Consolidated Quarterly Report at 30 September 2015

Transcription

1 Consolidated Quarterly Report at 30 September 2015 Approved by the Board of Directors on 13 November 2015 Class Editori Spa Via M. Burigozzo Milan Website: Share Capital 28,321, euro Economic & Administrative Index no Tax Code and VAT no

2 Directors and officers Board of Directors Chairman Vice Chairman and Managing Director Vice Chairman Vice Chairman Executive Director Executive Director Directors Victor Uckmar Paolo Panerai Luca Nicolò Panerai Pierluigi Magnaschi Gabriele Capolino Andrea Mattei William L. Bolster Maurizio Carfagna Elena Terrenghi Peter R. Kann Samanta Librio Maria Martellini Maria Grazia Vassallo Angelo Riccardi Board of Statutory Auditors Chairman Serving Auditors Alternate Auditors Mario Medici Lucia Cambieri Vieri Chimenti Francesco Alabiso Giampaolo Dassi Auditing Firm PKF Italia Spa The three-year mandates of the Board of Directors and the Board of Statutory Auditors, appointed at the Shareholders' Meeting held on 29 April 2013, will expire at the Shareholders' Meeting that approves the 2015 financial statements. The mandate of the auditing firm will expire at the Shareholders Meeting held to approve the 2021 financial statements. Page 2

3 Class Editori Spa and subsidiaries Registered offices at Via Marco Burigozzo 5, Milan Consolidated Quarterly Report at 30 September 2015 The quarterly report has been prepared on a consolidated basis, as required by current legislation. OPERATING PERFORMANCE The principal elements of the income statement contributing to the operating results at 30 September 2015 are discussed below: Total revenues for the first nine months of 2015 amounted to million euro, which was in line (-1%) with 2014 on a consistent comparative basis, excluding special transactions. In particular, the results for the comparative period of 2014 included the revenues of Class TV (digital terrestrial channel LCN 27) that was sold in December 2014, and those of the publishing initiative that celebrated the 25th anniversary of MF, amounting to 2.9 million euro. Without adjusting for consistency, revenues for the first nine months of 2015 were 6% lower. Third quarter revenues totalled million euro. The operating costs incurred during the first nine months of the year amounted to million euro, which was 6.9% less than the same period in This was a direct consequence of the cost saving and containment efforts that commenced in 2015, as well as the effect of deconsolidating Class TV. During the third quarter of 2014, operating costs benefited from savings of about 1.3 million euro that resulted from numerous settlements reached with suppliers in the second half of that year. Excluding those savings, the reduction in operating costs achieved during the first nine months of 2015 would have been 8.7%. Third quarter operating costs were 3.3% lower, while excluding the effects of the above-mentioned agreements the decrease would have been 9.3%. Page 3

4 The gross operating margin (EBITDA) reflects a 15.3% improvement with respect to the same period in the prior year. This improvement climbs to 29.2% (-5.48 million euro, compared with million euro in 2014) after adjusting for the effects of the settlements reached in Excluding the above effects, third quarter EBITDA reflects an improvement of 11.5% (-3.12 million euro compared with million euro in 2014). The operating loss (EBIT) for the first nine months of 2015 was million euro. As mentioned, the comparative results reported in 2014 benefited from the effect of settlements relating to prior years amounting to about 1 million euro. Excluding this effect, EBIT for the first nine months of 2015 would have been 12.9% better than in Third quarter EBIT reflects a loss of 5.71 million euro. This represents an improvement of about 1.1% with respect to 2014, after adjusting for the effect of the settlements reached in the prior year. Net financial charges amounted to 2.66 million euro, as against 3.35 million euro in the comparative period of This reduction was mainly due to lower borrowing during the period. After non-controlling interests, the net loss attributable to the group for the first nine months of 2015 amounted to million euro, compared with million euro in the same period of the prior year. Excluding the effects indicated above, the net results for the first nine months of 2015 reflect an improvement of 16.6%. The net loss attributable to the group for the third quarter was 6.54 million euro. Excluding the effects indicated above, this represents an improvement of 4.5%. SIGNIFICANT ECONOMIC-FINANCIAL EVENTS IN THE FIRST NINE MONTHS OF 2015 Nielsen data for the advertising market, encompassing all media, during the first nine months of 2015 highlights a decline of 1.6% with respect to Daily newspapers contracted by 7.3%. Periodicals were also lower (-3.9%). The best results were achieved by radio, +10%, and out-of-home TV (OOH), +9.5%. TV contracted by 1.6% and Internet (display and video) eased by 1.3%. Page 4

