interim report : 9 months 2004s.tf1.fr/mmdia/a/99/2/10370992upoiv.pdf · march 24 release of...

Interim report : 9 months 2004

Interim Report – 9 months 2004 1

TABLE OF CONTENTS

CONSOLIDATED KEY FIGURES ..........................................................3

KEY EVENTS .........................................................................................4

REVIEW OF OPERATIONS ...................................................................6

CONSOLIDATED PROFIT AND LOSS ACCOUNT OPERATIONAL BREAKDOWN............................................................11

CONSOLIDATED FINANCIAL STATEMENTS ....................................12

CONSOLIDATED PROFIT AND LOSS ACCOUNT....................................................................12 CONSOLIDATED BALANCE SHEET.........................................................................................13 CONSOLIDATED CASH FLOW STATEMENT...........................................................................15 NOTES TO THE FINANCIAL STATEMENTS.............................................................................16

Interim Report – 9 months 2004

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CONSOLIDATED KEY FIGURES (€ million)

9 months 2004 9 months 2003 2003 Turnover1 2,071.3 1,993.8 2,768.7 TF1 core channel advertising revenue 1,189.3 1,115.9 1,543.7 Diversification and other revenue 882.0 877.9 1,225.0 EBITDA2 383.1 362.2 495.5 EBIT 306.7 254.6 333.9 Net profit attributable to the Group 161.6 145.2 191.5 Shareholders’ funds 891.4 819.2 866.2 Net financial debt 472.6 474.1 443.2 Earnings per share (€) 0.75 0.68 0.90 Diluted earnings per share (€) 0.75 0.68 0.89 9 months 2004 9 months 2003 2003 Average number of outstanding shares (in thousands) 214,107 213,133 213,281 Closing share price (€) 22.8 25.4 27.7 Market capitalisation at end of period (€ billion) 4.9 5.4 5.9

1 Impacted by changes in accounting presentation linked to the transition to IFRS standards, see paragraph 2 of the notes to the consolidated financial statements.2 EBITDA : EBIT + Depreciation, amortisation and provisions (net)


KEY EVENTS BROADCASTING (source : Médiamétrie – individuals aged 4 years and over) The interview with Alain Juppé during the 8 o’clock news on February 3 attracted 12.1 million viewers, i.e., a 46.4% audience share. On April 10, the first show of La Ferme Célébrités attracted 8.5 million prime time viewers, that is a 45.7% audience share. On June 6, TF1 enjoyed exclusive rights to film the ceremonies for the 60th anniversary of the liberation of France and provided the signal for international broadcasting. The whole channel and indeed the whole group was mobilised for this event. TF1 broadcast live eight of the biggest Euro 2004 matches. On June 21, the France-Switzerland match notched up the best audience of the first ten months of the year for any type of programme by attracting over 15.3 million viewers, that is, a 59.9% audience share. The summer saga, Zodiaque (5 episodes), with Claire Keïm and Francis Huster, beat audience records for this programme type with an average approaching 10.8 million viewers per episode and a peak of 11.3 million viewers for the final episode. The showing of the film Astérix et Obélix: Mission Cléopâtre on October 5 was an audience success, with over 12.4 million viewers and a 50.2% audience share. The TF1 News and Technical divisions set up a major facility to cover the American presidential elections. TF1 teams covered the event live from New York, and a large number of journalists were mobilised to gather commentary and opinion worldwide. TPS AND DIGITAL DISTRIBUTION Launch of D-Free at the end of February. D-Free is a digital terrestrial television multiplex distributing four channels on the Italian territory and covering 51% of the Italian population. On March 15, TPS won the bid for the exclusive rights to the English Football League and will broadcast the whole of the English Premier League championship for three seasons, starting August 2004. In the presence of Patrick Devedjian, Industry Secretary, July 8 saw the launch of the HD Forum, an association that brings together the main participants in the audiovisual sector with the objective of promoting high definition television (HDTV) and supporting what looks set to be a digital revolution. On October 15, TPS L expanded coverage to 15 additional cities. At the same time, a “double play” offering - TV over telephone line and ADSL Internet access – was launched. Today, five million households can now subscribe to TPS L. THEMATIC CHANNELS LCI, which was already available in the French overseas departments and territories as well as in Australia, has increased its foreign distribution thanks to two new agreements with Africa and Sweden. That gives it a presence in 50 other countries. On February 6, Sportitalia (Europa TV), an unscrambled sports channel with a potential coverage of 81% of the Italian population, was launched in Italy. By co-producing La Vie comme elle va directed by Henri-Jean Meunier, which was released on March 3, Odyssée became the first thematic channel to co-produce a feature film. In March, TF1 raised its stake in TV Breizh to 67%, then to 71.1% in April. On June 22, LCI celebrated its tenth birthday. Since 1994, La Chaîne Info has made its mark as the top French non-stop news channel.


