As per the terms of Consob Resolution no. 11971/99 and subsequent amendments and additions
RESULTS FIRST 9 MONTHS 2017
REVENUES: €440MN
(+3.7% on 2016)
EBITDA: €34.1MN
(in line with 2016)
NET FINANCIAL POSITION POSITIVE: €40.5MN
(an improvement from the €31.7mn at end of 2016)
RESULT BEFORE EXTRAORDINARY TAX CHARGE POSITIVE
EXTRAORDINARY TAX CHARGE IMPACT AT €154.5MN
RESULTS THIRD QUARTER SIGNIFICANTLY STRONGER THANKS TO INTEGRATION WITH ITEDI (revenues: +16.2% – ebitda: +27%)
Rome, October 25 2017 – The Board of Directors of GEDI Gruppo Editoriale S.p.A. met today in Rome under the chairmanship of Marco De Benedetti and approved the consolidated results as of September 30 2017 presented by Chief Executive Officer Monica Mondardini.
Economic and Financial Results of the GEDI Group at September 30 2017
Below are the main economic and financial indicators at September 30 2017. It should be noted that there is a significant difference in the consolidation perimeter between the first nine months of 2017 and the same period of 2016, due to the deconsolidation of 5 newspaper titles in the last quarter of 2016 and to the consolidation of the ITEDI Group as from July 1 2017. The comparison between the two periods does not therefore fully represent the performance of operations.
As an effect of this transaction, as from June 27 2017 GEDI acquired control of the ITEDI Group. June 30 2017 was adopted as the date of consolidation and therefore the income statement of the GEDI Group for the first nine months of 2017 includes the ITEDI Group as from July 1.
In evaluating the economic results of the first nine months of 2017 and comparing them with the same period of 2016, in addition to the transaction described above, it is also necessary to take into account the deconsolidation in the fourth quarter of 2016 of 5 local newspapers belonging to the Group (Alto Adige, Il Trentino, Il Centro, La Città di Salerno, La Nuova Sardegna).
In order to guarantee that the figures are comparable, a pro-forma income statement for the first nine months of 2016 was drawn up with the same consolidation perimeter as the present one, i.e. excluding the newspapers that were given and including the ITEDI Group for the period July 1- September 30 2016. The chart below shows the main economic parameters.
Consolidated results with the same consolidation perimeter (€mn)
Performance of the market
After the slight recovery in 2016, in the first eight months of 2017 advertising investment declined by 4.0% on the same period of the previous year (Nielsen Media Research figures).Radio confirmed the positive trend that began in 2015, posting growth of 3.2% compared to the same period of 2016; television was down by 3.5%; the internet (excluding search and social media) received orders that were substantially unchanged from those of the same period of 2016 (-1.0%); the printed press fell by 9.1%, with newspapers posting -10.5% (-13.7% for national advertising and -7.8% for local advertising) and magazines -7.0%.
As for newspaper circulation, according to ADS (Accertamento Diffusione Stampa) figures, in the period from January to August 2017 sales on the newsstands and by subscription fell by 8.8%, a number that was substantially in line with that of the previous year.
Performance of operations of the GEDI Group in the first nine months of 2017
Consolidated revenues, amounting to €440.0mn, were up by 3.7% on the corresponding period of 2016 and remained substantially unchanged with the same consolidation perimeter (-0.2%).
Circulation revenues, totalling €145.0mn, were down by 5.6% compared to the first nine months of 2016 and by 6.3% on a like-for-like basis, in a market that, as described above, has continued to show a significant reduction in the circulation of newspapers (-8.8%).
Advertising revenue rose by 11% compared to the same period of 2016; growth on a like-for-like basis came to 6.0%, with a decline of 4.5% for the Group media but a significant improvement of third-party concessions thanks to the new concessions of Radio Italia and the newspapers La Stampa and il Secolo XIX for national advertising in the first six months of the year.
As regards the Group media, advertising orders for radio increased by 2.8%, confirming the positive evolution already seen in the previous year.
