INTERIM MANAGEMENT STATEMENT AS AT 31 MARCH 2013
24 ORE GROUP INTERIM MANAGEMENT STATEMENT MARCH 2013
CORPORATE BODIES ................................................................................................................................. 3 STRUCTURE OF THE 24 ORE GROUP ........................................................................................................ 5 HIGHLIGHTS ........................................................................................................................................... 6 OPERATING PERFORMANCE IN THE FIRST THREE MONTHS OF 2013 ................................ 7 SEGMENT REPORTING ...................................................................................................................... 10 SIGNIFICANT EVENTS IN THE FIRST THREE MONTHS OF 2013 ........................................... 18 EVENTS AFTER 31 MARCH 2013 ...................................................................................................... 19 FINANCIAL STATEMENTS ................................................................................................................ 21 HIGHLIGHTS OF INCOME STATEMENT ..................................................................................................... 21 STATEMENT OF FINANCIAL POSITION ..................................................................................................... 22 STATEMENT OF CASH FLOWS ................................................................................................................. 24 NET FINANCIAL POSITION ...................................................................................................................... 25 COMMENTARY ..................................................................................................................................... 26 GENERAL INFORMATION ........................................................................................................................ 26 FORMAT, CONTENT, AND REPORTING STANDARDS ................................................................................. 28 NOTES TO THE FINANCIAL STATEMENTS .................................................................................. 29 INCOME STATEMENT ............................................................................................................................. 29 STATEMENT OF FINANCIAL POSITION ..................................................................................................... 32 OUTLOOK FOR THE YEAR................................... ERRORE. IL SEGNALIBRO NON È DEFINITO. DECLARATION PURSUANT TO ART. 154-BIS, PARAGRAPH 2, ITALIAN LEGISLATIVE DECREE NO. 58 OF 24 FEBRUARY 1998, AS AMENDED .............................................................................................................. 36
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24 ORE GROUP INTERIM MANAGEMENT STATEMENT MARCH 2013
Corporate bodies The Board of Directors and the Board of Statutory Auditors were elected by the Ordinary Shareholders’ Meeting on 29 April 2013. The Board of Directors and the Board of Statutory Auditors will remain in office until the Shareholders’ meeting held to approve the 2015 financial statements.
Board of Directors Chairman
Benito BENEDINI
Chief Executive Officer
Donatella TREU
Directors
Luigi ABETE Antonio BULGHERONI Alberto CHIESI (2) Maria Carmela COLAIACOVO Mario D’URSO (1) Marcella PANUCCI Alessandro SPADA Carlo TICOZZI VALERIO (1) Marco VENTURI
Secretary to the Board Gianroberto VILLA
(1)
Independent Director
(2)
Co-opted on 30 April 2013 to replace Mario Mirarchi, who resigned on 29 April 2013.
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24 ORE GROUP INTERIM MANAGEMENT STATEMENT MARCH 2013
Board of Statutory Auditors Chairman
Luigi BISCOZZI
Standing statutory auditors
Maurilio FRATINO Laura GUAZZONI
Alternate Statutory Auditors
Maria SILVANI Fabio FIORENTINO
Representative of special-category shareholders Mario ANACLERIO
Corporate financial reporting manager Massimo Luca ARIOLI
Internal Audit Manager Massimiliano BRULLO
Independent auditor KPMG S.p.A.
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24 ORE GROUP INTERIM MANAGEMENT STATEMENT MARCH 2013
Structure of the 24 ORE Group Il Sole 24 ORE S.p.A.
24 ORE Cultura S.r.l.
100%
Nuova Radio S.p.A.
100%
Alinari 24 ORE S.p.A. (in liquidation)
55%
Il Sole 24 ORE UK Ltd .
100%
Shopping 24 S.r.l.
100%
Newton Management Innovation S.p.A.
60%
Newton Lab S.r.l.
51%
24 ORE Software S.p.A.
100%
Cesaco S.r.l.
48%
Diamante S.p.A.
75.02%
Mondoesa Lazio S.r.l.
35%
Fabbrica24 S.r.l.
100%
Aldebra S.p.A
19.39%
Signet S.r.l.
70%
Mondoesa Emilia S.r.l.
40%
Lambdago S.r.l.
70%
Mondoesa Milano Nordovest S.r.l
49%
BacktoWork24 S.r.l .
90%
Mondoesa Laghi S.r.l.
33.7%
Companies included in the scope of consolidation
Operating associates
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24 ORE GROUP INTERIM MANAGEMENT STATEMENT MARCH 2013
Highlights •
Consolidated revenue totalled € 98.8 million, down by 13.3%, mainly due to the performance of the advertising market (€ -7.5 million; -17.4% if compared to a 16.5% decline in the market) which is affected by the persisting financial advertising crisis.
•
Gross operating loss stood at € -6.7 million, affected by the € 15.2 million decrease in consolidated revenue. Compared to the first quarter of 2012, personnel costs recorded a € 3.3 million improvement, mainly as an effect of the decrease in the average headcount and of implementation of the solidarity agreements. Other costs improved by € 6.9 million, also as a result of implementation of the action plan.
•
Group loss of € -10.4 million, down by € 5.1 million compared with the same period of 2012.
•
The Net Financial Position was negative by € 31.4 million.
•
Il Sole 24ORE is Italy’s first digital daily newspaper with 58,949 digital copies on average in March. In terms of circulation of printed + digital versions it is the third largest in Italy. Total circulation figures stood at over 287,400 copies on average in March.
•
Group digital revenue was € 34.6 million (35.0% of the total), recording a growth as a result of revenue from e-publishing, IT services and advertising in digital publications.
•
In the 1st quarter of 2013 the web site www.ilsole24ore.com recorded growth of +22% in daily averages for single browsers - with the absolute record of 10,628,307 seen in March and +4.7% in average daily pages viewed. The mobile version of the website grew by 36.6% among average daily unique browsers and +32.5% of pages viewed (source: Nielsen Site Census).
•
Tax & Legal: growth in digital revenue (+11.6%), reaching 55% of total revenue (46% in the 1st quarter of 2012). The impact of GOP was in line with the same period last year as a result of the mix focusing on digital and cost containment action.
•
System advertising revenue decreased by 16.6% in line with the -16.5% market trend. Decreases more limited than those of the market were seen in Radio24 advertising revenue, down 12.1% compared to -17.3%. Internet advertising review recorded a more favourable performance, +6.8% vs. +5.0% (source: Nielsen Media Research January-February 2013)
•
Radio 24 confirms its position among the top ten most listened to national radio stations with 1,896,000 listeners daily average, this figure taken from the mobile average for March 2012March 2013, up 2% compared to the 2012 total (Eurisko Radio Monitor 2013).
