Interim consolidated financial statements at 30 September 2007

Transcription

1 Il Sole 24 ORE S.p.A. Sole shareholder company Registered office: Via Monte Rosa, Milan Share capital Euro 26,000, fully paid up Tax code and VAT no and Chamber of Commerce no (Translation from the Italian original which remains the definitive version) Interim consolidated financial statements at 30 September

2 Contents Company officers... 4 Board of directors... 4 Board of statutory auditors... 4 Independent auditors... 4 Structure of Il Sole 24 ORE Group... 5 Highlights... 6 Directors report on the nine months ended 30 September Operations of Il Sole 24 ORE Group... 7 Significant events... 8 Acquisition of 100% of Il Sole 24 ORE Business Media Group... 8 Subscription of the share capital increase of Editorial Ecoprensa S.A... 9 Acquisition of 100% of Data Ufficio S.p.A. Group... 9 Acquisition of 100% of S.T.R. S.p.A Exercise of options to extend full colour rotary presses... 9 Sale of business activity relating to the bookstore in Via Cavallotti Milan... 9 Consolidated income statement and balance sheet highlights Segment reporting The parent s income statement and balance sheet highlights Outlook Interim consolidated financial statements at 30 September 2007 of Il Sole 24 ORE 21 Financial statements Balance sheet Income statement Cash flow statement Statement of changes in equity Notes Background information Format, content and accounting policies Financial statements structure Consolidation policies Accounting policies Non-current assets Current assets Non-current assets classified as held for sale Equity Non-current liabilities Current liabilities Effects of changes in foreign exchange rates Revenue Costs Guarantees

3 6. Changes in accounting policies, changes in estimates and errors Risk management Principal reasons for uncertainty in estimates Consolidation scope Notes to the financial statements Non-current assets Current assets Equity Non-current liabilities Current liabilities Income statement Segment reporting Other information Guarantees Related party transactions Subsequent events Financial statements of the parent Il Sole 24 ORE S.p.A. at 30 September Balance sheet Income statement Cash flow statement Statement of changes in equity

4 Company officers The shareholders appointed the members of the boards of directors and statutory auditors during the ordinary meeting held on 26 April Board of directors Chairman Managing director Directors Secretary GIANCARLO CERUTTI CLAUDIO CALABI MAURIZIO BERETTA ALDO BONOMI INNOCENZO CIPOLLETTA GIUSEPPE DE RITA PAOLO SCARONI CARLO BRAMBILLA Board of statutory auditors Chairman PIERGIORGIO RE Standing auditors DEMETRIO MINUTO ALBERTO USUELLI Alternate auditors MARIA SILVANI LUIGI VIARENGO Independent auditors KPMG S.p.A. holds the engagement for the legally-required audit of the parent and the audit of the consolidated financial statements. 4

5 Structure of Il Sole 24 ORE Group Il Sole 24 ORE S.p.A. Consolidation scope Nuova Radio S.p.A. 100% 100% Il Sole 24 Ore Business Media S.r.l. Il Sole 24 Ore Editoria Specializzata S.r.l. 100% Faenza Industrie Grafiche S.r.l. (1) 50% 100% Faenza Editrice IbericaSL 9% 91% Faenza Editrice Do Brasil 24 ORE Television S.p.A. 100% 100% S.T.R. S.p.A. Il Sole 24 Ore UK Ltd 100% 24 Ore Motta Cultura S.r.l. 57% 100% Data Ufficio S.p.A. Motta Architettura S.r.l. 100% Vulcanoidee 100% S.r.l. 100% Data Ware S.r.l. Editoriale Ecoprensa SA (4) 15% 100% (2) Bandera S.r.l. (3) Blogosfere S.r.l. 30% 50% HS24 S.r.l. (3) (1) Held for sale (2) Subsidiary excluded from consolidation scope (3) Associate (4) Minority investment 5

6 Highlights Income statement highlights of Il Sole 24 ORE Group in thousands of Euros 3rd quarter of rd quarter of 2006 Revenue EBITDA EBIT Profit before tax Profit for the period Profit attributable to the shareholders of the parent Gross operating profit per share 0,61 20,87 * Operating profit per share 0,36 15,60 * Profit attributable to the shareholders of the parent pe 0,18 5,81 * *Before allocation approved by the shareholders during the extraordinary meeting of Balance sheet highlights of Il Sole 24 ORE Group in thousands of Euros Total assets Net financial position Equity attributable to the shareholders of the parent Equity attributable to the shareholders of the parent per share 1,73 80,77 Number of employees at period end *Before allocation approved by the shareholders during the extraordinary meeting of

