INTERIM MANAGEMENT STATEMENT AS AT 30 SEPTEMBER 2013 · Employee headcount at end of period 1,826...
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INTERIM MANAGEMENT STATEMENT AS AT 30 SEPTEMBER 2013
24 ORE GROUP
INTERIM MANAGEMENT STATEMENT SEPTEMBER 2013
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CORPORATE BODIES ................................................................................................................................. 3
STRUCTURE OF THE 24 ORE GROUP ........................................................................................................ 5
HIGHLIGHTS ............................................................................................................................................ 6
OPERATING PERFORMANCE IN THE FIRST NINE MONTHS OF 2013 ............................ 7
SEGMENT REPORTING .............................................................................................................. 10
SIGNIFICANT EVENTS IN THE FIRST NINE MONTHS OF 2013 ....................................... 20
EVENTS AFTER 30 SEPTEMBER 2013 ..................................................................................... 22
FINANCIAL STATEMENTS ........................................................................................................ 23
HIGHLIGHTS OF INCOME STATEMENT ..................................................................................................... 23
STATEMENT OF FINANCIAL POSITION ..................................................................................................... 24
STATEMENT OF CASH FLOWS ................................................................................................................. 26
NET FINANCIAL POSITION ...................................................................................................................... 27
COMMENTARY ............................................................................................................................ 28
GENERAL INFORMATION ........................................................................................................................ 28
FORMAT, CONTENT AND REPORTING STANDARDS .................................................................................. 29
NOTES TO THE FINANCIAL STATEMENTS ......................................................................... 31
INCOME STATEMENT ............................................................................................................................. 31
STATEMENT OF FINANCIAL POSITION ..................................................................................................... 34
OUTLOOK ...................................................................................................................................... 38
DECLARATION PURSUANT TO ART. 154-BIS, PARAGRAPH 2, ITALIAN LEGISLATIVE DECREE NO. 58 OF 24
FEBRUARY 1998, AS AMENDED .............................................................................................................. 39
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Corporate bodies
The Board of Directors and the Board of Statutory Auditors were elected by the Ordinary
Shareholders’ Meeting on 29 April 2013.
The Board of Directors and the Board of Statutory Auditors will remain in office until the
Shareholders’ meeting held to approve the 2015 separate financial statements.
Board of Directors
Chairman Benito BENEDINI
Chief Executive Officer Donatella TREU
Directors Luigi ABETE
Antonio BULGHERONI
Alberto CHIESI (2)
Maria Carmela COLAIACOVO
Mario D’URSO (1)
Marcella PANUCCI
Alessandro SPADA
Carlo TICOZZI VALERIO (1)
Marco VENTURI
Secretary to the Board
Gianroberto VILLA
(1) Independent Director
(2) Co-opted on 30 April 2013 to replace Mario Mirarchi, who resigned on 29 April 2013
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Board of Statutory Auditors
Chairman Luigi BISCOZZI
Standing Statutory Auditors Maurilio FRATINO
Laura GUAZZONI
Alternate Statutory Auditors Maria SILVANI
Fabio FIORENTINO
Internal Control & Risk Management Committee
Chairman Carlo TICOZZI VALERIO
Members Mario D’URSO
Alessandro SPADA
Human Resources and Compensation Committee
Chairman Carlo TICOZZI VALERIO
Members Mario D’URSO
Antonio BULGHERONI
Representative of special-category shareholders
Mario ANACLERIO
Corporate financial reporting manager
Valentina MONTANARI
Internal Audit Manager
Massimiliano BRULLO
Independent auditor
KPMG S.p.A.
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Structure of the 24 ORE Group
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Highlights
• In September 2013 Il Sole 24 ORE was confirmed as Italy’s top digital daily newspaper with
97,639 digital copies on average (+109% compared to January 2013). The total paper + digital
circulation (Source: ADS figures September 2013) is 292,223 copies and gives Il Sole 24 ORE
third place among the national daily newspapers. The positive effect of the digital development
strategy, which has seen the launch of new products, the streamlining of printed products and
costs, particularly in the industrial and administrative area, allowed an improvement in the
Publishing Area margin (€15.6 million net of advertising revenue) though remaining negative.
• Group digital revenue was €102.5 million (36.9% of the total for the first nine months of
2013 compared to 30.7% of the total for the same period in 2012)), up as a result of revenue
the new digital newspaper products, Tax & Legal digital revenue and advertising in digital
publications. The impact of Tax & Legal digital revenue stands at 57.8% of the area’s total
revenue (50.6% in 2012), maintaining its impact on GOP of the area at values in line with the
same period of the previous year. Subscribers to only digital versions of the magazines
targeting professionals increased by 20%.
• Unique users of the web site www.ilsole24ore.com have risen and in September reached
around 11 million (source: Omniture Site Catalyst).
• Radio 24, up 1% compared to a market down by 0.4% (source: Eurisko mobile average
September 2012/2013), is reconfirmed at 9th place in the national radio rankings with a daily
average of over 2 million listeners.
• Radiocor news agency records revenue up 9.5%, also as a result of new international
agreements.
• Consolidated revenue of €277.8 million, down by 12.1%, mainly due to the persisting
advertising market crisis. A more limited decline is seen in the third quarter of 2013 (-7.5% vs.
the same period in 2012) than in previous quarters (-13.3% in the first quarter, -14.2% in the
second).
• System advertising revenue decreased by 14.8% (market -14.6%); reference market -17.4%.
Source: Nielsen Media Research, January-September 2013). Internet recorded a 5.5% increase.
• Costs down by €35.9 million compared to September 2012 (-10.5%) as a result of
Management and the entire Company’s focus on implementing the action plans approved by
the Board of Directors. Excluding the increase in costs directly associated with digital
development, costs would be down by around 12%.
• Gross operating profit (GOP) was negative by €18.8 million, up €1.2 million (+6.0%)
compared to the same period of 2012, as a result of cost containment action, benefits deriving
from the strategy integrating the printed + digital products, enhancement of the editorial
content, the offer of increasingly segmented packages and streamlining of the production and
administrative structure. In particular, in the last quarter GOP recorded a 68% improvement
(€10.7 million) on that of the previous year (€-15.8 million) despite a loss of €5.1 million.
• Group loss of €-30.4 million, down by €7.7 million compared with the same period of 2012 as
a result of lower deferred tax assets.
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• The Net Financial Position was negative by €48.5 million.
OPERATING PERFORMANCE IN THE FIRST NINE MONTHS OF 2013
Market environment
The macro-economic scenario is confirmed as an extreme recession, with a direct impact on the
conventional publications market and on advertising investments.
The negative trend is confirmed also for the first nine months of 2013, which is affected by the
heavy economic crisis in progress and by the drop in the final demand of companies, public entities
and households.
The advertising market as a whole, considering all media including television, contracted by 14.6%
in the first nine months of 2013 compared to the same period of 2012. The Group’s reference
market of operations recorded a 17.4% decrease.
The press advertising revenue suffered greatly (-22.6%). Daily newspapers dropped by 21.5% and
magazines declined by 24.3%. Radio investments also decreased (-12.1%), as did online
investments (-2.6%) (source: Nielsen Media Research, January-September 2013).
As regards circulation figures, the period April-September 2013 shows a decline in the circulation
of traditional media compared to the same period of 2012. The leading national daily newspapers
recorded a drop of around 12%. In the same period the paper + digital circulation figures recorded
more limited decreases of 2%.
The current economic crisis has led to growing difficulties in final demand in the Group’s key
markets: businesses, households and professionals.
Consumer model developments are tending towards electronic media, online services, products and
databases. This phenomenon led to a downturn in expenditure, due to the difficulty to sell online
information on the professional market at a price that is suitable for the paper version.
The Italian IT business market has seen a further decrease in its overall value for expenditure,
continuing the negative trend seen for several years, which according to Assinform forecasts will
record a decrease of 4% in 2013.
The number of bankruptcy proceedings is continuing to rise (+14.8%), with double-figure
percentages for all legal formats and all the macro areas of operation, the highest figure being seen
in the north-east (19.5%). Insolvency proceedings other than bankruptcy are also up: +31% in the
first half of 2013 (source: Il Sole 24ORE-Cerved, 14 September 2013).
Self-employment, a market important to the Group, recorded a drop in income to levels lower than
those of 2007. The falling demand for services and in particular the delay in collections both from
public administration and private customers have taken their toll.
