Leader in the Italian daily press
No.1 paid circulation 19% market share
Co-leader in newsmagazines, developing a new concept of quality magazines
NATIONAL DAILY
La Repubblica
circ. 623,000 read. 2,673,000 MAGAZINEL’espresso
circ. 388,000 read. 2,369,000 +4 other titles RADIO 3 nat’l stations 6,8 mln listns. comb. ADVERTISINGSales for Group’s titles & third parties
LOCAL NEWSPAPER 16 dailies + 1 bi-weekly circ. 490,000 comb. read. 3,158,000 Sources: Audiradio 2002 (radio);
Readership: Audipress Autumn 2001 Circulation: Company data (dailies, magazines) 2002
Redsheriff (January 2003, internet)
Gruppo Editoriale
L’Espresso
Spa
http://www.gruppoespresso.it
INTERNET
Kataweb
192 millions monthly pageviews 4,3 mln unique users
No. 1 advertising “regie” for print media: gross adv. revenues 2002= 587 millions of euro (E) 8.0% of total market in Italy, 17.6% of print market), of which 3.9% for third parties
➧
Circulation 388,000
➧
2,369,000 readers per issue
over 46% from upper socio-economic classes over 66% college and university graduates
➧
Circulation 623,000
➧
2,673,000 readers per day
college and university graduates
members of the upper socio-economic classes,
high ranking professionals and decision makers
➧
Circulation 490,000
➧
3,158,000 readers per day
R A D I O
Age-group target: teenagers
➧
5.2 mln. daily listeners
➧over 54% are under 24 years old
➧over 44% are students
Age-group target: 24 - 40 years old
➧
1.6 mln daily listeners
➧over 59% are over 24 years old
Age-group target: youngest teenagers
➧
0.5 mln daily listeners
Source: Audiradio 2002; Company Estimate (M2O)
N .1 CO MM ERC IAL RADIO IN ITALY
M A G A Z I N E S
➧
Circulation 134,000
➧
Circulation 66,000
➧
Circulation 47,000
FINANCIAL HIGHLIGHTS
CONSOLIDATED RESULTS
in millions of € 2000 2001 2002 change 02/01 Revenues 952.7 923.1 963.7 4.4% - Circulation 297.2 310.9 398.7 - Advertising 613.9 577.1 527.9 - Other revenues 41.6 35.1 37.0Newsprint & paper 122.7 127.8 109.8 Other Operating Costs 471.6 419.2 426.6
Personnel 232.5 245.4 246.4
EBITDA 125.9 130.7 180.8 38.3%
Depreciation & Amortization 56.0 57.0 58.4
EBIT 69.9 73.7 122.4 66.0%
Profit before taxes 190.2 49.7 107.7
Net Profit 128.7 1.1 46.1
Net Financial Position -61.3 -111.2 -62.9 Capital Employed (*) 592.0 601.8 567.1 of which goodwill 304.6 295.2 285.7
EBITDA Margin 13.2% 14.2% 18.8%
EBIT Margin 7.3% 8.0% 12.7%
R.O.C.E. 11.8% 12.3% 21.6%
Profit per employee (000' €) 36.67 0.32 14.24
Eps (€) 0.30 0,11
FINANCIAL HIGHLIGHTS
CONSOLIDATED RESULTS
in millions of € 2000 2001 2002 2002 2003 2002 2003
Jan-Dec Jan-Dec Jan-Dec Jan-Sept Jan-Sept 3Q 3Q
Revenues 952.7 923.1 963.7 704.2 722,0 210.3 234.2
- Circulation 297.2 310.9 398.7 304.7 326.4 102.4 120.9 - Advertising 613.9 577.1 527.9 373.6 371.6 99.6 106.3 - Other revenues 41.6 35.1 37.0 26,0 24,0 8.3 6.9 Newsprint & paper 122.7 127.8 109.8 -81.4 -75.7 -26.3 -24.2 Other Operating Costs 471.6 419.2 426.6 320.3 323.2 99,0 106.8 Personnel 232.5 245.4 246.4 -183.2 -183.9 -54.9 -55.2
EBITDA 125.9 130.7 180.8 119.2 139.2 30.1 47.9
Depreciation & Amortization 56.0 57.0 58.4 40.9 40.8 15.2 13.8
EBIT 69.9 73.7 122.4 78.3 98.5 15,0 34.1
Profit before taxes 190.2 49.7 107.7 76.5 73.7 11.3 23,0
Net Profit 128.7 1.1 46.1 27.5 35,0 0.2 9.4
Net Financial Position -61.3 -111.2 -62.9 -104.3 -58.6
EBITDA Margin 13.2% 14.2% 18.8% 16.9% 19.2% 14.3% 20.4% EBIT Margin 7.3% 8.0% 12.7% 11.1% 13.6% 7.1% 14.5%
CONTRIBUTION TO YEAR 2002 CONSOLIDATED RESULTS
REVENUES
€
963.7
M
EBIT
€
122.4
M
(EBIT MARGIN
