Gruppo Editoriale L'Espresso : Economic and financial results of the Espresso Group at march 31 2017

COMUNICATO STAMPA

Ai sensi della delibera Consob 11971/99 e successive modificazioni e integrazioni

RFATTURATO A €136,4MN (€135,9 NEL 2016),
RISULTATO NETTO A €5,0MN (€5,5MN NEL 2016),
POSIZIONE FINANZIARIA NETTA POSITIVA A €29,0MN

Rome, April 27 2017 - The Board of Directors of Gruppo Editoriale l'Espresso S.p.A. met today in Rome under the chairmanship of Mr Carlo De Benedetti and approved the consolidated results as of March 31 2017 presented by Chief Executive Officer Monica Mondardini.

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FOREWORD On July 30 2016 the Espresso Group and ITEDI, following the memorandum of understanding signed on March 2 2016, signed a general agreement to merge the two companies in order to create the leading publishing Group in Italy and one of the main groups in Europe in the sector of daily and digital news. As part of the deconsolidation plan aimed at ensuring compliance with the print run thresholds set out in current regulations, in view of the future merger with La Stampa and Il Secolo XIX, during 2016 the Espresso Group completed the following transactions:  the sale on October 28 2016 of the entire shareholding interest of 71% in Seta SpA, publisher of the titles Alto Adige and Il Trentino;  the sale on November 1 2016 of the business arm including the newspapers Il Centro, and its printing centre, and La Città di Salerno;  the lease from December 1 2016 of the business arm including the newspaper 'La Nuova Sardegna' to the company DB Information SpA. The advertising for all the newspapers has remained with the sales advertising company A.Manzoni&C. To ensure that the figures are comparable, a pro-forma income statement was prepared for the first quarter of 2016 giving the results with the current consolidation perimeter, i.e. for the 5 titles that have been deconsolidated, taking into account only the revenues and costs of the concessionaire. Later in this press release the comparisons with the previous year refer to the pro-forma figures.

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PERFORMANCE OF THE MARKET

DoAfter the slight recovery in 2016, in the first two months of 2017 advertising investment underwent a decline of 2.3% compared to the corresponding period of 2016 (Nielsen Media Research figures). The decline affected all of the media, but with a different intensity: whereas television and radio received orders for an almost equivalent amount as in the same period of 2016 (-0.5% and -0.3% respectively), the internet (excluding search and social) reported a decline of 2.9% and the printed press was down by 8.6% with daily newspapers posting -9.7% (-10.9% for national advertising and -9.1% for local advertising) and magazines -6.4%. As far as newspaper circulation is concerned, according to ADS (Accertamento Diffusione Stampa) figures, in the first two months of 2017 there was a fall in sales on the newsstands and in subscription of 9.3%.

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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.

PERFORMANCE OF OPERATIONS OF THE ESPRESSO GROUP IN THE FIRST QUARTER OF 2017The Group closed the first quarter of 2017 with a positive net result of €5.0mn. Consolidated revenues, amounting to €136.4mn, were up by 0.4% on the first quarter of 2016 (-3.1% on a non like-for-like basis). Circulation revenues, amounting to €42.3mn, were down by 4.6% from the same period of last year on a like-for-like basis in a market that, as stated above, has continued to see a significant reduction in the circulation of newspapers. Advertising revenues were up by 6.8%, posting a decline of 6.6% for the Group media and a significant increase in third-party concessions, thanks to the new concessions of Radio Italia, La Stampa and Il Secolo XIX, for national advertising. For the Group media, radio advertising orders rose by 1.5%, confirming the positive trend already seen in the previous year. Internet orders underwent a slight decline (-1.5%) that was less than the market decline. Lastly, the printed press reported a significant fall (-10.4%), reflecting the negative performance of the newspaper and magazine market, which particularly affected the national press, while local papers held up well. Costs fell by 6.4% which affected both fixed personnel costs (-5.4%) and other costs (-7.2%). The consolidated gross operating margin came in at €13.1mn (€12.3mn in the first quarter of 2016 pro-forma). The consolidated operating margin came to €9.7mn (€8.8mn in the same period of last year pro-forma). The consolidated net result was €5.0mn, versus €5.5mn in the first quarter of 2016 proforma. The net financial position at the end of March 2017 was a positive €29.0mn, compared to €31.7mn at year end 2016 and €15.5mn at March 31 2016. The Group had 1,946 employees, including temporary contracts, at the end of March and the average number of employees in the period was 2.3% lower on a like-for-like basis than in the first quarter of 2016.