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Performance of the 24 ORE GROUP
HIGHLIGHTS OF 24 ORE GROUP
(in thousands of euro) Jan-Sep 2013 Jan-Sep 2012
Revenue 277,751 315,856
Gross operating profit (loss) (18,847) (20,040)
Operating profit (loss) (35,273) (35,942)
Profit (loss) before tax (36,850) (36,145)
Profit (loss) from continuing operations (30,809) (24,243)
Profit (loss) from discontinued operations - 725
Profit (loss) attributable to owners of the parent (30,353) (22,655)
Net financial position (48,500) 5,317 (1)
Equity attributable to owners of the parent 169,355 199,447 (1)
Employee headcount at end of period 1,826 1,868 (1)
(1) Value related to 31 December 2012
At 30 September 2013 the 24 ORE Group achieved consolidated revenue of €277.8 million, a
decrease of -12.1% compared to the €315.9 million recorded in 2012. This result is mainly affected
by:
- the overall negative advertising market trend (-14.6%). Group advertising revenue fell by
€17.3 million (-16.1%), compared with the 17.4% decline in the reference advertising
market (reference market: total press, radio and web; source: Nielsen Media Research,
January-September 2013);
- the drop in add-ons revenue, a different publishing plan and declining average sales
volumes;
- rationalisation of the books and magazines catalogue, with title transit from printed to digital
versions.
Digital revenue amounts to €102.5 million, up €5.6 million (+5.8%) compared to September 2012.
The impact on total consolidated revenue rose from 30.7% to 36.9%, indicating a consumer model
that is evolving in favour of electronic media, databases and online services, and from
implementation of the Group strategy to move towards digital through ongoing development of the
integrated printed and digital content and the transit of printed products to digital-only versions.
Note that in the last quarter of the year the drop in Group revenue was lower than in previous
periods, standing at -7.5% as opposed to -13.3% in the first quarter and -14.2% in the second, all
compared with the same periods of the previous year.
Personnel expense decreased by €13.5 million, equal to 11.5%. This decrease is mainly due to the
combined effect of:
- the falling average cost of employees, following application of the solidarity agreements
implemented as a result of those signed with the trade unions;
- a drop in the average headcount by 45 staff. Comparison between the periods under review
shows a decrease in the average headcount from 1,858 in September 2012 to 1,813 in 2013;
- a drop in the average number of temporary staff, apprentices and short-term contract staff by
36.
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Direct and operating costs fell by €22.3 million as a result of implementation of the digital
strategy and cost containment policies pursued, in particular:
- costs for raw materials and consumables decreased by €5.3 million (-26.1%);
- distribution costs declined by €5.2 million (-17.7%);
- printing costs declined by €6.2 million (-35.5%);
- commissions and other selling costs dropped by €2.7 million (-12.9%), directly associated
with the revenue performance and as a result of the rationalisation of sales structures.
Overall costs decreased by €35.9 million compared to the same period of the previous year, down
10.5%. Excluding the increase in costs directly associated with digital development, the decrease
would be around 12%.
Gross operating profit (GOP) recorded a €1.2 million improvement (+6.0%) compared to the
same period of 2012 despite remaining negative by €18.8 million (negative by €20.0 million in
2012). Action taken in previous months, such as the boost in the transit towards digital by
enhancing editorial content and increasingly segmented packages, rationalisation of the production
and administrative structure and the cost containment policies, has neutralised the effects of the
drop in revenue by around €38 million and mitigated the negative trend in results compared to the
previous year. In fact, in the last quarter GOP was a 68% improvement on that of the previous year,
up €10.7 million to €-15.8 million, though still recording a loss of €5.1 million.
The operating loss came to a negative €35.3 million, recording an improvement of €0.7 million
compared to the loss of €35.9 million in the same period of 2012. Depreciation, amortisation and
impairment totalled €16.5 million, in contrast with €15.9 million in 2012.
The loss attributable to owners of the parent amounted to €30.4 million, compared with the loss
of €22.7 million in the same period of 2012, as a result of lower deferred tax assets.
The Group’s net financial position at 30 September 2013 came to a negative €48.5 million,
compared to the positive €5.3 million at the start of the year.
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SEGMENT REPORTING
Organisational and offer rationalisation action commenced in January 2013, which can be
summarised as follows:
- To complete the printed and digital integration, the Publishing & Digital BU was created
within the Publishing Area, which brought together the printing department, the digital
version of the daily newspaper, new digital products and the web site www.ilsole24ore.com;
- The new Fabbrica 24 & E-Commerce Area was set up with the aim of combining expertise
for the development of new e-commerce business and digital services, as illustrated in the
summary table for the Corporate and Centralised Services Area.
In order to render the amounts for the two years comparable, the results for 2012 have been
reclassified on the basis of this organisational structure.
The statement below illustrates the Group essential data broken down by operating segment.
INCOME STATEMENT BY SEGMENT
SEGMENT Revenue from third parties
Revenue between segments
Tot. Revenue GOP/GOL Depreciation
& Amortisation
Operating profit (loss)
PUBLISHING
Jan-Sep 2013 81,660 44,076 125,736 (28,354) (3,353) (31,693)
Jan-Sep 2012 94,525 57,704 152,229 (26,956) (4,036) (30,985)
SYSTEM
Jan-Sep 2013 79,440 48 79,488 (2,735) (6) (2,742)
Jan-Sep 2012 93,337 6 93,342 (3,444) (2) (3,446)
TAX & LEGAL
Jan-Sep 2013 49,118 582 49,700 14,413 (287) 14,131
Jan-Sep 2012 57,361 545 57,906 16,713 (90) 16,623
SOFTWARE SOLUTIONS
Jan-Sep 2013 44,375 259 44,635 4,940 (4,488) 460
Jan-Sep 2012 45,936 141 46,078 3,647 (4,399) (743)
TRAINING AND EVENTS
Jan-Sep 2013 16,359 310 16,669 1,475 (173) 1,302
Jan-Sep 2012 15,196 898 16,094 1,382 (158) 1,224
RADIO -
Jan-Sep 2013 292 9,054 9,346 (457) (526) (982)
Jan-Sep 2012 402 9,826 10,228 (325) (497) (823)
CULTURE
Jan-Sep 2013 5,934 214 6,148 (2,533) (82) (2,616)
Jan-Sep 2012 8,787 474 9,261 (3,919) (119) (4,038) CORPORATE AND CENTRALISED SERVICES
Jan-Sep 2013 572 1,034 1,606 (5,597) (7,540) (13,133)
Jan-Sep 2012 312 1,207 1,519 (7,138) (6,618) (13,755)
CONSOLIDATED
Jan-Sep 2013 277,751 - 277,751 (18,847) (16,455) (35,273)
Jan-Sep 2012 315,856 - 315,856 (20,040) (15,919) (35,942)
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Publishing Area
Publishing is the division that heads up the daily newspaper Il Sole 24 ORE, its bundled add-on
products and a number of primary processes (printing and distribution), also managed for other
Group segments. This area also manages the digital version of the daily newspaper, the new digital
products, the www.ilsole24ore.com web site and the paid online content. The Area also comprises
the Radiocor news agency and B2B integrated communication activity targeting SMEs in specific
sectors, including agrifood, retail distribution, construction and welfare, directly managing
dedicated advertising sales forces.
PUBLISHING AREA REVENUE
(in thousands of euro) Jan-Sep 2013 Jan-Sep 2012 % change
Publishing & Digital 104,137 126,763 -17.8%
Sector-Specific Publishing 15,054 19,489 -22.8%
Agency and P.A. 6,545 5,978 9.5%
Total 125,736 152,229 -17.4%
The period April-September 2013 shows a decline of around 12% in the circulation of traditional
media compared to the same period of 2012. In the same period the paper + digital circulation
figures recorded more limited decreases of 2%.
The 24 ORE Group’s acceleration in digital development in recent years, especially in 2012,
allowed mitigation of the impact of the drop in printed circulation figures.
In September 2013 (latest available ADS data) Il Sole 24 ORE was confirmed as Italy’s no. 1 digital
newspaper with 97,639 digital copies, which also confirms the growth trend that began in January
(+109% compared to January 2013). As a result of this increase Il Sole 24 ORE has almost reached
an ADS-certified quota of 100 thousand digital copies. The total paper + digital circulation at
September 2013 is 292,223 copies.
Aggregate revenue generated by the Publishing Area was €125.7 million (-17.4% compared with
the same period of 2012) due mainly to the performance of advertising revenues (-23.8%),
circulation revenues and other revenues (-11.7%).
The strategic decision to focus on digital, along with action to streamline costs, products and the
production structure, has allowed an improvement (€15.6 million net of advertising revenue) in the
Publishing Area’s gross operating profit.
Publishing & Digital revenue dropped by 17.8% compared with the same period of the previous
year, particularly due to the advertising revenue trend.
New products with a view to integrating printed + digital were launched in the first nine months of
the year. The design and development of new paid digital products targeting the professional
segments has continued and will lead to the launch of more new products by the end of the year.
The most significant events of the first nine months are attributable to:
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- the January launch of the paid web site and of the new printed + digital newspaper
subscription formulas. At 30 September almost 9,000 users had purchased a subscription to
the site whilst, in parallel, the number of unique site users continues to rise. Note that in the
last quarter of 2013 the survey system changed from Nielsen Site Census to Omniture Site
Catalyst, and therefore period comparison on a like-for-like basis is not possible. We report
that in September 2013 the unique users of the site stood at around 11 million (source:
Omniture Site Catalyst) compared to approximately 9 million in September 2012 (source:
Nielsen Site Census).
