Results at 31 December 2016 approved[1]

Results at 31 December 2016

Consolidated revenue at EUR 968.3 million versus EUR 1,032.2 million at 31.12.2015

EBITDA before non-recurring income and expense totals EUR 100.5 million versus EUR 71.8 million at 31.12.2015

EBITDA at EUR 89.9 million versus EUR 16.4 million at 31.12.2015: + EUR 73.5 million

Net financial debt stands at EUR 366.1 million showing a strong improvement against 31.12.2015

Net cash flow at approximately EUR 42 million

Return to a positive Net Profit: EUR 3.5 million versus EUR -175.7 million at 31.12.2015

2017 Objectives

Ebitda at around EUR 140 million with Ebitda Margin showing a significant growth (to 15%)

Net profit positive and growing

Positive and improving net cash flow

Estimates for initial months of 2017

Improvement of more than EUR 10 million of Ebitda in January and February

Positive trend also expected for March

Consolidated Figures (EUR million)

31/12/2016

12/31/2015

Consolidated revenue

968.3

1,032.2

EBITDA before non-recurring income and expenses

100.5

71.8

EBITDA

89.9

16.4

EBIT

35

(107.0)

Net profit (loss)

3.5

(175.7)

Equity Figures (EUR million)

31/12/2016

12/31/2015

Net financial debt

366.1

486.7

Milan, 17 March 2017 - The Board of Directors of RCS MediaGroup, met today chaired by Urbano Cairo, and examined and approved the results at 31 December 2016, as shown in the table above and compared with 2015 figures.

A recovery, albeit still weak, was reported in 2016 in Italy, which seems to have involved most of the country. The annual change in GDP, registering a 0.9% growth in volume (growth in 2015 was 0.8%) rose just above the level reported in the year 2000. (Source: ISTAT). The recovery of the Spanish economy was more pronounced with GDP for 2016 increasing for the third year in a row and reporting a value of +3.2% (Source: INE), reaching a level higher than the European average. In this context the Italian advertising market during 2016 posted a growth in investments of 1.7% compared to the same period the previous year. Printed media registered a total drop of 5.6% (newspapers -6.7%, magazines -4% and on-line -2.3% - Source: Nielsen). Thanks to the macroeconomic recovery in Spain, gross advertising sales continued to rise reporting an increase of 2.9% compared to last year (newspapers -7.1%, magazines -2.7%, supplements -10.6% and internet +14% - Source: i2p Arce Media). The circulation market was affected by the transformation phase which has characterised the publishing industry in recent years. ADS data in Italy report a drop in printed distribution for national information newspapers for the January-December 2016 period (general -13.4% and -17.9% with digital copies, sports -9.2% and -9.4% with digital copies). The trend in the sales of information newspapers has also decreased in Spain (general -10.9%, sports -7.4%, economic -12.9% - Source: OJD).

Despite this difficult context, the objectives for 2016 were all reached:

  • EDITBA increased by more than EUR 73 million compared to 2015;
  • EBITDA before non-recurring expenses grew by more than EUR 28 million compared to 2015;
  • efficiency measures for over EUR 71 million;
  • return to a positive net profit;
  • net cash flow (excluding acquisitions and disposals) around EUR 42 million;
  • significantly improved net debt.

Group Operations at 31 December 2016

The Group's consolidated net revenue at 31 December 2016 stood at EUR 968.3 million, compared to EUR 1032.2 million for the same 2015 period, with a decrease of EUR 63.9 million which - on a like-for-like basis[2] - decreases to EUR 40.7 million. Publishing revenue totalled EUR 380.4 million, with a decrease of EUR 40.5 million compared to the same 2015 period, which decreases to EUR 22.4 million on a like-for-like basis. In terms of circulation the Group's leadership was confirmed in the respective newspaper reference sectors Corriere della Sera, La Gazzetta dello Sport, Marca and Expansión, while El Mundo confirmed the second place among Spanish general newspapers. Advertising revenue totalled EUR 451.2 million, with a decrease of EUR 24.3 million compared to the same 2015 period, that drops to EUR 19.7 million on a like-for-like basis. Advertising revenue in the Sports Area reported a good performance, growing EUR 9 million versus last year. Other publishing revenue stood at EUR 136.7 million, reporting a growth of EUR 1.4 million against last year, mainly thanks to the performance of News Spain.

