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Article Excerpt
Original Source: FD (FAIR DISCLOSURE) WIRE
OPERATOR: Good afternoon this is the Chorus Call conference operator. Welcome and thank you for joining Mondadori nine month 2007 results conference call. As a reminder all participants are in listen-only mode. After the presentation there will be an opportunity to ask questions.
(OPERATOR INSTRUCTIONS).
At this time I would like to turn the conference over to Mr. Carlo Maria Vismara, CFO of Mondadori, please go ahead sir.
CARLO MARIA VISMARA, CFO, MONDADORI (ARNOLDO) EDITORE SP: Thank you very much. Welcome to everybody, to this presentation on the first nine months 2007 of Mondadori. Starting from the market, we face -- we are facing this -- more or less the same trends in the market, we are used to see this here. That means for Books, stable in terms of value with a slight fall in copies and for Magazines it's a decrease of 5.8% in terms of volume. And for add-on sales, minus 17.7%. We are making the comparison with volume for circulation due the fact that the other figure relating to the value which would be minus 10.4% for the market is calculated in a different way where related to Mondadori. So from now on we will face only in terms of volume for Magazines.
As you remember in the first six months add-on sales were down by 20%, that means we have seen a slight increase in the figures in these three months. As far as advertising is concerned we had a slight improvement but we are still at plus 2.1% for Magazines, Radio continues with a 7.7% of increase and Internet is still very high, an increase of 42.9%.
In France things are doing a little better. Let's say that we have seen a slowdown in the decline of circulation minus 2.6%. If you remember in the first six months we were at minus 3.1%. And also the advertising now is more or less in line with last year with minus 1%. This is the market.
Talking about Mondadori, in the first nine months revenues were up by 16.9% thanks to the acquisition in France. But also on a like-for-like basis the figure would be up by 0.8% which you must compare with a minus 1.1% in the first six months. So that means that in the period revenues were up also on a like-for-like basis.
EBITDA is up by 15.8% with all divisions with good performances. Pre-tax profit is in line due to the higher amortization of France and Messaggerie Musicali above all and due to the financial charges resulting from our net position -- financial position and due also to the increase in the interest rates especially in the last period.
Net profit is down by 7.4%. This phenomenon is due to the composition of the pre-tax profit. That means that the impact of the companies calculated on an equity basis this year related to last year is negative.
Coming to the profit and loss, as I said before the figure by the revenues excluding France is up by 0.8%. And reclassified as you know due to the different way of recording our distribution activity it would be up by 22.3%. EBITDA is up 15.8%, EBIT 13.4%, as I said before pre-tax in line and net profit down by 7.4%.
Let's have a look to the changes in EBITDA starting from the first nine months of 2006 with EUR161.6 million. Then you see some extraordinary items that means development, which is the investment in Digital, investment in Retail which accounts for minus EUR5.5 million. The loss of our companies or the company owned by 40% which publishes Il Giornale is EUR4 million less than last year. And also we had some extraordinary impact from the deferred taxes we recorded last year on Random House, which is treated as you know at equity with equity method.
These three phenomenon in terms of EBITDA have an impact of minus EUR12 million and in terms of net profit that means minus EUR10.4 million. Then we have some positive non-recurring impact in terms of personnel due to the different way of recording the severance indemnity in the -- due to the changes in the IFRS rules. And we have the real result if you want on a like-for-like basis which is, we call efficiencies for EUR4.2 million. And then we have the difference between the EUR37.2 million EBITDA of France of this year related to nine months and the EUR5.4 million of last year, which was only September. So we come to EUR187.1 million of EBITDA.
Looking at our balance sheet, as you can see the average working capital is still less than 9% where related to revenues. The net capital employed is EUR1.1 billion more or less and it's financed by net debt at EUR622 million and net equity EUR463 million.
In the next page we have the cash flow generation. Starting from a net financial position at the end of last year net debt EUR554 million. Then we had a positive cash flow of EUR100 million and we bought shares at -- for EUR11 million. We paid dividends for EUR85 million and made investments for EUR48 million. Then the other items, which is taxation, fiscal charges and severance indemnity and so on are minus EUR27 million. And we come to minus EUR622 million of net financial position at the end of September of this year.
In the next page you have the revenues by division. As you can see Books are up 2.7%, Magazines 32% but where restated it would be minus 0.9%, then we will see when we talk about the different divisions. Advertising is up by 1%. Printing and Direct are in line. Retail is up by 28%, Radio 21% and Other 17%. So we have gross revenues up by 14%, then less intercompany, we come to 16.9% of increase.
Let's start from -- with the different divisions. So as far as Books are concerned, as you can see Trade is up 3.8%. That means that generally speaking we had an increase in our market share up to 28.4% and this is due to the performance of the Trade activity which had a plus 25% performance in the quarter. As we said before our editorial program was more balanced on the second part of the year and here you have the proof. And then you must consider that the phenomenon -- Dan Brown phenomenon was decreasing in this period last year. So the comparison is 3.8%.
As you remember in the first six months we had a minus 13% more or less in Education and we said we would have recovered by the end of September and this is the case. So you can see that now the figures are in line, plus 0.8%. Also Art & Exhibitions is performing well, plus 7%. And Distribution & Other is down by 5%. So the total revenues are up 2.7%.
Talking about Magazines, as you can see the total revenues are up by 32% and this is the split starting from net circulation, which was down by 3.3%, which is in this case due to the volume because the other two impacts of the TV guide and all the increasing prices are balanced let's say. Then we had a very good increase where related to the market in add-on sales which are still up by 1.6% and are related to a market which is declining by 17.7%. So this means a circulation down by 1%, more or less, excuse me, in line with last year.
Then Magazine advertising is still down by 3% -- 3.3% and so on a like-for-like basis the total revenues are down by 0.8%. Then you can see here how we restated last year to take into account the different way of recording our distribution activity, which means the EUR55 million last year. And then we have the revenues in France which are related for in 2006 only to September and this year for nine months.
Our development in the international network of Grazia is continuing -- is going on. As you can see now we have nine editions of Grazia and we launched Interni in Russia. Also the joint ventures which are recorded as equity, so you can see here the figures about revenues, are performing very well and especially Attica, which was already performing well in the first six months is going on with this trend also in the nine months.
So going to the, excuse me, going to the Mondadori France activity, here you have the split of the different figures of the revenues, which are more or less EUR290 million in the period. As you can see, advertising is EUR82 million -- accounts for EUR82 million, newsstands for EUR110 million and subscription for EUR87 million. So it's still one-third and one-third and one-third with newsstands which are performing a little better where related to advertising.
We still have excellent performance by -- for Closer and Autoplus which was the case also in the first six months. And we still have a stability in subscriptions which is very important. As you can see, subscription is much more important in France than in Italy.
And we started with our add-on sales activity in France. We started with some DVDs and then we launched the Cucina series at the -- on September 15. Now we are at the fifth edition and the numbers are still very, very satisfying. As far as advertising is concerned, as you know France is still a tough market but in this three -- in the last three months we could note a good recover in the figures maybe due also to the rugby, as you know, world championship which, for France, a very, very important event.
We have some extraordinary good performances from some titles. I give...
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