, S.L. and Subsidiaries with a group of banks (see Note 11).
 
At December 31, 2011, “Machinery and Tools” doesn´t include assets held under finance leases, because in 2011 the Group has paid last instalments as lease-purchase option. At December 31, 2010, “Machinery and Tools” includes EUR 937 thousand related to assets held under finance leases (see Note 8).
 
Additions
 
In 2011 and 2010, the additions relate mainly to the acquisition of new equipment in different companies of the Group.
 
Disposals
 
The disposals in 2011 include assets sold for EUR 8 thousand, an impairment loss on disposal of property, plant and equipment of EUR 14 thousand was recognized.
 
The disposals in 2010 included the derecognition of fully depreciated assets, sold for EUR 1 thousand, an gain on disposal of property, plant and equipment of EUR 1 thousand was recognized.
 
The depreciation of property, plant and equipment charged to the consolidated income statement in 2011 amounted to EUR 13,356 thousand (2010: EUR 13,880 thousand).
 
The Company takes out insurance policies to cover the possible risks to which its property, plant and equipment are subject. The Company considers that the present coverage is sufficient.
 
 
F-127
 
 
There are no restrictions on ownership of the Group’s property, plant and equipment other than those described above.
 
There are no commitments for future purchase of property, plant and equipment.
 
At December 31, 2011, fully depreciated property, plant and equipment in use amounted to EUR 73,826 thousand (December 31, 2010: EUR 69,786 thousand).
 
7. INVENTORIES
 
The detail of “Inventories” at December 31, 2011 and 2010, in thousands of Euros, is as follows:
 
 
 
12/31/11 (*)
 
 
12/31/10
 
 
 
Cost
 
 
Write-
down
 
 
Net
 
 
Cost
 
 
Write-
down
 
 
Net
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Raw materials and supplies
 
 
5,700
 
 
 
(1,105
)
 
 
4,595
 
 
 
6,315
 
 
 
(1,099
)
 
 
5,216
 
Goods and work in progress
 
 
994
 
 
 
-
 
 
 
994
 
 
 
1,095
 
 
 
-
 
 
 
1,095
 
Advances to suppliers
 
 
2
 
 
 
-
 
 
 
2
 
 
 
4
 
 
 
-
 
 
 
4
 
 
 
 
6,696
 
 
 
(1,105
)
 
 
5,591
 
 
 
7,414
 
 
 
(1,099
)
 
 
6,315
 
 
(*) Unaudited figures
 
“Raw Materials and Supplies” includes mainly paper and spare parts for printing presses.
 
The Group has arranged two insurance policies to cover the risks to which its inventories are subject, the coverage of which is considered to be sufficient.
 
8. LEASES
 
8.1. Finance leases
 
In 2011, the Group has paid last instalments as lease-purchase option, so at the end 2011 the Group has no minimum lease payments. At the end of 2010, the Group had entered into agreements with lessors for the following minimum lease payments (including any purchase options), based on the leases currently in force, without taking into account the charging of common expenses, future increases in the CPI or future contractual lease payment revisions (in thousands of Euros):
 
Minimum payments
 
12/31/10
 
 
 
 
 
Within one year
 
 
72
 
Between one and five years
 
 
-
 
 
 
 
72
 
 
 
F-128
 
 
Therefore at the end of 2011 the consolidated companies, as lessees, haven`t recognized leased assets. In 2010, the consolidated companies, as lessees, had recognized the leased assets detailed below:
 
 
 
12/31/10
 
 
 
 
 
Plant
 
 
-
 
Machinery and tools
 
 
937
 
 
 
 
937
 
 
8.2. Operating leases
 
The consolidated companies have arranged several operating leases relating mainly to the lease of the fixtures at one of the work centers of Dédalo Offset, S.L.U., and of Gráficas Integradas, S.A.U., the equipment with which the Group carries on its activities and transport equipment.
 
The expense recognized in the consolidated income statement for 2011 in relation to operating leases amounts to EUR 2,887 thousand (2010: EUR 2,880 thousand).
 
At the end of 2011 and 2010, the consolidated companies had acquired the following lease payment obligations under non-cancellable operating leases which fall due as follows:

2011
 
Year
 
Thousands
of euros
 
 
 
 
 
2012
 
 
2,541
 
2013
 
 
2,270
 
2014
 
 
2,270
 
2015
 
 
2,270
 
2016
 
 
2,269
 
2017 and subsequent years
 
 
2,846
 
 
 
 
14,466
 
 
2010
 
Year
 
Thousands
of euros
 
 
 
 
 
2011
 
 
2,678
 
2012
 
 
2,376
 
2013
 
 
2,376
 
2014
 
 
2,375
 
2015
 
 
2,375
 
2016 and subsequent years
 
 
4,828
 
 
 
 
17,008
 
 
 
F-129
 

The main characteristics of the building leases of the Group at December 31, 2011, are presented below:
 
 
-
Dédalo Offset, S.L.U.: agreement entered into with Mathew Chrome, S.L., for the lease of an industrial building located in the industrial area “Mateu Cromo” (Pinto, Madrid). The initial term is until October 1, 2019. The agreed annual price will be increased by a percentage equal to the increase experienced in the consumer price index (CPI).
 
 
-
Gráficas Integradas, S.A.U.: agreement entered into with Ameyago, S.L. for the lease of an industrial building and six parking spaces located in Madrid. The initial term was until December 21, 2010, with a renewal option for two additional years and afterwards with a renewal option on a yearly basis. The agreed annual price is increased by a percentage equal to the increase experienced in the consumer price index (CPI).
 