EBITDA was positive for EUR 89.9 million, with an improvement of more than EUR 73 million compared to the EUR 16.4 million at 31 December 2015. EBITDA before non-recurring expenses and income is positive for EUR 100.5 million, with an improvement of EUR 28.7 million (+40%) compared to the previous year thanks to the contribution of all business areas, except News Spain. In particular, the Sports Area contributed for EUR 15.5 million, News Italy grew EUR 10.9 million and Other Activities increased by EUR 3.4 million. Net non-recurring expenses of EUR 10.6 million were reported during the year (EUR 55.4 million at 31 December 2015).

This result was achieved in part thanks to the continuous and incisive cost containment measures, which generated benefits for more than EUR 71 million in 2016 (of which approximately EUR 47 million in Italy and EUR 24 million in Spain).

EBIT was positive for EUR 35 million, with an improvement of EUR 142 million over last year, which reflects the improvement of EBITDA and the lower write-down of assets (EUR 0.7 million in 2016 compared to EUR 64.1 million in 2015).

Net financial expenses show a decrease of EUR 4.6 million compared to 2015, standing at EUR 30.3 million, basically due to the reduction of medium term debt.

The net result for the year reported a return to a profit and positive result for EUR 3.5 million, with a growth of more than EUR 179 million compared to the negative result of EUR 175.7 million in 2015.

Net financial debt also showed a major improvement, totalling EUR 366.1 million (EUR 486.7 million at 31 December 2015), with a significant improvement in operations for approximately EUR 90 million compared to the same 2015 period.

The exact headcount at 31 December 2016 totalled 3,397 employees, reporting a decrease of 216 employees compared to the same 2015 period, as the balance between restructuring plans and hiring aimed at stabilisation. The average headcount totals 3,584 employees, 120 fewer than the same 2015 period.

Development activities and projects

The Group's activities focussed on promoting editorial contents, development of existing brands and the launch of new products, with constant attention paid to cost containment.

Among the initiatives aimed at promoting publications, Corriere della Sera's Bello dell'Italia stands out, the major news report with cultural appointments in symbolic places, widespread events and special section with a run of a million copies and L'Economia, the new Monday economic attachment part of a larger multimedia project characterised by innovative updated graphics and exclusive contents for offering continuous, accurate and fast economic and financial information. The newspaper also features the new column Il Caffè written by Massimo Gramellini.

La Gazzetta dello Sport organised the second edition of the Gran Galà of Gazzetta dello Sport where the Gazzetta Sports Awards 2016 were presented, attended by famous Italian athletes representing all sports. The Grande Gazzetta project was launched in the publishing area, with special dedicated editions, while the GazzettaTv editorial project continued on the web, featuring cult programmes such as Gazza Offside and Calciomercato.

Intense renewal and development activity also involved the magazine area: the pop style relaunch of OGGI, the weekly information and entertainment magazine for Italian families and the attachment Oggi Cucino, restyling of IoDonna, the weekly current events magazine for women, and new graphics forAmica, an Italian bible for fashion and style, and upcoming launch of the in-depth news magazineSette, which will hit new stands on Thursdays starting in mid-April completely revamped under the management of Beppe Severgnini.

The advertising division, which is restoring its historic name RCS Pubblicità, is experiencing a period of innovation and optimisation of its portfolio, recording excellent results from new publishing and restyling projects, as well as a significant growth in sales on mobile devices.

Major changes also for Marca andRadio Marca, with completely renewed style and contents, including the creation of Marca Claro, the worldwide alliance for multimedia sports information in South America.

Outlook

In a context still characterised by uncertainty, with reference markets falling (circulation and advertising in Italy and circulation in Spain), the Group's performance in 2016 showed a significant improvement in results compared to the previous year.

EBITDA, totalling EUR 89.9 million, rose by EUR 73.5 million compared to the previous year. EBITDA before non-recurring expenses and income, totalling EUR 100.5 million is in line with the objective announced to the market by the company for the year 2016. This result was achieved above all thanks to the strong commitment to reduce costs. The positive impact of efficiency measures in 2016, totalling more than EUR 71 million, offset the performance of revenue which was less than originally forecast.