12.7%
)
Divisional data has been adjusted to account for advertising & service companies revenues and results Divisional EBIT are calculated on a combined operating profit that doesn’t include negative figures (internet)
Repubblica's Books 28.1% 47.5% Repubblica's Magazines 6.0% 9.7% La Repubblica 29.7% 13.2% Radios and television 4.2% 11.7% Magazines 6.9% 10.0% Local Newspapers 25.1% 14.5% Internet 2.6% 25 Local Newspapers 26.3% 253 Magazines 10.5%
101 Advertising for third parties
2.7% 26 Radios and television 5.5% 53 La Repubblica 34.1% 328 Repubblica's Books 9.0% 87 Repubblica's Magazines 9.4% 90
MARKET OVERVIEW
THE ADVERTISING MARKET IN ITALY
2002 Espresso Market Newspapers -6.3 -7.9 Magazines -14.7 -12.5 TV - +0.5 Radio -5.0 -9.4 Total revenues (*) -8.5 -3.5 Radio 3.8% Print (Newspapers + Magazines) 39.4% Outdoor 2.4% Cinema 1.1% TV 53.3%
Source: AC Nielsen/FCP (for newspapers and magazines) (*) excluding internet
OUR SHARE 20.1%
OUR SHARE 17.9%
MARKET OVERVIEW
TOTAL ADVERTISING EXPENDITURE/GDP
Source: Zenith, Year 2001
1,73 1,30 1,05 1,03 1,00 0,91 0,88 0,82 0,80 0,77 0,75 0,73 0,72 0,67 0,65 0,57 0 0,2 0,4 0,6 0,8 1 1,2 1,4 1,6 1,8 Portugal USA U.K. Switzerland Norway Austria Germany Denmark Spain Canada Sweden Netherlands Belgium France Italy Ireland European Average 0.85%
K E Y S T R A T E G I E S
➧ The end of the Internet magics and the advertising downturn have been faced by l’Espresso Group with specific actions aimed to partially offset the effects of the crisis:
➧ a cost cutting plan has been the first step undertaken in order to offset the reduced (compared to forecasts) revenues and to keep margins in target
➧ a significant reduction of Internet losses (and a refocusings of its business model) has kept Kataweb’s cash disbursement within a range acceptable for the Group’s resources and consistent with the nearing of break-even, before Kataweb can play its role in the now cleared internet scenario and market picks up again
➧ Meanwhile investments are kept under control and focused in a way to guarantee future development in all key areas
➧ New sources of revenues are sought after: exploiting the strenght of the Group’s brands to sell products consistent with our position in the market (books, records, DVDs)
K E Y S T R A T E G I E S
➧ L’Espresso Group’s core business is in daily newspapers. We are focused on keeping our leadership, maintaining editorial quality, exploiting our unique position as “opposition” newspapers, taking advantage of the lenght of the current recession to complete plans for new generation-high-tech-labor-saving presses that will enable La Repubblica to print up to 128 pages in color in order to meet, when growth will require additional capacity, the renewed demand of advertising
Local newspapers capacity of 16 color pages will be enhanced by using “old” Repubblica units, so that it will be sufficient for the next 5 to 10 years. Local newspapers are keeping their pace towards rewarding profitability, which increased even in 2001/2002 thanks to a limited growth of revenues and tight cost control
➧ L’Espresso Group plays a significant role also at the top of the magazine market with a stand alone title, L’espresso, and with the magazines circulated as supplements of La Repubblica. In this field there are opportunities (youth) that we are preparing ourselves to exploit, as soon as the market recovers, with new titles and repositioning of existing ones
K E Y S T R A T E G I E S
