Telecom Italia Media: press release

03/04/2013 - 06:30 PM

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This press release contains a number of alternative performance indicators not contemplated under IFRS (EBITDA, EBIT, Net Financial Debt). Definitions of these terms are provided in an attachment.

Sale of the 100% Interest in La7 S.r.l. to Cairo Communication Approved

Annual Financial Statements as of 31 December 2012 Examined and Approved

2013-2015 Industrial Plan Approved

Agenda of the forthcoming General Shareholders’ Meeting broadened to include decisions to be taken pursuant to Article 2446 of the Italian Civil Code

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Telecom Italia Media Group:

REVENUES: 222.7 million euro; -15.5 million euro compared to FY 2011 (238.2 million euro)

EBITDA: -44.4 million euro; -71.7 million euro compared to FY 2011 (27.3 million euro)

EBIT: -262.7 million euro; -174.6 million euro compared to FY 2011 (-88.1 million euro)

Profit (loss): -240.9 million euro; -157.1 million euro compared to FY 2011 (-83.8 million euro)

NET debt: 260.1 million euro; +121.4 million euro compared to year-end 2011 (138.7 million euro)

The Board of Directors of Telecom Italia Media S.p.A. met today, chaired by Severino Salvemini,  and following a thorough examination of the possible alternatives and the result of the negotiations for the sale of the Company's entire interest in La7 S.r.l. to Cairo Communication S.p.A., excluding the 51% interest in MTV Italia S.r.l., resolved to give a mandate to the Chairman to finalise the agreeement with Cairo Communication S.p.A. and sign the relevant deed documents.

Under the agreement, Telecom Italia Media S.p.A. shall receive a consideration of 1 million euro.

Before transferring the shareholding, La7 S.r.l. will be recapitalized for an amount that will allow the Company to achieve, at that date, a positive net financial position of no less than 88 million euro. Such recapitalization will also help the company to achieve a shareholder equity of 138 million euro as contractually agreed.

The agreements also envisage the signing of a multi-year agreement between La7 S.r.l. and Telecom Italia Media Broadcasting S.r.l.for the supply of broadcasting capacity.

The transaction will allow Telecom Italia Media S.p.A. to stop providing financial support to La7 S.r.l. while at the same time keeping the network operator Telecom Italia Media Broadcasting S.r.l. within the Group.

As part of the transaction, at sale agreement signing, Telecom Italia S.p.A. committed itself to waive its financial receivables due from Telecom Italia Media S.p.A., for a total amount of 100 million euro.

The completion of the transaction will be subject to the receipt of the necessary authorisations pursuant to applicable laws and regulations.
 

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The Board of Directors also examined and approved the Group’s Annual Financial Statements as of 31 December 2012.

The Group’s consolidated revenues for the year 2012 amounted to 222.7 million euro, down 15.5 million euro compared to FY 2011 (238.2 million euro).

This result was influenced by: a reduction in La7 revenues (-15.7 million euro), due to both the lack of revenues from the Competence Center activities, which in 2011 amounted to 13.3 million euro, and the lower gross advertising sales of the channels (-3.5%), which however overperformed the sharply declining market (source Nielsen: -15.3% January/December 2012); the lower revenues of the MTV group (-18.6 million euro); the rise in revenues of the TIMB Network Operator (+20.2 million euro).

EBITDA was negative at 44.4 million euro, worsening by 71.7 million euro compared to 2011 (27.3 million euro), including the 20.5 million euro indemnity for the early termination of the Competence Center agreement. The result was also affected by the significant rise in the costs of the La7 programming, which was enriched by new network specific programmes and faces, and the reduction in MTV's EBITDA.

EBIT and the Net Result were affected by the results of the impairment test made at 31 December 2012, which led to an overall writedown of 156.7 million euro, of which 105.3 million euro on goodwill and 51.4 million euro on the La7 assets. In detail, the TIMB network operator’s goodwill was written down for 70.0 million euro, MTV’s goodwill for 23.1 million euro, La7’s goodwill for 12.2 million euro.

As a result of the goodwill writedown, EBIT amounted to 262.7 million euro, down by 174.6 million euro compared to 2011 (-88.1 million euro). Like-for-like EBIT was -106.0 million (-51.9 million euro for 2011).

Net Result amounted to -240.9 million euro, down by 157.1 million euro compared to 2011 (-83.8 million euro).

Net debt amounted to 260.1 million euro, up by 121.4 million euro compared to year-end 2011 (138.7 million euro). This change was mainly determined by the requirement for industrial investments (56.9 million euro), a negative EBITDA of 44.4 million euro, and the working capital, which worsened by 36.5 million euro, partly offset by the collection of the receivable for the National Tax Consolidation scheme of 19.3 million euro and other cash flow items for 2.9 million euro. Moreover, compared to the previous year, the performance was also affected by Cairo’s lower revenues as the company had factored receivables at the end of 2011, whereas in 2012 it did not factor any.