7 Directors report on the nine months ended 30 September 2007 Operations of Il Sole 24 ORE Group With circulation flat and advertising showing slight growth, Il Sole 24 ORE Group reported consolidated revenue of Euro million in the first nine months of 2007, up 12% on the Euro million of the same period of The gross operating profit totalled Euro 54.5 million, compared to Euro 37.6 million the first nine months of 2006, up 45.2%. As percentage of revenue, it rose from 10.1% in 2006 to 13.1% in the first nine months of The operating profit came in at Euro 32.4 million, also up on the Euro 28.1 million of the same period of 2006, which included gains of Euro 12.2 million. In addition, the new accounting treatment adopted for post-employment benefits at 31 December 2006 had a positive impact on the income statement, bringing in Euro 4.9 million following legislative changes affecting the allocation of post-employment benefits due to the application of IFRS. Consolidated profit for the period amounted to Euro 15.4 million, up 47.7% on the first nine months of the previous year (Euro 10.4 million). In April 2007, Il Sole 24 ORE Business Media S.r.l. (formerly Editoriale GPP S.p.A.) was included in the consolidation scope, contributing revenue of Euro 17.2 million and adding Euro 1.9 million to gross operating profit. Data Ufficio S.p.A. and S.T.R. S.p.A. were included in the consolidation scope in July 2007 and August 2007, respectively. They produce and sell management software. Data Ufficio Group brought in revenue of Euro 2.5 million and S.T.R. S.p.A. Euro 1.3 million. The first nine months of 2007 saw the excellent performance of advertising revenue, which grew 23.7% on 2006, in relation to all the Group s major means of communications and, in particular, the newspaper, radio and the internet. Advertising also fared well in the professional area, partly given the change in the consolidation scope. In terms of costs, despite the persistent growth in the cost of paper and distribution, personnel expense remained stable, and the effects of the plan launched in 2006 to contain and rationalise overheads and operating costs began to be seen in the period. Cash and cash equivalents totalled Euro 31.6 million, compared to Euro 86.1 million at 31 December 2006, after investments of Euro 74.4 million, including Euro 50.7 million due to changes in the consolidation scope, and the distribution of dividends of Euro 6.7 million and reserves of Euro 12 million. Equity attributable to the shareholders of the parent amounted to Euro million at period end, compared to Euro million at the beginning of At 30 September 2007, Group had 2,024 employees, including those with fixed-term and project-based contracts, compared to 1,600 at 31 December 2006, with an increase of 405 employees due to the 7

8 Significant events inclusion of Il Sole 24 ORE Business Media Group, S.T.R. S.p.A. and Data Ufficio S.p.A. in the consolidation scope. The following events occurred in the first nine months of 2007: the Group s stock exchange listing plan was defined and launched, with the naming of Morgan Stanley as advisor and Mediobanca and UBS Investment Bank as Global Coordinators for the public offer for subscription. In addition to these two banks,, Banca IMI, BNP Paribas, Citigroup, Goldman Sachs, Lehman Brothers, Merrill Lynch and UniCredit will act as Joint Bookrunners. Banca IMI, BNP, Mediobanca and UniCredit are also Joint Lead Managers in the public offer for subscription. In addition, Mediobanca is placement manager and sponsor; new publishing projects and strategic investments were carried out; work to contain and rationalise overheads and operating costs continued; the Group s operating structure was strengthened to take on the significant increase in size foreseen in the business plan. In particular: projects in the magazines area included the launch of House24, a high-end quarterly magazine on luxury real estate investments; the newspaper was developed with a new section called ArtEconomy, for the art market; the residual quotas of Il Sole 24 ORE Business Media S.r.l. Group (formerly Editoriale GPP S.p.A.) were acquired, kicking off the integration and streamlining of the group s activities; 100% of S.T.R. S.p.A. was acquired; 1000% of Data Ufficio S.p.A. was acquired; 30% of Blogosfere was acquired; options to acquire extension to existing rotary presses were exercised. Details on main transactions Acquisition of 100% of Il Sole 24 ORE Business Media Group In March, the residual 51% of Il Sole 24 ORE Business Media Group (formerly Editoriale GPP Group) was acquired for Euro 18.2 million. With this investment, Il Sole 24 ORE S.p.A. acquired a leadership position on the Italian business media market. Il Sole 24 ORE Business Media Group (formerly Editoriale GPP) was created out of the merger of four Italian publishers (Agepe, Quasar, Jce and Faenza) and is at the top of the B2B trade magazine market for the hotel, restaurant, supermarket chains, information technology, construction, architecture and communications. 8

9 Il Sole 24 ORE Business Media Group s products are mainly magazines. It has more than 70 titles, including Bargiornale, Mark Up and Linea Edp. Subscription of the share capital increase of Editorial Ecoprensa S.A. At the end of September, the Group subscribed a pro-rata portion (15%) of the share capital increase approved by its Spanish investee Editorial Ecoprensa S.A. to sustain its business plan. Expenditure for the Group totalled Euro 1.7 million, bringing its total investment in this company to Euro 5 million. Acquisition of 100% of Data Ufficio S.p.A. Group To develop its management software offer in the Professional Area, in early July, the Group finalised the acquisition of Data Ufficio S.p.A, a company that operates in the IT, publishing and graphics sectors, with a product portfolio that includes management software for accounting, tax and labour requirements for professionals, companies and the public administration. To date, the price paid for this acquisition amounts to Euro 8.5 million, and a price adjustment could be added on the basis of results achieved in 2006, 2007 and 2008, to be paid by July Total expenditure, including the above adjustment, should not exceed Euro 14.5 million. Acquisition of 100% of S.T.R. S.p.A. Early August saw the finalisation of the acquisition of S.T.R. S.p.A., Italy s leading management software maker for the construction industry. Construction companies, engineering firms, private and public customers and professionals in this field use S.T.R. S.p.A. s software. This acquisition was also part of the Group s vertical development strategy for management software in the professional area. The total price paid was Euro 15.7 million, and a price adjustment could be added on the basis of results achieved in 2007, 2008 and 2009, but total expenditure is not expected to exceed Euro 1 million. Exercise of options to extend full colour rotary presses On 25 September 2007, to proceed with the Full Colour Project launched in 2003, and to increase the number of colour pages in the Il Sole 24 ORE newspaper from 40 to 56, the Group exercised its option to acquire 4 extensions to the existing colour rotary presses at the two production sites in Milan and Carsoli (AQ) and the two smaller sites in Verona and Medicina (BO). The Group s total expenditure to extend these presses amounts to approximately Euro 5.7 million. Sale of business activity relating to the bookstore in Via Cavallotti Milan In February, the sale of the bookstore business activity in Via Cavallotti, Milan was completed for Euro 378 thousand. 9