➧ Our diversification process has seen radio as the key element, starting at the end of the ‘80s. Two new radio stations have been acquired in the last 5 years. Their growth in terms of audience and therefore of advertising revenues will be the key to a strong increase in profitability
New developments are under way throught cheap (but with high growth potential) acquisitions in Eastern Europe
➧ We entered the satellite TV domain, with a brand extention approach: tv channels will cover areas where our titles are strong. The natural development of Radio DJ leadership is DJ TV, which was launched in February 2001. New channels will be launched, again as brand extension, when market will allow. DJ TV is also broadcast via internet
➧ Internet is another main area of development, along three lines: a) brand extension of our printed titles; b) establishment of the brand Kataweb, to attract additional “profiled” unique users and generate additional contacts; c) mixing contents and web solutions in integrated offers to third parties
THE ONLY NEWSPAPER
READ THROUGHOUT ITALY
REPUBBLICA
CORRIERE DELLA SERA
NW 22%
56%NW
NE 21%
15%NE
C
31%
15% C
LA REPUBBLICA
2,673,000
READERS EVERY DAY
OVER 35%ARE UNDER 34 YEARS OLD
THE MAJORITY OF READERS CONSIST OF:
•COLLEGE AND UNIVERSITY GRADUATES
•MEMBERS OF THE UPPER SOCIO-ECONOMIC CLASSES •HIGH RANKING
PROFESSIONALS
OVER 30%OF READERS
ARE ALSO DECISION MAKERS IN BUSINESS
- La Repubblica - Il Venerdì - Affari & Finanza - Musica - Salute - D (Women’s supplement)
LOCAL
NEWSPAPERS
3,158,000
READERS EVERY D - Il Tirreno - La Nuova Sardegna - Il Mattino di Padova - La Tribuna di Treviso - La Nuova Venezia - La Provincia Pavese - Il Centro - La Gazzetta di Mantova - La Gazzetta di Reggio - La Gazzetta di Modena - La Nuova Ferrara - Alto Adige- Corriere delle Alpi - La Città di Salerno - Il Piccolo
- Messaggero Veneto - Sentinella del Canavese
L’ESPRESSO
2,239,000
READERS PER ISSUE
36% ARE UNDER 34 YEARS OLD
OVER 46% ARE FROM UPPER SOCIO-ECONOMIC CLASSES
Over 66% ARE COLLEGE AND UNIVERSITY GRADUATES
- L’Espresso
- Nat’l Geographic (Italian) - MicroMega - Limes - Le Scienze (Scientific American)
RADIO
6,800,000
LISTENERS EVERY DAY
OVER 54% OF RADIO DEEJAY’S LISTENERS ARE UNDER 24
YEARS OLD AND OVER 44%
ARE STUDENTS
OVER 59% OF RADIO CAPITAL’S LISTENERS ARE OVER 24
YEARS OLD
- Radio DeeJay - Radio Capital
LOCAL NEWSPAPERS
A NETWORK AT WORK
Average daily circulation 2002 (Company data)
NUOVA SARDEGNA 61,534 GAZZETTA DI MANTOVA 36,068 NUOVA VENEZIA 10,541 TRIBUNA DI TREVISO 18,484 NUOVA FERRARA 12,573 GAZZETTA DI MODENA 12,685 GAZZETTA DI REGGIO 15,523 CENTRAL NEWS AGENCY (A.G.L.) PROVINCIA PAVESE 24,247 IL TIRRENO 87,168 MATTINO DI PADOVA 29,956 ALTO ADIGE 33,903 CORRIERE DELLE ALPI 5,136 IL CENTRO 23,485 LA CITTÀ DI SALERNO 6,533 IL PICCOLO 46,701 IL NUOVO MESSAGGERO VENETO 52,611
CONTRIBUTION TO RESULTS
MAGAZINES
(L’ESPRESSO + NATIONAL GEOGRAPHIC)Nat.’l Geographic magazine only in millions of € 2001 2002 2001 2002 Total revenues 107.1 98.6 9.2 8.8 - circulation 66.5 61.2 - advertising 37.6 33.4 Operating profit 9.5 8.3 1.5 1.6
Adjusted Op. profit 12.3 10.1 adj. Margin 11.3% 10.0%
adj. ROCE 60.9% 54.9%
Adjusted Capital employed (*) 20.3 18.3
(*) gross of employee severance funds
The adjusted data takes into account the titles’ share of advertising and service companies revenues, results and capital employed
CONTRIBUTION TO RESULTS
LA REPUBBLICA
in millions of € 2001 2002 Total revenues 429.5 481.1 - circulation 143.1 228.5 - advertising 280.2 246.2 Operating profit 51.5 89.3Adjusted Op. profit 59.7 93.2
