April 2004
Agenda Company Overview Newspapers - products - strategy - industry overview - local strength Free press - products and strategy - industry overview - national strength Financials Outlook Appendix Il Messaggero headquarters in Via del Tritone, Rome 2
Company Overview: the Caltagirone group The Caltagirone group is a family-controlled industrial concern operating mainly in Italy The group operates in three main business areas : construction & real estate, cement, media Caltagirone Family 11% 7% 88% 34% CALTAGIRONE S.p.A. Mkt cap: 570m Free Float: : 12% CONSTRUCTION CEMENT MEDIA Sales: 189m Mkt cap: 316m (avg) Free Float: 39% (avg) * Sales: 293m Mkt cap: 406m Free Float: 36% * Sales: 249m Mkt cap: 805m Free Float: 30% * 54% VIANINI LAVORI S.p.A CEMENTIR S.p.A 2% Treasury shares 2% Treasury shares (General Contractor) 28% **** (Italy) 97% 30% ** CALTAGIRONE EDITORE S.p.A. (Newspapers, Advertising, Internet) 36% *** 62% VIANINI INDUSTRIA S.p.A 5% Treasury shares (Water pipes/pilons) CIMENTAS.A.S. (Turkey) * 2003 data; ** Includes 30% stake held by Mantegna 87 Srl, 100% controlled by Caltagirone S.p.A. ; *** 11% stake held by Mantegna 87 Srl,100% controlled by Caltagirone S.p.A.; **** Stake held by Vianini Lavori S.p.A., S.I.L.M. S.p.A. and C.D.R. Srl 3
Company Overview: the Caltagirone Editore group SHAREHOLDERS STRUCTURE Market 30% Vianini Lavori 4% Vianini Industria 3% Cementir 4% Caltagirone S.p.A. 25% (*) Caltagirone Family 34% The group started from construction and diversified into cement and media during the Nineties Group strengths are based on: - strong focus on core business - solid financial structure - constant search for new business opportunities - ongoing commitment to reach cost efficiencies - focus on long-term value creation (*) Includes Mantegna 87 Srl, 100% controlled by Caltagirone S.p.A. 4
Company Overview: Caltagirone Editore PRODUCTS Market position 1.26 million daily readers Sales 2003: 157m Market share: 50% in Lazio 678,000 daily readers Sales 2003: 59.6m Market share: 62% in Campania Daily circulation of 810,000 copies Sales 2003: 17.2m SERVICES Advertising agency for the Group and third parties (Il Nuovo Quotidiano di Puglia, Radio Globo (the first local radio in Rome), Radio Antenna 1and other radios in Rome, Milan, Naples) One of the main national internet portals Call center that offers services exploiting Caltanet s technology 5
Newspapers: the products National editions 13 Local editions National editions 7 Local editions 6
Newspapers: strategy National newspaper with high brand visibility 13 local editions Avg. 48 pages, with a maximum of 64 Up to 24 color pages 4th newspaper in Italy¹ with around 1.26 million daily readers 250,000 average copies sold ² National newspaper with high brand visibility 7 local editions Avg. 48 pages, with a maximum of 64 Up to 24 color pages (from March 2004) 9th newspaper in Italy¹ with around 678,000 daily readers 94,000 average copies sold ² STRATEGY Improvement of printing facilities of both Il Messaggero and Il Mattino with a total investment of 105 million in order to increase: number of pages, output quality and yield State of the art printing facilities will make easier switching from one edition to another at minimum extra cost Aggressive price policy in order to increase market share in the Macroregion Focus on cost control Financial incentives for new investments (ex L. 488, grants equal to 30% of investment for Il Mattino) 1 Excluding financial and sport dailies Source: Audipress 2002 ² Source: ADS 2002/2003 7
