Telecom Italia Media: 2014 revenues stable and losses greatly reduced

02/19/2015 - 07:40 PM

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REVENUES: 70.5 million euros; -1.7 million euros compared to 2013 (72.2 million euros)

EBITDA: 25.4 million euros; -4.8 million euros compared to 2013 (30.2 million euros)

EBIT: 5.9 million euros; +4.1 million euros compared to 2013 (1.8 million euros)

NET RESULT: - 5.3 million euros (-132,0 million euros in 2013, which included the value of Discontinued Operations associated with the sale of La7 and MTV Italia for 133.6 million euros)

NET FINANCIAL DEBT: 269.4 million euros; 259.9 million euros at the end of 2013

The preliminary economic and financial results of the Telecom Italia Media Group for the 2014 financial year as well as the previous year's results to which they are compared have been prepared according to the International Accounting Standards issued by the International Accounting Standards Board and homologated by the European Union (defined as "IFRS"). In the 2014 financial year, the same accounting principles as used for the previous year have been applied, apart from the new Principles/Interpretations adopted from 1 January 2014, which had no impact on the results of the 2014 financial year.

A number of alternative performance indicators are used in this press release which are not provided for in the IFRS accounting standards (EBITDA, EBIT, Net Financial Debt). The meaning and content of these are explained in the appendix.

The results of the 2014 financial year have not been audited by the Independent Auditors.

Note that this press release contains forward-looking statements about Telecom Italia Media Group’s intentions, beliefs and current expectations with regard to its financial results and other aspects of the Group's operations and strategies. Readers of the present press release should not place undue reliance on such forward-looking statements, as final results may differ significantly from those contained in the above-mentioned forecasts owing to a number of factors, the majority of which are beyond the Group’s control.

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The Telecom Italia Media Board of Directors, chaired by Severino Salvemini, today examined and approved the Company’s full year Financial Report at 31 December 2014.

Consolidated Group revenues reached 70.5 million euros in 2014, down by 1.7 million euros compared to 2013 (72.2 million euros). This trend is entirely attributable to the Network Operator and is due to the expiry, at the end of 2013, of contracts with some customers only partially offset by revenues from new customers and by the consolidation of the second half revenues of Rete A S.p.A. (9.4 million euros) not present in 2013.

EBITDA  amounted to 25.4 million euros; it is down by 4.8 million euros compared to 2013 (30.2 million euros) and mainly reflects the reduction in revenues only partially offset by a reduction of the operating costs of Persidera S.p.A.. Excluding the activities of Rete A, the Group's EBITDA fell by 7.0 million euros. The EBITDA of Telecom Italia Media S.p.A. also fell by 1.0 million euros.

EBIT amounted to 5.9 million euros compared to 1.8 million euros 2013 and was affected by lower depreciation and amortisation for 8.8 million euros fully attributable to the Network Operator. This change is primarily due to 2.2 million euros of depreciation and amortisation of Rete A not present in the 2013 accounts, and the redefining, during the annual review, of the useful life of the Network Operator frequencies - extended from 31 December 2028 to 31 December 2032 following the definitive assigning of licences for television activities - and of the transmission equipment, carried out as a consequence of the technological evolution of said equipment.

Net result amounted to -5.3 million euros compared to -132.0 million euros for 2013, period which included a total value of Discontinued Operations, associated with the sale of La7 and MTV Italia, equal to -133.6 million euros.

Net financial debt  was 269.4 million euros, up by 9.5 million euros compared to the end of 2013 (259.9 million euros). The performance is mainly attributable to the requirements resulting from the industrial investments of the period for 6.4 million euros (relative to the implementation of the Transport and Backup Network and the new “Playout” broadcasting infrastructure for the television channels of the Network Operator, including 0.7 million euros of investments by Rete A), the result of the positive operations of the period (EBITDA -25,4 million euros and D Working Capital +10.1 million euros), the net effect deriving from the consolidation of the debt of Rete A at 30 June 2014 (+21.1 million), and the net income from tax consolidation for 15.2 million euros. Other net disbursements for 12.5 million euros, which mainly include the net financial expenses for the period for 9.0 million euros, should also be added.