adj. Margin 13.0% 18.4%
adj. ROCE 22.5% 35.6%
Adjusted Capital employed (*) 266.0 262.1
CONTRIBUTION TO RESULTS
LOCAL NEWSPAPERS
in millions of € 2001 2002 Total revenues 233.8 239.3 - circulation 103.7 113.2 - advertising 107.7 106.3 Operating profit (*) 30.2 36.8Adjusted Op. profit 31.3 36.7
adj. Margin 12.6% 14.5%
adj. ROCE 13.5% 16.6%
Adjusted Capital employed (**) 231.8 220.8
(*) operating profit data takes into account the amortization of consolidated goodwill (**) gross of employee severance funds
The adjusted data takes into account the titles’ share of advertising and service companies revenues, results and capital employed
CONTRIBUTION TO RESULTS
RADIO AND TELEVISION
Radio Deejay only
in millions of € 2001 2002 2001 2002
Total revenues 49.8 48.9 40.6 39.4
Operating profit 6.0 7.0 18.4 16.0
Adjusted Op. profit 5.0 6.2 18.9 16.0
adj. Margin 9.3% 11.7% 46.0% 40.7%
adj. ROCE 8.9% 11.8%
Adjusted Capital employed (*) 56.5 52.6
(*) gross of employee severance funds
The adjusted data takes into account the title's share of advertising and service companies revenues, results and capital employed
CONTRIBUTION TO RESULTS
INTERNET
in millions of € 2001 2002 Total revenues 27.1 25.9 - advertising 10.7 8.0 - other revenues 16.4 17.9Gross Operating profit (loss) (27.0) (14.0)
Operating profit (loss) (34.8) (23.7)
Adjusted Op. profit (loss) (34.7) (23.7)
Adjusted Capital employed (*) 25.9 13.2
Number of Employees as of dec. 31 343 268 (*) gross of employee severance funds
The adjusted data takes into account the title's share of advertising and service companies revenues, results and capital employed
MAJOR ACCOMPLISHMENTS
OF L’ESPRESSO GROUP SINCE 1992
CUTS/REORGANIZATION
GROWTH/DEVELOPMENT
NUOVA SARDEGNA
New editorial system personnel - 20
MANZONI
Elimination of non profitable third party titles
STEC (*)
Reorganization in printing plant & new videopagination (18 days of strike) personnel - 70
First test of multimedia products
•technologies (videopagination) •videocassettes/CD by Edizioni La Repubblica MANZONI Reorganization personnel - 50 TIRRENO
Downsizing (from 3 to 2 presses) and new technologies
personnel - 30
REPUBBLICA
Monday edition of La Repubblica with no additional personnel
MANZONI
Advertising: flexibility in commercial policy, keeping prices high
(Rome printer for La Repubblica)
1992
1994 1993
MAJOR ACCOMPLISHMENTS
OF L’ESPRESSO GROUP SINCE 1992
CUTS/REORGANIZATION
GROWTH/DEVELOPMENT
REPUBBLICA
Layoff of 32 employees
L’ESPRESSO GROUP
Total labour cost: +1% against automatic wage adjustments +5%
REDUCTION OF PAGINATION Repubblica: - 7 vs 1992 Finegil: - 3 vs 1992 Espresso: -20 vs 1992 CPS Reorganization personnel -12 REPUBBLICA
New supplements: (Musica - Salute) Printing in colour
26 €mln investments +15 € mln advertising
+ 3 € mln operating profit margin
VIDEOCASSETTES Espresso Repubblica 1995 GMP (Free Press) Reorganization closing of 8 titles personnel - 20
EQV (Veneto regional newspapers)
Repubblica
New Women’s Supplement 1996
MAJOR ACCOMPLISHMENTS
OF L’ESPRESSO GROUP SINCE 1992
CUTS/REORGANIZATION
GROWTH/DEVELOPMENT
ESPRESSO
New launch of New York Review of Books (Rivista dei Libri)
FINEGIL
Acquisition of la Nuova Sardegna minority share Acquisition of la Città di Salerno
ELEMEDIA
Acquisition of Radio Capital
Acquisition of ERRE DJ minority share
REPUBBLICA
New supplements: Computer Valley, Viaggi New local edition in Palermo
1997
ESPRESSO/REPUBBLICA