- the 19 September launch of “Business Class Commercialisti”, following on from the success
of Business Class in April. “Business Class Commercialisti” is a platform that integrates
tools available to tax professionals, for example the daily newspaper, specialist magazines
and database consultation. The product mix was later enhanced with the “Quotidiano del
Fisco”, the new digital product that brings together and reorganises all the most authoritative
sources on tax matters offered by Il Sole 24 ORE, offering an overview every day of all the
latest tax-related news and in-depths on trending issues. Since the launch of the new
“Business Class Commercialisti” there have been over 850 subscriptions to this formula,
700 of which are multi-year.
In the last quarter, as in preceding quarters, the daily newspaper has monitored the main financial
and regulatory events, with special additional pages as inserts, single theme inserts, e-books and
online dossiers, providing increasing integration of the traditional paper and new digital product
mix.
In particular, the inserts have included in-depths on measures approved by Parliament, comments
on legal texts and explanations of new elements introduced in the “Decreto del Fare” (Action
Decree), the Employment Decree, the new earnings barometer “Redditometro” and the abolition of
IMU tax on the primary home.
The issue of Monday Practical Guides has also continued, weekly in-depth studies on tax and legal
matters associated with an online forum.
Of note among the major topics discussed are: the highway code, energy certification, university
entrance tests, credit cards, RCauto (vehicle insurance), the new “Sabatini” law and business
incentives, the guide to university masters degrees and home-based jobs.
With regard to Add-ons, available market figures continue to show the downward trend seen in the
first half of the year.
Add-on revenue in the first nine months of 2013 totalled €4.5 million, down 31.3% compared to the
same period in 2012 mainly as a result of a different publishing plan and declining average sales
volumes.
The Magazines market confirms the negative trend both in terms of advertising (-24.3%, source:
Nielsen Media Research, January-September 2013) and in copies sold (-11% for magazines in the
first eight months, internal source).
Total magazine revenues for the first nine months of 2013 amounted to €1.3 million, down 38.7%
on the same period of the previous year. The decline is particularly associated with the reduction of
the products portfolio.
Sector-specific Publishing in the first nine months of the year recorded a 22.8% drop in revenue
compared to the same period of 2012. The decrease is partly related to the persisting negative trend
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of the market and partly to the disposal in 2012 of a number of businesses no longer profitable,
including the placing in liquidation of the subsidiary Business Media web S.r.l. and the winding-up
of certain publications.
To offset the erosion of revenue from classic advertising, a plan was implemented that mainly
involves special transactions, events and initiatives in relation to the digital area.
The Agency and P.A. BU’s area of operations in Italy was significantly affected by the current
economic crisis and in a different way from traditional publishing. Corresponding with a constantly
high number of traditional operators is a demand market that declined even further, affected by the
growing demand for real-time content available free of charge online and of the drop/slowing of
demand from PA.
The Agency and P.A. BU recorded revenue up 9.5% on the same period last year, due to two
factors: the growth in revenue from the performance of typical journalism (news reports in Italian
and English) and the higher revenue associated with the visibility exchange agreement signed
between the LSE-Borsa Italiana Group and the 24 ORE Group which aims to set up the Italian
finance hub in Europe.
From the middle of 2011 the Agency began a growth and expansion path on the international
markets, through a series of distribution agreements with leading international organisations such
as: London Stock Exchange-Borsa Italiana in Italy and the UK; Bloomberg LP in the USA, Asia
and the Far East; VWD AG in Germany, France and the Netherlands; Dow Jones in Europe and
South America; Microsoft – MSN in Italy.
PUBLISHING AREA RESULTS
(in thousands of euro) Jan-Sep 2013 Jan-Sep 2012 % change
Circulation/other revenue 71,280 80,756 -11.7%
Revenue from advertising 54,456 71,473 -23.8%
Revenue 125,736 152,229 -17.4%
Gross operating profit (loss) (28,354) (26,956) -5.2%
GOP/GOL margin % -22.6% -17.7% -4.8 p.p.
Operating profit (loss) (31,693) (30,985) -2.3%
System Area – Advertising sales
System is the division acting as the advertising sales agency for the Group’s main media – except
for sector-specific publishing, which has its own network, and for some third-party media.
SYSTEM AREA REVENUE
(in thousands of euro) Jan-Sep 2013 Jan-Sep 2012 % change
Group revenue 64,541 83,449 -22.7%
Non-captive revenue 14,947 9,894 51.1%
Total 79,488 93,342 -14.8%
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The advertising market as a whole, also considering television, contracted by 14.6% in the first nine
months of 2013. All media, Internet included, fell. The press is the media with the highest decrease:
daily newspapers -21.5% and magazines -24.3%. A two-figure drop was also recorded by TV (-
13.1%), followed by radio (-12.1%). A more limited decrease was seen for Internet (-2.6%) (source:
Nielsen Media Research, January-September 2013).
In the first nine months of the year the System area achieved revenue of €79.5 million, down 14.8%
though this decline was less than that of the agency’s reference market (-17.4% reference market:
daily newspapers, magazines, radio and Internet - Nielsen: January-September), particularly
following the acquisition of licences for international publications. In 2013 the System area
undertook initiatives to consolidate the agency’s share of the Italian market and increase its
international market presence.
The agency’s trends are improving as regards the press, from -23.2% in the first half of 2013 to a
progressive -20.9% for September 2013. This result benefited from revenue on licences held for the
major international publications from January 2013 and amounting to €4.1 million. The press
market trend recorded a 22.6% decrease (source: Nielsen Media Research, January-September
2013).
The daily newspaper as a whole (newspaper plus supplements), closed the first nine months of
2013 with a 27.8% drop in revenue. The decrease is affected by the continuation of the financial
market crisis and the strong drop in advertising investments by companies in the merchandise
segments most important to Il Sole 24 ORE.
Radio 24 - in a declining market (-12.1%) - limited its decrease to -9.3%. This result was achieved
despite the fact that it is the major business sectors that form Radio 24’s typical investors
(Automotive, Finance/Insurance and Professional Services), further reducing their investments (-
13.1% Radio 24; -16.1% the radio market).
Internet recorded a 5.5% increase, moving in the opposite direction of the market (-2.6%), also due
to the acquisition of licences for third party sites.
SYSTEM AREA RESULTS
(in thousands of euro) Jan-Sep 2013 Jan-Sep 2012 % change
Circulation/other revenue 263 310 -15.2%
Revenue from advertising 79,226 93,033 -14.8%
Revenue 79,488 93,342 -14.8%
Gross operating profit (loss) (2,735) (3,444) 20.6%
GOP/GOL margin % -3.4% -3.7% 0.2 p.p.
Operating profit (loss) (2,742) (3,446) 20.4%
Tax & Legal Area – Professional publishing
The Tax & Legal Area develops integrated product systems of technical and regulatory content
targeting professionals, companies and the public administration. The specific market segments are
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controlled by three Business Units (Taxes/Labour/Economy, Law, Construction and Public
Administration), which satisfy all the information, training and operative requirements of the
reference targets through specialist information tools closely integrated with each other: books,
magazines, databases and Internet services.
TAX & LEGAL AREA REVENUE
(in thousands of euro) Jan-Sep 2013 Jan-Sep 2012 % change
Books 3,316 4,670 -29.0%
Magazines 16,367 22,479 -27.2%
Electronic publishing 22,730 24,071 -5.6%
IT services 5,995 5,206 15.2%
Other revenue 1,292 1,481 -12.7%
Total 49,700 57,906 -14.2%
The Tax & Legal Area operates in a market characterised by shrinking demand in a very negative
economic environment.
This trend is seriously affected by the heavy economic crisis in progress, causing growing
difficulties in final demand and which penalises professionals, the main target for the Area.
Consumer model developments are tending towards electronic media, online services, products and
databases. This phenomenon led to a downturn in expenditure, due to the difficulty to sell online
information on the professional market at a price that is suitable for the paper version.
Tax & Legal Area revenue as at 30 September 2013 totalled €49.7 million, down 14.2% compared
with the same period of 2012. The negative performance is concentrated exclusively in printed
products, books (-29.0%) and magazines (-27.2%), which confirm the strong decline already
recorded in the first half of the year and which will presumably be confirmed also in the next few
months.
In addition to the profound crisis seen in printed publishing, the factors causing the drop in revenues
are mainly attributable to:
- rationalisation of the magazines catalogue, with a number of publications becoming “digital
only” from January 2013 (Contabilità finanza e controllo, Guida alle pensioni);
- rationalisation of the books publishing plan.
Confirming the increasing appetite for the use of online sources for information and updates, digital
revenue reached 57.8% of the area’s total revenue (50.6% at 30 September 2012).
The initiatives and new projects have focused on expanding the online range and on digitalizing all
of the paper versions.
The different revenue mix has in any event kept the level of profit margins steady at 29%.
