PRESS RELEASE
This press release contains a number of alternative performance indicators not contemplated under IFRS (EBITDA, EBIT, Net Financial Position). Definitions of these terms are provided in the attachment.
Telecom Italia Media: the Board of Directors Approves the Group's Half-year Report at 30 June 2014
NET RESULT: -5.2 million euro (-133.5 million euro in H1 2013, which included the amount of the
Discontinued Operations relating to the disposal of La7 and MTV Italia for 137.9 million euro)
REVENUES: 30.6 million euro; -8.0 million euro compared to H1 2013 (38.6 million euro) EBITDA: 11.3 million euro; -7.0 million euro compared to H1 2013 (18.3 million euro) EBIT: -2.1 million euro; -6.2 million euro compared to H1 2013 (4.1 million euro)
NET FINANCIAL POSITION: 257.6 million euro; 259.9 million euro at the end of 2013
OPERATING FREE CASH FLOW: 7.3 million euro
Merger of TIMB and Rete A operations finalised; Persidera, the leading independent digital terrestrial operator in Italy, formed.
Market sounding for entities interested in acquiring Persidera started.
***
Rome - 29 July 2014
The Telecom Italia Media Board of Directors, chaired by Severino Salvemini, examined and approved the
Group's half-year report at 30 June 2014.
Consolidated Group revenuesreached 30.6 million euro in the first half of 2014, with a decrease of 8.0 million euro compared to the same period of 2013 (38.6 million euro). This result was entirely attributable to the Network Operator in relation with the expiry, at year-end 2013, of some contracts, only partially offset by higher revenues from other customers.
EBITDAamounted to 11.3 million euro, a 7.0 million euro decrease compared to the first half of 2013 (18.3 million euro), mainly reflecting the decline in revenues, which was only partially offset by a reduction in operating expenses of the Network Operator.
EBITamounted to -2.1 million euro, thus decreasing by 6.2 million euro compared to the first half of 2013 (4.1 million euro), and included lower amortisation for 0.8 million euro entirely attributable to the Network Operator.
Net resultamounted to -5.2 million euro compared to -133.5 million euro in the first half of 2013, which included an overall amount of Discontinued Operations of -137.9 million euro relating to the disposal of La7 and MTV.
Net financial positionamounted to 257.6 million euro, down by 2.3 million euro compared to year-end
2013 (259.9 million euro). This reduction was mainly attributable to the industrial investment requirements for the period of 3.7 million euro (associated with the completion of the Transport and Backup Network and the implementation of the broadcasting infrastructure for Network Operator's "Playout" television channels), the result of the operating activities for the period (EBITDA -11.3 million euro and Working Capital 0.3 million euro), and the net effect of the consolidation of Rete A (21.1 million euro), as well as the collection of the tax consolidation revenue of 20.5 million euro, chiefly
associated with the payment of interest on debt.
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RESULTS BY BUSINESS UNIT
The Network Operator Business Unit includes the operations of Telecom Italia Media Broadcasting (TIMB) relating to the management of the Digital Multiplexes, as well as the offering of accessory services and broadcasting platforms. On 30 June 2014, TIMB changed its company name into Persidera S.p.A.; for illustration purposes, any references to TIMB will have to be understood as referring to Persidera.
Network Operator (TIMB)
The Network Operator's revenues and income amounted to 31.1 million euro, decreasing by 9.4 million euro compared to the same period of 2013 (40.5 million euro). As illustrated above, this result was attributable both to the expiry of certain agreements and the decrease of other revenues, which were only partially offset by higher revenues from other customers.
EBITDA amounted to 15.2 million euro, a 6.4 million euro decrease compared to H1 2013 (21.6 million euro). This performance was mainly impacted by the above-mentioned lower revenues, which were only partially offset by lower operating expenses arising on lower provisions for risks related to trade receivables and future charges.
EBIT amounted to 1.8 million euro, a 5.6 million euro decrease compared to the first half of 2013 (7.4 million euro), due both to the change in EBITDA and lower amortisation of 0.8 million euro. It should be noted that, starting from 2014, the useful life of frequencies was extended from 31 December 2028 to 31
December 2032.