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24 ORE GROUP INTERIM MANAGEMENT STATEMENT MARCH 2013
Operating performance in the first three months of 2013 Market environment The macro-economic scenario is confirmed as an extreme recession, with a direct impact on the printed publications market and on advertising investments. The negative trend was confirmed at the beginning of 2013, affected by the heavy economic crisis in progress, causing a drop in the final demand of companies, public entities and households. Also self-employment figures, a market important to the Group, recorded a drop in income to levels lower than those of 2007. The falling demand for services and in particular the delay in collections both from public administration and private customers has taken its toll. The industrial sector is experiencing a particularly difficult moment: in the first quarter of 2013 a total of 4,218 companies closed down, +13% compared to the same period in 2012 (source: Il Sole 24 Ore - 10 April 2013). The Italian IT market has seen a further decrease in its overall value for expenditure, continuing the negative trend seen for several years, which according to Assinform forecasts will record a decrease of 5.8% in 2013 (-4.4% in 2012). The advertising market as a whole, thus considering all media including television, contracted by 16.5% compared to 2012 (source: Nielsen Media Research – January-February 2013). The press advertising revenue suffered greatly (-24.7%). Daily newspapers dropped by 26.1% and magazines declined by 21.6%. Radio investments decreased (-17.3%), with only the online segment experiencing growth (+5.0%). With regard to daily newspaper circulation, from April 2012 the ADS changed its information gathering method and now provides only actual monthly data, no longer the annual averages. Therefore for the first quarter of 2013 no direct comparison is possible with the corresponding figures for the previous year. Furthermore, from January 2013 ADS data output now includes the sale of digital copies as well as printed circulation figures. In the first three months of 2013 the leading daily newspapers (Corriere della Sera, Repubblica, Il Sole 24 ORE, La Stampa, Il Messaggero) recorded the following totals in terms of printed + digital figures: January 2013 an average of 1,558,638 average copies; February 2013 1,592,717 average copies; March 2013 1,580,862 average copies.
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24 ORE GROUP INTERIM MANAGEMENT STATEMENT MARCH 2013
Performance of the 24 ORE GROUP
HIGHLIGHTS OF 24 ORE GROUP (in thousands of euro)
Revenue Gross operating profit (loss)
1st quarter 2013
1st quarter 2012
98,806
113,977
(6,669)
(2,402)
Operating profit (loss) Profit (loss) before tax Profit (loss) for the year Profit (loss) attributable to owners of the parent
(12,198) (12,480) (10,435) (10,366)
(7,631) (7,650) (5,386) (5,289)
Net financial position Equity attributable to owners of the parent Employee headcount at end of year (1) Value related to 31 December 2012
(31,382) 189,116 1,846
5,317 199,447 1,868
(1) (1) (1)
In the first quarter of 2013, the 24 ORE Group obtained consolidated revenues of € 98.8 million, with a change of -13.3% relative to the € 114.0 million recorded in the same period of 2012. Revenue of € 7.5 million was affected by the drop in advertising, down 17.4% compared to the same period of 2012. This result felt the impact of the negative advertising market trend, which recorded stronger decreases in the press area (-24.7%, source: Nielsen) and radio area (-17.3%). Digital revenue amounts to € 34.6 million, up € 1.5 million (4.7%) compared to the first quarter of 2012. The impact on total consolidated revenue increased from 29% to 35%. Personnel expense decreased by € 3.3 million, equal to 7.8%. This decrease is also due to the combined effect of: -
the falling average cost of employees, following application of the solidarity agreements implemented as a result of those signed with the trade unions, which offered savings of € 1.2 million compared to the same period in 2012;
-
a drop in the average headcount by 39 staff. Comparison between the two quarters under review shows a decrease in the average headcount from 1,856 in 2012 to 1,817 in 2013.
Other costs were down by € 6.9 million compared to the same period in 2012, also due to implementation of the action plan approved on 4 October 2012. More specifically: -
costs for raw materials and consumables decreased by € 1.9 million;
-
distribution costs declined by € 1.7 million (-15.0%);
-
production costs declined by € 2.5 million (-16.5%);
-
commissions and other selling costs dropped by € 0.2 million as a result of the rationalisation of sales structures.
Gross operating profit (loss) was negative by € 6.7 million (negative by € 2.4 million in 2012) and down by € 4.3 million compared to 31 March 2012. The operating loss amounted to € 12.2 million, compared to the loss of € 7.6 million in the same period of 2012. Depreciation, amortisation and impairment totalled € 5.5 million, in contrast with € 5.2 million in 2012.
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24 ORE GROUP INTERIM MANAGEMENT STATEMENT MARCH 2013
The loss attributable to owners of the parent amounted to € 10.4 million, compared with the loss of € 5.3 million in the same period of 2012. The Group’s net financial position as at 31 March 2013 came to a negative € 31.4 million, compared to the positive € 5.3 million at the start of the year.
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24 ORE GROUP INTERIM MANAGEMENT STATEMENT MARCH 2013
Segment reporting Organisational and offer rationalisation action commenced in January 2013, which can be summarised as follows: -
To complete the printed and digital integration, the Publishing & Digital area was created within the publishing area, which brought together the printing department, the digital version of the daily newspaper, new digital products and the web site www.ilsole24ore.com;
-
The new Fabbrica24 & E-Commerce Area was set up with the aim of combining expertise for the development of new e-commerce business and digital services.
In order to render the amounts for the two years comparable, the results for 2012 have been reclassified on the basis of the new organisational structure. The data is reported net of internal relations.
Publishing Area Publishing is the division that heads up the daily newspaper Il Sole 24 ORE, its bundled add-on products and a number of primary processes (printing and distribution), also managed for other Group segments. This area also manages the digital version of the daily newspaper, the new digital products, the www.ilsole24ore.com web site and the paid online content. The area also comprises the Radiocor news agency and the B2B integrated communication activity targeting SMEs in specific sectors, including agrifood, retail distribution, construction and welfare, directly managing dedicated advertising sales forces. PUBLISHING AREA REVENUE (in thousands of euro)
Publishing & Digital
1st quarter 2013
1st quarter 2012
% change
37,492
47,732
-21.5%
Sector-Specific Publishing
5,933
7,541
-21.3%
Agency and P.A.
2,294
1,787
28.4%
45,720
57,060
-19.9%
Total
Based on the latest ADS data (March 2013), Il Sole 24 ORE is the leading Italian digital daily newspaper with 58,949 average digital copies, confirming growth from the 51,068 of February and 46,190 average digital copies in January. The digital record is also strengthened by the number of subscriptions to the paid content site, launched on 21 January 2013, which numbered 2,581 as at 31 March 2013. In terms of ADS total circulation figures (printed + digital), Il Sole 24 ORE is confirmed as the third most circulated daily newspaper in Italy with 287,443 copies circulated on average in March, 284,870 in February and 280,187 in January 2013.
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24 ORE GROUP INTERIM MANAGEMENT STATEMENT MARCH 2013
Aggregate revenue generated by the Publishing Area was € 45.7 million (-19.9% compared with the same period of 2012) due to the performance of advertising revenues (-23.6%), circulation revenues and other revenues (-15.8%). Publishing & digital revenue dropped by 21.5% compared with the same period of the previous year. The main new products refer to developments in the product mix that integrates printed and digital. This activity, launched in the last quarter of 2012, led to the launch on 25 February 2013 of the new digital product Il Giornale di Domani, which on the Il Sole 24 ORE app for tablets offers a preview from 8pm onwards of the newspaper due to the hit the newsstands the following morning. In the first few months of 2013, the key figures for the Internet market were as follows: -
the total daily average for the online audience using PC access increased by +8.35% in January-February 2013, with an online users population of over 41 million. The average time spent online was 1h 28m per day, recording +3.7% (Source: Audiweb).
-
The Internet advertising market recorded a positive trend, albeit much lower in growth rate terms than last year’s figures. In fact, in the first three months of the year the increase was +3% on the corresponding three months of 2012 (Source: Osservatorio FCP - Assointernet - January/March 2013).