10 Consolidated income statement and balance sheet highlights The Group s highlights as at and for the nine months ended 30 September 2007 are analysed below. The Group s business is highly vulnerable to seasonal trends, which cause a slowdown in publishing and, especially, advertising revenue in the summer. Revenue for the third quarter of the year, which amounted to Euro million, were, on average, 30% lower than the previous quarters and made up 26% of total revenue in the first three quarters. However, the third quarter of 2007 showed an increase on the Euro 98.3 million of the same period of The gross operating loss for the quarter amounted to Euro 1.5 million, an improvement of Euro 5.1 million on the gross operating loss of Euro 6.5 million in the same period of This improvement was due to the rise in advertising revenue, the effect of operating cost containment and lower accruals to the provisions for risks. Income statement in thousands of Euros Quarter ended Quarter ended Year ended Revenue from sales Other operating income Personnel expense ( ) ( ) ( ) Direct and operating costs ( ) ( ) ( ) Accruals and bad debts (4.443) (3.826) (8.073) EBITDA Amortisation/depreciation and impairment losses (22.478) (21.654) (26.358) Losses/profits on sale of non-current assets EBIT Financial income/expense Other income/expense from investment assets/liabilities Profits (losses) on the measurement of investments (555) - (382) Profit before tax Income taxes (18.259) (19.704) (22.504) Profit for the period/year Profit attributable to minority interests Profit attributable to the shareholders of the parent Revenue for the first nine months of 2007 amounted to Euro million, compared to Euro million in the same period of Net of the effect of changes in the consolidation scope, which amounted to Euro 24.6 million, revenue would have grown 5.4%. Advertising revenue of Euro million was up 23.7% on the first nine months of 2006 (+13.0% on a like-for-like basis), despite the effect of the termination of the contract with the San Paolo publisher (Euro 8.4 million generated in the first nine months of 2006). Newspaper advertising revenue rose 14.3%, partly due to the full colour pages introduced in July minuti the free newspaper that was launched in late 2006 brought in revenue of over Euro 4 million, while Viaggi del Sole contributed more than Euro 1.7 million. Advertising revenue from Radio 24 and the Group s websites outperformed 2006 with growth of 16.6% and 50.9%, respectively. 10

11 Revenue from the sale of newspapers, books and magazines totalled Euro million, up Euro 5.4 million or 3.2% on the Euro million of the first nine months of This increase was mainly due to sales of magazines (Euro 52.6 million, up 5.2%, mainly following the consolidation of Business Media and the contribution of new magazines in the publishing area) and products sold in relation to publications (Euro 44.1 million, up 2.5%). Sales revenue from the newspaper rose 1.4% from Euro 63.6 million to Euro 64.5 million, while sales revenue from books grew 7.6% to Euro 12.4 million. Other revenue amounted to Euro 76.1 million, up 9.7% on the Euro 69.4 million of the first nine months of the previous year. Revenue from the sale of software and e-publishing products, as well as conventions and training, also grew, while revenue from services related to the distribution of financial information in real time dropped 10.9%. Other operating income amounted to Euro 6.5 million in the period, compared to Euro 4.7 million in the first nine months of This caption includes cost recoveries, rent income, prior year income, grants and other sundry items. Personnel expense totalled Euro million, compared to Euro million in the period ended 30 September Without the new IFRS accounting treatment of post-employment benefits following changes in legislation concerning their allocation (a positive impact of Euro 4.7 million on equity), personnel expense would have amounted to Euro million, up 8.4%. This caption also includes expense for employees and other personnel working under different kinds of contracts (project-based agreements, work experience, etc.). Excluding the effect on equity mentioned above (Euro 4.7 million) or the change in the consolidation scope (Euro 6.8 million), personnel expense would have increased by 1.4% overall and the average expense per person by 0.4%. Direct and operating costs amounted to Euro million, compared to Euro million in the same period of 2006, up Euro 24.6 million, or 10.5%. As a percentage of revenue, these costs dropped from 63% in the first nine months of 2006 to 62.2% in the same period of They include Euro 16.9 million in relation to the change in the consolidation scope (in particular, Il Sole 24 ORE Business Media and Motta Architettura). On a like-for-like basis, the increase was mainly due to the free newspaper 24minuti and the new magazines launched in the second half of In addition, the increase in the cost of paper for the newspaper and the greater impact of postage charges for subscriptions and transport expense following the increase in volumes also affected these costs. Accruals and impairment losses totalled Euro 4.0 million, compared to Euro 3.8 million in the first nine months of They include bad debts and accruals for litigation with personnel and third parties. The increase is mainly due to the greater accrual for bad debts, as a result of the significant rise in revenue of the period and the growth in new small customers, such as professionals and small and mid-sized 11