9. FINANCIAL INSTRUMENTS
 
9.1. Financial assets by category
 
The breakdown of the balances of financial assets in the consolidated balance sheet at December 31, 2011 and 2010, based on the nature of the transaction and excluding balances with related parties, in thousands of Euros, is as follows:
 
Class Category
 
Other non-current financial assets
 
 
Other current financial assets
 
 
TOTAL
 
 
 
2011(*)
 
 
 
2010
 
 
 
2011(*)
 
 
 
2010
 
 
 
2011(*)
 
 
 
2010
 
Loans and receivables
 
 
314
 
 
 
314
 
 
 
13,469
 
 
 
17,206
 
 
 
13,783
 
 
 
17,520
 
Loans and receivables from related parties
 
 
-
 
 
 
-
 
 
 
6,804
 
 
 
6,608
 
 
 
6,804
 
 
 
6,608
 
Total
 
 
314
 
 
 
314
 
 
 
20,273
 
 
 
24,437
 
 
 
20,587
 
 
 
24,750
 
 
(*) Unaudited figures
 
9.2. Other non-current financial assets
 
“Other Non-Current Financial Assets” includes mainly the amounts deposited by the various Group companies in relation to leases and supply agreements.
 
9.3. Other current financial assets
 
The summary of the balance carried out in 2011 and 2010 under this current asset heading, in thousands of Euros, is as follows:
 
 
F-130
 
 
 
 
Balance at
12/31/11 (*)
 
 
Balance at
12/31/10
 
Current:
 
 
 
 
 
 
Trade receivables for sales and services
 
 
12,963
 
 
 
17,162
 
Loans to employees
 
 
2
 
 
 
4
 
Sundry accounts receivable
 
 
8
 
 
 
40
 
Other financial assets
 
 
496
 
 
 
-
 
Total current assets
 
 
13,469
 
 
 
17,206
 
 
(*) Unaudited figures
 
“Trade Receivables for Sales and Services” includes an allowance for doubtful debts, whose change in thousands of Euros is as follows:
 
 
 
Thousands
of Euros
 
 
 
 
 
Balance at December 31, 2009 (*)
 
 
(1,770
)
Provisions
 
 
(701
)
Amounts used
 
 
333
 
Balance at December 31, 2010
 
 
(2,138
)
Provisions
 
 
(1,341
)
Amounts used
 
 
631
 
Balance at December 31, 2011 (*)
 
 
(2,848
)
 
(*) Unaudited figures
 
At December 31, 2011, the Group had arranged a non-recourse factoring line with BBVA Factoring, S.A. EFC for up to EUR 700 thousand, of which at December 31, 2011 the consolidated companies had factored EUR 413 thousand. This arrangement is subject to compliance by the consolidated companies with certain conditions, which the Company considers were being met satisfactorily at the date of preparation of these consolidated financial statements.
 
In 2011, the Group has cancelled the non-recourse factoring line with Banco de Sabadell, S.A. for up to EUR 3,000 thousand.
 
9.4. Information on the nature and level of risk of financial instruments
 
The Group has established the mechanisms necessary to control, based on the Group’s financial position and structure and on the economic variables of the industry, exposure to changes in interest and exchange rates, as well as to credit and liquidity risks, using when necessary specific hedging transactions.
 
 
F-131
 
 
Credit risk
 
In the financing transactions area, credit risk arises due to the inability of a counterparty to meet the obligations established. The Group does not have a significant concentration of risk since 25% of its revenue is from related companies and approximately 58% of the accounts receivable from other parties is covered by credit insurance.
 
Liquidity risk
 
Liquidity risk is defined as a company's inability to meet its obligations as a result of adverse situations in the debt and/or capital markets that hinder or prevent the obtainment of the required financing.
 
The Company has incurred losses that have given rise to a significant reduction in its equity (see Note 2-h).
 
Liquidity risk is gradually being reduced through a series of initiatives, concretely, the Group manages liquidity risk by replacing the transactions nearing maturity with new transactions in order to meet short-term cash needs, thus avoiding the need to seek funds in potentially unfavorable conditions, and through the management of the Group’s payment and settlement policies vis-à-vis its customers and suppliers. Liquidity risk is considered to be adequately covered when the minimum amount of financing available is equivalent to one year of debt servicing.
 
Also, the Group considers it necessary to gradually increase the average term of its financing in order to reduce market pressure and to be in a better position to negotiate the maturity of the transactions. In the area of loan transactions, risk concentration with banks is periodically monitored in order to avoid it becoming excessive.
 
Interest rate risk
 
Interest rate fluctuations change the fair value of assets and liabilities that bear interest at fixed rates and the future flows from assets and liabilities tied to floating interest rates.
 
The objective of interest rate risk management is to achieve a balanced debt structure that makes it possible to minimize the aforementioned risks and the cost of debt. At December 31, 2011, the Group's bank borrowings were tied to floating interest rates and the reference interest rate was Euribor.
 
 
F-132
 
 
Accordingly, since its borrowings are exposed to interest rate risk, which could have an adverse effect on the financial results and cash flows, the Group has entered into derivatives to hedge the aforementioned risk (see Note 11.5.)
 
10. EQUITY AND SHAREHOLDERS’ EQUITY
 
Share capital
 
At December 31, 2011 and 2010, the Company’s share capital amounted to EUR 28,458 thousand and was represented by 284,580 fully subscribed and paid ordinary shares of EUR 100 par value each.
 
The percentage of ownership of the shareholders is as follows:
 
 
 
2011
 
Prisaprint, S.L.
 
 
40.00
%
Viking Business, S.L.
 
 
40.00
%
Cérmides, S.A.R.L.
 