5 On a consistent basis and excluding non-recurring special events, the advertising revenues of the Publishing House were 3.9% higher in the first nine months of Good advertising revenues were generated by Moving TV, while those of the TV channels also rose with Class CNBC at the forefront, reporting an acceleration in September. Overall, TV advertising was 25.9% higher on a consistent basis (excluding Class TV). Periodicals performed slightly better than the sector as a whole (-3.5%), while daily newspapers contracted (-3.5% after excluding special events, such as MF25) somewhat less than the market as a whole (-7.3%). Further special events, similar to MF25, are planned for later in the current year. Traffic on the Publishing House's websites grew significantly during the first nine months of 2015, especially due to the visits from mobile devices. This reflects the success of the MF/Milano Finanza website. Measured in terms of pages viewed by PCs and mobile devices, average monthly traffic on the Publishing House's websites grew strongly (+15%) during the first nine months of 2015, reaching 22.9 million pages compared with 19.9 million in the same period of 2014, with a peak of 26.5 million in July The market average contracted sharply (-11%) during the same period. There was also a marked rise in the monthly number of individual users (+8.1%) to 1.19 million, from 1.1 million in the third quarter of 2014, with a peak of 1.21 million in September 2015 (source: AudiWeb). This compares with the broad stability of the market average (+0.6%). The number of readers following the news from the websites in real time on Twitter now exceeds 87 thousand for MF-Milano Finanza and 29 thousand for Italia Oggi. The printed and digital distribution of MF/Milano Finanza averaged about 73 thousand copies during the first nine months (70 thousand in 2014), while Class averaged more than 40 thousand copies (54 thousand in 2014) and Capital averaged more than 43 thousand copies (56 thousand in 2014). Notable events during the first nine months of the year: in mid-march, Class Editori became the largest individual investor in WeToBusiness, the operating arm in Italy of WeChat, the most popular communications tool in China (and elsewhere), as well as social network, e- commerce, video, music and CRM (customer relationship management) operator. Working from Italy, this platform is able to manage relations with potential customers in China and monitor their profiles; Page 5

6 the Shareholders' Meeting held on 30 April 2015 resolved to grant the Board of Directors a new mandate, valid for a period of 18 months, to purchase and make use of treasury shares, in one or more tranches, representing not more than 10% of share capital and, in all cases, without exceeding the distributable profits and the available reserves reported in the latest approved financial statements. Again on that date, the Extraordinary session of the Shareholders' Meeting resolved to eliminate the nominal value of the shares and to consolidate the outstanding ordinary shares on the basis of 1 new ordinary share for every 3 ordinary shares held. Following this consolidation, share capital is now represented by 94,406,358 shares. The Shareholders' Meeting also authorised the issue of shares with additional voting rights. The consolidation of Class shares (1 new ordinary share for every 3 ordinary shares held) was completed on 4 June 2015, when the shares ceased to have a nominal value; the new edition of Case & Country, interni oltre il giardino, a monthly magazine, was launched at the Furniture Exhibition held in mid-april, with an excellent reception from both readers and advertisers; Embrace.it Srl was formed in early May 2015, with a 50% interest held by Class Editori, in order to publish GotoItaly, a digital title. The objective of the Publishing House is to penetrate further the sector of foreign language digital information for visitors to the principal Italian cities, with a particular focus on those coming from China; five editions (in Milan, Monza, Florence and, for the first time, Naples and Rimini) of the Student Fair were held during the first nine months of the year. These fairs, marking the Publishing House's presence in the sector that provides information to young people, attracted about 100 thousand students in total; In July, via CCeC, the e-commerce subsidiary, Class Editori commenced shipments of Italian food products for CCIG Mall, the Chinese platform for which the Publishing House is a main supplier in the food sector, as well as a main agent in the fashion, accessories and design sectors. The first shipment, valued at about 1 million euro, was part of a purchase contract worth at least 10 million euro per annum over the next four years. Page 6

