Mediaset Group. Interim Financial Report as at 31 March 2014

Transcription

1 Mediaset Group Interim Financial Report as at 31 March 2014

2 MEDIASET S.p.A. - via Paleocapa, Milan Share Capital Euros 614,238, fully paid up Tax Code, VAT number and inscription number in the Milan Enterprises Register: Website:

3 INDEX Corporate Boards... 1 Financial Highlights... 2 Introduction... 3 Interim Report on Operations at 31 March Significant events in the first quarter... 8 Performance by geographical area and business segment... 9 Group Performance... 9 Statement of Financial Position Group headcount Related-party transactions Right to opt-out of the obligation to publish reports in the event of significant transactions Events after 31 March Forecast for the year Consolidated Accounting Tables and Explanatory Notes Consolidated Accounting Tables Explanatory Notes... 32

4

5 CORPORATE BOARDS Board of Directors Chairman Fedele Confalonieri Deputy Chairman Pier Silvio Berlusconi Chief Executive Officer Giuliano Adreani Directors Marina Berlusconi Pasquale Cannatelli Paolo Andrea Colombo Mauro Crippa Bruno Ermolli Marco Giordani Alfredo Messina Gina Nieri Michele Perini Niccolò Querci Carlo Secchi Attilio Ventura Executive Committee Risk and Control Committee Compensation Committee Governance and Appointments Committee: Committee of Independent Directors for Related-Party Transactions Board of Statutory Auditors Independent Auditors Fedele Confalonieri Pier Silvio Berlusconi Giuliano Adreani Gina Nieri Carlo Secchi (Chairman) Alfredo Messina Attilio Ventura Attilio Ventura (Chairman) Paolo Andrea Colombo Bruno Ermolli Attilio Ventura (Chairman) Paolo Andrea Colombo Carlo Secchi Michele Perini (Chairman) Carlo Secchi Attilio Ventura Mauro Lonardo (Chairman) Francesca Meneghel (Regular Auditor) Ezio Maria Simonelli (Regular Auditor) Massimo Gatto (Alternate Auditor) Flavia Daunia Minutillo (Alternate Auditor) Riccardo Perotta (Alternate Auditor) Reconta Ernst & Young S.p.A. 1

6 MEDIASET GROUP: FINANCIAL HIGHLIGHTS Main Income Statement Data FY Q Q 2013 mio % mio % mio % 3, % Total net Revenues % % 2, % Italy % % % Spain % % % EBIT % % % Italy % % % Spain % % Profit before Tax and Minority Interest Net Result (12.5) 9.3 Main Balance Sheet and Financial Data 31st December st March st March 2013 mio mio mio 4,436.7 Net Invested Capital 4, , ,977.7 Total Net Shareholders' Equity 2, , ,119.9 Net Group shareholders' Equity 2, , Minorities Shareholders' Equity (1,459.0) Net Financial Position (1,378.7) (1,584.3) 1,139.3 Operating Cash Flow Investiments Dividens paid by the Parent Company Dividens paid by Subsidiares - - Personnel FY Q Q 2013 % % % 5, % Mediaset Group Personnel (headcount) 5, % 5, % 4, % Italy 4, % 4, % 1, % Spain 1, % 1, % 5, % Mediaset Group Personnel (average) 5, % 5, % 4, % Italy 4, % 4, % 1, % Spain 1, % 1, % Main Indicators FY Q Q % EBIT/Net Revenues 3.6% 6.4% 6.8% Italy 1.1% 5.4% 8.5% Spain 11.3% 9.6% 0.0 EBT/Net Revenues 0.3% 4.5% 0.0 Net Profit/Net Revenues -1.5% 1.1% 0.01 EPS (euro per share) (0.01) Diluted EPS (euro per share) (0.01)

7 INTRODUCTION This Interim Report on Operations at 31 March 2014 (the Quarterly Report ) has been prepared in accordance with article 154-ter of Legislative Decree 58/1998 and amendments thereto and Consob Communication DEM/ of 30 April 2008 and in compliance with the international accounting and financial reporting standards (IAS/IFRS) applicable under Regulation (EC) No. 1606/2002 of the European Parliament and of the Council of 19 July 2002, in particular with IAS 34 Interim Financial Reporting. The presentation of the reclassified consolidated financial statements and of the statutory financial statements provided in the Interim Report on Operations corresponds to the presentation adopted for the annual financial statements. The Explanatory Notes have been prepared in compliance with the minimum requirements of IAS 34 Interim Financial Reporting. As such, the information disclosed in this report is not comparable to that of complete financial statements prepared in accordance with IAS 1. This Quarterly Report has not been audited. INTERIM REPORT ON OPERATIONS AT 31 MARCH 2014 Group Highlights The Group s consolidated earnings in the first quarter of the year were affected, as expected, by the Italian advertising market, which posted a slightly negative performance, anyway showing greater stability compared to previous quarters. The advertising market in Spain instead performed positively year-on-year for the second consecutive quarter, buoyed by more favourable conditions in the television advertising segment and a macroeconomic climate showing clearer signs of moderate economic growth and of recovery in private consumption. In both geographical segments the Group has adopted a policy of adapting its broadcasting offering on the basis of forecast advertising revenues, which are expected to show progressive improvement over the course of the year. Such measures have enabled a structural reduction to be achieved over the last two years in running costs, keeping EBITDA for the quarter substantially at first quarter 2013 levels and lowering consolidated financial debt compared to 31 December 2013 through free cash flow generated in the period. The measures did not have an adverse impact on the audience share figures of the Group s channels in the reporting period. Key consolidated financial figures for the quarter compared to the corresponding quarter of the previous year are provided below. Consolidated net revenues amounted to EUR million, down on the EUR million recorded in 2013; EBITDA amounted to EUR million, up from the EUR million recorded in 2013; EBIT amounted to EUR 29.6 million compared to EUR 53.4 million for the corresponding period of the previous year; the figure was driven by higher amortisation expense on television broadcasting rights due to the different scheduling of sports events broadcast in the first quarter of 2014 compared to the first quarter of the previous year. Operating profitability fell to 3.6% from the 6.4% recorded in 2013; 3