12 companies. Accruals to the provision for litigation mainly relate to lawsuits against the company for defamation in the press. Depreciation and amortisation and impairment losses totalled Euro 22.5 million, compared to Euro 21.6 million in the same period of The 2006 figures included impairment losses of Euro 1.8 million on assets that were sold. Net of those impairment losses, the increase mainly relates to the amortisation and depreciation of the assets with definitive useful lives acquired with Il Sole 24 ORE Business Media S.r.l. Group, Data Ufficio S.p.A. and STR S.p.A. to which the cost of acquisition was allocated, and the depreciation of the full colour rotary presses that were rolled out in July Profits/losses on the sale of non-current assets amounted to Euro 0.4 million, compared to Euro 12.2 million in the same period of 2006, which mainly included profits on the sale of the property in Via Lomazzo. Net financial income amounted to Euro 1.5 million, compared to net financial income of Euro 1.8 million in the first nine months of the previous year. Other income and expense on non-current assets and liabilities totalled Euro 0.3 million. This caption includes dividends from investees. The loss arising on the measurement of investments amounted to Euro 0.6 million, and was due to the loss of HS24 S.r.l. attributable to the shareholders of the parent (Euro 0.5 million). Income taxes totalled Euro 18.3 million, compared to Euro 19.7 million in the first nine months of

13 Balance sheet In thousands of Euros Non-current assets Current assets Total assets Equity attributable to the shareholders of the parent Equity attributable to minority interests Total equity attributable to the shareholders of the parent Non-current liabilities Current liabilities Total liabilities Total equity and liabilities Non-current assets amounted to Euro million at period end, up Euro 76.0 million on the Euro million at 31 December This increase was mainly due to the following: the allocation of the acquisition price for Il Sole 24 ORE Business Media S.r.l. Group to titles and goodwill; the recognition of excess costs of Data Ufficio S.p.A. and S.T.R S.p.A.; the fair value adjustment to the investment in Borsa Italiana S.p.A; the acquisition of the investment in Blogosfere; investments in hardware, plant and buildings. Current assets totalled Euro million at year end, compared to Euro million at the beginning of the year, down Euro 25.9 million, which includes the change in the consolidation scope, with an impact of Euro 30.2 million, including trade receivables of Euro 19.1 million. Net of this effect, the change would have been mainly due to the Euro 54.5 million decrease in cash and cash equivalents. Trade receivables, net of the change in the consolidation scope, decreased Euro 2.6 million. Equity amounted to Euro million, compared to Euro million at 31 December The portion attributable to minority interests amounted to Euro 0.3 million at period end. Non-current liabilities totalled Euro million, up Euro 26.0 million on the Euro 92.1 million at the beginning of the year. Changes in the period mainly relate to the Euro 20.3 million increase in deferred tax liabilities following the accrual in relation to the allocation of the acquisition price of Il Sole 24 ORE Business Media S.r.l. to intangible assets (titles). This caption also includes a Euro 3.6 million increase in the provisions for risks and charges. Net financial liabilities decreased Euro 1.0 million. Current liabilities amounted to Euro million, up Euro 14.4 million on the Euro million of the same period of the previous year. The balance includes Euro 25.1 million in relation to Il Sole 24 13

14 ORE Business Media Group, S.T.R. S.p.A. and Data Ufficio S.p.A., as well as current taxes of Euro 12.9 million. Net of these effects, trade payables dropped Euro 22.0 million, tax liabilities rose Euro 13.3 million and other payables grew Euro 4.9 million. Cash flow statement (in thousands of Euros) 3rd quarter of rd quarter of Profit for the period/year attributable to the shareholders of the parent Adjustments Changes in net working capital Total net cash flows from operating activities Investments Disinvestments and other changes Total net cash flows used in investing activities Free cash flow Net cash flows used in financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents: At the beginning of the period/year At the end of the period/year Cash flows generated by operating activities totalled Euro 34.3 million in the period, up on the Euro 28.4 million of the first nine months of the previous year. The increase in the profit for the period, depreciation and amortisation and deferred tax assets/liabilities was only partially offset by the rise in net working capital, mainly due to the consolidation of new companies acquired in Cash flows used in investing activities amounted to Euro 73.6 million and included expenditure for investments of Euro 74.4 million, which related to the acquisition of all GPP Group shares (Euro 32.4 million), the share capital increase of Editorial Ecoprensa S.A. (Euro 1.7 million), the acquisition of Data Ufficio S.p.A. (Euro 13.0 million), the acquisition of 30% of Blogosfere S.r.l. (Euro 0.8 million), the acquisition of S.T.R. S.p.A. (Euro 15.4 million), property, plant and equipment, such as plant for properties, renovations to owned buildings and hardware equipment for management systems (Euro 4.9 million), intangible assets, including titles and management software systems (Euro 5.9 million) and other changes (Euro 0.2 million). Cash flows used in financing activities totalled Euro 17.1 million and mainly related to the distribution of dividends (Euro 6.7 million) and reserves (Euro 12.0 million), in addition to the repayment of short-term subsidised loans (Euro 1.0 million), net of interest income (Euro 2.1 million) and other financial changes (Euro 0.5 million). The net financial position decreased from Euro 81.3 million at 31 December 2006 to Euro 24.9 million. It may be summarised as follows: 14