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End June, TF1 Group signed an agreement with France Télévisions, ARTE France, INA, Pathé, Suez and Wanadoo, and acquired 100% of Histoire, the thematic channel dedicated to the history of France and the world. It is to complement TF1 Group’s “documentary and discovery” channel unit. The 7th edition of MediaCabSat (from December 29, 2003 to June 13, 2004) confirmed the solid audiences of the Group’s channels and underpinned the TF1 growth strategy in the complementary audiovisual landscape. Eurosport aired the XXVIIIth Olympic Games in Athens with full, live coverage plus a round-up of the highlights and results on the Eurosport interactive services. On October 25, the 8 o’clock news announced the launch of Pink TV, the first general-interest and “gay friendly” channel. PUBLISHING - DISTRIBUTION TF1 Licences launched in June two magazines adapted from TF1 channel’s line up : Ushuaïa and Téléfoot Magazine TF1 Vidéo released the DVD and VHS versions of the last episode of The Lord of the Rings, with sales reaching over 1.5 million units by the end of September. Téléshopping changed its formula as of September 20 – with a new set, new design and a new team of anchors. The TV show was given more depth, to become the consumption and home-shopping magazine. PRODUCTION / AUDIOVISUAL RIGHTS TF1 increased its stake in Groupe Glem to 97.8%, and then to 100% during the first half of 2004. Release of two TF1 Films Production co-productions in January and February : RRRrrrr!!!, which recorded more than 1.7 million entries and Podium 3.6 million entries. March 24 release of Immortel (ad vitam), adapted from the comic La Femme Piège by Enki Bilal and directed by the author: produced by Téléma and co-produced by TF1 Films Production. The latest film from Jean-Jacques Annaud, Deux Frères, co-produced by TF1 Films Production, was a major success with over 3 million admissions over its theatre life. May 1 saw the cinema release of Kill Bill Vol. 2 by Quentin Tarantino, distributed by TFM Distribution, to be seen by over 1.4 million cinema spectators. Four years after the success of Le fabuleux destin d'Amélie Poulain, the new Jean-Pierre Jeunet movie, Un long dimanche de fiançailles, co-produced by TF1 Films Production, was released on October 27. MISCELLANEOUS At the Salon de l’Automobile in September, TF1 presented the two major innovations that will revolutionize television in the coming years: high definition and mobility. VisioWave, the TF1 subsidiary specialised in networked digital video solutions for security applications, won the bid for the New York subway. It covered the roll-out phase of the new video security system.


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REVIEW OF OPERATIONS Boulogne, November 30, 2004 In the first nine months of 2004, TF1 Group operating revenue increased by 3.9%. At constant accounting methods (excluding changes linked to the convergence towards IFRS3 standards), the growth of TF1 Group’s operating revenue would have been 6.8%. The third quarter growth of net advertising revenue for the core channel was 6.8%, with an aggregate growth rate of 6.6% at the end of September. The third quarter was marked by sustained growth of advertising investment for the months of July and August followed by a slow-down in September. Operating revenue from other activities (total TF1 Group operating revenue minus the broadcasting (TF1 SA + TF1 Publicité) operating revenue) amounted to €868.2 M, an increase of 0.5%, to represent 41.9% of total TF1 Group consolidated operating revenue. The moderate increase for the first nine months of the year is primarily due to the changes in accounting presentation linked to the convergence towards IFRS standards. At constant accounting method, operating revenue from other activities would have increased by 7.2% thanks to the performance of the following subsidiaries:

- TPS, whose operating revenue climbed 8.0%, thanks to satellite and ADSL subscriptions; - Téléshopping (+ 20.4% before the impact of IFRS accounting method changes), thanks to the strong sales

growth across the board - programming, catalogue and Internet; - all the TF1 Group thematic channels, which notched up strong growth in their advertising revenue (+ 21.8%),

thanks to the good audiences achieved by the different channels and the broadcasting of the Olympic Games on Eurosport;

- TF1 International (+ 116.2% before the impact of IFRS accounting method changes) thanks to revenue generated in particular through sales of the films Agents Secrets and Arsène Lupin.