8 Interim Financial Report at 31 March 2014 Interim Report on Operations Earnings from operating activities, before tax and minority interests, amounted to EUR 2.5 million, compared to EUR 37.3 million at 31 March 2013; Net earnings of the Group amounted to EUR million, compared to the EUR 9.3 million profit posted in the first quarter of 2013; Consolidated net financial debt fell from EUR 1,459.0 million at 31 December 2013 to EUR 1,378.7 million at 31 March 2014, due to a free cash flow for the period of EUR 87.7 million. Performance review by geographical area: Italy In the first quarter of 2014 consolidated net revenues from the Group s Italian operations totalled EUR million, down from the EUR million posted in the corresponding period of the previous year. As was expected, advertising revenues in the first quarter of the year continued to show slightly negative growth, as despite the greater stability witnessed in the macroeconomic climate there are still no clear signs of a sustainable recovery in domestic demand and consumption. Gross advertising revenues in the first quarter for media licensed to the Group (free-to-air and pay television channels and the relative share of sub-licensing on websites) fell by 1.8%, although the figure suggests that the advertising market is progressively returning to normal compared to previous quarters. In the first quarter of 2013 advertising revenues fell by 19.4% year-on-year, while in the fourth quarter of 2013 they fell by 6.2%. According to the latest figures released by Nielsen, in the first two months of the year, the overall advertising market for traditional media fell by 3.2% yearon-year. Core revenues for Mediaset Premium from the sale of prepaid cards, recharges and easy pay subscriptions, as well as revenues pertaining to the Infinity offer, amounted to EUR million, down from EUR million in the first quarter of 2013, although subscriber numbers remained substantially unchanged compared to 31 December Revenues for EI Towers came to EUR 57.9 million, in line with the 2013 figure. Operating costs for the quarter (personnel expenses, costs for purchases, services and other charges) fell slightly (-0.8%) compared to the corresponding period of 2013, consolidating the structural reduction in running costs achieved over the last two years through cost efficiency measures. Total EBIT from operations in Italy amounted to EUR 7.0 million, compared to EUR 34.6 million at 31 March The change was driven by lower advertising revenues and higher amortisation expenses recognised in the quarter, primarily in relation to pay television rights to broadcast the Serie A league, for which a greater number of matches were scheduled in the reporting period compared to the first quarter of Operating profitability at the end of the reporting period came to 1.1%, compared to the 5.4% posted in Total audience over the 24-hour period averaged 11,520,000 viewers in the first quarter of Auditel statistics show that Mediaset networks as a whole, including both free-to-air and pay television (Premium Calcio) channels broadcast over the digital terrestrial network, obtained an 4

9 Interim Financial Report at 31 March 2014 Interim Report on Operations audience share of 33.3% over the 24-hour period, 33.4% in the Day Time slot and 33.9% in Prime Time. The table below shows the breakdown of audience share by network for the reporting period. (Source: Auditel) The Group is the affirmed market leader with the commercial target audience for all three of its general interest channels and as broadcaster in all three time slots. Notably, Canale 5 ranks in top spot and Italia 1 in third spot in all time slots with the year-old viewer target. 1st Quarter 2014 % COMMERCIAL TARGET SHARE years old ore Day Time Prime Time Mediaset RAI Mediaset s general interest channels held an audience share in the spring season of 28.1% over the 24-hour period, 28.2% in the Day Time slot and 28.2% in Prime Time. Adding to the total the Group s digital channels, total audience share over the 24-hour period came to 34.4% of all viewers, with a 34.3% share in Day Time and 35.1% in Prime Time. A positive contribution also came from the Multichannel Free and Pay networks, which added more than 6 points of audience share for overall viewers and over seven points for the commercial target audience. 5

10 Interim Financial Report at 31 March 2014 Interim Report on Operations GUARANTEE PERIOD: SPRING 2014 (from12/01 to 29/03) % COMMERCIAL TARGET SHARE years old ore Day Time Prime Time Mediaset RAI The following tables show the hours broadcast by each Mediaset network in the first quarter of the two years compared. Mediaset Networks - Broadcasted programmes 1Q Q 2013 D D% Film 1, % 1, % (38) -3.5% Tv Movie % % (54) -24.3% Mini-series % % 7 6.5% Telefilm 1, % 1, % (18) -1.3% Tv Romance - 0.0% % (12) % Sit-com % % % Soap % % (4) -5.6% Telenovelas % % % Cartoons % % (234) -86.3% Total TV Rights 3, % 3, % (40) -1.2% News % % (75) -8.5% Information programmes % % % Sport programmes % % % Event % % (10) -20.4% Entertainment: 1, % 1, % % Culture % % (35) -30.2% Teleshopping % % 5 2.2% Total in-house productions 3, % 3, % % Total 6, % 6, % - 0.0% 6