7 Revenues for the period are analysed as follows: ( /million) 30/09/ /09/2015 Change Change % %* Revenues from copies and subscriptions (6.2) (6.2) Advertising revenues: Italy and abroad (7.1) 2.8 Other revenues Total revenues (6.0) (1.0) * percentage change net of the advertising revenues generated by Class TV and the MF25 event Total revenues, inclusive of the advertising collected by the concessionaire and other initiatives organised directly by the Publishing House in Italy and abroad, were 7.1% lower than in the comparative period of Excluding the effect of the inconsistencies mentioned earlier, the total would have been higher than in the first nine months of In addition to income that cannot be classified elsewhere, other revenues mainly comprise the costs recharged to Group associates for services rendered and the period revenues (about 374 thousand euro) earned by CCeC, the e-commerce subsidiary. These revenues were earned in relation to the total order of about 1 million euro obtained in July, the full effects of which will be recognised in the remaining months of FINANCIAL POSITION The financial position at 30 September 2015 is as follows: (thousands) 31/12/ /09/2015 Net long-term borrowing (2,897) (178) Net short-term borrowing/liquid funds (60,332) (65,812) Of which: Financial payables (77,762) (79,556) Liquid funds and financial receivables 14,880 13,194 Securities 2, Net financial position: net borrowing/liquid funds (63,229) (65,990) Page 7

8 The net debt of the Publishing House, analysed above, amounts to million euro at 30 September 2015, compared with million euro at 31 December In addition to the results for the period, this change was mainly due to use of the resources released from the disposal of the Class TV channel to pay the suppliers that agreed debt rescheduling plans during the year ended 31 December In addition, during the first nine months of 2015, the Publishing House invested in the digital activities necessary for the further growth of the business and paid the loan instalments that fell due during the period. Non-current financial payables include a loan obtained by Assinform from Banca Carige, expiring in The amount due beyond 12 months totals 178 thousand euro. They also include a three-year loan, expiring in August 2016, from Banca Popolare dell'emilia Romagna that originally amounted to 6 million euro, following the refinancing of short-term credit lines of the same amount (the residual liability at 30 September 2015 is 3.49 million euro). As well as overdraft and current account lines, current financial payables include amounts drawn down from stand-by financing and hot-money lines of credit and the current portions of the loans mentioned above. Current financial payables also include the residual balance, amounting to about 14 thousand euro, on a soft loan expiring on 31 December 2015 that Class Editori obtained from Centrobanca. Liquid assets are held in a current account that earns interest on market terms. PERSONNEL Period average 31/12/ /09/2015 Absolute change Executives TV, radio and print journalists (5) Clerical staff (6) Total (11) Work has continued throughout 2015 to contain and reduce, where possible, the level of employment in the less productive areas with recourse to the social amortisers. Page 8

9 In particular, in view of the deepening crisis, the incisive action taken to reduce and rationalise payroll costs resulted in renewal by the Publishing House - for a further 24 months - of the solidarity agreements with the personnel of MF/Milano Finanza and Class, including a further decrease in the working hours of the persons involved. Specifically, the working hours at Class have been reduced by 60% from 30% previously, while the reduction at MF/Milano Finanza and Italia Oggi is now 35% instead of 25%. In addition, following the 24-month lay-off period at Capital, a 24-month solidarity agreement has been implemented by the periodical that reduces the working hours of personnel by 33%. Work to reduce payroll costs also continued at Ladies, Case&Country and Gentleman, with the agreement of government-assisted lay-off schemes under the supervision of the Lombardy Region's training and employment agency. In particular, a special rotating lay-off scheme covering a period of 24 months commenced on 14 September 2015, involving a 60% reduction in working hours. The substantial savings achieved by all these agreements will benefit the second half of the year, as well as 2016 and For other Group companies, not yet assisted by the social amortisers, the "Cooperation and Solidarity" contribution plan has remained in place, whereby employees are able to contribute 10% of their salary on a voluntary basis. The Publishing House employs 2 apprentices at 30 September Class Editori Spa carries out its activities at its registered offices, Via Burigozzo 5, Milan, and also at the following secondary offices: Milan - Via Burigozzo 8 Rome - Via Santa Maria in Via 12 and Via C. Colombo 456 New York 7 East, 20th Street London - St Mary Abchurch House, 5th Floor 123 Cannon Street ACCOUNTING POLICIES AND MEASUREMENT CRITERIA The accounting policies adopted for the preparation of the consolidated quarterly financial information are unchanged with respect to those applied for the preparation of the 2014 consolidated financial statements. This consolidated quarterly report has been prepared under the historical cost convention, except for the measurement of AFS financial instruments at fair value. Page 9