The net profit, equal to EUR 3.5 million, marks the Group's return to a positive result.

Net financial debt at 31 December 2016 stood at EUR 366.1 million (EUR 486.7 million at 31 December 2015), reporting a strong improvement compared to forecasts, with a very positive contribution of cash flow from operations.

A Budget has been prepared for the year in progress. It was approved by the Board of Directors and contains the following objectives for 2017:

  • Revenue slightly down (around -2%) mainly due to the termination of some advertising sales contracts for third party publishers, partly offset by the forecast improvement in the sports area and for advertising sales on the Group's publications;
  • EBITDA totalling around EUR 140 million, with EBITDA margin significantly up (from approximately 10% to around 15%) thanks to the continuous commitment to pursue efficiency, with cost rationalisation and reduction measures and pursuit of opportunities to develop revenue, mainly due to the effect of greater focus on advertising sales of its own product portfolio, reinforcement of publishing activities by enhancing editorial contents of newspapers and magazines and relative websites, with focus on product quality, and the development of revenue connected with the organisation of sports events;
  • Growth of Net Profit;
  • Positive and improving net cash flow.

The evolution of the general economic situation and reference sectors could affect the complete achievement of these objectives.

Moreover, reports on operations for the first two months of the year show a significant improvement of EBITDA of more than EUR 10 million compared to the same period of the previous year, in line for the growth expectations for the year, and increased growth is also estimated for March compared to the same 2016 period.

Parent company performance

The Board of Directors also approved the draft Financial Statements of the Parent Company RCS MediaGroup S.p.A., which show an improved net result of more than EUR 40 million compared to 2015, totalling EUR -9.2 million mainly due to the better positive result for EBITDA, lower impact of amortisation and write-downs of assets, as well as lower net financial expenses. Lower income from financial assets was also reported, more than offset by lower expenses from disposed assets. The Parent Company's shareholders' equity dropped from EUR 360.5 million at 31 December 2015 to EUR 353.7 million at 31 December 2016, against a share capital of EUR 475.1 million. The Board resolved to propose to the Shareholders' Meeting to carry forward the net loss of EUR 9,210,975.00.

Convocation of the Ordinary Shareholders' Meeting (27 April 2017)

Lastly, the Board of Directors voted to convene the Ordinary Shareholders' Meeting in a single call for 27 April 2017 at the Company's offices in Milan, Via Balzan no. 3. The Shareholders' Meeting will be asked to vote on:

  • approval of the Financial Statements for the year closed on 31 December 2016 and Board of Directors' Report on operations and the proposal to carry forward the net loss of EUR 9,210,975;
  • integration of the Board of Statutory Auditors with the appointment of two alternate auditors.

***

Riccardo Taranto, the Director responsible for drawing up the company's statements, hereby declares, pursuant to article 154-bis, paragraph 2 of the Consolidated Law on Finance (Testo Unico della Finanza, TUF), that the information contained in this press release accurately represents the figures contained in the Group's accounting records. This press release contains some estimates and forecasts subject to risks and uncertainties, based on future events, which may not even occur.

***

It should be noted that the Financial Statements and Consolidated Financial Statements for 2016 will be published by the deadline and using the procedures required by law. They have been audited by Independent Auditors.

***

[1] Alternative performance ratios: EBITDA - considered as the operating income before depreciation, amortisation and write-downs. It also includes income and expenses from equity investments measured with the equity method. Net Financial Debt - the financial ratio determined as the result of current and non-current financial payables net of cash and cash equivalents as well as current assets and non-current financial assets related to derivatives.

Operations: figure from management reporting.

[2] Excluding the effects due to the disposed assets (Gazzetta TV and Verticals for Mothers in China), as well as the effects of a different publishing plan for add-on products and the impacts from rationalisation of the promotional offer.

For further information:
RCS MediaGroup - Media Relations
Maria Verdiana Tardi - +39 02 2584 5412 - +39 347 7017627 - verdiana.tardi@rcs.it
RCS MediaGroup - Investor Relations
Arianna Radice- +39 02 2584 4023 - +39 335 6900275 - arianna.radice@rcs.it
www.rcsmediagroup.it

RCS Mediagroup S.p.A. published this content on 17 March 2017 and is solely responsible for the information contained herein.
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