Gruppo 24 ORE
2009 annual financial report
2009 annual FINANCIAL report Gruppo 24 ORE
2009 annual financial report
2009 annual financial report
2 Gruppo 24 ORE
2009 annual financial report
2009 annual2009 annual FINANCIAL report financial report
3 Gruppo 24 ORE
2009 annual financial report
Gruppo 24 ORE Share capital EURO 35,123,787.40 fully paid in Milan companies register, Tax code and VAT no. 00777910159 Registered offices and administration: via Monte Rosa 91 - 20149 Milan - Italy Tel +39.02.3022.1 - www.gruppo24ore.com
4 Gruppo 24 ORE
2009 annual financial report
indeX
management report 8 Corporate bodies 8 Struc ture of the 24 ORE Group 10 Highlights 12 Overview of 2009 results 17 Significant events in 2009 21 Shareholders and stock performance 23 Principal risks and uncertaintie 25 Human resources 30 Environment and safety 34 Main consolidated income statement and statement of financial position figures of the 24 ORE Group 38 Segment reporting 44 Main separate income statement and statement of financial position figures of the parent 62 Other disclosures 64 Disclosure pursuant to Italian Legislative Decree 196 of 30 June 2003 (Code for Personal Data Protec tion 69 Reconciliation between consolidated and parent profit and equity 70 Disclosure pursuant to CONSOB regulation 11971, as amended 70 Subsequent events 71 Outlook 71 Proposal for covering the 2009 loss 72
CONSOLIDATED FINANCIAL STATEMENTS OF THE 24 ORE GROUP AS AT and for the year ended 31 DECEMBER 2009 75 Consolidated financial statements 76
NOTEs to the consolidated financial statements 84 1. General information 84 2. format, content, and International Accounting Standards 86 3. Struc ture of financial statements 86 4. consolidation policie 90 5. accounting policies 92
5 Gruppo 24 ORE
16. changes in accounting policies, errors, and changes in estimates 126 17. risk management 127 18. principal reasons for uncertainties in estimates 142 19. Scope of consolidation 143 10. Highlights of restated statements of financial position and income statements for subsidiaries, associates, and joint ventures 145 11. notes to the consolidated financial statement 147 12. Segment reporting 182 13. other information 185
Certification of consolidated financial statements pursuant to Article 81-ter of CONSOB Regulation no. 11971 of 14 May 1999, as amended 203
Report of the Independent Auditor on the consolidated financial statements at 31 December 2009 205
Report of the Board of Statutory Auditors to the shareholders on the consolidated financial statements as at 31 December 2009 209
separate fINANCIAL STATEMENTS OF THE PARENT “IL SOLE 24 ORE S.P.A.” as at and FOR THE YEAR ENDed 31 DECEMBER 2009 215 Separate financial statements 216
NOTES to the separate financial stetements 224 1. General information 224 2. format, content, and International Accounting Standards 225 3. Struc ture of financial statements 225 4. accounting policies 229 5. changes in accounting policies, errors, and changes in estimates 262 6. risk management 263 7. principal reasons for uncertainties in estimates 279 8. notes to the separate financial statements 280 9. other information 306
6 Gruppo 24 ORE
2009 annual financial report
Certification of financial statements pursuant to Article 81-ter of CONSOB Regulation no. 11971 of 14 May 1999 as amended 327
Report of the Independent Auditor on financial statements of the Il Sole 24 ORE S.p.A. at 31 December 2009 329
Report of the Board of Statutory Auditors to the shareholders pursuant to Article 153 of Italian Legislative Decree 58/98 and Article 2429(3) of the civil code concerning the separate financial statements for the year ended 31 December 2009 333
7 Gruppo 24 ORE
2009 annual financial report
MANAGEMENT REPORT Corporate bodies The Board of Directors was elected on 30 October 2007, effective as from 6 December 2007. The Board of Statutory Auditors was elected by shareholders at the Ordinary Meeting held on 26 April 2007. The Board of Directors and the Board of Statutory Auditors will remain in office until the shareholders’ meeting held to approve the 2009 separate financial statements. Board of Directors Chairman Giancarlo CERUTTI
Chief Executive Donatella TREU (1) Officer
Directors luigi ABETE Diana BRACCO Nicola DE BARTOLOMEO Antonio FAVRIN Giampaolo GALLI (2) Paolo LAMBERTI Giovanni LETTIERI Gaetano MACCAFERRI Francesco PROFUMO (3) Marco SALOMONI (3) Luca TACCONI Marino VAGO Marco WEIGMANN (3)
Secretary to Gianroberto VILLA the Board (1) Appointed Chief Executive Officer by the Board of Directors on 12 March 2010. (2) Co-opted on 20 March 2009 to replace Maurizio Beretta, who resigned on il 2 February 2009. His appointment was confirmed by theO rdinary General Shareholders’ Meeting on 28 April 2009. (3) Independent director.
8 Gruppo 24 ORE
2009 annual financial report
Board of Statutory Auditors Chairman Maria SILVANI (4) Standing statutory Demetrio MINUTO auditors Alberto USUELLI Alternate Statutory Luigi VIARENGO Auditor Gianluigi GROSSI (5) Internal Control & Audit Committee Chairman Marino VAGO Members Francesco PROFUMO Marco SALOMONI
Compensation Committee Chair Woman Diana BRACCO Members Francesco PROFUMO Marco SALOMONI Representative of special-category shareholders Representative Angelo MIGLIETTA Corporate financial reporting manager Manager Giuseppe CREA Internal control & auditing manager Manager Massimiliano BRULLO Independent auditor KPMG S.p.A., has been entrusted with the legally-required audit of the separate and consolidated financial statements pursuant to Article 159 of Italian Legislative Decree no. 58 of 24 February 1998.
(4) Appointed by the Ordinary General Shareholders’ Meeting on 28 April 2009. (5) Appointed by the Ordinary General Shareholders’ Meeting on 28 April 2009.
9 Gruppo 24 ORE
2009 annual financial report
Structure of the 24 ORE Group esa software S.p.A. 70%
innovare 24 s.p.a. 100% str S.p.A. 100%
Data ufficio S.p.A. 100%
nuova radio S.p.A. 100%
il sole 24 ore uk ltd 100%
Faenza Editrice % Iberica S.L. 100
il sole 24 ore Il Sole 24 ORE S.p.A. % bUSINESS MEDIA S.r.l. 100
business 60% media web S.r.l.
Newton lab S.r.l. ex newton 51% economics S.r.l. Newton Management 60% Innovation S.p.A. PLUS PEOPLE S.r.l. 50%
Blogosfere S.r.l. 80%
24 ore % cultura S.r.l. 100
Alinari 55% 24 ore S.p.A.
10 Gruppo 24 ORE
2009 annual financial report
Mondoesa Mondoesa milano Cesaco S.r.l. % % OVEST S.r.l. % 60 Nordovest S.r.l. 49 35 IN LIQUIDAZIONE
Mondoesa Mondoesa % % EMILIA S.r.l. 40 UMBRIA S.r.l. 32
Mondoesa Mondoesa Softlab S.r.l. % % % 40 LAZIO S.r.l. 35 VARESE S.r.l. 30
Mondoesa laghi s.r.l. E.veneto S.r.l. ex mondoesa % % 33.7 in liquidazione 30 CEDIMEGA S.r.l.
Mondoesa % Aldebra S.p.A. % ADIGE S.r.l. 35 20.62
Diamante S.p.A. 30%
Italia News S.r.l. 20%
companies included Editorial % in scope of Ecoprensa S.A. 15.54 consolidation
11 Gruppo 24 ORE
2009 annual financial report
highlights
Consolidated income statement highlights of 24 ORE Group
CONSOLIDATED INCOME STATEMENT HIGHLIGHTS OF 24 ORE GROUP
(in thousands of euro) c2009 c2008 Revenue 502,702 573,022 Gross operating profit (loss) (24,685) 49,283 Operating profit (loss) (67,470) 17,801 Profit (loss) before tax (66,743) 25,343 Profit (loss) for the year (53,343) 16,014 Profit (loss) attributable to owners of the parent (52,564) 16,111 Gross operating profit (loss) per share (0.19) 0.37 Operating profit (loss) per share (0.51) 0.13 Earnings (loss) per share attributable to owners of the parent (0.39) 0.12
Consolidated statement of financial position highlights of 24 ORE Group
CONSOLIDATED statement of financial position HIGHLIGHTS OF 24 ORE GROUP
(in thousands of euro) c31/12/2009 c31/12/2008 Total assets 646,122 728,179 Net financial position 98,829 149,006 Equity attributable to owners of the parent 296,864 357,103 Equity per share attributable to owners of the parent 2.23 2.68 Employee headcount at end of period 2,202 2,255
Revenue gross operating profit (loss)
600 100 573.0 572.1
illions 64.4 illions M M 49.3 550 50
502.7 500 0
(24.7) 450 -50 2009 2008 2007 2009 2008 2007
12 Gruppo 24 ORE
2009 annual financial report
13 Gruppo 24 ORE
2009 annual financial report Management report on the year ended 31 December 2009
14 Gruppo 24 ORE
2009 annual financial report Management Management report on the report on tyeahr ended e year ended31 December 2009 31 December 2009
15 Gruppo 24 ORE
2009 annual financial report
16 Gruppo 24 ORE
2009 annual financial report
Overview of 2009 results
The problems faced by the world economy in 2009, especially in the most advanced countries due to one of the severest financial crises in decades, and the consequent fall in gross domestic product (‒4.1% in Europe and ‒5.1% in Italy) also made a major negative impact on the Italian publishing industry. The print industry was especially hard hit, although it had already been suffering from competition by the internet as a source of information, especially for younger generations. Advertising spending, which is the principal source of publisher revenue, fell of sharply (in Italy, by € 1.3 billion, ‒13.4% for all media including television, ‒21.6% for print media only – source: Nielsen Media Research January-December 2009) – returning to the levels of 2006. Sales are plunging in Italy (ADS media mobile data for the 12 months from December 2008 to November 2009), with the number of copies sold by leading national newspapers falling by 9.6% in 2009. Partly due to reduced promotional copies, Il Sole 24 ORE suffered an 11.7% decline in sales.
The Group reacted to the crisis by focusing on the quality and credibility of its information, a wider ranger of professional and business services, reductions in direct and operating costs which, on a comparable basis, totalled € 36.3 million in 2009 alone (‒10.4% from 2008, fully offsetting the contraction in non-advertising revenue) and adjustment to the size of its permanent staff (with a target of cutting more than 200 positions overall by 2011, by cutting the number of executives and implementing restructuring or early retirement plans for journalists, graphic artists and typographers). It is expected that annual savings of € 14 million will be realised when these cutbacks are fully implemented, against total personnel restructuring costs of € 21 million charged entirely to 2009 results.
System, our advertising agency, reported that its revenue was down by € 45.9 million (‒22.5%, ‒19.5% net of deconsolidated publications) as compared to 2008. This result was better than originally expected in a year when certain exogenous factors had major effects. More specifically, these were: the financial crisis and consequent freeze on advertising for which the Group’s publications are the natural outlet, the greater impact of the crisis on merchandise segments (automotive, finance and professional services) to which the agency is more exposed and the closing of several publications. In spite of these factors, the agency’s market share grew in 2009, and its performance during the period 2006-2009 beat the market, with an average annual downturn of ‒2.3% in contrast with ‒7.3% for the market and ‒10.1% for print media.
Business to business activities were also severally impacted by the drastic collapse on the advertising market, which is the fundamental reason for the negative performance by the sector-specific
17 Gruppo 24 ORE
2009 annual financial report
publishing segment, in which the Group had expanded its presence in August 2006 by acquiring the Editoriale GPP Group (subsequently renamed Il Sole 24 ORE Business Media S.r.l.). The market trend simply accentuated and accelerated the structural decline of certain product lines, making it necessary to implement a drastic restructuring plan that is currently underway. This restructuring involves reorganisation of the product portfolio, with the sale of products/product families that are loss-makers or at risk of structural deterioration, and streamlining of operating structures.
Implementation of this plan, for which non-recurring charges of over € 4 million were recognised in 2009, will be concluded in 2010 with estimated savings of € 3 million annually. The merger of Il Sole 24 ORE Business Media S.r.l. with the parent company will be completed in 2010, which will make it possible to realise further synergies. In spite of the benefits expected from these various restructuring measures, the revision of future earnings prospects resulted in non- recurring impairment losses on intangible assets by about € 11 million.
The restructuring of Il Sole 24 ORE Business Media S.r.l. is part of a more wide-ranging programme to contain operating costs that kept the entire Group very busy throughout 2009, with action being taken to cut production, distribution and editorial costs, revision of the characteristics of certain products, and the closure of unprofitable lines of business. This included the decision to terminate publication of the free press newspaper 24Minuti, in spite of the positive response it had received from the public. On a comparable basis that excludes non- recurring charges, these measures helped to reduce direct and operating costs by € 36.3 million from 2008, almost entirely offsetting the plunge in non-advertising revenue.
The main results of 2009 compared with those of 2008 are summarised below:
CONSOLIDATED INCOME STATEMENT HIGHLIGHTS OF 24 ORE GROUP
(in thousands of euro) c2009 c2008 Revenue 502,702 573,022 Gross operating profit (loss) (24,685) 49,283 Operating profit (loss) (67,470) 17,801 Profit (loss) before tax (66,743) 25,343 Profit (loss) attributable to owners of the parent (52,564) 16,111 Equity attributable to owners of the parent 296,864 357,103 Net financial position 98,829 149,006 Employee headcount at end of period 2,202 2,255
18 Gruppo 24 ORE
2009 annual financial report
In 2009, the 24 ORE Group had consolidated revenue of € 502.7 million, € 70.3 million less than in 2008 (‒12.3%). On a comparable scope of consolidation, i.e. acquisitions whose effects are not comparable with the previous financial year (Esa Software S.p.A., Blogosfere S.r.l. and Business Media Web S.r.l.), the downturn was € 94.2 million (‒16.6%). This was largely attributable to lower advertising revenue (‒23.3%) and the lower contribution of add-on products.
Gross operating loss stood at € 24.7 million, in contrast with gross operating profit of € 49.3 million in 2008.
This comparison is impacted by the different scope of consolidation, on the one hand, and the non-recurring charges recognised in 2009, on the other hand. If both components were excluded, gross operating loss would have been € 6.5 million in 2009.
The significant downturn was due to the trend already mentioned in revenue, mainly that for advertising, which the benefits of action underway on operating costs were only partly able to offset.
The contribution of the new acquisitions ESA Software S.p.A. and Newton Management Innovation S.p.A. made in the second half of 2008 (2H08) increased revenue by € 25.2 mn and GOP by € 2.5 mn.
Non-recurring charges, largely comprised of those tied to restructuring and staff cutbacks, were entirely expensed in 2009 and total € 22.1 mn.
Operating loss stood at € 67.5 mn, compared with an operating profit of € 17.8 mn in 2008. In addition to what has been mentioned regarding GOP, the 2009 balance includes non-recurring impairment losses on assets and goodwill for € 11.7 mn, in addition to higher amortisation for intangible assets connected with the new acquisitions (€ 4.7 mn).
The loss attributable to owners of the parent was € 52.6 mn, compared with a profit of € 16.1 mn in 2008. This change reflects the negative impact tied to lower net financial income (lower average liquidity and lower interest rates), which was more than offset by the positive impact of taxes, upon recognition of deferred tax assets and the effects of streamlining measures implemented during the period.
The net financial position of the Group at 31 December 2009 was a positive by € 98.8 mn, down from € 149.0 mn at 31 December 2008, as a result of operating performance during the
19 Gruppo 24 ORE
2009 annual financial report
financial year, in addition to the payment of € 10.2 mn in dividends and net investments of € 20.4 mn.
In 2009 advertising revenue decreased by a total of € 57.1 mn, or ‒23.3%, from 2008. Of this amount, € 45.9 mn stemmed from the System advertising agency, with the remainder being accounted for by the Professionals Area.
The circulation revenue for the Publishing Area fell 22.4%, mainly in consequence of the aforementioned downturn in sales of add-on products, which fell by € 17.5 mn (‒63.3%), in addition to lower newspaper revenue (‒9.5%).
Professionals Area revenue rose by 3.3%, which was associated entirely with the change in the scope of consolidation. Like-for-like comparison shows a decrease of ‒7.9%, primarily due to the contraction (‒20.4%) of revenue from sector-specific publishing, which was severely hit by the trend on the advertising market.
20 Gruppo 24 ORE
2009 annual financial report
Significant events in 2009
The main activities relating to 2009 were primarily aimed at countering the negative trend of the various revenue lines through incisive rationalisation and curbing of costs.
In addition, some acquisition transactions were completed, mainly in connection with renegotiation of commitments already made, and in any case of limited entity.
Going into greater detail, the key thrusts of cost-curbing action can be summarised as being: – actions taken on the product portfolio – reduction of the number of publications/sections and rethinking of the features of some products, with action also on print runs, formats and number of pages; – closure of loss-making business lines – such as, in particular, the 24Minuti free daily, publication of which ceased at the end of March 2009; – cost-curbing action on production, distribution and editorial work – through process streamlining, renegotiation of contracts with all the main suppliers, and cost cutting relating to the daily newspaper’s in-house staff and freelancers; – actions taken on the organisational structure and on staff costs – via simplification of the operational management structure (with operating responsibility for the Multimedia Area repositioned within the Publishing Area), and establishment of a plan for company staff to use their annual holidays and part of previous holidays not taken; – actions taken on the various overhead cost categories – in particular on marketing and advertising costs, travel and entertainment expenses, advisory costs, and operating locations’ costs; – implementation of structural measures involving the Group’s permanent staff, by reaching agreements with trade unions for the elimination of about 200 staff positions overall, including those connected with disposed business units; these agreements rely principally on early retirement, whose procedures and requirements will be implemented and satisfied by spring 2010.
Other transactions completed out during the period include the following: – on 24 January 2009, Il Sole 24 ORE Business Media S.r.l. acquired a 60% equity interest in Bologna Fiere WEB S.r.l. (simultaneously renamed Business Media Web S.r.l.), which besides the portal www.edilio.it, also contributes new specialised skills and has permitted completion of our online offering in the building sector. – in March 2009 the Group, in relation to the contractual commitments established by the July 2007 master agreement, achieved ameliorative amendments that permitted acquisition of a
21 Gruppo 24 ORE
2009 annual financial report
further 50% interest in the company Blogosfere S.r.l., thus increasing our total stake to 80%. The investment amounted to € 850 thousand. The equity investment was sold in January for € 1.6 million. – on 24 April 2009, acquisition was completed of the remaining 43% of the capital of 24 ORE Motta Cultura S.r.l. for € 740 thousand, taking our equity interest up to 100%. – The subsidiary Nuova Radio S.p.A. invested € 3.2 million to acquire 13 new frequencies, in view of improving the quality of its radio signal and expanding its coverage in certain areas of Valle d’Aosta, Lombardy, Liguria, Emilia Romagna and Sicily, mainly on highways and motorways. – on 8 July, the subsidiary Data Ufficio S.p.A. reached an agreement with Buffetti S.p.A. to sell its business unit Grafica, which produces printed forms and other printed material, for the sum of € 1.2 million. This deal forms part of the process of concentration on core businesses and disposal of marginal ones also featuring structurally limited or negative profitability, is effective as from 1 September 2009. – as part of measures to curb operating costs and optimise operating efficiency, in October a number of moves were approved to streamline the Group’s corporate structure. Specifically, on 2 October, the extraordinary shareholders’ meeting of H24 Software S.p.A., which heads the companies operating in the software segment, resolved to proceed with the merger through takeover of the wholly-owned subsidiaries STR S.p.A. and Data Ufficio S.p.A while, at the same time, changing the company’s name to Innovare24 S.p.A. These operations were completed in December, effective 1 January 2010.
Finally, there were certain major changes in key management positions at the Group during FY 2009, and specifically: – on 30 March 2009, the Board of Directors of Il Sole 24 ORE S.p.A., having acknowledged the resignation of the newspaper’s editor, Ferruccio de Bortoli, appointed Gianni Riotta as the newspaper’s new editor. – in December, Claudio Calabi resigned as Chief Executive Officer and member of the Board of Directors of Il Sole 24 ORE S.p.A.
22 Gruppo 24 ORE
2009 annual financial report
Shareholders and stock performance
Through its corporate Investor Relations function, the Company endeavours to create a transparent, ongoing dialogue with its shareholders and with investors, based on comprehension of reciprocal roles.
To do this, during the year we organise events – such as conference calls and road shows – designed to widen and encourage the market’s knowledge of the Group and to present our financial position and results.
In order to assure timely and easy access to information concerning the issuer that is important for its shareholders, during 2009 the Company enhanced the Investor Relations section in its corporate website (www.gruppo24ore.com). This section makes available disclosures concerning the issuer’s financial reporting compliance, price-sensitive press releases, and documentation prepared as support material for events and presentations.
Performance of Il Sole 24 ORE stock in 2009 vs. the main indexes (02/01/2009 = 100)
Gen-09 Feb-09 Mar-09 Apr-09 Mag-09 Giu-09 Lug-09 Ago-09 Set-09 Ott-09 Nov-09 Dic-09 130
120
110
100
90
80
70
60
Il Sole 24 ORE Dow Jones EURO STOXX Media P Inde x FTSE Italia All Share Inde x source: bloomberg
23 Gruppo 24 ORE
2009 annual financial report
The global financial crisis, which swept across major financial markets worldwide in the form of a credit crunch, government bail-outs, nationalisations and bail-out plans, continued in early 2009, pushing markets to historic lows in March. After massive amounts of liquidity were pumped into the system, the equity market staged a strong recovery, making up for a good part of the losses sustained in 2008. In regard to the publisher segment, more cyclical issues out- performed the more defensive ones. In this context, Il Sole 24 Ore stock recovered by 24% from its March 2009 low, consistently with the performance over the same time horizon (March- December) by the Dow Jones Euro STOXX Media P index.
MARKET PERFORMANCE OF IL SOLE 24 ORE STOCK
indicator date value Max. price 25.05.2009 EUR 2.545 Min. price 10.03.2009 EUR 1.545 Price at start of period 02.01.2009 EUR 2.280 Price at end of period 30.12.2009 EUR 1.919 Average price in December EUR 1.990 Average annual price EUR 2.155 Max. daily trading volume (‘000) 22.05.2009 no. 181.1 Min. daily trading volume (‘000) 08.12.2009 no. 2.8 Annual average daily trading volume (‘000) no. 31.0 End-of-period market capitalisation (*) 30.12.2009 € mn 255.9
(*) calculated including also the 90 mn unlisted shares held by confindustria source: bloomberg for reference prices and volumes
Shareholder base as at 31 December 2009
SHAREHOLDER BASE
shareholders and stock performance no. ordinary no. special total % shares shares shares Confindustria 90,000,000 – 90,000,000 67.5% Il Sole 24 ORE S.p.A. – 4,894,693 4,894,693 3.7% Market – 38,438,520 38,438,520 28.8% Total shares 90,000,000 43,333,213 133,333,213 100.0%
Market 28.8 %
Il Sole 24 ORE S.p.A. Confindustria 3.7 % 67.5 %
24
Gruppo 24 ORE
2009 annual financial report
Principal risks and uncertainties
In the extensive number of activities where it is present, the 24 ORE Group is exposed to a series of risks. Their identification, assessment and management involve the Group’s Chief Executive Officer – also in his capacity as an executive director as per the Corporate Governance Code of Borsa Italiana S.p.A. – and the heads of business areas and central corporate functions.