 
18.01
%
Other shareholders
 
 
1.99
%
Total
 
 
100.00
%
 
At December 31, 2011, the Company’s equity was less than half of its share capital and, therefore, pursuant to Article 363 of the Consolidated Spanish Companies Law, the share capital of the Company must be reduced in the event that equity is not recovered within one year. In order to remedy this situation, the Company will propose to the shareholders at the General Meeting called within two months of the approval of the financial statements that the necessary measures provided by law have to be taken. At this date, the Company has recorded participating loans amounting EUR 130,803 thousand which, in accordance with the Consolidated Spanish Companies Law, is included in equity for legal purposes in respect of the capital reductions and company liquidations provided for in corporate legislation (see Note 14).
 
Share premium
 
The Consolidated Spanish Public Limited Liability Companies Law expressly permits the use of the share premium account balance to increase capital and does not establish any restrictions as to its use.
 
Consolidation reserves
 
The detail, by company, of “Equity – Consolidation Reserves” in the accompanying consolidated balance sheets at December 31, 2011 and 2010, in thousands of Euros, is as follows:
 
 
F-133
 
 
 
 
 
2011(*)
 
 
 
2010
 
 
 
 
 
 
 
 
 
 
Dédalo Offset, S.L.U.
 
 
(33,809
)
 
 
(20,035
)
Distribuciones Aliadas, S.A.U.
 
 
3,713
 
 
 
2,617
 
Norprensa, S.A.U.
 
 
2,844
 
 
 
1,665
 
Bidasoa Press, S.L.U.
 
 
(4,292
)
 
 
(4,205
)
Dédalo Heliocolor, S.A.U.
 
 
(45,093
)
 
 
(37,665
)
Gráficas Integradas. S.A.U.
 
 
(169
)
 
 
1,111
 
Dédalo Grupo Gráfico, S.L.
 
 
83,744
 
 
 
57,051
 
 
 
 
6,938
 
 
 
539
 
 
(*) Unaudited figures
 
These reserves include EUR 2,551 thousand in relation to the “Revaluation Reserve Royal Decree-Law 7/1996, of 7 June” of the subsidiaries. Once the tax authorities have reviewed and approved the aforementioned balance, it may be used, free of tax, to offset losses and to increase capital. From January 1, 2007 (i.e. ten years after the date of the balance sheet reflecting the revaluation transactions), the balance of this account can be taken to unrestricted reserves, provided that the monetary surplus has been realized. The surplus will be deemed to have been realized in respect of the portion on which depreciation has been taken for accounting purposes or when the revalued assets have been transferred or derecognized. If this balance were used in a manner other than that provided for in Royal Decree-Law 7/1996, it would be subject to tax.
 
Reserves for first-time application of IFRSs
 
As a result of the first-time application of IFRSs to the Group's consolidated financial statements, certain assets and liabilities arose at January 1, 2007, the effect on equity of which is included in this account.
 
Capital management policy
 
The principal objective of the Group’s capital management policy is to guarantee the financial structure based on compliance with the legislation.
 
In order to determine the capital structure, the Group aims to optimize the cost of capital at all times and to achieve a gearing ratio that enables it to make the potential generation of cash compatible with the future development of its business activities.
 
11. FINANCIAL LIABILITIES
 
11.1. Financial liabilities by category
 
The detail, by nature of the transactions, of “Financial Liabilities” in the consolidated balance sheets at December 31, 2011 and 2010, excluding the balances with related companies, in thousands of Euros, is as follows:
 
 
F-134
 
 
2011
 
 
Class
 
Category
 
 
Non-current
bank
borrowings
 
 
Other non-
current
liabilities
 
 
Current bank
borrowings
 
 
Other current
liabilities
 
 
TOTAL
 
Accounts payable
 
 
64,881
 
 
 
-
 
 
 
41,593
 
 
 
23,953
 
 
 
130,427
 
Accounts payable to related parties
 
 
-
 
 
 
139,192
 
 
 
-
 
 
 
3,297
 
 
 
142,489
 
Liabilities at fair value through profit or loss
 
 
3,700
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
3,700
 
Deferred Revenue
 
 
-
 
 
 
-
 
 
 
-
 
 
 
186
 
 
 
186
 
Total
 
 
68,581
 
 
 
139,192
 
 
 
41,593
 
 
 
27,436
 
 
 
276,802
 
 
(*) Unaudited figures
 
2010
 
 
Class
 
Category
 
 
Non-current
bank
borrowings
 
 
Other non-
current
liabilities
 
 
Current bank
borrowings
 
 
Other current
liabilities
 
 
TOTAL
 
Accounts payable
 
 
89,431
 
 
 
-
 
 
 
42,748
 
 
 
23,459
 
 
 
155,638
 
Accounts payable to related parties
 
 
-
 
 
 
95,758
 
 
 
-
 
 
 
9,100
 
 
 
104,858
 
Liabilities at fair value through profit or loss
 
 
5,000
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
5,000
 
Deferred Revenue
 
 
-
 
 
 
-
 
 
 
-
 
 
 
214
 
 
 
214
 
Total
 
 
94,431
 
 
 
95,758
 
 
 
42,748
 
 
 
30,046
 
 
 
265,710
 
 
11.2. Bank borrowings
 
On February 8, 2008 the Dédalo Group entered into two syndicated financing agreements:
 
 
·
An agreement entered into by Dédalo Grupo Gráfico, S.L. and a group of banks consisting of Banco Español de Crédito, S.A., Banco Santander Central Hispano, S.A., HSBC Bank Plc, Sucursal en España, Banco Bilbao Vizcaya Argentaria, S.A., Banco de Sabadell, S.A., Caja de Ahorros y Monte de Piedad de Madrid and La Caixa D’Estalvis y Pensions de Barcelona, with Banco Español de Crédito, S.A. acting as the agent bank, for an overall maximum amount of EUR 70 million tied to Euribor plus a spread of 1.525%, the main purpose of which is to refinance its investees’ debt.
 
Dédalo Offset S.L.U., and Promotora de Informaciones, S.A. also entered into the aforementioned syndicated financing agreement as guarantors.
 