15 (in thousands of Euros) 30 September December 2006 Cash and cash equivalents Bank overdrafts and loans due within one year Other current financial liabilities Current financial assets 2 2 Net current financial position Non-current financial liabilities Non-current financial assets and hedging derivative fair value Net financial position Segment reporting Publishing General publications Publishing is the division that heads the newspaper Il Sole 24 ORE, the related products that are attached thereto, 24minuti (the free newspaper launched in late 2006) and specific magazines such as English24, Viaggi24 and House24. It also manages certain primary processes (printing and distribution) on its own behalf and on that of other Group segments. Segment reporting in thousands of Euros Quarter ended Quarter ended Year ended Revenue EBITDA EBITDA margin (%) 14,1% 15,3% 13,7% System advertising System is the division that handles advertising activities for the Group s main means of communications and those of third parties. Segment reporting in thousands of Euros Quarter ended Quarter ended Year ended Revenue EBITDA 356 (1.159) (1.381) EBITDA margin (%) 0,2% -0,9% -0,8% Professionals professional and specialised publishing 15

16 The Professionals segment targets professionals (mainly accountants, lawyers and business consultants), the public administration and small and mid-sized companies, offering them a wide range of publications, from magazines, books and databases to e-publishing, training and management software. This segment also includes, inter alia, the Frizzera system, the Pirola trademark and Via Libera and Impresa24 software. The Professionals segment also manages B2B integrated communications activities for small and mid-sized companies in specific sectors, such as agriculture/food, retail distribution, construction and welfare. It directly manages specific advertising sales networks. Segment reporting in thousands of Euros Quarter ended Quarter ended Year ended Revenue EBITDA EBITDA margin (%) 20,1% 20,3% 17,7% Multimedia Multimedia oversees the collection, production and distribution of specific digital content for financial institutions, investors and businesses using a variety of transmission technologies: satellite, land lines and wireless networks. This segment also manages the Group s online activities, making Il Sole24 ORE content and products available digitally on the website and the e-commerce channel Shopping24. In addition, Multimedia broadcasts Radiocor news, offers online databases the content of the Group s major titles and acts as content provider for the public administration, mobile phone operators and third party publishers using a technological platform that customises content on the basis of each customer s specific needs. Multimedia also manages the Ventiquattrore.tv web-based television channel. Segment reporting in thousands of Euros Quarter ended Quarter ended Year ended Revenue EBITDA (734) 748 EBITDA margin (%) 5,8% -2,4% 1,7% 16

17 Radio Radio manages the national news and talk radio station Radio24. Using a publishing format, the station alternates radio news with informational programs and entertainment based exclusively on the spoken work and where, each day, approximately 18 hours of life radio are broadcast directly from the studios in Milan and Rome. Each week, more than thirty different programs go on air, covering the most important areas of public interest, from national and international news to economics and finance, without overlooking information on home and family, sports, culture and leisure, as well as work and well-being. Segment reporting in thousands of Euros Quarter ended Quarter ended Year ended Revenue EBITDA (685) (2.496) (1.238) EBITDA margin (%) -7,6% -31,7% -10,0% Centralised corporate and services The corporate area comprises Group management and coordination, as well as support services, such as IT systems and facility management which, together with administrative, purchasing and HR services, are charged to the business segments using activity-based costing criteria. This segment also includes certain projects and/or start-ups that, because of their small size or because they are to be integrated into other business segments, are managed directly by the corporate offices. Segment reporting in thousands of Euros Quarter ended Quarter ended Revenue EBITDA (3.836) (9.931) 17

18 The parent s income statement and balance sheet highlights Income statement in thousands of Euros Quarter ended Quarter ended Year ended Revenue from sales Other operating income Personnel expense (92.356) (94.891) ( ) Direct and operating costs ( ) ( ) ( ) Accruals and bad debts (4.219) (3.513) (8.197) EBITDA Amortisation/depreciation and impairment losses (10.189) (12.233) (13.874) Losses/profits on sale of non-current assets EBIT Financial income/expense Other income/expense from investment assets/liabilities Profits (losses) on the measurement of investments (26) - - Profit before tax Income taxes (20.476) (21.981) (25.455) Profit for the period Balance sheet in thousands of Euros Non-current assets Current assets Total assets Equity Total equity Non-current liabilities Current liabilities Total liabilities Total equity and liabilities

19 Cash flow statement (in thousands of Euros) 3rd quarter of rd quarter of Profit for the period/year attributable to the shareholders of the parent Adjustments Changes in net working capital Total net cash flows from operating activities Investments Disinvestments and other changes Total net cash flows used in investing activities Free cash flow Net cash flows used in financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents: At the beginning of the period/year At the end of the period/year

20 Outlook Early figures for October confirm the strong trend in advertising revenue, as publishing revenue from products sold along with publications have slowed compared to the same period of the previous year. This is in line with market developments and forecasts. However, other lines of revenue are up, as overheads decrease. All things considered, barring any non-recurring, unforeseeable events, 2007 should end with profit up on the previous year and in line with forecasts. Milan, 15 November 2007 The Chairman of the board of directors GIANCARLO CERUTTI (signed on the original) 20

