Telecom Italia Media: the Board of Directors Approves the Group's Half–year Report at 30 June 2013

07/30/2013 - 03:14 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. Moreover, following the disposal of LA7 S.r.l., finalized on 30 April 2013, and the planned disposal of MTV Italia S.r.l., which is expected to be finalized by September 2013, earnings results have been restated 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 half of 2013 have been restated taking account of the classification of the profit or loss generated by those assets as Discontinued Operations.

REVENUES: 38.6 million euro; +0.9 million euro compared to H1 2012 (37.7 million euro)

EBITDA: 18.3 million euro; -1.6 million euro compared to H1 2012 (19.9 million euro)

EBIT: 4.1 million euro; -2.9 million euro compared to H1 2012 (7.0 million euro)

NET RESULT: -133.5 million euro (-35.0 million euro in H1 2012); this result includes the value of Discontinued Operations associated with the disposal of La7 S.r.l. and the planned disposal of MTV Italia S.r.l.

NET FINANCIAL POSITION: 285.3 million euro (260.1 million euro at year-end 2012)

With three digital multiplexes covering 95% of Italian population, TIMB strengthened its customer portfolio by increasing its revenues and confirming the results of the first half of 2012. In addition, TIMB expanded its range of services through the launch of broadcasting services, thanks to the creation of a new playout centre, and digital audio/video content distribution and transport services, as well as interactive media services.

The Chairman, Severino Salvemini, commented: “With the disposal of the Group’s television channels, and encouraged by the positive performance of the Network Operator TIMB, we have achieved a focused and sustainable industrial organisation of an infrastructural nature, with positive and, to a large extent, foreseeable cash flows. We are committed to focus on leadership and technological excellence and, thanks to our excellent positioning on the market, to establish the company as an independent network operator of reference, which is already serving more than twenty television channels.”

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Rome, 30 July 2013

The Telecom Italia Media Board of Directors, chaired by Severino Salvemini, examined and approved the Group’s half-year report at 30 June 2013.

More in detail:

Consolidated Group revenues reached 38.6 million euro in H1 2013, with an improvement of 0.9 million euro compared to the same period of 2012 (37.7 million euro). The increase was entirely attributable to higher revenues of the Network Operator.

EBITDA amounted to 18.3 million euro, showing a 1.6 million euro decrease compared to H1 2012 (19.9 million euro).

EBIT amounted to 4.1 million euro, decreasing by 2.9 million euro compared to H1 2012 (7.0 million euro).

Net result was -133.5 million euro compared to -35.0 million euro in H1  2012 and accounted an overall economic effect including losses related to the disposal of La7, sold on April 2013, for  129.8 million euro and the negative results of the first half 2013 of MTV, that will be sold by September 2013, for 8.1 million euro.

Net financial position was 285.3 million euro (260.1 million euro at year-end 2012). The increase was chiefly attributable to the net cash flow associated with the disposal of La7 (110.7 million euro) and the planned disposal of MTV (12.6 million euro), only partially offset by Telecom Italia’s waiver of financial receivables for 100.0 million euro, as set forth in the agreement for the disposal of LA7. It also included the industrial investments requirement amounting to 4.1 million euro, the result of the operating activities for the period (EBITDA -18.3 million euro and D Working Capital +3.1 million euro), and net outlays for 13.0 million euro, which included the outlay for the acquisition of MTV from La7 and net financial expenses for the period.

Results by Business Unit

Following the disposal of LA7 S.r.l., finalised on 30 April 2013, and the planned disposal of MTV Italia S.r.l., the relevant Business Units have been classified among Discontinued Operations; therefore, the method of representation of income statement and balance sheet results has been reviewed, isolating the Network Operator Business Unit, in line with the previous year.

The Network Operator Business Unit includes the operations of Telecom Italia Media Broadcasting (TIMB) relating to the management of the Digital Multiplexes, as well as the offering of accessory services for Group companies and third parties.

Network operator (TIMB)

Network Operator revenues for H1 2013 amounted to 38,6 million euro, increasing by 0.9 million euro compared to the same period of 2012 (37,7 million euro).

EBITDA amounted to 21.6 million euro, a 0.4 million euro decrease compared to H1 2012 (22.0 million euro). The decline was primarily generated by an increase in operating costs mainly associated with provisions.

EBIT amounted to 7.4 million euro, a 1.7 million euro decrease compared to H1 2012 (9.1 million euro).

At 30 June 2013, the three TIMB’s digital multiplexes covering 95% of Italian population hosted 20 television channels.

Related party transactions

The Board of Directors of Telecom Italia Media, in light of the favourable opinion passed by the Board Committee made up of all the Independent Directors, approved a two-year facility agreement for a total amount of 140 million euro with Telecom Italia Finance, a financial company fully controlled by Telecom Italia.

Through this transaction, Telecom Italia Media will repay most of the debt arising from the intercompany current account with its parent company Telecom Italia, which at 30 June 2013 amounted to 180 million euro, benefitting from lower financial charges.

The conditions offered by TI Finance, compared with similar market offers, were the less expensive in terms of interest rate besides providing for greater flexibility of use.

The loan terms and conditions are set out below:

4  amount: 140 million euro

4  type: Facility Agreement

4  duration: from 31 July 2013 to 31 July 2015

4  rate: EURIBOR + 2.8564%

4  commitment fee: 0.125% per year

4  repayment: at maturity or early repayment, including partial repayment.           

The facility agreement  with TI Finance represents a related party transaction and for TI Media—given the size of the financed amount—one of greater importance.  As such, in accordance with prevailing regulations, a specific document on the matter will be published by TI Media within the terms required by law.

Events subsequent to 30 June 2013

On 4 July 2013, the agreement for the sale of 51% stake of MTV Italia S.r.l. to Viacom International Media Networks (VIMN) was signed.

Under the agreement, Telecom Italia Media shall receive a consideration of 10 million euro, subject to an adjustment upon closing, based on working capital changes that, according to current estimates, will have a positive impact. As part of the transaction, upon finalization Telecom Italia Media committed itself to waive its financial receivables claimed from MTV Italia , amounting approximately to 9.3 million euro, on the signing date. The parties finally agreed on the renewal of a multi-year agreement for TIMB’s supply of broadcasting capacity and services to MTV Italia. The closing of the transaction, subject to the condition precedent of the authorisations required by applicable regulations, is expected to take place by the end of September 2013.

Outlook

The Telecom Italia Media Group, following the disposal of its television business units La7 and La7d, finalised on 30 April 2013, and the planned disposal of MTV, will focus its development strategy on the implementation of initiatives aimed at restoring the Group’s efficiency and profitability.

In light of the economic and regulatory environment in which Telecom Italia Media operates,

expectations for 2013 are as follows:

4  keeping the Network Operator TIMB’s present level of bandwidth rental (98%), with the aim of consolidating its customer base and expanding the offering of additional services, while implementing a careful cost control and reducing investments, as a result of the completion of the digitalisation process.

Based on the foregoing, in 2013 Telecom Italia Media expects to achieve results that are in line with those of 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, Luigino Giannini, has declared that the accounting disclosures contained in this press release correspond to the data records, accounting books and accounts entries.

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The conference call to illustrate the Group’s results at 30 June 2013 will not be held.