Merger between Editoriale L’Espresso SpA and Editoriale La Repubblica SpA into Gruppo Editoriale L’Espresso SpA
ELEMEDIA
Merger between Erre DJ, Radio Capital and Italia Radio
REPUBBLICA
Launch of italian edition of National Geographic magazine
ELEMEDIA
Acquisition of Italia Radio
LOCAL DAILIES
Acquisition of Il Piccolo and Il Messaggero Veneto 1998
MAJOR ACCOMPLISHMENTS
OF L’ESPRESSO GROUP SINCE 1992
CUTS/REORGANIZATION
GROWTH/DEVELOPMENT
GMP
Downsizing throught disposal of non profitable titles
KATAWEB
Establishment of the company, fully dedicated to Internet: development of advertising and e-commerce
1999
LOCAL DAILIES
Merger of Messaggero Veneto and Piccolo, local newspapers of Udine and Trieste, in the North of Italy
FREE PRESS
Merger of Free Press into Manzoni with strong reduction of activities: sale of 12 publications and reduction of 48
employees
ELE TV
Start–up of EleTv, active in theme television channels
LOCAL DAILIES
Acquisition of a 35% of “Libertà”, local newspaper of Piacenza, in the North of Italy 2000
MAJOR ACCOMPLISHMENTS
OF L’ESPRESSO GROUP SINCE 1992
CUTS/REORGANIZATION
GROWTH/DEVELOPMENT
KATAWEB
Downsizing through disposals,
cancellation of projects, reorganisation and concentration on activities more related to Group’s core business
COST CUTTING ACTIONS
Implemented in all divisions in order to offset downturn of advertising market
COST CUTTING ACTIONS
Continued in all divisions, with major focus on Kataweb, paper consumption, personnel and promotional costs
LA REPUBBLICA’s BOOKS
Launch of a series of50 titles, offered as options with la Repubblica at €4,90, as a strategy of brand-extension and reader’s quality exploitation
RADIO
Acquisition of two radio stations in Eastern European Countries
ELEMEDIA
Launch of DJ TV
2002 2001
HIGHLIGHTS
PERSONNEL
Number of Employees 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Payroll Employees 2,709 2,653 2,637 2,555 2,507 2,458 2,447 2,460 2,481 2,547 2,512 Contractors’ 635 622 606 531 519 504 491 501 507 419 418 3,344 3,275 3,243 3,086 3,026 2,962 2,938 2,961 2,988 2,966 2,930Women’s magazine, Viaggi 25 44 49 46 50 51 51
Radio Capital + m2o+ La Città+ Nat’l Geographic 72 101 102 125 123 103
Il Piccolo, Messaggero Veneto 333 329 347 330 316
Internet (incl. acquisitions) 165 495 343 268
MARKET OVERVIEW
NEWSPAPERS CIRCULATION
IN ITALY
5,342 6,068 6,809 5,977 5,890 5,894 5,881 5,913 6,073 6,0575,888 -1,000 2,000 3,000 4,000 5,000 6,000 7,000 1980 1985 1990 1995 1996 1997 1998 1999 2000 2001 2002Average Circulation Average daily n. copies readers
‘000 ‘000
Corriere della Sera 679.8 2,825
la Repubblica 623.4 2,673 Espresso Group Local Dailies 490.5 3,158
La Gazzetta dello Sport 440.7 3,115 Il Sole 24 Ore 407.8 1,515 La Stampa 387.1 1,82 Il Messaggero 268.7 1,365 Il Giornale 218.7 904 Il Gazzettino 121.5 739 Il Secolo XIX 119.5 592 Il Mattino 99.3 774 Avvenire 97.0 229 Unione Sarda 65.4 282 Il Giornale di Sicilia 63.7 430 La Gazzetta del Mezzogiorno 59.8 557
Il Tempo 50.3 331 Others 1,694.8 10,322 Total (E) 5,888.0 29,993 Our Share 18.9% 19.4% EVOLUTION OF DAILY NEWSPAPERS CIRCULATION
AVERAGE DAILY SALES (‘000 COPIES)
MAJOR NEWSPAPERS SOLD IN ITALY
MARKET OVERVIEW
MAIN PRIVATE RADIO STATIONS
Commercial Nat’l Radio
Daily Listeners Station (x ,000) Deejay 5,209 RTL 102.5 4,267 Dimensione Suono 4,092 Rete105 3,168 Radio Montecarlo 2,176 Italia Network 2,002 Radio Capital 1,589 Radio Maria 1,588
Radio 24 Il Sole 24 Ore 1,433
Kiss Kiss 1,071
One o One (101) 989
Radio Radicale 463
m2o 450 (*)