11 Interim Financial Report at 31 March 2014 Interim Report on Operations Performance review by geographical area: Spain Consolidated net revenues for Mediaset España Group at the end of the first quarter of 2014 amounted to EUR million, showing an increase of 1.9% compared to the corresponding period of the previous year. Gross television advertising revenues amounted to EUR million, up 1.7% year-onyear. Mediaset España s share of the television advertising market recorded a slight drop, falling to 42.8%. The latest Infoadex figures available show that television advertising spend in Spain rose by 3.1% in the first quarter of the year compared to the corresponding period of the previous year. Total costs amounted to EUR million, showing substantially no change year-on-year thanks to concerted cost optimisation policies. Over the last four years, cost control measures have brought a cumulative saving of EUR 54.7 million (-23.7%). As a result of the above performance EBIT came to EUR 22.6 million, compared to EUR 18.8 million in the first quarter of 2013, corresponding to an operating profitability of 11.3% compared to 9.6% in the first quarter of Mediaset España Group s free-to-air multichannel television offering at 31 March 2014 included Telecinco and Cuatro, as well as the thematic channels La Siete, Factoria De Ficcion, Boing, Divinity, Energy and Nueve. As reported in the section Subsequent Events, following the implementation of a supreme court ruling, as of 6 May 2014 the channels La Siete and Nueve from the Mediaset España Group s multichannel offering were blacked out. Mediaset España Group s average audience share in the first quarter of the year over the 24-hour segment was 29.4% of all viewers and 31.5% of the commercial target audience. In the first quarter of the year television consumption in Spain dropped slightly year-on-year to 4.4 hours of viewing per day, with the average daily audience numbering over eight million viewers. Reported below is the breakdown of audience share for Mediaset España Group s general interest channels and thematic channels. 7

12 Interim Financial Report at 31 March 2014 Interim Report on Operations The table below shows the programming schedule for the two main networks, Telecinco and Cuatro, for the reporting period, with comparative figures provided for the corresponding period of the previous year. Telecinco-Cuatro Schedule Hours of broadcasted contents 1Q Q 2013 D D% Film % % 2 0.8% TV Movies, Mini-series and Telefilm % % % Cartoons - 0.0% % (16) % Total TV Rights 1, % % % Quiz-game-show % % (212) -27.5% Sport % % % Documentaries and others 1, % 1, % (74) -4.1% News % % (32) -4.8% Fiction % % % Others - 0.0% - 0.0% - 0.0% Total in-house productions 3, % 3, % (143) -4.2% Total 4, % 4, % - 0.0% Significant events in the first quarter On 10 February UEFA, at the end of a tender open to all operators, awarded Mediaset the exclusive broadcasting rights for Italy on all platforms for all Champions League live matches and highlights for the three-year period , , Mediaset will therefore have the exclusive rights for the live broadcast of all matches on pay television and for a game per round in freeview, in addition to the possibility of also broadcasting all matches in delayed broadcast, highlights, and all goals viewable in the same evening, as well as live streaming of the games on all fixed and mobile devices. As of the forthcoming Champions League season, the most important match of the Wednesday round will be broadcast exclusively and free of charge in HD only on Mediaset channels. Accordingly, it will not be broadcast on either the digital or satellite pay television networks. As of the following season and for three years until 2018, all the matches of the most important football tournament in Europe, including the European Super Cup, will only be broadcast by Mediaset, on the Group s free-to-air and pay television networks and online services. As of 1 January 2014 the partial transfer of broadcasting assets from the subsidiary Towertel S.p.A. to EI Towers S.p.A. took effect, as approved in 2013 by the companies respective boards of directors. On 1 January 2014 the transfer of the commercial business unit from Mondadori Pubblicità S.p.A. to Mediamond S.p.A. took effect. The transaction entailed the transfer of balance sheet assets and liabilities, personnel and contractual arrangements relating to advertising sales in print magazines published by Arnoldo Mondadori Editore and third-party publishers and on R101 radio stations and third-party stations, in order to create, within one company, Mediamond S.p.A., the most comprehensive integrated advertising sales house for Magazines, Radio and Web in Italy. 8

13 Interim Financial Report at 31 March 2014 Interim Report on Operations Performance by geographical area and business segment In this section we give a breakdown of the consolidated income statement, balance sheet and cash flow statement to show the contribution to Group performance of the two geographical areas of business, Italy and Spain. For each geographical area, revenues and performance are reported, broken down by business segment. The presentation of the income statement, balance sheet and cash flow figures shown below corresponds to the presentation adopted in the Report on Operations accompanying the annual Consolidated Financial Statements. As such the figures are restated with respect to the financial statements attached, in order to highlight the intermediate aggregates considered most significant for understanding the performance of the Group and of the individual business units. Although not required by law, the criteria adopted in preparing the aggregates and notes referring the reader to the relevant statutory financial statement items have been disclosed in accordance with guidance provided by Consob Communication of 28 July 2006 and the CESR Recommendation on alternative performance measures (or non-gaap measures) dated 3 November 2005 (CESR/05-178b). The performance figures provided refer to progressive totals at the end of the first quarters of 2014 and 2013; balance sheet figures are stated at 31 March 2014 and at 31 December Group Performance The consolidated income statement reported below shows the intermediate aggregates making up earnings before interest, taxes, depreciation and amortisation (EBITDA) and earnings before interest and taxes (EBIT). EBITDA measures the difference between consolidated net revenues and operating costs, including costs of a non-monetary nature relating to amortisation, depreciation and write-downs (net of any write-backs) of current and non-current assets. EBIT is measured by deducting from EBITDA costs of a non-monetary nature relating to amortisation, depreciation and write-downs (net of any write-backs) of current and non-current assets. 9