Programming costs increased by 2.8% to €642.9 M, primarily as a result of broadcasting the Euro 2004, but compensated for by a lower level of retired and expired rights than in the first nine months of 2003. Operating income amounted to €306.7 M, up by 20.5%, meaning that the Group recorded an operating profitability of 14.8%, an improvement of two points compared to the same period last year. The financial result was practically stable at €(15.8) M, consisting primarily of the interest payable on the Group’s debt, which stood at €472.6 M. The increase in goodwill amortisation – going from €(9.1) M in the first nine months of 2003 to €(22.3) M for the same period 2004, is the result of TF1’s acquisition of additional shareholdings in TV Breizh and Groupe Glem, whose goodwill were fully amortised in first half 2004, and the acquisition of 100% of the capital of the channel Histoire, which goodwill was fully amortised in third quarter 2004. Net profit attributable to the group increased by 11.3% to reach €161.6 M, i.e., a net margin on operating revenue of 7.8% (+ 0.5 points over the first nine months of 2003). At September 30, 2004, shareholders’ funds totalled €891.4 M on a balance sheet total of €3,226.4 M. Consolidated net debt stood at €472.6 M, i.e., 53.0% of shareholders’ funds. Outlook TF1 Group confirms and adjusts the upwards revision of its outlook for annual advertising revenue growth within a range of 5% to 6% . Within a constant framework, Group consolidated revenue could climb 5% to 6% (taking into consideration the changes to accounting presentation, the increase should be 2% to 3%). With a forecast growth in programming costs somewhere between 4% and 5%, TF1 Group should improve its 2004 consolidated net income compared to financial year 2003.

3 See paragraph 2 in the notes to the consolidated statement of accounts


A.) Broadcasting (source: Médiamétrie) For the first 10 months of the year, television consumption reached a new record, with an average of 3 hours 21 minutes per day for individuals aged 4 years and over and 3 hours 25 minutes for women aged under 50. That is an increase of 4 and 10 minutes, respectively, compared to the first 10 months of 2003. TF1 profited fully from this situation. Over the period, TF1 registered the biggest audience share growth among the free-to-air channels, with 35.5% of women aged under 50 (up 1.4 points compared to the same period in 2003) and 32.0% of individuals aged 4 years and over (+ 0.5 points). TF1 has also underscored its leadership by obtaining 90 of the 100 best audiences for the beginning of the year. This score includes 26 programmes with more than 10 million viewers (vs. 17 in the same period of 2003). In October, TF1 registered its best audience score of the year (excluding the June broadcast of the Euro 2004) with the showing of the film Asterix et Obelix: Mission Cléopâtre. It attracted 12.4 million viewers. B.) Advertising (source: Secodip, January-October 2004) For the period January-October 2004, TF1 gross advertising revenue increased by 6.4%, with a market share improvement of 0.3 points to reach 54.8%. Among the growth sectors for the period were: - food, up by 8.5%; TF1’s market share (58.8%) continues to grow (+ 0.9 points vs. January-October 2003); - cosmetics, with growth of 1.0%, a market share stable at 55.7% and an advertiser presence rising three points to 86%; - automobile, which rose 11.4%, with a 53.3% market share (+ 0.3 points) and a growing number of advertisers (+ 8

advertisers vs. January-October 2003); - services, which grew 15.3%, with a 47.1% market share (+ 1.1 points); banking and insurance raised their budgets with

TF1 by 29.5% and 16.3%, respectively; - telecommunications, up 27.8%, with a market share of 55.4% (+ 0.7 points) thanks primarily to Internet access

providers; Two sectors declined: - house cleaning by 16.2%, but TF1 continued to have a large market share at 57.4%; - publishing, down by 9.1%, was hit by the fall in music publishing investment (- 32.0%); this sector has been in trouble

since 2003. Since January 1, 2004, the press sector has been allowed to invest in television on analogue channels. TF1 has been the prime beneficiary of this deregulation of the advertising market: - €37.2 M invested at end October 2004, i.e., 1.6% of the channel’s revenue, - a 55.4% market share, - 69% advertiser presence At end September 2004, the thematic channel market in France represented 8.6% of gross revenue of the total television market and 2.7% of the multi-media market. Advertising revenue of all thematic channels increased by 33.8% to €350 M. The new arrivals in this segment - retail, press and book publishing – represented 3.5% of gross revenue of thematic channels. C.) The TF1 Group Operating revenue generated by the Group’s other activities (total TF1 Group operating revenue minus the broadcasting (TF1 SA + TF1 Publicité) operating revenue) amounted to €868.2 M, an increase of 0.5%. At constant accounting method, the increase would have been 7.2%. Other activities improved their operating profitability with a margin of 5.6% for the first nine months of the year (vs. 4.8% for the same period of 2003). N.B.: the activity of the TF1 subsidiaries is analysed below on the basis of their contribution to consolidated financial figures. I) Publishing – Distribution For the first nine months of 2004, operating revenue of Publishing-Distribution declined 21.0% to €196.1 M. The reasons for this decline are mainly due to accounting changes:


since July 1, 2003, the TF1 Interactif activity, which was previously integrated in TF1 Entreprises, has been accounted for in the Internet division within the e-TF1 legal structure. TF1 Entreprises therefore suffered from an unfavourable comparison (revenue from the TF1 Interactif activity on June 30, 2003, was roughly €12.0 M);

in the framework of convergence towards IFRS standards, TF1 has changed the accounting presentation, which

has had a negative impact on the consolidated revenue of the Publishing-Distribution division of €52.0 M for the first nine months of 2004. These changes concern only the presentation of revenue and costs and do not affect operating income.