21 (Translation from the Italian original which remains the definitive version) Interim consolidated financial statements at 30 September 2007 of Il Sole 24 ORE Financial statements Balance sheet in thousands of Euros Note (*) ASSETS Non-current assets Property, plant and equipment (1) 96,475 98,537 Goodwill (2) 52,688 3,026 Intangible assets (3) 77,237 53,710 Investments in associates and joint ventures (4) ,055 Financial assets available for sale (5) 18,664 4,435 Other non-current assets (6) 17,969 17,348 Deferred tax assets (7) 15,608 4,313 Total 279, ,424 Current assets Inventories (8) 17,035 11,680 Trade receivables (9) 162, ,646 Other receivables (10) 8,487 3,953 Other current assets (11) 8,774 6,717 Cash and cash equivalents (12) 31,561 86,101 Assets held for sale (4) Total 228, ,097 TOTAL ASSETS 507, ,521 (*) Section 11 of the notes 21

22 in thousands of Euros Note EQUITY AND LIABILITIES A) Equity Equity attributable to the shareholders of the parent Share capital (13) 23,400 23,400 Revaluation reserves (14) 32,422 20,561 Hedging and translation reserve (15) Other reserves (16) 25,978 25,978 Retained earnings (17) 57,596 58,488 Utile (Perdita) del periodo del Gruppo (18) 15,776 16,650 Total equity attributable to the shareholders of the parent 155, ,389 Share capital and reserves attributable to minority interests Profit attributable to minority interests (18) (343) - Total minority interests Total 155, ,066 B) Non-current liabilities Non-current financial liabilities (19) 17,894 18,845 Payroll provisions (20) 41,118 42,815 Deferred tax liabilities (7) 30,902 10,618 Provisions for risks and charges (21) 23,366 19,836 Other non-current liabilities (22) 4, Total 118,055 92,148 C) Current liabilities Bank overdrafts and loans due within one year (23) 6,577 4,765 Trade payables (24) 161, ,363 Other current liabilities (25) 19,126 3,094 Other payables (26) 46,722 36,085 Total 233, ,307 Total liabilities 351, ,455 TOTAL EQUITY AND LIABILITIES 507, ,521 (*) Section 10 of the notes 22

23 Income statement in thousands of Euros Note 3rd quarter of rd quarter of ) Continuing operations Revenue from books, magazines and newspapers (27) 173, ,325 Advertising revenue (28) 166, ,820 Other revenue (29) 76,162 69,406 Total revenue 416, ,551 Other operating income (30) 6,542 4,710 Personnel expense (31) (104,928) (101,062) Change in inventories (9) 2,138 (3,320) Raw materials, consumables and supplies (32) (33,021) (22,004) Services (33) (192,592) (176,951) Use of third party assets (34) (27,525) (23,804) Other operating costs (35) (8,372) (8,731) Accruals (21) (1,248) (1,592) Provision for bad debts (9) (3,195) (2,234) Gross operating profit 54,524 37,563 Amortisation of intangible assets (3) (12,706) (10,419) Depreciation of property, plant and equipment: (1) (9,772) (9,406) Impairment losses on property, plant and equipment: - (1,829) Profits/losses on the sale of non-current assets (36) ,179 Operating profit 32,393 28,088 Financial income (expense) (37) 1,549 1,840 Other income from investment assets/liabilities (38) Profits (losses) on the measurement of investments (39) (555) - Profit before tax 33,692 30,154 Income taxes (40) (18,259) (19,704) Profit from continuing operations 15,433 10,450 2) Discontinued operations Profit (loss) from discontinued operations - - Profit for the period 15,433 10,450 Loss attributable to minority interests Profit attributable to the shareholders of the parent 15,776 10,450 23

24 Basic earnings per share in Euros (18) Diluted earnings per share in Euros (18) (*) Section 10 of the notes 24

25 Cash flow statement (in thousands of Euros) 3rd quarter of rd quarter of 2006 A) CASH FLOWS FROM OPERATING ACTIVITIES Profit for the period attributable to the shareholders of the parent 15,776 10,450 Adjustments for: Dividends received (305) (226) Depreciation of property, plant and machinery 9,772 9,406 Amortisation of other intangible assets 12,706 10,419 Impairment losses di altre property, plant and equipment e immateriali - 1,829 (Profits) loss on the sale of property, plant and equipment (8) (11,589) (Profits) losses on the sale of intangible assets (205) (340) (Profits) losses on the sale of business activities (133) (250) (Profits) losses on the sale of investments in associates - - Increase (decrease) in provisions for risks and charges 3,530 (5,810) Increase (decrease) in payroll provisions (1,697) 240 Increase (decrease) in deferred tax assets/liabilities 8,329 2,522 Net financial (income) expense (2,149) (2,105) Cash flows from operating activities before changes in working capital 45,616 14,546 (Increase) decrease in inventories (5,355) 3,320 (Increase) decrease in trade receivables (16,520) 4,355 Increase (decrease) in trade payables (14,132) (19,515) Income taxes paid (6,042) (5,988) (Increase) decrease in other assets/liabilities 26,024 31,684 Changes in net working capital (16,025) 13,857 TOTAL NET CASH FLOWS FROM OPERATING ACTIVITIES (A) 29,591 28,403 B) CASH FLOWS FROM INVESTING ACTIVITIES Dividends received Considerations on the sale of associates - - Considerations on the sale of property, plant and equipment 84 22,301 Considerations on the sale of intangible assets Considerations on the sale of business activities - - Investments in property, plant and equipment (4,898) (32,496) Investments in intangible assets (5,962) (2,536) Other changes in Intangible assets (8) - Investments in property, plant and equipment from business combinations (2,889) - Increase in goodwill from business combinations (49,661) - Other increases in goodwill - - Investments in intangible assets from business combinations (30,309) - Acquisition of investments in associates (771) (1,424) (Decrease) in associates from business combinations 22,050 - Other decreases (increases) in other non-current assets 4,563 7 Acquisitions of available-for-sale financial assets (1,707) (3,283) TOTAL NET CASH FLOWS USED IN INVESTING ACTIVITIES (B) (68,820) (16,612) C) CASH FLOWS FROM FINANCING ACTIVITIES FREE CASH FLOW (A + B) (39,229) 11,790 Dividends paid (18,666) (9,000) Agreement (repayment) of long-term bank loans (951) (2,347) Net change in other non-current financial assets (439) (363) Net change in held-for-trading financial assets (116) - Net financial interest received 2,149 2,105 Change in equity attributable to minority interests (343) - Other changes in reserves 1,241 1,091 TOTAL NET CASH FLOWS USED IN FINANCING ACTIVITIES (C) (17,125) (8,514) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (A+B+C) (56,354) 3,276 OPENING CASH AND CASH EQUIVALENTS 81,338 94,901 Effect of changes in foreign exchange rates - - CLOSING CASH AND CASH EQUIVALENTS 24,984 98,177 INCREASE (DECREASE) OF THE PERIOD (56,354) 3,276 25