As part of this process, the different types of risk (strategic, operating, legal & regulatory, financial and reporting) are classified according to assessment of (a) their impact on achievement of objectives, (b) the likelihood of their occurrence and (c) the degree of effectiveness of protective actions implemented. The weighted result of application of these assessment criteria permits prioritisation of action and monitoring and identification of those responsible for managing such risks.
Moreover, in order to assure a further appropriate and timely risk-management tool, the principal risks and their indicators are constantly monitored as part of the Group’s normal internal reporting process.
On occasion of the meeting of the Internal Control & Audit Committee and of the Board of Directors of Il Sole 24 ORE S.p.A. on 20 March 2009, the Executive Director presented the report identifying the Group’s principal risks, based on which the Board also approved the 2009 Internal Auditing Plan.
Strategic risks
Risks connected with strategies in the traditional and multimedia publishing sectors
The publishing industry is involved in a process of transition from conventional forms of publishing to electronic/online publishing, associated with the introduction of new technologies and distribution channels. It is difficult to predict the impacts of this in terms of the market’s competitive dynamics.
The Group is continuing to expand its business also to relatively new sectors and environments (such as online publishing). It has in fact made investments targeting development of this sector within all business segments, and further investments are envisaged.
25 Gruppo 24 ORE
2009 annual financial report
An important part of future growth will depend to a significant extent on growth of digital/ electronic business. Given this, any failure of these new initiatives, and also any delays in the transition process, might lead to adverse effects on the Group’s income statement, balance sheet and financial position.
Risks connected with management of externally driven growth
The Group’s strategic guidelines contemplate future growth that is externally driven.
The Group in fact intends to pursue a strategy designed to expand its business also through acquisitions or partnership agreements. Implementation of this strategy also depends on the possibility of concluding acquisitions or partnership agreements at satisfactory conditions and on the Group’s ability to assimilate, in its organisation, the new initiatives as part of the Group’s normal business.
Difficulties potentially associated with acquisition deals or partnership agreements, such as delays in closing deals or unexpected costs and liabilities might have a negative impact on the Group’s business activity and on its results.
Operating risks
Risks connected with recent acquisitions and with the Group’s integration process
The Group’s present configuration stems from an integration process that is still underway. Some of the companies forming the group were in fact acquired during the previous three financial years and the Group’s strategic intentions envisage additional future growth, including through acquisitions.
Acquisition deals, by nature, feature significant elements of risk. These include, but are not limited to, loss of customers and key staff by acquired companies, legal risks, or possible integration difficulties due to different corporate cultures.
Furthermore, this process features the risks typical of a corporate group’s integration operations, i.e. difficulties relating to co-ordination of management, integration of budgeting and reporting
26 Gruppo 24 ORE
2009 annual financial report
procedures and of the commercial proposition, as well as the use of resources to achieve operating efficiency improvements. Although the Group has already initiated the process of integrating the existing organisational facilities, technologies and services with those of the newly acquired companies, completion of the process might be achieved with timing and costs that are different than those originally planned. Such a circumstance might jeopardise full exploitation of the production, distribution, and commercial synergies expected, with consequent adverse effects on the Group’s business activity and on its results.
Risks connected with the advertising revenue trend
The Group generates a considerable part of its revenue through sale of advertising space in its own media (the daily newspaper “Il Sole 24 ORE”, magazines, sector-specific magazines, the free newspaper, radio, and websites) and those of independent publishers.
In 2009 advertising revenue totalled € 187.6 mn and accounted for 37.3% of Group revenue (vs. 42.7% of total revenue in 2008).
A significant share of revenue and margins therefore depends on the quality of publishing products created and on our ability to make them appealing to advertisers. Given this, the Group might have to make investments to maintain and/or increase the competitiveness of its publishing products to attract and/or maintain strong interest on the part of advertisers, with consequent effects on the Group’s income statement, balance sheet and financial position.
Moreover, domestic and international macroeconomic conditions heavily influence the level of advertising sales. Given this, the present situation of global economic crisis has had and will continue to have a heavily negative impact on the Group’s income statement and financial position in 2010.
Risks connected with the newspaper’s circulation trend
Advertising revenue and revenue from newsstand and subscription sales substantially depend on levels of circulation and readership. The entire paid daily press market has been riding a steadily downward trend for several years now, which is also related to ever-increasing competition from new media. The economic crisis currently underway has further exacerbated these circumstances. These trends may affect the possibility of increasing the newspaper’s price and also affect its
27 Gruppo 24 ORE
2009 annual financial report
appeal to advertisers. Support of circulation would generate additional costs that might not be recovered through higher advertising revenue.
Risks connected with maintenance of the high standard of reliability and reputation of our brand and products
We believe that our brands and products have an excellent reputation thanks to the quality of our content and the professionalism of our staff, especially that of our journalistic staff in the publishing field. Events eroding this reputation or reducing customers’ trust in our products’ quality and reliability would therefore have a negative impact on the Group’s business turnover and financial position and results.
Risks connected with the relationship with some Group worker categories
The Group’s business and financial position and results could suffer significantly from the effects of renewal of national and/or company-level collective bargaining agreements for certain categories of workers, as well as of any cases of conflict that may occur, particularly during negotiation of such agreements.
Strikes, work slowdowns and interruption of services and business activity, or contractual renewals that cause significant cost increases, leading to consequent operating rigidity of the Group, could therefore adversely affect its profitability and the possibility of maximising its operating efficiency.
Risks connected with the trade receivables trend
Based on the type of customers targeted by the products and services of the Group’s various segments, it is not believed that there is a high risk in terms of trade receivables. It is nevertheless deemed advisable to activate operating procedures that limit sales to customers considered not to be solvent and to post specific provisions for bad debts to cover any losses caused by non- collectability of receivables.
At the same time, however, the difficult contingent economic situation is leading to increased credit risk exposure, in connection with customers’ extension of payment times and the potential increase in insolvencies.
28 Gruppo 24 ORE
2009 annual financial report
Legal and regulatory risks
Risks connected with evolution of relevant regulatory framework
In conducting its business, the Group is subject, among others, to Italian Law no. 47 of 8 February 1948 (“Provisions concerning the press”), Law no. 416 of 5 August 1981 (“Rules governing publishers and support measures for publishing”), and Law no. 62 of 7 March 2001 (“New rules for publishing and publishing products”). These regulations also contemplate a series of grants and facilitations from which publishing companies can benefit.
Specifically, the Group mainly benefits from low-cost postal rates for mailing its publishing products and from facilitated telephone rates.
Introduction in the publishing industry of a more restrictive regulatory framework or any changes to the present system of grants and facilitations could have a negative impact on the Group’s balance sheet, income statement and financial position.
Furthermore, regulatory changes in 2009 partially modified the reference scope of advertising revenue.
Consob Resolution no. 16850, which was adopted for only one quarter, eliminated almost all of the regulated newspaper disclosure obligations applicable to issuers. With Resolution no. 17002, Consob restored the rules that applied before the aforementioned changes to the regulation came into force, insofar as Consob realised that sudden implementation of that Directive would have caused severe inequalities amongst investors, by discriminating against those that use newspapers and not other media as their primary source of information.
Consob Resolution no. 16840, which eliminated the obligation of newspaper publication of foreign CIU (Collective Investment Undertaking) fund units and notices affecting the funds to which they refer will come into full force in 2010. That will markedly reduce advertising revenue in this segment, in which Il Sole 24 Ore has historic leadership.
In light of the possible new regulatory scenarios, the 24 ORE Group is currently reviewing the best way to accredit itself as operator of the system for regulated distribution of information over the internet (SDIR) so that it will be ready if necessary.
29 Gruppo 24 ORE
2009 annual financial report
Human resources
The Group total payroll headcount at 31 December 2009 was 2,202 employees, including fixed and unlimited term employment relationships. This headcount was 53 employees lower than on 31 December 2008.
The following tables contain information concerning staff breakdown.
LENGTH OF SERVICE
area up to 10-20 over total 10 years years 20 years Corporate 158 81 27 266 Publishing 289 233 193 715 Professionals 562 318 64 944 System (advertising sales) 58 41 24 123 Radio 64 26 – 90 Multimedia 27 28 9 64 Total 1,158 727 317 2,202 % 52.6% 33.0% 14.4% 100.0%
AGE bands
area up to 35-50 over total 35 years years 50 years Corporate 48 171 47 266 Publishing 97 428 190 715 Professionals 236 606 102 944 System (advertising sales) 25 72 26 123 Radio 28 54 8 90 Multimedia 5 50 9 64 Total 439 1,381 382 2,202 % 19.9% 62.7% 17.3% 100.0%
MALE/FEMALE POPULATION
male female Headcount as at 31/12/2008 1,275 927 927 – % 57.9% 42.1%
30 Gruppo 24 ORE
2009 annual financial report
LENGTH OF SERVICE - executives
area up to 10-20 over total 10 years years 20 years Corporate 17 11 4 32 Publishing 6 4 – 10 Professionals 19 22 3 44 System (advertising sales) 5 6 2 13 Radio 2 – – 2 Multimedia 5 1 – 6 Total 54 44 9 107 % 50.5% 41.1% 8.4% 100.0%
AGE bands - executives
area up to 35-50 over total 35 years years 50 years Corporate – 18 14 32 Publishing – 7 3 10 Professionals – 27 17 44 System (advertising sales) – 7 6 13 Radio – – 2 2 Multimedia 1 4 1 6 Total 1 63 43 107 % 0.9% 58.9% 40.2% 100.0%
MALE/FEMALE POPULATION - executives
male female female Headcount as at 31/12/2008 83 24 24 – % 77.6% 22.4%
In 2009 total staff turnover was 5.1%, including the hiring and termination of employees with fixed-term contracts. For employees with open-end contracts only, turnover was 3.8%.
In 2010, we will therefore continue initiatives and participation in national and regional employer-branding events designed to bring job supply and demand together, with the aim of making the Group’s new dimension known, together with its opportunities, thereby increasing our ability to attract talents.
31 Gruppo 24 ORE
2009 annual financial report
Labour relations
The most significant activities relating to 2009 were as follows: – on 1 September, the Grafica division of Data Ufficio S.p.A. was sold to Buffetti S.p.A. (this business unit manufactures and sells graphic arts products to stationers, wholesalers and specialised retailers). A total of 47 employees were involved. – transfer from the Milan headquarters at Via Monte Rosa 91 to the Milan offices on Via Ramuscio/Patecchio of 94 employees of central units and of the Multimedia Area as part of the process of space rationalisation and reduction of facility management costs. – Signing and application to Il Sole 24 Ore S.p.A. – Typography Division – of agreements on part-time work and flexible working schedules. – In September, discussions and formal negotiations began with the trade union representatives of journalists, graphic artists and typographers for the structural employee reorganisation plan that when fully implemented (over 24 months, beginning 1 January 2010) calls for a total reduction of about 200 job positions, including those associated with business unit spin-offs. The preliminary and master agreements signed in December rely principally on early retirement, whose procedures and requirements will be implemented and satisfied by spring 2010.
The regulatory and economic provisions of the national collective bargaining agreement for journalists were also renewed in 2009.
Organisation
The most significant activities relating to 2009 were as follows: – continued organisational streamlining, including a gradual reduction in the number of units reporting directly to the Chief Executive Officer, in view of speeding up and rendering decision-making processes faster and more effective; – organisational simplification through reduction of the number of business areas (from 5 to 4) and integration in the Publishing Area of the business units that previously belonged to the Multimedia Area (Online Business Unit, Finance Business Unit and Agency Business Unit); – revision and organisational updating of certain business structures, in view of promptly seizing all opportunities on an increasingly demanding and selective market and seeking continuous improvement and management streamlining dynamics. The principal areas involved are the Commercial Department and Professional Area Operations Department, the Training Business Unit, the Tax & Legal Business Unit, and the Finance and Public Administration Business Unit. Furthermore, responsibility for product information technologies has been
32 Gruppo 24 ORE
2009 annual financial report
assigned to the Publishing and Professional Areas to realise greater efficiency and synergies throughout the entire product development cycle; – updating of the Privacy Code scheme of responsibilities and delegations of authority (pursuant to Legislative Decree no. 196 of 30 June 2003) in view of rendering it consistent with the evolution in corporate organisation and statutory obligations; – continuation of the project to develop internal Group communication, based on gradual extension of corporate intranet use to all Group companies, systematic dissemination of material information regarding the organisation and promotion of measures intended to promote the sense of personal belonging to the company and the Group (e.g. the series of initiatives named “24 ORE per l’Abruzzo”); – consolidation of integration and management of recently acquired companies, which includes sharing of information, processes and best practices, to permit application of common HR guidelines and enhancement of the operating synergies that are possible due to the size of the Group.
Training
During 2009 over 7,300 hours of training were provided for Il Sole 24 ORE S.p.A. and Nuova Radio S.p.A., with 450 participants among managers, journalists, white-collars, and blue-collars. Of these, over 600 hours were provided for training and information about safety, especially about Legislative Decree no. 81/2008 on the liability of executives and managers, 3,800 hours were dedicated to specialised training and almost 1,800 hours were dedicated to language training. About 260 hours of managerial training were provided. Two of the training financing funds to which Il Sole 24 Ore S.p.A. subscribes were used: Fondirigenti and Fondimpresa. Financing for 46% of the total incurred cost was requested. One of the financed projects at the plants was the Multipurpose Maintenance Technician course, which was attended by blue-collar workers from the two maintenance departments at the Carsoli printing centre. It was based on the framework of the project implemented the previous year in Milan, in view of guaranteeing the cross-disciplinary mechanical and electronic knowledge of the various specialists, in view of realising greater flexibility and efficiency in the technical organisation.
Participation in the training activities offered by the Training Business Unit and its Business school continued for white-collar supervisors and specialised training managers for 670 hours.
There was also intensive technical and operational training activity for personnel of the Group’s other companies, particularly in the software field. At STR S.p.A. over 322 hours of internal training were provided, 204 hours of training at Data Ufficio S.p.A. and 657 hours at ESA Software S.p.A..
33 Gruppo 24 ORE
2009 annual financial report
Environment and safety
Safety policy
Protection of worker health and safety in 24 ORE Group companies has always been a priority, taking the form of a constant quest for and development of conditions able to assure such protection, both for employees and for anyone involved in operating activities.
The organisational unit dedicated to corporate safety management is comprised by theE mployer (DL), who designated, pursuant to Article 18 of Legislative Decree no. 81/2008, an Employer Safety Representative (DDL) and a Prevention and Protection Service Manager (RSPP). The latter reports directly to the DL and coordinates at the operational level with the DDL. The RSPP manages and coordinates two Prevention and Protection Service Supervisors (ASPP), who are in charge of monitoring compliance in northern Italy and in central-southern Italy, respectively. The organisational structure also relies on the assistance of the Medical Officer for all the Italian facilities and on outside consultants for carrying out specific projects and regulatory studies.
In line with its corporate policy and with the requirements of the new Italian Consolidated Workplace Safety Act (Legislative Decree 81/2008), the Company implemented a safety management system and drew up a new Risk Assessment Report (DVR). The updates to this report were illustrated and discussed at the regular annual safety meeting with the workers’ various safety representatives. Accident and injury trend were analysed at this meeting. In 2009 the incidence of industrial accidents was consistent with previous years (with a seriousness index of 0.15 and a frequency index of 7.2, which was up slightly in terms of seriousness from the previous year and down slightly as an index of frequency). The indices show a substantially reassuring situation as regards injuries.
During 2009 evacuation and crisis management simulations were performed at the Company’s various locations, including the building at Via Monte Rosa 91 in Milan, which also involved the various companies present in the building. Environmental assessments of physical and chemical risks were performed at the new facilities. Major moves to new operating facilities took place (in Rome, Bari and Florence), partly in order to render compliance with statutory obligations objective.
Special attention was dedicated to contract work activities, for which new procedures were implemented in accordance with recent regulatory amendments. These were to be shared with
34 Gruppo 24 ORE
2009 annual financial report
the corporate departments assigned to manage the numerous activities (events and services) carried out at the 24 ORE Group.
The medical protocol for the health section of the new rules was drafted, being updated with new alcohol and drug addiction treatment. Periodic examinations were performed without finding any occupational diseases.
Both production sites in Milan and Carsoli (L’Aquila) are compliant with current fire-prevention legislation as they possess valid fire-prevention certificates.A t the Carsoli site a modification and extension project is underway that already received an opinion of compliance from the L’Aquila Fire Department. An inspection is scheduled for February 2010.
Aside from this and all the specific related analyses, the company undertook an informational and training campaign for the new hires.
The DVR was updated after enactment of Legislative Decree no. 106 of 3 August 2009, and drafts of the procedures applicable to work equipment and electrical risk were prepared. The possible modifications to be made to the specific document on work-related stress assessment are being reviewed, in anticipation of publication of the National and Regional Government Conference guidelines.
Environmental aspects
The Group’s plants and their activities are subject to the applicable environmental and occupational safety regulations: – Atmospheric emissions: the production sites located in Milan and Carsoli (province of L’Aquila) operate according to appropriate authorisations, in a situation featuring low atmospheric emissions and in compliance with the legal limits established for such emissions. Qualified independent laboratories periodically perform chemical analyses for qualitative and quantitative control of gaseous emissions. – Noise pollution: the Milan and Carsoli production locations are monitored in regard to workplace noise pollution. Monitoring of noise pollution in the surrounding environment at these plants was performed in compliance with applicable national and local noise pollution regulations. All principal activities were carried out in closed spaces or spaces that were equipped with adequate physical barriers to contain noise pollution in the external environment. – Waste water: the production plants located in Milan and Carsoli (L’Aquila) produce civil waste
35 Gruppo 24 ORE
2009 annual financial report
water that is discharged into the sewer network in both Milan and Carsoli, pursuant to the appropriate authorisations. The system for collection of rainwater at the Carsoli plant is also equipped with drains for filtration of any pollutants before being channelled to the storage tank. – Waste disposal: waste coming from the production cycle and from offices is sorted and disposed of in compliance with current legal requirements. Sorting of the waste generated at the printing plants and offices permits the recovery and recycling of most wastes that are produced. Specifically in regard to paper, the production process of the printing centres, including those not owned, generates total discards and waste of about 11% (4,700 tonnes). – Paper management: in 2009 Il Sole 24 ORE S.p.A. purchased 45,357 tonnes of paper, 99% of which was recycled. Some 84% of paper purchased in 2009 was supplied by papermakers possessing forestry and environmental certifications, such as PEFC (Pan-European Forest Certification), FSC (Forest Stewardship Council), EMAS (European Eco-Management and Audit Scheme) and ISO 14001, which assure pursuit of eco-compatible forestry. Procedures are being implemented at the paper mills so that 100% of the supplied paper is covered by forestry and environmental certifications in 2010. – Asbestos: at the Milan and Carsoli production sites, no presence of asbestos has been found, pursuant to current legislation. – Certifications: the Carsoli site has had ISO 14001 certification since July 2002 for environmentally friendly management of its typical activities of newspaper and magazine printing. The certification, renewed in 2008, is valid until 2011.E xtension of this certification to the Milan production site as well is being evaluated.
To comply with the provisions of EU Regulation 1907/2006, the hazardous substance management system has been upgraded through implementation of a new procedure that involves: survey of all substances and preparations, acquisition of the suppliers’ safety forms and Reach certificates, controlling the introduction of new preparations and periodic review and updating of records.
Training meetings were also held in 2009 with the purchasing department to ensure full compliance by unit managers. Additional action is planned in 2010 to complete the database of existing substances and preparations.
The subsidiary Nuova Radio S.p.A., owner of the radio broadcaster Radio 24, franchisee for nationwide commercial radio broadcasting, has a broadcasting network of 244 frequencies active on Italian territory.
Italian Ministerial Decree 381/1998, as amended by the Prime Minister’s Decree of 8 July 2003,
36 Gruppo 24 ORE
2009 annual financial report
currently regulates legislative aspects concerning the problem of electromagnetic pollution. This establishes the limits of intensity of electromagnetic fields to which human beings may be exposed.
Application of the above decrees is delegated to regional authorities, which do so through the regional environmental agencies. In addition, in the last few years nearly all the Italian regions, pursuant to national framework Law no. 36/2001, have enacted regional laws that added details to the national rules and related maximum limits. Regional laws also establish the regions’ own procedures for approval and control of broadcasting installations.
The 24ORE Group believes that the situation of broadcasting installations pertaining to Nuova Radio S.p.A. does not exceed the intensity limits for electromagnetic fields established by current regulations. The Group in any case constantly monitors the possible onset of potential risks, also taking preventive action to eliminate risks of overshooting field intensity limits.
37 Gruppo 24 ORE
2009 annual financial report
Main consolidated income statement and statement of financial position figures of the 24 ORE Group consolidated Income Statement
highlights CONSOLIDATED INCOME STATEMENT
(in thousands of euro) c2009 c2008 Revenue from sales and services 502,702 573,022 Other operating income 14,359 15,521 Personnel expense (203,207) (175,858) Change in inventories (2,966) (1,414) Purchase of raw materials and consumables (34,299) (40,337) Services (243,605) (267,405) Other operating costs (47,733) (43,634) Provisions and provision for bad debts (9,936) (10,612) Gross operating profit (loss) (24,685) 49,283 Depreciation losses amortisation and impairment (43,056) (31,490) Gains/losses on disposal of non-current assets 272 8 Operating profit (loss) (67,470) 17,801 Financial income 2,450 10,208 Expenses from investments (1,723) (2,666) Profit (loss) before tax (66,743) 25,343 Income taxes 13,400 (9,329) Profit (loss) for the year (53,343) 16,014 Profit (loss) attributable to non-controlling interests (779) (97) Profit attributable to owners of the parent (52,564) 16,111
Revenue totalled € 502.7 mn, down € 70.3 mn from 2008. Net of changes in the scope of consolidation, the fall in revenue is € 94.2 million, or –16.6%.
In more detail the most important reduction involved advertising revenue, which represented 37.3% of total Group revenue, which fell from € 244.6 mn in 2008 to € 187.6 mn in 2009 (–€ 57.1 mn, or –23.3%). Advertising revenue of the System agency (€ 157.7 million) fell by € 45.9 million, while that of specialised magazines in the Professional Area (€ 29.8 mn) fell by 26.5%.
Revenue from the sale of newspapers, books and magazines amounted to € 155.4 mn, compared with € 191.4 mn in 2008, with a decrease of € 35.9 mn, or –18.8% YoY. The primary contributor to this trend was the fall in add-on sales, which amounted to € 10.1 mn, down by € 17.3 mn. The newspaper’s circulation revenue decreased from € 82.3 mn to € 74.5 mn –( 9.5%), magazine revenue amounted to € 57.4 mn (–11.6%) and book revenue amounted to € 13.5 mn (–19.3%).
