REVENUES AT 648.7MN (€615.8MN IN 2017)
ADJUSTED EBITDA AT €51.7MN (€57.4MN IN 2017)
NET DEBT AT €103.2MN (€115.1MN AT END OF 2017: IN JULY DISBURSEMENT OF €35.1MN AS LAST INSTALMENT OF TAX DISPUTE)
Rome, March 1 2019 – Today in Rome, under the chairmanship of Marco De Benedetti, the Board of Directors of GEDI Gruppo Editoriale S.p.A. met and approved the consolidated results as of December 31 2018 as presented by Chief Executive Laura Cioli.
Performance of the market
In 2018, the advertising market was essentially stable (-0.2%) compared to the previous financial year (Nielsen Media Research figures).
All the main media, except for the printed press, showed a positive performance: radio reported advertising orders up by 5.5%, confirming the trend in progress since 2015, the internet, excluding search engines and social media, reported a rise of 4.5% and television a rise of 0.6%. By contrast, orders for the printed media again posted a loss of 7.0%, with newspapers reporting -6.2% (-4.9% orders for the national papers and -7.4% for the local papers) and magazines -8.2%.
As for newspaper circulation in 2018, according to ADS (Accertamento Diffusione Stampa) figures, there was a decline in sales on the news-stands and by subscription of 7.4% (-8.3% for national papers and -6.8% for local papers). Including digital copies, overall circulation dropped by around 5.7%.
Performance of operations of the GEDI group in 2018
It should be remembered that, on June 27 2017, the merger was completed into GEDI of the ITEDI Group, publisher of the newspapers La Stampa and il Secolo XIX. As an effect of this deal, GEDI acquired control of the ITEDI Group, which entered the consolidation perimeter on June 30 2017. Thus, the income statement of the GEDI Group for the year 2017 included the ITEDI Group from July 1, 2017 onwards.
For the main economic indicators illustrated below, the change from 2017 is also given on a like-for-like basis.
Consolidated revenues, totalling €648.7mn, rose by 5.3% compared to 2017 (-5.9% on a like-for-like basis). The revenues from all the digital activities accounted for 12.2% of consolidated revenue, and the digital products of the various Group publications at the end of 2018 exceeded 113,000 subscribers.
Circulation revenues came to €284.6mn and were up by 8.3% on those of the previous year, but were down by 8.1% on a like-for-like basis in a market that, as stated above, has continued to report a significant decline in newspaper circulation.
Advertising revenues, totalling €318.0mn, rose by 4.9% compared to 2017, but were down by 2.9% on a like-for-like basis.
As for the Group media, advertising orders for radio grew by 5.5%, confirming the positive trend already seen in the previous year.
Internet orders showed growth of 11.0% (+3.1% on a like-for-like basis).
Lastly, orders for the printed press rose by 3.2% (-8.1%on a like-for-like basis).
Costs were 7.1% higher than in 2017 but fell by 4.5% on a like-for-like basis. More specifically, industrial fixed costs were lower (-6.0%) thanks to the ongoing reorganization of the production structure of the Group, and operational and administrative costs were also down (-4.4%) thanks to the measures adopted to reduce labour costs, overheads and editorial costs (-1.9%) thanks to the first effects of the actions taken to reduce journalism costs and charges for editorial collaborators.
The gross operating margin was €33.1mn (€52.8mn in 2017), including restructuring expenses and other non-ordinary items totalling €18.7mn (€4.6mn in the previous year). Such charges derive for €17.6mn from the trade union agreements signed at the end of 2018 regarding the editorial reorganisation of the publications La Repubblica and L’Espresso, which will significantly positively affect the costs of journalism in 2019. Of these costs, about 50% relate to retirements already agreed in the first months of 2019, and the remaining 50% relates to future retirement forecasts. Net of such effects, the adjusted gross operating margin totalled €51.7mn, comparable to the €57.4mn of 2017.
The consolidated operating result showed a negative balance of €11.1mn compared to the €28.2mn of 2017 (€27.6mn on a like-for-like basis) and includes, as well as the restructuring expenses as above, €1.3mn of write-downs of printing plants (€8.3mn in 2017) and €24.2mn of write-downs on goodwill for publications recognized on the basis of the impairment test verification. Net of such components, the adjusted operating result totalled €33.1mn, comparable to the €41.1mn of 2017.