TF1 Vidéo (including RCV et CIC) saw its contribution to consolidated operating revenue fall by 25.1% to €111.0 M. Before the effect of the accounting change operating revenue would have grown 6.4%. The solid performance of kiosk activity and traditional channel sales – thanks, for example, to a film-intensive schedule (Kill Bill 1, Lord of the Rings III) – more than made up for a decline in rental business. The latter was impacted by the discontinuation of the distribution contract for the Buena Vista Home Entertainment catalogue (on December 31, 2003). TF1 Vidéo operating income amounted to €10.7 M vs. €11.0 M in the previous year. TF1 Entreprises registered a fall in operating revenue of 55.1% to €19.5 M. Excluding the impact of accounting changes, the decline would have been 44.4%. Other than the accounting impact and the transfer of the TF1 Interactif business to e-TF1 (see comments above), the fall was also due to the decline of TF1 Musique (shrinking of the disc market and the weaker performance of the Star Academy 3 products relative to those of Star Academy 2). Operating income amounted to €4.4 M, a fall of 49.4% compared to the first nine months of 2003. Téléshopping confirmed the good performance it has achieved across the board (TV programmes, catalogue and Internet) since the beginning of the year. Its contribution to consolidated operating revenue increased by 19.4% to €62.7 M (an increase of 20.4% excluding the impact of accounting changes). Operating income amounted to €9.1 M (vs. €3.5 M in 2003) thanks to strong volume growth and the decrease in sub-contracting costs, leading to an operating margin increase of 7.8 points to 14.5%. II) Internet – Interactif division e-TF1 benefited from the integration of TF1 Interactif. e-TF1’s contribution to consolidated operating revenue amounted to €38.1 M for the first nine months of the year (vs. €14.5 M for the first nine months of 2003). Growth was sustained by the success of the programme A prendre ou à laisser (over 32 million audiotel calls and close to five million SMSs) and the game La Maison, which was broadcast this summer. The number of pages viewed on the TF1.fr site climbed 19% during the first nine months of the year. e-TF1 operating income was €2.8 M at September 30, 2004, compared to a loss of €2.3 M at September 30, 2003. III) Thematic channels

Eurosport Eurosport is present in 54 countries and broadcast in 19 languages across all pay broadcast platforms in Europe, cable, satellite, digital terrestrial and ADSL (France). It reached 98 million households at September 30, 2004 (+ 1% compared to end September 2003), of which 50.6 million are paying subscriber households in Europe (+ 7%). At September 2004, Eurosportnews was broadcast in six languages to over 70 countries and reached 18.2 million households. Over the period, the average Eurosport audience increased by 10% compared to the same period last year and reached 673,000 viewers per median ¼ hour. Close to 23 million different viewers watched Eurosport each day during the period. The contribution to operating revenue at end September 2004 increased by 3.0% to €218.5 M. This was thanks to the combined effect of increased revenue generated by cable and satellite (accelerated penetration of the number of paying households) and a rise in advertising revenue (improved pan-European advertising market and more live broadcasting of sports events). Operating income amounted to €24.5 M, with an 11.2% operating margin for the first nine months of 2004. The third quarter was marked by significant costs generated by broadcasting the Olympic Games in August. Eurosport’s contribution to Group net income at end September 2004 was €5.0 M, i.e., a decline compared to the same period in 2003 (€6.2 M), primarily due to the consolidation under the equity method of the channel Sportitalia (owned at 29%), which reported a slight loss at end September.


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Thematic channels

Operating revenue was up 8.9% to €40.3 M thanks to the solid performance of all the channels and the integration of Histoire starting July 1, 2004.

- the TF6 contribution to Group operating revenue increased by 11.4%, thanks to cable and satellite revenue and increased advertising revenue, which represented 51% of the total;

- Série Club operating revenue soared 13.6%, with advertising revenue representing 41% of the total; - LCI’s operating revenue increased by a small 3.2%, a rise in advertising revenue compensating for the negative

impact of the reduced subscription revenue paid by CanalSatellite; - Odyssée’s operating revenue stabilised at €2.3 M.

The thematic division saw its operating loss reduced in the first nine months of 2004 to €(11.7) M vs. €(12.4) M in 2003, thanks, for example, to profit generated by TF6. Most of the operating loss came from LCI. The latter was penalised by the fall in subscriber revenue and the consolidation of the channel Histoire, which reported a slight loss over the third quarter 2004. IV) Production and Audiovisual rights

Production4 Operating revenue of the Production division fell 24.4% to €35.7 M, primarily due to the decline in volume at Glem and Studios 107 (discontinuation of services for Khalifa TV). The net loss of € (11.4) M includes goodwill amortisation for Glem (€6.1 M) within TF1 Production. This goodwill was fully amortised in 2004 accounts.