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TAX & LEGAL AREA RESULTS
(in thousands of euro) Jan-Sep 2013 Jan-Sep 2012 % change
Circulation/other revenue 49,335 57,487 -14.2%
Revenue from advertising 365 419 -13.0%
Revenue 49,700 57,906 -14.2%
Gross operating profit (loss) 14,413 16,713 -13.8%
GOP/GOL margin % 29.0% 28.9% 0.1 p.p.
Operating profit (loss) 14,131 16,623 -15.0%
Software Solutions Area
The Software Solutions area includes all the software activities of the 24 ORE Group, through a
functional organisation that covers various activities and addresses the markets through the brands
that make it up. 24 ORE Software S.p.A. is the 24 ORE Group company covering the various
product brands. The range specifically comprises software products with the “Software 24 ORE”
brand, mainly addressed to professionals such as the STR, Data Ufficio and Softlab brands that are
specific for the public administration, construction industry and legal markets, and lastly the Esa
Software brand products targeting SMEs. Diamante products target the SME market and the
development of Cloud solutions.
SOFTWARE SOLUTIONS AREA REVENUE BY SEGMENT
(in thousands of euro) Jan-Sep 2013 Jan-Sep 2012 % change
24ORE Software products 44,084 45,902 -4.0%
Diamante products 551 175 insig.
Total 44,635 46,078 -3.1%
The reference market of operations for the Software Solutions Area targets professionals such as
chartered accountants, employment consultants, lawyers, engineers, architects, surveyors and small
and medium enterprises. The area is also engaged in the Public Administration sector and
associations such as the tax assistance centres (CAF).
The Italian IT market has seen a further decrease in its overall value for expenditure, continuing the
negative trend seen for several years, which according to Assinform forecasts will close 2013 with a
decrease of -4%. In this context, SMEs recorded 2-figure decreases and the medium-large sized
businesses, representing 62% of national IT expenditure, recorded a drop of just a few percentage
points and continue to drive the market. A strong increase was seen in the digital market (mobile,
social media, e-commerce, cloud - the latter up +43.2%), though in absolute values these are still
limited figures that fail to offset other losses (source: Assintel Survey, October 2013).
During the period under review the Software Area saw a 3.1% drop in revenue due to the crisis in
the reference sectors, i.e. construction and SMEs.
24 ORE GROUP
INTERIM MANAGEMENT STATEMENT SEPTEMBER 2013
17
Among the initiatives, worthy of note are the press conference presentation on 13 June of 24 ORE
Cloud, a professional marketplace offering apps and software specifically for microbusinesses. In
the growing cloud solutions market for professionals, EasyLex Cloud - and online version of law
office software for the medium/high level segment - and Via Libera Condominio Cloud - an online
solution for condominium administrators - have been available since the beginning of September.
In addition, as regards the tax assistance centres, the 730 campaign closed with around 4,270,000
tax returns validated.
Despite the difficulties of the times, which have an impact on this business unit, the action taken,
particularly regarding development of the product mix, have allowed an improvement in GOP.
RESULTS OF THE SOFTWARE SOLUTIONS AREA
(in thousands of euro) Jan-Sep 2013 Jan-Sep 2012 % change
Circulation/other revenue 44,635 46,078 -3.1%
Revenue 44,635 46,078 -3.1%
Gross operating profit (loss) 4,940 3,647 35.4%
GOP/GOL margin % 11.1% 7.9% 3.2 p.p.
Operating profit (loss) 460 (743) 161.9%
Training and Events Area
The Training and Events area provides specialist training to young university graduates, managers
and professionals and organises annual conferences and events on a contract basis for large
customers all over Italy. Included in this area are the activities of the subsidiaries Newton
Management Innovation S.p.A. (a management consulting and training company) and Newton Lab
S.r.l. (an event organising and multimedia content management agency).
TRAINING AREA REVENUE BY BUSINESS UNIT
(in thousands of euro) Jan-Sep 2013 Jan-Sep 2012 % change
Business school 7,664 7,047 8.7%
Annual Training and Events 1,373 1,964 -30.1%
Newton Man. Innov. and Newton Lab products 6,402 5,967 7.3%
Training for Professionals and SMEs 1,231 1,117 10.2%
Total 16,669 16,094 3.6%
Revenues from the Training BU, including the revenues of 24 ORE Training, Events and the
Newton line, rose by 3.6% compared to 30 September 2012.
Business school revenue totalled €7.7 million, up 8.7% on the same period of last year. The Full
Time Master performance recorded revenues up 29.9% compared to the same period of the previous
year as a result of development of the new Online Masters range with diploma. The Part Time
Masters were in line with the previous year, with 66 specialisation Masters, 4 Executive24 Masters
24 ORE GROUP
INTERIM MANAGEMENT STATEMENT SEPTEMBER 2013
18
in blended formula for middle management and 4 Master24 classes (classroom and online sessions
with diploma) for managers and professionals.
Revenue from Newton Management Innovation and Newton Lab products rose by an aggregate
10.2% compared to the first nine months of 2012, mainly due to the acquisition of a number of new
customers.
TRAINING AREA RESULTS
(in thousands of euro) Jan-Sep 2013 Jan-Sep 2012 % change
Circulation/other revenue 16,669 16,094 3.6%
Revenue 16,669 16,094 3.6%
Gross operating profit (loss) 1,475 1,382 6.8%
GOP/GOL margin % 8.9% 8.6% 0.3 p.p.
Operating profit (loss) 1,302 1,224 6.4%
Radio Area
The Radio Area manages the national radio station Radio 24, a news and talk radio with an
editorial format alternating news and entertainment programmes based almost exclusively on
speech. Every week, over 40 different programmes cover all the key areas of public interest,
ranging from national and international news to business and finance; from topics concerning the
home, work and the environment to sport, culture and leisure; and from healthcare to wellbeing.
Every day 19 editions of the radio news, 16 programmes and 8 reports on the financial markets are
broadcast. Daily live hours total 18.
The most recent audience data from Eurisko refers to the mobile average for September 2012-
September 2013 (120,000 cases), a period in which radio recorded a daily average of 34,821,000
listeners, down slightly (by 0.4%; -139,000) on the mobile average for May 2012-June 2013.
Radio 24, reconfirming its 9th position in the national radio rankings with a daily average of
2,006,000 listeners (source: Eurisko mobile average September 2012/2013), recorded an increase of
19,000 listeners compared to the mobile average for May 2012-June 2013 (+1%).
Radio Area revenue as at 30 September 2013 totalled €9.3 million, down 8.6% compared with the
same period of 2012. Radio 24 and web site advertising revenue dropped by 8.0%. Agency revenue
achieved by Radio 24 shows a 9.3% drop, compared with a decline of the market trend by 12.1%.
In terms of advertising space, Radio 24 recorded a 9.5% decrease compared to the same period last
year (source: Nielsen analysis per second Jan-Sep 2013/2012), and its positioning in seconds
compared to the total radio market remains steady at 8.4%.
Through the consortium Club Dab Italia S.p.A., in 2013 Radio 24 has once again confirmed its
commitment to developing the digital network by enhancing the systems covering the road network.
24 ORE GROUP
INTERIM MANAGEMENT STATEMENT SEPTEMBER 2013
19
RADIO AREA RESULTS
(in thousands of euro) Jan-Sep 2013 Jan-Sep 2012 % change
Circulation/other revenue 346 444 -22.2%
Revenue from advertising 9,001 9,784 -8.0%
Revenue 9,346 10,228 -8.6%
Gross operating profit (loss) (457) (325) -40.4%
GOP/GOL margin % -4.9% -3.2% -1.7 p.p.
Operating profit (loss) (982) (823) -19.4%
Culture Area
This Area includes Group activities in the culture segment, through 24 ORE Cultura S.r.l. and
Alinari 24 ORE S.p.A. (in liquidation). Its scope ranges from the planning and staging of art and
photography exhibitions to the intermediation of photographic reproduction rights, the sale of
objects and photographs, the publication of essays (Scheiwiller imprint), art and photographs sold
on a catalogue or contract basis, educational and digital products.
In the first nine months of 2013, the Culture Area recorded revenue of €6.1 million, down (-33.6%)
on the same period of 2012 as a result of Alinari 24 ORE S.p.A. being placed in liquidation in
August 2012.
A consistent improvement in GOP was recorded despite the revenue performance. Compared to the
same period last year, the area benefited by €1.4 million essentially due to reduced operating costs
and particularly those associated with discontinued Alinari 24 ORE S.p.A. operations.
Firstly, 2013 saw the end of the exhibition dedicated to Picasso at the Palazzo Reale in Milan,
organised in collaboration with the Picasso Museum of Paris.
The following exhibitions opened in the first nine months of 2013: Modigliani, Soutine e gli artisti
maledetti, The Desire for Freedom. Arte in Europa dal 1948, Homo Sapiens and Manet. 24
September 2013 saw the inauguration of the exhibition dedicated to Pollock e gli Irascibili (Palazzo
Reale, Milan, 24 September 2013-14 February 2014).
