ESPRESSO GROUP: CONSOLIDATED NET PROFIT 2004 EQUAL TO €87.7MILLIONS (+29% IN COMPARISON WITH 2003); DIVIDEND EQUAL TO €0.13 PER SHARE (+18% IN COMPARISON WITH 2003).
Consolidated Financial Statements 2004. The Board of Directors of the Gruppo Editoriale L’Espresso S.p.A. met today in Rome under the Chairmanship of Carlo Caracciolo to examine 2004 Financial Statements. The main consolidated results in comparison with the previous year are the following:
(€million) Consolidated Data
2003
2004
∆ %
Revenues
1.051,1
1.079,8
+2,7%
Of which:
– Circulation Revenues
482,8
496,4
+2,8%
– Advertising Revenues
-534,0
546,1
+2,3%
Gross Operating Profit
231,5
231,5
Operating Profit
175,1
177,4
+1,3%
Net Finanacial Income/(Expense)
(28,6)
(12,9)
Net Profit
67,8
87,7
Shareholders’ Equity
332
375,2
Net Financial Position
(149,5)
(131,1)
Employees
3.166
3.271
Proposal of dividend The Board of Directors proposes the Meeting of Shareholders, to be convened on April 20, 2005, to distribute a dividend amounting to €0.13 per share, gross of legal deductions, with an increase by 18% in comparison with €0.11 per share in the previous year. The dividend will be paid on May 26, 2005, against detachment of coupon n. 9 on May 23, 2005.
Comment to the consolidated financial statements The Espresso Group closed 2004 financial year with a consolidated net profit amounting to €87.7 millions (equal to €0.20 per share) increasing from €67.8 millions (€0.16 per share) in 2003, against consolidated revenues increased from €1,051.1 millions to €1,079.8 millions. The consolidated operating profit amounted to €177.4 millions, with a margin equal to 16.4% (€175.1 millions in the previous year, with a margin equal to 16.7%). Net financial debt as of December 31, 2004 decreased from €149.5 millions in the previous year to €131.1 millions, thanks to the cash generated from operating activities which has more than compensated the expenses due to investments (€99 millions) and dividends (€47 millions) The shareholders’ equity increased from €332 millions at the end of 2003 to €375.2 millions as of December 31, 2004.
The following events characterized 2004: the start-up at full capacity of the full colour project of la Repubblica (which implied also the construction of the new printing site in Rome), the move of all the Roman companies of the Group in new premises, the confirmation of the success of the edotorial products coupled with la Repubblica and L’espresso, the growth in the audience of the radio stations and the substantial recovery of the Internet area. Together with the strengthening of the core business, attention was also dedicated to development: new publishing initiatives were studied, such as the launch of a magazine devoted to the television programmes (TVmagazine), and the restyling of the weekly Musica, which will be turned into a monthly magazine. It was, furthermore, reached an important agreement to acquire the national television network Rete A. The network is addressed to young people: its audience and advertising have increased steadily and may further develop exploiting the trademarks and the know-how of the Group’s radios as well as the technology placed at its disposal by the internet area.
Advertising revenues were still weak in the year, but they registered signs of recovery in the last quarter, due also to the full-colour offer of la Repubblica. With the new rotaries becoming operative, in line with the expected schedule and almost one year in advance in respect of the market, la Repubblica is today the only national daily newspaper in the position to offer the advertising investors pages and formats with no saturation limits. The market answered positively: 73% of the advertising space in the daily was in colour in December while in the same period in 2003 the percentage was equal to 49.4%; should we consider also the year on year data, the increase in revenues of the colour display advertising in la Repubblica amounts to 12.3% in comparison with the previous year, while the same variation in the market of the national dailies amounted only to 7.5% (FCP data, December 2004). The first months 2005 seem also to move in the direction of a quick substitution of the black-and-white advertising towards the colour one, with an undoubted advantage in terms of revenues and profit.
The revenues of the editorial products coupled with the Group’s titles confirmed also this year the existence of an autonomous market, which is well consolidated and with a stable weight on the structure of the Group’s revenues and profit. The revenues deriving from the optional products amounted to €227.2 millions in 2004, with margins higher than 35%. Circulation of dailies and magazines remained in line with 2003: la Repubblica with 625 thousand average daily copies, local dailies with 488 thousand and L’espresso with 390 thousand average weekly copies. Radio Deejay, with its 5.6 million average daily listeners and 12.7 million average weekly listeners, confirmed to be the first Italian radio; Radio Capital reached almost 2 million average daily listeners (5.8 million average weekly listeners) and m2o, targeted toward the very young people, has, in the last two years, more than doubled its audience achieving almost one million average daily listeners. The advertising revenues of the three radios are also positive, increasing, altogether, by 18.9% in comparison with the previous year.