Audiovisual rights5 Operating revenue was up 31.6% to €50.8 M. TF1 International and Téléma are the main contributors to this growth with the success of the films Agents Secrets, La Femme Piège and Arsène Lupin. The net loss was brought down to €(1.1) M, vs. €(2.4) M for the first nine months of 2003. V) Digital distribution

Télévision par Satellite – TPS September 2004 was marked by the restructuring of the TPS offering. This saw the creation of a new fixed fee including TPS Star, the TPS premium channel and the three cinema channels for €19.5 per month. TPS and France Télécom continued the roll-out of their television over telephone line offering. As of October 15, over five million households are eligible for the offering. Two types of offering are now available to consumers – one for digital television starting at €19 per month, the other for digital television + Internet starting at €32.9 a month. For the first nine months of 2004, TPS’s contribution to operating revenue amounted to €281.6 M, i.e., a growth of 8.0% compared to the same period in 2003. Group TPS consolidated net income is positive to the tune of €12.8 M. However, considering the cyclical nature of its business, TPS will report a net loss for the whole year 2004. Some 80,000 new satellite subscribers and between 30,000 and 50,000 new ADSL subscribers should come on board for the full year 2004. VI) Miscellaneous

Visiowave (80% TF1) Operating revenue was up 34.0% to €7.1 M. The key event of the third quarter was the formalisation of the selection of Visiowave by the New York mass transit authority. Operating income was negative at €(4.4) M. D.) Human resource update The TF1 Group workforce increased slightly (to 3,825 people) both at TF1 SA and at its subsidiaries during the first nine months of 2004 compared to December 31, 2003 (3,682 people). 4 TF1 Production, TPP, Studios 107, Groupe Glem, Alma, TAP, Quai Sud 5 TF1 Films Production, TF1 International, Ciby DA, TCM, Téléma, Cabale


E.) The stock At October 29, 2004, theTF1 share closed at €23.59, that is, a decline of 15.4% since the beginning of the year. This compares with a rise of 3.1% of the CAC 40 stock market index and of 3.2% of the SBF 120 index. The TF1 Group market capitalisation at October 29, 2004 stood at €5.08 billion.


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CONSOLIDATED PROFIT AND LOSS ACCOUNT OPERATIONAL BREAKDOWN (€ million) 9 months 04 9 months 03 2003 TF1 Channel Advertising revenue 1,189.3 1,115.9 1,543.7 Advertising agency fees (63.5) (61.6) (82.4) NET REVENUE FROM BROADCASTING 1,125.8 1,054.3 1,461.3 Royalties and contributions - Authors (46.2) (43.2) (58.1) - CNC (58.7) (55.2) (76.5) Transmission costs - TDF, Satellites, Transmissions (42.7) (42.8) (57.2) Programming costs (642.9) (625.5) (852.0) GROSS MARGIN 335.3 287.6 417.5 Diversification revenue and other revenue6 877.4 873.3 1,219.4 Other operating expenses6 (829.6) (797.4) (1,141.4) Depreciation, amortisation and provisions (net) 6 (76.4) (108.9) (161.6) OPERATING PROFIT 306.7 254.6 333.9 FINANCIAL PROFIT / (LOSS) (15.8) (15.2) (14.4) PROFIT BEFORE TAX AND EXCEPTIONAL ITEMS 290.9 239.4 319.5 Exceptional items (1.8) (1.3) (8.1) Goodwill amortisation (22.3) (9.0) (12.0) Corporate income tax (103.2) (87.3) (114.7) Share in net earnings of companies consolidated under the equity method (4.0) 0.0 0.0 NET PROFIT OF CONSOLIDATED COMPANIES 159.6 141.8 184.7 Minority interest 2.0 3.4 6.8 NET PROFIT ATTRIBUTABLE TO THE GROUP 161.6 145.2 191.5

6 Impacted by changes in accounting presentation linked to the transition to IFRS standards, see paragraph 2 of the notes to the consolidated financial statements