In this scenario, the web site www.sole24ore.com recorded a growth of unique site browsers with a daily average of over 670 thousand, equal to +22.2% over the average for the previous year, with the absolute record of 10,628,307 seen in March; average daily pages viewed increased by +4.7% compared to the same quarter in 2012 (source: Nielsen Site Census). Vice versa, in the first quarter of 2013 the mobile version of the website grew by 36.6% among average daily unique browsers and 32.5% of pages viewed (source: Nielsen Site Census). As at 31 March 2013 the reader application for the daily newspaper recorded 469,458 downloads, whilst the total for all Group applications downloaded reached 825,777 downloads. In the first quarter web site revenue amounted to € 3.7 million, down 6.4% on the same period of 2012 due to the 5% loss in advertising (+2.5% net of this funding source). Sector-specific publishing showed a 21.3% contraction of revenue compared with the same period in 2012. The decrease can be attributed in part to the imbalance in the area between the comparison periods, caused by the need to streamline the portfolio and discontinue business proving no longer profitable, including the placing in liquidation of the subsidiary Business Media Web and the abandoning of certain publications. During the first quarter a relaunch plan was prepared to enhance the professional community reached by the sector-specific publications with a view to developing new digital revenue components. The Agency and P.A. BU’s area of operations in Italy was harder hit by the current economic crisis, and certainly in a different way, than traditional publishing. The demand market fell even further as a result of the growing demand for real-time content available free of charge online and of the drop/slowing of demand from PA and the industrial and banking groups. As at 31 March 2013 the Agency and P.A. BU recorded revenue up 28.4% on the same period last year, due to the higher revenue associated with promotion services arising from the visibility
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24 ORE GROUP INTERIM MANAGEMENT STATEMENT MARCH 2013
exchange agreement signed between the LSE-Borsa Italiana Group and the 24ORE Group which aims to set up the Italian finance hub in Europe. From the middle of 2011 the Agency also began a growth and expansion path on the international markets, through a series of distribution agreements with leading international organisations such as: London Stock Exchange-Borsa Italiana in Italy and the UK; Bloomberg LP in the USA and the Far East; VWD AG in Germany, France and the Netherlands; Dow Jones - Factiva in Europe and South America; Microsoft – MSN in Italy. PUBLISHING AREA RESULTS (in thousands of euro)
1st quarter 2013
1st quarter 2012
% change
Circulation/other revenue
23,018
27,345
-15.8%
Revenue from advertising
22,702
29,715
-23.6% -19.9%
Revenue
45,720
57,060
Gross operating profit (loss)
(9,101)
(5,300)
-71.7%
GOL margin %
-19.9%
-9.3%
-114.3%
(10,290)
(6,646)
-54.8%
Operating profit (loss)
System area – Advertising sales System is the division acting as the advertising sales agency for the Group’s main media – except for sector-specific publishing, which has its own network, and for some third-party media. SYSTEM AREA REVENUE (in thousands of euro)
Captive revenue Non-captive revenue Total
1st quarter 2013
1st quarter 2012
% change
27,221
35,447
-23.2%
4,655
2,798
66.4%
31,876
38,245
-16.7%
The advertising market closed 2012 with a decrease stronger than that of the last four years, and 2013 began with an even heavier drop. In fact, the first two months of 2013 closed with a decrease of 16.5% (total market including TV). Once again the press recorded the highest decrease: paid daily newspapers -26.1% and magazines -21.6%. A two-figure drop was also recorded by radio (17.3%), followed by TV (-16.1%). A more limited growth than in the past was seen in the Internet segment (+5.0%) (source: Nielsen Media Research January-February 2013). In this market scenario, the System Area ended the first quarter of 2013 with a 16.6% decrease in advertising revenue, in line with the general market performance and definitely better than the trend for the reference market in which the agency operates (-18%; reference market: paid daily newspapers, magazines, radio and Internet). The initiatives undertaken by the System Area from the end of 2012 had a positive effect, consolidating the impact of the agency on the Italian market and increasing its presence on the international market. Net of these initiatives, and therefore on a likefor-like basis, the agency would have closed the first quarter down 20.5% on the same period of 2012. Press closed the first quarter of 2013 with a 24.1% decrease. The daily newspaper as a whole (newspaper plus supplements), recorded a 28.0% decrease. This was stronger than that of the
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24 ORE GROUP INTERIM MANAGEMENT STATEMENT MARCH 2013
market and immediate competitors, but it has to be noted that the competitors benefited from investments by consumer product, distribution and tourism companies, sectors which do not consider Il Sole 24 ORE suitable for their medium-low target advertising. The post-elections political instability caused a further slowing of the advertising in March, and the daily newspaper saw an additional decline in investments. From the analysis of advertising space by segment, a change in the top three places was seen: Finance/Insurance returns to first place, followed by Professional Services, whilst Automotive which in 2012 was in top position - was overtaken by the Apparel sector which settled in third place. The top three segments account for 50% of total advertising revenue. Radio24 recorded a lower decrease (-12.1%) than that of the market (-17.3%), confirming its ability to attract advertisers thanks to the quality and unique of the editorial product as well as the development of special projects. The Internet segment saw a stronger growth than that of the market. The first quarter closed at +6.8%, a change which improves even further if the Internet total is considered net of provisions (+18.8%). In March the political instability generated strong decreases even on the Internet segment. The very recently issued FCP-Assointernet figures, in fact, show a slowing down of overall growth in the first quarter of 2013 (+2.1% compared to the 1st quarter of 2012).
SYSTEM AREA RESULTS (in thousands of euro)
1st quarter 2013
1st quarter 2012
% change
Circulation/other revenue
77
95
-18.6%
Revenue from advertising
31,799
38,150
-16.6%
Revenue
31,876
38,245
-16.7%
(71)
21
-440.9%
-0.2%
0.1%
-509.0%
(74)
20
-462.1%
Gross operating profit (loss) GOL margin % Operating profit (loss)
Tax & Legal – Professional publishing The Tax & Legal Area develops integrated product systems of technical and regulatory content targeting professionals, companies and the public administration. The specific market segments are controlled by three Business Units (Taxes/Labour/Economy, Law, Construction and Public Administration), which satisfy all the information, training and operative requirements of the reference targets through specialist information tools closely integrated with each other: books, magazines, databases and Internet services.
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24 ORE GROUP INTERIM MANAGEMENT STATEMENT MARCH 2013
TAX & LEGAL AREA REVENUE (in thousands of euro)
1st quarter 2013
1st quarter 2012
% change
Books
1,393
1,857
-25.0%
Magazines Electronic publishing IT services Other revenue
6,506 8,284 1,908 424
8,277 7,562 1,570 520
-21.4% 9.6% 21.5% -18.4%
18,514
19,785
-6.4%
Tax & Legal Total
The Tax & Legal Area operates in a market characterised by a markedly shrinking demand in a very negative economic environment. The negative trend is seriously affected by the heavy economic crisis in progress, causing growing difficulties for the final demand of companies, public entities and households, with whom the professionals interact, the main target for the Area. The consumption model evolved in favour of electronic media, online service, products and databases. This phenomenon led to a downturn in expenditure, due to the difficulty for the professional market to sell online information at a price that is suitable for the paper version. The revenue of Tax & Legal in the first three months of 2013 equalled € 18.5 million, decreasing in comparison with the € 19.8 million of the same period of 2012 (-6.4%). The negative performance is concentrated exclusively in printed products, books (-25.0%) and magazines (-21.4%), also dependent upon the streamlining of the product portfolio. The digital component grew by 11.6% (E-publishing and online services), with the Area’s impact on total revenue increasing from 46% in March 2012 to 55% in 2013, compared to a reduction in the paper component whose impact decreased from 51% in 2012 to 43% in 2013. Note the particularly positive trend in online services and products (21.5%), confirming the increasingly strong appetite for the use of online sources of information and updates. The initiatives and new projects focused on expanding the online range and digitalizing all of the paper versions.