14 Interim Financial Report at 31 March 2014 Interim Report on Operations Mediaset Group: Income Statement (values in EUR million) 1Q Total consolidated net revenues Personnel expenses Purchases, services, other costs Operating costs EBITDA Rights amortisations Other amortisations and depreciations Amortisations and depreciations EBIT Financial income/(losses) (22.4) (13.8) Income/(expenses) from equity investments (4.7) (2.3) EBT Income taxes (4.4) (17.7) Net profit from continuing operations (1.9) 19.5 Net profit from discontinued operations - - Minority interests in net profit (10.6) (10.2) Mediaset Group net profit (12.5) 9.3 The following table shows key Group income statement figures stated as a percentage of consolidated net revenues Total consolidated net revenues 100.0% 100.0% Operating costs 60.7% 61.3% EBITDA 39.3% 38.7% Amortisation, depreciation and write-downs 35.7% 32.3% EBIT 3.6% 6.4% EBT 0.3% 4.5% Net profit -1.5% 1.1% Tax rate (EBT %) n.s. 47.6% Below we look at the breakdown of the income statement by geographical area to report the contribution to performance of the Group s Italian and Spanish operations. 1Q 10

15 Interim Financial Report at 31 March 2014 Interim Report on Operations Breakdown by geographical area: Italy The following is an abridged income statement of Mediaset Group s domestic business: Italy: Income Statement (values in EUR million) 1Q Total consolidated net revenues Personnel expenses Purchases, services, other costs Operating costs EBITDA Rights amortisations Other amortisations and depreciations Amortisations and depreciations EBIT Financial income/(losses) (22.0) (13.4) Income/(expenses) from equity investments EBT (13.1) 21.3 Income taxes (1.4) (14.1) Net profit from continuing operations (14.5) 7.2 Net profit from discontinued operations - - Minority interests in net profit (3.2) (3.0) Mediaset Group net profit (17.7) 4.2 The following table shows key income statement figures stated as a percentage of consolidated net revenues. 1Q Total consolidated net revenues 100.0% 100.0% Operating costs 60.6% 59.7% EBITDA 39.4% 40.3% Amortisation, depreciation and write-downs 38.3% 34.9% EBIT 1.1% 5.4% EBT -2.1% 3.4% Net profit -2.9% 0.7% Tax rate (EBT %) n.s. 66.3% 11

16 Interim Financial Report at 31 March 2014 Interim Report on Operations Below we report the performance of the Group s Italian operations broken down by business segment. Integrated Television Operations, including free-to-air and pay television broadcasting and accessory operations consisting of Web publishing, teleshopping, publishing, licensing and merchandising, and film production and distribution. EI Towers, including hosting, maintenance and management operations in relation to radio, television and wireless telecommunications networks run by the listed company EI Towers S.p.A.. The two abridged statements that follow report revenues and EBIT for the business segments identified. Revenues 1Q Business segments breakdown changes % changes Integrated Television Operations % EI Towers % Eliminations (45.0) - (44.8) % Total % Operating Result 1Q Business segments breakdown changes % changes Integrated Television Operations (9.1) n.s. EI Towers % Total % 12

17 Interim Financial Report at 31 March 2014 Interim Report on Operations The income statements of the two geographical areas of operation are reported below. Both areas posted improving income margins in the quarter with respect to the corresponding period of the previous year. Integrated Television Operations changes % changes 1Q Gross advertising revenues (9.5) -1.9% Agency discounts (72.0) (73.5) % Total net advertising revenues (8.0) -1.9% Revenues from subscriptions/pre-paid cards (1.7) -1.1% Other revenues (4.9) -9.7% Total Revenues (14.5) -2.3% Personnel expenses (2.6) -2.4% Operating costs % TV and movie rights amortisation % Other amortisation and depreciation (3.4) -13.8% Inter-segment costs % Total Costs % Operating result (9.1) 20.3 (29.4) % % on revenues -1.5% 3.3% The drop in revenues from television broadcasting in the reporting period was mainly driven by lower advertising revenues, as reported earlier. The drop in other revenues was almost entirely due to lower proceeds from movie distribution operations, in which, unlike the same period of 2013, the transfer of the relative broadcasting rights to the pay television satellite platform is not included. The change in total costs was substantially due to higher amortisation expense for television broadcasting rights as a result of the greater number of Serie A league matches scheduled in the quarter compared to the first quarter of Operating costs in the reporting period (personnel expenses, costs for purchases, services and other charges) remained substantially in line with the figure for the first quarter of 2013, consolidating the structural reduction in running costs achieved over the last two years through cost efficiency measures. 13