10 Comparative information is also presented in accordance with the IFRS. The quarterly report at 30 September 2015 has been prepared in compliance with art. 154 ter of Decree 195/2007 and the Issuers' Regulation issued by Consob pursuant to art. 82 of Consob Regulation no /1999 (as amended), as well as with annex 3D to that Regulation. Complete information, concerning both the consolidated financial statements of the Group and the separate financial statements of Class Editori S.p.A., was published as part of the annual financial statements at 31 December 2014 and the 2015 half-year report, to which reference should be made. SCOPE OF CONSOLIDATION The scope of consolidation includes Class Editori Spa and the companies which it controls, given the power to determine their financial and management policies in order to obtain benefits from their activities. Subsidiaries are consolidated from the date when control is effectively transferred to the Group and cease to be consolidated from the date when such control is transferred outside the Group. Subsidiaries are consolidated on a line-by-line basis. Information on the financial position and performance of subsidiaries and associates was used to prepare the consolidated data. Such information, prepared by the individual Group companies at the reporting date, was suitably reclassified and adjusted to reflect uniform application of the accounting policies adopted by the Group. All intercompany balances and transactions have been eliminated from the quarterly report, together with any unrealised gains and losses arising on transactions with Group companies. Subsidiaries that are dormant or in liquidation are consolidated using the equity method, or at cost if their influence on the results of the Group is not significant. Investments in associates, over which the Group exercises significant influence, are measured at equity as established in IAS 28. Profits or losses attributable to the Group are recognised in the consolidated financial statements from the date when such significant influence begins and until the date when it ceases. Page 10

11 The scope of consolidation of the Publishing House at 30 September 2015 is presented below: Consolidation on a line-by-line basis In addition to Class Editori Spa, the following subsidiaries have been consolidated on a line-by-line basis: Percentage Ownership - Milano Finanza Editori Spa % and subsidiaries: - MF Servizi Editoriali Srl % - MF Editori Srl % - Lombard Editori Srl % - Class Digital Service Srl % and subsidiaries: - PMF News Editori SpA % - E-Class Spa % - Campus Editori Srl % - MF Service Srl % and subsidiaries: - CHTV Srl % - Edis Srl % - MF Conference Srl % - DP Analisi Finanziaria Srl in liquidation % - EX.CO Srl in liquidation % - Class Editori Service Srl in liquidation % - Class TV Service Srl % - Classpi Spa % - Global Finance Media Inc % - Class CNBC Spa (1) 2.73 % - CFN/CNBC B.V % - Radio Classica Srl % - MF Dow Jones Srl (2) % - Telesia Spa % - Country Class Editori Srl % - Fashion Work Business Club Srl % - Assinform/Dal Cin Editore Srl % - I Love Italia Srl in liquidation % - Class Meteo Services Srl in liquidation % - TV Moda Srl % - Classint Advertising Srl in liquidation % - Class Servizi Televisivi Srl % New Satellite Radio Srl % - Aldebaran Srl % - Class China ecommerce Srl (2) % (1) Consolidated line-by-line since 63.34% held by CFN CNBC Holding B.V. (2) Consolidated line-by-line since Class Editori Spa exercises operational control. Page 11

12 Equity method The following associates of Class Editori Spa have been consolidated using the equity method: - Italia Oggi Editori - Erinne Srl % and subsidiaries - Upcube Srl in liquidation % - Mito Srl % - Radio Cina Italia Srl % - Embrace.it Srl % - Wetobusiness Srl % The following events relating to subsidiaries and associates took place during the period: the formation of Embrace.it Srl in May 2015, with a 50% interest held by Class Editori. The objective of the Publishing House is to penetrate further the sector of foreign language digital information for visitors to the principal Italian cities, with a particular focus on those coming from China and on the universe of Englishspeaking tourists; as part of the reorganisation of the Publishing House and the further rationalisation of resources and the internal organisation, planning commenced during the first nine months of 2015 for the absorption by MF Service Srl of CHTV Srl; During July, Class Editori purchased the remaining 5% equity interest in Assinform Dal Cin Srl, thus increasing ownership to 100%; the investment in Telesia Spa has increased from 85.62% to 93.53%; again during July, Class Editori subscribed to a capital increase by Wetobusiness Srl, acquiring 12.16% of the quota capital; Agefi-Class S.A. has been deconsolidated since it is dormant. Page 12

