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Grupo Radio Centro Reports Fourth Quarter and Year-End Results for the Period Ended December 31, 2008

Posted on: Monday, 23 February 2009, 19:09 CST

MEXICO CITY, Feb. 23 /PRNewswire-FirstCall/ -- Grupo Radio Centro, S.A.B. de C.V. (NYSE: RC, BMV: RCENTRO-A) (the "Company"), one of Mexico's leading radio broadcasting companies, announced today its results of operation for the fourth quarter and year ended December 31, 2008. All figures were prepared in accordance with the Mexican Financial Reporting Standards ("MFRS") issued by the Mexican Board for Research and Development of Financial Information Standards.

Fourth Quarter Results

Broadcasting revenue for the fourth quarter of 2008 was Ps. 231,342,000, representing an increase of 15.0% compared to the Ps. 201,177,000 reported in the fourth quarter of 2007. This increase was mainly attributable to higher advertising expenditures by the Company's clients, who purchased more airtime in the fourth quarter of 2008 compared to the same period of 2007. This was a result of a highly competitive environment, in which the Company sought to gain market share by offering attractive sales packages, as well as increasing the size of the Company's sales force.

The Company's broadcasting expenses (excluding depreciation, amortization and corporate, general and administrative expenses) for the fourth quarter of 2008 were Ps. 124,842,000, representing an increase of 17.9% compared to the Ps. 105,869,000 reported in the fourth quarter of 2007. This increase was primarily due to increased expenses related to expanded advertising campaigns undertaken by the Company during the fourth quarter of 2008 and higher sales commissions paid to the Company's sales force as a result of the increase in advertising sales. In addition, we had an increase in costs payable in U.S. dollars due to the depreciation of the Mexican peso against the U.S. dollar in the fourth quarter of 2008, specifically with regard to the five-year renewal of our agreement to operate XHFO-FM and the rental payments related to such operation.

For the fourth quarter of 2008, the Company reported broadcasting income (i.e., broadcasting revenue minus broadcasting expenses, excluding depreciation, amortization and corporate, general and administrative expenses) of Ps. 106,500,000, an 11.7% increase compared to the Ps. 95,308,000 reported in the fourth quarter of 2007. This increase in broadcasting income was mainly attributable to the increase in broadcasting revenue described above.

Depreciation and amortization expenses for the fourth quarter of 2008 were Ps. 7,944,000, a 2.9% increase compared to the Ps. 7,720,000 reported in the fourth quarter of 2007.

The Company's corporate, general and administrative expenses were Ps. 4,461,000 in the fourth quarter of 2008, a decrease of 6.8% compared to the Ps. 4,789,000 reported in the fourth quarter of 2007.

The Company reported operating income of Ps. 94,095,000 in the fourth quarter of 2008, a 13.6% increase compared to the Ps. 82,799,000 in operating income reported in the fourth quarter of 2007. This increase was due to the increased broadcasting revenue during the fourth quarter 2008 compared to the fourth quarter of 2007, as described above.

During the fourth quarter of 2008, other expenses, net, were Ps. 17,539,000, a 27.6% increase compared to the Ps. 13,743,000 reported in the fourth quarter of 2007. This increase was mainly attributable to higher legal expenses during the fourth quarter of 2008 compared to the same period of 2007.

The Company's comprehensive financing cost in the fourth quarter of 2008 was Ps. 1,825,000 compared to the Ps. 679,000 reported in the fourth quarter of 2007. This increase was mainly attributable to higher fees payable in U.S. dollars under our undrawn credit facility in the fourth quarter of 2008 compared to the fourth quarter of 2007

For the fourth quarter of 2008, the Company reported income before taxes of Ps. 74,731,000, an increase of 9.3% compared to the Ps. 68,377,000 reported in the fourth quarter of 2007, primarily from the increase in broadcasting income during the fourth quarter of 2008, as described above.

The Company recorded income taxes of Ps. 17,038,000 in the fourth quarter of 2008, a decrease of 25.7% compared to the Ps. 22,923,000 recorded in the fourth quarter of 2007 due to certain fiscal deductions taken for tax purposes.

As a result of the foregoing, the Company's net income for the fourth quarter of 2008 was Ps. 57,693,000, an increase of 26.9% compared to net income of Ps. 45,454,000 reported in the fourth quarter of 2007.

Twelve-Month Results

For the year ended December 31, 2008, broadcasting revenue was Ps. 735,105,000, representing a 12.3% increase compared to the Ps. 654,760,000 reported in the same period of 2007. The increase in broadcasting revenue was mainly attributable to an increase in advertising expenditures by the Company's clients, who purchased more airtime during 2008 than 2007. This was the result of a highly competitive environment, in which the Company sought to gain market share by offering attractive sales packages, as well as increasing the size of its sales force.

