Under the terms of CONSOB Resolution 11971/99 and subsequent amendments and additions
GEDI GRUPPO EDITORIALE S.P.A.
ECONOMIC AND FINANCIAL RESULTS AS OF 30 September 2019
TURNOVER AT € 441.5 MN
ADJUSTED EBITDA AT € 35.9 MN
NET LOSS AT– € 18.3 MN (effect of the sale of Persidera – € 16.9 MN; restructuring expenses – € 3.7 MN)
ADJUSTED OPERATING PROFIT/(LOSS) 3RD QUARTER
SUBSTANTIALLY IN LINE WITH 2018
NET FINANCIAL DEBT AT € 118.4 MN
Rome, 21 OCTOBER 2019 – The Board of Directors of GEDI Gruppo Editoriale S.p.A. met today in Rome. The meeting was chaired by Marco De Benedetti. In relation to the assessments expressed by Mr De Benedetti in his interview with the Corriere della Sera on the Group’s performance, the Board of Directors wishes to specify that, although it acknowledges the difficulties it faces, deriving from the ongoing suffering of the print media sector which affects the results of all publishers, the GEDI Group maintains a solid leadership in daily newspapers, digital media and radio, and adopts measures capable of facing the future, investment and development, and creating sustainable value, fully aware of the significance and delicacy of the business and of the function that it performs in the country, with a sense of responsibility and respect for the work done by the management and by the editors of the publications and by all the women and men who work proudly in it. The Board subsequently approved the consolidated results as at 30 September 2019 presented by the Chief Executive Officer Laura Cioli.
In the first eight months of 2019, advertising investments came down by 5.9% compared to the corresponding period of the previous year (Nielsen Media Research figures).
Among the main media only radio and the Internet (excluding Search and Social) showed a positive trend with growth respectively of 2.5% and 2.2%. Revenue of television fell by 6.4%, while printed media was the format that suffered most, recording a further drop of 12.5% with newspapers reporting -10.6% (-12.7% revenue for national papers and -7.7% for local papers) and magazines -15.5%. According to ADS (Accertamento Diffusione Stampa) data, in the first eight months of 2019, newspaper subscriptions and sales at news stands fell by 8.2% (-6.7% for national newspapers and -9.0% for local newspapers). Including digital copies, overall circulation dropped by around -7.3%.
Operating performance of the GEDI Group in the first nine months of 2019
Consolidated revenues, totalling € 441.5 million, fell by 6.0% compared to the first nine months of 2018. Revenue from all digital activities accounted for 12.0% of consolidated turnover (14.8% the Repubblica brand), and the digital products of the various Group publications at the end of September 2019 reached 126,000 subscribers.
Circulation revenues, amounting to € 205.2 million, decreased by 4.8% compared with the corresponding period of the previous financial year, in a market which, as indicated above, reported a decrease of 8.2% in the sales of daily newspapers at news-stands and via subscription.
Advertising revenue, at €206.4 mn, fell by 7.0% compared to the first nine months of 2018.
Costs, including depreciation and amortisation, were 5.2% lower compared to the first nine months of 2018. Personnel costs (-6.2%) and other costs (-4.5%) decreased. However, these reductions only partially reflect the effects of restructuring of the editorial team of La Repubblica (which became operational during March) and the closure of two printing sites (from April).
Adjusted gross operating profit came to € 35.9 million, while it would have been € 25.1 million prior to application of IFRS 16, compared to € 31.6 million in the first nine months of 2018. The gross operating profit was € 31.1 million (€ 20.2 million net of the impacts of IFRS 16), including restructuring expenses for a total of € 4.9 million deriving mainly from the further rationalisations of the industrial structure and of the commercial structures of the Group’s advertising concessionaire.
The adjusted operating profit/(loss), excluding the above restructuring expenses, amounted to € 12.0 million (€ 11.5 million before the application of IFRS 16) compared to the € 17.5 million of the first nine months of 2018. Operating profit was € 7.1 million (€ 6.7 million net of the impacts of IFRS 16).