CULTURE AREA RESULTS
(in thousands of euro) Jan-Sep 2013 Jan-Sep 2012 % change
Circulation/other revenue 6,148 9,261 -33.6%
Revenue 6,148 9,261 -33.6%
Gross operating profit (loss) (2,533) (3,919) 35.4%
GOP/GOL margin % -41.2% -42.3% 1.1 p.p.
Operating profit (loss) (2,616) (4,038) 35.2%
24 ORE GROUP
INTERIM MANAGEMENT STATEMENT SEPTEMBER 2013
20
SIGNIFICANT EVENTS IN THE FIRST NINE MONTHS OF 2013
In January 2013 the ADS regulation entered into force which also certifies digital copies sold over
and above predefined price thresholds. The full text of the “Additional regulation for ADS surveys
for digital publications” is available at:
http://www.adsnotizie.it/pdf/regolamento_edizioni_digitali.pdf.
ADS figures for September 2013 see Il Sole 24 ORE as Italy’s leading digital daily newspaper with
97,639 digital copies. The total paper + digital circulation at September 2013 is 292,224 copies.
The Group’s digital strategy has led new product development focusing on customer profiling and
expansion of the integrated printed + digital mix, enhancing the Group’s editorial content. This
activity, which began in the last quarter of 2012, led to the release of the following new products
and related commercial mix:
- The new paying web site was launched on 21 January. The new site strengthens the identity
with the daily newspaper and offers exclusive content and news updated in real time, Radio
24 interviews available as podcasts, Radiocor’s breaking news, exclusive in-depths and
analyses by the Il Sole 24 ORE experts, guides, specials and e-books. The increased wealth
of information on the site is arranged in a multi-level product that includes areas of free
content and others with paid content;
- On 17 February 2013 the new Radio 24 web site was launched, with a new concept designed
to enhance the wealth of Radio 24 content also on the web, with a view to increasing the
counts for unique users and pages visited, and to raising the level of appeal for the online
advertising market.
- 8 April also saw the launch of the new “Business Class” subscription (along with a new
version of the Tablet app) which includes the card, the free and paid web sites, the two
digital editions of the newspaper, databases and international reviews;
- the April release of the new version of digital editorial reports, the digital wallet, a new tool
available to readers for access to the digital content via credit usable directly online.
- the “Business Class Commercialisti” platform integrating tools available to tax
professionals, for example the daily newspaper, specialist magazines and database
consultation, was launched on 19 September. Enhancement then came later with the
“Quotidiano del Fisco”, the new digital product that brings together and reorganises all the
most authoritative sources on tax matters offered by Il Sole 24 ORE, offering an overview
every day of all the latest tax-related news and in-depths on trending issues;
- in September the restyling of “Stream24”, the platform that pools and distributes the
Group’s multimedia content, showed a record number of pages viewed (12,990,338 monthly
total of pages viewed - Omniture Site Catalyst).
On 27 February 2013 the solidarity agreement was finalised for the white collars and blue collars of
Il Sole 24 ORE S.p.A. with a 20% graphics and polygraphics contract. This agreement entered into
force on 1 March 2013 and will be valid for one year, extendable by a further twelve months.
The solidarity for journalists of the Radiocor Agency was also raised from 8% to 20% with effect
from 1 March 2013. This agreement will expire on 31 January 2014.
24 ORE GROUP
INTERIM MANAGEMENT STATEMENT SEPTEMBER 2013
21
On 29 April 2013 the Il Sole 24 ORE S.p.A. shareholders’ meeting appointed the Board of
Directors, which will remain in office until the shareholders’ meeting called to approve the financial
statements as at 31 December 2015.
The appointed members were: Carlo Valerio Ticozzi, Mario Mirarchi, Benito Benedini, Donatella
Treu, Marcella Panucci, Maria Carmela Colaiacovo, Luigi Abete, Antonio Bulgheroni, Marco
Venturi, Alessandro Spada and Mario D’Urso. The first ten directors were appointed from the list
filed by the majority shareholder, Confindustria, and the remaining director from the list filed by
minority shareholders The Gabelli Equity Trust Inc with other shareholders. Among the appointed
directors, those confirming independence in accordance with law are Carlo Ticozzi Valerio, Mario
Mirarchi and Mario D’Urso.
Benito Benedini was appointed Chairman of the Board of Directors.
The shareholders’ meeting also appointed the Board of Statutory Auditors, which will remain in
office until the shareholders’ meeting called to approve the financial statements as at 31 December
2015.
Laura Guazzoni, Maurilio Fratino and Luigi Biscozzi were appointed standing auditors and Maria
Silvani and Fabio Fiorentino were appointed alternate auditors. Laura Guazzoni, Maurilio Fratino
and Maria Silvani were appointed from the list filed by the majority shareholder, Confindustria,
whilst Luigi Biscozzi and Fabio Fiorentino were appointed from the list filed by minority
shareholder Edizione S.r.l. Luigi Biscozzi is Chairman of the Board of Statutory Auditors.
Following the resignation of Mario Mirarchi on 29 April 2013, due to work commitments, on 30
April the Board of Directors appointed the next candidate indicated on the same list as the outgoing
director, i.e. Alberto Chiesi, pursuant to Article 22 of the Company By-Laws.
Again on 30 April the Board confirmed Donatella Treu’s appointment as Chief Executive Officer
and assigned corporate management powers to the Chairman and to the Chief Executive Officer.
On 18 June 2013 the Board of Directors of Il Sole 24 ORE S.p.A. approved the plan to merge the
wholly-owned subsidiary Nuova Radio S.p.A. into Il Sole 24 ORE S.p.A. The merger will become
effective from 31 December 2013 with accounting and tax effects from 1 January 2013. This
transaction will not change the scope of consolidation.
On 18 June 2013 Roberto Napoletano was appointed to manage Radio 24 and the press agency
Radiocor.
On 17 September 2013 the Board of Directors of Il Sole 24 ORE S.p.A. appointed Valentina
Montanari as Corporate Financial Reporting Manager with effect from 1 October 2013.
24 ORE GROUP
INTERIM MANAGEMENT STATEMENT SEPTEMBER 2013
22
EVENTS AFTER 30 SEPTEMBER 2013
The quota of 100,000 certified digital copies was exceeded by Il Sole 24 ORE in October.
October saw the launch of the new version of Il Sole’s historic section “L’Esperto Risponde” with
printed attachments and the new digital version.
The Group’s new organisational structure came into effect in November 2013, with the aim of
implementing the innovation model which poses the reader-customer at the heart of its core
business and focuses on digital development as its tool of excellence for creating value through
increasingly customised services and products.
In particular, the new organisation is characterised by a single journalism and publishing
department whereby all the Group’s activities (printed publications, web site, specialist digital daily
newspapers, specialist news, radio and press agency) operate in harmony for its onslaught on the
specific reference markets, along with a Marketing & Product Development Department
responsible for marketing, publishing product development for the Group’s media on all platforms
and a Sales & Customer Management Department responsible at Group level for the sale of
products and services on all channels and for Group customer management activities.
24 ORE GROUP
INTERIM MANAGEMENT STATEMENT SEPTEMBER 2013
23
FINANCIAL STATEMENTS
Highlights of income statement
HIGHLIGHTS OF CONSOLIDATED INCOME STATEMENT
(in thousands of euro) Jan-Sep 2013 Jan-Sep 2012
Revenue from sales and services (1) 277,751 315,856
Other operating income 7,177 5,102
Personnel expense (2) (104,049) (117,534)
Increase in internally-generated assets 1,338 -
Change in inventories (7,338) 2,606
Purchase of raw materials and consumables (7,581) (22,783)
Services (151,266) (164,837)
Other operating costs (29,354) (32,846)
Provisions and allowances for impairment (5,525) (5,604)
Gross operating profit (loss) (3) (18,847) (20,040)
Depreciation, amortisation and impairment losses (16,455) (15,919)
Gains/losses on disposal of intangible assets and property, plant and equipment 30 17
Operating profit (loss) (4) (35,273) (35,942)
Financial income (expenses) (5) (1,341) (19)
Income (expenses) from investments (236) (184)
Profit (loss) before tax (36,850) (36,145)
Income taxes (6) 6,040 11,902
Profit (loss) from continuing operations (30,809) (24,243)
Profit (loss) from discontinued operations - 725
Profit (loss) attributable to non-controlling interests (456) (862)
Profit (loss) attributable to owners of the parent (30,353) (22,655)
24 ORE GROUP
INTERIM MANAGEMENT STATEMENT SEPTEMBER 2013
24
Statement of financial position
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(in thousands of euro) Note 30.09.2013 31.12.2012
ASSETS
Non-current assets
Property, plant and equipment 69,032 74,001
Goodwill 75,010 75,010
Intangible assets 82,942 82,164
Investments in associates and joint ventures 788 829
Available-for-sale financial assets 1,186 1,186
Other non-current financial assets - 75
Other non-current assets 3,771 3,972
Deferred tax assets 77,474 69,752
Total (7) 310,204 306,990
Current assets
Inventories 9,932 17,283
Trade receivables 130,525 155,119
Other receivables 14,368 10,127
Other current assets 8,939 5,570
Cash and cash equivalents 8,401 12,234
Total (8) 172,165 200,333
Assets held for sale - -
TOTAL ASSETS 482,369 507,323
24 ORE GROUP
INTERIM MANAGEMENT STATEMENT SEPTEMBER 2013
25
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONT.)