13 PRINCIPAL EVENTS SUBSEQUENT TO PERIOD END The Angola pavilion won overall first prize at Class Expo Pavilion Heritage Awards presented on 30 October, at the end of the six month Expo period. The ceremony was held in the Unicredit Pavilion. The Class Expo Pavilion Heritage Awards were organised by Class Editori and Laureate International Universities, a network comprising 80 universities in 29 countries, together with the World Association of Agronomists, and supported by IBM. These awards were made to those pavilions and clusters that best interpreted and communicated the theme of the Universal Exposition and, above all, that left a valuable inheritance for future generations. FUTURE PROSPECTS During the first nine months of 2015, the Publishing House has significantly lowered the operating losses reported compared with the same period in the prior year. This reflects the cost-reduction actions already implemented, which will be followed by the effects of further measures involving all sectors, including payroll costs. The Publishing House has also decided to invest substantially in the future, including the digital business and e-commerce. Despite the uncertainties still affecting the advertising market, the revenues from the publishing initiatives planned by the Publishing House for the remainder of the year should result in full-year revenues reaching those reported in 2014, when the scope of consolidation was broader. For the Board of Directors The Vice Chairman Paolo Panerai Page 13

14 CLASS EDITORI Spa and subsidiaries Quarterly Report 01/01/ /09/2015 Consolidated economic data (euro/000) uro/000 30/09/ /09/2015 Change (%) Change* (%) Sales revenues 54,177 50,939 (6.0) (0.6) Other revenues and income 3,513 3,295 (6.2) (6.2) Total revenues 57,690 54,234 (6.0) (1.0) Operating costs (64,159) (59,711) (6.9) (8.7) Gross operating margin (EBITDA) (6,469) (5,477) Net non-core income (charges) 1,038 (528) n.s. n.s. Depreciation, amortisation and write-downs (5,938) (5,896) (0.7) (0.7) Operating result (EBIT) (11,369) (11,901) (4.7) 12.9 Financial income (charges), net (3,351) (2,664) Net result for the period (14,720) (14,565) (Profit)/Loss attributable to non-controlling interests (625) (149) Results attributable to owners of the parent (15,345) (14,714) (*) Comparison of the nine-month periods 2015/14 on a consistent basis, excluding the revenues from special transactions (sale of the Class TV channel and the MF25 publishing event). For costs and margins, the comparison excludes the positive effects of the supplier settlements agreed during the first nine months of Page 14

15 CLASS EDITORI Spa and subsidiaries Quarterly Report 01/07/ /09/2015 Consolidated economic data (euro/000) uro/000 III Quarter 2014 III Quarter 2015 Change (%) Change* (%) Sales revenues 15,564 14,881 (4.4) (0.8) Other revenues and income 1, (62.5) (62.5) Total revenues 16,844 15,361 (8.8) (5.7) Operating costs (19,100) (18,478) (3.3) (9.3) Gross operating margin (EBITDA) (2,256) (3,117) (38.2) 11.5 Net non-core income (charges) 512 (424) n.s. (17.3) Depreciation, amortisation and write-downs (1,736) (2,168) Operating result (EBIT) (3,480) (5,709) (64.1) 1.1 Financial income (charges), net (1,026) (855) Net result for the period (4,506) (6,564) (45.7) 3.4 (Profit)/Loss attributable to non-controlling interests (49) 27 n.a. n.a. Results attributable to owners of the parent (4,555) (6,537) (43.5) 4.5 (*) Comparison of the third quarters 2015/14 on a consistent basis, excluding the revenues from special transactions (sale of the Class TV channel and the MF25 publishing event). For costs and margins, the comparison excludes the positive effects of the supplier settlements agreed during the third quarter of Page 15

16 STATEMENT PURSUANT TO ART. 154-BIS, PARA. 2, OF DECREE NO. 58 OF 24 FEBRUARY 1998 The undersigned Gianluca Fagiolo, as the Executive responsible for preparing the corporate accounting documents of Class Editori S.p.A., hereby confirms pursuant to art. 154-bis, para. 2, of the Consolidated Finance Law that the accounting information included in the quarterly report at 30 September 2015 of Class Editori S.p.A. agrees with the documentary records, books and accounting entries. Milan, 13 November 2015 The Responsible Executive Gianluca Fagiolo Page 16