Newspapers: industry overview Market Share readership * LA REPUBBLICA IL CORRIERE DELLA SERA (000 readers per day) 2704 2679 Il Messaggero and Il Mattino have a market share of 50% in Lazio and 62% in Campania, respectively. LA STAMPA 1598 IL MESSAGGERO 1267 IL RESTO DEL CARLINO 1198 LA NAZIONE 893 IL GAZZETTINO 750 IL GIORNALE 746 IL MATTINO 678 IL TIRRENO 575 LA GAZZETTA DEL M EZZOGIORNO 508 50% IL SECOLO XIX LA SICILIA 506 413 62% IL GIORNO 408 GIORNALE DI SICILIA 403 Macroregion Leggo Presence * Excluding financial and sports daily newspapers - Source: Audipress Spring 2003;Audipress Autumn 2003 data is not yet available on a regional basis 8
Newspapers: local strength Market Share in the Macroregion * Il Messaggero + Il Mattino 45.1% La Repubblica 21.0% Corriere della Sera Il Tem po 10.4% 5.5% Market share of 50% in Lazio Market share of 62% in Campania * Readers per day excluding financial and sports daily newspapers - Source: Audipress Spring 2003 9
Free press: products and strategy 1st free newspaper in Italy with: - daily circulation of 810,000 copies - daily readership of 979,000 * Average 24 pages in tabloid format Torino Milano Bologna Venezia Padova Verona Firenze Roma Launched in March 2001, expected to reach break-even by the end of 2004 Distributed from Monday to Friday in: - railway stations (exclusive long-term agreement with Grandi Stazioni) - underground stations -bars - hospitals - universities - other meeting points Napoli Creation of a national network in order to reach a wider presence Reinforcement of market leadership to exploit advertising upturn Target focus on: - youngsters - working people - mass affluent STRATEGY * Source: Eurisko 2003 10
Free press: industry overview Avg. Daily readers by region * Free newspapers are present in 8 regions, accounting for 71% of Italian population Avg. Daily readers of at least one free newspaper: 1,650,000 Lombardia Leggo: 212,000 Veneto Leggo: 90,000 Piemonte Leggo: 97,000 Torino Milano Bologna Venezia Padova Verona Emilia Romagna Leggo: 55,000 Toscana Leggo: 42,000 Firenze Campania Leggo: 140,000 Roma Napoli Lazio Leggo: 339,000 Puglia Leggo: 5,000 * Source: Eurisko 2003 11
Free press: national strength Leggo is the #1 free newspaper in Italy National Avg. Daily readers * Leggo 979,000 City 734,000 Metro 692,000 * Source: Eurisko 2003 12
Industry Overview: profitability vs quoted peers Caltagirone Editore ranks as one of the most profitable media groups * EBITDA MARGIN 22.00% 22.10% 18.80% 18.20% 17.30% 11.74% 13.41% 14.25% 13.80% 14.20% 8.20% 9.48% 3.50% 5.20% 5.96% RCS POLIGRAFICI EDITORIALE M ONDADORI GRUPPO EDITORIALE L'ESPRESSO CALTAGIRONE EDITORE 2001 2002 2003 *See Appendix for details about business mix. 13
Financials: revenue breakdown milions Advertising is the main driver of Group revenue Circulation Advertising Internet&Services Others 106 136 165 152 153 164 72 71 69 68 67 78 1998 1999 2000 2001 2002 2003 14
Financials: operating costs breakdown 2002 High proportion of services is due to: - in-house management of logistics - outsourcing of low-value added activities OTHER COSTS 4% RAW M ATERIALS 17% PERSONNEL 42% SERVICES 37% 15
Financials: FY 2003 millions Dec 31, 2003 Dec 31, 2002 YoY% Circulation Advertising 78 164 67 153 16% 7% Underlying ciculation revenue was flat Add on promotions boosted circulation revenues by 7.9m Advertising growth for Il Messaggero and Il Mattino was + 4.5%. Leggo increased revenues by 28%. Others 7 7 0% Total Sales 249 227 10% Costs 194 188 3% Paper costs declined by 14% year- over- year Service costs increased by 8 m due to add on promotions EBITDA 55 39 41% % margin 22.1% 17.3% EBIT % margin 29 11.5% 17 7.6% 71% 3.6 m increase in amortization due to new printing center in Torrespaccata (6 months in 2003) 1,87 devaluation of Caltanet stake Net Financial Charges Pretax (continuing) 3 32 15 32-80% 0% 2 m dividends from 2% RCS stake Lower interest income due to lower yield on cash deposits Extraordinaries -8-9.8-14% Tax Minorities Net income (report) 5-2 26-5 -0.7 17 nm nm 55% Current taxes: - 12 m Defered tax credit: 16.8m due to devaluation of financial stakes Expected average future tax rate around 35% (DT no longer possible). % margin 10.4% 7.3% 16
