GRUPPO EDITORIALE L’ESPRESSO S.P.A.
The Board of Directors analysed the consolidated results as at December 31, 2012
THE ECONOMIC CRISI IS HEAVILY AFFECTING THE PUBLISHING SECTOR, NEVERTHELESS, GRUPPO ESPRESSO CLOSED YEAR 2012 WITH NET PROFIT EQUAL TO €21.8M
NET OF DIVIDEND DISTRIBUTION AND PURCHASE OF OWN SHARES EQUAL TO €26.9M, NET INDEBTEDNESS RECORDS FURTHER DECREASE FROM €110.2M TO €108.1M
Espresso Group financial results at December 31, 2012
Consolidated results(€m) | Year 2011 | Year 2012 | D% 2012/2011 |
Revenues, of which: | 890.1 | 812.7 | -8.7% |
· circulation | 271.4 | 261.5 | -3.7% |
· Add-on products | 62.9 | 49.4 | -21.5% |
· advertising | 534.7 | 476.3 | -10.9% |
· others | 21.1 | 25.6 | +21.3% |
Gross operating profit | 159.8 | 102.4 | -35.9% |
Operating profit | 122.5 | 60.4 | -50.7% |
Pre-tax profit | 107.5 | 44.1 | -59.0% |
Net profit | 60.6 | 21.8 | -64.0% |
(€M) | December 31 2011 | December 31 2012 |
Net Financial position | (110.2) | (108.1) |
Shareholders’ Equity including minority interests | 565.0 | 557.7 |
· Shareholders’ equity | 563.3 | 555.9 |
· Minority interests | 1.7 | 1.8 |
Employees | 2,673 | 2,536 |
The contraction in advertising investments has worsened over the year, from -7.5% (first quarter) to -11.6% (second quarter), to -17.7% (third quarter), ending with -20.5% over the last three months of the year.
This negative trend has affected all the traditional media, except the Internet: the press sector was down 17.9%, television 15.3% (-19% for traditional TV and +9,5% for satellite and digital terrestrial TV), with a 10.2% decline in radio. In contrast, advertising sales on the Internet have repeated their good performance, even if growth in this sector has resulted less evident in comparison with the previous years (+5.3%, except search engines, as this sector has not been surveyed by Nielsen). As regards advertising investments, in particular in the press sector, both dailies and magazines have recorded considerable downturns – respectively -17.6% and -18.4% – with almost similar downturns in advertising at both the national and local level.
In terms of circulation, as in the past years, the performance is still recording a decline, in a generalized consumer spending depression which is affecting both dailies and magazines: according to internal assessments based on ADS data, year 2012 has recorded a 8.7% decline in daily newspapers sales.
Performance of Gruppo Espresso results in year 2012.
In this scenario of severe recession, the Group’s consolidated revenues amount to €812.7M, recording an 8.7% decrease with respect to year 2011 (€890.1M).
Circulation revenues amount to €261.5M, down 3.7% over the corresponding period of the previous year (€271,4M) in a market situation which – as mentioned above – has globally suffered a severe 8.7% decline in volumes. The Group’s titles good performances, as compared to the reference market sectors, are confirmed in year 2012. The latest ADS (December 2012) and Audipress data (2012/III Survey) show that la Repubblica is still the top daily newspaper in terms of newsstand sales and readership (3 million).
Moreover, the development of digital products confirmed a good performance (Repubblica+ and Repubblica Mobile), reaching in December 2012 over 66 thousand active subscribers.
According to the latest Audipress figures, the network of local newspapers has recorded 3.2 million average daily readers and, finally, L’Espresso ranks first among the news magazines with 2.5 million readers.
Advertising revenues, which amount to €476.3M, suffered a 10.9% downturn over the previous year, in a market that has declined by 14.3%.
The trend of each single media is basically a reflection of the general market performances; anyway, the results displayed on all the above media are slightly more favorable to the Group.
The Group’s press media suffered a 16.5% downturn (-17.9% in the market) with a 15.6% downturn for dailies vis-à-vis the -17.6% performance of this sector. The radio sector suffered a 2.5% decline, vis-à-vis the 10.2% decline recorded in the market. According to the latest RadioMonitor radio audience survey, Radio Deejay – with 5.2 million listeners on the “average day” – ranks second nationally. m2o radio station is a huge success, with 1.7 million listeners. Radio Capital is also doing well, hitting the 1.6 million mark. Advertising in the Internet has performed very well, expanding by 14% vis-à-vis the slowly-reached +5.3% in the reference market. The Group’s progress is based on the increase in audience: in year 2012, the Group’s network of websites has recorded an average of 2.4 million daily unique users, with a 7% increase with respect to year 2011 (Nielsen Site Census). Once again Repubblica.it ranks first among the information websites displayed in Italian, with an average of 2 million daily unique users (+5% with respect to year 2011) and well-ahead of the first-placed. Moreover, the Group’s audiences of local daily newspapers and “D” have recorded a remarkable increase (+49% and +33% respectively).
Revenues from add-on products amount to €49.4M and are suffering a 21.5% downturn vis-à-vis year 2011 – produced by generalized consumer spending depression and gradual contraction of the specific market going on since year 2007 – after a phase of intense activity.
