Telecom Italia Media: Board of Directors examines Q3 2003 results

11/03/2003 - 00:00 PM

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After the Seat Pagine Gialle SpA split came into effect on 1 August 2003, Directories businesses were transferred to a beneficiary company which was subsequently disposed of. Such were the changes to the consolidation area of split company Telecom Italia Media in the wake of these transactions that it is not possible to provide comparisons on equivalent terms with the 2002 financial year. In consequence, Telecom Italia Media SpA and Group earnings, up to the operating results, have been restated on an equivalent consolidation area basis, with the exclusion of individual components associated with businesses that have been transferred.

All operating results improved compared with the same period in 2002

Consolidated revenues for the first three quarters of the year up 3% (up 24% on equivalent terms)

Internet Unit posts growth: revenues up 82%; gross operating result 31.6 million euros, up from 3.2 million euros for the first three quarters of 2002

Tin.it active users up 18% ca.
compared with 30 September 2002

Virgilio remains Italy’s No 1 portal with 4.8 billion pageviews (25% higher than at 30 September 2002)

Television Unit revenues rise 24% (up 36% taking into account the new advertising sales method) compared with the first three quarters of 2002. Operating income 14% higher. Advertising income leaps by 40%

La7 continues to achieve significant results,
audience share exceeds 2% on a permanent basis

Acquisition of multimedia press agency “apcom”
following agreement with Associated Press

Seat Pagine Gialle SpA split effective from 1 August 2003

TELECOM ITALIA MEDIA GROUP

REVENUES: 418 MILLION EUROS
3% GROWTH COMPARED WITH THE FIRST THREE QUARTERS OF 2002
(+24% ON EQUIVALENT TERMS)

GROSS OPERATING PROFIT 0.9 MILLION EUROS
(+103% COMPARED WITH THE FIRST THREE QUARTERS OF 2002)

OPERATING INCOME BEFORE AMORTIZATION OF GOODWILL ARISING ON CONSOLIDATION: -53.6 MILLION EUROS
(40.4% IMPROVEMENT COMPARED WITH THE FIRST THREE QUARTERS OF 2002)

OPERATING INCOME: 77 MILLION EURO LOSS
(34% IMPROVEMENT COMPARED WITH THE FIRST THREE QUARTERS OF 2002)

THIRD-QUARTER FIGURES: REVENUES UP 3.2%, GROSS OPERATING RESULT UP 75.2%

GROUP NET FINANCIAL STANDING AT 30 SEPTEMBER 2003: 64.5 MILLION EUROS IN THE BLACK

The Telecom Italia Media (Telecom Italia Group) Board of Directors, chaired by Riccardo Perissich, met today to examine and adopt the company’s third-quarter 2003 results.

Telecom Italia Media Group results for the first three quarters of 2003

Revenues grew by 3% to 418.1 million euros, up from the figure of 406.1 million euros registered for the same period in 2002; revenue growth corresponded to 24% on equivalent terms. Results were driven predominantly by Internet Unit performance, which recorded sharply higher revenues (up by 82%) and by the Television Unit, which posted 24% higher revenues (up 36% taking into account the new advertising sales method).

The gross operating result was equal to 0.9 million euros. This was a major improvement (a 103% increase) compared with the equivalent period during the preceding year, when a 30.8 million euro loss was registered.

Operating income prior to amortization of goodwill arising from consolidation amounted to a 53.6 million euro loss. This was a 40.4% improvement compared with the first three quarters of 2002, when the result was a 90 million euro loss.

Operating income improved by 34% compared with the same period in 2002 to a 77 million euro loss, against 116.8 million euros.

The consolidated net financial standing at 30 September 2003 was plus 64.5 million euros (compared with net financial borrowings equal to 679.6 million euros at year-end 2002). This figure reflects the positive effects of the split, and of changes to the consolidation area.

The Telecom Italia Media Group in the third quarter of 2003

Revenues amounted to 117.9 million euros, a 3.2% increase compared with the 114.3 million euros total registered for the same period in 2002. The gross operating loss was pegged back to 3.4 million euros, which was a major improvement (+75.2%) compared with the equivalent period during the preceding year, when a 13.6 million euro loss was recorded.

Operating income, corresponding to a 29.5 million euro loss, registered a 29.3% improvement compared with the same period in 2002 (a 41.6 million euro loss).

Performance by Business Unit

INTERNET

In the first nine months of 2003 Internet Business Unit revenues were equal to 176.8 million euros, an 82% increase compared with the same period in 2002.
The gross operating result for the first nine months of 2003 was 31.6 million euros. This was driven by significant growth compared with the first three quarters of 2002 (3.2 million euros). Unit operating income increased by approximately 89% compared with the same period in 2002 to a finish with a 4.3 million euro loss.
In detail:
• In the first three quarters of 2003 the Tin.it department registered revenues equal to 158.2 million euros (82.4 million euros for the same period in 2002) with a 92% growth. The gross operating result was 31.5 million euros (14.8 million euros for the first nine months of 2002). Operating income posted a 2.6 million euro profit (despite an 8.7 million euro amortization of goodwill arising from consolidation). This was a 21.5 million euros improvement on the first three quarters of 2002 (when an 18.9 million euro loss was recorded). Active user numbers at 30 September 2003 were 18% higher than at 30 September 2002 (2.4 million).
• Matrix recorded revenues of 23.6 million euros (14.5 million euros for the first nine months of 2002), corresponding to 63% growth. The company’s gross operating result was 0.1 million euros, a significant improvement on 30 September 2002 (-11 million euros). Virgilio remains Italy’s number one portal with some 12.5 million unique browsers (a 29% rise on the September 2002 figure). Pageviews at 30 September 2003 totalled 4.8 billion (25% more than over the same period in 2002).