As of 30 September 2012, net debt amounted to 224.1 million euro.

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The 2012 results by Business Unit were reported in the press release issued on 7 February 2013.

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Results of the Parent Company Telecom Italia Media S.p.A.

FOREWORD:

Following the contribution, effective 1 September 2012, of the television business units to LA7 S.r.l., the figures reported below include for the 2011 and 2012, respectively, 12 months and 8 months of television activities.

The Parent Company’s revenues amounted to 80.2 million euro, down by 59.7 million euro compared to FY 2011 (139.9 million euro).

EBITDA amounted to -53.8 million euro, down by 51.6 million euro compared to 2011 (-2.2 million euro).

EBIT amounted to -98.6 million euro, including the effect of the 25.4 million euro writedown of the goodwill related to the shareholding in TIMB, down by 30.8 million euro compared to 2011 (-67.8 million euro).

Net Result amounted to -163.2 million euro, down by 101.7 million euro compared to 2011 (-61.5 million euro).

In the Financial Statements as of 31 December 2012, equity amounted to 71.1 million euro, whereas subscribed and paid up capital was 212.2 million euro.

Therefore, as of 31 December 2012, figures include the item pursuant to Article 2446 of the Italian Civil Code (“Capital reduction due to losses”).

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2013-2015 industrial plan

The Telecom Italia Media Group, following the sale of its television business units La7 and La7d, will focus its development strategy on the implementation of initiatives aimed at restoring the Group’s efficiency and profitability.

In detail, the new Plan sets the following objectives for MTV:

  • focus on the FTA sector, after the sale of non-core satellite channels to Viacom in late 2012;
  • greater attention to entertainment and significant investments in content and communications, with the aim of increasing audience share results;
  • cost control, with the aim of returning to a positive EBITDA.

The new role of MTV Pubblicità will be to strengthen its customer portfolio, as has already happened with the subscription of an agreement with De Agostini for advertising sales of three new digital channels, and with Viacom for advertising sales of the channels Nickelodeon and Comedy Central.

With reference to Telecom Italia Media Broadcasting the objectives are as follows:

  • keeping the present level of bandwidth rental (98%), consolidating its customer base and keeping a high level of customer satisfaction;
  • increasing the offer of additional service to its customers;
  • cost control and reduction of investments to about 4 million euro per year, given the completion of the digitalisation plan.

Finally, the holding TI Media will focus its objectives on efficiency through a major cost cutting plan, mainly based on the containment of external costs and the rationalisation of staff structures.

Based on such assumptions, for the 2013-2015 period the Telecom Italia Media Group expects the following:

  • revenue increase at an annual average rate of about 11%;
  • EBITDA increase at an annual average rate of 36% and EBITDA Margin of about 33% at the end of 2015;
  • a decrease in investments: in the three years covered by the Plan they will amount to about 35 million euro;
  • cash generation of about 50 million euro for the three years and target positive net-cash flow from 2014;
  • A reduction of net financial debt.

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Since the Company has found itself in the circumstances regulated by Article 2446 of the Italian Civil Code, the Board of Directors decided to include a new item in the Agenda of the General Shareholders' Meeting already called for 5 April 2013, with notice published on 22 February 2013.

In detail, the Board of Directors resolved to broaden the Agenda to include an item regarding the decisions to be taken pursuant to the above-mentioned Article 2446 of the Italian Civil Code, and to change the item regarding the integration of the Board of Directors due to the resignation of Mauro Giusto from his position as Board Member (cf. press release issued on 27 February 2013).

The relevant integrating notice shall be published in accordance with current applicable regulations.

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The Board of Directors has verified that the Board meets the requirements regarding its composition and that it also has a sufficient number of independent directors, namely Irene Bignardi, Adriano De Maio, Lorenzo Gorgoni, Davide Rampello, Sergio Ristuccia and Fabio Alberto Roversi Monaco.

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Pursuant to sub-section 2, clause 154-bis of the Unified Finance Act, the manager in charge of drafting the company’s accounting documents, Mr. Luigino Giannini, has declared that the accounting disclosures contained in this press release correspond to the data records, accounting books and accounts entries.

Finally, it should be pointed out that the auditing process of the consolidated and separate financial statements of Telecom Italia Media at 31 December 2012 is still underway.

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The Group’s results at 31 December 2012 and the 2013-2015 Plan will be illustrated to the financial community during a conference call scheduled for 6:00 PM (CET). Journalists may listen in to the presentation by phone on 800 408 088 (callers from Italy) and +39 06 33 458 042 (international callers). For those who are unable to follow the live conference call, a recorded version of the presentation will be available for 2 days at the number: +39 06 334843 (access code 500866# for the Italian version: 499,755# for the English version).

Milan, 4 March 2013