38 Gruppo 24 ORE
2009 annual financial report
Other revenue totalled € 159.7 mn, compared with € 137.0 mn in the previous year (+16.6%). Net of the changed scope of consolidation, and thus excluding the new acquisitions Esa Software S.p.A. and Newton Management Innovation S.p.A., these would have fallen by 0.8%. Revenue from the sale of software products (+58.6%), electronic publishing (+5.9%), conferences and training (+8.2%) rose. Conversely, revenue of services relating to distribution of real-time financial news flows decreased– ( 8.3%). Revenues for other products and services grew by € 2.3 mn as a result of the new acquisitions.
Other operating income totalled € 14.4 mn, compared with € 15.5 mn in 2008. This item includes the recovery of costs, rental income, contingent income, contributions and other residual items.
Personnel expense totalled € 203.2 mn, compared with € 175.9 mn in 2008. The change in personnel expense is the result of a 10.0% increase, attributable to the increase in the average headcount (192 average units, including 194 from the new acquisitions) and the 5.8% increase in the average unit cost. The average headcount was 2,230. This change was impacted by changes in the scope of consolidation during the period, on the one hand, and the recognition of non- recurring charges connected with employee leaving incentives and the restructuring and early retirement plan, on the other hand. The effect of the new acquisitions cause personnel expense to rise by € 10.9 mn, while non-recurring charges in 2009 totalled about € 21 mn. Excluding these discontinuities, personnel expense fell by -2.7%, largely in consequence of the lower average cost per employee. This was realised partly through the recovery of accumulated holiday entitlements.
Direct and operating costs totalled € 328.6 mn with a 6.9% YoY decrease. Net of the changed scope of consolidation and non-recurring, items the reduction was 10.1%. This was the result of cost-containment measures implemented during the year, which mainly related to distribution, printing, advertising, marketing and promotion components and costs for external professional services and permitted the partial offsetting of the revenue downturn.
Provisions and provisions for bad debts amounted to € 9.9 mn, compared with € 10.6 mn in 2008.
Depreciation, amortisation and impairment losses amounted to € 43.1 mn, compared with € 31.5 mn in 2008. The increase was due entirely to impairment losses on intangible assets for goodwill of € 8.6 mn and publications for € 3.1 mn.
Net financial income fell from € 10.2 mn in 2008 to € 2.4 mn in 2009. The decrease of € 7.8
39 Gruppo 24 ORE
2009 annual financial report
mn from the previous year stemmed entirely from lower interest income, due to cuts in interest rates and lower average cash balances.
Expenses from investments totalled € 1.7 mn due to recognition of impairment losses on associates and non-controlling interests.
Income taxes totalled a positive € 13.4 mn, in contrast with a negative € 9.3 mn in the previous financial year, due to the recognition of deferred tax assets on the loss for the year and streamlining measures implemented during the year.
consolidated statement of financial position
HIGHLIGHTS OF consolidated STATEMENT OF FINANCIAL POSITION
(in thousands of euro) c31/12/2009 c31/12/2008 Non-current assets 319,519 331,052 Current assets 323,611 397,127 Non-current assets held for sale 2,992 – Total assets 646,122 728,179 Equity attributable to owners of the parent 296,864 357,103 Equity attributable to non-controling interests 718 1,390 Total equity 297,581 358,494 Non-current liabilities 89,912 108,178 Current liabilities 258,156 261,508 Non-current liabilities held for sale 472 – Total liabilities 348,540 369,686 Total equity and liabilities 646,122 728,179
Non-current assets amounted to € 319.5 mn vs. € 331.1 mn as at 31 December 2008, with an decrease of € 11.5 mn.
Aside from the normal amortisation and depreciation allowances, the total change for the year, € 31.3 mn, is mainly attributable to: – impairment losses on certain assets, and principally: a portion of goodwill and the value of certain publications attributed to the sector-specific Publishing Business Unit, for a total of € 11.0 mn, as well as certain non-controlling interests of € 1.7 mn; – an increase in goodwill allocated to the Software Solutions Business Unit for the acquisition of Data Ufficio S.p.A., due to revision of the estimates for the last price instalment to be paid to the seller (€ 2.5 mn);
40 Gruppo 24 ORE
2009 annual financial report
– investments of € 17.1 mn in radio frequencies, transmission plant, hardware, software, and production plants; – the recognition of increased deferred tax assets (+€ 14.5 mn), in consequence of the loss in 2009.
Current assets amounted to € 323.6 mn, compared with € 397.1 mn at the beginning of the year, with a decrease of € 73.5 mn. The change is almost entirely due to reduction in cash and cash equivalents for € 54.9 mn, trade receivables for € 22.1 mn, partly offset by the increase in receivables for current taxes of € 5.5 million.
Equity totalled € 297.6 mn, compared with € 358.5 mn at 31 December 2008. Non-controlling interests in equity were € 0.7 mn.
Non-current liabilities totalled € 89.9 mn, compared with € 108.2 mn at the beginning of the year, for a decrease of € 18.3 mn, stemming principally from lower deferred tax liabilities (€ 5.7 mn), reduction in the provisions for risks and charges (€ 4.5 mn) and employee benefits (€ 3.5 mn).
Current liabilities totalled € 258.2 mn, virtually unchanged from the € 261.5 mn at 31 December 2008. They reflect a € 13.9 mn reduction in trade payables, which was sharply lower than the reduction in trade receivables, and fully offset by the higher liabilities connected with restructuring charges.
41 Gruppo 24 ORE
2009 annual financial report
Consolidated statement of cash flows
HIGHLIGHTS OF CASH FLOWS
(in thousands of euro) c2009 c2008 Profit (loss) attributable to owners of the parent (52,564) 16,111 Adjustments 19,324 10,439 Changes in net working capital 10,043 (47,567) Net cash used in operating activities (23,196) (21,017) Investments (18,096) (72,430) Disinvestments and other changes (2,337) (958) Net cash used in investing activities (20,433) (73,388) Free cash flow (43,629) (94,405) Net cash from (used in) financing activities (9,612) 1,131 Net decrease in cash & cash equivalents (53,241) (93,274) Opening 145,299 238,573 Closing 92,058 145,299
Total cash flows were negative by € 53.2 mn, compared with a negative € 93.3 mn for the previous year. This result stems from the absorption of cash by operating activities, investments and acquisitions and the cash flow absorbed by financing activities.
Net Cash used in operating activities was € 23.2 mn, compared with absorption of € 21.0 mn in 2008. This change stemmed mainly from the loss for the year, which was partially offset by the positive change in net working capital.
Net Cash used in investing activities was € 20.4 mn, and consists of € 17.1 mn for operating investments and € 2.0 mn for the purchase of equity investments in subsidiaries.
Net Cash used in financing activities was € 9.6 million, compared with generated cash flow of € 1.1 mn in the previous year. The main outflows related to the payment of dividends (€ 10.2 mn) and to repayments of medium-long term loans (€ 3.1 mn). Interest income on cash deposits and current accounts totalled € 2.5 million (€ 10.2 million in the previous year).
The net financial position fell from € 149.0 mn at 31 December 2008 to € 98.8 mn at 31 December 2009. Cash and cash equivalents decreased in connection with the changes in the cash flows commented on above. Medium-long term indebtedness fell upon repayment of the amount due for the period for subsidised loans, while short-term indebtedness fell as a result of repayment of bank overdrafts by subsidiaries.
42 Gruppo 24 ORE
2009 annual financial report
The following table summarises the breakdown of the net financial position.
NET FINANCIAL POSITION
(in thousands of euro) c31/12/2009 c31/12/2008 Cash and cash equivalents 95,277 150,129 Bank overdrafts and loans – due within one year (3,633) (4,830) Short-term net financial position 91,644 145,299 Non-current financial liabilities (10,886) (14,140) Non-current financial assets and fair value changes in financial hedging instruments 18,071 17,847 Medium/long-term net financial position 7,185 3,707 Net financial position 98,829 149,006
43 Gruppo 24 ORE
2009 annual financial report
segment reporting
Publishing Area – Generalist publishing
Publishing is the division that heads up the daily newspaper Il Sole 24 ORE, its bundled add-on products, theme magazines such as English24, I Viaggi del Sole and House24, the monthlies Ventiquattro and IL – il maschile de Il Sole 24 ORE, plus a number of primary processes (printing and distribution) also managed for other Group segments.
PUBLISHING REVENUE BY PRODUCT
(in thousands of euro) c2009 c2008 change Newspaper 168,224 207,076 –18.8% Add-on products 10,152 27,675 –63.3% Other 8,982 16,210 –44.6% Total 187,358 250,961 –25.3%
Information on products, customers and operations
The editorial offices Iof l Sole 24 ORE are organised according to theme sections and are located at the Milan and Rome offices and at six otherI talian officesF ( lorence, Genoa, Bologna, Turin, Padua and Trieste). The daily newspaper, in particular, has international coverage provided by correspondents seconded to eight foreign locations (Brussels, Buenos Aires, London, Frankfurt, Shanghai, New York, Paris and Madrid). The overall editorial organisation relies on 336 journalist employees, who also contribute to the contents of the portal www.ilsole24ore.com.
The newspaper is printed at the two owned printing centres in Milan and Carsoli (province of L’Aquila) and at the following six independent production sites: Verona, Mechelen (Belgium), Benevento, Catania, Cagliari and Medicina (Bologna). Out of a total of 128.5 million copies printed in 2009, 59% were printed at company owned plants and 41% at independent plants.
Market, performance and main activities in 2009
Total Publishing Area revenue fell by 25.3% from 2008. This decrease affected all products, and hit those with a high proportion of advertising content particularly hard.
Revenue generated by the daily newspaper fell by 18.8% from the previous year. Advertising revenue
44 Gruppo 24 ORE
2009 annual financial report
decreased by -24.1% and reflected the strong growth, above market averages, during the two-year period 2007-2008 and the particularly severe contraction in financial advertising.
The most recent circulation data A( DS moving average December 2008-November 2009) show a 9.6% drop in the number of copies distributed in Italy by leading paid national dailies as compared with the same period in the previous year. This is the principal reason for the policy to reduce promotional sales of copies implemented by publishers. For this specific reason, the circulation of Il Sole 24 ORE during this period fell by 11.7%, with about 296 thousand copies on average.
Among the editorial products, highlights worthy of mention included the traditional event: “Telefisco – le ultime manovre e le altre novità per imprese e professionisti” (the latestT elefisco edition focusing on the latest national budget manoeuvres and other new developments for businesses and professionals) – with over 72 thousand participants and 130 venues linked by videoconference – and “Forum Lavoro 2009,” the 2009 edition of the employment forum, which focused on the new compliance obligations for businesses relating to introduction of the “comprehensive employment & payroll register” [“libro unico sul lavoro” – which replaces several different ledgers and records kept previously], with more than 50 locations linked by videoconference. Another point to note is that the Italian government’s anti-crisis manoeuvre in the early months of 2009 introduced numerous accounting and reporting changes for businesses and professionals. In order to assure even more detailed service information for its readers, Il Sole 24 ORE decided to follow this topic with a combined print and online special (with a free part, consisting of support documentation and articles on the topic, and a paid part consisting of additional content and a video forum held by an expert). Particularly important among the various regulatory innovations introduced to combat the crisis were those concerning numerous facilitations and bonuses to buoy up consumer spending and household income. The need for information relating to introduction of these new programmes prompted the newspaper to publish an editorial product (“Guide to the Bonuses”) able to summarise in a single paid insert all facilities available to households – from the purchase of more ecological cars to the scrapping of old domestic appliances. Lastly, besides the two traditional publications relating to tax returns – “Guida 730”, a product indispensable for do-it-yourself preparation of personal income tax returns, and “Guida UNICO 2009” with a CD Rom (for preparation of comprehensive tax returns) – another highlight was the publication of “Bilanci 2008” (2008 Financial Statements) – dedicated to the annual general meetings of listed companies and containing a detailed presentation of each set of financial statements with comments by the Finance editorial team – and of “Il nuovo process civile” (= The new civil court procedure), a guide to the changes introduced by the relevant reform. Among the free publishing products, we highlight the definitive text of “Manovre d’estate” [= Summer manoeuvre – relating to interim government measures] and a series of practical guides on changes affecting workers and
45 Gruppo 24 ORE
2009 annual financial report
pensioners, “Tremonti ter” [relating to tax benefits for reinvestment of earnings in equipment], “Famiglia e scudo fiscale” [= The family and the tax amnesty – relating to repatriation of offshore assets], “Guida alla sanatoria di Colf e Badanti [= Guide to legalising position of home helps and carers] (linked to a special day on the subject transmitted in streaming on our site], “Guida alla scelta del Master” [= Guide to choosing a master course], and “Guida al condominio” [= Guide to the condominium], plus the dossier “In lite con il Fisco” [= Litigation with the tax authorities]. The line of in-depth paid add-ons to the newspaper, launched in the fourth quarter of 2008, continued to enjoy success throughout FY 2009 (Lezioni per il futuro [Lessons for the Future], Nuovo ABC dell’Economia [New ABC of Economics], Il Muro che cambiò la storia [The Wall that Changed History], Manuale di navigazione per piccole imprese [Navigation Manual for Small Businesses]). These were detailed manuals containing questions and answers by experts on topics of great current interest, as well as the first book of photographs published with Alinari 24 ORE in celebration of the 20th anniversary of the fall of the Berlin Wall.
On the add-on market, 2009 confirmed the negative trend that reached critical proportions in late 2008, with estimated gross sales of € 242 mn, down 22% from the previous year. This change largely reflected the steady decline in average sales for each individual product. The number of new series grew from 2008, while the average price fell slightly. The increase in the number of initiatives did not offset the decrease in average sales. Some publishers managed to make up for the contraction in revenue by increasing the number of product launches, while others with the same number of initiatives reported a decline in step with that of the market. In spite of the increased number of series offered as compared with 2008, the 24 ORE Group suffered a severe downturn in sales –( 63.3%) due to the sharp reduction in average sales per individual initiative. In order to combat the heavy sales loss and maintain positive margins for individual initiatives, the 24 ORE Group is continuing to concentrate on launches focusing on the core target, maintaining a high standard of quality by curbing acquisition costs and communication investments.
The free newspaper market is suffering from its total reliance on advertising revenue. In the international market, the leading players in the sector have been showing major losses of profitability and have shut down the publications that were in greatest difficulty. Against this backdrop, the performance 24minuti fell short of expectations. Accentuation of the economic crisis during the first part of 2009 caused the Group to decide to stop publication from the beginning of April, despite the public’s appreciation of the publication’s editorial approach.
In the magazine sector, the decline in newsstand sales and, in particular, advertising sales continued, which were down by –28.3 %, as reported by Nielsen (data updated to December 2009 – excluding professional magazines).
46 Gruppo 24 ORE
2009 annual financial report
The area’s magazines experienced a decrease of 25.2% in sales from the previous financial year. During 2009, the men’s magazine “IL – il maschile del Sole 24 ORE” – launched in September 2008 – confirmed its success thus far and withstood the impact of the advertising downturn. “Ventiquattro” magazine has been harder hit by the downturn in advertising revenues than the men’s magazine. Lastly, once again in connection with advertising sales trends, in the early months of 2009 the Group decided to suspend publication of “House 24” magazine.
Support for newsstand promotions of magazines continued in the fourth quarter of 2009, with the launch of subscription campaigns.
An early renewal reminder notice was sent out for “English 24” with a bundled offer with the Business English Course kit (an add-on that had previously been returned).
“I Viaggi del Sole” collaborated as media partner on realisation of the add-on “La Parola Dipinta.” Contacts were made with an international service for foreign sale of the rights to certain monographic issues that when translated as collector items might become add-ons.
AREA results
(in thousands of euro) c2009 c2008 change Circulation/other revenue 88,359 113,829 –22.4% Revenue from advertising 99,000 137,132 –27.8% Revenue 187,358 250,961 –25.3% Gross operating profit (loss) (4,561) 24,694 –118.5% GOP margin % –2.4% 9.8% –12.3 p.p. Operating profit (loss) (9,610) 18,800 –151.1%
47 Gruppo 24 ORE
2009 annual financial report
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 (Business Media) – and for some third-party media.
SYSTEM REVENUE
(in thousands of euro) c2009 c2008 change Captive revenue 147,018 193.675 –24,1% Non-captive revenue 11,180 10.471 6,8% Total 158,197 204.146 –22,5%
REVENUE BY GROUP PRODUCT
(in thousands of euro) c2009 c2008 change Publishing 98,237 135,700 –27.6% Professionals 3,524 3,277 7.5% Radio 12,146 12,306 –1.3% Multimedia 6,194 5,798 6.8% Culture/Events 150 354 –57,5% Revenue reversed to Areas 120,252 157,435 –23.6% System revenue 26,766 36,240 –26.1% Total revenue for Group products 147,018 193,675 –24.1%
Information about products, customers and operations
In Italy the advertising sales agency has a matrix organisation based on district and product/type. The various sales territories are managed by eight different local offices that are either branches or sales agencies. They are flanked by the networks specialised by medium, product or type, i.e. Websystem, Radio, Regulatory and Real Estate Advertising, Specials, Regional Magazines and Fashion-Luxury- Furnishing.
As at 31 December 2009 the sales organisation in Italy had 61 employees and 136 agents.
Outside Italy, advertising sales are handled by the International Division, present – via a network of representatives located in all major countries. The subsidiaryI l Sole 24 ORE UK Ltd. handles the sale of advertising space in the United Kingdom.
The System Area’s active customer base (i.e. customers for which at least one advertisement was published during the year) consists of over 7,600 customers. They mostly consist of majorI talian and foreign companies active in the finance, automotive, professional services, public administration, and manufacturing sectors.
48 Gruppo 24 ORE
2009 annual financial report
Market, performance and main activities in 2009
The advertising market closed 2009 with a slight improvement over its performance during the first nine months of the year, although it still posted double-digit losses (–13.4%; total media, including television – source Nielsen). This slowdown in losses owed not so much to market recovery as to comparison of Q4 2009 with Q4 2008, when the impact of the economic crisis was already evident (the heaviest losses were posted in October 2008).
The reference market for System, which does not reflect the local type of newspapers, television and, in the case of internet, only display, ended down by –19.3%. Magazines reported the worst performance (–28.7%).
Overall, the System Area ended 2009 with revenue down by –22.5%, which is adjusted to –19.5% if the suspended publications are excluded, including the free newspapers and loss of certain franchises. Against the backdrop of cutbacks in advertising spending, especially print media, and the crisis in the financial sector, the advertising agency, which in contrast with the market as a whole had finished 2008 in the black, ultimately ended 2009 with results that were substantially the same as the overall market. The comparison reflects the strong spurt in growth during the two-year period 2007-2008. Indeed, during 2006-2009, net of the advertising revenue realised by the publisher San Paolo, System had an annual average concentration of –2.3%, while the market fell by –7.3%, and even –10.1% for the print division.
The newspaper was badly hit by the current crisis, falling 24.1% from 2008. Public notice revenue paid for the strong growth recorded in the preceding two years (+16.6%), while financial advertising was most badly hit by the severe market downturn. The number IPOs, which had already fallen in 2008 from 2007, totalled only five in 2009, and only one was published in national newspapers. This was joined by the effects of CONSOB (Italian securities & exchange commission) resolutions nos. 16840 and 16850, which eliminated the obligation for publication of a whole series of financial announcements in daily newspapers. This obligation was then temporarily restored inA ugust – only for some types of announcements – by CONSOB resolution no. 17002.
The top four business segments in terms of the number of advertising pages published in Il Sole 24 ORE newspaper accounted for 43% of total advertising. Overall they were substantially stable as compared with the previous year (–0.9%). The performance of the same segments in total paid newspapers was far more critical (–13.2%). However the amount of space bought by advertisers in the automotive segment grew at Il Sole 24 ORE, while declining sharply on the daily newspaper market as a whole. A last point to note is the excellent performance of the Tourism/Travel segment
49 Gruppo 24 ORE
2009 annual financial report
(+37%). If daily newspapers are in trouble, this is even truer of their bundled supplements. There were decreases of around -40% for monthly supplements and men’s supplements. Our monthly Ventiquattro reflected this trend, while the advertising sales ofIL were noteworthy, reaching a total of 858 pages. The Apparel segment held the biggest share in the two supplements published by the 24 ORE Group, publishing 432 pages and accounting for over 30% of total advertising pages.
In contrast with a general drop of 7.7% in advertising space bought on the radio market (Nielsen – January-December 2009), Radio 24 reported performance for all of 2009 that was almost unchanged from the previous year, or –0.9%. System’s overall performance for the radio medium was 2.4%, thanks to the new sales concession acquired for Radio Margherita in the period.
When counted by seconds, Radio 24 maintained its 7.8% share of the entire market. Certain major segments are growing, like the Automotive segment, which has a share of 21.6% and grew 25.3% from 2008. Finance/Insurance, the second-ranked segment, grew by 10.6%. Major growth continued in the following segments: Leisure Time (+133.3%), Pharmaceutical/Healthcare Products (+109.1%) and Tourism/Travel (+53.8%).
The sale of online advertising space, both for certain sites belonging to the 24 ORE Group, and for major sites belonging to other publishers, finished the year with an overall change of– 2.3% from the same period of 2008. This contrasted with a display advertising market (commercial advertising net of certain types on which Websystem does not operate) that reported a decrease of –1.3% (Source: FCP/Assointernet January-December 2009).
24 ORE Group sites (ilsole24ore.com, radio24.it, b2b24.it and Blogosfere) that represent 57% of total sales performed negatively (–10.9%), mainly due to the elimination of certain sites in the b2b24 category. On a comparable basis, the decrease falls to –3.2%. The growth reported on the sites of franchised independent publishers was far higher than the market average, closing up 12.2%. This was largely the result of the performance of certain local daily newspapers that belong to the syndication Italianews, and of certain franchised vertical sites like Meteo.it, Ticketone and Rockol. The site ilfoglio. it also posted an excellent result; this site was received under franchise in the second half of the year.
AREA RESULTS
(in thousands of euro) c2009 c2008 change Circulation/other revenue 531 589 –9.8% Revenue from advertising 157,666 203,557 –22.5% Revenue 158,197 204,146 –22.5% Gross operating (10,541) (2,655) –297.0% GOL margin % –6.7% –1.3% –5.4 p.p. Operating loss (10,544) (2,659) –296.6%
50 Gruppo 24 ORE
2009 annual financial report
Professionals Area – Professional and specialist publishing
The Professionals Area targets professionals (mainly chartered accountants, lawyers, and employment consultants), the public administration, and SMEs with broad-spectrum publishing solutions comprising magazines, books, data banks, online services, training courses, and management software. The Professionals Area comprises, among others, the product system branded Frizzera, the Pirola brand, and software under the Via Libera and Impresa24 brands. It also comprises the software companies ESA Software S.p.A., Data Ufficio S.p.A. and STR S.p.A.
The Professionals Area also manages B2B integrated communication activities targeting SMEs in specific sectors, including agribusiness and food, retail distribution, building, ICT, and welfare, directly managing dedicated advertising sales networks.