The Company's broadcasting expenses (excluding depreciation, amortization and corporate, general and administrative expenses) for the year ended December 31, 2008 were Ps. 452,350,000, an increase of 7.2% compared to the Ps. 421,970,000 reported in 2007. This increase was primarily due to (i) expenses related to extensive advertising campaigns undertaken by the Company; (ii) higher sales commissions to the Company's sales force, as a result of the increase in broadcasting revenues; and (iii) higher expenses related to the Company's market research in 2008 compared to 2007.

Broadcasting income (i.e., broadcasting revenue minus broadcasting expenses, excluding depreciation, amortization and corporate, general and administrative expenses) for the year ended December 31, 2008 was Ps. 282,755,000, an increase of 21.5% compared to the Ps. 232,790,000 reported 2007. This increase was mainly attributable to the increase in broadcasting revenue, as described above.

Depreciation and amortization expenses for the year ended December 31, 2008 were Ps. 31,720,000, a decrease of 5.8% compared to the Ps. 33,687,000 reported in 2007. This decrease was due to the Company no longer recording depreciation on certain Company assets whose useful lives have ended.

The Company's corporate, general and administrative expenses for the year ended December 31, 2008 were Ps. 14,461,000, a 2.1% decrease compared to the Ps. 14,774,000 reported in 2007.

As a result of the foregoing, the Company reported operating income of Ps. 236,574,000 for the year ended December 31, 2008, a 28.3% increase compared to the Ps. 184,329,000 reported in 2007.

Other expenses, net, for the year ended December 31, 2008 were Ps. 56,880,000, a 24.2% increase compared to the Ps. 45,806,000 reported in 2007. This increase was mainly attributable to higher legal expenses during 2008 compared to 2007.

The Company's comprehensive financing cost for 2008 was Ps. 7,678,000, a 31.2% increase compared to the Ps. 5,850,000 reported in 2007. This increase was mainly due to fees paid in connection with the amendment of the Company's credit facility in 2008. The increase in comprehensive financing cost was partially offset by the fact that the Company did not record a loss on its net monetary position in 2008 (due to a change in MFRS regarding inflation accounting), as compared to a loss on net monetary position of Ps. 3,477,000 recorded in 2007.

For the year ended December 31, 2008, the Company reported income before taxes of Ps. 172,016,000, a 29.7% increase compared to the Ps. 132,673,000 reported in 2007, mainly due to an increase in broadcasting revenue, as described above.

The Company recorded income taxes of Ps. 45,251,000 for the year ended December 31, 2008, compared to Ps. 41,554,000 recorded in 2007, primarily due to higher taxable income.

As a result of the foregoing, the Company reported net income of Ps. 126,765,000 for the year ended December 31, 2008, an increase of 39.1% compared to net income of Ps. 91,119,000 reported in 2007.

Company Description

Grupo Radio Centro owns and/or operates 14 radio stations. Of these 14 radio stations, Grupo Radio Centro operates 11 in Mexico City. The Company's principal activities are the production and broadcasting of musical and entertainment programs, talk shows, news and special events programs. Revenue is primarily derived from the sale of commercial airtime. In addition to the Organizacion Radio Centro radio stations, the Company also operates Grupo RED radio stations and Organizacion Impulsora de Radio (OIR), a radio network that acts as the national sales representative for, and provides programming to, Grupo Radio Centro-affiliated radio stations.

Note on Forward-Looking Statements

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

IR Contacts In Mexico: Pedro Beltran/Alfredo Azpeitia Grupo Radio Centro, S.A.B. de C.V. Tel: (5255) 5728-4800 Ext. 7018 aazpeitia@grc.com.mx In NY: Maria Barona/Peter Majeski i-advize Corporate Communications, Inc. Tel: (212) 406-3690 grc@i-advize.com.mx. GRUPO RADIO CENTRO, S.A.B. DE C.V. CONSOLIDATED AUDITED BALANCE SHEETS as of December 31, 2008 and 2007 (1) (figures in thousands of Mexican pesos ("Ps.") and U.S. dollars ("U.S. $") (2) December 31, 2008 2007 U.S. $(2) Ps. Ps. ASSETS Current assets: Cash and temporary investments 6,727 93,054 167,011 Accounts receivable: Broadcasting, net 21,768 301,101 195,707 Other 450 6,225 4,663 Prepaid taxes 217 3,007 0 22,435 310,333 200,370 Prepaid expenses 2,760 38,179 33,360 Total current assets 31,922 441,566 400,741 Property and equipment, net 33,620 465,034 461,555 Deferred charges, net 351 4,850 6,047 Excess of cost over book value of net assets of subsidiaries, net 59,924 828,863 828,863 Other assets 240 3,325 3,239 Total assets 126,057 1,743,638 1,700,445 LIABILITIES Current: Advances from customers 10,305 142,543 124,418 Suppliers and other accounts payable 4,872 67,388 55,420 Taxes payable 1,363 18,859 50,847 Total current liabilities 16,540 228,790 230,685 Long-Term: Reserve for labor liabilities 4,358 60,276 58,605 Deferred taxes 1,575 21,782 5,130 Total liabilities 22,473 310,848 294,420 SHAREHOLDERS' EQUITY Capital stock 81,724 1,130,410 1,130,410 Cumulative earnings 18,639 257,818 231,098 Reserve for repurchase of shares 3,169 43,837 43,837 Majority shareholders' equity 103,532 1,432,065 1,405,345 Minority interest 52 725 680 Total shareholders' equity 103,584 1,432,790 1,406,025 Total liabilities and shareholders' equity 126,057 1,743,638 1,700,445