Investments for the first half of 2014 totalled 3.7 million euro and were mainly aimed at completing the transport network and implementing the broadcasting infrastructure for television channels (Playout).
In the first half of 2014, TIMB's operating free cash flow amounted to 12.1 million euros.
At 30 June 2014, the three digital multiplexes of TIMB covered 95.2% of the Italian population. The relevant signals are broadcast from 812 broadcasting sites throughout the Italian territory. The allocated broadcasting capacity amounted approximately to 62.3 Mbps, corresponding to about 94% of available capacity.
EXTRAORDINARY TRANSACTIONS
The merger process between Persidera and Rete A continues with a plan to accelerate and maximise the synergies between the two companies. This plan also envisages the merger of Rete A into Persidera by the end of this year.
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In parallel, TIME and Gruppo Editoriale l'Espresso (holding 70% and 30% of the capital of Persidera, respectively), for which Mediobanca and Banca IMI, respectively, continue to act as financial advisors, began to sound the market for entities interested in acquiring Persidera.
OUTLOOK
The Telecom Italia Media Group, following the sale of its television business units La7, La7d and MTV Italia, has focused its development strategy on the implementation of initiatives aimed at restoring the Group's efficiency and profitability. In light of the economic and regulatory environment in which Telecom Italia Media operates, and without taking account of the effects arising from the merger of TIMB and Rete A, for 2014 the Network Operator's present level of bandwidth rental is expected to be maintained, also by acquiring new customers, and expanding the offering of additional services, in addition to allowing a positive operating cash generation, while maintaining a tight cost control.
***
Pursuant to sub-section 2, clause 154-bis of the Unified Finance Act, the manager in charge of drafting the company's accounting documents, Luigino Giannini, has declared that the accounting disclosures contained in this press release correspond to the data records, accounting books and accounts entries.
Press Office
+39 06 355981 www.telecomitaliamedia.it
Investor Relations
+39 06 35598278 www.investor.telecomitaliamedia.it
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Attachments
ALTERNATIVE PERFORMANCE INDICATORS
In addition to the conventional financial indicators established under IFRS, this press release regarding the Interim Financial Report at 30 June 2014 contains certain alternative performance indicators in order to facilitate understanding of the company's earnings management and its balance sheet and financial situation. These indicators, which also feature in the interim financial statements (the interim reports at
31 March and 30 September), and the annual report at 31 December should not be construed as a substitute for the conventional indicators contemplated under IFRS.
The alternative performance indicators are described below:
EBITDA: Telecom Italia Media uses this indicator as a financial target in internal (Business Plans) and external (made by analysts and investors) presentations. It provides a useful unit of measurement for assessing the Groups operating performance, both as a whole and at the business unit level, and the performance of the Parent Company Telecom Italia Media S.p.A., in addition to EBIT. These indicators are as follows:
Profit (loss) before tax from continuing operations | |
+ | Financial charges |
- | Financial income |
+/- | Other charges/(income) from equity investments |
+/- | Share of results of equity investments in associates and companies under joint control, accounted for using the equity method |
EBIT- Operating Income | |
+/- | Impairment losses/(Reversals) of non-current assets |
+/- | Capital losses/(Gains) on disposals of non-current assets |
+ | Depreciation and amortization |
EBITDA - Operating result before depreciation and amortization, Capital gains/(losses), and Impairment reversals/(losses) on non-current assets |
Net Financial Debt: The Telecom Italia Media Group considers Net Financial Debt is an accurate indicator of its ability to meet its financial obligations, and is calculated as Gross Financial Debt minus Cash and Cash Equivalents and other Financial Assets.
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The reclassified Separate Consolidated Income Statements, the Consolidated Statements of Comprehensive Income, the Consolidated Statements of Financial Position and the Consolidated Statements of Cash Flows of the Telecom Italia Media Group, herewith presented, are the same as those included in the Interim Management Report included in the Half-yearly Financial Report to June 30, 2014 and are unaudited. Such statements are however consistent with those included in the Telecom Italia Media Group Half-year Condensed Consolidated Financial Statements at June 30, 2014.