PROFESSIONALS REVENUE BY BUSINESS UNIT
(in thousands of euro) c2009 c2008 change Tax, legal & PA 89,592 94,069 –4.8% Sector-specific publishing 48,737 61,055 –20.2% Software solutions 74,490 51,243 45.4% Training 12,847 12,178 5.5% Other 33 15 114.4% Total 225,698 218,561 3.3%
Information about products, customers and operations
TheP rofessionals Area makes products designed to meet all professional needs in terms of publishing, training, management and communication of specific targets (professionals, businesses and public administrations) using multimedia product systems. As at 31 December 2009 the Area’s product line was mainly comprised by B2B items consisting of (a) books (about 1,000 catalogue titles for the Tax, Legal and PA business unit (BU) and about 600 titles for the sector-specific Publishing BU), (b) magazines/ periodicals (about 45 specialised publications for the Tax, Legal & PA BU and some 90 specialised titles for the sector-specificP ublishing BU, (c) databases (16, all accessible online), (d) management software (about 50 products), and (e) training (approximately 373 courses during the year).
Magazines/periodicals – which basically refer to the Tax, Legal and PA and sector-specificP ublishing BUs – are sold mainly as subscriptions via mail order or, alternatively, distributed on a select circulation basis. The average circulation figure for active subscriptions, which represents the average calculated at 31 December of the number of monthly subscriptions, was about 349 thousand in 2009, compared with about 392 thousand the previous year. The renewal rate averaged approximately 71%.
51 Gruppo 24 ORE
2009 annual financial report
E-publishing products (databases) are sold as subscriptions, mainly via the agent network. In 2009 the average number of subscriptions was about 45 thousand, with an 11% YoY increase and a 76% renewal rate.
Market, performance and main activities in 2009
TheP rofessionals Area as a whole reported revenue growth of 3.3% over the previous year. This was entirely attributable to the changed scope of consolidation, reflecting acquisitions made during 2008 (ESA Software S.p.A. and Newton Management Innovation S.p.A.).
On a comparable consolidation basis, revenue was down by 8.7% mainly because of lower advertising sales for media managed by sector-specificP ublishing (–24.1%) and because of the negative trend of some product lines of the Tax & Legal business unit (–4.7%).
More specifically, the fall in revenue for theTax & Legal BU was due to the downturn in revenue of the magazines & periodicals (–10.8%), books (–17.7%) and customised services targeting the Public Administration. In the case of the magazines and periodicals and books lines, revenue reflected the effects of decisions to rationalise the catalogue with the closure of unprofitable print publications and their conversion into online periodicals and reduce the number of titles on unprofitable book product lines. The magazines and periodicals line remained the principal product line and accounted for 48.8% of revenue as compared with 52.1% in 2008. The line maintained high margins, thanks both to cross-selling policies, which increased average spending, and to significant action on costs. Magazines & periodicals continue to feature high subscriber loyalty, aided also by the development of exclusively online publications, created for the very purpose of meeting the relevant target’s increasing propensity to use electronic media and Internet.
2009 confirmed the growth of e-publishing revenue (+6.7%) and of online products (+35.7%). This is underpinned by a constant and significant effort in terms of product, editorial and technological innovation in order to respond quickly and effectively to evolution of the target’s usage models, and by the development of system-wide offers.
Among the business unit’s publishing novelties, we highlight the launch in January of a new periodical under the Frizzera brand – “Guida Practica per le Aziende” [= Practical Guide for Companies] – targeting those who handle the operational aspects of tax, accounting and legal-entity matters in companies. Since January 2009 the new site of “Guida al Diritto” [= Law Guide] has been on line and is set to become the lawyers’ portal, integrating the magazine’s contents with those of the database
52 Gruppo 24 ORE
2009 annual financial report
Lex24. Once again in January, migration to the solely online version took place of “Guida Normativa” [= Regulatory Guide], a historical professional daily newspaper, and of “Il Merito” [a monthly concerning case law]. February featured the birth of the first database with an e-newspaper, thanks to integration of contents between online “Guida Normativa” and “Nuovo Tributi Lavoro Società” [covering a broad range of professional topics and featuring the best of related Il Sole 24 Ore articles and services], the Group’s most popular professional database. Since the end of June 2009 the new product “Sistema Elettronico Lavoro Frizzera” [= a new database for employment/labour professionals] has been on line, integrated with the related “UnicoLavoro” database, already present in the catalogue, which is the main e-publishing product aimed at the target. In FY2009 the Internet portal “Professionisti24”, constantly enhanced with editorial and technological improvements, featured growth of one-time visitors by 17.4% YoY and of average page views by 26.5% YoY. Gradual migration was initiated for the area’s databases to a new, more advanced technological platform, together with introduction of new online search approaches in line with that of the most common search engines. Lastly, we launched the “Digital Bookshop” project to create an online bookstore for sale, in e-commerce mode, of books and monographs in protected PDF files. Sale of this type of product, already successfully tested, responds to the new consumer usage model, featuring ever increasing propensity to buy electronic products instead of traditional print products. A new Frizzera e Guida al Lavoro imprint periodical was launched in November – Dossier Lavoro [“Work Dossier”] – that analyses every single institute of law not only in terms of labour law but also social security and welfare contributions, tax and accounting. The new periodical has currently attracted 4,000 subscribers.
Revenue for the Software Solutions BU grew by 45.4% from 2008. Excluding the change in scope of consolidation caused by the acquisition of ESA Software S.p.A. on 30 October 2008 and the Graphics business unit sold by the subsidiary Data Ufficio S.p.A. in September 2009, revenue was still up by 7.3%. This performance, which was especially important during this market phase, was accomplished thanks to innovative sales methods of the Via Libera software, which switched from a one-shot sale to an automatically renewed annual subscription (94% loyalty rate) and launch of the new product Gestione IRAP (“Managing IRAP”). Another positive factor was growth of revenue in the corporate market, in particular of the “Impresa24” product and of sales of new products developed also thanks to reutilisation of software packages produced by acquired companies, i.e. Via Libera Azienda [= general company management], Studio24Edilizia [= specific for the building industry], Studio24Avvocati [= for legal firms], Studio24Commercialisti [= for professional accountants], and Via Libera Paghe Online [= for managing employee pay packets]. The first version of the innovative serviceN “ etWork24” was released during the fourth quarter. Created in collaboration with the subsidiary Diamante, its purpose is to realise an online platform for communication and operating interaction between chartered accountants and their clients (professionals, craftsmen, small businesses and SMEs) that use the Group’s operating software. Data Ufficio brand products, a leader on the market of tax solutions for tax assistance centres
53 Gruppo 24 ORE
2009 annual financial report
(CAF) and the Public Administration, showed a revenue increase of 5.5%. Performance of products under the STR brand was also good (+1.5%), mainly for the part concerning provision of services and customisations and thanks to a significant increase in assistance contracts. A point worthy of note was the success of the STR Vision product in the large-account market – confirming the great interest in the new STR Vision platform – and development of new projects for existing customers, consolidating the linear growth trend. Overall, the SME market also showed growth, thanks to services/maintenance work and to activities for migration of the customer base to STR Vision. At ESA Software S.p.A. the end of FY2009 confirmed the continuing difficulties faced by the business operating software market, especially in the automotive sector. Revenue fell from the previous year, especially for new software licenses and services and for resale of third-party hardware and software.
Revenue for the Training business unit was up 5.5% from 2008. Excluding the change in scope of consolidation represented by Newton Management Innovation S.p.A., acquired during the previous year, revenue was down by 5.0%. This result was due to the change in editorial planning and to cancellation of initiatives in the finance and markets area. The Annual & Eventi line targeting top management was most severely impacted by the crisis. Businesses drastically reduced their spending on communication, severely penalising both the recruitment of sponsors and sponsored events. Good performance also came from the “Master Part-time” courses in the weekend format targeting middle management and from the “Executive Master” courses for executives and managers. The Executive Master course in business management and strategy was complemented by the Executive Master course in corporate finance. The result of short courses/professional refresher programmes was also good.
Among the initiatives distinguishing FY2009, we highlight the 4th Summit Made in Italy and the 3rd Forum Cultura d’Impresa sulla Leadership al femminile [= Business Culture Forum on Female Business Leadership]. These events, together with the series of sponsored conferences, helped to neutralise the negative effect of the decision not to hold the “Tuttorisparmio” event [concerning savings and investments]. In September, we highlight the great success of the 9th Energy Summit undertaken in partnership with IBC of London. Thirteen “MasterF ull-Time” courses of the Business School were held, targeting young university graduates in Milan, Rome and Parma and two new Master courses at the new Rome location: the 10th edition of Media Relations and 11th edition of Diritto & Impresa [= Law and Enterprise]. June featured the start, in Milan, of the 1st edition of the Master in Tourism Economics & Management. Finally, 3 Annual Meetings were organised during the fourth quarter, with the 11th edition of the Annual Assicurazioni [Annual Insurance Meeting] turning out to be a success.
The great attractiveness of the Master24 model was confirmed, i.e. an innovative product combining the multimedia series delivered via newsstands with classroom training for earning a diploma. Among the titles of these initiatives, we highlight (a) M24 Business management & strategy – re-presented
54 Gruppo 24 ORE
2009 annual financial report
in a second, updated edition, jointly with the Corriere della Sera newspaper, (b) M24 Marketing & communication and (c) M24 Administration, finance and control.R evenue of the subsidiary Newton Management Innovation S.p.A. fell from 2008, due to the deep cuts made by large companies in their training budgets and the deferral of decisions on communication, consulting and training programmes that characterised all of 2009. The revenue of Newton’s principal historic clients fell sharply. This phenomenon was offset by broadening the customer base, which was facilitated in turn by affiliation with the 24O re Group, which permitted partial recovery.
The results of thesector-specific Publishing BU were dominated by the contraction in revenue (–20% from 2008), particularly advertising revenue (–24%), which was consistent with market dynamics. The other sources of revenue showed less severe contraction: magazines and periodicals were down by 12% from 2008, while training, especially sponsored training, thoroughly bucked the trend (+45% from 2008). Web related revenue totalled about € 2.4 mn, down by 10% from 2008, especially due to the changes in non-segment advertising revenue. By contrast, the sector-specificP ublishing networks – which serve segment customers – recorded a 10% increase. On the individual markets, the most critical areas are ICT and Building (whose revenue changed by –38% and –34%, respectively, from 2008). This continued the trend of a sharp fall-off in advertising revenue. The Ho.re.ca (Hotel, Restaurants and Catering) and Medicine areas reported decreases of around –30% and –27%, while the trend for Agriculture (–12%) and Retail (–19%) was less negative. The 100% owned subsidiary Faenza Iberica – active in the construction materials segment – suffered from the severe recession afflicting the Spanish property market (sales fell by 56% from 2008). The subsidiary Business Media Web S.r.l. (60% owned) – whose acquisition was completed in January 2009 – closed the year with revenue down by 7% due to the mix of web related sales (the portal www.edilio.it and the newsletter Saie Profiles) that performed well (+21%) and the other revenue that fell instead by 40%.
2009 was also characterised by the drafting of a restructuring plan which is in an advanced stage of implementation through sales of business units, streamlining and organisational simplification. The costs for this restructuring have already been accrued in 2009. At the corporate level, the process for a business combination has begun, which will lead to the merger of the subsidiary Il Sole 24Ore Business Media S.r.l. into the parent by May 2010.
AREA results
(in thousands of euro) c2009 c2008 change Circulation/other revenue 193,074 175,870 9.8% Revenue from advertising 32,625 42,692 –23.6% Revenue 225,698 218,561 3.3% Gross operating loss 26,544 37,137 –28.5% GOL margin % 11.8% 17.0% –5.2 p.p. Operating loss 1,371 23,210 –94.1%
55 Gruppo 24 ORE
2009 annual financial report
Multimedia Area
The Multimedia Area manages three different lines of business: (i) the real-time financial news services business, involved in the production and distribution, in digital format, of specific news content for financial institutions, investors and companies; (ii) the online business, which manages the www.ilsole24ore.com portal and the Shopping24 e-commerce channel; and (iii) the Radiocor press agency.
MULTIMEDIA REVENUE BY BUSINESS LINE
(in thousands of euro) c2009 c2008 change Real-time financial news 18,043 20,790 –13.2% On line 10,508 11,240 –6.5% Radiocor press agency 7,723 7,229 6.8% Group products 115 – 0.0% Total 36,389 39,259 –7.3%
Market, performance and main activities in 2009
Multimedia Area revenue fell 7.3% from 2008. This result reflected different performance in the various business segments.
In the Finance Business Unit segment, which provides real time financial news, the effects of the downturn recorded in 2009 due to the financial crisis reinforced the downward trend that had been going on for several years, especially in the low-end segment. This performance is the result of a reduction in the average sale price of services and greater competitive pressures. In this competitive context, no significant product innovations were introduced on the market, while cases of aggressive sales policies were reported, even for major contracts.
TheF inance BU reported that its revenue was down by 13.2%, consistently with market trends. The fall in revenue for traditional financial information products (Market PRO, Xplane and Vetrina) stems in part from the price cuts offered during renegotiation of certain contracts and in part to cancellation of certain supply contracts to important customers. In response to this situation, the line of offered products was shifted in 2009 towards the middle range (private banking and pension fund managers), which features less competition and has better margins than the low-end segment in which the business unit has traditionally operated. In this perspective, the Market PRO, Xplane and Vetrina products were reinforced both with more advanced functions and the inclusion of higher added value content. Transformation of the Vetrina service into a fully multimedia and interactive mode was completed. Product line upgrades were the driving force behind execution of several agreements with institutional operators for the sale of high-end products on the bank, asset management and
56 Gruppo 24 ORE
2009 annual financial report
pension fund operating segment. The innovative projects worth mentioning include signing of a major contract with a leading bank group for provision of online trading services.
The performance of the Agency (Radiocor) bucked this trend, on an otherwise highly competitive market. Its revenue was up 6.8% due to the increase in sales by the diversified Publishing Products segment (newsletters, magazines, round tables, etc.), together with renewal of the annual contracts with the most weight on revenue in the Public Administration segment, where higher budget resources and a greater focus on communication with citizens led the entire segment to acquire broad-spectrum information and communication services. In the Online BU segment, the internet phenomenon of 2009 was the continuous growth in social networks, and especially the boom enjoyed by Facebook. With over 350 million users at the end of 2009 (of which about 13 million in Italy), it has become one of the top web sites in terms of time spent online. Use of video content on the web continued, especially with the development of YouTube and the birth of co-branded video channels (e.g. BBC, RAI). Likewise, the importance of browsing on mobile terminals grew, partly due to the success of Apple’s iPhone. In Italy, the internet advertising market recovered modestly in 2009 from the previous year (+5%). However, the trend has been unfavourable to publishers for some time now, insofar as the search segment posted the highest growth rate (+11%), while the display segment slipped slightly (–1% from 2008) (source: FCP/Assointernet January-December 2009). The C e ommerce market nearly ground to a halt (+1%) after years of double-digit sales growth (+45% in 2006, +23% in 2007 and +14% in 2008). Its 2009 performance reflected an increase in the number of orders (+13%) but a decrease in average sales ticket amounts (–10%). On this market, the Publishing, Audio and Music segments grew overall by 17% (source: B2C Observatory of the Milan Polytechnic School of Management).
Revenue of the online business unit was down by 6.5% from FY2008. This was the result of the adverse trend in advertising, down by 3.3% in terms of revenue, which joined that of other products, headed by the “Big On Line” database. Highlights of operating performance in this segment were the increase in number of pages visited, reaching an annual total of 743.9 million pages visited in 2009 (+37% from the previous year, source: Nielsen SiteCensus), but without having reached the monthly peak of October 2008 that, coinciding with the height of concern over the financial crisis, had pushed the number of pages visited in just one month to a record 85.9 million. The number of individual monthly visitors rose, reaching an average of 4.5 million (+37% from 2008), with an annual record of 5.3 million in October 2009 (source: Nielsen SiteCensus). The product line was upgraded with the launch of the Motori24 channel in March 2009, generating excellent results both in terms of traffic and advertising sales tied to a vertical target. MediaCenter24 was reintroduced at the end of October 2009: this is the first video channel of an Italian publication to offer a large-size video window (635x405), together with optimisation of pre-roll and post-roll
57 Gruppo 24 ORE
2009 annual financial report
advertising formats. The site’s internal search engine was also re-engineered in 2009.A new premium format was introduced in the advertising area, called background. This allows advertisers to sponsor the home page with a frame that completely surrounds content, guaranteeing high visibility for the promoted brand or programme. Finally, several projects were launched to guarantee prompt, detailed processing of the site navigation metrics necessary for analysis and development of the business, redesign the site (planned for the first half of 2010) and the presence of Il Sole 24 Ore in social media. In the eCommerce area, sales grew on Shopping24 to € 12.5 mn (+17%, consistently with market performance in the publishing segment). It not only includes Group products (97% of transaction volume) but also a small portion of third party products (3%), through the commercial partnerships established with operators in segments where the Group does not have a presence (e.g. Hoepli.it, Yoox, Born4Shop, Bow.it and Vini24).
AREA RESULTS
(in thousands of euro) c2009 c2008 change Circulation/other revenue 30,672 33,375 –8.1% Revenue from advertising 5,717 5,884 –2.8% Revenue 36,389 39,259 –7.3% Gross operating profit (loss) (2,438) 650 –475.4% GOP margin % –6.7% 1.7% –8.4 p.p. Operating profit (loss) (2,662) 307 –966.9%
58 Gruppo 24 ORE
2009 annual financial report
Radio Area
The Radio Area manages the national radio station Radio24, a news and talk radio with an editorial format alternating news and entertainment programmes based exclusively on speech. Every week, over 30 different programmes cover all the key areas of public interest, ranging from national and international news to business and finance; from topics concerning the family and home to sport, culture and leisure; and from wellbeing to work.
In 2009 the radio audience grew by 1.9% from the previous year, reaching 39.1 million daily listeners according to the last Audiradio survey. RAI Radio1 confirmed its position as the most popular radio station, with over 6.2 daily listeners, while RTL 102.5 came in second place with 5.3 million listeners. Public radio audiences and, in general, informational radio audiences, declined from 2008 in favour of commercial and entertainment radio. The biggest loss was sustained by Rai Radio 2, which lost over 1 million listeners Public. The private national broadcaster that enjoyed the strongest audience growth on an average day was Radio 105, which acquired over half a million new listeners as compared with 2008, breaking the barrier of 4.5 million listeners for a 13.4% increase (Source: Audiradio).
Radio 24 comes in tenth place in national radio rankings, with 1,885,000 daily listeners.
Compared with the previous year, Radio 24 suffered from the same decline in audiences that affected public and informational broadcasters, posting a loss of over two hundred thousand listeners.
Starting in January 2009, Audiradio has flanked its traditional survey method based on telephone interviews with a panel survey based on a paper-based radio diary. This new tool made it possible to acquire information about the radio listening habits over 7-day, 14-day, 21-day and 28-day periods. Radio 24 had 4.6 million listeners over a 7-day period, 5.2 million listeners over a 14-day period, 5.6 million over a 21-day period and 5.8 million listeners over a 28-day period. The composition ofR adio 24 audience is predominantly male (72% men and 28% women) and adult (68% between the ages of 25 and 64), with a high level of education (81% university and second school graduates) belonging to the most prestigious professional categories (25% professionals, executives, entrepreneurs, professors, intellectuals and teachers; 22% white collar workers) and concentrated in northern and central Italy (83%). (Source: Audiradio. 2009 Total).
The national radio advertising market ended 2009 with sales of € 436 mn, down by 7.7% from the previous year (source: FCP Assoradio Observatory). When measured in terms of seconds, the radio advertising market grew instead, by 1.3% from 2008. Analysis of the total radio market segments
59 Gruppo 24 ORE
2009 annual financial report
shows that Automobiles, Publishing Media and Food were at the top of the ranking, followed by Distribution, Telecommunications and Finance/Insurance.
Radio Area revenue grew slightly by 0.6%. Revenue generated by marketing, sponsorships, technical services and audio-video productions created for other Group Areas were up slightly. The trend in the advertising segment was better than the market performance. Radio 24 realised revenue that was just a little lower than in the previous year (–1.3%), with an increase in advertising space (+2.3%).
Activities in 2009 were marked by the policy to improve the quality of the radio signal and coverage of certain locations in Valle D’Aosta, Lombardy, Liguria, Emilia Romagna, Lazio and Sicily through investments in frequencies. Radio 24 reaches 86.9% of the Italian population with 244 transmitters located nationwide. Finally, on occasion of its tenth anniversary, in October Radio 24 launched a multi-themed television and online campaign in order to widen its audience.
AREA RESULTS
(in thousands of euro) c2009 c2008 change Circulation/other revenue 617 377 64.0% Revenue from advertising 12,464 12,624 –1.3% Revenue 13,081 13,001 0.6% Gross operating loss (1,293) (1,327) 2.6% GOL margin % –9.9% –10.2% 0.3 p.p. Operating loss (5,016) (4,802) –4.4%
60 Gruppo 24 ORE
2009 annual financial report
Corporate and Centralised Services Area
The Corporate Area comprises the Group management and co-ordination functions and support services, such as information systems and facility management that, together with administration, procurement and human resource management services, are charged to the business divisions according to activity-based costing.
ThisA rea also includes certain activities that by virtue of their limited size, or pending integration in the business areas, are directly managed by Corporate units.
ThisA rea includes Group activities in the culture segment, through 24 ORE Cultura S.r.l. and Alinari 24 ORE S.p.A. Its activity ranges from the planning and staging of art and photography exhibitions, intermediation of photographic reproduction rights, sale of objects and photographs, publication of literature books (Sheiwiller imprint), art and photographs sold on a catalogue or contract basis, educational products and digital image processing services.
Revenue of the Culture BU slipped by 10.2% in 2009. This reflected the difficult cyclical period, which reduced consumption of cultural products, sponsorship budgets and Christmas gifts by firms and public subsidies for the sector. The 2009 performance of 24 ORE Cultura S.r.l. pales particularly in comparison with what was accomplished in 2008, especially the great success of the Canova exhibition at Palazzo Reale in Milan. Two events are worthy of special mention for 2009: the exhibition “F.T. MARINETTI=FUTURISMO” - which made it possible to expand awareness of Marinetti from that of inventor and champion of Futurism, to that of writer and publisher of Futurist texts – and, at Palazzo Reale in Milan, the exhibition “Monet – il tempo delle ninfee” [= Monet – the time of water lilies].