TAX & LEGAL AREA RESULTS (in thousands of euro)
1st quarter 2013
1st quarter 2012
Circulation/other revenue
18,393
19,615
-6.2%
Revenue from advertising
122
170
-28.3%
18,514
19,785
-6.4%
5,252
5,621
-6.6%
28.4%
28.4%
-0.2%
5,177
5,604
-7.6%
Revenue Gross operating profit (loss) GOL margin % Operating profit (loss)
14
% change
24 ORE GROUP INTERIM MANAGEMENT STATEMENT MARCH 2013
Software Solutions Area The Software Solutions Area includes all the software activities of the 24 ORE Group, through a functional organisation that covers various activities and addresses the markets through its related brands. 24ORE Software S.p.A. is the 24ORE Group company covering the various product brands. The range specifically comprises software products with the “Software 24ORE” brand, mainly addressed to professionals such as the STR, Data Ufficio and Softlab brands that are specific for the public administration, construction industry and legal markets, and lastly the Esa Software brand products targeting SMEs; Diamante products target the SME market and the development of Cloud solutions. SOFTWARE SOLUTIONS AREA REVENUE BY SEGMENT (in thousands of euro)
24ORE Software products Diamante products Total
1st quarter 2013
1st quarter 2012
% change
14,105
15,301
-7.8%
224
-
insig.
14,330
15,301
-6.4%
The reference market of operations for the Software Solutions area targets professionals such as chartered accountants, employment consultants, lawyers, engineers, architects, surveyors and small and medium enterprises. The area is also engaged in the Public Administration sector and associations such as the tax assistance centres (CAF). The Italian IT market has seen a further decrease in its overall value for IT expenditure, continuing the negative trend seen for several years, which according to Assinform forecasts will close 2013 with a decrease of -5.8%. 2012 was the worst year in recent history for Italian businesses. Never before have so many companies closed down, over 400 thousand last year. In the first four months of 2013 the bankruptcy rate of businesses has already increased by no less than 13% in percentage terms. The regions worst hit in absolute terms of the number of bankruptcies are Lombardy, Lazio, Veneto and Campania (source: Il Sole 24ORE-Cerved). During the period under review the Software Area saw a 6.4% drop in revenue due to the persisting crisis in the reference sectors, i.e. construction and SMEs. The organisational and corporate integration process of the Group’s software houses, acquired between 2007 and 2012, was completed in 2013. The aim is to integrate the professional digital and online content of Il Sole 24ORE into the application software in such a way as to offer users a qualified service of value. RESULTS OF THE SOFTWARE SOLUTIONS AREA (in thousands of euro)
1st quarter 2013
1st quarter 2012
% change
Circulation/other revenue
14,330
15,301
-6.4%
Revenue
14,330
15,301
-6.4%
Gross operating profit (loss) GOL margin % Operating profit (loss)
15
154
216
-28.7%
1.1%
1.4%
-23.8%
(1,317)
(1,178)
-11.8%
24 ORE GROUP INTERIM MANAGEMENT STATEMENT MARCH 2013
Training and Events Area The Training and Events area provides specialist training to young university graduates, managers and professionals and organises annual conferences and events on a contract basis for large customers all over Italy. Included in this area are the activities of the subsidiaries Newton Management Innovation (a management consulting and training company) and Newton Lab (an event organising and multimedia content management agency). TRAINING AREA REVENUE BY SEGMENT (in thousands of euro)
1st quarter 2013
1st quarter 2012
% change
Business school
3,013
2,978
1.2%
Newton Man. Innov. and Newton Lab products Other
1,743 977
2,790 1,001
-37.5% -2.4%
Total
5,734
6,769
-15.3%
Revenues from the Training BU, including the revenues of 24 ORE Training, Events and the Newton line, dropped by 15.3% compared to 31 March 2012. Business school revenue totalled € 3.0 million, up 1.2% on the same period of last year. The Master Full Time performance recorded revenues up 11.2% compared to the same period of the previous year. The Part Time Masters were in line with the previous year, with 43 specialisation Masters and 3 Executive24 masters in blended formula for middle management. Revenue from Newton Management Innovation and Newton Lab products fell by 37.5% compared to the first three months of 2012. The delay is essentially attributable to a different programming of Newton Lab events. TRAINING AREA RESULTS (in thousands of euro)
1st quarter 2013
1st quarter 2012
% change
Circulation/other revenue
5,734
6,769
-15.3%
Revenue
5,734
6,769
-15.3%
600
938
-36.1%
10.5%
13.9%
-24.5%
547
893
-38.8%
Gross operating profit (loss) GOL margin % Operating profit (loss)
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24 ORE GROUP INTERIM MANAGEMENT STATEMENT MARCH 2013
Radio Area The Radio Area manages the national radio station Radio24, a news and talk radio with an editorial format alternating news and entertainment programmes based almost exclusively on speech. Every week, over 40 different programmes cover all the key areas of public interest, ranging from national and international news to business and finance; from topics concerning the home, work and the environment to sport, culture and leisure; and from healthcare to wellbeing. Every day 19 editions of the radio news, 16 programmes and 11 reports on the financial markets are held. Daily live hours total 18. The finding of the 2013 Eurisko Radio Monitor survey places Radio 24 tenth in the nationwide radio standings with 1,896,000 listeners on an average day, this figure taken from the mobile average for March 2012-March 2013, up 2% compared to the 2012 total. The increase in the mobile average for the last twelve months suggests that in the first quarter of 2013 Radio24 recorded a daily average of listeners of more than two million. Radio24 revenue as at 31 March 2013 totalled € 3.1 million, down 12.2% compared with the same period of 2012. Advertising revenue dropped by 10.7% compared with the same period of 2012. In terms of advertising space, Radio24 recorded -15% (vs. -16.5% for the market) compared to the same period last year (source: Nielsen analysis per second), and its positioning in seconds compared to the total radio market remains steady at 9%. RADIO AREA RESULTS (in thousands of euro)
1st quarter 2013
1st quarter 2012
% change
Circulation/other revenue
37
100
-63.1%
Revenue from advertising
3,096
3,467
-10.7%
Revenue
3,133
3,567
-12.2%
Gross operating profit (loss)
(564)
84
-770.1%
-18.0%
2.4%
-863.0%
(738)
(78)
-847.0%
GOL margin % Operating profit (loss)
17
24 ORE GROUP INTERIM MANAGEMENT STATEMENT MARCH 2013
Culture Area This Area includes Group activities in the culture segment, through 24 ORE Cultura S.r.l. and Alinari 24 ORE S.p.A. Its scope ranges from the planning and staging of art and photography exhibitions to the intermediation of photographic reproduction rights, the sale of objects and photographs, the publication of essays (Scheiwiller imprint), art and photographs sold on a catalogue or contract basis, educational and digital products. In the first three months of 2013, the Culture area recorded revenue of € 2.0 million, down (-16.5%) on the same period of 2012 as a result of Alinari 24ORE S.p.A. being placed in liquidation in August 2012. 24ORE Cultura S.p.A., considering its total revenue and income from its partnership agreements for event organisation, was essentially in line (-4%) with the first quarter of 2012. Firstly, 2013 saw the end of the exhibition dedicated to Picasso at the Palazzo Reale in Milan, organised in collaboration with the Picasso Museum of Paris. 2013 saw the inauguration of the exhibitions: Modigliani, Soutine e gli artisti maledetti (Milan, Palazzo Reale from 14 February to 8 September), The Desire for Freedom. Arte in Europa dal 1948 (Milan, Palazzo Reale from 14 March to 2 June) and Homo Sapiens (Novara until 30 June). Lastly, the Manet exhibition in Venice was inaugurated on 23 April.