26 Statement of changes in equity (in thousands of Euros) Share capital Revaluation reserve Hedging and translation reserve Other reserves Retained earnings Profit for the period Equity attributable to the shareholders of the parent Equity attributable to minority interests Total equity Balance at 1 January ,400 20,561-25,978 58,848 7, , ,858 Change in profit for ,071 (7,071) Dividends/distsribution to reseves (9,000) - (9,000) - (9,000) Income/expense taken directly to equity Adjustment to reserve for post-employment benefits Fair value of hedging instruments Profit for the period ,450 10,450-10,450 Balance at 30 September ,400 20, ,978 57,704 10, , ,399 (in thousands of Euros) Share capital Revaluation reserve Hedging and translation reserve Other reserves Retained earnings Profit for the period Notes:(*) (13 ) (14 ) (15 ) (16 ) (17 ) (18 ) Equity attributable to the shareholders of the parent Equity attributable to minority interests Total equity Balance at 31 December ,400 20, ,978 58,488 16, , ,066 Change in profit for ,650 (16,650) Dividends/distsribution to reseves (18,666) - (18,666) - (18,666) Income/expense taken directly to equity Adjustment to reserve for post-employment benefits ,124-1,124-1,124 Fair value of hedging instruments Fair value of assets held for sale - 11, ,861-11,861 Profit for the period ,776 15,776 (343) 15,433 Change in reserves Other changes Change in % ownership of investments Balance at 30 September ,400 32, ,978 57,596 15, , ,935 (*) section 10 of the notes Milan, 15 November 2007 The Chairman of the Board of Directors GIANCARLO CERUTTI (signed on the original) 26

27 Notes 1. Background information The Il Sole 24 ORE Group is a leading provider of economic and financial information to the general public, professionals, companies and financial institutions. The composition of the Group and the consolidation scope at 30 September 2007, together with the changes that have taken place since 31 December 2006, are explained in section 9. Consolidation scope. The main events affecting the Group during the first nine months of 2007 are detailed in the Report on Operations. The following companies were consolidated at 30 September 2007: Il Sole 24 ORE S.p.A., the parent, which acts both as the holding company for controlling investments in group companies, and as an operating company for the core business activities (general, financial and professional information, press agency, etc.). 24 ORE Television S.p.A., which handled the production of television content but is no longer active. Nuova Radio S.p.A., broadcaster of Radio 24, a news and talk radio station. Il Sole 24 ORE Editoria Specializzata S.r.l., which specialises in products relating to farming and the food industry. Il Sole 24 ORE UK Ltd, which handles the sale of advertising space in the UK. Motta Architettura S.r.l., specialised in architectural and design products. 24 ORE Motta Cultura S.r.l., which focuses on products related to art and photography. 24 ORE Business Media S.r.l., which specialises in professional B2B publishing in sectors such as hotels, restaurants, information technology, electronics, construction and architecture. On 1 July 2007, Editoriale Quasar S.p.A., which publishes specialised publications for the consumer goods, IT, electronics and communications industries, and Pubblistampa S.r.l., which provides journalism services, were merged into this company. Faenza Editrice Iberica S.A.: which operates in a particular niche of the Spanish market publishing magazines on ceramics. Faenza Editrice Do Brasil S.A.: which operates in a particular niche of the Brazilian market publishing magazines on ceramics. Data Ufficio S.p.A., specialised in software solutions and digital services for the public administration and professionals, as well as office products and printed matter. STR S.p.A., specialised in software solutions for the construction industry. 27