AREA RESULTS
(in thousands of euro) c2009 c2008 change Circulation/other revenue 7,733 9,165 –15.6% Revenue from advertising 813 354 129.7% Revenue 8,546 9,518 –10.2% Gross operating loss (32,398) (9,216) –251.5% GOL margin % –379.1% –96.8% –282.3 p.p. Operating loss (41,009) (17,055) –140.5%
61 Gruppo 24 ORE
2009 annual financial report
Main separate income statement and statement of financial position figures of the parent
Income Statement
highlights of INCOME STATEMENT
(in thousands of euro) c2009 c2008 Revenue from sales and services 407,202 486,196 Other operating income 13,604 15,051 Personnel expense (153,756) (141,315) Change in inventories (1,842) (1,268) Purchase of raw materials and consumables (28,596) (36,802) Services (213,046) (237,087) Other operating costs (35,241) (35,080) Provisions and provision for bad debts (8,019) (7,930) Gross operating profit (loss) (19,693) 41,765 Depreciation, amortisation and impairment losses (13,374) (13,102) Gains/losses on disposal of non-current assets 225 2 Operating profit (loss) (32,842) 28,665 Financial income 2,727 10,640 Loss from investments (20,642) (7,227) Profit (loss) before tax (50,757) 32,078 Income taxes 4,322 (11,156) Profit (loss) for the year (46,435) 20,922
Statement of financial position
highlights OF STATEMENT OF FINANCIAL POSITION
(in thousands of euro) c2009 c2008 Non-current assets 297,676 309,837 Current assets 282,731 338,608 Non-current assets held for sale 1,591 – Total assets 581,998 648,445 Equity 323,869 378,139 Total equity 323,869 378,139 Non-current liabilities 56,676 65,865 Current liabilities 201,453 204,441 Total liabilities 258,129 270,306 Total equity and liabilities 581,998 648,445
62 Gruppo 24 ORE
2009 annual financial report
Statement of cash flows
HIGHLIGHTS OF SEPARATE CASH FLOWS
(in thousands of euro) c2009 c2008 Profit (loss) for the year (46,436) 20,922 Adjustments 18,760 567 Changes in net working capital 946 (45,891) Net cash used in operating activities (26,730) (24,401) Investments (13,615) (65,808) Disinvestments and other changes 555 (7,256) Net cash used in investing activities (14,473) (73,064) Free cash flow (41,203) (97,465) Net cash from (used in) financing activities (8,525) 1,782 Net decrease in cash & cash equivalents (49,728) (95,682) Opening 151,227 246,910 Closing 101,499 151,227
63 Gruppo 24 ORE
2009 annual financial report
Other disclosures
Corporate governance
With the resolution passed at the Shareholders’ Meeting held on 20 August 2007, Il Sole 24 ORE officially subscribed to the Corporate Governance Code for Listed Companies issued by Borsa Italiana S.p.A.
The primary objective of the corporate governance system adopted by the Company is the creation of shareholder value, in the awareness of the importance of transparency for corporate choices and decision-making – and also of the need to set up an effective internal control system.
Pursuant to Article 123-bis of the Italian Consolidated Law on Finance, Article 89-bis of the CONSOB (Italian securities & exchange commission) Issuers’ Regulation, and Article 1A.2.6 of Instructions to the Milan Bourse Regulation, we have prepared the Corporate Governance Report. Besides describing the corporate governance system adopted by the Group, the Report also provides information concerning ownership status, adherence to the Corporate Governance Code, and compliance with consequent commitments.
The Report can be consulted at the website www.gruppo24ore.com, in the Governance section. It consists of two parts: the first part contains a description of the governance set-up, whilst the second part reports on implementation of Corporate Governance Code recommendations.
Below we present the points most relevant to the Management Report.
Ownership status and treasury shares
As at 31 December 2009, the share capital of Il Sole 24 ORE S.p.A., fully subscribed and paid in, totalled € 35,123,787.40, divided into 90,000,000 ordinary shares (67.50% of share capital) and 43,333,213 special shares (32.50% of share capital), of which 4,894,693 treasury shares, without any indication of par value.
Pursuant to Article 93 of Italian Legislative Decree no. 58 of 24 February 1998 (the Italian Consolidated Law on Finance), Confederazione Generale dell’Industria Italiana – Confindustria (the Confederation of Italian Industry), which owns all ordinary shares of Il Sole 24 ORE S.p.A.,
64 Gruppo 24 ORE
2009 annual financial report
accounting for 67.50% of shares issued and 71.17% of shares outstanding, directly exercises control of Il Sole 24 ORE S.p.A.
All Il Sole 24 ORE S.p.A. shares currently owned by Confindustria, as well as any future shares that it might acquire, are registered on a fiduciary basis in the name of Ms. Emma Marcegaglia, in her capacity as Chairwoman of Confindustria.
With the exception of the Company (in the case of treasury shares), shareholders cannot own special-category shares to an extent greater than one fiftieth of share capital plus one share. The limit is applied both to shareholdings directly owned by an individual shareholder and to (i) shares owned by the shareholder’s immediate family, including the spouse not legally separated, co-habiting children, and those who are maintained by the shareholder; (ii) shares indirectly owned via controlled companies, trustees, or interposed persons; (iii) shares directly or indirectly owned by a pledgee or holder of beneficiary interest (usufructuary), and when the corporate rights are attributed to them, and borrowed shares.
The limit also applies to shares owned by the group to which the shareholder belongs, meaning the group formed by subsidiaries, parents, or jointly controlled entities, and the group formed by parties associated with the shareholder, whatever their legal status might be.
Those who own special-category shares exceeding the limit established by the Company By-Laws are under obligation to notify the Company of this in writing immediately after occurrence of the event causing the excess. Excess shares owned must be sold within one year after notification or, in absence of the latter, after official complaint by theC ompany of infringement of the ban.
For shares owned in excess of the ownership limit established by the Company By-Laws, the shareholder does not have the right of registration in the Shareholder Register and exercise of corporate rights. Dividends accruing on excess shares remain acquired by the company, which posts them in a specific reserve.
Special-category shares are assigned a preference dividend of 5% based on the share’s implicit accounting parity and that cannot be accumulated from one financial year to the next.
As at the date of the Board of Directors’ meeting, based on the entries in the Shareholder Register, and taking into account the notifications received pursuant toA rticle 120 of the Italian Consolidated
65 Gruppo 24 ORE
2009 annual financial report
Finance Act, the following parties directly or indirectly own Company shares accounting for 2% or more of share capital:
PARTIES DIRECTLY OR DIRECTLY OWNING COMPANY SHARES ACCOUNTING FOR 2% OR MORE OF SHARE CAPITAL
declarant direct shareholders % of ordinary % of capital share capital voting rights Ordinary shares Confindustria - Confederazione Confindustria - Confederazione 67.500% 67.500% Generale dell’Industria Italiana Generale dell’Industria Italiana Special-category shares Il Sole 24 ORE S.p.A. Il Sole 24 ORE S.p.A. 3.671% 3.671% Edizione S.r.l. Edizione S.r.l. 2.000% 2.000%
There are no shareholders exceeding the special-share ownership limit underA rticle 8 of the Company By-Laws.
On 28 April 2009 the Shareholders’ Meeting renewed authorisation for the Board of Directors, without any time limit, to dispose of special-category treasury shares, pursuant to Article 2357-ter of the Italian Civil Code as per the terms and approaches envisaged by the Stock Option and Stock Granting Plans.
The Shareholders’ Meeting has not delegated any powers to the Board of Directors either to increase share capital under Article 2443 of the Italian Civil Code or to issue equity financial instruments.
There are no Shareholder Meeting authorisations to buy back own shares pursuant toA rticle 2357 et seq. of the Italian Civil Code.
Stock granting plan for employees
On 30 October 2007, the Board of Directors and the shareholders approved a plan for the granting of free special-category shares of Il Sole 24 ORE S.p.A. open to all employees of the parent and of Nuova Radio S.p.A. for the years 2007, 2008, 2009 and 2010.
The shares are granted to all employees who, on the last day of the second month prior to the month when the shares are actually granted (the “grant date”), have an indefinite-term or fixed-term employment relationship with Il Sole 24 ORE S.p.A. or Nuova Radio S.p.A..
On 15 December 2009, for the tranche relating to 2009, employees were granted 916,783 special
66 Gruppo 24 ORE
2009 annual financial report
shares, coming on top of the 2007 and 2008 tranches, consisting of 1,074,343 special shares. The number of shares in the third tranche was calculated according to the reference price (€ 2.055 per share), in turn calculated based on the arithmetical average of the closing prices of special-category shares recorded on the Mercato Telematico Azionario (MTA - Milan screen-based equity market) during the 30 calendar days preceding grant date.
Therefore, as at 31 December 2009, a total of 1,991,126 special shares had been granted, free of charge, to employees.
Stock Option Plan
On 30 October 2007, the Board of Directors and Shareholders’ Meeting of Il Sole 24 ORE S.p.A. approved the 2008-2010 Stock Option Plan (“Plan”) to give certain key figures in the Company performance incentives. The plan established assignment to beneficiaries, in just one instalment, of a total number of 2,250,000 options to purchase an equal number of the Company’s special-category shares.
TheP lan’s beneficiaries are: a. the Chief Executive Officer of theC ompany; b. The following business managers, who report directly to theCEO : b.1: i. Director of the Publishing Division; ii. Director of the Professionals Division; iii. Director of the System Division; b.2: iv. Director of the Multimedia Division; v. Director of the Radio Division. c. The heads of theA dministration, Financial & Control and of the Human Resources functions; d. 6 managers of other functions reporting to the CEO.
Options have been allocated to beneficiaries in the following proportions: a. 750,000 options to the Chief Executive Officer of theC ompany; b. (i) 210.000 Options for each of the business managers listed at b.1. and (ii) 150,000 Options for each of the business managers listed at b.2.; c. 105,000 options to each of the heads of the Administration, Finance & Control and of the Human Resources & Labour Relations functions; d. 60,000 options to each of the managers of the other 6 functions reporting to the CEO.
67 Gruppo 24 ORE
2009 annual financial report
The options have been assigned in just one tranche and beneficiaries cannot exercise them before three years have passed since grant date (vesting period).
Following departure of several beneficiaries from the Group, including the CEO Claudio Calabi, at 31 December 2009, there were 1,170,000 granted and exercisable options.
The purchase price of the shares will be € 5.623 per share, i.e. equal to the arithmetical average of daily closing prices of the company’s special-category shares on the Milan screen-based equity market (Mercato Telematico Azionario) organised and managed by Borsa Italiana S.p.A., during the 30 (thirty) calendar days preceding the grant date of the options.
Vesting of the options is subject to the condition precedent of equalling or topping a consolidated Group gross operating profit (GOP) amount for financial years 2008-2009-2010, corresponding to the sum of forecast consolidated Group GOP amounts for the same financial years, as approved by the company’s Board of Directors on 30 October 2007 (the so-called “vesting condition”). The objective will be considered to have been achieved even if the sum of actual 2008-2009-2010 GOP is 3% lower than the sum of forecast amounts mentioned above.
In this Annual Financial Report, no costs associated with these options have been recognised because, on the basis of the final 2009 figures and the consequently material change in prospects for 2010 as well, the business plan based on which the above GOP objectives were fixed is no longer relevant.
Organisational, management and control model pursuant to Italian Legislative Decree 231 of 8 June 2001
With the application of Italian Legislative Decree 231 of 8 June 2001 as amended, which introduced a specific regime of corporate liability for certain types of crime, theC ompany has adopted specific in- house rules and regulations aimed at reducing the risk of illicit acts that could benefit theC ompany.
In particular, the Company’s Board of Directors has approved a model of organization, management and control pursuant to Legislative Decree 231/01 (hereinafter “the Model”) which meets the requirements of said legislation and which has been prepared in accordance with the guidelines issued by Confindustria.
The current Model, amended inO ctober 2009, was drafted on the basis of a detailed analysis of the Company’s operations designed to identify potentially at-risk activities: on the basis of the information
68 Gruppo 24 ORE
2009 annual financial report
collected and the observations formulated, the Company has drawn up rules of conduct, principles and control methods for drafting internal procedures.
The Model includes specifications of the field of application and the target audience for the Model, and also defines the functions and powers of the SupervisoryC ommittee, which is appointed by the Board of Directors, and establishes the information that must be provided to this committee.
The Model comprises a special part, which in turn is divided into eight sections that establish specific principles of control designed to prevent (i) crimes against the Public Administration, (ii) white collar crimes, (iii) market abuse, (iv) culpable manslaughter and bodily harm committed in breach of accident-prevention regulations and regulations for the protection of occupational hygiene and health, (v) receipt of stolen goods, money laundering and reuse (use of money, assets or profits having an illegal origin), (vi) computer crime, (vii) copyright infringement committed by Company directors, executives, employees or outsourcers, or (viii) other offences contemplated byL egislative Decree 231/2001, whose risk of perpetration has been deemed remote, possible only in theory but not in practice.
Finally, the Model contains the Code of Conduct and set of principles and ethical and conduct principles designed to prevent commission of the offences envisaged in Legislative Decree 231/2001. The Model has also defined the disciplinary system, broken down according to the various types of recipients of the Model and designed to penalise violation of the provisions of the Model.
So as to ensure the utmost efficacy of application of these rules, theC ompany has promoted awareness of the Model and has arranged for specific training and communication programmes illustrating its contents.
The Model is available for viewing in the Governance section of the Company’s web site: www.gruppo24ore.com.
Disclosure pursuant to Italian Legislative Decree 196 of 30 June 2003 (Code for Personal Data Protection)
Pursuant to the requirements of paragraph 26 of the Technical Protocol concerning minimum security requirements – which forms Annex B of Italian Legislative Decree 196 of 30 June 2003 (“Code for Personal Data Protection”), we advise that, during 2009, we updated our Security Policy Document (“Documento Programmatico sulla Sicurezza”) as per legally established deadlines.
69 Gruppo 24 ORE
2009 annual financial report
The SecurityP olicy Document contains appropriate information concerning security measures adopted by the Company, based on processing performed of personal data, risk analysis, and distribution of tasks and responsibilities for data handling, with the aim of minimising the risk of destruction or loss, even if accidental, of personal data and of unauthorised access or processing not allowed or not consistent with the purposes of data collection. Among the items of information required by the law in question, the aforementioned policy document also describes measures appropriate for assuring data integrity and availability.
Reconciliation between consolidated and parent profit and equity
The statements of reconciliation between consolidated and parent profit and equity are shown in Section 11 of the notes to the consolidated financial statements.
Disclosure pursuant to CONSOB regulation 11971, as amended
As required by Article 79 of the Issuers’ Regulation, the following table shows the shareholdings owned in Il Sole 24 ORE S.p.A. and in its subsidiaries by members of the Board of Directors and Board of Statutory Auditors, by general managers, and by key managers.
full name investee company number of number of number of number of shares shares shares shares owned as at acquired sold owned as at 31/12/2008 in 2009 in 2009 31/12/2009 Claudio Calabi Il Sole 24 ORE S.p.A. 1,140 973 – 2,113 (1) Diana Bracco Il Sole 24 ORE S.p.A. 10,000 – – 10,000 (2) Alberto Usuelli Il Sole 24 ORE S.p.A. 4,200 – – 4,200 (3) Key managers Il Sole 24 ORE S.p.A. 6,483 5,838 – 12,321 (1) (4)
(1) shares from free stock granting plan for all employees. (2) shares owned through a subsidiary. (3) shares owned by the individual and his immediate family. (4) key managers (i.e. strategically accountable managers) include the heads of the four business areas, the chief financial officer and the group human resources director.
70 Gruppo 24 ORE
2009 annual financial report
subsequent Events
The Board of Directors ofI l Sole 24 ORE S.p.A. on 1 February 2010 approved the project for merger into the parent of the wholly owned subsidiary Il Sole 24 ORE Business Media S.r.l.
The purpose of this operation is to simplify the current chain of control underI l Sole 24 ORE S.p.A., in accordance with the structural cost containment plan adopted by the company. Final approval for the merger, which will be retroactively effective to 1 January 2010 for legal, accounting and tax purposes, will take place in May 2010.
In January, the Group disposed of its equity investment in the company Blogosfere S.r.l., equal to 80% of the quota capital, for a total price of € 1.6 mn.
On 12 March 2010, the Board of Directors of Il Sole 24 ORE S.p.A. resolved to appoint Donatella Treu as Chief Executive Officer, granting her the authority associated with that position.
outlook
The changes on theC ompany’s reference markets during the current financial year remains plagued by uncertainty, so that 2010 most probably represents a year of stabilisation or extremely limited growth.
In particular, the advertising market remains dominated by the difficulty of making any forecasts for the entire year. At the Group, the weak signs of recovery that emerged during the first two months in its reference sector are offset by a critical situation in terms of financial advertising, which has been heavily penalised by the impact of statutory and regulatory changes, especially elimination of the obligation for publication in newspapers of the units of foreign CIU funds and associated notices. This was a sector in which the 24ORE Group has historically been a leader.
In the professional segment, excluding activities in the business publishing area (sector-specific publishing), forecasts call for substantial stability, although they are still extremely influenced by the process of transition from paper templates and tools to electronic platforms.
The measures for the current year will thus concentrate, on the one hand, on identifying new products and the evolution of existing ones, in view of best exploiting market changes and the opportunities
71 Gruppo 24 ORE
2009 annual financial report
offered by technology and, on the other hand, continuation of measures aimed to bring costs into balance.
The effect of the measures taken in 2009 and those scheduled in 2010 that are part of the plan for realising total savings of about € 40 mn by 2011, has been estimated to be an additional € 8-10 mn.
On the basis of the foregoing, and in the absence of extraordinary costs that are not foreseeable at this time, expectations are that GOP will improve.
Proposal for covering the 2009 loss
To the Shareholders,
We submit the financial statements of Il Sole 24 ORE S.p.A. at 31 December 2009, which show a net loss for the year of € 46,436,225. We propose that this entire loss be covered by drawing on the following equity accounts: – reserve for capital grants under Law 416/81 for € 9,374,495 – retained earnings for € 37,061,730
Milan, 12 March 2010
Chairman of the Board of Directors GIANCARLO CERUTTI
72 Gruppo 24 ORE
2009 annual financial report
73 Gruppo 24 ORE CON2009 annual financial reportSOLIDATED FINANCIAL STATEMENTS OF THE 24 ORE GROUP AS AT AND FOR THE YEAR ENDED 31 DECE74 MBER 2009 Gruppo 24 ORE CONSOLIDATE2009 annual financial report D FINANCIAL
STATEMENTS COOFNSOLIDATED FINANCIAL STATEMENTS OF THE 24 ORE GROUP THE 24 ORE GROUPAS AT AND FOR THE YEAR ENDED AS AT AND FOR31 DECEMBER 2009 THE YEAR ENDED 31 DECEMBER 75 2009 Gruppo 24 ORE
2009 annual financial report
Consolidated financial statements consolidated Statement of financial position
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(in thousands of euro) note (*) n31/12/2009 n31/12/2008 ASSETS Non-current assets Property, plant and equipment (1) 90,523 96,363 Goodwill (2) 72,867 80,021 Intangible assets (3) 100,511 111,899 Investments in associates and joint ventures (4) 3,098 4,652 Available-for-sale financial assets (5) 2,903 3,386 Other non-current financial assets (6) 19,227 18,650 Other non-current assets (7) 773 994 Deferred tax assets (8) 29,617 15,087 Total 319,519 331,052 Current assets Inventories (9) 15,433 19,988 Trade receivables (10) 193,537 215,590 Other receivables (11) 12,517 4,646 Other current assets (12) 6,847 6,774 Cash and cash equivalents (13) 95,277 150,129 Total 323,611 397,127 Assets held for sale (14) 2,992 – TOTAL ASSETS 646,122 728,179
(*) section 11 of the explanatory notes (notes to the consolidated financial statements). as required by consob resolution no. 15519 of 27 july 2006, the effects of related-party transactions on the statement of financial position, income statement, and statement of cash flows of the 24 ore group are reported in section 13.4 and detailed in section 13.1.
76 Gruppo 24 ORE
2009 annual financial report
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (cont.)
(in thousands of euro) note (*) n31/12/2009 n31/12/2008 EQUITY AND LIABILITIES Equity Total equity attributable to owners of the parent Share capital (15) 35,124 35,124 Equity reserves (16) 180,316 180,316 Revaluation reserves (17) 20,561 20,561 Hedging and translation reserves (18) (333) (104) Other reserves (19) 34,961 32,278 Retained earnings (20) 78,799 72,817 Profit (loss) attributable to owners of the parent (21) (52,564) 16,111 Total 296,864 357,103 Equity attributable to non-controlling interests Capital and reserves attributable to non-controlling interests – 1,497 1,487 Profit (loss) attributable to non-controlling interests (21) (779) (97) Total 718 1,390 Total equity 297,582 358,493 Non-current liabilities Non-current financial liabilities (22) 10,886 14,140 Employee benefit obligations (23) 38,786 42,270 Deferred tax liabilities (8) 20,997 26,674 Provisions for risks and charges (24) 19,209 23,696 Other non-current liabilities (25) 34 1,398 Total 89,912 108,178 Current liabilities Bank overdrafts and loans - due within one year (26) 3,633 4,830 Financial liabilities held for trading (27) 459 143 Trade payables (28) 161,077 174,944 Other current liabilities (29) 8,792 9,404 Other payables (30) 84,195 72,187 Total 258,156 261,508 Liabilities held for sale (14) 472 – Total liabilities 348,540 369,686 TOTAL EQUITY AND LIABILITIES 646,122 728,179
(*) section 11 of the explanatory notes (notes to the consolidated financial statements). as required by consob resolution no. 15519 of 27 july 2006, the effects of related-party transactions on the statement of financial position, income statement, and statement of cash flows of the 24 ore group are reported in section 13.4 and detailed in section 13.1.
77 Gruppo 24 ORE
2009 annual financial report
consolidated income statement
Consolidated income Statement
(in thousands of euro) note (*) e2009 e2008 1) Continuing operations Revenue from newspapers, books and magazines (31) 155,443 191,380 Revenue from advertising (32) 187,559 244,631 Other revenue (33) 159,700 137,011 Total revenue 502,702 573,022 Other operating income (34) 14,359 15,521 Personnel expense (35) (203,207) (175,858) Change in inventories (9) (2,966) (1,414) Purchase of raw materials and consumables (36) (34,299) (40,337) Services (37) (243,605) (267,405) Use of third party assets (38) (33,443) (33,116) Other operating costs (39) (14,290) (10,518) Provisions (23) (2,286) (3,939) Provisions for bad debts (10) (7,650) (6,673) Gross operating profit (loss) (24,685) 49,283 Amortisation of intangible assets (3) (19,776) (15,226) Depreciation of property, plant and equipment (1) (11,565) (11,067) Impairment losses on property, plant and equipment and on intangible assets (40) (11,716) (5,197) Capital gains (losses) on disposal of non-current assets (41) 272 8 Operating profit (loss) (67,470) 17,801 Financial income (42) 3,046 11,557 Financial expenses (42) (596) (1,349) Total financial income 2,450 10,208 Other income (expenses) from investment assets and liabilities (43) (555) (2,480) Gains (losses) from equity-accounted investees (44) (1,168) (186) Profit (loss) before tax (66,743) 25,343 Income taxes (45) 13,400 (9,329) Net profit (loss) from continuing operations (53,343) 16,014 2) Discontinued operations Profit from discontinued operations – – Profit (loss) for the year (53,343) 16,014 Profit (loss) attributable to non-controlling interests (779) 97 Profit (loss) attributable to owners of the parent (52,564) 16,111
Basic EPS (€) (0.40) 0.12 Diluted EPS (€) (0.40) 0.12
(*) section 11 of the explanatory notes (notes to the consolidated financial statements).