18 Interim Financial Report at 31 March 2014 Interim Report on Operations (values in EUR million) EI Towers changes % changes 1Q Revenues towards third parties % Inter-segment revenues % 0.0% Total revenues % Personnel expenses (0.3) -3.2% Operating Costs (0.9) -4.4% Other amortisation and depreciation (0.5) -4.4% Inter-segment costs % Total costs (1.7) -3.9% Operating result % 0 0 % on revenues 27.8% 24.7% EI Towers Group posted a 13.2% increase in EBIT for the reporting period, with an operating profitability of 27.8% thanks to further improvements in the optimisation of operating costs. Inter-segment revenues, totalling EUR 45.0 million refer to hosting, assistance, maintenance and logistics services, broadcasting infrastructure use and engineering services provided to the subsidiary Elettronica Industriale. Revenues from other customers refer to hosting, maintenance and logistics services provided to other broadcasters and wireless telecommunications providers. 14

19 Interim Financial Report at 31 March 2014 Interim Report on Operations Breakdown by geographical area: Spain The following is an abridged income statement of the Group s Spanish business; figures are those of Mediaset España Group (consolidated figures). Spain: Income Statement (values in EUR million) 1Q Total consolidated net revenues Personnel expenses Purchases, services, other costs Operating costs EBITDA Rights Amortisations Others amortisations and depreciations Amortisations and depreciations EBIT Financial income/(losses) (0.5) (0.3) Income/(expenses) from equity investments (6.5) (2.5) EBT Income taxes (3.0) (3.6) Net profit from continuing operations Net profit from discontinued operations - - Minority interests in net profit Mediaset Group net profit The following table shows key income statement figures stated as a percentage of consolidated net revenue from Spanish operations Total consolidated net revenues 100.0% 100.0% Operating costs 61.1% 66.7% EBITDA 38.9% 33.3% Amortisation, depreciation and write-downs 27.6% 23.8% EBIT 11.3% 9.6% EBT 7.8% 8.1% Net profit 6.4% 6.4% Tax rate (EBT %) Tax rate (EBT %) 19.2% 22.7% 1Q 15

20 Interim Financial Report at 31 March 2014 Interim Report on Operations The breakdown of Mediaset España Group s revenues is shown below: (values in EUR million) 1Q % change Gross advertising revenues % Agency discounts (10.8) (11.3) 5.2% Net advertising revenues % Other revenues % Total net consolidated revenues % The item Other revenues mainly includes revenues from the distribution of movie coproductions, revenues from gambling and merchandising and income from telephone traffic originating from the interactive segments of various television shows; the figure shows substantially no change compared to the first quarter of the previous year. 1Q % changes Operating costs % Personnel expenses % Purchases, services, other costs % TV and movie rights amortisation % Other amortisation and write-downs % Total costs for Mediaset España Group in the first quarter of 2014 are in line with the figure for the first quarter of the previous year, thanks to concerted cost optimisation policies. At 31 March 2014, EBIT from Spanish operations totalled EUR 22.6 million, up from EUR 18.8 million in 2013, with an operating profitability of 11.3%. Other income statement components for Mediaset Group as a whole are shown below. 1Q % changes Financial income/(losses) Despite a lower average financial debt, net financial expenses were driven up by the spread between yields paid on bonds placed last year after the close of the first quarter by the 16

21 Interim Financial Report at 31 March 2014 Interim Report on Operations subsidiary EI Towers and Mediaset, a transaction which permitted average debt maturities to be lengthened considerably, and yields paid on bonds issued at earlier dates. 1Q % changes Result from equity investments n.s. The lower figure for the quarter was primarily due to higher losses on the 22% equity investment held by Mediaset España in Digital Plus, a company controlled by the Spanish digital satellite platform of the same name % changes EBT % Income taxes % Tax Rate (%) n.s. 47.6% Net profit from discontinued operations n.s. Minority interests in net profit % Group net profit n.s. Earnings for the reporting period are stated net of income taxes in accordance with the recognition criteria set forth by IAS 34, applying the estimated income tax rate that will be applied at year end. Minority Interests refers to the share of consolidated net earnings of Mediaset España and EI Towers attributable to third parties, on the basis of the interests held by the Group at the respective reporting dates. Statement of Financial Position The Group s balance sheet and its breakdown by geographical area are reported below in abridged form, restated to show the two main aggregates Net Invested Capital and Net Financial Position; the latter consisting of Total Financial Debt, Cash and Other Cash Equivalents and Other Financial Assets. Details of the items making up the net financial position are provided in Note 4.7. The following tables therefore differ in their layout from the statutory balance sheet, which primarily distinguishes current from non-current assets and liabilities. Equity Investments and Other Financial Assets include assets recognised in the consolidated statement of financial position as Investments in Subsidiaries and Other Companies, and non-current equity investments and financial receivables recognised in the consolidated statement of financial position as Other Financial Assets (thus excluding hedging derivatives, which are included as Net Working Capital and Other Assets/Liabilities). 1Q

