The Espresso Group: The Board of Directors approved the consolidated financial statements of the first half 2009

Market outlook
The results attained by the Espresso Group over the first half 2009 have to be analysed in the framework of the  heavy crisis that is  currently weighing on the economy and, in particular, on the reference market. Since the fall of 2008 the serious recession that has hit the economy has produced – as widely publicized – a significant contraction of the advertising market, that in the last quarter
of 2008 has recorded an overall decline equal to 9.5% and equal to 13.4% in the publishing sector.
According to the figures published by Nielsen Media Research, since January 2009 this contraction  has significantly worsened: in the first five months of the year advertising investments have recorded an overall decline  of 17.5%, and of 25.1% in the publishing sector, with daily newspapers dropping by 22.2% and magazines by 29.5%.
The abovementioned contraction  has affected also the radio sector, in which advertising revenues dropped by 18.6%; the only performance with a positive trend was advertising on the Internet which, nonetheless, has equally recorded a slowdown (+7.8%).
As far as trends are concerned the recent monthly data show that the market has slightly improved, this being likely due more to the progressive decline recorded in 2008 than to the real appearance of a recovery. 
Alongside the general decline in  consumption, in the first half of 2009 circulation of daily newspapers and magazines equally recorded a slowdown: decline in sales was respectively 5.5% in daily newspapers, 6.1%  in weekly magazines and 8.2% in monthly titles (source ADS).
Gruppo Espresso first-half 2009 financial report
The Group’s consolidated net profit over the first half 2009 was equal to €449.3mn, with a decline of 17.3% on the corresponding period of 2008 (€543.2mn).
Advertising revenues, amounting to €246.2mn, show an overall reduction of 23.8% with a slightly improving trend in the second quarter (-21.3%) on  the previous quarter (-26.8%).
Advertising revenues of daily newspapers, with a decline of 19%, are recording a decrease lower than  the reference market, while the  other Group’s media  are showing trends substantially in line with the trends of the respective markets. 
Circulation revenues, net of add-on products, amounted to €132.7mn and show a good resiliency (-1.9% on the corresponding period of 2008). In particular, circulation revenues from daily newspapers are in line with 2008 thanks to the stability of sales of local dailies and to the increased newsstands  sales of  la Repubblica  over the latest few months. In contrast, magazines show a decline in line with the market trends.
As far as circulation is concerned, the local daily newspapers have recorded values in line with the first half of 2008, thus confirming the higher resiliency of this sector and the strength of the Group’s  titles; in contrast,  la Repubblica and L’espresso have recorded a decline that was also determined by the decision to eliminate or reduce some highly promotional, but unprofitable, circulation initiatives.
Finally, Revenues from add-on products have suffered a reduction of 15% to €61.2mn, that, nonetheless,  should be considered a positive performance as it  was attained in a market recording a severe contraction.
Consolidated Gross Operating Profit amounts to €40.6mn with respect to €96.7mn of the first-half 2008, showing a decline of 58.1%. It must be noticed that the impact of the drastic reduction of advertising revenues was partially offset by the significant structural reduction on operating costs (-12.1%), realized thanks to the current reorganization plan that at full speed will produce a cost reduction of 17% (€140mn) with respect to year 2008. It must be noticed however that the implementation of the abovementioned plan entails extraordinary expense that has had an impact on the profit and loss account of the first half-year.
The consolidated operating profit amounts to €19.3mn (€75.5mn in the first-half of 2008) and the consolidated net profit to €0.1mn (€36.4mn in the corresponding period of 2008); this year again the local daily newspapers and the radio sectors are showing a good profitability; while a loss was recorded by the divisions of  la Repubblica and L’espresso, that have reflected the much more severe reductions in advertising revenues, that have hit their reference markets.
The consolidated net financial position improved from an indebtedness of €278.9mn at the end of  2008 to an indebtedness of €249.1mn as of  June 30 2009, with a financial surplus of  €29.8mn generated by a current cash flow of to €46mn, equal to the one generated during the first half of 2008, and by investments amounting to €14.6mn (vis-à-vis €33.9mn of the corresponding period of 2008). 
At the end of June 2009 the employees of the Group – including term contracts – totalled 3,208 persons, 242 less (-7%) than at the end of June 2008 and 136 less with respect to the end of 2008, reflecting – even if still only partially – the effects of the  ongoing restructuring plans.
Alessandro Alacevich, Central Director of Finance and Administration,  dirigente preposto alla redazione dei documenti contabili societari (manager in charge of drafting theaccounting  and corporate records), pursuant to subparagraph 2 article 154bis of Testo Unico della Finanza (Finance Act) states that the accounting information included in this press release corresponds to the documented results, the books and the accounting records. 
Expected trend of operations
Over the first half-year the market recorded a drastic reduction in advertising investments on the previous year and the recent monthly performance shows an almost stable situation.
In the abovementioned extremely critical framework, the Group is implementing a complex plan of measures aimed at both counterbalancing the declining revenues’ impact on profitability and to ensure the necessary development.
In particular, a number of necessary actions has been started to adjust the structure of costs to the decline of the market, setting out interventions that will entail overall structuralsavings equal to around €140mn (-17%) with respect to the costs of 2008: this amount will enable to significantly counterbalance the  impacts on the Group’s revenues produced by the current reduction of advertising investments.
A new impulse was given to the commercial activities that in the first-half of the year have already enabled the Group’s media to show a recovery of competitiveness in the advertising market. 
In addition, managerial skills were strengthened in order to better enhance the development of contents on the new platforms. 
Finally, the  quality of the journalistic effort of the Group’s  titles  is  supported also  by the circulation trend that is better than the reference market.
The trend of operation for the rest of the year  is tightly linked to the uncertainty of the development in the economic situation; nonetheless, at present no significant changes are foreseen vis-à-vis the reported results.

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