TELEVISION

In the first nine months of 2003 the Television Business Unit posted 71.4 million euros in overall revenues, after an impressive 24% rise on the same period in 2002 (+36% taking into account the new advertising sales method). Despite the higher costs sustained for channel repositioning and subsequent programming enhancements, the gross operating result was up by 24% to -28.5 million euros. This compares with -37.5 million euros for the first nine months of 2002. Operating income posted a 14% improvement to -56 million euros, against -65.1 million euros for the equivalent period during the preceding year. Business Unit advertising income rose by 40% compared with the first nine months of 2002. Thus far this year, the La7 channel has consolidated its editorial image and seen its brand profile enhanced; station shows have conquered a larger audience share (source: Auditel) compared with the first nine months of 2002; the channel has broken through the 2% barrier. MTV continues to be Italy’s premier youth television channel.

OFFICE PRODUCTS & SERVICES

In the first nine months of 2003 Business Office Products & Services Unit revenues amounted to 140 million euros, following a 6% fall on equivalent terms compared with the first three quarters of 2002 (i.e. excluding the effects of businesses disposed of in April, and of operations that have left the consolation area). Most of this drop may be attributed to a slowdown in the consumer and office products markets, and to lower sales of computer consumables. The gross operating result posted a 7% improvement on equivalent terms; operating income dropped by 46% on equivalent terms compared with the same period in 2002.

Parent company Telecom Italia Media SpA

Telecom Italia Media SpA revenues for the first nine months of 2003 posted 96% growth compared with the same period in 2002 to reach 159 million euros (compared with 82.4 million euros). Third-quarter 2003 parent company revenues corresponded to 51.6 million euros, a 96.7% rise on the figure of 26.4 million euros recorded for the third quarter of 2002.

The gross operating result for the first nine months of 2003 increased to 16.8 million euros, a figure that was 242.8% higher than during the same period in 2002 (4.9 million euros). The parent company’s third-quarter gross operating result amounted to 5.5 million euros (a 135% improvement on the figure of 2.3 million euros recorded for the third quarter of 2002).

Operating income for the first nine months of 2003 – a 14.4 million euro loss – was a  significant improvement (55.3%) compared with the same period in 2002 (a loss of 32.2 million euros). In the third quarter of 2003 the parent company practically halved its operating loss to 5.7 million euros (from -10.8 million euros for the third quarter of 2002).

Other events during the period

On 30 September 2003 Telecom Italia Media acquired a 100% stake in e.Bisnews, the company that runs the AP.Biscom multimedia agency that was founded in agreement with Associated Press. Telecom Italia Media subsequently changed these companies’ names respectively to TMnews and apcom.

Past Telecom Italia Media SpA parent company and consolidated data

The partial pro rata split of Seat Pagine Gialle SpA (split company) and the subsequent assets transfer to a newly-founded company (beneficiary company) approved by the 9 May 2003 Extraordinary Shareholders’ Meeting resulted in the beneficiary company taking over the Directories Market going concerns (telephone publishing, directory assistance and business information) from 25 July 2003. The split company changed its name to Telecom Italia Media SpA, while the beneficiary company took over the Seat Pagine Gialle SpA name. The split became effective on 1 August 2003, which was also when the changes to the area of consolidation came into effect for accounting purposes. Telecom Italia commenced proceedings to dispose of its equity in Seat Pagine Gialle SpA in the second quarter of 2003, and completed this process on 8 August. In view of these transactions, data are not sufficiently homogeneous to enable a comparison of the results achieved during the first nine months of 2003 with Seat PG Group results for the corresponding period in 2002.

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The Telecom Italia Media Board of Directors has co-opted Professor Adriano De Maio, Dean of the Luiss Guido Carli University of Rome, to replace outgoing director Guido Roberto Vitale.

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Telecom Italia Media has announced the 2004 calendar of company events and the publication dates for Telecom Italia Media SpA’s earnings and finance figures. Any alterations to this timetable shall be announced in good time:

• 16 February: Board Meeting to examine the Telecom Italia Media Group preliminary full-year 2003 results;

• 19 March: Board Meeting to adopt the draft full-year 2003 operating accounts and consolidated financial statements;

• 5 May: Board Meeting to adopt the first-quarter 2004 management report; Shareholders’ Meeting to adopt the 2003 accounts;

• 26 July: Board Meeting to examine the Telecom Italia Media Group preliminary first-half 2004 results;

• 7 September: Board Meeting to adopt the first half 2004 management report;

• 8 November: Board Meeting to adopt the third-quarter 2004 management report.

Pursuant to Article 82 of CONSOB ruling no. 11971/99 (and subsequent amendments and additions), the company intends to make use of the dispensation from the obligation to publish quarterly reports for the periods October-December 2003 and March-June 2004.