 
F-135
 
 
 
●
A multi-borrower credit agreement entered into by Distribuciones Aliadas, S.A.U., Company, Norprensa, S.A.U., Bidasoa Press, S.L.U., Dédalo Heliocolor, S.A.U., and Gráficas Integradas, S.A.U., the latter as guarantor, and a group of banks consisting of Banco Español de Crédito, S.A., Banco Santander Central Hispano, S.A., HSBC Bank Plc, Sucursal en España, Banco Bilbao Vizcaya Argentaria, S.A., Banco de Sabadell, S.A., Caja de Ahorros y Monte de Piedad de Madrid and La Caixa D’Estalvis y Pensions de Barcelona, in which Banco Español de Crédito, S.A. is the agent bank, for a maximum amount of EUR 60 million tied to Euribor plus a spread 1.875%.
 
On November 6, 2009 the Dédalo Group entered into two adhesion and modifying novation contracts of the financing agreements entered into on February 8, 2008 that amended certain clauses of the financing agreement:
 
 
●
The following are noteworthy amendments to the agreement entered into by Dédalo Grupo Gráfico, S.L.
 
 
●
Exemption from the obligation to meet the financial ratios of Promotora de Informaciones, S.A. established for December 31, 2009.
 
 
●
Deferral of the principal repayment installments for 18 months from August 8, 2009, ending on February 8, 2013 in the case of the tranche relating to the revolving credit facility with a ceiling of EUR 10 million, and on February 8, 2015 in the case of the tranche relating to the credit with a ceiling of EUR 60 million.
 
 
●
The credit is tied to Euribor plus a spread of 2.00%.
 
 
·
The following are noteworthy amendments to the multi-borrower credit agreement entered into by Distribuciones Aliadas, S.A.U., Norprensa, S.A.U, Bidasoa Press, S.L.U., Dédalo Heliocolor, S.A.U. and Gráficas Integradas, S.A.U.
 
 
●
Exemption from the obligation to meet the financial ratios established for December 31, 2009.
 
 
●
Deferral of the principal repayment installments for 18 months from August 8, 2009, ending on February 8, 2013 in the case in the tranche relating to the revolving credit facility with a ceiling of EUR 5 million, and on February 8, 2015 in the case of the tranche relating to the credit with a ceiling of EUR 55 million.
 
 
●
Granting of a guarantee by Promotora de Informaciones, S.A.
 
 
●
Compliance with the financial ratios established in the financing agreement of Promotora de Informaciones, S.A.
 
 
●
The credit is tied to Euribor plus a spread of 2.00%.
 
 
F-136
 
 
The detail, by maturity, of the items that form part of “Bank Borrowings”, in thousands of Euros, is as follows:
 
 
 
2012
 
 
2013
 
 
2014
 
 
2015
 
 
Total
 
Syndicated loans
 
 
24,800
 
 
 
24,800
 
 
 
26,499
 
 
 
14,101
 
 
 
90,200
 
Syndicated credit facilities (*)
 
 
15,000
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
15,000
 
Syndicated interest
 
 
2,043
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
2,043
 
Syndicated fees and commissions
 
 
(250
)
 
 
(250
)
 
 
(250
)
 
 
(19
)
 
 
(769
)
Total
 
 
41,593
 
 
 
24,550
 
 
 
26,249
 
 
 
14,082
 
 
 
106,474
 
(*) The final maturity period of the Syndicated credit facilities is 2013.
 
11.3. Other current liabilities
 
The summary of the transactions relating to “Other Current Liabilities” carried out in 2011 and 2010, in thousands of Euros, is as follows:
 
 
 
Balance at
12/31/11 (*)
 
 
Balance at
12/31/10
 
Current:
 
 
 
 
 
 
Payable to non-current asset suppliers
 
 
134
 
 
 
209
 
Payable to suppliers and sundry accounts payable
 
 
22,050
 
 
 
21,513
 
Remuneration payable
 
 
1,769
 
 
 
1,737
 
Total current liabilities
 
 
23,953
 
 
 
23,459
 
(*) Unaudited figures
 
In "Other financial liabilities" at December 31, 2011 and 2010, the Group records a debt with suppliers of fixed assets of EUR 134 thousand, EUR 209 thousand, respectively.
 
11.4. Derivative financial instruments
 
Interest rate derivatives
 
At December 31, 2011, the Group had entered into financial instruments to hedge interest rate risk with various banks in relation to the syndicated financing agreements referred to in Note 11.2.
 
 
F-137
 
 
The changes in the value of these financial instruments are recognized as finance income and finance costs for the year as required by IFRSs, since in view of their nature they do not qualify for hedge accounting (see Note 4-h).
 
“Non-Current Financial Liabilities” in the accompanying consolidated balance sheet includes the fair value of the various financial instruments at year-end.
 
The total capital hedged amounts to EUR 70,560 thousand, with maturity on February 8, 2015 and half-yearly settlements.
 