CONSOLIDATED FINANCIAL STATEMENTS 7 CONSOLIDATED PROFIT AND LOSS ACCOUNT (€ million) 9 months 04 9 months 03 2003 TURNOVER 2,071.3 1,993.8 2,768.7 Net advertising revenue 1,288.2 1,197.1 1,663.2 TF1 1,189.3 1,115.9 1,543.7OTHERS 98.9 81.2 119.5 Diversification revenue8 750.5 759.5 1,056.1Technical services revenue 15.8 17.6 23.6Other revenue 16.8 19.6 25.8 Operating expenses (1,764.6) (1,739.2) (2,434.8)External production costs (437.5) (418.0) (593.3)Staff costs (270.9) (258.7) (363.9)Other operating expenses8 (979.8) (954.9) (1,316.0)Depreciation, amortisation and provisions (net) - Depreciation (73.5) (83.7) (117.5)- Provisions8 (2.9) (23.9) (44.1) OPERATING PROFIT 306.7 254.6 333.9 Financial revenue 12.3 6.3 15.5Financial expenses (28.1) (21.5) (29.9) FINANCIAL PROFIT / (LOSS) (15.8) (15.2) (14.4) PROFIT BEFORE TAX AND EXCEPTIONAL ITEMS 290.9 239.4 319.5 Exceptional items (1.8) (1.2) (8.1) Goodwill amortisation (22.3) (9.1) (12.0) Corporate income tax (103.2) (87.3) (114.7) Share in net earnings of companies consolidated under the equity method (4.0) 0.0 0.0 NET PROFIT BEFORE MINORITY INTEREST 159.6 141.8 184.7 Minority interest 2.0 3.4 6.8 NET PROFIT ATTRIBUTABLE TO THE GROUP 161.6 145.2 191.5Average number of outstanding shares (in thousands) 214,107 213,133 213,281Earnings per share (€) 0.75 0.68 0.90Diluted earnings per share (€) 0.75 0.68 0.89

7 These consolidated financial statements at September 30, 2004 have been subject to a limited review by our statutory auditors. 8 Impacted by changes in accounting presentation linked to the transition to IFRS standards, see paragraph 2 of the notes to the consolidated financial statements


CONSOLIDATED BALANCE SHEET ASSETS (€ million)

30.09.04Net

31.12.03Net

30.09.03Net

Intangible fixed assets 885.6 894.9 893.7 Audiovisual rights 89.1 99.7 98.9Other intangible fixed assets 796.5 795.2 794.8 Goodwill 98.1 114.9 106.9 Tangible fixed assets 177.8 197.5 199.1 Land 45.7 45.7 45.7Freehold buildings 32.8 34.7 35.3Other tangible fixed assets 99.3 117.1 118.1 Financial assets 55.6 13.3 12.3 Investments consolidated under the equity method 42.8 1.0 0.0Investments and loans to associated undertakings 8.5 6.4 6.5Other financial assets 4.3 5.9 5.8 FIXED ASSETS 1,217.1 1,220.6 1,212.0 Programmes and film rights9 556.6 693.4 704.5Raw materials and supplies 14.7 10.5 11.9 Trade debtors9 839.6 621.7 571.2Other debtors and adjustment accounts9 496.2 481.7 566.2 Marketable securities and cash at bank and in hand 102.2 185.1 36.0 CURRENT ASSETS 2,009.3 1,992.4 1,889.8 TOTAL ASSETS 3,226.4 3,213.0 3,101.8



SHAREHOLDERS’ EQUITY AND LIABILITIES (€ million)

30.09.04

31.12.03

30.09.03

Share capital 43.1 43.0 42.9Share premium 66.4 63.7 59.8Other reserves 620.3 568.0 571.3Profit attributable to the group 161.6 191.5 145.2 SHAREHOLDERS’ FUNDS 891.4 866.2 819.2 Minority interest (0.8) (0.1) 3.3Provisions for liabilities and charges10 88.0 102.9 84.2 Financial creditors and borrowings (1) (2) 574.8 628.3 510.1Trade creditors10 873.7 919.1 858.4Other creditors and adjustment accounts 799.3 696.6 826.6 CREDITORS 2,247.8 2,244.0 2,195.1 TOTAL SHAREHOLDERS' FUNDS AND LIABILITIES 3,226.4 3,213.0 3,101.8 (1) Including current bank overdrafts 16.8 0.6 0.4(2) Less than one year 65.3 116.3 496.3



CONSOLIDATED CASH FLOW STATEMENT


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(€ million) 9 months 04 2003 9 months 03 1- Operating activities • Net profit 159.5 184.7 141.8 Depreciation, amortisation and provisions 71.6 155.9 101.1

- Intangible fixed assets 33.3 50.5 33.3 -Tangible fixed assets 37.3 58.9 44.5- Financial assets (7.4) 5.9 0.1- Expenses to amortise 1.1 2.0 1.5- Goodwill 22.3 12.0 9.0- Provisions for liabilities and charges (15.0) 26.6 12.7