78 Gruppo 24 ORE
2009 annual financial report
consolidated statement of Comprehensive income
consolidated stAtement of comprehensive income
(in thousands of euro) note (*) e2009 e2008 Profit (loss) for the year (53,343) 16,014 Other components of comprehensive income Actuarial gains (losses) of defined-benefit plans (19) 1,051 (841) Effective portion of changes in fair value of cash flow hedges (18) (316) (812) Fair value of Stock Granting (19) 1,884 1,895 Taxes on other components of comprehensive income (18) (19) (166) 454 Other components of comprehensive income after tax (21) 2,453 696 Total comprehensive income (expense) for the year (50,890) 16,710 Attributable to: Non-controlling interests (779) (97) Owners of the parent (50,111) 16,807 Total comprehensive income (expense) for the year (50,890) 16,710
(*) section 11 of the explanatory notes (notes to the consolidated financial statements). as required by consob resolution no. 15519 of 27 july 2006, the effects of related-party transactions on the statement of financial position, income statement, and statement of cash flows of the 24 ore group are reported in section 13.4 and detailed in section 13.1. income components stemming from non-recurring events or transactions, or from transactions or events that do not recur frequently, are also reported in section 13.4.
79 Gruppo 24 ORE
2009 annual financial report
consolidated statement of cash flows
CONSOLIDATED STATEMENT of cash flow
(in thousands of euro) note (*) e2009 e2008 A) CASH FLOWS FROM ORDINARY ACTIVITIES Profit (loss) attributable to owners of the parent (21) (52,564) 16,111 Adjustments for: Dividends charged to income statement (6) (21) Depreciation of property, plant and equipment (1) 11,565 11,067 Amortisation of other intangible assets (3) 19,776 15,226 Impairment losses on other intangible assets and goodwill (40) 11,716 5,197 Impairment losses on non-current assets (43) (44) 1,722 2,687 (Gain) loss on sale of property, plant and equipment (41) (63) 78 (Gain) loss on sale of intangible assets (41) (184) (73) (Gain) loss on sale of business units (41) (25) (13) Increase (decrease) in provisions for risks and charges (24) (4,442) (1,636) Increase (decrease) in employee benefits (2,791) (31) Increase (decrease) in deferred tax assets/liabilities (8) (20,208) (13,269) Changes in consolidation scope of operating provisions (213) – Annual instalment of substitute tax 4,928 1,457 Income statement effects of acquisitions – (22) Net financial income (42) (2,450) (10,208) Cash flows from operating activities before change in working capital (33,239) 26,550 (Increase) decrease in inventories 2,966 1,414 (Increase) decrease in trade receivables 22,006 (24,877) Increase (decrease) in trade payables (13,923) (16,716) Income taxes paid (16,265) (13,729) (Increase) decrease in other assets/liabilities 15,318 6,341 Changes in consolidation scope of working capital (59) – Changes in net working capital 10,043 (47,567) NET CASH used in operating ACTIVITIES (A) (23,196) (21,017)
80 Gruppo 24 ORE
2009 annual financial report
CONSOLIDATED STATEMENT of cash flow (CONT.)
(in thousands of euro) note (*) e2009 e2008 B) CASH FLOWS from INVESTING ACTIVITIES Dividends received 6 21 Proceeds on sale of property, plant and equipment (1) (41) 678 152 Proceeds on sale of intangible assets (3) (41) 186 188 Proceeds on sale of company divisions 600 13 Investments in property, plant and equipment (1) (6,556) (13,422) Investments in intangible assets (3) (10,587) (12,864) Other changes in property, plant and equipment (1) (79) - Other changes in intangible assets (3) (1,556) - Other increases in goodwill (2) (1,353) (500) Purchase of investments in associates – (420) Purchase of investments in subsidiaries (46) (936) (45,424) Other decreases (increases) in investments in associates (4) (62) (104) Other decreases (increases) in other non-current assets and liabilities (803) (728) Purchases of available-for-sale financial assets (5) (17) (300) Changes in scope of investing activities 46 – NET CASH USED IN INVESTING ACTIVITIES (B) (20,433) (73,388)
FREE CASH FLOWS (A + B) (43,629) (94,405)
CONSOLIDATED STATEMENT of cash flow (CONT.)
(in thousands of euro) note (*) e2009 e2008 C) CASH FLOWS from FINANCING ACTIVITIES Dividends paid (20) (10,249) (13,911) Registering (repayment) of long-term bank loans (3,114) (3,133) Change in other non-current financial assets (583) (1,240) Change in financial assets/liabilities held for trading (27) 316 812 Net financial interest received (42) 2,450 10,208 Change in equity attributable to non-controlling interests (779) (97) Other changes in reserves 2,453 8,492 Changes in scope of financing activities (106) – NET CASH FROM (USED IN) FINANCING ACTIVITIES (C) (9,612) 1,131
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (A+B+C) (53,241) (93,274) OPENING CASH AND CASH EQUIVALENTS 145,299 238,573 CLOSING CASH AND CASH EQUIVALENTS (13) 92,058 145,299 INCREASE (DECREASE) OF THE YEAR (53,241) (93,274)
(*) section 11 of the explanatory notes (notes to the consolidated financial statements). as required by consob resolution no. 15519 of 27 july 2006, the effects of related-party transactions on the statement of financial position, income statement, and statement of cash flows of the 24 ore group are reported in section 13.4 and detailed in section 13.1.
81 Gruppo 24 ORE
2009 annual financial report
consolidated Statement of changes in equity
consolidated sTATEMENT OF CHANGES IN EQUITY
(in thousands of euro) share equity revaluation hedging other retained profit equity equity total capital reserves reserves and reserves earnings (loss) attributable non-con- equity note (*) translation for the to owners trolling reserves year of the interests parent
Balance at 1 January 2008 35,124 180,316 20,561 485 29,182 53,049 27,694 346,411 1,365 347,776 Reserve for post-employment benefits for adjustment to IFRS – – – – (841) – – (841) – (841) Fair value changes in hedging instruments – – – (812) – – – (812) – (812) Fair value of Stock Granting – – – – 1.895 – – 1.895 – 1.895 Taxes on expenses and income recognised in equity – – – 223 231 – – 454 – 454 Income/expenses recognized directly in equity – – – (589) 1,285 – – 696 – 696 Profit for the year – – – – – – 16,111 16,111 (97) 16,014 Total income/expenses allocated in the year – – – (589) 1,285 – 16,111 16,807 (97) 16,710 Allocation of 2007 profit – – – – – 27,694 (27,694) – – – Distribution of dividends/reserves – – – – – (13,911) – (13,911) – (13,911) Gross proceeds of greenshoe – – – – – 7,796 – 7,796 – 7,796 Transfers between reserves – – – – 1,811 (1,811) – – – – Change in % held of investments – – – – – – – – 122 122 Balance at 31 December 2008 35,124 180,316 20,561 (104) 32,278 72,817 16,111 357,103 1,390 358,493
Reserve for post-employment benefits for – – – – 1,051 – – 1,051 – 1,051 adjustment to IFRS Fair value changes in hedging instruments – – – (316) – – – (316) – (316) Fair value of Stock Granting – – – – 1,884 – – 1,884 – 1,884 Taxes on expenses and income recognised in equity – – – 87 (253) – – (166) – (166) Income/expenses recognized directly in equity – – – (229) 2,682 – – 2,453 – 2,453 Loss for the year – – – – – – (52,564) (52,564) (779) (53,343) Total income/expenses allocated in the year – – – (229) 2,682 – (52,564) (50,111) (779) (50,890) Allocation of 2008 profit – – – – – 16,111 (16,111) – – – Dividends – – – – – (10,130) – (10,130) (119) (10,249) Change in % held of investments – – – – – – – – 226 226 Other changes – – – – 1 – – 1 – 1 Balance at 31 December 2009 35,124 180,316 20,561 (333) 34,961 78,799 (52,564) 296,864 718 297,582
(*) section 11 of the explanatory notes (notes to the consolidated financial statements).
Milan, 12 March 2010
Chairman of the Board of Directors GIANCARLO CERUTTI
82 Gruppo 24 ORE
2009 annual financial report
83 Gruppo 24 ORE
2009 annual financial report
EXPLANATORY NOTES
1. General information
The 24ORE Group operates in a leadership position in the business and financial news and information market. Its offering targets the general public, professional categories, companies and financial institutions.
The composition of the Group and the scope of its consolidation as at 31 December 2009, with the changes that have taken place with respect to 31 December 2008, are reported in Section 9 – Scope of consolidation.
The companies included in the scope of consolidation as at 31 December 2009 were: – Il Sole 24 ORE S.p.A., the parent, 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.). – Innovare24 S.p.A., the object of which is to produce and distribute software and electronic equipment for data processing, automation and transmission. This is the former H24 Software S.p.A., which changed its name upon resolution by the extraordinary shareholders’ meeting on 2 October 2009; – Nuova Radio S.p.A., the broadcaster of Radio24, a news & talk radio station; – Il Sole 24 ORE UK Ltd, which sells advertising space in the United Kingdom; – 24 ORE Cultura S.r.l., specialized in products dedicated to art and photography; – Il Sole 24 ORE Business Media S.r.l., specialized in professional B2B publishing, in sectors such as hotels and catering, information technology, electronics, building, and architecture; – Alinari 24 ORE S.p.A., a company active in the photography and image sector; – Blogosfere S.r.l., company active in the online information sector; – Shopping 24 S.r.l., which is an e-commerce and online marketing company. This is the former Grafica on demand S.r.l., incorporated on 7 November 2008 and which changed its company name at the extraordinary meeting on 3 September 2009; – Newton Management Innovation S.p.A., a company active in training services; – Newton Lab S.r.l., a company active in training services. The company is an indirect subsidiary through Newton Management Innovation S.p.A.; – Faenza Editrice Iberica S.L., active in the Spanish sector-specific publishing market with magazines for the ceramic sector and an indirect subsidiary through Il Sole 24 ORE Business Media S.r.l.; – Business Media Web S.r.l., specialized in professional B2B publishing, in sectors such as hotels and catering, information technology, electronics, building, and architecture, and is indirectly controlled through Il Sole 24 ORE Business Media S.r.l.; – Data Ufficio S.p.A., specialized in software solutions and electronic communication services for
84 Gruppo 24 ORE
2009 annual financial report
the public administration and professionals and in office products and printed materials. The company is indirectly controlled through Innnovare24 S.p.A.; – STR S.p.A., specialized in software solutions for the building industry. The company is indirectly controlled through Innnovare24 S.p.A.; – Esa Software S.p.A., a company active in management software for small and medium enterprise and for professionals. The company is indirectly controlled throughI nnnovare24 S.p.A.; – Cesaco S.r.l., which markets products of ESA Software S.p.A. and provides support services. The company is indirectly controlled through ESA Software S.p.A., which in turn is indirectly controlled through Innovare24 S.p.A.
On 12 March 2010, the Board of Directors approved the Group’s consolidated financial statements as at and for the financial year FY( ) ended 31 December 2009 and also authorized their publication.
The registered and administrative offices ofI l Sole 24 ORE S.p.A. are located in Milan (Italy) at Via Monte Rosa 91. Confindustria (theC onfederation of Italian Industry) controls the parent.
The share capital of the parent totals € 35,124 thousand, 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; – 38,438,520 special-class shares listed on the Milan Bourse screen-based equity market (MTA – Mercato Telematico Azionario) of Borsa Italiana S.p.A. in the Standard segment (Class 1), accounting for 28.8% of all shares; – 4,894,693 special-class treasury shares, accounting for 3.7% of all shares.
The company’s by-laws contain rules based on which the controlling ownership of Il Sole 24 ORE S.p.A. cannot be changed. More specifically, underA rticle 8, shareholders may not own a number of special-category shares exceeding one-fiftieth of share capital plus one share, with the exception of the Company itself, which may own them as treasury shares. Il Sole 24 ORE S.p.A. special-class stock is currently listed on the Milan screen-based Mercato Telematico Azionario (MTA) of Borsa Italiana S.p.A. in the Standard (Class 1) segment. The total number of special-class shares placed on the market as at 31 December 2009 accounts for approximately 28.8% of the parent’s share capital.
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
85 Gruppo 24 ORE
2009 annual financial report
2. Format, content, and International financial reporting Standards
These consolidated financial statements were prepared on the assumption that the Company is operated on a going concern basis and in accordance with the recognition and measurement criteria set out in international accounting standards (International Accounting Standards – IAS and International Financial Reporting Standards – IFRS), as amended by the applicable interpretations (issued by the Standing Interpretations Committee – SIC and International Financial Reporting Interpretations Committee – IFRIC), approved and published by the International Accounting Standards Board – IASB, approved by EC Regulation 1126/2008 of the European Commission. In view of simplifying European Union legislation and improve its clarity and transparency, the European Commission has combined in a single text the principles set out in the previous EC Regulation 1725/2003, as amended. EC Regulation 1126/2008, which, effective as at 2 December 2008, abrogated and replaced EC Regulation 1725/2003 of the European Commission, as amended, adopted IFRS in compliance with EC Regulation 1606/2002 of the European Parliament and Council.
The International Financial Reporting Standards (referred to hereinafter as “IFRSs”) applied to financial statements as at and for the year ended 31 December 2009 and the comparative figures as at and for the year ended 31 December 2008 are those endorsed by the European Commission as at the reporting date of these consolidated financial statements.
It should also be noted that the currency used to present these consolidated financial statements is the euro and that amounts are expressed in thousands of euro (€’000).
3. Structure of the consolidated financial statements
The Group has prepared the consolidated statement of financial position by classifying current and non-current assets and liabilities separately.
Each asset and liability item that includes amounts falling due both within and beyond 12 months is analyzed so as to show the amount that is expected to be recovered or paid beyond 12 months.
All of the details needed for full and accurate disclosure are provided in the notes in the form of additional sub-classifications of the items shown on the statement of financial position.
86 Gruppo 24 ORE
2009 annual financial report
In compliance with the new version of IAS 1, in effect from 1 January 2009, all revenue and cost items are recognised on two statements: – the Separate income statement, which shows the components of profit (loss) for the year, and its final line item is definedProfit (Loss) for the year; – a second statement named Statement of Comprehensive income, which begins with the profit (loss) for the year illustrated in the Separate income statement and shows the items of the statement of Other components of comprehensive income plus the portion of the items of the statement of Other components of comprehensive income of associates and joint ventures measured using the equity method. The final line on the Statement of Comprehensive income is defined as theTotal comprehensive income.
The consolidated separate income statement shows all income and cost items, excluding those components that are recognised separately from the profit (loss) for the current year pursuant to specific IFRS provisions, and allocation of the portion of profit (loss) for the year attributable to the owners of the parent and the portion attributable to non-controlling interests.
The components that are recognised separately from the profit (loss) for the current year pursuant to specific IFRS provisions are presented in the statement of Other components of comprehensive income. These components reflect the change in: – the translation reserve for translation of financial statements denominated in a foreign currency; – the reserve for post-employment benefits TFR( ) for the actuarial gains and losses resulting from defined benefit plans; – the reserve for gains and losses resulting from restatement of available-for-sale financial assets; – the reserve for the effective portion of gains and losses on cash flow hedging instruments.
The items of the statement of Other components of comprehensive income are presented net of the associated tax effects.
The amounts previously recognised on the statement of Other components of comprehensive income that are reclassified during the year as items of the profit (loss) for the year shown on the consolidated separate income statement are defined as reclassification adjustments. These adjustments are recognised under the appropriate item on the statement of Other components of comprehensive income, in order to avoid counting them twice in Total comprehensive income.
Items are classified in the separate income statement according to their nature.
Unless stated otherwise, when the term “income statement” is used in these consolidated financial statements, it means the separate income statement.
87 Gruppo 24 ORE
2009 annual financial report
Disclosure of cash flow is provided in the statement of cash flows, which is an integral part of these consolidated financial statements.
The indirect method has been used for presenting cash flows, according to which the profit (loss) for the year has been adjusted for the effects of: – changes in inventories, receivables and payables generated by operating activities; – non-cash operations – all other elements whose cash effects are cash flows involved in investing or financing activities.
As required by the relevant regulations, a reconciliation has also been prepared of amounts in the statement of cash flows with the equivalent items shown in the statement of financial position.
The table illustrating net financial position has been conceived on the basis of the guidance provided by the Committee of European Securities Regulators (CESR) on 10 February 2005 –“Recommendations for consistent implementation of the EU Commission’s Regulation on Prospectuses.” The table details the main components of net financial position and indicates payable/receivable positions vis-à-vis related parties.
The consolidated statement of changes in equity shows: 1. the total comprehensive income for the year, with separate indication of the total amounts attributable to the owners of the parent and those attributable to non-controlling interests; 2. for each equity item, any effects of retroactive application or retroactive restatement recognised pursuant to Ias 8; 3. for each equity item, reconciliation of the carrying amount at the beginning and at the end of the financial year, with separate indication of the changes resulting from: – profit or loss; – each item of the statement of Other components of comprehensive income and – transactions with shareholders, with separate indication of grants by shareholders, distribution of equity to shareholders, and changes in equity interest in the subsidiaries without loss of control.
At the bottom of the statement of financial position, separate income statement, statement of comprehensive income and statement of cash flows, reference is made to a specific section where a statement illustrates the sub-items for the amounts of positions or transactions with related parties, as distinguished from the reference items, with indication of the effects on the statement of financial position, profit (loss) for the year and statement of cash flows of the Group. This indication by individual item is omitted only when it is not significant for comprehension of the Group’s financial position, profit or loss for the year and cash flows.
88 Gruppo 24 ORE
2009 annual financial report
At the bottom of the separate income statement and the statement of comprehensive income, reference is made to a specific section where a statement illustrates the sub-items (if they are of a material amount) of the components of income resulting from non-recurring events or transactions or from infrequent transactions, with indication of the effects on the statement of financial position, the profit (loss) for the year and statement of cash flows of the Group. These income items are shown separately in the cost or revenue items to which they refer.
If atypical and/or unusual transactions – other than mergers, demergers and asset contributions – have been carried out during the year, a statement is prepared summarising key information to clarify the impact on equity, cash flows and profit (loss) associated with such transactions.
A specific table, which is an integral part of the consolidated financial statements, lists the companies of the Group, indicating their name, registered office, share capital, equity interests directly or indirectly owned by the parent and each subsidiary, and consolidation method, and also provides a list of investments carried at equity. Also shown are shareholdings exceeding 2% of share capital in listed companies and exceeding 10% of share capital in unlisted companies, or in private limited liability companies, including foreign companies.
The notes to the consolidated financial statements are presented in a systematic manner. For each of the items shown in the statement of financial position, separate income statement, statement of comprehensive income, statement of cash flows and statement of changes in equity, there is a specific cross-reference to the detailed disclosure provided in the notes.
Comparative information with the previous financial year is provided for all amounts shown in these consolidated financial statements. Comparative information is also provided in regard to the commentary and illustrative notes, if this is material to comprehension of the consolidated financial statements for the current year.
The presentation and classification of the items on the consolidated financial statements remain consistent from one year to the next, exception where, in accordance with Section 6 – Changes in accounting policies, changes in accounting estimates, and errors, following a significant change in the nature of the transaction or a reassessment of the financial statements, a different presentation or classification has become necessary, in order to provide more relevant information for the purpose of making financial decisions, as well as more reliable information for the purposes faithfully presenting the financial position, results and cash flows of the Group.
When accounting standards are applied retroactively, or specific financial statement items are restated,
89 Gruppo 24 ORE
2009 annual financial report
or financial statement items are reclassified, at least three statements of the consolidated statement of financial position are presented in regard to: – the end of the current financial year; – the end of the previous financial year; – the beginning of the first comparative financial year.
In cases in which the presentation or classification of consolidated financial statements items have changed, the comparative figures have been changed accordingly, and the nature, amount and reasons for the reclassification have been provided.
4. Consolidation policies
The 24 ORE Group consists of the parent Il Sole 24 ORE S.p.A. and its subsidiaries.
The parent consolidates all of its investments in subsidiaries in the consolidated financial statements.
Companies are considered subsidiaries if the parent has the power to determine their financial and operating policies in order to obtain benefits for its own activity.
Investments in subsidiaries are excluded from consolidation in those cases where control can no longer be exercised as the parent has lost the power to determine their financial and operating policies. Such investments are shown at cost.
When preparing the consolidated financial statements, the parent consolidates on a line-by-line basis its own separate financial statements and those of its subsidiaries as though they were the financial statements of a single economic entity.
The same accounting standards have been applied to similar transactions and events that took place in similar circumstances.
The separate financial statements of the parent and of its subsidiaries used to prepare the consolidated financial statements were all drawn up at 31 December 2009.
The subsidiaries are included in the consolidated financial statements (statement of financial
90 Gruppo 24 ORE
2009 annual financial report
position, separate income statement and statement of comprehensive income) from the date on which the parent acquires control and are no longer consolidated from the date on which the parent loses control.
Subsidiaries are measured at the date of acquisition of control using the purchase method. In accordance with this method, all identifiable assets, liabilities and contingent liabilities of the business acquired that qualify for accounting recognition, are recognized at their respective fair value as at the acquisition date.
In preparing the consolidated financial statements, the parent aggregates its financial statements and those of the subsidiaries item by item, summing the various assets, liabilities, equity, revenues and costs.
The carrying amount of the investments held by the parent and by other Group companies in each subsidiary included in the scope of consolidation is eliminated against the related portion of equity.
Any cost paid for the subsidiary over and above the interest acquired in the net fair value of its identifiable assets, liabilities and contingent liabilities qualifying for accounting recognition is recognized as goodwill. Goodwill, as an asset that produces future economic benefits, but that cannot be individually identified nor accounted for separately, is initially recognized at cost.
Reference should be made to the section “Goodwill and Business Combinations” in section 5, Accounting policies, for a detailed explanation of the policy applied for the measurement of goodwill.
If the interest acquired in the net fair value of the identifiable assets, liabilities and contingent liabilities qualifying for accounting recognition exceeds the cost of the subsidiary at the date of acquisition (generating “negative goodwill”), the excess is recognized in the income statement.
Any temporary differences emerging from the difference between the net fair value of identifiable assets, liabilities and contingent liabilities qualifying for accounting recognition and their value recognizable for tax purposes give rise to deferred tax assets and/or liabilities if the required conditions exist.
The portions of non-controlling interests in the equity of consolidated companies are recognized separately as non-controlling interests in the specific equity items relating to the non-controlling interests in capital and reserves, whereas the portion of the profit (loss) attributable to non-controlling
91 Gruppo 24 ORE
2009 annual financial report
interests is shown in the consolidated income statement under “Profit (loss) attributable to non- controlling interests.”
All receivables and payables and costs and revenue deriving from transactions between companies included in the scope of consolidation are eliminated. The profits and losses that have not yet been realised from transactions between consolidated companies of the Group have also been eliminated, if present. The dividends distributed by consolidated companies are also eliminated from the income statement and added back to the prior years’ profits if and to the extent that they were paid out of such earnings.
The financial statements of foreign subsidiaries expressed in currencies other than the euro are translated: – at the spot exchange rate on the consolidated reporting date for monetary items; – at the exchange rate prevailing on the transaction date for non-monetary items measured at historical cost; – at the exchange rate prevailing on the date on which the fair value was determined for non- monetary items measured at fair value.
Exchange differences arising from recognition of non-monetary items at the consolidated reporting date are recognized under equity in a separate “Hedging and translation reserve”.
5. Accounting policies
The consolidated financial statements of the 24ORE Group have been prepared in compliance with IFRSs.
This section provides a summary of the main accounting standards applied, indicating the key accounting policies used in preparing the consolidated financial statements and the other accounting principles used if they are considered significant for comprehension of the consolidated financial statements.