Comment to the outstanding bond loan issues The company, after having made public the BBB- with a positive outlook rating, awarded by Standard&Poor’s, has successfully placed by professional investors on October 8 a ten-year bond loan issue amounting to €300 millions. The bond issue had a very good success on the market with subscription applications five times higher than the previewed amount, it is listed on the Luxembourg Stock Exchange and pays an annual coupon amounting to 5.125% equal to the ten-year mid-swap rate plus 105 basis points. The funds collected will be devoted to the reimbursement of the bond issue maturing on August 1, 2005 – €200 millions – and to finance the acquisition of Rete A – about €100 millions.
The 2004 Income Statement of the Parents’ Company The Parent Company closed the year with a net profit amounting to €70.4 millions, increasing in comparison with €57.7 millions in the previous year. Revenues amounted to €656.4 millions, +1.2% in comparison with €648.5 millions in 2003. The operating profit decreased from €125.7 millions to €98.5 millions mainly because of the higher depreciation and production costs relevant to the full colour project of la Repubblica.
Performance in the first months 2005 In the first months 2005, the advertising revenues of the Group registered a progressive improvement, driven by the increase of the colour advertising. The performance of the editorial products coupled with the Group’s titles was also excellent: the first issues of the Guide del Touring (Italian Touring Club Guides) coupled with la Repubblica sold more than 255 thousand average copies, while the DVD movies of the Kubrick’s complete work, coupled with L’espresso, sold almost 100,000 copies per issue. On January 10, TVmagazine, the new fortnightly on television, was launched. Following a formula successful in Germany and France, it offers a guide to the TV listings for two weeks. The first issues sold about 400 thousand average copies receiving positive comments by the public and the critics.
The new digital radio of la Repubblica started its programmes on February 14. It broadcasts three hours a day within the internet site. The radio, totally dedicated to news, in-depth analyses, opinions and debates may be presently listened to through the internet site of the daily, Repubblica.it and it may constitute the first step of a digital channel, when this technology will affirm itself also within the radio sector. On February 10, 2005, the Authority for Communication awarded its favourable opinion to the acquisition of the national television network Rete A, and the “all clear” by the Antitrust Authority is expected within few days. Finally, at the end of January, the Direzione Regionale del Lazio dell’Agenzia delle Entrate (the Regional Department of Lazio of the Revenues Agency) agreed with the request of ruling filed in order to obtain the non-application of the antielusion provisions for a project relevant to the merger within Kataweb SpA of the companies Elemedia SpA, Ele TV SpA and Studio Vit Srl. This operation will enable the Espresso Group to integrate the activities of the radio-television sector and the Internet, benefiting, therefore, from the synergies among the titles operating in the sector of multimediality.
Increase of share capital to the benefit of a stock option plan The Board of Directors, finally, in partial use of the proxy provided by the Shareholders’ Meeting on April 6, 2001 to increase under Article 2441 Civil Code the share capital in favour of the company’s employees and its subsidiaries, deliberated an increase in share capital equal to number 1,485,000 shares, at a price of €4.75 of which €0.15 of nominal value and €4.60 of premium, to the benefit of a stock option plan.
Proposal of revocation and award of a new proxy to the Board to buy own shares The Board of Directors has also deliberated to propose to the Shareholders’ Meeting the revocation, for the remaining period and as concerns the part not yet used, of the present proxy to buy own shares and to award, at the same time, a new one. The buy back, taking also into account the Group’s financial structure, could be a means to be used to create value for shareholders. The required proxy has the following characteristics: a) duration: 18 months starting from the day following the approval by the Shareholders’ Meeting; b) maximum number of ordinary shares purchasable: 6,250,000 equal to about 1.5% of the share capital; c) price interval: €0.15 (nominal value) – €8;
Convocation of the Ordinary Meeting The Ordinary Shareholders’ Meeting will be called in first convocation on April 20, 2005 at 11,00 a.m. by the seat of FIEG in via Piemonte 64 in Rome, and, in second convocation, for the following day, same venue and time. Shareholders shall deliberate in the ordinary session, beyond the approval of the financial statements and the proposal of allocation of the net profit, the appointment of the Board Director Francesco Dini, already co-opted by the Board on April 21, 2004, as well as the proposal of revocation and the award of the new proxy to the Board to buy own shares.
Company’s contacts The text of this press release is also available in the company’s site www.gruppoespresso.it. For further information: Stefano Mignanego, Direttore Centrale Relazioni Esterne (Central Director for External Relations), telephone number 06/84787434 ; e-mail s.mignanego@gruppoespresso.it.
Rome, February 23, 2005
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