Telecom Italia Media: Board of Directors examines preliminary full year 2003 results

02/16/2004 - 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. The changes to the consolidation area of the demerged company Telecom Italia Media were so extensive that it is not significant to provide comparisons on equivalent terms with results for the 2002 financial year. Consequently, Telecom Italia Media SpA and the Group up to operating income level have been restated to exclude items referring to subsequently disposed of businesses.

All operating results improved
compared with full year 2002

Consolidated revenues for full year 2003 up 3%
(up 25% on equivalent terms)

The Internet Unit posts growth: revenues up 80% and gross operating result up compared with 2002 (from 10.1 to 47.6 million euros).

Tin.it active users increase 13% compared with full year 2002

Virgilio remains Italy’s No 1 portal with 6.6 billion pageviews (+25% compared to 2002) and 13.1 million unique browsers (up 19% on 2002)

Television Unit revenues rise 28% compared with full year 2002. Operating income 16% higher. Gross Advertising income up by 41%

LA7 continues to achieve significant results
with audience share exceeding 2%

Seat Pagine Gialle SpA split effective from 1 August 2003

TELECOM ITALIA MEDIA GROUP

REVENUES: 594.6 MILLION EUROS
AN INCREASE OF 3% COMPARED WITH FULL YEAR 2002
(+25% ON EQUIVALENT TERMS)

GROSS OPERATING PROFIT: 11.6 MILLION EUROS
(+142% COMPARED WITH FULL YEAR 2002)

OPERATING INCOME BEFORE AMORTIZATION OF GOODWILL ARISING ON CONSOLIDATION: - 71.9 MILLION EUROS
(A 39% IMPROVEMENT COMPARED WITH FULL YEAR 2002)

OPERATING INCOME: - 103 MILLION EUROS
A 33% IMPROVEMENT COMPARED WITH FULL YEAR 2002
(UP 35% ON EQUIVALENT TERMS)

GROUP NET FINANCIAL POSITION
AT YEAR-END 2003: CASH FOR 59.1 MILLION EUROS


The Telecom Italia Media (Telecom Italia Group) Board of Directors, chaired by Riccardo Perissich, met today to examine the Group and Parent company preliminary results for 2003, which are currently being audited by external auditors.

Telecom Italia Media Group preliminary results for full year 2003
(restated earnings)

Revenues amounted to 594.6 million euros, following 3% growth on the figure of 577.4 million euros registered during the same period in 2002. Excluding the effect of changes to the area of consolidation, underlying revenue growth corresponded to 25%. Revenues were boosted in particularly by the Internet Unit, which recorded sharply higher revenues (80%), and the Television Unit, where revenues grew by 28%.

The gross operating result was equal to 11.6 million euros. This was a major improvement (a 142% increase) compared with the equivalent period during the preceding year, when a 27.9 million euro loss was registered. 

Operating income prior to amortization of goodwill arising from consolidation was equivalent to a 71.9 million euro loss. This was a 39% improvement compared with 2002, when the result was a 118.7 million euro loss.

Operating income rose by 33% to a 103 million euro loss, against 153.4 million euros for the same period in 2002. Excluding the effect of changes to the area of consolidation, underlying operating income growth corresponded to 35%.

Consolidated net financial standing at year-end 2003 was plus 59.1 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.


Preliminary results by Business Unit

INTERNET

Internet Business Unit revenues for 2003 amounted to 251 million euros, an 80% increase on the same period in 2002 (139.2 million euros). The 2003 gross operating result was a 47.6 million euro profit, following dramatic growth (371%) compared with full year 2002 (10.1 million euros). Internet Unit operating income posted 91% growth on the same period in 2002 (when a 47.1 million euro loss was recorded), and came in at a 4.4 million euro loss.
In detail:
• in 2003 the Tin.it Unit registered revenues of 222.1 million euros (114.9 million euros over the same period in 2002), corresponding to 93% growth. The gross operating result rose by 146% to 44.5 million euros (18.1 million euros in 2002). Operating income closed with a profit of 2.2 million euros (despite 11.6 million euros for amortization of goodwill), a 30 million euro improvement on full year 2002 (when a 27.8 million euro loss was posted). Active users at year-end 2003 numbered approximately 2,514,000, up 13% on year-end 2002.
• Matrix recorded revenues of 35.5 million euros (27.7 million euros in full year 2002), corresponding to 28% growth and a 3.1 million euro gross operating result profit; this was a significant 142% improvement on year-end 2002 (when the result was a 7.3 million euro loss). The 4.7 million euro operating income loss was 68% better than the 14.6 million euro loss registered for full year 2002. At year-end 2003 Virgilio remained Italy’s number one portal, with some 13.1 million unique browsers (up 19% on year-end 2002). Year-end 2003 page views totalled 6.6 billion (25% more than for 2002).

TELEVISION

Overall Television Unit 2003 revenues of 113 million euros were up sharply (28%) compared with the same period in 2002, when the figure was 88.4 million euros. Despite higher costs sustained for channel repositioning, and subsequent programming enhancements, the gross operating result posted a 36% improvement to -28.7 million euros. This compares with -44.9 million euros for full year 2002. Operating income posted a 16% improvement to -71.2 million euros, against -85 million euros for the equivalent period during the preceding year. Television Unit gross advertising income rose by 41% compared with 2002. During 2003, the LA7 channel consolidated its editorial image and enhanced its brand profile; audience share increased over the year and is now above 2% (source: Auditel). Over the same period, MTV continued to reign as Italy’s premier youth television channel, with revenues of 64.1 million euros (+26% compared with full year 2002) and an operating profit, after the operating loss registered for the previous year.

OFFICE PRODUCTS & SERVICES

Business Office Products & Services revenues for 2003 amounted to 184.8 million euros, following a 6% fall on equivalent terms compared with 2002 (i.e. excluding the effects of businesses disposed of in April, and of operations that have left the consolation area). Most of this contraction may be attributed to a slowdown in the consumer and office products markets. On equivalent terms the gross operating result posted a 11% decrease; on equivalent terms, operating income fell by 42% compared with the same period in 2002.

Telecom Italia Media SpA preliminary results for full year 2003
(restated earnings)

Telecom Italia Media SpA’s 2003 revenues amounted to 223 million euros, a 94% increase on the same period in 2002 (114.9 million euros). The full year 2003 gross operating result rose to 20.2 million euros, from 2.8 million euros in 2002. Operating income over the period also posted significant 51% growth compared with 2002: the 25.1 million loss posted was less than half the 51.1 million euro loss recorded for the 2002 financial year.

OTHER EVENTS DURING THE PERIOD

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

In late November LA7 and MTV began digital terrestrial television trials in Turin, Milan, Rome, Bologna, Modena, Pesaro and Macerata. By March 2004, a total of 4000 households selected by specialist companies will be taking part in trials. In observance of company plans and in compliance with broadcast industry regulations, Telecom Italia Media Group television stations have taken steps to acquire the frequencies and equipment necessary to establish a digital terrestrial broadcast network in compliance with the requisites needed for authorization to set up a digital terrestrial television Operator company.

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 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 the date when 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 last year. In view of these transactions, 2003 data is not homogeneous with 2002 figures and therefore a comparison of the results achieved during 2003 with Seat PG Group results for the corresponding period in 2002 is not significant.

§§§

The preliminary 2003 results will be presented to the financial community during a conference call tomorrow, 17 February, starting at 6 p.m. (Italian time). Members of the media who wish to listen to the call should dial +39 06 33485042. Journalists who are unable to listen live may access a recording of the presentation by dialling +39 06 334843 (access code 49740#).