(in thousands of euro) Note 30.09.2013 31.12.2012
EQUITY AND LIABILITIES
Equity
Equity attributable to owners of the parent
Share capital 35,124 35,124
Equity reserves 180,316 180,316
Revaluation reserves - 20,561
Hedging and translation reserves (105) (193)
Other reserves 14,416 22,250
Retained earnings (Loss brought forward) (30,043) (12,857)
Profit (loss) attributable to owners of the parent (30,353) (45,755)
Total (9) 169,355 199,447
Equity attributable to non-controlling interests
Capital and reserves attributable to non-controlling interests (2,537) 165
Loss attributable to non-controlling interests (456) (2,659)
Total (9) (2,993) (2,495)
Total equity (9) 166,362 196,953
Non-current liabilities
Non-current financial liabilities 2,452 3,686
Employee benefit obligations 31,729 32,733
Deferred tax liabilities 11,816 11,957
Provisions for risks and charges 12,477 13,733
Other non-current liabilities 1,872 2,972
Total (10) 60,346 65,081
Current liabilities
Bank overdrafts and loans - due within one year 54,303 2,967
Financial liabilities held for trading 145 266
Trade payables 149,530 173,422
Other current liabilities 5,704 10,476
Other payables 45,979 58,160
Total (11) 255,661 245,289
Liabilities held for sale - -
Total liabilities 316,007 310,370
TOTAL EQUITY AND LIABILITIES 482,369 507,323
24 ORE GROUP
INTERIM MANAGEMENT STATEMENT SEPTEMBER 2013
26
Statement of cash flows
STATEMENT OF CASH FLOWS
(in thousands of euro) Note Jan-Sep 2013 Jan-Sep 2012
Items of the statement of cash flows
Profit (loss) before tax attributable to the Group [a] (36,394) (34,558)
Adjustments [b] 15,404 15,911
Profit (loss) attributable to non-controlling interests (456) (862)
Depreciation, amortisation and impairment losses 16,479 16,093
(Gains) Losses 190 (17)
Change in provisions for risks and charges (1,256) (525)
Change in employee benefit obligations (1,003) 1,696
Change in deferred taxes 149 (517)
Financial income/(expenses) 1,331 29
Other adjustments (32) 14
Changes in net working capital [c] (18,421) 17,355
Change in inventories 7,338 (2,606)
Change in trade receivables 24,653 52,774
Change in trade payables (23,864) (11,094)
Income taxes paid (1,041) (2,672)
Other changes in net working capital (25,505) (19,048)
Total cash flow from continuing operations [d=a+b+c] (39,410) (1,292)
Cash flow from investing activities [e] (13,354) (11,550)
Investments in intangible assets, property, plant and equipment (12,322) (8,784)
Acquisition of investments in subsidiaries (67) (1,288)
Disposal of intangible assets and property, plant and equipment 76 62
Other changes in investing activities (1,041) (1,539)
Cash flow from financing activities [f] 27,284 17,265
Net financial interest paid (1,331) (29)
Repayment of medium/long-term bank loans (1,233) (1,100)
Change in short-term bank loans 29,690 -
Change in non-current financial assets (46) 19,561
Dividends paid (132) (204)
Change in capital and reserves 246 (959)
Change in equity attributable to non-controlling interests 90 (4)
Cash flows absorbed during the period [g=d+e+f] (25,480) 4,424
OPENING CASH AND CASH EQUIVALENTS 9,268 28,667
CLOSING CASH AND CASH EQUIVALENTS (16,213) 33,091
(INCREASE) DECREASE FOR THE PERIOD (12) (25,480) 4,424
24 ORE GROUP
INTERIM MANAGEMENT STATEMENT SEPTEMBER 2013
27
Net financial position
NET FINANCIAL POSITION
(in thousands of euro) 30.09.2013 31.12.2012
Cash and cash equivalents 8,401 12,234
Bank overdrafts and loans - due within one year (54,303) (2,967)
Short-term net financial position (45,902) 9,268
Non-current financial liabilities (2,452) (3,686)
Fair value changes in financial hedging instruments (145) (266)
Medium-long term net financial position (2,597) (3,951)
Net financial position (13) (48,500) 5,317
24 ORE GROUP
INTERIM MANAGEMENT STATEMENT SEPTEMBER 2013
28
COMMENTARY
General information
The share capital of the Parent totals €35,123,787, represented by 90,000,000 ordinary shares and
43,333,213 special class shares. Their breakdown is as follows:
- 90,000,000 ordinary shares owned by Confindustria, accounting for 67.5% of all shares;
- 40,031,186 special-category shares listed on the Milan Stock Exchange screen-based equity
market (MTA – Mercato Telematico Azionario) of Borsa Italiana S.p.A. in the Standard
segment (Class 1), accounting for 30.0% of all shares.
- 3,302,027 special-category treasury shares, accounting for 2.5% of all shares.
The company By-laws contain provisions whereby the controlling shareholders of the Issuer may
not be changed. In particular, in accordance with Article 8 of the by-laws, shareholders may not
hold more special-class shares than those that represent one fiftieth of the share capital plus one
share, with the exception of the Issuer that owns them as treasury shares.
Il Sole 24 ORE S.p.A. special-class stock is currently listed in the Standard (Class 1) segment on
the MTA of Borsa Italiana S.p.A.
The stock identification codes are:
STOCK IDENTIFICATION CODES
Name Il Sole 24 ORE S.p.A.
ISIN IT0004269723
Alphanumerical code S24.MI
Reuters code S24.MI
Bloomberg code S24 IM
The companies included in the scope of consolidation at 30 June 2013 were:
- Il Sole 24 ORE S.p.A., the Parent Company, which acts both as the holding company for
majority investments in Group companies, and as an operating company by performing core
business activities (general, financial and professional news and information, press agency,
etc.).
- 24 ORE Software S.p.A., specialised in software solutions and IT services for public
administration and construction industry professionals;
- Nuova Radio S.p.A., the broadcaster of Radio 24, a news & talk radio station.
- Il Sole 24 ORE UK Ltd., which mediates the sale of advertising space in the United
Kingdom.
- 24 ORE Cultura S.r.l., specialised in products dedicated to art and photography and in the
organisation of shows and events.
- Alinari 24 ORE S.p.A. (in liquidation);
- Shopping 24 S.r.l., which is an e-commerce and online marketing company;
- Newton Management Innovation S.p.A., a company active in training services;
24 ORE GROUP
INTERIM MANAGEMENT STATEMENT SEPTEMBER 2013
29
- Newton Lab S.r.l., a company active in training services. The company is indirectly
controlled through Newton Management Innovation S.p.A.;
- Fabbrica 24 S.r.l., active in the e-commerce sector. The company is indirectly controlled
through 24 ORE Software S.p.A.;
- Diamante S.p.A., a software house specialising in the development of Management
Solutions for SMEs and Professionals.
- BacktoWork 24 S.r.l., specialised in the production and development of communications
projects through the creation and management of a portal that aims to bring together
managers and small businesses. The company is indirectly controlled through Fabbrica 24
S.r.l.
Compared with the latest financial statements approved, the following changes to the scope of
consolidation took place:
- On 18 March 2013 Fabbrica 24 S.r.l. established BacktoWork 24 S.r.l., with an investment
of 90% of the share capital for an amount equal to €100 thousand, of which €22,500
released as a cash injection, thereby acquiring control.
- On 29 March 2013, Business Media Web S.r.l. (in liquidation) approved its final liquidation
financial statements as at 20 March 2013 and the asset distribution plan.
- On 29 July 2013 the subsidiary Fabbrica 24 S.r.l, disposed of its entire 70% investment in
Lambdago S.r.l., losing control over that company as a result.
- After resolving to zero out quota capital to cover losses and full waiver of the right of
subscription to a quota capital increase for reconstitution, on 10 September 2013 the
subsidiary Fabbrica 24 S.r.l. no longer owns a 70% investment in the capital of Signet S.r.l.
and therefore no longer has control over the company.
The registered and administrative offices of Il Sole 24 ORE S.p.A. are located at Via Monte Rosa
91, Milan, Italy. Confindustria (the Confederation of Italian Industry) controls the parent.
Format, content and reporting standards
The interim management statement for the period ended 30 September 2013 was prepared on the
assumption that the Company is operated on a going concern basis, using the recognition and
measurement criteria set out in International Accounting Standards (IAS/IFRS), consistent with
those used to prepare the last financial statements.