22 Interim Financial Report at 31 March 2014 Interim Report on Operations Net Working Capital and Other Assets/Liabilities include current assets (apart from cash and cash equivalents and current financial assets included in the Net Financial Position), deferred tax assets and liabilities, non-current assets held for sale, provisions for risks and charges, trade payables and taxes payable. (values in EUR million) Balance Sheet Summary 31/03/ /12/2013 TV and movie rights 1, ,830.3 Goodwill Other tangible and intangible non current assets 1, ,218.9 Equity investments and other financial assets Net working capital and other assets/(liabilities) Post-employment benefit plans (91.7) (92.5) Net invested capital 4, , Group shareholders' equity 2, ,119.9 Minority interests Total Shareholders' equity 2, , Net financial position 1, ,459.0 The breakdown of the balance sheet by geographical area (Italy and Spain) is shown below. With reference to the Group s Italian business, Equity Investments and Other Financial Assets include the carrying amount of the controlling interest held in Mediaset España and the 25% equity interest held in Mediacinco Cartera, a fully consolidated subsidiary of Mediaset España, which owns the remaining 75% controlling interest. These holdings are then netted and eliminated on consolidation. (values in EUR million) Balance Sheet Summary (geographical breakdown) Italy Spain 31/03/ /12/ /03/ /12/2013 TV and movie rights 1, , Goodwill Other tangible and intangible non current assets Equity investments and other financial assets 1, , Net working capital and other assets/(liabilities) 21.8 (41.6) Post-employment benefit plans (91.7) (92.5) - - Net invested capital 3, , , , Group shareholders' equity 2, , , ,419.1 Minority interests Total Shareholders' equity 2, , , , Net financial position 1, ,552.5 (103.9) (93.5) 18

23 Interim Financial Report at 31 March 2014 Interim Report on Operations The table below shows the breakdown of the Group balance sheet at 31 March 2013 to show the effect of the line-by-line consolidation of Mediaset España. (values in EUR million) Balance Sheet Summary (geographical Eliminations/ Mediaset Italy Spain breakdown) Adjustments Group TV and movie rights 1, (0.2) 1,757.5 Goodwill Other tangible and intangible non current assets ,165.8 Equity investments and other financial assets 1, (952.7) Net working capital and other assets/(liabilities) Post-employment benefit plans (91.7) - - (91.7) Net invested capital 3, , (589.8) 0.0 4, Group shareholders' equity 2, ,433.9 (1,407.9) 2,108.2 Minority interests Total Shareholders' equity 2, , (589.8) 0.0 2, Net financial debt 1,482.6 (103.9) 0.0 1,378.7 The following table is an abridged cash flow statement broken down by geographical area, showing cash flows over two periods. Items have been restated with respect to the standard IAS 7 layout used to prepare the statutory cash flow statement in order to show changes in Net Financial Position, considered the most significant indicator of the Group s ability to meet its financial obligations. (values in EUR million) Cash Flow Statement Mediaset Group Italy Spain as at 30 September Net Financial Position at the beginning of the year (1,459.0) (1,712.8) (1,552.5) (1,786.5) Free Cash Flow (6.5) - Cash Flow from operating activities (*) Investments in fixed assets (168.6) (223.7) (87.2) (141.6) (81.5) (82.1) - Disposals of fixed assets Changes in net working capital and other current assets/liabilities (40.2) 73.7 (57.9) Change in the consolidation perimeter (1.9) - (1.9) Own share's sell/buyback Equity investments/invesment in other financial assets (5.5) (0.9) (5.1) (0.4) (0.4) (0.5) Cashed-in dividends Dividends paid Financial Surplus/Deficit (6.9) Net Financial Position at the end of the period (1,378.7) (1,584.3) (1,482.6) (1,651.1) (*): Net profit +/- minority interests + amortisations +/- net provisions +/- valuation of investments recorded using the net equity method + changes in valuation reserves - gains/losses on equity investments The Group s free cash flow amounted to EUR 87.7 million. Italian operations alone generated a free cash flow of EUR 76.9 million. Cash flow in the first quarter of the year compared to the corresponding period of the previous year was affected by the change in advertising sales in the last quarter of the two previous years. 19

24 Interim Financial Report at 31 March 2014 Interim Report on Operations The table below shows the increase of fixed assets reported in the cash flow statement. Increase in fixed assets Mediaset Group Italy Spain from 1/1 to 30/ Investments in TV and movie rights (184.5) (206.0) (105.0) (127.5) (79.6) (78.5) Changes in advances on TV rights 21.5 (9.2) 22.1 (6.4) (0.6) (2.8) TV and movie rights: investments and advances (163.1) (215.2) (82.9) (133.8) (80.2) (81.3) Investments in other fixed assets (5.5) (8.5) (4.3) (7.7) (1.3) (0.8) Total investments in fixed assets (168.6) (223.7) (87.2) (141.6) (81.5) (82.1) Cash outflows of EUR 1.9 million carried under the item Change in Consolidation Area refer to the acquisition on 28 February 2014 of the company Sart S.r.l. by the subsidiary Towertel S.p.A. at a price of EUR 2.4 million, net of net cash and cash equivalents held by the target company at the acquisition date. Equity Investments/Other Financial Assets for the first quarter of 2014 include EUR 5.1 million in costs incurred for the acquisition of a 1.8% equity interest in the company Jade 1290 GMBH by the subsidiary RTI S.p.A., acquired via payment for new rights issued and subscribed by the subsidiary at 31 December Group headcount At 31 March 2014 the Group headcount came to 5,738 employees (5,800 at 31 March 2013 and 5,693 at 31 December 2013). The increase compared to 31 December is almost entirely attributable to temporary personnel employed in the production of television series and dramas. The following tables show the change in employee numbers for the reporting period, broken down by employment grade for the two geographical areas of operation. Number of employees (including temporary staff) ITALY SPAIN as at 31 March Managers Journalists Middle managers Office workers 2,917 2, Industry workers Total 4,448 4,472 1,290 1,328 Average workforce (including temporary staff) ITALY SPAIN 1Q Managers Journalists Middle managers Office workers 2,925 3, Industry workers Total 4,473 4,626 1,287 1,