The interest rate derivatives entered into by the Group and outstanding at December 31, 2011, and their fair values at that date, were as follows (in thousands of Euros):
 
2011 (*)
 
 
 
 
 
 
 
 
 
 
 
Nominal value
 
Company
Instrument
Expiry
 
Nominal
value
 
 
Fair value
 
 
Outstanding at
2012
 
 
Outstanding at
2013
 
Dédalo Grupo Gráfico, S.L.
Collar
2015
 
 
38,160
 
 
 
(2,000
)
 
 
26,640
 
 
 
12,960
 
Dédalo Heliocolor, S.A.U.
Collar
2015
 
 
32,400
 
 
 
(1,700
)
 
 
21,600
 
 
 
11,400
 
Total
 
 
70,560
 
 
 
(3,700
)
 
 
48,240
 
 
 
24,360
 
(*) Unaudited figures
 
2010
 
 
 
 
 
 
 
 
 
 
 
Nominal value
 
Company
Instrument
Expiry
 
Nominal
value
 
 
Fair value
 
 
Outstanding at
2011
 
 
Outstanding at
2012
 
Dédalo Grupo Gráfico, S.L.
Collar
2015
 
 
42,000
 
 
 
(2,700
)
 
 
34,320
 
 
 
26,640
 
Dédalo Heliocolor, S.A.U.
Collar
2015
 
 
36,000
 
 
 
(2,300
)
 
 
28,800
 
 
 
21,600
 
Total
 
 
78,000
 
 
 
(5,000
)
 
 
63,120
 
 
 
48,240
 
 
The fair value of the derivatives outstanding at December 31, 2011 is a negative amount of EUR 3,700 thousand (2010: a negative amount of EUR 5,000 thousand).
 
In 2011 the Group recognized a benefit amounting to EUR 1,300 thousand in the consolidated income statement arising from the changes in value of these financial instruments (2010: EUR 600 thousand).
 
The Group uses valuations provided by banks to determine the fair value of the derivatives.
 
Interest rate sensitivity analysis
 
The fair value of the interest rate derivatives entered into by the Group depends on the change in the Euribor and long-term swaps yield curve.
 
 
F-138
 
 
The detail of the analysis of the sensitivity of the derivatives to the euro yield curve, which the Group considers to be reasonable, in thousands of Euros, is as follows:
 
Sensitivity (before tax)
 
12/31/11
 
 
12/31/10
 
+0.5% (INCREASE IN THE YIELD CURVE)
 
 
462
 
 
 
946
 
-0.5% (DECREASE IN THE YIELD CURVE)
 
 
(472
)
 
 
(1,186
)
 
The sensitivity analysis shows that the negative fair value of interest rate derivatives decreases in response to increases in market rates, thus partially reducing the higher forecast borrowing costs.
 
The Group considers a 0.5% change in interest rates to be likely. Taking into consideration the expected maturities, an interest rate increase of this scale would generate a finance cost of EUR 294 thousand in 2012, considering the expected maturities and the intention of the Company of renewing some of the credit facilities.
 
Liquidity and interest risk tables
 
The following table details the liquidity analysis of the Dédalo Group for its derivative financial instruments in 2011. The table was prepared on the basis of the undiscounted net cash flows. Where the settlement (receivable or payable) is not fixed, the amount was calculated using the forward rates based on the yield curve. For instruments with options, the time value was excluded from the forecast cash flows and from the forward exchange rates.
 
Maturity
 
Forecast cash flow (in thousands of
euros)
 
Within 3 months
 
 
(802
)
3 to 6 months
 
 
-
 
6 to 9 months
 
 
(885
)
9 to 12 months
 
 
-
 
1 to 2 years
 
 
(1,315
)
2 to 3 years
 
 
(625
)
More than 3 years
 
 
(117
)
 
 
F-139
 

Liquidity risk of the financial debt
 
The management of liquidity risk involves the close monitoring of the maturity schedule of the Group’s financial debt and the maintenance of credit lines and other means of financing that enable the Group to cover its projected cash needs in the short, medium and long term.
 
The following table details the Group’s liquidity analysis for its non-derivative financial liabilities in 2011. The table was prepared on the basis of the cash outflows without discounting for the scheduled maturities, when the latter are expected to occur before the contractual maturities. The cash flows include the expected redemptions and interest payments. Where the settlement is not fixed, the amount was calculated using the forward rates based on the yield curve at 2011 year-end plus the related margin. The margin applied to the floating-rate debt was 2%.
 
Maturity
 
Thousands of euros
 
 
Euribor forward rate
 
Within 3 months
 
 
14,424
 
 
 
1.76
%
3 to 6 months
 
 
-
 
 
 
-
 
6 to 9 months
 
 
13,961
 
 
 
1.30
%
9 to 12 months
 
 
-
 
 
 
-
 
1 to 2 years
 
 
41,992
 
 
 
1.25
%
2 to 3 years
 
 
27,719
 
 
 
1.50
%
More than 3 years
 
 
14,372
 
 
 
1.77
%
Total
 
 
112,467
 
 
 
 
 
 
Fair value of the financial instruments: valuation techniques and assumptions applicable to fair value measurements.
 
The financial instruments are grouped together on three levels, 1 to 3, based on the degree to which the fair value is observable.
 
-
Level 1: those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;
 
-
Level 2: those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
 
-
Level 3: those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).
 
 
F-140
 
 
The Dédalo Group’s interest rate derivatives are classified as level-2 derivatives.
 
11.5. Guarantee commitments to third parties and other contingent liabilities
 
The Group has provided guarantees to third parties amounting to approximately EUR 624 thousand. Of this amount, EUR 613 thousand relate to a guarantee provided to the Pinto Municipal Council relating to urban development work in the industrial park where Dédalo Offset, S.L.U., is located, of which Promotora de Informaciones, S.A. guarantees EUR 419 thousand.
 
Management considers that any liabilities that might arise in addition to those for which provisions have already been recognized would not be material.
 