CULTURE AREA RESULTS (in thousands of euro)
1st quarter 2013
1st quarter 2012
% change
Circulation/other revenue
2,038
2,440
-16.5%
Revenue
2,038
2,440
-16.5% 11.7%
Gross operating profit (loss)
(998)
(1,130)
GOL margin %
-49.0%
-46.3%
-5.8%
Operating profit (loss)
(1,026)
(1,168)
12.2%
Significant events in the first three months of 2013 In January 2013 the ADS regulation entered into force which also certifies digital copies sold over and above predefined price thresholds. The full text of the “additional regulation for ADS surveys for digital publications” is available at: http://www.adsnotizie.it/pdf/regolamento_edizioni_digitali.pdf. The first ADS data output refers to January 2013 and saw our daily newspaper in first place with 46,190 digital copies sold, and in third place for the number of printed/digital copies. In the last quarter of 2012, Digital Area activity focused on developing products and services to enhance the paid digital content and on defining new integrated commercial formulas (printed and digital) designed to satisfy the information needs of our customer segments.
18
24 ORE GROUP INTERIM MANAGEMENT STATEMENT MARCH 2013
In the first few months of 2013 these activities achieved the following results: -
The new paying web site was launched on 21 January. The new site strengthens the identity with the daily newspaper and offers exclusive content and news updated in real time, Radio24 interviews available as podcasts, Radiocor’s breaking news, exclusive indepths and analyses by the Il Sole 24ORE experts, guides, specials and e-books. The increased wealth of information on the site is arranged in a multi-level product that includes areas of free content and others with paid content.
-
25 February saw the launch of Il Giornale di Domani, a new digital product which on the Il Sole 24 ORE app for tablets offers a preview from 8pm onwards of the newspaper due to the hit the newsstands the following morning, through an exclusive selection of previews, comments and news, an economic agenda illustrating the main events planned and an overview of the day’s financials.
On 1 March 2013 the Board of Directors of Il Sole 24 ORE S.p.A. integrated the plan of action approved on 4 October 2012 with further action that drives the Group towards increasing its current share of the digital market. On 27 February 2013 the solidarity agreement was finalised for the white collars and blue collars of Il Sole 24Ore S.p.A. with a 20% graphics and polygraphics contract. This agreement entered into force on 1 March 2013 and will be valid for one year, extendable by a further twelve months. The solidarity for journalists of the Radiocor Agency was also raised from 8% to 20% with effect from 1 March 2013. This agreement will expire on 31 January 2014.
Events after 31 March 2013 On 29 April 2013, the Shareholders’ Meeting of Il Sole 24 ORE S.p.A. approved the financial statements for 2012, resolving not to distribute dividends and fully to cover the € 44,193,656 loss for the year of the parent Il Sole 24 ORE S.p.A. from the following equity items: Revaluation reserve – Law 342/00 € 18,785,669 Revaluation reserve – Law 350/03 € 1,775,811 Fair value reserve for stock grants € 7,619,251 Retained earnings € 16,012,925 The shareholders’ meeting appointed the Board of Directors, which will remain in office until the shareholders’ meeting called to approve the financial statements as at 31 December 2015. The appointed members were: Carlo Valerio Ticozzi, Mario Mirarchi, Benito Benedini, Donatella Treu, Marcella Panucci, Maria Carmela Colaiacovo, Luigi Abete, Antonio Bulgheroni, Marco Venturi, Alessandro Spada and Mario D’Urso. The first ten directors were appointed from the list filed by the majority shareholder, Confindustria, and the remaining director from the list filed by minority shareholders The Gabelli Equity Trust Inc with other shareholders. Among the appointed directors, those confirming independence in accordance with law are Carlo Ticozzi Valerio, Mario Mirarchi and Mario D’Urso. Benito Benedini was appointed Chairman of the Board of Directors.
19
24 ORE GROUP INTERIM MANAGEMENT STATEMENT MARCH 2013
The shareholders’ meeting also appointed the Board of Statutory Auditors, which will remain in office until the shareholders’ meeting called to approve the financial statements as at 31 December 2015. Laura Guazzoni, Maurilio Fratino and Luigi Biscozzi were appointed standing auditors and Maria Silvani and Fabio Fiorentino were appointed alternate auditors. Laura Guazzoni, Maurilio Fratino and Maria Silvani were appointed from the list filed by the majority shareholder, Confindustria, whilst Luigi Biscozzi and Fabio Fiorentino were appointed from the list filed by minority shareholder Edizione S.r.l. Luigi Biscozzi was appointed Chairman of the Board of Statutory Auditors. Following the resignation of Mario Mirarchi on 29 April 2013, due to other work commitments, on 30 April the Board of Directors appointed the next candidate indicated on the same list as the outgoing director, i.e. Alberto Chiesi, pursuant to Article 22 of the By-laws. Again on 30 April the Board confirmed Donatella Treu’s appointment as Chief Executive Officer and assigned corporate management powers to the Chairman and to the Chief Executive Officer. The main new products refer to developments in the product mix that integrates printed and digital. This activity, which begin in the last quarter of 2012, led to the release of the following new products and related commercial mix: •
On 8 April “Buongiorno dal tuo amico Sole” was launched, a product with exclusive content developed in native format for iPads. From 6am Buongiorno dal tuo Amico Sole offers the latest US and Asian stock market figures and two international press reviews on Global news released worldwide and news on Italy as reported by other countries.
•
8 April also saw the launch of the new “Business Class” subscription (along with a new version of the Tablet app) which includes the card, the free and paid web sites, the two digital editions of the newspaper, databases and international reviews.