92 Gruppo 24 ORE
2009 annual financial report
Non-current assets
Property, plant and equipment
This item includes the property, plant and equipment owned for use in production, to provide goods and services and for administrative purposes, and which are expected to be used for more than one financial year.
It also includes any spare parts that can only be used in connection with a specific non-current asset, as well as spare parts and related equipment of a certain value that are expected to be used for more than one year.
Only those components that are likely to generate future economic benefits and which have a cost that can be reliably determined are recognized as non-current assets.
Non-current assets are initially recognized at cost.
Cost includes the purchase or construction cost, ancillary charges and any costs directly attributable for bringing the asset to the place and condition necessary for it to function.
Financial expenses directly attributable to the purchase, construction or production of an item of property, plant and equipment are included in the asset’s cost if they will lead to future economic benefits and can be reliably determined (directly attributable).F inancial expenses are those that would not have been incurred if there had been no expenditure for the item of property, plant and equipment to which they refer.
Routine maintenance costs are charged to the income statement.
The costs relating to components of property, plant and equipment that are used to replace parts removed from the same property, plant and equipment are accounted for as non-current assets, when it is likely that they will generate future economic benefits and their cost can be reliably determined. The carrying amount of the parts that have been removed is derecognized.
After initial recognition, the cost method is adopted, under which non-current assets are shown in the statement of financial position at cost, net of accumulated depreciation and any impairment losses.
93 Gruppo 24 ORE
2009 annual financial report
Each non-current asset component is depreciated on a straight-line basis over its estimated useful life on the assumption that its residual value is zero. Depreciation commences when the asset is available for use.
Land is of unlimited useful life and, therefore, it is not depreciated.
Non-current assets that are not yet available for use are not depreciated.
Depreciation terminates on the more recent of two dates: when the item of property, plant and equipment is classified as held for sale (see the paragraph entitled N“ on-current assets classified as held for sale”) and the date on which the asset is derecognized.
Depreciation is not interrupted just because the asset is not being used.
A non-current asset is derecognized when it is disposed of or when no future economic benefit can be expected either from its use or from its disposal.
The period and method of depreciation of each component of property, plant and equipment are reviewed at the end of each year.
A check is carried out at each reporting date to see if there are any signs that assets are impaired. If there is any indication that this is the case, an estimate is made of the asset’s recoverable amount.
This impairment test is carried out by comparing the carrying amount of the asset with its recoverable amount.
The recoverable amount is the higher out of the asset’s fair value, net of any selling costs, and its value in use.
Fair value is determined on the basis of the best information available at the time to reflect the amount that the company could obtain at the reporting date by disposing of the asset in an arm’s length transaction between knowledgeable, willing parties.
The value in use is calculated by estimating the net present value of the future cash flows expected to be generated by the asset being tested for impairment.
94 Gruppo 24 ORE
2009 annual financial report
Impairment losses are recognized immediately in the income statement.
Impairment losses that have already been recognized are reviewed at the end of each year in order to evaluate whether they are still justified or should be reversed.I f there is any such indication that this is the case, an estimate is made of the asset’s recoverable amount.
The original value of an asset that suffered an impairment loss in previous years is only reinstated if there is a change in the valuations used to calculate the asset’s recoverable amount. If this is the case, the carrying amount of the investment is increased to its recoverable amount. This recoverable amount cannot be higher than the carrying amount that would have applied if no impairment loss had been recognized in previous years.
Reversals of impairment losses are recognized in the income statement.
Finance leases
Assets purchased under finance lease arrangements are recognized as property, plant and equipment at the present value of the minimum payments due under the lease contract, even if ownership of the leased asset has not been acquired, and are depreciated on a straight-line basis over their useful life. This treatment is applied because the substantial and financial nature of the contracts– and not their legal nature – must be taken into account.
The present value of the minimum payments due under the lease contract are also recognized initially as a payable in “Finance lease payables due in more than one year” under non-current liabilities.
Government grants
Government grants, including non-monetary grants measured at fair value, are not recognized until there is reasonable certainty that the conditions to obtain them will be respected and the grants will effectively be received.
Government grants related to assets, obtained in connection with non-current assets, are recognized as deferred income and then transferred to the income statement under “Other operating income,” on a systematic and rational basis that spreads them appropriately over the asset’s useful life.
95 Gruppo 24 ORE
2009 annual financial report
Government grants offsetting costs or losses already incurred or to provide immediate financial support, without there being any related future costs, are recognized in the income statement as income for the year in which they become collectable.
The benefits stemming from a public loan at an interest rate lower than the going market rate have been recognised as government grants, in compliance with the policies specified above. These benefits have been calculated by measuring the difference between the loan’s initial carrying amount, calculated according to the amortised cost method established by IAS 39, and the amounts received.
Goodwill and business combinations
All business combinations for which IFRS 3 is applicable are accounted for applying the purchase method. In accordance with this method, all identifiable assets, liabilities and contingent liabilities of the business acquired that qualify for accounting recognition, are recognized at their respective fair value as at the acquisition date.
Any excess cost paid for the business combination over and above the interest acquired in the net fair value of its identifiable assets, liabilities and contingent liabilities that qualify for accounting recognition is recognized as goodwill.
Goodwill, as an asset that produces future economic benefits, but that cannot be individually identified nor accounted for separately, is initially recognized at cost.
Goodwill is not amortized, but subjected to annual impairment testing. For the purposes of impairment testing, goodwill acquired as part of a business combination is allocated to the cash- generating units (CGUs) that are expected to benefit from the synergies created by the combination.
The CGUs to which the goodwill is allocated are checked annually for any impairment. If there is any indication of impairment, their carrying amount is compared with their recoverable amount.
Impairment tests are carried out more frequently if specific events or changed circumstances suggest that goodwill has suffered impairment.I f goodwill is initially recognized during the current year, an impairment test is carried out prior to the end of the same year.
96 Gruppo 24 ORE
2009 annual financial report
The recoverable amount is the greater of fair value net of any selling costs and value in use, calculated by estimating the present value of the future cash flows expected to derive from theC GU being tested for impairment.
If the CGU’s recoverable amount is lower than its carrying amount, an impairment loss is recognized.
An impairment loss recognized for goodwill cannot be reversed in future years.
If the interest acquired in the net fair value of the identifiable assets, liabilities and contingent liabilities that qualify for accounting recognition exceeds the cost of the business combination at the date of acquisition, the excess is recognized in the income statement.
Any temporary differences emerging between the net fair value of identifiable assets, liabilities and contingent liabilities that qualify for accounting recognition and their value recognized for tax purposes give rise to deferred tax assets and/or liabilities.
Intangible assets
Intangible assets recognized are non-monetary assets that have no physical substance, which have to be: – identifiable, in other words separable or arising from contractual or other legal rights; – under the company’s control as a result of past events; – likely to generate future economic benefits for the company; – and with a cost that can be measured reliably.
Initial recognition is at cost.
The cost of intangible assets not acquired through business combinations includes the purchase price and any other direct cost to prepare the asset for use.
The cost of intangible assets acquired through business combinations is their fair value at the date of acquisition.
The process of formation of intangible assets generated internally distinguishes between the research and development phases. No intangible asset deriving from the research phase is recognized. Intangible assets deriving from the development phase are recognized if they satisfy the conditions listed above.
97 Gruppo 24 ORE
2009 annual financial report
Trademarks, publications and publishing rights generated internally are not recognized as intangible assets.
The cost of intangible assets generated internally is represented by the sum of the cost incurred from the date on which the intangible asset first satisfies the conditions for accounting recognition.
Financial expenses directly attributable to the purchase, construction or production of an intangible asset are included in the asset’s cost if they will lead to future economic benefits and can be reliably determined. Financial expenses (directly attributable) are those that would not have been incurred if there had been no expenditure for the intangible asset to which they refer.
After initial recognition, the cost method is adopted.
Intangible assets with a finite useful life are shown in the statement of financial position at cost, net of accumulated amortisation and impairment losses.
The cost of intangible assets with a finite useful life is amortized on a straight-line basis over their estimated useful life on the assumption that their residual value is zero. Amortization commences when the asset is available for use.
Intangible assets with a finite useful life that are not yet available for use are not amortized.
The period and method of amortization of intangible assets with a finite useful life are reviewed at the end of each financial year.
Amortization terminates on the more recent of two dates: when the intangible asset is classified as held for sale (see the paragraph entitled “Non-current assets classified as held for sale”) and the date on which the asset is derecognized.
An intangible asset is derecognized when it is disposed of or when no future economic benefit can be expected either from its use or from its disposal.
Intangible assets with an indefinite useful life are not amortized.
An intangible asset has an indefinite useful life when, based on certain determinant factors, there is no foreseeable limit to the period in which it is expected to generate net cash inflows.
98 Gruppo 24 ORE
2009 annual financial report
Among the key factors playing a significant role in determining the existence of indefinite useful life, we have considered: – the asset’s expected utilization; – the productive life cycles typical of the asset, also based on information in the public domain concerning estimated useful lives of asset categories used in similar ways; – technical, technological and any other type of obsolescence; – the stability of the economic sector in which the asset operates and changes in demand for the products and services originated by the asset; – actions that will presumably be taken by competitors; – the level of maintenance costs necessary to obtain the future economic benefits expected from the asset; – the period of control over the asset and the legal limits to its utilization; – the dependence of useful life on the useful life of other assets.
The useful life of intangible assets that are not amortized is reviewed at the end of each financial year to ascertain whether the key factors mentioned above still support the assumption of an indefinite useful life.
A check is carried out at each reporting date in order to see whether intangible assets have suffered impairment.
Intangible assets with an indefinite useful life and those that are still not available for use are subjected to annual impairment testing, whether or not there are signs of a loss in value.
This impairment test is carried out by comparing the carrying amount of the intangible asset with its recoverable amount.
The recoverable amount is the higher of fair value net of any selling costs and value in use, calculated by estimating the present value of the future cash flows expected to derive from the intangible asset that is being tested for impairment.
If it is not possible to estimate the recoverable amount of the individual asset, the recoverable amount of the CGU to which the asset belongs is calculated. This recoverable amount is then compared with the CGU’s carrying amount.
Impairment losses are recognized immediately in the income statement.
99 Gruppo 24 ORE
2009 annual financial report
Impairment losses that have already been recognized are reviewed at the end of each year in order to evaluate whether they are still justified or should be reversed.I f there is any such indication that this is the case, an estimate is made of the asset’s recoverable amount.
The original value of an intangible asset that suffered an impairment loss in previous years is only reinstated if there is a change in the valuations used to calculate the asset’s recoverable amount. If this is the case, the carrying amount of the investment is increased to its recoverable amount. This recoverable amount may not exceed the carrying amount that would have been determined had no impairment loss been recognized for the investment in prior years.
Reversals of impairment on intangible assets are recognized in the income statement.
Investments in associates and joint ventures
Associates are those companies over which the parent exercises significant influence, although without holding a controlling interest.
Investments in associates are accounted for under the equity method, excluding those classified as held for sale (see the paragraph entitled “Non-current assets classified as held for sale”).
Under the equity method, an investment is initially recognized at cost.
The carrying amount is subsequently increased or decreased to reflect the investor’s share of the associate’s profits or losses made after the date of acquisition.
The investor’s share of the associate’s profit or loss for the year is recognized in the investor’s income statement.
Any dividends received from the associate reduce the carrying amount of the investment.
Any part of the investor’s share of the associate’s profits and losses deriving from transactions between the two companies is eliminated.
Associates have the same reporting date as the investor company.
In the event that the investor’s share of an associate’s losses exceeds the carrying amount of its investment
100 Gruppo 24 ORE
2009 annual financial report
in that associate, the investor accounts for any further losses as a provision in liabilities, but only to the extent that the company has contracted legal or constructive liabilities on behalf of the associate.
Following application of the equity method, an individual review is carried out at each reporting date to see if there is any objective evidence that investments in associates are impaired.
If there is an indication of an impairment loss, the entire carrying amount of the investment is tested for impairment, by comparing its recoverable amount with its carrying amount. The recoverable amount, which is the higher out of the fair value less selling costs and the value in use, is calculated for each investment in an associate.
Fair value is the amount obtainable from the sale of the investment in the associate in an arm’s-length transaction between knowledgeable and willing parties, less the costs of disposal.
The value in use is calculated by estimating the parent’s interest in the future cash flows that are expected to derive from the associate, including the cash flows stemming from its operating activities and the proceeds from final disposal of the investment.
Impairment losses are recognized immediately in the income statement.
Impairment losses that have already been recognized are reviewed at the end of each year in order to evaluate whether they are still justified or should be reversed. If such an indication exists, the recoverable amount of that asset is estimated.
The original value of an investment in an associate that suffered an impairment loss in previous years is only reinstated if there is a change in the valuations used to calculate its recoverable amount. If this is the case, the carrying amount of the investment is increased to its recoverable amount. This recoverable amount may not exceed the carrying amount that would have been determined had no impairment loss been recognized for the investment in prior years.
Reversals of impairment on investments in associates are recognized in the income statement.
Available-for-sale financial assets
Investments in other companies, over which the parent has neither control nor significant influence, are classified in this category.
101 Gruppo 24 ORE
2009 annual financial report
Initial measurement of these investments is at fair value on the trading date (identifiable as the purchase cost), net of transaction costs directly attributable to the purchase.
After initial recognition: – investments consisting of equity instruments that do not have a market price listed on an active market and whose fair value cannot be measured reliably are valued at cost; – investments consisting of equity instruments that have a market price listed on an active market are valued at fair value; in other words, the value at which each investment could be exchanged in an arm’s-length transaction between knowledgeable and independent parties. The gains and losses resulting from changes in fair value are recognised directly in equity, with the exception of impairment losses and foreign exchange gains and losses, and are shown in the statement of Other components of comprehensive income and the statement of comprehensive income.
An individual review is carried out at each reporting date to see if there is any objective evidence that investments have suffered an impairment loss.
If there is objective evidence that there has been an impairment loss: – for investments valued at cost, the amount of the loss is measured as the difference between the investment’s carrying amount and the present value of the expected future cash flows discounted at a current market rate of return for a similar financial asset. Impairment losses are recognized immediately in the income statement and can never be reversed; – for investments measured at fair value, the amount of the loss is measured as the difference between the investment’s purchase cost and its current fair value. Any impairment losses are recognized in the income statement, as are any losses charged against equity. The latter have to be reversed and cumulatively recognized in the income statement. Impairment losses can never be reversed on the income statement.
Dividends from investments in other companies are recognised among “Other income (expenses) from investment assets and liabilities” when the shareholders’ right to receive the payment has been established.
Other non-current financial assets
This category includes all medium-/long-term receivables and financial instruments that are held to maturity.
Initial measurement of non-current financial assets is at fair value on the trading date (identifiable as the purchase cost), net of transaction costs directly attributable to the purchase.
102 Gruppo 24 ORE
2009 annual financial report
After initial recognition, both medium-/long-term receivables and financial instruments held to maturity are measured at amortized cost using the effective interest method.
The effective rate of interest is the rate that exactly discounts the future cash flows expected over the estimated life of the financial instrument to its net carrying amount.
An individual review is carried out at each reporting date to see if there is any objective evidence that any non-current financial asset has suffered impairment loss.
If there is objective evidence that the impairment loss has occurred, the amount of the loss is measured as the difference between the carrying amount of the medium-/long-term receivable or the investment held to maturity and the present value of the expected future cash flows discounted at the original effective rate of interest of the financial asset.
The amount of the loss is recognized immediately in the income statement.
If in a subsequent year, the amount of the impairment loss decreases and this decrease is linked to an event that took place after recognizing the loss, it is reversed and reflected in the income statement.
Other non-current assets
This category includes: – guarantee deposits; – tax receivables still to be refunded.
Initial recognition of the tax receivables still to be refunded and of the guarantee deposits is at fair value at the transaction date, net of any directly attributable transaction costs.
After initial recognition, both the tax receivables still to be refunded and the guarantee deposits are measured at amortized cost, using the effective interest method, calculated as indicated in the paragraph on “Other non-current financial assets” of the section on non-current assets.
An individual review is carried out at each reporting date to see if there is any objective evidence that other non-current assets have suffered a loss in value.
If there is objective evidence that there has been an impairment loss, the amount is determined.
103 Gruppo 24 ORE
2009 annual financial report
The amount of the loss is measured as the difference between the carrying amount and the present value of the expected future cash flows discounted at the original effective rate of interest of the non- current asset in question.
The amount of the loss is recognized in the income statement.
If in a subsequent year, the amount of the impairment loss decreases and this decrease is linked to an event that took place after recognizing the loss, it is reversed and reflected in the income statement.
Deferred tax assets
Deferred tax assets are portions of income tax that will be recovered in future years, relating to: – deductible temporary differences; – unutilized tax losses carried forward; – unutilized tax receivables carried forward.
Deductible temporary differences are differences between the carrying amount of an asset or liability shown in the statement of financial position and the value that is recognised for tax purposes. When calculating the taxable income of future years, these will translate into deductibles when the carrying amount of the asset or liability is realised or extinguished.
Deferred tax assets are recognized on all deductible temporary differences and on all unutilized tax losses and tax credits carried forward, if it is probable that sufficient taxable income will be generated in future years to offset them.
Deferred tax assets are measured at the tax rates that are expected to apply during the year when the tax asset will presumably be realized, based on the measures in force at the reporting date.
Deferred tax assets are not discounted to their present value.
The tax benefit of deferred tax assets is recognized in the income statement, unless the tax derived from a transaction or event that was recognized as other component of comprehensive income or directly in equity or came from a business combination.
Deferred tax assets resulting from items that are credited or debited as other component of comprehensive income or directly to equity are also credited or debited as other component of comprehensive income or to equity.
104 Gruppo 24 ORE
2009 annual financial report
Current assets
Inventories
Inventories include saleable goods, such as items bought for resale and items produced internally, as well as goods that are used in their production as part of the company’s normal operations, such as semi-finished goods, work in progress, raw and ancillary materials, and consumables.
Inventories are valued at the lower out of historical cost and market value.
The cost of inventories includes all purchase costs, transformation costs and any other costs incurred to bring stocks to their current position and condition.
When determining the purchase cost, account is taken of the price effectively paid, including directly applicable ancillary costs such as transport and customs duty, net of any trade discounts.
For goods already produced or being processed internally, the historical cost used is manufacturing cost.
The calculation of manufacturing cost takes into account the purchase cost, as mentioned previously, plus all production or transformation expenses, i.e. direct costs and a reasonable allocation of indirect costs for the period in question.
The transformation costs of semi-finished goods, work in progress and finished products are obtained by means of a cost accounting system that establishes the actual cost of each job order.
Purchase cost and manufacturing cost do not include any distribution or selling expenses.
Goods purchased for resale, items produced internally, semi-finished goods and work in progress are valued based on specific identification of actual cost.
Raw and ancillary materials and consumables are measured at their weighted average cost for the period, taking the value of opening inventory into account.
If it is no longer possible to measure inventories at historical cost as explained above, due to a decrease in selling prices, deterioration of goods, or the presence of obsolete or slow-moving goods, net realizable value is used. This value is based on market trends for goods, finished products, semi-finished goods
105 Gruppo 24 ORE
2009 annual financial report
produced internally and work in progress. In the case of raw and ancillary materials and consumables and bought- in semi-finished goods replacement cost is used.
Each item of inventory is reviewed to check the existence of one or more events described above as cause of the reduction in the original utility or functionality, and for determining, for each class of inventory, the realizable value or the replacement cost.
Net realizable value represents the selling price under normal business conditions, net of any costs to completion and direct selling costs that can be reasonably expected.
Replacement cost represents the cost at which a certain item of inventory can be repurchased or reproduced, under normal business conditions.
The adjustment to replacement cost for raw materials is carried out directly, whereas the adjustment to net realizable value for finished products is done by setting up a suitable provision, which is then deducted directly from the nominal value shown under assets.
Given the nature of the inventories, it is highly unlikely that the circumstances that caused the write- down itself will change in subsequent years.
Trade receivables
Trade receivables include amounts due from customers and advances to suppliers.
Trade receivables are initially recognized at their fair value on the transaction date, i.e. for the amount expected to be received less any directly attributable transaction costs.
After initial recognition, trade receivables are shown at their estimated realizable value. The initial recognition value of trade receivables is adjusted to the estimated realizable value through a provision for bad debts.
The adjustment to estimated realizable value is achieved by reducing the face value of the receivables, taking account of losses due to non-collection, returns and billing adjustments, discounts and allowances not accrued and any other reasons why a lower amount is likely to be received. Billing adjustments also include estimates of books and newspapers likely to be returned in the future. Billing adjustments also include estimates of books and newspapers likely to be returned in the future. The
106 Gruppo 24 ORE
2009 annual financial report
provision is determined by analyzing the individual receivables and any other present or future factors likely to affect them.
If receivables are factored definitively (i.e. on a non-recourse basis), they are derecognised and the profit or loss is recognised for the difference between the amount received and their carrying amount.
When the collection of trade receivables is deferred for more than 12 months and the transaction effectively constitutes a form of financing, the fair value of the proceeds is determined by discounting all future inflows at a hypothetical interest rate.
Advances to supplies refer to advance payments for physical goods to which the right of access does not yet exist or for services not yet received. The right of access to physical goods arises when ownership is achieved or when the supplier makes them available in accordance with the terms agreed. Services are considered to have been received when the supplier has performed them in compliance with a service agreement.
Other receivables
Other receivables include the following: – italian and EU VAT credits for which a refund has been claimed, as well as the tax credits for the publishing industry and the tax prepayment on post-employment benefits I( talian acronym: “TFR”); – payments on account and advances to employees that will not have to be reimbursed in the future as they will offset amounts to be paid, and loans to employees; – Receivables from others, on transactions that do not generate revenue. This account group also includes advances to suppliers for the purchase of property, plant and equipment and intangible assets.
Other receivables are initially recognized at their fair value on the transaction date, i.e. for the amount expected to be received less any directly attributable transaction costs.
Current tax assets
Current tax assets are only shown in this item if, and only if, the amount already paid for the current year and for previous years exceeds the amount due, unless a refund has already been requested for the latter.
107 Gruppo 24 ORE
2009 annual financial report
Other current financial assets
This item includes short-term financial receivables.
Other current financial receivables are initially recognized at their fair value on the transaction date, i.e. the amount expected to be received less any directly attributable transaction costs.
This item also includes hedging instruments for which a hedging relationship has been established for the element being hedged.
Hedging instruments are designated derivatives whose cash flows are expected to offset changes in the cash flows of a designated element hedged. A position is designated as a hedging relationship when there is formal documentation supporting management of the risk and the related hedging strategy and when the hedge is highly effective and reliably measurable.
As financial receivables, derivatives designated as hedging instruments are initially recognized at their fair value, i.e. at the transaction price of the consideration given or received, less any directly attributable transaction costs.
Following initial recognition, recognition of hedging transactions entails an equal and opposite recognition through profit or loss of the changes in the fair value of the hedging instrument and of the element hedged.
Designated hedging relationships are considered cash flow hedges, i.e. hedges for exposure to the variability of cash flows due to a particular risk associated with a recognized asset or liability which could have an impact on the income statement.