The interim management statement was prepared pursuant to art. 154-ter of Italian Legislative
Decree no. 58 of 24 February 1998, introduced pursuant to art. 1 of Italian Legislative Decree no.
195 of 6 November 2007.
The interim management statement was not subject to audit.
The financial statements presented include:
Consolidated income statement for the first nine months of 2013, with comparison data for the
same period of 2012. This income statement is in abridged form, grouping revenue items with
respect to the financial statements as at 31 December 2012, details of which are provided in the
related notes;
24 ORE GROUP
INTERIM MANAGEMENT STATEMENT SEPTEMBER 2013
30
Consolidated statement of financial position as at 30 September 2013, with comparison data
from the latest approved financial statements;
Statement of cash flows for the first nine months of 2013, with comparison data for the same
period of 2012;
Net financial position at 30 September 2013, with breakdown of assets and liabilities into short-
term or medium-term components and with comparison data from the latest approved financial
statements.
Lastly, note that the consolidated interim results of the 24 ORE Group are affected by seasonal
elements, particularly with regard to sales of the daily newspaper, advertising revenue and the
performance of the professional publishing segment. Such seasonality is particularly felt in the
second and third quarter of the year, which historically record the best and worst figures of the
calendar year.
The following section provides an illustration of the financial statements, with an indication of the
most significant changes and related causes for the most important items.
24 ORE GROUP
INTERIM MANAGEMENT STATEMENT SEPTEMBER 2013
31
NOTES TO THE FINANCIAL STATEMENTS
Income Statement
(1) Revenue
Revenue totalled €277,751 thousand, down €38,106 thousand on the same period of the previous
year, i.e. -12.1%, due mainly to the drop in advertising revenue, magazines and books.
IL SOLE 24 ORE GROUP REVENUE BY TYPE
(in thousands of euro) Jan-Sep 2013 Jan-Sep 2012 Change % change
Advertising 89,990 107,273 (17,283) -16.1%
Daily newspapers 42,581 51,253 (8,672) -16.9%
Magazines 21,659 32,260 (10,601) -32.9%
Software 41,789 42,922 (1,133) -2.6%
Electronic publishing 31,215 26,779 4,435 16.6%
IT services 11,250 10,190 1,060 10.4%
Add-ons 4,323 5,918 (1,595) -27.0%
Books 4,963 6,500 (1,538) -23.7%
Conferences and Training 16,990 15,812 1,178 7.5%
Other products and services 12,993 16,949 (3,956) -23.3%
Total 277,751 315,856 (38,106) -12.1%
The breakdown by operating segment is provided below.
REVENUE BY OPERATING SEGMENT
(in thousands of euro) Jan-Sep 2013 Jan-Sep 2012 Change % change
Publishing 125,736 152,229 (26,493) -17.4%
System 79,488 93,342 (13,854) -14.8%
Tax & Legal 49,700 57,906 (8,206) -14.2%
Software Solutions Area 44,635 46,078 (1,443) -3.1%
Training 16,669 16,094 575 3.6%
Radio Area 9,346 10,228 (882) -8.6%
Culture Area 6,148 9,261 (3,113) -33.6%
Other areas 1,606 1,519 87 5.7%
Eliminations (55,578) (70,802) 15,224 21.5%
Group (Consolidated) 277,751 315,856 (38,106) -12.1%
24 ORE GROUP
INTERIM MANAGEMENT STATEMENT SEPTEMBER 2013
32
(2) Personnel
Personnel expense was €104,049 thousand, compared to €117,534 thousand for the same period last
year.
The €13,485 thousand improvement (11.5%), of which €5,472 thousand was due to the effect of the
employee solidarity agreements and to the decrease in the average headcount by 45 staff compared
to 30 September 2012, added to which is the decrease in short-term contract personnel by 36 staff.
Employees as at 30 September 2013 were 1,826, compared with 1,868 at 30 September 2012.
The number of employees by category is as follows:
EMPLOYEES
AVERAGE HEADCOUNT Jan-Sep 2013 Jan-Sep 2012 Change
Number % Number % Number %
Managers 74.5 4.1% 81.6 4.4% (7.1) -8.7%
Journalists 390.3 21.5% 398.0 21.4% (7.7) -1.9%
White collars 1,249.5 68.9% 1,268.0 68.2% (18.4) -1.5%
Blue collars 98.6 5.4% 110.3 5.9% (11.8) -10.7%
Total 1,812.9 100.0% 1,857.9 100.0% (45.0) -2.4%
(3) Gross operating profit (loss)
The interim result of gross operating profit (EBITDA) before depreciation and amortisation,
impairment losses on fixed assets and capital gains/losses from asset disposals, was negative at
€18,847 thousand, up by €1,193 thousand on the same period of the previous year.
As well as to the decrease in personnel expense already mentioned, the positive change in the gross
operating profit/loss of €1,193 thousand derives from:
- an increase in internally-generated assets of €1,338 thousand, referring to the capitalisation
of software project development costs;
- costs for services, as a result of the digital strategy implemented by the Group, decreased by
€13,571 thousand, particularly due to the effect of lower distribution costs by €5,232
thousand (-17.7%), of which €4,119 thousand relating to the daily newspaper; a decrease in
printing costs of €6,206 thousand due to lower volumes and to review of the production
structure; commissions and other selling expenses down by €2,702 thousand; a decrease in
advertising and promotion costs by €1,892 thousand;
- costs for raw materials and consumables decreased by €5,258 thousand, mainly due to the
lower volumes produced;
- other operating costs fell by €3,492 thousand, largely referring to royalties down by €1,600
thousand and to charges relating to pro bono collections in favour of areas hit by the
earthquake in the Emilia Romagna region, that were present in 2012 but not during the
current year.
24 ORE GROUP
INTERIM MANAGEMENT STATEMENT SEPTEMBER 2013
33
Note the increase in advertising fees to third party publishers of €4,135 thousand, directly
associated with the increase in revenue on third party titles under licence.
(4) Operating profit (loss)
The operating loss was €35,273 thousand, an improvement of €669 thousand compared to the same
period of the previous year.
The total depreciation, amortisation and impairment losses for the first nine months of 2013 was
€16,455 thousand, compared with the €15,919 thousand recorded in 2012.
(5) Financial income (expenses)
FINANCIAL INCOME (EXPENSES)
(in thousands of euro) Jan-Sep 2013 Jan-Sep 2012 Change % change
Financial income from investment of surplus cash 40 336 (297) -88.2%
Other financial income 84 114 (30) -26.3%
Foreign exchange gains - 3 (3) -100.0%
Total income 124 453 (329) -72.7%
Foreign exchange losses (30) (32) 2 6.3%
Financial expenses on short-term borrowings (784) (63) (721) -1149.9%
Financial expenses on medium-/long-term borrowings 35 (44) 79 180.3%
Other financial expenses (686) (334) (352) -105.6%
Total expenses (1,464) (472) (992) -210.0%
Total (1,341) (19) (1,321) INSIG.
Net financial income and expenses were negative for €1,341 thousand and are broken down as
follows:
- financial income of €124 thousand on cash resources. It was €329 thousand lower than in
the same period of the previous year because of the decline in financial income relating to
lower average liquidity in the period;
- financial expenses, amounting to €1.464 thousand, rose mainly as a result of the increase in
financial expenses on short-term borrowings in relation to the greater use of current account
overdrafts and short-term credit facilities, and due to the securitisation of trade receivables.
(6) Income taxes
Income taxes are calculated using the rate expected to be applied at the end of the year. The
resulting total was positive due to the allocation of deferred tax assets allocated against the loss for
the period, despite the impact of IRAP which also affects part of the labour costs and financial
expenses.
Taxes for the period therefore totalled €6,040 thousand compared with an income of €11,627
thousand in the same period of 2012. Compared with the previous year, the decrease in the tax
burden stemmed mainly from the non-recurring income from realignment recorded in the same
period last year.
24 ORE GROUP
INTERIM MANAGEMENT STATEMENT SEPTEMBER 2013
34
There is no material difference in the tax rates applied to the various companies of the Group. No
foreign company benefits from preferential tax treatment. For the foreign shareholdings, Italian
taxes have been allocated and are to be paid upon the distribution of dividends.
No company has calculated taxes on reserves taxable on distribution as there are no plans for their
distribution either this year or in coming years.
Statement of financial position
The statement of financial position can be summarised in the following items: HIGHLIGHTS OF THE STATEMENT OF FINANCIAL POSITION
(in thousands of euro) 30.09.2013 31.12.2012
Non-current assets 310,204 306,990
Current assets 172,165 200,333
Non-current assets held for sale - -
Total assets 482,369 507,323
Equity attributable to owners of the parent 169,355 199,447
Equity attributable to non-controlling interests (2,993) (2,495)
Total equity 166,362 196,953
Non-current liabilities 60,346 65,081
Current liabilities 255,661 245,289
Non-current liabilities held for sale - -
Total liabilities 316,007 310,370
Total equity and liabilities 482,369 507,323
(7) Non-current assets
Non-current assets amounted to €310,204 thousand compared to €306,990 thousand at 31
December 2012, up €3,214 thousand.