Other revenues, amounting to €25.6M, have increased by 21.3% vis-à-vis year 2011, thanks to the growth in rental of digital terrestrial television bandwidth to third parties. Total costs show a 2.4% reduction: if one excludes digital edition and DTT activity -whose costs are increasing in order to support their development – a 5% reduction is recorded thanks to a further cost reduction implemented in year 2012 in the Group’s industrial and administrative areas.
The consolidated gross operating profit amounts to €102.4M, decreasing by 35.9% with respect to €159,8M of year 2011. All the Group’s traditional sectors of activity are suffering a decline due to general decrease in revenues; the present crucial situation is particularly affecting the activities concerning the daily newspaper la Repubblica, the Group’s magazines and add-on products, while the Group’s local dailies and radio stations show greater relisience. In contrast, the Internet area is improving, thanks to growth in revenues, likewise the television sector, thanks to the increased bandwidth rental activity. Finally, one should notice that provisions equal to €18.2M to face reorganization expense were set aside in year 2012 vis-à-vis €12,9M of year 2011.
The consolidated operating profit amounts to €60.4M, down 50.7% compared with €122.5M of the previous year. One should notice that increase in amortizations with respect to the previous year is linked to amortization of DTV frequencies linked to the rights-to-use license for 20 years obtained on June 28, 2012.
The consolidated net result has recorded €21.8M profits vis-à-vis €60.6M reached in year 2011. Over the year the Company has allocated €11,9M related to the pending fiscal proceedings.
The consolidated net financial position as at December 31, 2012 is -€108.1M, slightly improved vis-à-vis -€110.2M recorded at the same date of year 2011: the €29M current financial surplus has been absorbed by dividends (€25M) and purchase of own shares (€1.9M).
End of December 2012 the Group staff, including fixed-term contracts, amounted to 2,536 employees, 137 down as at December 31, 2011. The average number of employees in the period was 4.8% lower than in year 2011, decreasing from 2,747 to 2,614 employees.
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The company’s Director of Administration and Accounts, Dottor Gabriele Acquistapace, manager in charge of drafting corporate and accounting records, pursuant to subparagraph 2 art. 154 bis of “Testo Unico delle Finanze” (finance act), states that the accounting information included in this press release corresponds to the documents results, the books and the accounting record.
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Proposed allocation of 2012 net profit The Board of Directors is going to propose to the Shareholders Meeting called on April 18, 2013, not to distribute any dividend for year 2012 and to destinate the Net Profit to the Retained Earnings Reserve, as the legal reserve has already reached 20% of the share capital. verification of requisites for independence of the members of the board of directors and board of statutory auditors The Board of Directors has verified members’ requisites for independence and confirmed that the following members are entitled: Agar Brugiavini, Giorgio Di Giorgio, Mario Greco, Elisabetta Oliveri, Tiziano Onesti, Luca Paravicini Crespi and Michael Zaoui. Requisite for independence and honorability were also confirmed for the members of the Board of Statutory Auditors. Subsequents events and outlook Over the latest five years the Italian publishing industry has recorded some severe decrease in revenues due in particular to the negative performance of advertising investments: this sector has suffered a first drastic decrease in 2009 and again an equally severe decrease in year 2012; both these periods have been characterized by a heavy recession phase in the economic scenario. In order to illustrate the above framework, one should just consider that, according to Nielsen’s assessments, in year 2012 advertising investments have decreased in nominal terms by 24% with respect to their value in year 2007, and in the same period investments in the press sector have suffered a 44% decrease. In addition, the publishing industry has had to face further difficulties linked to the circulation of daily newspapers and magazines, as this sector has been involved in the process of digitalization and also affected by the more general and diffused consumer spending problems. The first two months of year 2013 do not show any sign of improvement: the performances of advertising sales and circulation are in line with those recorded over the last quarter of year 2012. Gruppo Espresso has successfully overcome the economic crisis of year 2009, actually recovering in year 2011 its pre-crisis level of profitability, by means of a deep reorganization process implemented over the 2009-2010 period, thus achieving a significant debt reduction.
In order to face the second wave of crisis appeared in the last quarter of year 2011 and still ongoing, the Group has put in place its plans aimed at accelerating the development of digital editions on the one side, and further cost reduction on the other side. However, even if these actions have enabled reducing the negative impact of the economic crisis and anyway reaching positive results – in a highly burdensome sector – still have not been enough to maintain the profitability of year 2011. On the other hand, in the absence of a radical change of direction in the present economic scenario and specific market – now unlikely to take place – the deterioration of results should be expected to persist over year 2013. Developing digital editions, confirming the success of its traditional products and cost reduction are still the Group management guidelines and, if no change takes place in this framework, the Group shall plan a set of sharper cost reduction actions aimed at enhancing the present situation. – The Board of Directors of Gruppo Editoriale L’Espresso S.p.A. met today in Rome and analysed the consolidated results as at December 31, 2012.Market Outlook 2012 financial statements of the parent company The Parent Company revenues amounted to €403.9M (€459.6M in year 2011). Operating Profit has reached €21.8M (€65.0M in year 2011).Net Profit amounted to €33.9M (€65.5M in year 2011).