(1) Amounts for the fourth quarter 2007 are expressed in Mexican pesos with purchasing power as of December 31, 2007. As a result of a change in MFRS for periods beginning in 2008, we have not prepared 2008 amounts using inflation accounting or re-expressed 2007 amounts as of December 31, 2008.

(2) Peso amounts have been translated into U.S. dollars, solely for the convenience of the reader, at the rate of Ps. 13.832 per U.S. dollar, the noon buying rate for Mexican pesos on December 31, 2008 as published by Federal Reserve Bank of New York.

GRUPO RADIO CENTRO, S.A.B. DE C.V. CONSOLIDATED AUDITED STATEMENTS OF INCOME for the three-month and twelve-month periods ended December 31, 2008 and 2007 (1) (figures in thousands of Mexican pesos ("Ps.") and U.S. dollars ("U.S. $")(2), except per Share and per ADS amounts) 4th Quarter Accumulated 12 months 2008 2007 2008 2007 U.S.$ (2) Ps. Ps. U.S.$ (1) Ps. Ps. Broadcasting revenue (3) 16,725 231,342 201,177 53,145 735,105 654,760 Broadcasting expenses, excluding depreciation, amortization and corporate, general and administrative expenses 9,026 124,842 105,869 32,703 452,350 421,970 Broadcasting income 7,699 106,500 95,308 20,442 282,755 232,790 Depreciation and amortization 574 7,944 7,720 2,293 31,720 33,687 Corporate, general and administrative expenses 323 4,461 4,789 1,045 14,461 14,774 Operating income 6,802 94,095 82,799 17,104 236,574 184,329 Other expenses, net (1,268) (17,539) (13,743) (4,112) (56,880) (45,806) Comprehensive financing cost: Interest expense (165) (2,276) (755) (606) (8,376) (2,767) Interest income (3) (2) (34) (85) 16 228 399 (Loss) Gain on foreign currency exchange, net 35 485 (12) 34 470 (5) (Loss) Gain on net monetary position (4) 0 0 173 0 0 (3,477) (132) (1,825) (679) (556) (7,678) (5,850) Income before income taxes: 5,402 74,731 68,377 12,436 172,016 132,673 Income taxes 1,232 17,038 22,923 3,271 45,251 41,554 Net income 4,170 57,693 45,454 9,165 126,765 91,119 Net income applicable to: Majority interest 4,169 57,673 45,443 9,162 126,720 91,098 Minority interest 1 20 11 3 45 21 4,170 57,693 45,454 9,165 126,765 91,119 Net income per Series A Share (5) 0.0563 0.7790 0.5598 Net income per ADS (5) 0.5067 7.0110 5.0382 Weighted average common shares outstanding (000's) (5) 162,725 162,725 (1) Amounts for the fourth quarter 2007 are expressed in Mexican pesos with purchasing power as of December 31, 2007. As a result of a change in MFRS for periods beginning in 2008, we have not prepared 2008 amounts using inflation accounting or re-expressed 2007 amounts as of December 31, 2008. (2) Peso amounts have been translated into U.S. dollars, solely for the convenience of the reader, at the rate of Ps. 13.832 per U.S. dollar, the noon buying rate for Mexican pesos on December 31, 2008, as published by Federal Reserve Bank of New York. (3) Broadcasting revenue for a particular period includes (as a reclassification of interest income) interest earned on funds received by the Company pursuant to advance sales of commercial air time to the extent that the underlying funds were earned by the Company during the period in question. Advances from advertisers are recognized as broadcasting revenue only when the corresponding commercial air time has been transmitted. Interest earned and treated as broadcasting revenue for the fourth quarter of 2008 and 2007 was Ps. 2,130,000 and Ps. 1,848,000, respectively. Interest earned and treated as broadcasting revenue for the twelve months ended December 31, 2008 and 2007 was Ps. 6,510,000 and Ps. 3,333,000, respectively. (4) As a result of a change in MFRS for periods beginning in 2008, we will no longer use inflation accounting unless the economic environment is "inflationary", as defined by MFRS. Since the economic environment was not inflationary in the fourth quarter 2008, we have not reported gain (loss) on net monetary position for this period. (5) Earnings per share calculations are made for the last twelve months as of the date of the income statement, as required by the Mexican Stock Exchange.

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

Source: PR Newswire

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