Please note that the limited audit work by our independent auditors on the Telecom Italia Media Group Half- yearly Condensed Consolidated Financial Statements at June 30, 2014 has not yet been completed.
Consolidated Separate I ncome Statement
(in thousands of euro) | H 1 2 0 1 4 | H 1 2 0 1 3 C han g e ( b) ( a- b) % |
(in thousands of euro) | ( a) | H 1 2 0 1 3 C han g e ( b) ( a- b) % |
Revenues | 30,592 | 38,649 (8,057) (20.7) |
Other income | 666 | 3,073 (2,407) (78.3) |
T o t al o pe r at i n g r e ve n u e s an d o t he r i n c o m e | 3 1 , 2 5 8 | 4 1 , 7 2 2 ( 1 0 , 4 6 4 ) ( 25. 1) |
Acquisition of goods and services | (14,579) | (15,250) 671 4.4 |
Employee benefits expenses | (3,807) | (3,956) 149 3.8 |
Other operating expenses | (1,589) | (4,182) 2,593 62.0 |
Changes in inventories | - | - - - |
Internally made assets | - | - - - |
O P E RAT I N G RE S U L T B E F O RE D E P RE C I AT I O N AN D AM O RT I Z AT I O N - E B I T D A | 1 1 , 2 8 3 | 1 8 , 3 3 4 ( 7 , 0 5 1 ) ( 38. 3) |
Depreciation and amortization | (13,374) | (14,192) 818 5.8 |
Gains/ (losses) realized on disposals of non-current assets | 1 | - 1 100.0 |
Impairment reversals /(losses) on non-current assets | - | - - - |
O P E RAT I N G P RO F I T ( L O S S ) - E B I T | ( 2 , 0 9 0 ) | 4 , 1 4 2 ( 6 , 2 3 2 ) n . a . |
Income/ (expenses) from investments | 5 | (69) 74 n.a. |
Finance income | 9 | 672 (663) (98.7) |
Finance expenses | (4,311) | (2,947) (1,364) (46.3) |
P RO F I T ( L O S S ) B E F O RE T AX F RO M C O N T I N U I N G O P E RAT I O N S | ( 6,3 87 ) | 1,7 98 ( 8 , 1 8 5 ) n . a . |
Income tax expense | 1,204 | (1,278) 2,482 n.a. |
P RO F I T ( L O S S ) F RO M C O N T I N U I N G O P E RAT I O N S | ( 5,1 83 ) | 52 0 ( 5 , 7 0 3 ) n . a . |
Profit (loss) from discontinued operations/Non-current assets held for sale | - | (137,954) 137,954 100.0 |
P RO F I T ( L O S S ) F O R T H E P E RI O D | ( 5 , 1 8 3 ) | ( 1 3 7 , 4 3 4 ) 1 3 2 , 2 5 1 96. 2 |
Attributable to: - O w n e r s o f t he P ar e n t - Non-controlling interests | ( 5 , 1 8 4 ) 1 | ( 1 3 3 , 5 3 0 ) 1 2 8 , 3 4 6 96. 1 (3,904) 3,905 n.a. |
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-
o
- from discontinued operations/non-current assets held for sale
P r o f i t ( l o s s ) f o r th e p e r i o d
O th e r c o m p o n e n ts o f th e s ta te m e n t o f c o m p r e h e n s i v e i n c o m e
° Remeasurement of defined benefit plans
° Actuarial gains (losses) (205) (66) (139)
° Income tax expense 56 19 37
sub-total (149) (47) (102) Co m p r e h e n s i v e p r o f i t ( l o s s ) f o r th e p e r i o d ( 5, 332) ( 137, 481) 132, 149
Attributable to:
- Profit (loss) for the year attributable to equity holders of the Parent Company
> Income (loss) from continuing operations (5,333) 4,405 (9,738)
> Profit (loss) from discontinued operations/Non-current assets held for sale - (137,954) 137,954
- Profit (loss) for the period attributable to equity holders of the Parent Company (5,333) (133,549) 128,216
- Minority interests
> Income (loss) from continuing operations 1 (3,932) 3,933
> Profit (loss) from discontinued operations/Non-current assets held for sale - - -
- Profit (loss) for the period attributable to Minority Interests 1 (3,932) 3,933
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Telecom Italia Media's Network Operator (TIMB) business unit includes the operations of Telecom Italia Media Broadcasting, Beigua S.r.l., Timb 2 S.r.l. and Rete A (following the merger of the digital terrestrial network operations) relating to managing the Digital Multiplexes operated by the Group, as well as the provision of accessory services and broadcasting platforms to third parties.