• Investment grants released to revenue (5.3) (12.3) (7.1)• Expenses to amortise 0.0 (1.5) (0.5)• Capital gains / (losses) on disposal of fixed assets 8.3 (3.4) 0.0• Change in deferred taxation (1.1) (2.8) (0.1)• Share of investments consolidated under the equity method 4.0 0.0 0.0 CASH FLOW 237.0 320.6 235.2 • Stocks (71.3) (20.4) (33.6)• Trade debtors (74.7) 52.9 63.6• Trade creditors 104.1 (54.3) (61.6)• Net advances from third parties 5.2 14.5 14.4 Change in working capital needs (36.7) (7.3) (17.2) NET CASH INFLOW FROM OPERATING ACTIVITIES 200.3 313.3 218.0 2- INVESTING ACTIVITIES (96.9) (155.0) (63.8)• Purchase of intangible fixed assets (31.4) (58.2) (31.6)• Purchase of tangible fixed assets (19.8) (42.0) (23.3)• Disposal of tangible, intangible and financial fixed assets 2.4 5.5 1.8• Purchase of financial asset investments (49.9) (17.1) (4.9)• Change in liabilities on purchase of financial asset investments 0.0 (50.2) 0.0• Net increase / (decrease) in other financial assets (0.2) (1.9) (2.0)• Net increase / (decrease) in fixed assets creditors 2.0 8.9 (3.8) • Consolidation adjustments (0.1) 1.9 2.4 NET CASH OUTFLOW FROM INVESTING ACTIVITIES (97.0) (153.1) (61.4) 3- FINANCING ACTIVITIES • Increase in shareholders’ funds 7.5 20.1 11.9• Increase in capital subscribed by minorities 0.0 2.4 2.4• Net change in loans (70.6) 103.8 (33.2)• Dividends paid (139.4) (138.3) (138.3) NET CASH INFLOW / (OUTFLOW) FROM FINANCING ACTIVITIES (202.5) (12.0) (157.2) TOTAL INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS (99.2) 148.2 (0.6)Cash at beginning of period 184.5 36.3 36.3Net inflow / (outflow) (99.2) 148.2 (0.6)Cash at end of period 85.3 184.5 35.7

NOTES TO THE FINANCIAL STATEMENTS

1. GROUP ACCOUNTING POLICIES The consolidated 9 months financial statements of the TF1 Group have been prepared in accordance with French Generally Accepted Accounting Standards notably the 99/02 rules of the Accounting Regulations Committee, confirmed by the Government order dated June 22, 1999, and the recommendations of the National Accounting Council on interim accounts. The accounting policies adopted for the 9 months consolidated financial statements are consistent with those used for the previous years’ consolidated financial statements.

2. CHANGES OF METHOD With effect from January 1, 2004, TF1 Group made changes in accounting presentation which, while based on the accounting framework described in paragraph 1, converge on the presentation that will be adopted in 2005 under International Financial Reporting Standards. Those changes in presentation are described below.

• Programmes and film rights (impact on the balance sheet presentation) Programmes and film rights are accounted for in inventories when technical acceptance of them has occurred and the rights are opened. All rights not fulfilling the preceding conditions are accounted for in commitments and contingencies (for the part of rights not paid) or in prepayments and accrued income (for the rights already prepaid). The impact on the consolidated balance sheet as of January 1, 2004 is summarised in the table below (in €M): Heading concerned Part not paid Part paid Total impact Programmes and film rights (22.3) (170.0) (192.3) Trade debtors (7.9) 249.0 241.1 Other debtors and adjustment accounts (42.0) (79.0) (121.0) TOTAL ASSETS (72.2) 0.0 (72.2) Trade creditors (72.2) (72.2) TOTAL SHAREHOLDERS’ FUNDS AND LIABILITIES

(72.2) - (72.2)

COMMITMENTS AND CONTINGIENCIES 72.2 - 72.2 This change in accounting presentation does not affect the change in working capital needs.

• Turnover (impact on the profit and loss presentation) Forecasts for returns of merchandise sold are no longer accounted for through a risk accrual but rather through credit notes to be issued, which decreases revenue and related expenses. This change in presentation concerns primarily TF1 Entreprises, TF1 Vidéo and Téléshopping. The pay-backs on certain distribution contracts are deducted from revenue such that only the economic advantage to TF1 (commission) appears as income. This change primarily concerns TF1 Entreprises and TF1 Vidéo.

These two changes have a negative impact of €57.9 M on consolidated operating revenue at September 30, 2004. They only concern the presentation of revenue and expense and do not impact operating income.


