Telecom Italia Media: The Board of Directors Approved the Group’s Interim Financial Report at 31 March 2014

05/08/2014 - 04:30 PM

- + Text size
Print

This press release contains a number of alternative performance indicators not contemplated under IFRS (EBITDA, EBIT, Net Financial Position). Definitions of these terms are provided in the attachment. Moreover, following the disposal of LA7 S.r.l. (finalised on 30 April 2013) and the disposal of MTV Italia S.r.l. S.r.l. (finalised on 12 September 2013), figures for the first quarter of 2013, used for comparison, have been reconstructed while taking account of the classification of the results generated by those assets as Discontinued Operations.

Recovery of losses for 121.2 million euro. NET RESULT: -2.6 million euro (-123.8 million euro in Q1 2013, which included the amount of the Discontinued Operations relating to the disposal of La7 and MTV Italia)

REVENUES: 15.5 million euro; -3.3 million euro compared to Q1 2013 (18.8 million euro)

EBITDA: 5.7 million euro; -3.1 million euro compared to Q1 2013 (8.8 million euro)

EBIT: -1.0 million euro; -2.8 million euro compared to Q1 2013 (1.8 million euro)

NET FINANCIAL POSITION: 255.1 million euro; 259.9 million euro at the end of 2013

TIMB’S OPERATING FREE CASH FLOW: 9.0 million euro; it amounted to 0 euro in Q1 2013

Also following the signing of the agreement on the merger with Rete A for the creation of the leading independent network operator in Italy, efforts continued to consolidate the customer base and expand the offering of TIMB's additional services.

                                         ***

The Telecom Italia Media Board of Directors, chaired by Severino Salvemini, today examined and approved the Group’s Interim Financial Report at 31 March 2014.

Consolidated Group revenues reached 15.5 million euro in the first quarter of 2014, with a decrease of 3.3 million euro compared to the same period of 2013 (18.8 million euro). This result was entirely attributable to the Network Operator in relation with the expiry, at year-end 2013, of the agreements with RTI (Mediaset Extra and Italia2) and with QVC, only partially offset by higher revenues from other customers.

EBITDA amounted to 5.7 million euro, a 3.1 million euro decrease compared to the first quarter of 2013 (8.8 million euro), mainly reflecting the decline in revenues.

EBIT amounted to -1.0 million euro, thus reporting a decrease of 2.8 million euro compared to the first quarter of 2013 (1.8 million euro), and included lower amortisation for 0.3 million euro attributable to the Network Operator.

Net result amounted to -2.6 million euro compared to -123.8 million euro in the first quarter of 2013, which included an overall amount of Discontinued Operations of 126.4 million euro relating to the disposal of La7 and MTV Italia.

Net financial position amounted to 255.1 million euro, down by 4.8 million euro compared to year-end 2013 (259.9 million euro). This reduction was mainly attributable to the industrial investment requirements for the period of 2.1 million euro (associated with the completion of the Transport and Backup Network and the implementation of the broadcasting infrastructure for Network Operator’s “Playout” television channels), and to the positive result of the operating activities for the period (EBITDA                      -5.7 million euro and D Working Capital -3.2 million euro). The figure also accounted for other net outlays of 2.0 million euro which chiefly comprised net finance expense for the period of 2.2 million euro.

Results by Business Unit

Following the disposal of LA7 S.r.l. (finalised on 30 April 2013) and the disposal of MTV Italia S.r.l. (finalised on 12 September 2013), 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 and broadcasting platforms.

Network Operator (TIMB)

Network Operator revenues and income amounted to 15.8 million euro, decreasing by 3.0 million euro compared to the same period of 2013 (18.8 million euro). As illustrated above, this result was attributable to the expiry of certain agreements, only partially offset by higher revenues from other customers and the increase of other income.

EBITDA amounted to 7.5 million euro, a 2.1 million euro decrease compared to the first quarter of 2013 (9.6 million euro). This result was chiefly influenced by the above-mentioned lower revenues, only partially offset by lower operating costs.

EBIT amounted to 0.8 million euro, a 1.7 million euro decrease compared to the first quarter of 2013 (2.5 million euro), due both to the change in EBITDA and lower amortisation of 0.4 million euro. It should be noted that, starting from 2014, the useful life of frequencies was extended from 31 December 2028 to 31 December 2032.

Investments for the first quarter of 2014 totalled 2.1 million euro and were mainly aimed at completing the transport network and implementing the broadcasting infrastructure for television channels (Playout).

In the first quarter of 2014, TIMB operating free cash flow totalled 9.0 million euro, while in the same period of 2013 it amounted to 0 euro. This improvement was substantially attributable to better management of working capital (+11.6 million euro), partially offset by the decreased EBITDA.

At 31 March 2014, the three digital multiplexes of TIMB covered 95.2% of the Italian population. The allocated broadcasting capacity amounted approximately to 61.3Mbps, corresponding to about 94% of available capacity.

Changes to the 2014 financial calendar

The Board of Directors made some changes to the financial calendar published on 16 January 2014 on the meetings called to approve the Company’s Financial Reports for the year 2014. In detail, the meeting to examine the Half-year Financial Report will be held on 29 July 2014 and not on 31 July 2014 as previously announced.

The updated calendar is as follows:

  • 29 July: Meeting of the Board of Directors to approve the 2014 Half-year Financial Report;
  • 4 November: Meeting of the Board of Directors to approve the Interim Financial Report at 30 September 2014.

Should there be any changes to the above dates, they will be promptly announced.

Events subsequent to 31 MARCH 2014

Agreement with Gruppo Editoriale L’Espresso

On 9 April 2014, Telecom Italia Media (TI Media) and Gruppo Editoriale L’Espresso (GRUPPO ESPRESSO) signed agreements to merge the network operator businesses for DTTV controlled by Telecom Italia Media Broadcasting S.r.l. (TIMB) and Rete A S.p.A. (Rete A), respectively.

The merger between TIMB and Rete A, which own three and two digital multiplexes respectively, will give rise to the leading independent network operator in Italy, with five digital multiplexes and nationwide high-coverage infrastructure, based on latest-generation technologies. The group resulting from the operation will be the primary supplier of the main non-integrated Italian and foreign television publishers operating on the Italian market. The transaction will also generate significant industrial synergies.

The merger will be carried out through GRUPPO ESPRESSO’s contribution of 100% of Rete A shares in TIMB. Upon completion of the transfer, TI Media and GRUPPO ESPRESSO will each hold 70% and 30% of shares in TIMB which will control Rete A’s entire capital. GRUPPO ESPRESSO will retain its participation in All Music S.p.A.

Against the new TIMB, TI Media will be entitled to appoint the majority of TIMB Directors including the Managing Director, whilst GRUPPO ESPRESSO will appoint the Chairman.

The agreement signed also states that, once the merger is completed, a valorisation process will be started entailing the search for investors interested in the combined entity.

Bearing in mind the uncertainty surrounding legislative developments on frequency use, TI Media has also reserved the option to purchase the right to use (thus excluding the infrastructure and customers) one of the five frequencies controlled by the combined entity.

The transaction is expected to be finalised by June, subject to AGCOM authorisation being obtained.

Outlook

The Telecom Italia Media Group, following the sale of its television business units La7, La7d and MTV Italia, has focused 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, and without taking account of the effects arising from the merger of TIMB and Rete A — for which the authorisation process is still underway — for 2014 the Group expects to keep, also through new customers, the Network Operator TIMB’s current level of bandwidth rental and expand the offering of additional services, which, together with careful cost control, will enable the achievement of a positive cash generation.

                                         ***

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.

Milan, 8 May 2014