The consolidated net loss was € 18.3 million (- € 17.3 million excluding the effects of IFRS 16) including the effects of the sale of Persidera (- €16.9 million) and restructuring expenses with impact on the net profit/(loss) of € 3.7 million. Net of these effects there was a consolidated net profit of € 2.2 million; the first nine months of 2018 ended with consolidated net profit of € 7.8 million.
In particular, on 5 June 2019, the Parent Company GEDI Gruppo Editoriale SpA, in agreement with TIM SpA, the other seller, signed a binding agreement with F21 and Ei Towers for the sale of its 30% stake in the company Persidera, a non-core asset of the Group. The agreement sets a price for GEDI of € 74.5 million, from which will be deducted at the closing the dividends distributed during 2019 (of € 4.3 million received in April) and to which will be added the interest accrued from 1 August up to the closing date.
Therefore, the net loss includes the write-down on the value of the equity investment of € 16.9 million, made to adjust the book value to the sale price, increased by € 0.4 million for costs to sell and decreased by € 0.4 million related to the interest accrued from 1 August on the price.
The net financial debt at 30 September 2019 before the application of the new accounting standard IFRS 16 amounted to € 118.4 million, up compared to the € 103.2 million of the end of 2018 owing mainly to € 25.6 million of payments related to reorganisation plans in progress. Application of IFRS 16 led to recording, at 30 September 2019, of payables for leasing and rights of use of € 58.6 million, and therefore net financial debt after IFRS 16 application totalled € 177.0 million. We can remind you that on 9 April 2019, the Company entirely repaid on maturity the convertible bond loan with a value of € 100 million, partially via a revolving credit line agreed in April 2018.
The Group’s workforce, including fixed-term employees, at the end of September 2019, numbered 2,241 employees, down 118 compared to 31 December 2018. The average workforce for the period was 6.3% lower than in the first nine months of the previous year.
The Company’s Director of Administration and Accounts, Mr Gabriele Acquistapace, the company’s Financial Reporting Manager, hereby attests, under the terms of paragraph 2 of Art. 154-bis of the “Testo Unico delle Finanze” (Consolidated Law on Finance) that the accounting disclosure contained in this press release corresponds to the results documented in the Company’s accounts and ledgers.
Key results for the third quarter
The performance in the third quarter, as already in the second, shows an improvement compared to the trends recorded in the early months of the year. In the period July-September a drop was recorded in total turnover of 5.8%, substantially in line with that which characterised the first half of the year (-6.1%) but with non-uniform trends among the different components: the reduction in advertising revenue (-5.9%) and circulation revenue (-4.0%) was less than that of the previous months (-7.4% and -5.2% respectively in the first half of the year) while the reduction in revenue from add-ons and others was more significant (-17.5%) owing to a different calendar of activities.
The trend in total costs, including operating income/(expenses) , showed a drop of 5.4% compared to the corresponding period of 2018 and was in line with the reduction recorded in the first months of the year (4.7%).
The adjusted operating profit/(loss) was € 4.3 million, showing a reduction compared to the third quarter of 2018 (-15.9%) decidedly lower compared to that recorded in the first half of the year (-38.5%); the consolidated net profit/(loss) amounted to € 0.7 million (€ 3.5 million in the corresponding period of 2018).
Subsequent events at the close of the first nine months of the year and outlook
There were no significant events subsequent to the end of the first nine months of the year.
The results of the second and third quarters, which are substantially in line with the corresponding period of the previous year (- € 1.0 million), show much better performance compared to the first months of the year.
With regard to the prospects for 2019, there are no market developments that are significantly different from those affecting the first nine months.
For the fourth quarter we expect to see further effects from the measures implemented: the relaunch of the La Repubblica newspaper and the restructuring of the editorial team, the rationalisation following closure of a further two printing sites, reorganisation of GEDI News Network and consequent opportunities for further increased efficiency and synergy, and the development of technological platforms with particular reference to CRM and editorial systems.
It can therefore be expected that, in the absence of currently unforeseeable events, the Group will record a positive result at the end of the year, excluding the impact of the sale of Persidera and of any other non-ordinary components.
Under the terms of CONSOB Resolution 11971/99 and subsequent amendments and additions