12. TAX MATTERS
 
12.1. Current tax receivables and payables
 
The detail of the current tax receivables and payables at December 31, 2011 and 2010, in thousands of Euros, is as follows:
 
 
 
 
2011(*)
 
 
 
2010
 
 
 
 
 
 
 
 
 
 
Tax assets arising from taxable temporary differences
 
 
1,883
 
 
 
20,430
 
Total non-current tax receivable
 
 
1,883
 
 
 
20,430
 
 
 
 
 
 
 
 
 
 
Tax withholdings and prepayments
 
 
6
 
 
 
21
 
VAT refundable
 
 
2,390
 
 
 
1,294
 
Total current tax receivable
 
 
2,396
 
 
 
1,315
 
 
 
 
 
 
 
 
 
 
Liabilities due to taxable temporary differences
 
 
1,883
 
 
 
6,151
 
Total non-current tax payable
 
 
1,883
 
 
 
6,151
 
 
 
 
 
 
 
 
 
 
VAT payable
 
 
340
 
 
 
182
 
Tax withholdings payable
 
 
4,223
 
 
 
3,817
 
Accrued social security taxes payable
 
 
4,479
 
 
 
3,481
 
Total current tax payable
 
 
9,042
 
 
 
7,480
 
(*) Unaudited figures
 
12.2. Reconciliation of the accounting loss to the tax loss
 
Dédalo Grupo Gráfico, S.L. and its subsidiaries file consolidated tax returns in Group 225/04, in accordance with Corporation Tax Law 43/1995, of 27 December.
 
The reconciliation of the net amount of income and expenses for the year and the tax loss that is used for calculating the income tax expense/income, in thousands of Euros, is as follows:
 
 
F-141
 
 
2011 (*)
 
 
 
Consolidated
income
statement
 
Loss for the year
 
 
(44,011
)
2011 income tax
 
 
14,279
 
Permanent differences-
 
 
 
 
Penalties
 
 
726
 
Other permanent differences
 
 
-
 
Temporary differences-
 
 
 
 
Finance lease transactions
 
 
1,921
 
Short-term provisions
 
 
(1,674
)
Allocation of reinvestment deferral relief
 
 
46
 
Other temporary differences
 
 
-
 
Tax loss
 
 
(28,713
)
(*) Unaudited figures
 
2010
 
 
 
Consolidated
income
statement
 
Loss for the year
 
 
(22,009
)
2010 income tax
 
 
-
 
Permanent differences-
 
 
 
 
Penalties
 
 
855
 
Other permanent differences
 
 
-
 
Temporary differences-
 
 
 
 
Finance lease transactions
 
 
2,298
 
Short-term provisions
 
 
(878
)
Allocation of reinvestment deferral relief
 
 
50
 
Other temporary differences
 
 
-
 
Tax loss
 
 
(19,684
)
 
 
F-142
 
 
12.3. Tax assets arising from temporary differences

In 2011, the Group has considered unlikely the recoverable of the tax effects, basically due to the loss carryforwards, and changes in the Group fiscal plan during 2011.Therefore, the expense recognized in the consolidated income statement for 2011 in relation to income tax amounts to EUR 14,279 thousand.
 
Dédalo Grupo Gráfico, S.L. and its subsidiaries, Dédalo Offset, S.L.U and Dédalo Heliocolor, S.A; have tax loss carry forwards that arise in years prior to their inclusion in the consolidated tax group that have not been recognized, whose amount, in thousands of euros, and last year for offset are as follows:
 
Company
 
 
Year
 
Thousands of
euros (*)
 
Last year for
offset
 
 
 
 
 
 
 
 
 
 
Dédalo Offset, S.L.U.
 
 
2000
 
2,139
 
 
2018
 
Dédalo Offset, S.L.U.
 
 
2003
 
6,784
 
 
2021
 
Dédalo Grupo Gráfico, S.L.
 
 
2003
 
2
 
 
2021
 
Dédalo Grupo Gráfico, S.L. and Subsidiaries
 
 
2004
 
9,064
 
 
2022
 
Dédalo Grupo Gráfico, S.L. and Subsidiaries
 
 
2005
 
20,110
 
 
2023
 
Dédalo Grupo Gráfico, S.L. and Subsidiaries
 
 
2006
 
29,352
 
 
2024
 
Dédalo Grupo Gráfico, S.L. and Subsidiaries
 
 
2007
 
26,498
 
 
2025
 
Dédalo Grupo Gráfico, S.L. and Subsidiaries
 
 
2008
 
52,826
 
 
2026
 
Dédalo Grupo Gráfico, S.L. and Subsidiaries
 
 
2009
 
30,084
 
 
2027
 
Dédalo Grupo Gráfico, S.L. and Subsidiaries
 
 
2010
 
19,684
 
 
2028
 
Dédalo Grupo Gráfico, S.L. and Subsidiaries
 
 
2011
 
28,713
 
 
2029
 
 
 
 
 
 
233,284
 
 
 
 
(*) The balance of tax loss carry forwards differs from the amount declared according to Spanish GAAP considering that it defers from IFRS.
 
12.4. Tax liabilities arising from temporary differences
 
The deferred tax liability arose as a result of the reinvestment of extraordinary gains, the finance lease agreements.
 
There was no change in the liabilities arising from temporary differences in 2011.
 
12.5. Years open for review by the tax authorities
 
Under current legislation, taxes cannot be deemed to be finally settled until the tax returns filed have been reviewed by the tax authorities or until the four-year statute-of-limitations period has expired.
 
 
F-143
 
 
In 2010 tax year, inspection interventions, in order to check and investigate, have been started, for 2006 and 2007 periods, for VAT and Corporation Tax, in the companies Dédalo Grupo Gráfico, S.L, Dédalo Offset, S.L.U and Dédalo Heliocolor, S.A.U, and the Income Tax in Dédalo Grupo Gráfico, S.L and Dédalo Offset S.L.U. Group administrators consider there will be no significant liabilities affecting attached consolidated financial statements.
 
On August 3, 2011, the Tax Authorities in Castilla la Mancha has signed the absence of anomalies in their inspection intervention of Dédalo Heliocolor and has considered correct all the registrations of the company Dédalo Heliocolor.
 
12.6. Accrued Social Security taxes payable
 
On August 2, 2010, Social Security General Tresury granted Dédalo Grupo Gráfico companies the deferment of their debts to the Social Security in the November 2009 to March 2010 period, amounting 3,192 thousand Euros. The payment of this amount would take place in 24 installments, being started in last September 2010.
 