Property, plant, equipment and intangible assets decreased by €4,191 thousand due to the
amortisation of intangible assets and depreciation of property, plant and equipment for €16,454
thousand, partially offset by the investments, for €12,326 thousand overall.
The €7,722 thousand increase in deferred tax assets refers to the higher tax losses. Deferred taxes
net of liabilities amounted to €65.658 thousand and the deferred tax assets can be used without time
limits and are considered recoverable.
The changes in property, plant, equipment and intangible assets at 30 September 2013 were as
follows:
24 ORE GROUP
INTERIM MANAGEMENT STATEMENT SEPTEMBER 2013
35
PROPERTY, PLANT, EQUIPMENT AND INTANGIBLE ASSETS
Opening
balance
Purchases
Disposals Amort.
Reclassifications
and otjerchanges
Impairment Changes in consolidated
companies
Closing balance
Property, plant and equipment 74,001 2,814 (42) (7,728) (9) - (4) 69,032
Intangible assets 82,164 9,513 (4) (8,726) 6 - (10) 82,942
Totale 156,165 12,326 (47) (16,454) (3) - (13) 151,975
Investments in intangible assets amounted to €9.513 thousand and refer mainly to software for
management and administration systems.
The investments in property, plant and equipment totalled €2,814 thousand and relate mainly to
hardware, production plants at factories and leased properties.
Depreciation of property, plant and equipment and amortisation of intangible assets amounted to
€16,454 thousand, calculated in relation to their estimated useful life, which did not change
compared to the latest approved financial statements. Amortisation commences from the start of
use.
With regard to goodwill recognised to the financial statements at 30 September 2013, there have
been no changes since the latest approved financial statements.
(8) Current assets
Current assets amounted to €172,165 thousand compared to €200,333 thousand at the beginning of
the year, recording a decrease of €28,168 thousand. Inventories dropped by €7,351 thousand. Trade
receivables were down by €24,594 thousand, also due to the effect of the securitisation. The impact
at 30 September 2013 of the factoring without recourse of trade receivables was €14,059 thousand.
Other receivables increased by €4,240 thousand, of which €2,700 thousand due to receivables from
social security institutions in relation to the solidarity agreements.
24 ORE GROUP
INTERIM MANAGEMENT STATEMENT SEPTEMBER 2013
36
(9) Equity
The equity of the Group totalled €166,362 thousand, recording a decrease compared to the financial
statements at 31 December 2012 due to the following changes:
STATEMENT OF CHANGES IN EQUITY
(in thousands of euro) Share capital
Equity reserves
Revaluation reserves
Hedging and
translation reserves
Other reserves
Retained earnings/Loss
brought forward
Profit (loss) for the period
Equity attributable
to owners of the
parent
Equity attributable
to non-controlling
interests
Total equity
Balance at 31 December 2012 35,124 180,316 20,561 (193) 22,250 (12,857) (45,755) 199,447 (2,495) 196,953
Reserve for post-employment benefits for IFRS adjustment 240 240 1 241
Fair value changes in hedging instruments 121 121 121
Taxes on expenses and income recognised in equity (33) (67) (100) (100) Total income/expenses recognised directly in equity - - - 87 173 - - 261 1 262
Profit (loss) for the period - - - - - - (30,353) (30,353) (456) (30,809)
Total income/expenses recognised in the period - - - 87 173 - (30,353) (30,092) (455) (30,547)
Change in 2012 profit (loss) - - (20,561) - (8,008) (17,186) 45,755 - - -
Dividends - - - - - - - - (132) (132) Acquisitions and Change in % held of investments - - - - - - - - 58 58
Other changes - - - - - - - - 31 31
Balance at 30 September 2013 35,124 180,316 - (105) 14,416 (30,043) (30,353) 169,355 (2,993) 166,362
(10) Non-current liabilities
Non-current liabilities amounted to €60,346 thousand, compared with €65,081 thousand at the
beginning of the year, with a decrease of €4,735 thousand due mainly to the repayment of loan
instalments for €1.2 million.
(11) Current liabilities
Current liabilities amounted to €255,661 thousand, up €10,372 thousand compared to €245,289
thousand at the start of the year. Bank overdrafts and loans increased by €51,337 thousand. The
change is partly offset by a decrease of €23,891 thousand in trade payables and of €16,953 thousand
in other current liabilities. Of particular note are the payables to personnel for reorganisation which
decreased by €7,980 thousand, falling from €10,500 thousand at 31 December 2012 to €2,520
thousand at 30 September 2013.
24 ORE GROUP
INTERIM MANAGEMENT STATEMENT SEPTEMBER 2013
37
(12) Statement of cash flows
Total cash flow was negative by €25.5 million compared to the cash flow for the same period last
year (positive by €4.7 million), which had benefited from the proceeds of extinction of the MPS life
insurance policy.
Net cash used in operating activities was negative by €39.4 million, compared to the negative
cash flow of €1.3 million the previous year. This result is due mainly to the operating loss and to the
negative performance of net working capital for €18.4 million, of which €24.7 million referring to
the decline in trade receivables, €23.9 million to the decrease in trade payables, €26.6 million to the
downward change in other assets and liabilities and €7.3 million to the positive change in
inventories. Other changes in net working capital amounting to €-25.5 million are attributable to the
financial effects of the reorganisation, the economic effects of which were recorded in the previous
year, and to changes in accrued liabilities and deferred income also associated with seasonal
phenomena.
Net cash used in investing activities was negative at €13.4 million, compared to €11.6 million the
previous year, consisting mainly of operating investments.
Cash flow from financing activities was positive by €27.3 million, compared to the positive €17.3
million recorded last year, largely due to the effect of the securitisation of trade receivables.
(13) Net financial position
The net financial position was negative by €48.5 million at 30 September 2013 (€5.3 million at 31
December 2012). Cash and cash equivalents decreased and short-term bank borrowings increased in
relation to the cash flow trend already discussed in the Statement of cash flows and to the
securitisation of trade receivables. Medium-long term indebtedness decreased following repayment
of the amount due during the period for subsidised loans.
24 ORE GROUP
INTERIM MANAGEMENT STATEMENT SEPTEMBER 2013
38
Seasonality of Group business
The Group’s business is subject to seasonality, consisting of a slowdown in revenues – both from
circulation and, above all, advertising – in the summertime.
QUARTERLY RESULTS
(in thousands of euro) 1st quarter
2012 2nd quarter
2012 3rd quarter
2012 4th quarter
2012 1st quarter
2013 2nd quarter
2013 3rd quarter
2013
Revenue 113,977 115,613 86,267 115,004 98,806 99,139 79,806
Gross operating profit (loss) (2,402) (1,800) (15,838) (21,628) (6,669) (7,116) (5,062)
Operating profit (loss) (7,631) (7,071) (21,240) (38,712) (12,198) (12,669) (10,406)
The figures illustrated above are merely provided for reference purposes and may not be used in
forecasting future results.
OUTLOOK
The recession continues to have a negative impact on revenue and on publishing industry margins.
According to major economic research centres, Italy is unlikely to see a clear inversion of the
economic trend and in falling consumption in the final quarter of the year.
In this context, with regard to advertising revenue no significant changes are forecast in the current
trend, even though the decline in advertising could be more limited than in previous quarters despite
remaining characterised by strong volatility. Much of the action taken (digital development strategy
targeting all customer segments, the focus on and enhancement of all the Group’s publishing
content, the cost containment measures already adopted, rationalisation of the production and
administrative structure, the design and development of communications solutions for major
advertising customers) has begun to produce its effects, limiting the impact of the decline in
advertising revenue. In addition to these measures already launched, further efficiency-enhancing
action is currently at definition stage.
At present, and in the absence of events which cannot as yet be predicted, the Group continues to
carefully monitor the reference scenario - still characterised by a high degree of uncertainty - and
the specific situation. Consequently, it is assumed that the current year will close with a drop in
revenue compared to the previous year and with an operating loss that is more limited due to the
action taken both in terms of the digital development strategy and in cost containment.
Nevertheless, it could prove necessary to record non-recurring expenses in relation to the
implementation of further efficiency-enhancing and rationalisation action.
Milan, 13 November 2013
The Chairman of the Board of Directors
Benito BENEDINI
(signed on the original)
24 ORE GROUP
INTERIM MANAGEMENT STATEMENT SEPTEMBER 2013
39
Declaration pursuant to art. 154-bis, paragraph 2, Italian Legislative Decree no. 58 of 24 February 1998, as amended
The Corporate Financial Reporting Manager, Valentina Montanari, hereby certifies that the
economic and financial data in this interim management statement is consistent with the corporate
books and accounting records.
Milan, 13 November 2013
Corporate financial reporting manager
Valentina MONTANARI
(signed on the original)