20
24 ORE GROUP INTERIM MANAGEMENT STATEMENT MARCH 2013
Financial statements Highlights of income statement
HIGHLIGHTS OF CONSOLIDATED INCOME STATEMENT (in thousands of euro)
Note
1st quarter 2013
1st quarter 2012
Revenue from sales and services
(1)
98,806
113,977
1,981 (38,904) 468 (1,657)
1,712 (42,218) (1,404)
(3,987)
(6,108)
(52,404) (9,056) (1,917)
(56,669) (9,464) (2,228)
(6,669)
(2,402)
(5,531)
(5,228)
Other operating income Personnel expense Increase in internally-generated assets Change in inventories
(2)
Purchase of raw materials and consumables Services Other operating costs Provisions and allowances for impairment Gross operating profit (loss)
(3)
Depreciation, amortisation and impairment losses Gains/losses on disposal of intangible assets and property, plant and equipment
2
(1)
Operating profit (loss)
(4)
(12,198)
(7,631)
Financial income (expenses)
(5)
(266)
(20)
Income (expenses) from investments Profit (loss) before tax Income taxes
(6)
Profit (loss) from continuing operations Profit (loss) from discontinued operations Profit (loss) attributable to non-controlling interests Profit (loss) attributable to owners of the parent
21
(16)
-
(12,480)
(7,650)
2,045
2,264
(10,435)
(5,386)
-
-
(69)
(97)
(10,366)
(5,289)
24 ORE GROUP INTERIM MANAGEMENT STATEMENT MARCH 2013
Statement of financial position
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (in thousands of euro)
Note
31.03.2013
31.12.2012
Property, plant and equipment
71,693
74,001
Goodwill
75,010
75,010
Intangible assets
81,321
82,164
814
829
Available-for-sale financial assets
1,186
1,186
Other non-current financial assets
75
75
ASSETS Non-current assets
Investments in associates and joint ventures
Other non-current assets Deferred tax assets Total
(1)
3,993
3,972
72,479
69,752
306,571
306,990
15,626 168,421 12,204
17,283 155,119 10,127
Current assets Inventories Trade receivables Other receivables Other current assets Cash and cash equivalents Total
(2)
Assets held for sale TOTAL ASSETS
22
10,688
5,570
7,954
12,234
214,893
200,333
-
-
521,463
507,323
24 ORE GROUP INTERIM MANAGEMENT STATEMENT MARCH 2013
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONT.) (in thousands of euro)
Note
31.03.2013
31.12.2012
EQUITY AND LIABILITIES Equity Equity attributable to owners of the parent Share capital Equity reserves Revaluation reserves Hedging and translation reserves Other reserves
35,124
35,124
180,316
180,316
-
20,561
(158)
(193)
14,243
22,250
Retained earnings (Loss brought forward)
(30,043)
(12,857)
Profit (loss) attributable to owners of the parent
(10,366)
(45,755)
Total
189,116
199,447
Equity attributable to non-controlling interests Capital and reserves attributable to non-controlling interests Profit (loss) attributable to non-controlling interests Total Total equity
(9)
(2,529)
165
(69)
(2,659)
(2,598)
(2,495)
186,518
196,953
Non-current liabilities Non-current financial liabilities
3,585
3,686
Employee benefit obligations
31,088
32,733
Deferred tax liabilities
11,973
11,957
Provisions for risks and charges
13,617
13,733
2,972
2,972
63,235
65,081
35,534
2,967
217
266
171,337
173,422
9,031
10,476
55,593
58,160
271,711
245,289
-
-
Total liabilities
334,946
310,370
TOTAL EQUITY AND LIABILITIES
521,463
507,323
Other non-current liabilities Total
(10)
Current liabilities Bank overdrafts and loans - due within one year Financial liabilities held for trading Trade payables Other current liabilities Other payables Total
(11)
Liabilities held for sale
23
24 ORE GROUP INTERIM MANAGEMENT STATEMENT MARCH 2013
Statement of cash flows
CONSOLIDATED STATEMENT OF CASH FLOWS 1st quarter 2013
1st quarter 2012
Profit (loss) before tax attributable to the Group [a]
(12,411)
(7,554)
Adjustments [b] Profit (loss) attributable to non-controlling interests Depreciation, amortisation and impairment losses (Gains) Losses Change in provisions for risks and charges Change in employee benefit obligations Change in deferred taxes Financial income/(expenses)
3,994 (69) 5,531 14 (116) (1,645) 14 266
5,559 (97) 5,228 1 270 136 1 20
Changes in net working capital [c] Change in inventories Change in trade receivables Change in trade payables Income taxes paid Other changes in net working capital
(25,618) 1,657 (13,302) (2,085) (11,887)
(1,782) 1,404 (3,423) 15,656 (15,419)
Total cash flow from continuing operations [d=a+b+c]
(34,034)
(3,777)
(2,398) (2,382) 4 (20)
(2,416) (2,403) 1 (14)
(415) (266) (101) (48) 36 (1) (35)
19,549 (20) (87) 19,654 3 0
(36,847)
13,356
OPENING CASH AND CASH EQUIVALENTS
9,268
28,667
CLOSING CASH AND CASH EQUIVALENTS
(27,580)
42,023
(36,847)
13,356
(in thousands of euro)
Note
Cash flow from investing activities [e] Investments in intangible assets, property, plant and equipment Disposal of intangible assets and property, plant and equipment Other changes in investing activities Cash flow from financing activities [f] Net financial interest received Repayment of medium/long-term bank loans Change in non-current financial assets Dividends paid Change in capital and reserves Change in equity attributable to non-controlling interests Cash flows absorbed during the year [g=d+e+f]
INCREASE (DECREASE) FOR THE YEAR
(12)
24
24 ORE GROUP INTERIM MANAGEMENT STATEMENT MARCH 2013
Net financial position
NET FINANCIAL POSITION (in thousands of euro)
Note
Cash and cash equivalents
31.03.2013
31.12.2012
7,954
12,234
Bank overdrafts and loans - due within one year
(35,534)
(2,967)
Short-term net financial position
(27,580)
9,268
(3,585)
(3,686)
(217)
(266)
(3,802)
(3,951)
(31,382)
5,317
Non-current financial liabilities Fair value changes in financial hedging instruments Medium-long term net financial position Net financial position
(13)
25
24 ORE GROUP INTERIM MANAGEMENT STATEMENT MARCH 2013
Commentary General information The share capital of the Parent totals € 35,123,787, represented by 90,000,000 ordinary shares and 43,333,213 special class shares. Their breakdown is as follows: -
90,000,000 ordinary shares owned by Confindustria, accounting for 67.5% of all shares;
-
40,031,186 special-category shares listed on the Milan Bourse screen-based equity market (MTA – Mercato Telematico Azionario) of Borsa Italiana S.p.A. in the Standard segment (Class 1), accounting for 30.0% of all shares.
-
3,302,027 special-category treasury shares, accounting for 2.5% of all shares.
The company By-laws contain provisions whereby the controlling shareholders of the Issuer may not be changed. In particular, in accordance with Article 8 of the by-laws, shareholders may not hold more special-class shares than those that represent one fiftieth of the share capital plus one share, with the exception of the Issuer that owns them as treasury shares. Il Sole 24 ORE S.p.A. special-class stock is currently listed in the Standard (Class 1) segment on the MTA of Borsa Italiana S.p.A. The stock identification codes are: STOCK IDENTIFICATION CODES Name
Il Sole 24 ORE S.p.A.
ISIN
IT0004269723
Alphanumerical code
S24.MI
Reuters code
S24.MI
Bloomberg code
S24 IM
The companies included in the scope of consolidation at 31 March 2013 were: -
Il Sole 24 ORE S.p.A., the Parent Company, which acts both as the holding company for majority investments in Group companies, and as an operating company, by performing core business activities (general, financial and professional news and information, press agency, etc.).
-
24 ORE Software S.p.A. (formerly Innovare24 S.p.A.), specialised in software solutions and IT services for public administration and construction industry professionals;
-
Nuova Radio S.p.A., the broadcaster of Radio24, a news & talk radio station.
-
Il Sole 24 ORE UK Ltd., which mediates for the sale of advertising space in the United Kingdom.
-
24 ORE Cultura S.r.l., specialised in products dedicated to art and photography and in the organisation of shows and events.
-
Alinari 24 ORE S.p.A. (in liquidation)
26
24 ORE GROUP INTERIM MANAGEMENT STATEMENT MARCH 2013
-
Shopping 24 S.r.l., which is an e-commerce and online marketing company.
-
Newton Management Innovation S.p.A., a company active in training services.
-
Newton Lab S.r.l., a company active in training services. The company is indirectly controlled through Newton Management Innovation S.p.A.
-
Fabbrica 24 S.r.l., active in the e-commerce sector. The company is indirectly controlled through 24 ORE Software S.p.A.
-
Signet S.r.l., specialised in the design, production, management and distribution of multimedia products and contents. The company is indirectly controlled through Fabbrica 24 S.r.l.
-
Lambdago S.r.l., specialised in the study, production, development and marketing of software applications and web sites. The company is indirectly controlled through Fabbrica 24 S.r.l.
-
Diamante S.p.A., a software house specialising in the development of Management Solutions for SMEs and Professionals.
-
BacktoWork24 S.r.l., specialised in the production and development of communications projects through the creation and management of a portal that aims to bring together managers and small businesses. The company is indirectly controlled through Fabbrica 24 S.r.l.