Financials: profitability over time Facts Caltagirone Group acquires Il Messaggero and Il Mattino Strong cyclical upswing Strong advertising growth Reorganization of activities and completion of turnaround process Strict cost control Economic slowdown Advertising demand fall Further improvement in efficiency through reduction of labour cost Launch of LEGGO Start of a new advertising upturn New printing plant up and running (Il Messaggero) EBITDA margin EBIT margin 29.1% 31.4% Results 14.7% 17.8% 10.9% 22.1% 22.6% 18.2% 17.3% 22.1% 11.5% 6.0% 6.7% 6.9% 7.6% 1.0% 1996 1997 1998 1999 2000 2001 2002 2003 17
Financials: breakdown by quarter millions 1 6.7 1 6.3 9.6 4.4 6.0 1 2.6 7.7 8.3 4.8 4.1 1 1.3 5.7 8.1 1 3.4 8.1 6.5 1 1.7 1 1.3 8.6 6.2 8.0 1 0.3 1.0-0.6 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2002 2003 EBITDA EBIT Net Income (continuing) 18
Financials: breakdown by quarter p ro fita b ility ratio s 17.4% 10.8% 20.5% 13.6% 9.7% 8.3% 18.5% 13.3% 22.5% 10.9% 25.0% 16.9% 15.9% 11.5% 23.9% 15.2% * Q3 2003 margin figures are not directly comparable due to first time inclusion of new printing plant depreciation. Q1 Q2 Q3 Q4 Q1 Q2 Q3 * Q4 2002 2003 EBITDA margin Net M argin (continuing) 19
Financials: cash flow 29 m 498 m (6) m 9 m (63) m (25) m 442 m Operating Cash Flow Financial investment Capex * Interest income Dividend paid Net Cash December 2002 Net Cash December 2003 * 2003 Capex is unusally high due to one-off expenditure for new printing facility in Torrespaccata 20
Financials: market multiples 805 m* Adjusted firm value is 5.9x historical Ebitda 248.7 m (442 m) 317m Adjusted EV Sales 2003 = 1.3x (60m) Sales 2003 55 m Adjusted EV Ebitda 2003 =5.9x Market Cap Net Cash 2003 Peripheral Assets Adjusted EV (2% stake inrcs Mediagroup + others) Ebitda 2003 * As of April 20, 2004 21
Outlook Circulation Flat/slight increase due to add-on sales Advertising Our strength in local advertising provided resilience during last cyclical downturn BUT being one of the top national players, we will benefit from any advertising upswing Cost control We aim at further improvement of existing cost structure Growth goals We pursue organic growth as well as external growth in the core business 22
Appendix 23
Business mix RCS MEDIAGROUP GRUPPO EDITORIALE L'ESPRESSO INTERNET/ SERVIS OTHERS BOOKS OTHERS 3% 7% 16 % 21% RADIO/ TELEVISION 5% MAGAZINES MAGAZINES 10% 19 % FREE PRESS 1% DAILY NEWSPAPERS 43% DAILY NEWSPAPERS 75% CALTAGIRONE EDITORE INTERNET SERVI CES, 1% FREE PRESS OTHERS 2% 6% DAILY NEWSPAPERS 91% POLIGRAFICI EDITORIALI GRUPPO MONDADORI OTHERS INTERNET/SERVICES 3% 5% INTERGROUP SALES COMPUTER 14% PUBLISHING OT HERS 1% B OOK S 16% 1% DIRECT DIVSION 7% DAILY NEWSPAPERS PRINTING 22% MAGAZINES 39% 92% As of Decmenber 2002 24
For further information www.caltagironeeditore.it INVESTOR RELATIONS Riccardo Rossetti Claudia Del Grosso Ronchitelli Tel. +39 06 45412213 Fax +39 0632493326 r.rossetti@caltagironeeditore.com Tel. +39 06 45412213 Fax +39 06 45412288 c.delgrosso@caltagironeeditore.com Contact Alessandra Crisari Tel. +39 06 45412213 Fax +39 06 45412288 investor.relations@caltagironeeditore.com 25