(¹) It includes the a ctivity of Telecom Ita lia Media Broa dca s ting, Beigua S.r.l., Timb 2 S.r.l. e Rete A (for the ha lf-yea rly fina ncia l report a t June 30, 2014 only with res pect to the hea dcount of pers onnel, 12 units ).
⁽²⁾ It includes Telecom Ita lia Media S.p.A.'s a ctivities .
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Consolidated Statements of Financial Position
(in thausands af euro)
ASSETS
06/30/2014 12/31/2013 CHANGE
N ON-CU RRENT ASSETS
lntanglble assets:
Gaadwill 42,291 21,230 21,061
lntang(ble assets with a finite usefullife 128,379 113,043 15,336
170,670 134,273 36,397
Tanglble assets:
Property, plant and equiprnent awned 79,123 60,375 18,748
Assets held under finance leases
Other non-current assets
lnvestrnents in assaciates and jaint ventures accaunted far using the equity rnethad
79,123 60,375 18,748
other investrnents 812 788 24
Nan-current financial assets 152 180 (28) Miscellaneaus receivables and ather nan-current assets 13,015 16,040 (3,025) Deferred tax assets 10,507 8,351 2,156
24,486 25,359 (873)
TOTAL NON-CURRENT ASSETS (A) 274,279 220,007 54,272
CURRENT ASSETS
lnventaries 11 11
Trade and rniscellaneaus receivables and ather current assets 31,367 38,156 (6,789) Current incarne tax receivables 547 182 365 lnvestrnents
Current financial assets
Securities atherthan investrnents , financial receivables and ather
current financial assets 43 46 (3)
Cash and cash equivalents 5,492 17 5,475
TOTAL CU RR ENT ASSETS (B) 37,460 38,412 (952)
TOTAL ASSETS (A+ B) 311,739 258,419 53,320
EQUITY ANO LIABILITIES l l
EQUITY
Equity attributable ta equity halders af the Parent Carnpany (64 ,608) (59,120) (5,488)
Equityattributable ta Minarity lnterests 40,233 76 40,157
TOTAL EQU ITY (C) (24,375) (59,044) 34,669
N ON-CU RRENT LIAB ILITIES
Nan-current financialliabilities l 4 (3)
Ernplayee benefits 1,929 1 ,369 560
Deferred tax liabilities 22,224 19,840 2,384
Provisians
Miscellaneaus payables and ather nan-current liabilities 11,670 11,670
TOTAL NON-CURRENT LIABILITIES ( D) 35,824 32,883 2,941
CURRENT LIABILITIES
Current financial liabilities 263,276 260,116 3,160
Trade and rniscellaneaus payables and ather current liabilities 34,677 24,446 10,231
Current incarne tax payables 2,337 18 2,319
TOTAL CU RR ENT LIABILITIES (E)
300,290 284,580 15,710
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TOTAL LIABILITIES (F=D+E) 336,114 317,463 18,651
TOTAL EQUITY ANO LIABILITIES (C+ F) 311, 739 258,419 53,320
Consolidated Cash Flows Statements
(in thousands of euro)
CASH FLOWS FROM OPERATING ACTIVITIES
Profit (loss) for the period
Adjustments for:
Depreciation and amortization
lmpairment lossesjreversals of non-current assets (including investments) Net change in deferred tax assets and liabilities
Gainsjlosses realized on disposals of non-current assets (including investments)
Share of lossesjgains of associates accounted for usingthe equity method
H1 2014
(5,183)
13,374
6 (1,509)
(1)
H1 2013
520
14,192
74 (2,058)
Change in employee benefits
Change in inventories
(3) (120)
Change in trade receivables and in net receivables for contract works
Change in trade payables
Net change in income tax receivablesjpayables
Net change in miscellaneous receivablesjpayables and other assets/liabilities