Compared with the latest financial statements approved, the following changes to the scope of consolidation took place: -
On 18 March 2013 Fabbrica 24 S.r.l. established BacktoWork24 S.r.l., acquiring 90% of the share capital for an amount equal to € 100 thousand, of which € 22,500 released as a cash investment, thereby acquiring control.
-
On 29 March 2013, Business Media Web S.r.l. (in liquidation) approved its final liquidation financial statements as at 20 March 2013 and the asset distribution plan.
The registered and administrative offices of Il Sole 24 ORE S.p.A. are located at Via Monte Rosa 91, Milan, Italy. Confindustria (the Confederation of Italian Industry) controls the parent.
27
24 ORE GROUP INTERIM MANAGEMENT STATEMENT MARCH 2013
Format, content, and reporting standards The interim management statement for the three-month period ended on 31 March 2013 was prepared on the assumption that the Company is operated on a going concern basis and in accordance with the recognition and measurement criteria set out in International Accounting Standards (IAS/IFRS), consistent with those used to prepare the last annual financial statements. The interim management statement was prepared pursuant to art. 154-ter of Italian Legislative Decree no. 58 of 24 February 1998, introduced pursuant to art. 1 of Italian Legislative Decree no. 195 of 6 November 2007. The interim management statement was not subject to audit. The financial statements presented include: 1. Consolidated income statement for the first three months of 2013, with comparison data for the same period of 2012. This income statement is in abridged form, grouping revenue items with respect to the financial statements as at 31 December 2012, details of which are provided in the related notes; 2. Consolidated statement of financial position as at 31 March 2013, with comparison data from the latest approved financial statements; 3. Statement of cash flows for the first three months of 2013, with comparison data for the same period of 2012; 4. Net financial position as at 31 March 2013, with breakdown of assets and liabilities into short-term or medium-term components and with comparison data from the latest approved financial statements. Lastly, note that the consolidated interim results of the 24 ORE Group are affected by seasonal elements, particularly with regard to sales of the daily newspaper, advertising revenue and the performance of the professional publishing segment. Such seasonality is particularly felt in the second and third quarter of the year, which historically record the best and worst figures of the calendar year. The following section provides an illustration of the financial statements, with an indication of the most significant changes and related causes for the most important items.
28
24 ORE GROUP INTERIM MANAGEMENT STATEMENT MARCH 2013
Notes to the financial statements Income Statement (1) Revenue Revenue totalled € 98,806 thousand, down € 15,171 thousand on the same period of the previous year, i.e. -13.3%, due mainly to the drop in advertising revenue, magazines and books.
IL SOLE 24 ORE GROUP REVENUE - BREAKDOWN BY TYPE (in thousands of euro)
1st quarter 2013
1st quarter 2012
Change
% change
Advertising
35,337
42,791
(7,455)
-17.4%
Daily newspapers
14,638
17,789
(3,151)
-17.7%
8,292
11,541
(3,249)
-28.2%
Software
13,447
14,289
(842)
-5.9%
Electronic publishing
Magazines
10,154
8,468
1,687
19.9%
IT services
3,477
3,246
231
7.1%
Add-ons
1,373
1,786
(413)
-23.1%
Books
2,077
2,403
(327)
-13.6%
Conferences and Training
5,776
6,718
(942)
-14.0%
Other products and services
4,234
4,944
(710)
-14.4%
98,806
113,977
(15,171)
-13.3%
Total
The breakdown by operating segment is provided below.
REVENUE BY OPERATING SEGMENT (in thousands of euro)
Publishing System Tax & Legal Software solutions Training Radio Culture Other Eliminations Group (Consolidated)
1st quarter 2013
1st quarter 2012
Change
% change
45,720 31,876 18,514 14,330 5,734 3,133 2,038 726 (23,265)
57,060 38,245 19,785 15,301 6,769 3,567 2,440 496 (29,686)
(11,340) (6,369) (1,271) (972) (1,035) (434) (403) 230 6,421
-19.9% -16.7% -6.4% -6.4% -15.3% -12.2% -16.5% 46.3% 21.6%
98,806
113,977
(15,171)
-13.3%
29
24 ORE GROUP INTERIM MANAGEMENT STATEMENT MARCH 2013
(2) Personnel Personnel expense was € 38,904 thousand, compared to € 42,218 thousand for the same period last year. The increase of € 3,313 thousand (7.8%) was mainly due to the decrease in the average headcount by 39 staff and to application of the solidarity agreements, implemented after agreements were signed with the trade unions, which allowed savings of € 1.2 million compared to the same period in 2012. Employees as at 31 March 2013 were 1,846, compared to 1,879 as at 31 March 2012. The number of employees by category is as follows:
AVERAGE HEADCOUNT OF 24 ORE GROUP 1st quarter 2013 AVERAGE HEADCOUNT
1st quarter 2012
Change
Number
%
Number
%
Number
%
Managers
76.7
4.2%
81.5
4.4%
(4.8)
-5.9%
Journalists
393.0
21.6%
401.1
21.6%
(8.1)
-2.0%
1,248.2
68.7%
1,262.3
68.0%
(14.1)
99.0
5.4%
111.0
6.0%
(12.0)
-1.1% 10.8%
1,855.9 100.0%
(39.0)
-2.1%
White collars Blue collars Total
1,816.9 100.0%
(3) Gross operating profit (loss) The interim result of gross operating profit (EBITDA) before depreciation and amortisation, impairment losses on fixed assets and capital gains/losses from asset disposals, was negative at € 6,669 thousand, down by € 4,267 thousand on the same period of the previous year mainly as a result of lower revenue. Costs for services totalled € 52,404 thousand, down € 4,265 thousand (-7.5%) on the same period of the previous year. In particular: -
distribution costs decreased by € 1,747 thousand (-16.5%). This decrease was mostly due to the lower volumes mentioned above, the effect of which was partly offset by the higher distribution premiums calculated on the new Wednesday, Saturday and Sunday cover prices;
-
printing costs, down by € 1,550 thousand (-25.4%) associated with the drop in volume of products sold as add-ons to the daily newspaper;
-
advertising fees to third-party publishers increased by € 1,553 thousand as a result of the increase in revenue from new advertising agency agreements with third-party publishers.
Furthermore, concerning raw materials and consumables, costs decreased by € 1,869 thousand compared to 31 March 2012.
30
24 ORE GROUP INTERIM MANAGEMENT STATEMENT MARCH 2013
(4) Operating profit (loss) The operating loss was € 12,198 thousand, down by € 4,568 thousand compared to the same period of the previous year. The total depreciation, amortisation and impairment losses as at 31 March 2013 was € 5,531 thousand, up € 303 thousand on the same period in 2012.
(5) Financial income (expenses) Net financial expenses amounted to € 266 thousand and are broken down as follows:
FINANCIAL INCOME (EXPENSES) (in thousands of euro)
1st quarter 2013
1st quarter 2012
Change
% change
Financial income from investment of surplus cash
12
131
(119)
-90.7%
Other financial income
31
29
2
7.0%
Foreign exchange gains
11
1
10
1970.5%
Total income Foreign exchange losses Financial expenses on short-term borrowings Financial expenses on medium-/long-term borrowings Other financial expenses
54
160
(107)
-66.8%
(18)
(12)
(6)
-48.2%
(234)
(48)
(186)
-387.8%
10
(21)
31
145.4%
(78)
(98)
20
20.3%
Total expenses
(320)
(180)
(141)
-78.3%
Total
(266)
(20)
(248)
-1248.8%
Financial income amounting to € 54 thousand was lower than the previous year due to the drop in financial income from the reduced cash and cash equivalents for the period. Financial expenses, amounting to € 320 thousand, rose mainly as a result of the increase in financial expenses on short-term borrowings in relation to the greater use of current account overdrafts and short-term credit facilities.