On December 31, 2011, the amount due is EUR 1,084 thousand, corresponding to 8 pending installments.
 
13. INCOME AND EXPENSES
 
Results by company
 
The contribution of each company included in the scope of consolidation to the consolidated loss for 2011 and 2010, in thousands of Euros, is as follows:
 
 
Line of business
 
 
2011(*)
 
 
 
2010
 
Dédalo Grupo Gráfico, S.L.
Corporate
 
 
(848
)
 
 
(965
)
Dédalo Offset, S.L.U.
Offset
 
 
(18,978
)
 
 
(13,774
)
Macrolibros, S.L.U.
Offset
 
 
(2,517
)
 
 
-
 
Dédalo Helicolor, S.A.U.
Gravure
 
 
(19,258
)
 
 
(8,175
)
Gráficas Integradas, S.A.U.
Gravure
 
 
(129
)
 
 
(1,281
)
Altamira, S.A.U.
Offset
 
 
-
 
 
 
-
 
Distribuciones Aliadas, S.A.U.
Press
 
 
(629
)
 
 
1,096
 
Norprensa, S.A.U.
Press
 
 
14
 
 
 
1,178
 
Bidasoa Press, S.L.U.
Press
 
 
(1,666
)
 
 
(88
)
Total
 
 
 
(44,011
)
 
 
(22,009
)
(*) Unaudited figures
 
Revenue
 
The geographical breakdown of the Group’s revenue from its ordinary business in 2011 and 2010, in thousands of Euros is as follows:
 
 
F-144
 
 
 
 
 
2011(*)
 
 
 
2010
 
Domestic sales
 
 
69,231
 
 
 
84,678
 
Export sales
 
 
15,714
 
 
 
10,245
 
Total
 
 
84,945
 
 
 
94,923
 
(*) Unaudited figures
 
Domestic sales relate to the provision of services for printing press, books, magazines and sales brochures. Export sales, all of which are to European Union countries, relate mainly to the provision of book printing services.
 
Employees
 
The detail of “Employee Benefit Costs” in the consolidated income statement for 2011 and 2010, in thousands of Euros is as follows:
 
 
 
 
2011(*)
 
 
 
2010
 
Employer social security costs
 
 
8,620
 
 
 
9,379
 
Other employee benefit costs
 
 
444
 
 
 
553
 
Total
 
 
9,064
 
 
 
9,932
 
(*) Unaudited figures
 
The average number of employees in 2011 was 827 (2010: 911).
 
 
 
2011 (*)
 
 
 
2010
 
Managers
 
 
9
 
 
 
11
 
Supervisors
 
 
75
 
 
 
88
 
Other
 
 
743
 
 
 
812
 
Total
 
 
827
 
 
 
911
 
(*) Unaudited figures
 
In 2011, the Group has executed a 77 employee restructuring, under a Collective Dismissal Procedure, in Dédalo Heliocolor, S.A.U., and additionally the Group has cancelled its business unit of daily press in Dédalo Offset, S.L.U. with a 17 employees redundancy.
 
The breakdown by gender was as follows:
 
 
 
 
2011(*)
 
 
 
2010
 
 
 
Men
 
 
Women
 
 
Men
 
 
Women
 
Managers
 
 
9
 
 
 
-
 
 
 
11
 
 
 
-
 
Supervisors
 
 
72
 
 
 
3
 
 
 
84
 
 
 
4
 
Other
 
 
647
 
 
 
96
 
 
 
713
 
 
 
99
 
Total
 
 
728
 
 
 
99
 
 
 
808
 
 
 
103
 
(*) Unaudited figures
 
 
F-145
 
 
Fees paid to auditors
 
The fees for financial audit services provided to the Group by the principal auditor in 2011, amounted to EUR 74 thousand (2010: EUR 74 thousand).
 
In 2011 the Group has received other professional services provided by the auditor and other related companies, amounted to EUR 106 thousand (2010: the Group did not receive other professional services).
 
14. RELATED PARTY TRANSACTIONS
 
The detail of the balances with related parties at December 31, 2011 and 2010, in thousands of Euros is as follows:
 
 
 
Balance
receivable
 
 
Non-current
balance payable
 
 
Current balance
payable
 
 
 
 
2011(*)
 
 
 
2010
 
 
 
2011(*)
 
 
 
2010
 
 
 
2011(*)
 
 
 
2010
 
Shareholders
 
 
-
 
 
 
-
 
 
 
139,192
 
 
 
95,025
 
 
 
-
 
 
 
6,033
 
Related entities
 
 
6,804
 
 
 
6,608
 
 
 
-
 
 
 
733
 
 
 
3,297
 
 
 
3,067
 
TOTAL
 
 
6,804
 
 
 
6,608
 
 
 
139,192
 
 
 
95,758
 
 
 
3,297
 
 
 
9,100
 
(*) Unaudited figures
 
The detail of the transactions carried out with related parties in 2011 and 2010 is as follows:
 
 
  
Income
    
Expenses
  
 
     2011 (*)     2010       2011 (*)     2010  
Shareholders
     -       -       70       316  
Related entities
     21,211       32,182       2,748       738  
TOTAL
     21,211       32,182       2,818       1,054  
(*) Unaudited figures
 
All the transactions with related parties were carried out on an arm’s length basis.
 
“Receivable from Related Parties” includes balances for services specific to the Group's business activities, mainly for Ediciones El País, S.L., Diario AS, S.L., Estructura Grupo de Estudios Económicos, S.A. and Promotora General de Revistas, S.A.
 
“Non-Current Payables to Related Parties” includes a subordinated loan granted by the shareholder Inversiones Ibersuizas, S.A. with a maturity of seven years and amounting to EUR 2,400 thousand. This loan does not bear any interest.
 