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES (A)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of intangible assets on an accrual basis
Purchase of tangible assets on an accrual basis
Total investments in intangible and tangible assets on an accrual basis
Change in trade payables relating to investing activities
Total purchase of intanglble and tanglble assets on a cash basis
Acquisition of subsidiaries and businesses, net of cash acquired (Il) ------
Acquisition of other investments (Il)
Change in financial receivables and other financial assets (l) Proceeds from sale of subsidiaries, net of cash disposed of (Il)
Proceeds from salejrepayment of tanglble, intanglble and other non current assets
(Il)
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES (B)
CASH FLOWS FROM FINANCING ACTIVITIES
Change in current financialliabilities and other
Proceeds from non-current financial liabilities (including current portion) Repayments of non-current financialliabilities (including current portion) Other changes in non-current financial liabilities
lncreasesjreductions of share capitai and other changes in Equity (including subsidiaries)
Amount paid for instruments representing equity
Dividends paid
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES (C)
CASH FLOWS FROM (USED IN) DISCONTINUED OPERATIONS/NON-CURRENT ASSETS HELD FOR SALE (D)
AGGREGATE CASH FLOWS (E=A+B+C+D)
N ET CASH AN D CASH EQUIVALENTS AT BEGIN N IN G OF THE PERIOD (F)
Net foreign exchange differences on net cash and cash-eq -tijlents (G)
NET CASH ANO CASH EQUIVALENTS AT END OF THE PERIOD (H=E+F+G)
(l) The amount payable for the acquisition also includes any goodwill and is glven net of the cha nge in receivables resulting from the relevant acquisition
(Il) The amount payable for the acquisition is glven net of the change in payables resulting
from the relevant acquisition
(2,050)
312
117
21,730
26,793
(27 ) (3,719) (3,746)
317 (3,429)
217 (21 ,268)
5
(24,475)
21 ,268
(33)
21,235
23 ,553 (18 ,061)
5,492
2,791 (1,44 7)
2,314 (1,923)
14,343
(149) (3,985) (4,134) (2,770) (6,904) (9,460)
(4,581) (113,902)
20
(134,827)
(4)
100,000
99,996 (725)
(21,213) (159 , 856) (181,069)
Other lnformation on Cash Flows
(in thousands of euro)
lncome tax expense (paid)/received lnterest expense paid
lnterest income received
Dividends received
BREAKDOWN OF NET CASH AND CASH EQUIVALENTS:
(in thousands of euro)
H1 2014
20,271 (4,263)
11
H1 2014
Hl 2013
16,622 (2,889)
Hl 2013
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD:
Cash and cash equivalents- from continuing operations
17 45,919
Cash and cash equivalents- from discontinued operationsjassets held for sale
Bank overdraft repayable on demand - from continuing operations
Bank overdraft repayable on demand - from discontinued operationsjassets held for sale
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD:
Cash and cash equivalents- from continuing operations
17 (18,078)
(18,078)
(18,061)
5,492
3,194
49,113 (160,058)
(48,911) (208,969) (159,856)
7,979
Cash and cash equivalents- from discontinued operationsjassets held for sale
Bank overdraft repayable on demand - from continuing operations
Bank overdraft repayable on demand - from discontinued operationsjassets held for sale
115,492
r5,492
29
8,008 (181,127)
(7,950) (189,077) (181,069)
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