Orders for the internet showed a slight increase (+1.6%), with a performance that was better than that of the market (-1.0%).
Lastly, print orders fell sharply (-8.3%), affected by the negative trend of advertising orders in the newspaper sector, which in August declined by 10.5%.
Costs, excluding optional products and third-party concessions, were down by 4.5% and by 6.1% on a like-for-like basis; both fixed personnel costs and other costs were also lower (-4.4% and -7.4% respectively).
The consolidated gross operating margin came in at €34.1mn, a figure that was in line with that reported in the same period of 2016 and an improvement on the figure on a like-for-like basis (€32.9mn), despite the adverse evolution of the sector.
The consolidated operating result came to €22.7mn and was in line with the result for the same period of 2016 (€22.8mn) but higher than the result on a like-for-like basis (€20.5mn).
Overall tax expense came to €160.1mn because of the extraordinary charge incurred for the settlement of the dispute described above, for an amount of €154.5mn.
The consolidated net result because of the tax change mentioned above was a loss of €143.9mn, which compares to net income of €11.5mn in the first nine months of 2016 on a like-for-like basis.
The net financial position at the end of September 2017 was a positive €40.5mn and showed an improvement compared to the end of 2016 (€31.7mn) in spite of the fact that the merger during the period of the ITEDI Group had involved consolidating the latter’s negative net financial position of €8.4mn. Taking into account the settlement of the tax dispute, as illustrated above, during the fourth quarter and more precisely on October 2 and November 30 the Company will make total disbursements of €140.2mn, after which it will have net debt of around €100mn.
The Group had 2,475 employees, including temporary contracts, at the end of September, after the entry of 532 persons from the ITEDI Group.
Main economic results of third quarter 2017
The results for the third quarter of 2017 show how the Group, with its new consolidation perimeter, is significantly stronger than it was previously.
Its Consolidated net revenues were 16.2% higher than those of the equivalent quarter of 2016, and the operating result was up from €5.1mn to €6.8mn; the consolidated net result was a loss of €151.2mn, taking into account the fact that the extraordinary tax charge was recognized in the accounts during the third quarter.
As already noted, to evaluate the performance of operations more accurately, given the change in the consolidation perimeter, pro-forma accounts were drawn up for 2016 using the current consolidation perimeter.
On the like-for-like basis consolidated net revenues declined by 3.3% as a result of the continuing negative trend of the sector, both in terms of circulation and of advertising orders. The consolidated operating result, however, rose to €6.8mn from €4.9mn in 2016.
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The Company’s Director of Administration and Accounts, Mr Gabriele Acquistapace, the Executive responsible for the preparation of the company’s financial statements, hereby attests in compliance with the terms of paragraph 2 of Art. 154-bis of the “Testo Unico delle Finanze” (Finance Consolidation Act) that the figures contained in this press release correspond to the results documented in the company’s accounts and general ledger.
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Main events that have occurred since the close of the first nine months and outlook for the rest of the year
On October 9 GEDI Gruppo Editoriale acquired 10% of Radio Italia from Mario Volanti, the majority shareholder of the Company. Radio Italia is one of the top 5 radio stations in Italy, with almost 4.4 million listeners on an average day. Its format is based on Italian music, it owns the television channel Radio Italia TV and organizes important events such as concerts and music tours. Its editorial content and its audience profile complement those of GEDI’s radio stations extremely well. With the acquisition of this shareholding GEDI aims to develop its collaboration with Radio Italia, strengthening its position in a sector where advertising revenues have been increasing for years, unlike those of the traditional media.
Regarding the outlook for the year 2017, based on the performance reported in the first nine months of the year, there are no signs of an improvement in the negative trends that have been affecting the newspaper and magazine sector for years, while the positive evolution of radio is consolidating. In this context the Group continues to be committed, in particular, to the radio sector, to the development
of its digital businesses, in which it is a market leader, and to cutting costs, and is of the opinion that, in the absence of any events that cannot at the moment be foreseen and without considering the impact of the settlement of the tax dispute, it will report a positive result and the merger with ITEDI will bring new opportunities.