25 Interim Financial Report at 31 March 2014 Interim Report on Operations Related-party transactions Transactions conducted with related parties do not qualify as atypical or unusual, and are part of the normal course of business of the Group and its companies. Such transactions are conducted at arm s length, considering the nature of the goods and services provided. Detailed information on the impact on Group performance, financial position and cash flow of transactions conducted with parent companies, associates, joint ventures and affiliates is provided in Note 7, together with the disclosures required by the Consob Communication of 29 July Right to opt-out of the obligation to publish reports in the event of significant transactions Pursuant to Article 3 of Consob Resolution No of 20 January 2012, on 13 November 2012 the Board of Directors decided to apply the opt-out mechanism established in Article 70, paragraph 8 and Article 71, paragraph 1-bis of Consob Regulation No /99, as amended, thereby taking advantage of the right to opt-out of obligations to publish the reports required in the event of significant transactions such as mergers, spin-offs, capital increases through the transfer of assets in kind, acquisitions and disposals. Events after 31 March 2014 On 4 April 2014, Mediobanca Banca di Credito Finanziario S.p.A., the sole bookrunner for the transaction, brought to a successful close the placement of 7,065,600 EI Towers S.p.A. ordinary shares, equal to 25% of the share capital. The shares are held by Elettronica Industriale S.p.A., an indirect wholly-owned subsidiary of Mediaset S.p.A. The shared were offered through an accelerated bookbuild targeted at Italian and international qualified investors. The offering was closed at a final price of EUR per share, raising a total of EUR million. At the consolidated level the transaction qualifies as a sale of equity interests in a subsidiary, without entailing a loss of control. As such, the transaction will be recognised in accounts in the second quarter of the year, as required by IAS/IFRS in force, as a transaction with the shareholders of the company. Accordingly, the transaction will have no impact on Group performance in the income statement. The difference between the net price received from the placement of the shares and minority interests in the transaction at the transaction date will be carried in a specific Group shareholders equity reserve, net of any tax effects. Starting from the second quarter of 2014, EI Towers Group will be consolidated on a line-byline basis considering the equity interests resulting from the transaction, with % of the share capital recognised as minority interests. In financial terms, the net proceeds from the transaction will go to lower consolidated net financial debt, which at 31 March 2014 totalled EUR 1,378.7 million. 21

26 Interim Financial Report at 31 March 2014 Interim Report on Operations As of 6 May 2014, nine out of 24 Spanish digital terrestrial channels were blacked out in implementation of the supreme court ruling of 27 November 2012, which repealed the resolution adopted by cabinet on 16 July 2010 assigning each Spanish television broadcaster an additional channel. Specifically, broadcasting was suspended on two of the eight channels operated by Mediaset España (La Siete and Nueve), three of the eight channels operated by Atresmedia Group (Xplora, La Sexta3 and Nitro), two of the four channels operated by VeoTV Group and two of the four teleshopping channels operated by Net TV Group. On 6 May 2014, the Board of Directors of Promotora de Informaciones S.A. (Prisa) accepted the offer made by Telefonica S.A. for the purchase of the majority interest amounting to 56% of the capital held by Prisa in the company Distribuidora de Television Digital S.A. (DTS). If the offer becomes binding the related terms will need to be notified to the parties. From that time, Mediaset Espana S.A., which like Telefonica holds an equity interest of 22% in DTS, will be entitled to exercise the rights established in the shareholders' agreement signed in 2010, including the tag along and pre-emption rights. 22

27 Interim Financial Report at 31 March 2014 Interim Report on Operations FORECAST FOR THE YEAR In Italy, there was an essentially unstable trend in the advertising market also at the beginning of the first quarter and the sector is still not benefitting from any clear signals of a recovery in consumer demand. In this context, Publitalia's commercial strategy remains focused on the long-term sustainability of the advertising market, through the defence of profitability and avoiding driving down prices, a practice that has been adopted by some competitors. This strategy will enable the Group to consolidate its overall market share - even if in the short term there could be a temporary reduction in the share of the television market - ensuring a faster and more solid recovery when the expected growth in the sector begins. In Spain, where economic recovery is much clearer and has already begun, advertising revenues are expected to see moderate growth also in the second quarter. Moreover, at the end of the period, Mediaset España will also benefit from exclusive coverage of the matches of the Spanish national football team during the World Cup in Brazil. The poor visibility for the remainder of the year makes it difficult to make reliable predictions on the consolidated result for the full year. In the coming months, the Group will remain focused on the multiplatform development of its content, the strategic evolution of the pay-tv business, as well as operating efficiency, cash generation and medium term profitability also by taking advantage of the structural reduction in operating costs made in the last two years. For the Board of Directors the Chairman 23

