Telecom Italia Media: the Board of Directors Approves the Group’s Interim Financial Report at 31 March 2013

05/06/2013 - 05:50 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 the attachment. Following the planned disposal of LA7 S.r.l., earnings results have been classified under the item "Profit (loss) from discontinued operations/assets held for sale”, in accordance with IFRS 5. In the interest of greater clarity in the representation of the Group’s earnings performance, the historical income statement figures provided for the purposes of comparison with the first quarter of 2013 have been reconstructed while taking account of the classification of the profit or loss generated by those assets as Discontinued operations. Following the early adoption of IAS 19 revised (IASR 19R 2011) – Employee Benefits, which requires a retrospective application, data from Q1 2012 used for comparison were reconstructed.

Telecom Italia Media: the Board of Directors Approves the Group’s Interim Financial Report at 31 March 2013

REVENUES: 24.5 million euro; -3.1 million euro compared to Q1 2012 (27.6 million euro)

EBITDA: 5.2 million euro; -3.2 million euro compared to Q1 2012 (8.4 million euro)

EBIT: -3.4 million euro; -4.4 million euro compared to Q1 2012 (1.0 million euro)

NET RESULT: -123.8 million euro (-15.7 million euro in Q1 2012); this result includes the value of Discontinued operations associated with the sale of La7 S.r.l.

NET FINANCIAL POSITION: 189.6 million euro; -70.5 million euro compared to the end of 2012 (260.1 million euro)

TIMB strengthened its customer base and confirmed the positive results achieved in Q1 2012; TIMB's three digital multiplexes cover 95% of the Italian population

The FTA MTV Network reported a 0.65% share for the quarter; the share for March was 0.7% on the total audience share, and 1.8% on the target group aged 15-34, exceeding 100,000 viewers in the average minute

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Milan, 6 May 2013

The Telecom Italia Media Board of Directors, chaired by Severino Salvemini, examined and approved the Group’s Interim Financial Report at 31 March 2013.

More in detail:

Consolidated Group revenues reached 24.5 million euro in Q1 2013, with a decrease of 3.1 million euro compared to the same period of 2012 (27.6 million euro).

The performance was mainly influenced by the ongoing economic crisis which impacted the Italian advertising television market (-16.1% January-February 2013, source Nielsen), that consequently affected also the advertising sales of MTV, which fell 16.4% in the quarter, and by the closure of some MTV's activities (Playmaker and the Kids and Entertainment channels in partnership with Viacom). By contrast, the Network Operator's revenues were in line with those of Q1 2012, strengthening the results and the customer base it has achieved.

EBITDA amounted to 5.2 million euro, a 3.2 million euro decrease compared to Q1 2012 (8.4 million euro).

EBIT amounted to -3.4 million euro, decreasing by 4.4 million euro compared to Q1 2012 (1.0 million euro).

Net result was -123.8 million euro, compared to -15.7 million euro in Q1 2012, and included 122.1 million euro referring to the total value of discontinued operations associated with the sale of LA7 S.r.l. The effect on the income statement of the disposal amount to 104.4 million euro and is included in the above-mentioned figure

Net financial debt amounted to 189.6 million euro, down 70.5 million euro compared to year-end 2012 (260.1 million euro), mainly attributable to the 100.0 million euro financial receivables waived by Telecom Italia, as set forth within the process of sale of LA7 S.r.l., partially offset by industrial investments requirements totalling 3.2 million euro (of which 1.5 million euro for the acquisition of television rights by MTV Italia, 1.6 million euro for the conclusion of activities started in the previous year on the Digital Terrestrial network, and 0.1 million euro for other investments), the result of operating activities for the period, and the effect arising on the sale of LA7 S.r.l. for 22.3 million euro and other net outlays for 0.8 million euro.

RESULTS BY BUSINESS UNIT

Following the planned disposal of LA7 S.r.l., the relevant business unit was classified under

Discontinued operations. Therefore, the methods of representation of the income statement and balance sheet results were also revised through the identification of two specific operating segments:

- MTV Group, which includes activities carried out by MTV Italia and its subsidiary MTV Pubblicità, concerning

TV broadcasters MTV and MTV Music, the production of multimedia music platforms, as well as Digital operations (Web);

- Network Operator, which includes the activities of Telecom Italia Media Broadcasting (TIMB) relating to managing the Digital Multiplexes, as well as the offer of ancillary services and television broadcasting platforms for the Group and third parties.

1. Network Operator (TIMB)

Network Operator revenues in Q1 2013 amounted to 18.8 million euro, increasing by 0.5 million euro compared to the same period of 2012 (18.3 million euro). This performance was essentially in line with the same period of the previous year, mirroring the strengthening of the customer base achieved in 2012.