 
F-146
 
 
On December 31, 2010 it also included several subordinated loans with capitalized interest granted by the shareholder Prisaprint, S.L. amounting to EUR 1,600 thousand, EUR 10,000 thousand, EUR 5,000 thousand and EUR 8,024 thousand, entered into on June 15, 2004, June 9, 2006, November 23, 2006 and February 19, 2008, respectively. These subordinated loans bear interest tied to Euribor. As a result of these subordinated loans, interest of EUR 57 thousand was capitalized in 2011 (2010: EUR 266 thousand).
 
On June 29, 2011 Prisaprint, S.L. has granted a participating loan to the Company of EUR 62,802 thousand through several disposals and the conversion of the previous subordinated loans arranged on June 15, 2004, on June 9, 2006, on November 23, 2011 and on February 19, 2008. It also includes three participating loans granted by Prisaprint, S.L. on December 1, 2007 for EUR 21,500 thousand, on May 29, 2009 for EUR 12,909 thousand and on March 26, 2010 for EUR 33,592 thousands.
 
Additionally, in 2011 Prisaprint has granted other ordinary financing loans amounting to EUR 5,989 thousand.
 
“Current Payables to Related Parties” includes mainly the short-term amount of the loan of EUR 585 thousand granted by Diario El País, S.L. to increase the production capacity of the printing plants of Distribuciones Aliadas, S.A.U., and Norprensa, S.A.U., and EUR 403 thousand payable in relation to investments. Additionally, it also includes the trade payables due to paper purchases basically to Ediciones El País, S.L., and services from Promotora de Informaciones, S.A.
 
The income from associates corresponds to commercial activities relating to the Group’s business.
 
Expenses relating to associates in 2011 correspond mainly to loan interest payments to Prisaprint, S.L. and Diario El País, S.L. of EUR 316 thousand and EUR 38 thousand, respectively. These interests accrued to an Euribor reference.
 
Remuneration of directors and senior executives
 
The remuneration received by the members of the Board of Directors, which includes senior executives, was EUR 24 thousand in 2011 (2010: EUR 245 thousand). The Group has not granted any loans to its directors and it does not have any pension or insurance obligations to them.
 
 
F-147
 
 
15. EVENTS AFTER THE REPORTING PERIOD
 
On February 8, 2012 the Group has proceeded to the payment of the third installement for amount of 12.400 thousands of Euros corresponding to the syndicated financing agreements (see Note 11.2).
 
On February 9, 2012, the Tax Authorities in Madrid has signed the absence of anomalies in their inspection interventions for 2006 and 2007 periods, for VAT, Income Tax and Corporation Tax figures of Dédalo Offset, S.L.U. and Dédalo Grupo Gráfico, S.L. and has considered corrects all the tax filings of these companies.
 
No additional significant events for the Group have occurred since December 31, 2011.
 
 
F-148
 
 
 
DÉDALO GRUPO COMPANIES
APPENDIX I
 
2011 (*)
 
 
 
 
 
Thousands of euros
 
 
 
 
 
CARRYING
 
 
% OF DIRECT
 
 
% OF INDIRECT
 
 
SHARE
 
 
 
 
 
 
 
INVESTEE
REGISTERED
OFFICE
LINE OF BUSINESS
 
AMOUNT
 
 
OWNERSHIP
 
 
OWNERSHIP
 
 
CAPITAL
 
 
RESERVES
 
 
PROFIT/LOSS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
DÉDALO OFFSET, S.L.U.
CTRA. PINTO A FUENLABRADA, KM. 20,800- PINTO- MADRID
GRAPHIC ARTS
 
 
24,557
 
 
 
100.00
%
 
 
0.00
%
 
 
1,000
 
 
 
45,052
 
 
 
(21,495
)
MACROLIBROS, S.L.U.
C/ VAZQUEZ DE MENCHACA, 9 (VALLADOLID)
GRAPHIC ARTS
 
 
3,240
 
 
 
0.00
%
 
 
100.00
%
 
 
500
 
 
 
5,257
 
 
 
(2,517
)
DISTRIBUCIONES ALIADAS, S.A.U.
POL. LA ISLA, CALLE RIO VIEJO, PARCELA 53 - DOS HERMANAS (SEVILLA)
GRAPHIC ARTS
 
 
5,848
 
 
 
100.00
%
 
 
0.00
%
 
 
2,100
 
 
 
7,461
 
 
 
(629
)
NORPRENSA, S.A.U.
PARQUE EMPRESARIAL, I.N.-F. CALLE CALLE COSTURERA, S/N - LUGO
GRAPHIC ARTS
 
 
3,349
 
 
 
100.00
%
 
 
0.00
%
 
 
1,800
 
 
 
4,393
 
 
 
14
 
BIDASOA PRESS, S.L.U.
POL. INDUSTRIAL LA COMA - PICASSENT (VALENCIA)
GRAPHIC ARTS
 
 
1,565
 
 
 
100.00
%
 
 
0.00
%
 
 
2,047
 
 
 
1,184
 
 
 
(1,666
)
DÉDALO HELIOCOLOR, S.A.U.
CTRA. NAC II, KM 48,500 POLIG-INDUSTRIAL-1, CABANILLAS DEL CAMPO
GRAPHIC ARTS
 
 
9,353
 
 
 
100.00
%
 
 
0.00
%
 
 
8,456
 
 
 
20,284
 
 
 
(19,387
)
GRÁFICAS INTEGRADAS, S.A.U.
C/ SANTA LEONOR, 63 - MADRID
GRAPHIC ARTS
 
 
-
 
 
 
0.00
%
 
 
100.00
%
 
 
601
 
 
 
25
 
 
 
(129
)
 
(*) Unaudited figures
 
 
F-149