28

29 Mediaset Group Accounting Tables and Explanatory Notes

30 MEDIASET GROUP INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION (EUR million) Notes 31/3/ /12/2013 ASSETS Non current assets Property, plant and equipment Television and movie rights 4.1 1, ,830.3 Goodwill Other intangible assets Investments in associates Other financial assets Deferred tax assets TOTAL NON CURRENT ASSETS 4, ,970.1 Current assets Inventories Trade receivables Tax receivables Other receivables and current assets Current financial assets Cash and cash equivalents TOTAL CURRENT ASSETS 1, ,552.9 Non current assets held for sale - - TOTAL ASSETS 6, ,

31 MEDIASET GROUP INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION (EUR million) Notes 31/3/ /12/2013 LIABILITIES AND SHAREHOLDERS' EQUITY Share capital and reserves Share capital Share premium reserve Treasury shares (416.7) (416.7) Other reserves Valuation reserve 4.5 (13.5) (13.9) Retained earnings 1, ,147.4 Net profit for the period (12.5) 8.9 Group Shareholders' Equity 2, ,119.9 Minority interests in net profit Minority interests in share capital, reserves and retained earnings Minority interests TOTAL SHAREHOLDERS' EQUITY 2, ,977.7 Non current liabilities Post-employment benefit plans Deferred tax liabilities Financial liabilities and payables 4.7 1, ,327.4 Provisions for non current risks and charges TOTAL NON CURRENT LIABILITIES 1, ,551.4 Current liabilities Financial payables Trade and other payables 1, ,201.0 Provisions for current risks and charges Current tax liabilities Other financial liabilities Other current liabilities TOTAL CURRENT LIABILITIES 1, ,993.9 Liabilities related to non current assets held for sale - - TOTAL LIABILITIES 3, ,545.3 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 6, ,

32 MEDIASET GROUP INTERIM CONSOLIDATED INCOME STATEMENT (EUR million) STATEMENT OF INCOME Notes 1Q Q 2013 Sales of goods and services Other revenues and income TOTAL NET CONSOLIDATED REVENUES Personnel expenses Purchases, services, other costs Amortisation, depreciation and write-downs Impairment losses and reversal of impairment on fixed assets - - TOTAL COSTS EBIT Financial expenses 4.8 (22.4) (13.8) Income/(expenses) from equity investments (4.7) (2.3) EBT Income taxes NET PROFIT FROM CONTINUING OPERATIONS (1.9) 19.5 Net Gains/(Losses) from discontinued operations - - NET PROFIT FOR THE PERIOD (1.9) 19.5 Attributable to: - Equity shareholders of the parent company (12.5) Minority Interests Earnings per share Basic (0.01) Diluted (0.01)

33 MEDIASET GROUP INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (EUR million) Note 1Q Q 2013 PROFIT OR (LOSS) FOR THE PERIOD (1.9) 19.5 OTHER COMPREHENSIVE INCOME RECYCLED TO PROFIT AND LOSS Changes arising from translating the financial statement of foreign operations - - Effective portion of gains and losses on hedging instruments (cash flow hedge) Gains and losses on available-for-sale financial assets - - Other gains and losses of associates valued by equity method - (0.2) Other gains and losses - - Tax effects 4.5 (0.1) (3.3) OTHER COMPREHENSIVE INCOME NOT RECYCLED TO PROFIT AND LOSS - - Changes in revaluation surplus - - Actuarial gains and losses on defined benefit plans - - Other gains and losses of associates valued by equity method - - Other gains and losses - - Tax effects - - TOTAL OTHER COMPREHENSIVE INCOME FOR THE PERIOD NET OF TAX EFFECTS (B) TOTAL COMPREHENSIVE INCOME (A)+(B) (1.5) 27.9 attributable to: - owners of the parent (12.1) non controlling interests

34 MEDIASET GROUP INTERIM CONSOLIDATED CASH FLOW STATEMENT (EUR million) Notes 1Q Q 2013 CASH FLOW FROM OPERATING ACTIVITIES: Operating profit before taxation Depreciation and amortisation Other provisions and non-cash movements 1.5 (4.9) + Change in trade receivables Change in trade payables (19.4) (28.2) + Change in other assets and liabilities (20.3) (4.5) - Interests (paid)/received (1.0) (7.2) - Income tax paid (18.3) (6.8) Net cash flow from operating activities [A] CASH FLOW FROM INVESTING ACTIVITIES: Proceeds from the sale of fixed assets Proceeds from the sale of equity investments - - Interests (paid)/received - - Purchases in television rights (184.5) (206.0) Changes in advances for television rights 21.5 (9.2) Purchases of other fixed assets (5.6) (8.5) Equity investments - (0.9) Changes in payables for investing activities (74.3) (3.2) Proceeds/(Payments) for hedging derivatives (0.3) (0.5) Changes in other financial assets (5.6) (5.7) Dividends received - - Business Combinations net of cash acquired 5.1 (1.9) - Changes in consolidation area - - Net cash flow from investing activities [B] (250.6) (233.7) CASH FLOW FROM FINANCING ACTIVITIES: Changes in financial liabilities (74.4) (135.7) Corporate bond - - Dividends paid - - Changes in other financial assets/liabilities 1.4 (0.7) Interests (paid)/received (26.0) (24.9) Net cash flow from financing activities [C] (98.9) (161.3) CHANGE IN CASH AND CASH EQUIVALENTS [D=A+B+C] (5.0) (30.7) CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD [E] CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD [F=D+E]