28 Il Sole 24 ORE S.p.A. has its registered and administrative offices in Via Monte Rosa 91, Milan. It ultimate parent is Confindustria (Italian General Federation of Industries). These consolidated financial statements have been prepared as part of the listing of Il Sole 2 ORE shares and their consequent inclusion in the special category of the Italian Stock Exchange. 2. Format, content and accounting policies These interim consolidated financial statements as at and for the nine months ended 30 September 2007 have been prepared on a goingconcern basis and in accordance with the International Financial Reporting Standards (IFRS) and related interpretations issued by the International Accounting Standards Board (IASB) and endorsed by the European Commission with regulation no. 1725/2003 and subsequent modifications, in line with Regulation no. 1606/2002 of the European Parliament. The format and content of these interim consolidated financial statements comply with the disclosure requirements of IAS 34 Interim Financial Reporting. Accordingly, these interim consolidated financial statements do not include all of the information required for annual financial statements and should be read together with the consolidated financial statements as at and for the year ended 31 December The accounting policies applied in the preparation of the interim consolidated financial statements are the same as those applied to the comparative figures at 31 December 2006 and 30 September The interim separate financial statements of the parent and the main consolidated companies have been prepared in compliance with IFRS. The appropriate adjustments have been made to the financial statements of the other companies consolidated on a line-by-line basis (Motta Architettura S.r.l., 24 ORE Motta Cultura S.r.l. and the companies of the Il Sole 24ORE Business Media Group), as they were prepared using accounting policies that differ from IFRS. These interim consolidated financial statements are presented in Euros and amounts are expressed in thousands of Euros. These interim consolidated financial statements have been audited by KPMG S.p.A.. 3. Financial statements structure The Group has prepared the consolidated interim balance sheet by classifying current and non-current assets and liabilities separately. Each asset and liability that includes amounts that fall due both within and beyond 12 months is analysed so as to show the amount that is expected to be recovered or paid beyond 12 months. All of the details needed for full disclosure are provided in the notes in the form of additional sub-classifications of the items shown in the balance sheet. 28

29 Captions are classified in the consolidated interim income statement by nature. The consolidated cash flow statement has been prepared to provide information on cash flows and constitutes an integral part of these interim consolidated financial statements. The indirect method has been used for presenting cash flows, according to which the profit for the period has been adjusted for the effects of: changes in inventories, receivables and payables generated by operating activities; non-monetary transactions; all other elements whose monetary effects are cash flows generated by investing or financing activities. The amount of the dividends distributed to shareholders during the period and the related amount per share are shown separately. The Group has also prepared a reconciliation of the consolidated equity and profit for the period with the equivalent figures of the parent. The notes are presented in a systematic manner. For each of the captions shown in the balance sheet, income statement, cash flow statement and statement of changes in equity, there is a crossreference to the details provided in the notes. 4. Consolidation policies The Group consists of the parent Il Sole 24 ORE S.p.A. and its subsidiaries. The parent company consolidates all of its investments in subsidiaries in the interim consolidated financial statements. Companies are considered subsidiaries if the parent has the power to govern their financial and operating policies of so as to obtain benefits from their activities. Investments in subsidiaries are no longer consolidated when the parent loses control, i.e., when it has lost the power to determine their financial and operating policies. Such investments are shown at cost. When preparing the interim consolidated financial statements, the parent consolidates its own interim separate financial statements and those of its subsidiaries on a line-by-line basis as though they were the financial statements of a single economic entity. The same accounting policies have been applied to similar transactions and events that took place in similar circumstances. The interim separate financial statements of the parent and its subsidiaries used to prepare the interim consolidated financial statements were all prepared at 30 September The subsidiaries are included in the interim consolidated financial statements (balance sheet and income statement) from the date on which the parent acquires control and are no longer consolidated from the date on which the parent company loses control. 29

30 Subsidiaries are measured at the date when control is acquired using the purchase method. In accordance with this method, all identifiable assets, liabilities and contingent liabilities of the business acquired, which meet recognition requirements, are recognised at their fair values at the acquisition date. In preparing the interim consolidated financial statements, the parent aggregates its interim separate financial statements and those of its subsidiaries caption by caption, adding together the various assets, liabilities, equity captions, revenues and costs. The carrying amount of investments held by the parent and other Group companies in each subsidiary included in the consolidation scope is eliminated against the related portion of equity. Any cost paid for the subsidiary over and above the interest acquired in the net fair value of its identifiable assets, liabilities and contingent liabilities which can be recognised from an accounting point of view is recorded as goodwill. Goodwill, which is an asset that generates future economic benefits, but which cannot be separately identified or recognised, is initially recognised at cost. Reference should be made to the section Goodwill and Business Combinations for a detailed explanation of how goodwill is measured. If the interest acquired in the net fair value of the identifiable assets, liabilities and contingent liabilities which meet recognition requirements exceeds the cost of the subsidiary at the date of acquisition (generating negative goodwill ), the excess is taken to profit or loss. Deferred tax assets and liabilities arise on the temporary differences between the net fair value of identifiable assets, liabilities and contingent liabilities which meet recognition requirements and their value for tax purposes, where the related conditions exist. The portions of equity attributable to minority interests of consolidated companies are recognised separately as minority interests in the appropriate equity captions for capital and reserves attributable to minority interests, whereas the portion of the profit for the period attributable to minority interests is taken to the consolidated interim income statement under Profit attributable to minority interests. All receivables and payables and costs and revenue arising from transactions between companies included in the consolidation scope are eliminated. Any unrealised profits or losses on transactions between consolidated companies and included under inventories, property, plant and equipment or intangible assets at the balance sheet date are also eliminated. The dividends distributed by consolidated companies are also eliminated from the income statement and added back to the prior year profits to the extent that they were paid out of such earnings The interim financial statements of foreign subsidiaries expressed in currencies other than the Euro are translated: at the spot exchange rate on the balance sheet date for monetary items; 30