The Board of Directors Approves the Group’s Report on Operations at 31 March 2010

05/04/2010 - 05:06 PM

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TELECOM ITALIA MEDIA GROUP:

Consolidated revenues up by 17.3%

Ebitda positive for the first time since 2003, already reaching in the first quarter the break-even objective outlined in the Industrial Plan for the 2010 financial year

Ebit and Net Result improve by 30%

REVENUES: €56.9 million; +€8.4 million (€48.5 million in Q1 2009)

EBITDA: €1.7 million; +€5.5 million (-€3.8 million in Q1 2009)

EBIT: -€13.2 million; + €5.4 million (-€18.6 million in Q1 2009)

NET result: -€11.1 million (-€16.6 million in Q1 2009)

NET debt: €351.3 million (€345.1 million at 31 December 2009)

This press release includes alternative performance indicators not considered under IFRS (EBITDA, Net Debt). These terms are defined in the appendix.

The Board of Directors of Telecom Italia Media, chaired by Berardino Libonati, examined and approved today the Group’s results at 31 March 2010.

The first quarter 2010 closed with a more than positive result for Telecom Italia Media. In fact for the first time since 2003 the company has reached a positive result at Group level bringing forward, and indeed exceeding, already in the first quarter, the break-even objective outlined in the Industrial Plan for the full year 2010. Ebit and Net Result have also improved by around 30% compared with the first quarter of 2009 consequently reducing cash absorption in the period. 

The positive result in the first quarter is due to the growth in the revenues of the Network Operator and to the recovery in the television advertising market, of which La7 and MTV have partly benefited.

Group consolidated revenues in the quarter reached €56.9 million rising 17.3% (€48.5 million in Q1 2009) mainly thanks to the higher revenues of the Network Operator TIMB (+109.4%) due to the leasing of digital bandwidth to third parties.

EBITDA was positive for €1.7 million, an improvement of €5.5 million (€-3.8 million in Q1 2009). The important result in the period is linked to the growth in revenues, only partially offset by the higher costs sustained by La7 for programming enrichment and by an increase in TIMB operating costs. 

EBIT after amortization for the period was -€13.2 million, an improvement of €5.4 million (-€18.6 million in Q1 2009). The change is almost entirely due to the improvement in EBITDA described previously.

Net Result for parent company shareholders, excluding the contribution of activities held for sale, was

-€11.1 million, an improvement of €5.5 million (-€16.6 million in Q1 2009).

Net Debt was €351.3 million, an increase of only €6.2 million compared with 31 December 2009 (€345.1 million). The change is mainly the result of industrial investments in the period (€10.9 million) and financial costs (€2.0 million), after the positive effect of the operational management in the same period  (-€6.7 million).

Results breakdown by sector

1. Telecom Italia Media S.p.A. (La7, Digital Content, La7d)

Revenues in the first quarter of 2010 were €27.4 million, a fall of €1.7 million compared with the first quarter of 2009 (€29.1 million). La7’s net advertising revenues and those from Digital Content activities for Telecom Italia were stable, whereas Media Services activities have fallen following the end of support services for the start-up of Dahlia TV already concluded in the first half of 2009.

EBITDA was -€9.1 million, a fall of €3.1 million compared with the first quarter of 2009 (-€6.0 million). This result was affected by a lower contribution from revenues and by higher operating costs for €1.4 million, mostly linked to La7 programming which was enriched compared with the first quarter of 2009.

EBIT was -€15.8 million, compared with -€12.8 million in the first quarter of 2009.

In particular, La7 advertising revenues at 31 March 2010 were substantially in line with revenues in the same period of 2009 thanks to the minimum guarantee contract with the Cairo concessionary. In the first quarter of 2010 actual gross advertising sales nevertheless rose by €0.5 million compared with the minimum guaranteed (+1.5%) and is substantially in line with the recovery in the television advertising market (+4.9% in the January-February period; source: Nielsen).

Furthermore, in the first quarter of 2010, a period conditioned by the impact of the switch off of the analogue signal between November and December 2009 in large areas such as Lazio and Campania, La7 obtained an average daily share of 2.72% (compared with 2.86% in Q1 2009). The switch off created tuning problems and fragmented viewing as a result of more offers from digital channels. In order to face this new scenario in March was launched La7d, the new general content free to air digital channel for young people and women, which joins the already established La7 channel, maintaining the reliability and originality of the La7 brand.

