The Board of Directors approves the data for the First Quarter

05/06/2002 - 00:00 PM

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- REVENUES INCREASE TO EURO 333 MILLION (+14.2)
- SIGNIFICANT INCREASE IN GROSS OPERATING PROFIT: EURO 27.1 MILLION (+17.8)
- POSITIVE GROSS OPERATING PROFIT IN THE INTERNET AREA

Upon invitation of Managing Director Paolo Dal Pino, the Board of Directors of Seat Pagine Gialle (Telecom Italia Group), chaired by Enrico Bondi, approved today the Report on Operations for the first quarter.

Turnover and gross operating profit showed a significant increase during the first quarter of 2002 for the Seat PG Group, which has reached the breakeven point in the Internet Area for the first time. It has also shown further development in the Telephone Directories Area, despite the fact that this quarter is characterized by a negative seasonal trend.

The revenues of the Seat Group came to Euro 333 million during the first quarter of 2002, up 14.2% compared to the figure of Euro 291.5 million for the first quarter of 2001 and up approximately 1% compared to pro forma revenues) (*). Thanks to additional cost-cutting measures and recovered efficiency, the gross operating profit rose by 17.7%, coming to Euro 27.1 million as opposed to Euro 23 million during the same period last year (Euro 13.8 million in the pro-forma results of the first quarter of 2001).

As usual, the first quarter was influenced by seasonal aspects tied to the telephone directory publication schedule in Italy and abroad (during this quarter only 64 editions of Pagine Gialle and telephone directories were published out of 477 editions to be published in 2002). In the previous year, revenues and gross operating profit for the area were 11% and 6,5% of the total for the year, respectively.

The operating profit for the period is negative for Euro 68.9 million, while pro-forma results for the first quarter of 2001 showed a negative figure of Euro 76.8 million, due to full consolidation of television activities, which occurred this year.

The parent company’s net consolidated results for the period are negative by Euro 46.9 million, although this figure shows improvement compared to the loss of Euro 56 million reported for the first quarter of 2001.

The performance of the Group’s main business areas is detailed below.

The revenues of the Directories Area, equivalent to Euro 135 million, rose 3.8% during the quarter, despite the seasonal aspects mentioned above. The development of synergies with the Virgilio portal has continued. Special mention must be made of the excellent performance of Pagine Gialle On Line (www.paginegialle.it), whose quarterly revenues rose by 3.5% compared to the first three months of 2001, with an increase (+78%) in page views to 22 million a month. Advertising sales have also proceeded for the new telephone directories under the brand name Pagine Bianche, which will be published starting in September.

The Internet Area posted revenues of Euro 32.1 million, with a gross operating profit – positive for the first time – of Euro 600,000, thanks to the good performance of Internet access services (ISP), against the loss of approximately Euro 8 million during the first quarter of 2001. This improvement is due to streamlining operations and recovered efficiency.
Active ISP users in the past 45 days increased from 1.8 to 1.93 million users between January and March of this year (+6.9%), due to the significant rise in ADSL service subscribers, that increased in three months from 133 thousand to 207 thousand (+55.6%), despite the lack of any sales innovation or advertising promotion. The new range of access products was not introduced until mid-April when the Tin.it brand was relaunched. Therefore, active Internet users rose by over 123,000 units in three months, against the 149,000 gained over the entire course of 2001. During the quarter, the Virgilio portal continued to affirm its leadership with a 14% increase in page views compared to the last quarter of 2001.

The Telegate Directories Assistance showed a slightly positive gross operating profit, despite market difficulties in Germany. The revenues of this Area were Euro 36.7 million (-9.6%). The extremely positive performance of 89.24.24 Pronto Pagine Gialle has continued in terms of revenue (+37%) as well as the number of calls handled (+ 54%).

The Office Product and Services Area, headed by Buffetti SpA, posted revenues that were up 11.2% compared to the first quarter of 2001, reaching Euro 74.4 million. There have also been important developments in the turnover of CIPI (promotional items), whose revenues went from a little under Euro 2 million to approximately 4 million. The network of 1010 franchises is currently being relaunched.

In the Television Area, revenues came to Euro 16.7 million, for a 10% quarterly increase thanks to the input of MTV Italia, with which an agreement has been operative since April 2001. The new programming of La7 went on the air this past March 18 and as a result, the effects of this relaunch will be seen in the next few months. For the entire year 2002, a significant reduction in operating loss is expected compared to 2001.

Lastly, the plan to streamline the business areas and the portfolio of equity investments is proceeding, as a result of which the number of companies in the Seat Group has dropped from 200 to 168.

Consolidated net financial indebtedness remains substantially unvaried compared to the situation at the end of 2001 (Euro 928 million compared to 922).

(*)The pro forma quarterly figures for 2001 refer to the statement of income, up to operating profit, obtained by consolidating into Seat Pagine Gialle data also the statements of income for the companies that were fully consolidated after March 31, 2001, particularly the Television Area.