Financial expenses increased from €8.7mn in 2017 to the current €10.8mn, as a result of the increase in financing sources after the Company stipulated new loan agreements in 2018 with a view to reimbursing the bond issue due in April 2019.
Write-downs for €12.0mn were also made in 2018 on the shareholdings held in Persidera and Editoriale La Libertà based on the results of the impairment test.
The consolidated net result showed a loss of €32.2mn, including, as specified above, write-downs of goodwill on publications and shares investment recognized on the basis of the impairment test verification for a total of €36.3mn and expenses for restructuring and other non-ordinary components with an effect on the net result of €12.6mn. The net result in 2017 had been negative by €123.3mn (-€125.1mn on a like-for-like basis) as a result of an extraordinary tax charge of €143.2mn from the settlement of a dispute, pending in the Court of Cassation, relating to tax-avoidance issues regarding the tax benefits resulting from the corporate reorganization of Gruppo Editoriale L’Espresso in 1991.
Net debt totalled €103.2mn at December 31 2018, an improvement compared to the €115.1mn at the end of 2017. On July 2 2018, the Company made a payment of €35.1mn as the final instalment of the above-mentioned settlement of its tax dispute.
The Group had 2,359 employees at the end of 2018 including temporary contracts, and the average number of employees for the period on a like-for like basis was 2.5% lower than in 2017.
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.
The 2018 financial statements of the parent company
The parent company’s revenue totalled €255.7mn (€279.6mn in 2017). The operating loss was €35.5mn (-€5.0mn in 2017). The net result was a loss of €32.2mn (-€116.6mn in 2017).
Proposal to the shareholders’ meeting
Given the presence of available reserves in the financial statements for a total of €344,443,160.84, the Board of Directors proposes to the Shareholders’ Meeting called on April 19, 2019full coverage of the losses for the year, totalling €32,158,364.81 using the available reserves recorded in the financial statements as at December 31 2018The revocation and renewal of the power of attorney to the said Board is further proposed to the Shareholders’ meeting for a period of 18 months for the purchase of a maximum of 20 million treasury stocks at a unit price which shall be no higher than 10% and no less than 10% with respect to the reference price recorded by the shares in the session of the Italian Stock Exchange prior to each purchase transaction or the date on which the price is set and, in any case, where the purchases are made on regulated markets, for a payment not exceeding the highest price between the last independent transaction and the highest current independent purchase offer price on the market, in compliance with the provisions of the EU Delegated Regulation 2016/1052.
The main reasons for renewing the authorisation are to: fulfil the obligations deriving from any share options programmes or other assignments of Company shares to employees or to members of the administrative or control bodies of GEDI or its subsidiaries; fulfil the obligations deriving from any debt instruments convertible or exchangeable with share instruments; set up a portfolio of treasury stocks to be used as payment in any extraordinary transactions, including equity exchanges, with other entities as part of transactions of interest to the Company (the so-called “securities inventory”); carry out liquidity support activities of the security on the market; take the opportunity to create value and to ensure an efficient use of liquidity in relation to the performance of the market; for any other purposes rated by the competent authorities as admissible market practices in accordance with the applicable European and domestic guidelines, and with the procedures established therein.
Verification of the existence of the requisites of independence of the directors and statutory auditors
The Board of Directors has checked the existence of the requisites of independence of the directors, confirming in such role Prof. Agar Brugiavini, Mrs. Giacaranda Maria Caracciolo di Melito Falck, Mrs. Elena Ciallie, Prof. Alberto Clò, Mrs. Silvia Merlo, Ms. Elisabetta Oliveri, Mr. Luca Paravicini Crespi and Mr. Michael Zaoui, as well as the requisites of independence and honour of the Board of Statutory Auditors.
Subsequent events and outlook
No significant events have taken place since the close of the year.
With regard to developments in the first few months of 2019, the information currently available does not suggest any significant changes in market trends to those that characterised 2018.
In this context, the Group will continue to engage in developing its products, to implement the rationalization measures to preserve profitability in a structurally difficult market, to achieve further advantages deriving from the merger with the Itedi Group and strengthen its leadership in digital activities.