Revenues in the first quarter of 2010 relating to “Digital Content” activities were €4.0 million, with a rise of €0.5 million (€3.5 million in Q1 2009). The contract with Telecom Italia for exclusive Advisor activities was renewed in the first quarter of 2010. On this occasion Telecom Italia asked Telecom Italia Media to  expand the consultancy activities already carried out by Telecom Italia Media in relation to the IPTV, Web and Mobile platforms, while at the same time entrusting Telecom Italia Media with the responsibility  also to assist Telecom Italia in conceiving and creating the Cubo Vision content offer.

2. MTV Group

MTV’s revenues in the first quarter of 2010 amounted to €17.4 million, a fall of €1.4 million (€18.8 million in Q1 2009). In view of the 3.4% rise in gross advertising sales, revenues were mainly affected by a reduction in Playmaker Group activities (-€0.6 million) and a reduction in revenues relating to MTV Mobile of €0.7 million, which is expected to be recovered later in the year. MTV’s satellite network, which represents around a third of the company’s turnover, showed a positive result thanks to the diversification and enrichment of its offer, rising in terms of audience and revenues by over 20%. 

EBITDA was +€0.6 million (-€0.2 million in Q1 2009). The fall in revenues was more than compensated by the reduction in costs thanks to the incisive company reorganization programme which began in the second half of last year, and to the careful control of operating spending. 

EBIT in the period was -€1.2 million euro (-€2.0 million in Q1 2009).

3. Network Operator (TIMB)

Revenues from the Network Operator in the first quarter of 2010 were €20.1 million an increase of   €10.5 million compared with 2009, +109.4% (€9.6 million in Q1 2009). This result was due to an increase in revenues from hospitality services on the digital Multiplexes.

EBITDA was €10.2 million, an increase of €7.9 million (€2.3 million in Q1 2009).

EBIT was €3.8 million, an increase of €7.5 million (-€3.7 million in Q1 2009).

Investments in the first quarter 2010 were €2.0 million, reduced by €0.7 million compared with the same period the previous year, as a result of the postponement of the switch off in the eastern Piedmont and Lombardy regions to the second half, which involved a partial delay in investments to the following months.

At 31 March 2010 the three Digital Multiplexes (excluding the fourth, which for the moment is only operational in Sardinia) cover respectively 79.3%, 88.9% and 29.5% of the Italian population. In particular the third Multiplex, operating in the “All digital” Regions only, covers 94.0% when only calculating the regions/areas where the Switch Off process has already been completed. 

EVOLUTION OF OPERATIONS

On the basis of the more than positive results achieved in Q1 and notwithstanding the current economic framework, Telecom Italia Media expects an improvement in operating profitability and to achieve a positive result in EBITDA in the current year. This result should be achieved even taking into consideration the larger commitment of support for La7 programming and the costs related to the start up of the new channel La7d. 

The good performance expected for operations will not allow for a reduction in financial demand, but the positive results from the capital increase will determine a financial cash-in which will notably reduce the financial exposure and improve Telecom Italia Media’s corporate financial indexes.

§§§

Finally the Board of Directors, with reference to the capital increase approved by the Shareholders’ Meeting held on 8 April 2010, acknowledged the activities already put in place, and in particular:

  • The cancellation of the par value of ordinary and savings shares, with effect from 19 April 2010;
  • The reverse stock split at the ratio of one ordinary / savings share for every 10 ordinary / savings shares held, with effect from 19 April 2010.

As for the capital increase of €240 million through the issue of ordinary shares to be offered on an optional basis to ordinary and savings share holders, the Company - on receipt of all necessary authorizations and completion of fulfillment requirements, and should market conditions allow it- will call a meeting of the Board of Directors to establish the subscription price, the maximum number of shares to be issued and the subscription ratio. The Board of Directors will be held in the imminence of the offer within the first half of 2010.

§§§

The manager responsible for the preparation of the Company’s accounting documents, Paolo Serra, states, in accordance with paragraph 2 of article 154-bis of the Testo Unico della Finanza (Financial Law) that the accounts information contained in this press release corresponds to the accounts documents, books and records.

§§§

The Group’s results as of 31 March, 2010 will be presented to the financial community tomorrow 5 May 2010, during a conference call, starting at 10.00 a.m. (Italian time). Journalists will be able to follow the conference call by connecting to the following number: + 800 408 088 from Italy and 3 9 06 33 485 04  from abroad. For those who are unable to follow the live conference call, a recording of the presentation will be available for 7 days afterwards at the following number: +39 06 334 843 (access code: 289625# for the Italian version, 178514# for the English version).

> Appendix (file .pdf, 107 KB)

 Rome, 4 May 2010