(6) Income taxes Income taxes are calculated using the rate expected to be applied at the end of the year.
31
24 ORE GROUP INTERIM MANAGEMENT STATEMENT MARCH 2013
Statement of financial position The statement of financial position can be summarised in the following items: HIGHLIGHTS OF THE STATEMENT OF FINANCIAL POSITION (in thousands of euro)
31.03.2013
31.12.2012
Non-current assets
306,571
306,990
Current assets
214,893
200,333
Total assets
521,463
507,323
Equity attributable to owners of the parent
189,116
199,447
Equity attributable to non-controlling interests Total equity Non-current liabilities
(2,598)
(2,495)
186,518
196,953
63,235
65,081
Current liabilities
271,711
245,289
Total liabilities
334,946
310,370
Total equity and liabilities
521,463
507,323
(7) Non-current assets Non-current assets reduced from € 306,990 thousand to € 306,571 thousand, down € 419 thousand compared to 31 December 2012. Property, plant, equipment and intangible assets decreased by € 3,151 thousand due to the amortisation of intangible assets and depreciation of property, plant and equipment for € 5,544 thousand, partially offset by investments totalling € 2,333 thousand. The changes in property, plant, equipment and intangible assets as at 31 March 2013 were as follows: PROPERTY, PLANT, EQUIPMENT AND INTANGIBLE ASSETS (in thousands of euro)
Opening balance
Purchases
Disposals
Amort./Depr.
Reclassifications and other changes
Changes in consolidated companies
Closing balance
Property, plant and equipment
74,001
381
(2)
(2,685)
(2)
(0)
71,693
Intangible assets
82,164
1,952
-
(2,845)
2
50
81,321
156,165
2,333
(2)
(5,531)
-
50
153,014
Total
Investments in intangible assets amounted to € 1,952 thousand and refer mainly to software for management and administration systems. The investments in property, plant and equipment totalled € 381 thousand and relate mainly to hardware and plant production systems. The changes in consolidated companies for € 50 thousand refer to the acquisition of BacktoWork24 S.r.l. during the year.
32
24 ORE GROUP INTERIM MANAGEMENT STATEMENT MARCH 2013
Depreciation of property, plant and equipment and amortisation of intangible assets amounted to € 5,531 thousand, calculated in relation to their estimated useful life, which did not change compared to the latest approved financial statements. Amortisation commences from the start of use. Goodwill recognised in the balance sheet amounts to € 75,010 thousand, with no change compared to the last approved financial statements. Deferred tax assets increased by € 2,727 thousand.
(8) Current assets Current assets increased by € 14,560 thousand compared with the figure as at 31 December 2012. Trade receivables and deferrals recorded an increase of € 18,421 thousand, partly offset by the decrease of € 4,281 thousand in cash and cash equivalents.
(9) Equity Group equity totalled € 186,518 thousand, recording a decrease compared to the financial statements as at 31 December 2012 due to the following changes:
STATEMENT OF CHANGES IN EQUITY (in thousands of euro)
Balance at 31 December 2012 Income/expenses recognised directly in equity Fair value changes in hedging instruments Taxes on expenses and income recognised in equity
Share capital
Equity reserves
Revaluation reserves
Hedging and translation reserves
Other reserves
Retained earnings/Loss brought forward
Profit (loss) for the year
Equity attributable to owners of the parent
Equity attributable to noncontrolling interests
Total equity
35,124
180,316
20,561
(192)
22,250
(12,857)
(45,755)
199,447
(2,495)
196,952
-
-
-
48
-
-
-
48
-
48
-
(13)
-
(13)
-
-
-
(13)
-
-
Total income/expenses recognised directly in equity
-
-
-
35
-
-
-
35
-
35
Profit (loss) for the year
-
-
-
-
-
-
(10,366)
(10,366)
(69)
(10,435)
Total income/expenses allocated in the year
-
-
-
35
-
-
(10,366)
(10,331)
(69)
(10,400)
Change in 2012 profit (loss)
-
-
(20,561)
-
(8,008)
(17,186)
45,755
-
-
-
Dividends
-
-
-
-
-
-
-
-
(36)
(36)
-
-
-
-
-
-
-
-
2
2
35,124
180,316
-
(158)
14,243
(30,043)
(10,366)
189,116
(2,598)
186,518
Change in reserves Acquisitions and Change in % held of investments Balance at 31 March 2013
33
24 ORE GROUP INTERIM MANAGEMENT STATEMENT MARCH 2013
(10) Non-current liabilities Non-current liabilities decreased from € 65,081 thousand to € 63,235 thousand. The decrease is mainly due to the change in employee benefits.
(11) Current liabilities Current liabilities rose from € 245,289 thousand to € 271,711 thousand. The change is mainly due to the increase in short-term bank borrowings. Trade payables decreased by € 2,085 thousand and other payables fell by € 2,567 thousand. Other payables include payables to personnel as a result of the reorganisation, which in the first three months of 2013 decreased by € 3,536 thousand, from € 10,500 thousand as at 31 December 2012 to € 6,964 thousand at 31 March 2013.
(12) Statement of cash flows Total cash flow was negative by € 36.8 million compared to the cash flow for the same period last year (positive by € 13.4 million), which had benefited from the proceeds of extinction of the MPS life insurance policy. Net cash used in operating activities was negative by € 34.0 million, compared to the negative cash flow of € 3.8 million the previous year. This result is due mainly to the operating loss, which net of adjustments amounted to € 8.4 million, and to the negative performance of net working capital for € 25.6 million, of which € 13.3 million referring to the decrease in trade receivables, € 2.1 million to the decrease in trade payables, € 11.9 million to the change in other assets and liabilities and € 1.6 million to the positive change in inventories. Net cash used in investing activities was a negative at € 2.4 million, in line with the cash flow for the same period last year and consisting mainly of operating investments. Cash flow used in financing activities was negative by € 0.4 million, compared to the positive € 19.5 million for the same period of last year, which had benefited from the extinction of the MPS life insurance policy for € 19.7 million.
(13) Net financial position The net financial position decreased from € 5.3 million at 31 December 2012 to € -31.4 million at 31 March 2013. Cash and cash equivalents decreased and short-term bank borrowings increased in relation to the cash flow trend already discussed in the Statement of cash flows. Medium-long term indebtedness decreased, upon repayment of the amount due during the period for subsidised loans.
34
24 ORE GROUP INTERIM MANAGEMENT STATEMENT MARCH 2013
Outlook for the year The recession will continue to have a negative effect on consumption and on revenue trends. The review of the business plan with additional action approved by the Board of Directors on 1 March, constant pressure to reduce costs and investments targeting digital innovation will allow the Group to remain competitive over the next three years.
Milan, 13 May 2013
The Chairman of the Board of Directors MR. Benito BENEDINI (signed on the original)
35
24 ORE GROUP INTERIM MANAGEMENT STATEMENT MARCH 2013
Declaration pursuant to art. 154-bis, paragraph 2, Italian Legislative Decree no. 58 of 24 February 1998, as amended The Corporate Financial Reporting Manager, Massimo Luca Arioli, hereby certifies that the economic and financial data in this interim management statement is consistent with the corporate books and accounting records. Milan, 13 May 2013 Corporate financial reporting manager
Mr. Massimo Luca ARIOLI (signed on the original)
36