Network Operator – Persidera S.p.A. (former Telecom Italia Media Broadcasting – TIMB)

Network Operator revenues and incomes  for 2014 financial year amounted to 70.5 million euro, decreasing by 1.7 million euro compared to the previous year (72.2 million euro). This result, as highlighted above, is attributable both to the expiry of some contracts and the decrease in other income, partially offset by higher revenues from other customers and the increase in revenues and other income pertaining to the consolidation of the activities of Rete A starting from the second half-year 2014.

EBITDA  amounted to 32.1 million euro, a 3.9 million euro decrease compared to the 2013 financial year (36.0 million euro). This performance was mainly affected by the lower revenues previously described, only partially offset by a reduction in purchases of goods and services and by lower operating costs connected to trade receivables management and provision for risks and charges, as well as costs pertaining to the consolidation of Rete A activities relating to the second half of 2014.

EBIT amounted to 12.6 million euros and is up by 5.0 million euros compared to the 2013 financial year (7.6 million euros) due to both the change in the EBITDA and the lower depreciation and amortization. This item is affected by the increased depreciation and amortisation relative to Rete A (not present in 2013). It therefore drops also due to the redefining, during the annual review, of the useful life of the Network Operator frequencies and of the transmission equipment mentioned above.

The investments for 2014 amounted to 6.4 million euros and mainly refer to the completion of the transport and backup network, the implementation of the broadcasting infrastructure (Playout) for television channels and the investments made by Rete A.

From second half-year 2014, due to the effect of the transfer of Rete A S.p.A. to Persidera S.p.A., the technical and commercial management of the digital Multiplexes expanded to include, in addition to the 3 MUXES already owned by  Persidera (former TIMB) the 2 MUXES owned by Rete A. At 31 December 2014 the three digital multiplexes owned by Persidera prior to the merger cover 95.6% of the Italian population. Their signals are transmitted by 814 broadcasting sites distributed throughout the country. The transmission capacity allocated amounts to around 102 Mbps which represents around 91% of the available capacity. Also at 31 December 2014, the coverage of the 2 Digital Multiplexes formerly of Rete A was over 93%. The relative signals are transmitted by 400 broadcasting sites distributed throughout the country.

INTEGRATION OF THE DIGITAL TERRESTRIAL NETWORK OPERATOR ACTIVITIES

On 30 June 2014 Telecom Italia Media and Gruppo Editoriale L’Espresso completed the integration of the digital terrestrial network operator activities respectively owned by Persiderea S.p.A. (former TIMB) and Rete A S.p.A. (Rete A).

The integration was implemented through the transfer of 100% of Rete A shares owned by GRUPPO ESPRESSO to Persidera. After the transfer, TI Media and GRUPPO ESPRESSO hold 70% and 30% of the shares of Persidera respectively. This company holds the entire capital of Rete A. On 1 December 2014 Reta A was merged by incorporation into Persidera, with retroactive accounting and fiscal effects from 1 January 2014.

This operation gave rise to the largest independent network operator in Italy, with five digital multiplexes and an infrastructure with extensive national coverage and capable of providing high quality services. The group resulting from the operation is the reference provider for the main non-integrated national and foreign television editors operating on the Italian market.

The Telecom Italia Media Board of Directors, during its meeting on 15 January 2015, has acknowledged the developments in the Persidera valuation and decided that the results of the process itself obtained to date are not in line with expectations and therefore the sale of the shareholding held is not foreseeable at this stage.

OUTLOOK FOR THE 2015 FINANCIAL YEAR

The Telecom Italia Media Group, following the sale of its television business units La7 and MTV, has focused its development strategy on the implementation of initiatives aimed at restoring the Group’s efficiency and profitability. In light of the current economic and regulatory environment in which Telecom Italia Media operates, and considering the effects of the integration of Persidera (former TIMB) and Rete A, in 2015 the plan is to maintain the current level of bandwidth rental also through new customers, expand the offering of additional services and, implementing tight control over costs, thereby generate positive cash flow from the operating activities.

SHAREHOLDERS' MEETING

The Board of Directors has convened the Company's Shareholders' Meeting to meet on 30 April 2015 in Rozzano (Milan) to resolve as follows: during the ordinary part, on the Financial Statements as at 31 December 2014 and the Remuneration Report; and during the extraordinary part, on the proposed merger by incorporation of the Company into Telecom Italia (the notice convening the meeting is available on the Company's website at www.telecomitaliamedia.it/assemblea).

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Pursuant to sub-section 2, clause 154-bis of the Consolidated Financial Law, the Manager responsible for preparing the corporate 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.

Rome, 19 February 2015