EBITDA amounted to 9.6 million euro, a 1.7 million euro decrease compared to Q1 2012 (11.3 million euro). This reduction was primarily attributable to higher structural costs and several provisions subsequent to the switch off.

EBIT amounted to 2.5 million euro, a 2.5 million euro decrease compared to Q1 2012 (5.0 million euro).

At 31 March 2013, TIMB's three digital multiplexes covered 95% of the Italian population, confirming their full rental.

2. MTV Group

MTV revenues for Q1 2013 amounted to 8.0 million euro, down 3.7 million euro compared to the same period of 2012 (11.7 million euro). The performance was mainly attributable to the reduction in gross advertising sales, which amounted to 7.8 million euro in Q1 2013 with a 16.4% decrease compared to the same period of 2012 (9.3 million euro), in line with the trend of the Italian advertising television market, which fell by 16.1% in the January-February period (source Nielsen), as mentioned above. Revenues were also impacted by the write-off of Playmaker's operations following the discontinuation of the business unit, and of the activities regarding the creation of the Kids and Entertainment channels of Viacom, subsequent to the sale of the business unit at the end of 2012.

Audience share continued to show a positive trend (source Auditel), with a 0.65% share for Q1 2013. In detail, the MTV free-to-air network, which includes the channels MTV8 and MTV Music, reported an increase both in terms of share (+3%) and average audience (+11%) compared to Q4 2012 (the first quarter in which audience data were published), accounting for over 5.6 million daily viewer contacts and generating 42 million monthly viewer contacts. This uptrend regarded both free-to-air channels: MTV8 and MTV Music reported an increase in share of 2% and 7%, respectively. In detail, March represented the most significant month in terms of concentration of editorial investments aimed at supporting the beginning of a television season, considered the most attractive from a commercial standpoint: the FTA network achieved a 0.7% share, with a 1.8% share on the target group aged 15-34.

EBITDA amounted to -3.7 million euro, a 1.9 million euro decrease compared to Q1 2012 (-1.8 million euro). The reduction in revenues was partially offset by the decrease in expenses related to the acquisition of goods and services and other operating expenses.

EBIT amounted to -5.2 million euro, decreasing by 2.3 million euro compared to Q1 2012 (-2.9 million euro).

Corporate governance issues

In accordance with the issues submitted to the Shareholders’ Meeting and to the extent set forth by applicable laws, the Board of Directors resolved to entrust the Board of Statutory Auditors with the tasks of the Supervisory Board within the meaning of Legislative Decree No. 231 of 8 June 2011.

events subsequent to 31 March 2013

  • executing the resolution of the Board of Directors of 14 March 2013, on 11 April 2013, La7 S.r.l. transferred to TI Media its 51% interest in the share capital of MTV Italia, for a total consideration of 9.6 million euro.

  • After having received all authorisations required by applicable laws and regulations, on 30 April 2013 Telecom Italia Media finalised the sale of La7 S.r.l. to Cairo Communication Group.

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

Before transferring the stake in La7 S.r.l., the Company was recapitalised for an amount that allowed the Company to achieve, at the date of finalisation, a positive net financial position of no less than 88 million euro. Such recapitalisation also helped the company to achieve the contractually agreed equity of 138 million euro.

Based on the above mentioned agreements and excluding the losses incurred by La7 S.r.l. in the period, the effect on the income statement arising from the disposal was negative at approximately 104.4 million euro; taking account of La7 S.r.l.'s estimated losses up to the date of finalisation, the figure amounts to about 130 million euro.

As part of the transaction, Telecom Italia S.p.A. waived its financial receivables from Telecom Italia Media S.p.A. for a total amount of 100 million euro.

outlook

Following the sale of La7 and La7d television operations, Telecom Italia Media Group will focus its development strategy on the implementation of initiatives that will bring the Group back to efficiency and profitability.

In light of the current economic and regulatory environment in which Telecom Italia Media operates, the following is expected in 2013:

  • keeping of the current level of bandwidth rental (98%) of the Network Operator TIMB with the aim of consolidating its customer base, increasing the range of additional services offered to its customers while carefully controlling costs and reducing investments as a result of the completion of the digitalisation plan.

  • MTV's focus on the free-to-air sector after the sale of its satellite channels considered as non-core to Viacom at the end of 2012, with greater attention paid to entertainment and significant investments in content and communications combined with strict cost control;

On the basis of the foregoing, in 2013 Telecom Italia Media expects results in line with those reported in 2012, in comparable terms.

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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

 

Milan, 6 May 2013