3. CHANGES IN SCOPE OF CONSOLIDATION The changes in the scope of consolidation between December 31, 2003 and September 30, 2004 result from: - The additional stake in TV Breizh, which increased TF1 Group’s interest in this subsidiary from 40.5% to 71.1%; - The additional stake in Groupe Glem, which increased TF1 Group’s interest in this subsidiary from 72.8% to 100%; - From January 1, 2004, Italian companies Prima TV (49% owned) and Europa TV (29% owned) have been consolidated under the equity method. The stocks of these two companies were acquired for respectively €12.7 M and €22.0 M. Prima TV holds a national television broadcasting authorisation for a DTT network on the Italian territory (commercial name : D-Free). Following this acquisition, TF1 Group has the opportunity to exercise a two year option relative to a part of the multiplex capacity, in order to broadcast a pay channel over the area covered. TF1 Group has a pre-emption right over the shares of its partner, as well as a “guaranteed price” put option to be exercised in 2006. In return, TF1 Group has granted to its partner a promise to sell at the same time. In addition, the shareholders’ agreement includes a mechanism for resolving any management deadlock, through a guaranteed price issue. Europa TV holds a national television broadcasting licence for an analogue terrestrial network on the Italian territory. TF1 Group has a pre-emption right over the shares of its partner, as well as a continuation right. The shareholders’ agreement includes a mechanism for resolving any management deadlock, through a guaranteed price issue. Europa TV launched in February 2004 the channel Sportitalia. - Yagan Productions and Histoire, in each of which companies TF1 Group holds 100%, were fully consolidated with effect from July 1, 2004. The changes in the scope of consolidation between September 30, 2003 and September 30, 2004 result from: - Publications Metro France, acquired at the end of 2003, which has been consolidated under the equity method since December 31, 2003; - Film par Film, previously proportionately consolidated, was excluded from the scope of consolidation with an effective date of December 31, 2003.

4. SUBSEQUENT EVENTS No significant event has occurred since September 30, 2004.

5. SHAREHOLDERS’ FUNDS (€ million) Share Capital Retained earnings Shareholders’ funds Shareholders’ funds at Dec. 31, 2001 42.4 728.0 770.4 Capital increase (1) 0.4 17.1 17.5 Dividends (136.9) (136.9) Net profit at Dec. 31, 2002 155.2 155.2 Shareholders’ funds at Dec. 31, 2002 42.8 763.4 806.2 Capital increase (1) 0.2 10.3 10.5 Dividends (138.3) (138.3) Exchange differences (0.6) (0.6) Change of method (2) (3.1) (3.1) Net profit at Dec.31, 2003 191.5 191.5 Shareholders’ funds at Dec. 31, 2003 43.0 823.2 866.2 Capital increase (1) 0.1 2.6 2.7 Dividends (139.1) (139.1) Exchange differences 0.0 0.0 Net profit at September 30, 2004 161.6 161.6 Shareholders’ funds at September 30, 2004 (3) 43.1 848.3 891.4 (1) Stock options exercised. (2) Set up of opening provisions (net of tax) for long service leave (3) Share capital is divided into 215,481,579 ordinary shares with a nominal value of €0.20 per share. Share capital is fully subscribed.


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6. FINANCIAL CREDITORS AND BORROWINGS Financial creditors and borrowings were €574.8 M at September 30, 2004, and mainly consist in: - The €500 M bond issue and the related €20.4 M interest; - Bilateral lines of banking credit amounting to €15.9 M; - The financial debt linked to leasing and amounting to €13.7 M; - Current bank overdrafts for €24.8M.

7. BUSINESS LINE INFORMATION AT SEPTEMBER 30, 2004 (Contributions in € million) Turnover Operating profit 9 months 2004 9 months 2003 2003 9 months 2004 9 months 2003 2003 TF1 core channel 1,202.0 1,127.4 1,561.2 258.3 213.0 299.0 Publishing and Distribution (1) 193.1 243.7 344.3 24.8 24.5 34.3 TPS 280.4 260.0 353.1 19.2 15.3 2.8 Eurosport 218.2 211.3 283.4 24.5 23.5 30.2 Thematic channels 40.2 37.1 50.9 (11.7) (12.4) (17.1) Internet 38.2 14.6 26.0 2.8 (2.3) (1.2) Production 34.7 42.4 57.3 (3.6) (2.7) (13.0) Audiovisual rights 41.6 32.6 53.3 (3.3) (1.5) (0.9) Miscellaneous 6.1 5.1 13.4 (4.4) (2.9) (0.2) Total (1) 2,054.5 1,974.2 2,742.9 306.6 254.5 333 .9

(1) The turnover at September 30, 2004 incorporates the changes in presentation described in paragraph 2.

8. TF1 COMPANY FINANCIAL STATEMENTS (€ million) 9 months 2004 9months 2003 2003Turnover 1,136.0 1,063.9 1,473.2Operating profit 259.0 224.8 318.2Net profit 168.6 72.8 101.7


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Télévision Française 1 A public limited company (« Société anonyme ») with a share capital of €43,096,516

R.C.S. Nanterre B 326 300 159 Postal address : 1, quai du Point du Jour, 92656 Boulogne Cedex, France, Tel : + 33 1 41 41 12 34

Contacts : Investor Relations Department

Tel : + 33 1 41 41 27 32, Fax : + 33 1 41 41 29 10 Internet : http://www.tf1finance.fr E-mail: [email protected]


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http://www.tf1finance.fr/

interim report : 9 months 2004s.tf1.fr/mmdia/a/99/2/10370992upoiv.pdf · march 24 release of...

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