Espresso group: results for first half 2012

The Board of Directors has approved the consolidated results as at 30 June 2012

NET INDEBTNESS AT €147.1M (€150.7M AT JUNE 2011)

Espresso Group financial results at June 30, 2012 

Consolidated results (€m)1st half2011 1st half2012 D%2012/2011 
Revenues, of which:457.4419.8-8.2%
·          Circulation129.2127.1-1.6%
·          Advertising274.4251.1-8.5%
·          Add-on Products40.825.6-37.3%
·          Others13.016.0+23.1%
Gross operating profit81.560.8-25.4%
Operating profit 63.042.1-33.2%
Pre-tax profit55.736.2-35.0%
Net profit31.521.2-32.7%
(€m)30 June201131 December201130 June2012
Net financial position(150.7)(110.2)(147.1)

Shareholders’ Equity including minority interests

·          Shareholders’ equity542.4563.3560.3
·          Minority interests3.61.71.7

Rome, 25 July 2012 –
The Board of Directors of Gruppo Editoriale L’Espresso met today in Rome under the chairmanship of Carlo De Benedetti, and approved the consolidated results at 30 June 2012.

Market Outlook

The deteriorating economic situation, characterised by a period of severe recession and great uncertainty about future prospects, has weighed heavily on the publishing industry.
Advertising investments are in sharp decline: in the first five months of 2012, they declined by 9.5% over the same period in 2011 (source: Nielsen Media Research).
The trend was negative for all traditional media: print was down 13.6%, television 10% and radio 5.5%. Advertising sales on the Internet, however, continued their favourable trend, rising by 10.6%.
As concerns the press in particular, dailies and periodicals posted similar declines, ‑13.5% and ‑13.8% respectively.
In terms of circulation, ADS data (moving average in February 2012, on a like-for-like basis) show a reduction in newsstand sales of 5.3% for dailies, 6% for weeklies and 9.7% for monthlies.

Performance of Gruppo Espresso results over the first half of 2012.

Consolidated revenues
amount to €419.8m, down 8.2% on the first half of 2011 (€457.4m). This decline is attributable to the performance of add-on products, which was extraordinarily positive in the first half of 2011, and to the decline in advertising revenue, due to market trends.
Circulation revenues
, excluding add-on products, amounted to €127.1m, showing relative resilience when compared with the same period in the previous year (€129.2m), thanks in part to the gradual adjustment of newspaper cover prices.
The latest ADS (May 2012) and Audipress data (2012/I Survey) show that la Repubblica is once again the top daily newspaper in terms of newsstand sales and the top information daily in terms of readership (3.5 million).
The latest Audipress figures also show that L’Espresso is the top-ranking news magazine, with 2.6 million readers, up 4.2% on the previous survey.
Lastly, in June 2012, the significant programme to renovate the 18 local newspapers was completed, giving them new, full-colour graphics and a totally integrated press-Web publishing system.
Advertising revenue
, which amounted to €251.1m, registered a decline of 8.5% over the first half of 2011, in a market that was down by 9.5% in May.
By individual sector, the trends reflect general market trends: the press was down 12.6% and radio 5%.
The trend in Internet advertising, on the other hand, was very positive, expanding by 13.2%, thus confirming the brilliant results of recent years, even in a decidedly unfavourable context.
Revenues from add-on products
amounted to €25.6m, significantly down (-37.3%) on the same period in 2011; this reflects on the one hand the impact of a general decline in consumption and, on the other, the particular success that was obtained by these initiative in the first half of last year.
Other revenues
, amounting to €16m, increased by over 20% compared with the first six months of 2011, thanks to growth in rental of digital terrestrial television bandwidth to third parties as well as positive developments in subscriptions to digital products.
Total costs
show a reduction of 4.2%, mainly as a result of new plans to reduce headcount and cut costs, which were implemented during the course of 2011.
The consolidated gross operating profit amounts to €60.8m, 25.4% less than the €81.5m in the first half of 2011. About half of this decline is due to lower margins on add-on products and the remainder to press and radio activities, which were hit by the downturn in advertising revenues, while the results of Internet and television activities improved.
The consolidated operating profit amounts to €42.1m, down 33.2% compared with €63m in the same period of the previous year.
The consolidated net result recorded profits of €21.2m, down from €31.5m in first half of 2011.
The consolidated net financial position, taking into account dividends amounting to €25m and purchases of own shares amounting to €1.2m, came to ‑€147.1m at 30 June 2012, compared with ‑150.7m as of June 30, 2011.
The Group staff, including fixed-term contracts, amounted to 2,632 employees at end June, 41 down on 31 December, 2011. The average number of employees in the period was 4.8% lower than in the first half of 2011.


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.


Subsequents events and outlook

In light of the general state of the economy and the negative prospects for the short to medium term, it can be expected that the difficulties observed in the sector in the first half of the year are destined to continue, particularly as regards advertising sales.
In spite of this, the Group closed the first half of the year with a significantly positive result, confirming the forecast of a positive result for the entire year, even though quite sharply down on 2011.
The structural nature of the current crisis means that the Group must once again be committed to actions to safeguard its profitability in the short and medium term.


It is recalled that, with ruling no. 64/9/2012, filed on 18 May 2012, the “Commissione Tributaria Regionale” (regional tax commission of Rome), ruled on assessments issued by the “Agenzia delle Entrate” (revenue office) concerning events dating back to the 1991 tax year, partially condemning the company. In particular, the “Commissione Tributaria Regionale” declared as legitimate the application of ITL 440,824,125,000 tax on capital gains which, according to the commission, had been made but not declared and ITL 13,972,000,000 for costs indicated as non-deductible for dividends and tax credits, with the application of penalties set at the legal minimum and payment of court costs.
Considering the ruling to be patently unjustified as well as clearly unlawful on numerous aspects of ritual and merit, the Group appealed to the “Corte di Cassazione” (supreme commission) on 27 June 2012 and made a request for suspension of proceedings to the “Commissione Tributaria Regionale” on 28 June 2012.
On 19 July 2012, the “Commissione Tributaria Regionale” suspended the enforceability of the ruling.

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