In designated cash flow hedge relationships, the portion of the profit or loss on the hedging instrument, which is considered an effective hedge, is recognized directly on the statement of Other components of comprehensive income and on the statement of comprehensive income. The ineffective portion of the profit or loss on the hedging instrument is to be recognized on the separate income statement.
If the value of a financial instrument used as a designated hedging instrument and recognised as a financial asset measured at fair value is negative, it is recognised as a financial liability in accordance as indicated under “Other current financial liabilities” in the C“ urrent liabilities” section.
108 Gruppo 24 ORE
2009 annual financial report
Other current assets
Other current assets comprise accrued income and prepaid expenses.
Accrued income and prepaid expenses represent portions of costs or revenue that relate to two or more periods. They measure revenue and charges that have to be accounted for earlier or later than the event that gives rise to their original recognition. The fundamental condition for them to be recognized is that the amount of these portions of costs and revenue that are common to several periods varies on a time basis.
The amount to be spread over two or more periods is split on a time basis by counting the months, in order to allocate the correct portion to the current year in the case of accruals, or to postpone a portion to subsequent years in the case of prepaid expenses.
Accrued income measures the portions of revenue due to be received in full in a future period, but partially applicable to the year to which the financial statements refer.
Prepaid expenses reflect portions of costs recognized entirely during the current year, or in previous years, and represent the part that is being deferred to one or more future years.
Cash and cash equivalents
These include bank and post office deposits, as well as cash in hand and cash equivalents.
Bank and post office deposits, cash in hand and cash equivalents in national functional currency are shown at face value.
Cash and deposit accounts include all movements that took place up to the reporting date. Accrued interest and related charges due at the reporting date are included, even if actual receipt takes place subsequently.
Collections received after the reporting date are not included in this item, even if backdated.
Cash payments made or requested after the reporting date are not taken into consideration.
109 Gruppo 24 ORE
2009 annual financial report
Assets and liabilities classified as held for sale
All non-current assets and disposal groups classified as held for sale are shown separately from other assets in the statement of financial position.
The carrying amount of non-current assets and disposal groups classified as held for sale will be recovered mainly by selling them off, rather than by using them on an ongoing basis.
The carrying amount is considered as being recoverable mainly by selling off the assets when management has decided on a disposal plan. The sale is expected to be completed within one year of the reclassification and at a reasonable price with respect to the current fair value of the assets concerned.
Non-current assets classified as held for sale are measured at the lower out of their carrying amount and their fair value net of selling costs. Such assets are not depreciated.
Held-for-sale non-current assets which represent a significant autonomous business segment or geographic area, or which are investments in subsidiaries acquired solely for subsequent sale, are classified as discontinued operations.
The profit or loss resulting from discontinued operations, as well as the related capital gains or losses on the discontinued operations, which are recognized at fair value net of costs of the sale, are shown separately under a single item on the income statement.
All gains or losses deriving from non-current assets classified as held for sale, other than discontinued operations, are included in the profit (loss) from continuing operations.
Equity
This represents the difference between the all assets and liabilities, determined according to the applied recognition and measurement criteria.
Equity is broken down into the portion attributable to the owners of the parent and the portion attributable to non-controlling interests.
110 Gruppo 24 ORE
2009 annual financial report
Equity includes the items listed below:
Capital, i.e. the par value of the amount paid by shareholders on the date of establishment or for subsequent capital increases plus the value of reserves converted into share capital over time, net of the par value of any amounts due from shareholders for capital subscribed and not yet called up and for capital called up but not yet paid in.
Equity reserves, which include: – capital injections, i.e. reserves made up of new contributions made by shareholders; – the share premium reserve, i.e. the difference between the issue price of the shares and their par value; – equity transaction costs, i.e. all costs associated with the purchase or issue of new shares, including the costs originated by the procedure for listing on a regulated market incurred by the parent during the year.
Revaluation reserves, which include: – reserves for asset revaluations envisaged by specific laws; – profits and losses arising from changes in the fair value of recognized available-for-sale financial assets, except for impairment losses and foreign exchange gains and losses. Pursuant to Article 6, paragraphs 1 and 4, of Italian Legislative Decree 38/2005, these revaluation reserves, set up as a result of fair-value measurements, are not available for distribution. – changes in the carrying amount of investments in associates caused by changes in the associate’s equity. The revaluation reserve that is recognised in consequence of this change may not be distributed to shareholders, pursuant to Article 6, paragraphs 1 and 4 of Legislative Decree 38/2005. This reserve is also kept separate from the non-distributable reserve that is recognised and shown under other reserves, comprised of the profit for the year recognised on the income statement in an amount corresponding to the gains, net of the relevant tax cost, resulting from the portion of the profit of the equity investment.
Hedging and translation reserves, which include: – the translation reserve, which contains the exchange differences generated on conversion of the monetary and non-monetary elements of foreign subsidiaries included in consolidation, which prepare their individual financial statements in a currency other than the functional currency; – the cash flow hedging reserve, relating to the part of the profit or loss on cash flow hedging instruments that is considered an effective hedge.
The hedging reserves, which are set up following changes in the fair value of cash flow hedging instruments, are not available for distribution in accordance with Article 6, paragraphs 1 and 4, of Legislative Decree 38/2005.
111 Gruppo 24 ORE
2009 annual financial report
Other reserves, which include: – the legal reserve, which is an obligatory reserve under Article 2430 of the Italian civil code, which requires that at least 5% of the profit for the year has to be set aside in the legal reserve until it reaches one fifth of the share capital.U p to this limit, the reserve is not available for distribution; – the reserve for grants related to assets, for grants that are meant to integrate equity. These grants were paid until 1987, in accordance with Article 8 of Italian law 416/1981, and are taxable on distribution; – the negative goodwill reserve. This is an adjustment to equity relating to the merger of companies in prior years; – the fair value reserve for stock grants and stock options. This is an equity adjustment related to equity instruments assigned for transactions involving share-based payments, i.e. the corresponding entry for the cost recognized for equity instruments assigned to employees. The shares, stock options and other equity instruments assigned to employees as part of their pay package are measured at the fair value of the equity instruments assigned, calculated as at the grant date. In the interval between the grant date – i.e. the date on which the right arises to receive the shares, stock options, and equity instruments once given conditions have been met– and vesting date – i.e. the date when the conditions envisaged on the grant date have effectively materialized – no change is made to the fair value calculated on the grant date. Vesting conditions other than market conditions are not considered in the estimate of fair value made on the grant date. These non-market conditions are instead considered when adjusting the number of equity instruments calculated on grant date, so that the amount recognized is based on the number of equity instruments that definitively qualify for vesting; – the post-employment benefit adjustment reserve reflects recognition of the actuarial gains and losses on post-employment benefits. This item reflects changes in the present value of this liability as a result of the program evolving differently from how it was initially envisaged from an actuarial point of view. The Group has adopted the rule of recognising actuarial gains and losses in the financial year that they occur, as other components of comprehensive income; – the IFRS first-time application FTA( ) reserve, which is made up of the adjustments deriving from the transition to the IFRSs related to the value of treasury shares. This reserve has a corresponding entry of equal value in the non-available treasury share reserve. Subsequent adjustments related to the transition to the IFRSs have been reclassified as retained earnings; – the statutory reserve and other optional reserves defined by the by-laws or approved by the shareholders; – the non-available reserve consisting of earnings recognized on the income statement representing capital gains – net of related tax effect – stemming from application of the fair-value or equity method and that do not relate to financial assets and liabilities at fair value through profit or loss, or to hedging instruments, as required by Article 6, paragraphs 1 and 2, of Italian Legislative Decree 38/2005.
Retained earnings, i.e. prior years’ profits or losses that have not been distributed or allocated to
112 Gruppo 24 ORE
2009 annual financial report
other reserves. This also includes all amounts related to theIFR S FTA reserve, with the exception of amounts related to treasury shares.
Also included in this item is the payment related to exercising the greenshoe option granted to the coordinators of the global public offering during the listing process for the purchase of special treasury shares at the offering price.
Profit (Loss) for the year, i.e. the financial performance for the year, as shown in the corresponding item of the income statement.
Equity is shown by separately indicating the portion attributable to the owners of the parent, broken down in the accounts indicated above, and the portion attributable to non-controlling interests, broken down between: – the portion of the profit/loss for the year of consolidated subsidiaries, separately identified, attributable to non-controlling interests; – the portion of the share capital and reserves of consolidated subsidiaries attributable to non- controlling interests, made up of the value of non-controlling interests at the date of acquisition of the investment and the non-controlling interests’ share of any changes in equity since that date.
Non-current liabilities
Non-current financial liabilities
This item essentially includes the amounts due to banks for medium-/long-term bank loans.
The initial measurement of non-current financial liabilities is at fair value as at the trading date, net of directly attributable transaction costs.
After initial recognition, non-current financial liabilities are measured at amortized cost using the effective interest method.
Employee benefit obligations
This caption comprises the post-employment benefit provision accrued for all contractual categories of employees at the reporting date.
113 Gruppo 24 ORE
2009 annual financial report
Following the amendments made to Italian post-employment benefit (“TFR”) regulations by Law 296 of 27 December 2006 (the 2007 national budget law) and by subsequent implementing decrees and regulations (i.e. the pension reform) enacted during 2007, the Group adopted the following accounting policy: – the post-employment benefits accrued at 31 December 2006 are considered defined benefit plans pursuant to IAS 19, consistently with their recognition and classification in previous financial years. The guaranteed post-employment benefits that are paid upon termination of the employment relationship are recognised in the period when the right accrues; – the related liability is calculated on the basis of actuarial assumptions and of the actual debt accruing and not paid as at the end date of the period in question, applying the criteria envisaged by IAS 19 for defined-benefit plans, according to which the Group retains actuarial and investment risk; – the discounting approach, based on demographic and financial assumptions, was implemented by applying the accrued benefits method with the projected unit credit method determined by professional actuaries. This method consists of measurements that express the current average value of accrued pension obligations according to the service that the worker has performed until the time when the measurement was made, considering demographic variables such as employee rotation and mortality and financial variables, such as the discount rate. In consequence of the changes introduced by the reform, the component tied to expected future wage increases was excluded from the discounting calculation beginning from 1 January 2007. – the actuarial gains and losses are recognised in the post-employment benefit Adjustment reserve, classified under Other reserves, as indicated in the Equity section, and shown on the statement of other components of comprehensive income and on the statement of comprehensive income.
For post-employment benefits accruing as from 1 January 2007, reference should be made to Other Payables in the Current Liabilities section.
Deferred tax liabilities
Deferred tax liabilities are portions of income taxes due in future years because of taxable temporary differences.
Taxable temporary differences are differences between the carrying amount of an asset or liability shown in the statement of financial position and the value that is recognised for tax purposes. When calculating the taxable income of future years, they will translate into taxable amounts when the carrying amount of the asset or liability is realised or extinguished.
114 Gruppo 24 ORE
2009 annual financial report
Deferred tax liabilities are recognized for all taxable temporary differences except in those cases where the liability derives from: – initial recognition of goodwill, or – initial recognition of an asset or liability in an operation that is not a business combination and that does not have any effect either on the reported profit (loss) for the year or that for tax purposes at the date of the operation.
Deferred tax liabilities are also recognized for the taxable temporary differences deriving from investments in associates, except in the case where the following two conditions exist simultaneously: (a) the parent is able to control when taxable temporary differences are eliminated, and (b) it is probable that the temporary differences will be eliminated in the foreseeable future.
Deferred tax liabilities are valued at the tax rates that are expected to apply during the year when the tax liability will presumably be extinguished, based on the tax rates enacted at the reporting date.
Deferred tax liabilities are not discounted to present value.
The tax charge relating to deferred tax liabilities is recognized in the income statement, unless the tax derived from a transaction or event that was recognized as other component of comprehensive income or directly in equity or came from a business combination.
Deferred tax liabilities resulting from items that are credited or debited as other component of comprehensive income or directly to equity are also credited or debited as other component of comprehensive income or to equity.
Deferred tax liabilities are offset by deferred tax assets only if the two items refer to the same tax.
Provisions for risks and charges
This item includes the various provisions made for risks and charges.
These provisions are set up to cover liabilities whose amount or timing is uncertain, which arise from legal or constructive obligations, and that exist at the reporting date as the result of a past event.
These obligations, which derive from contractual provisions, legal regulations, established models of corporate practice, or public assumptions of responsibility, mean that the company has no real alternative than to comply.
115 Gruppo 24 ORE
2009 annual financial report
Obligations are recognized in accounts when they effectively exist, based on a past event, and when compliance will probably mean using economic or financial resources for an amount that can be estimated with a certain degree of accuracy.
Provisions are measured at the value that represents the best estimate of the amount required to extinguish the obligation or to transfer it to third parties at the reporting date.
If discounting for the cost of money has a significant effect because of the expected timing of the obligation, the amount of the provision is equal to the present value of the outflow expected to be needed to extinguish the liability.
The financial component of the discounted provisions is recognized in the income statement under financial expenses.
The current portions of provisions for risks and charges are reclassified toC “ urrent portions of provisions for risks and charges” in the section devoted to current liabilities.
Contingent liabilities
Contingent liabilities are obligations deriving from past events: – whose existence will be confirmed by future events, or – the extinction of which is unlikely to involve an outlay of economic or financial resources, or – the amount of which cannot be estimated with sufficient accuracy.
Contingent liabilities are not recognised in the accounts, but rather described exactly in the explanatory notes to the financial statements. If possible, calculation of the financial effects, the uncertainties regarding the amount and the estimate when it is likely that the event causing the contingent liability is likely to occur are also specified in the notes.
Finance lease payments – due after one year
This category includes the amounts due for items of property, plant and equipment acquired under finance leases.
Initial recognition of these payables, as well as their subsequent measurement after initial recognition,
116 Gruppo 24 ORE
2009 annual financial report
follows the same accounting treatment as was explained in the note on property, plant and equipment in the section on non-current assets.
The current portions of finance lease obligations are reclassified toF “ inance lease payments – due within one year” in the section on current liabilities.
Other non-current liabilities
This category includes guarantee deposits received that will have to be reimbursed.
Guarantee deposits are initially recognized at their fair value on the transaction date, net of any directly attributable transaction costs.
Current liabilities
Bank overdrafts and loans
This item includes the bank current accounts with an overdraft balance, as well as the current portions of amounts due to banks for medium-/long-term loans which are expected to be settled within twelve months of the reporting date.
Other current financial liabilities
This category includes: – short-term financial payables; – the financial expenses accrued on these payables
Short-term financial payables are initially recognized at their fair value on the transaction date, i.e. for the amount expected to be paid less any directly attributable transaction costs.
Financial expenses are recognized in the same way as the other accruals in “Other current liabilities” in the section on current liabilities.
This item also includes hedging instruments for which a hedging relationship has been established for the element being hedged.
117 Gruppo 24 ORE
2009 annual financial report
Hedging instruments are designated derivatives whose cash flows are expected to offset changes in the cash flows of a designated element hedged. Designated hedging relationships are considered cash flow hedges, i.e. hedges for exposure to the variability of cash flows due to a particular risk associated with a recognized asset or liability which could have an impact on the income statement. A position is designated as a hedging relationship when there is formal documentation supporting management of the risk and the related hedging strategy and when the hedge is highly effective and reliably measurable.
As financial liabilities, derivatives designated as hedging instruments are initially recognized at their fair value, i.e. at the transaction price of the consideration given or received, less any directly attributable transaction costs.
Following initial recognition, recognition of hedging transactions entails an equal and opposite recognition through profit or loss of the changes in the fair value of the hedging instrument and of the element hedged.
In designated cash flow hedge relationships, the portion of the profit or loss on the hedging instrument, which is considered an effective hedge, is recognized directly in equity and disclosed on the statement of other components of comprehensive income and on the statement of comprehensive income. The ineffective portion of the profit or loss on the hedging instrument is to be recognized through profit or loss.
Current tax liabilities
This category includes the current direct taxes for the year and previous years, to the extent that they have not already been paid.
The amount in the statement of financial position is shown net of advance payments of tax, withholding taxes and tax credits, unless a rebate has been claimed.
Current income taxes are measured for the amount expected to be paid to the tax authorities, applying current tax rates and regulations, or substantially enacted as at the reporting date.
Current taxes are recognised as an expense on the income statement, with the exception of taxes that result from transactions or events recognised as other component of comprehensive income or in equity, which are also charged as other component of comprehensive income or equity.
118 Gruppo 24 ORE
2009 annual financial report
Trade payables
Trade payables include the amounts due to suppliers, the liabilities to be paid for goods and services received and invoiced, the advances received from customers for goods and services still to be rendered, and deferred income relating to products sold on a subscription basis.
The amounts due to suppliers and the advances from customers are recognized at fair value at the transaction date, i.e. at the amount formally agreed with the counterparty, net of any trade discounts and adjusted for returns or other billing adjustments.
The deferred income relating to products sold on a subscription basis is recognized in the same way as explained for deferred income in “Other current liabilities” in the section on current liabilities.
When the payment of trade payables is deferred and the transaction effectively constitutes a form of financing, after initial recognition, they are measured at amortized cost using a hypothetical interest rate.
Current portions of provisions for risks and charges
This item includes the current portions of P“ rovisions for risks and charges” in the section on non-current liabilities, which are expected to be settled within twelve months of the reporting date.
Other current liabilities
Other current liabilities include accrued liabilities other than those relating to financial expenses, which are classified under O“ ther current financial liabilities”, and deferred income other than income on products sold on a subscription basis, which are classified under “Trade payables” in the section on current liabilities.
As already explained for accrued income and prepaid expenses, accrued liabilities and deferred income also represent portions of costs or revenue that relate to two or more years.
Accrued liabilities measure the portions of costs due to be paid in full in a future year, but partially applicable to the year to which the financial statements refer.
119 Gruppo 24 ORE
2009 annual financial report
Deferred income reflects portions of revenue recognized entirely during the current year, or in previous years, and represents the part that is being deferred to one or more future years.
Deferred income includes the deferral of grants related to assets obtained for investments in property, plant and equipment and intangible assets, treated in the way explained in the paragraph on grants related to assets under “Property, plant and equipment” in the section on non-current assets.
Other payables
Other payables include: – the amounts due to social security institutions for social security charges and pension contributions; – tax liabilities other than for direct taxes classified under “current tax liabilities” in the current liabilities section, such as the taxes payable for tax assessments or disputes that have been settled, for tax withheld as a withholding agent and for tax claims of any kind in the hands of collection agencies. The amount in the statement of financial position is shown net of advance payments of tax, withholding taxes and tax credits, unless a rebate has been requested for them; – amounts due to employees for wages and salaries, expense reports to be reimbursed, accrued vacation and additional months’ pay; – dividends payable to shareholders; – other payables that cannot be classified under any other current liability caption.
Other payables are initially recognized at their fair value on the transaction date, i.e. for the amount agreed with the counterparty, less any directly attributable transaction costs.
Because of their nature and duration, other payables do not have a set discount rate. As established by IAS39, after initial recognition these payables are shown at their original value, as discounting would have an insignificant effect.
As from the financial year beginning 1 January 2007, this category also includes: – amounts payable to supplementary pension funds, relating to the accrued portions of employees post-employment benefits and not yet paid to the funds; – amounts payable to the central treasury fund set up with INPS (the Italian state pension & welfare agency) relating to the portions of employees’ post-employment benefit accruing and not yet paid to the fund.
120 Gruppo 24 ORE
2009 annual financial report
Following the pension reform mentioned above in relation to employee benefit obligations, the portions of employee post-employment benefits accumulated as from 1 January 2007 have been, at the employee’s discretion: – allocated to forms of supplementary pension provision; – held within the company, which transfers these portions of post-employment benefit to the central treasury fund set up with INPS.
Both those portions of employee post-employment benefits allocated, as from 1 January 2007, to supplementary pension provision and those allocated, as of the same date, to the central treasury fund with INPS, are recognized as post-employment benefits and classified among defined-contribution plans.
As required by IAS 19, contributions to be paid to a defined-contribution plan are accounted for on an accruals basis as amounts payable to supplementary pension funds and/or to the INPS treasury fund, against service rendered by employees. More specifically, the liability for benefit portions payable to the INPS treasury fund does not include the cost of revaluation, which is instead incumbent on the INPS.
Finance lease payments – due within one year
This item includes the current portions of “Finance lease payments”, in the section on non-current liabilities, which are expected to be settled within 12 months of the reporting date.
Effects of fluctuations in foreign exchange rates
At each reporting date, all monetary elements in foreign currency, i.e. all assets and liabilities that will be collected or paid in a fixed or determinable quantity of foreign currency, are translated at the year-end spot exchange rate.
Exchange differences deriving from the translation of monetary elements at a different rate from the one used at the time of initial recognition during the year or in previous financial statements are recognised in profit or loss in the year that they arise, except for exchange differences deriving from a monetary element that forms part of an investment in a foreign associate.
Exchange differences deriving from a monetary element that forms part of an equity investment in a foreign associate are recognized in an equity reserve and held there until the investment is sold. They are reported on the statement of other components of comprehensive income and on the statement of comprehensive income. The total amount of the exchange differences recognized in a special equity
121 Gruppo 24 ORE
2009 annual financial report
reserve is recognized on the separate income statement at the time that the gain or loss on sale of the investment is recognized.
At each reporting date, all non-monetary elements measured at purchase cost in a foreign currency are translated at the exchange rate in force on the date of the purchase. All non-monetary elements measured at fair value in a foreign currency are translated at the exchange rate in force on the date that the fair value was determined.
When the carrying amount of a non-monetary element expressed in foreign currency is determined – by comparing two or more amounts, the exchange rate applied to the amounts used for comparison with the original carrying amount is the rate prevailing at the time the comparison is made.
This means that if the carrying amount to be recognised is one of the amounts being used in the comparison, any exchange differences that arise are recognised in profit or loss, in the same way as for monetary elements.
If a designated fair value hedging relationship has been set up between a hedging instrument and an element being hedged in foreign currency, the accounting policy applied is the same as for hedges, as explained under “Other current financial assets” in the section on current assets.
Revenue
Revenue from the sale of goods is recognized in the income statement when: – a significant portion of the risks and benefits of ownership of the goods have been transferred to the buyer; – the revenue amount can be measured reliably; – there is no longer any effective control over the goods sold; – it is probable that there will be economic benefits from the transaction; – related transaction costs can be reliably determined.
Revenue from the provision of services is recognized in the income statement with reference to the stage of completion of the transaction at the reporting date when: – the revenue amount can be reliably measured; – it is probable that there will be economic benefits from the transaction; – the stage of completion of the transaction can be reliably measured; – the costs incurred and to be incurred can be reliably calculated.
122 Gruppo 24 ORE
2009 annual financial report
More specifically: – revenue from the sale of goods is considered earned when ownership is transferred, which is generally considered as coinciding with shipment, both for daily newspapers and magazines sold individually, and for book publications that are sold on firm-sale basis (i.e. no returns). Revenue is recognized net of a reasonable estimate of returns; – revenue from the sale of newspapers and magazines on a subscription basis is recognized over the period of the subscription; – revenue from the sale of advertising space is recognized on the basis of the date of publication of the publicity insert or advertisement; – revenue from the sale of services with a contractual duration, such as online, master-course, and database subscription services, is recognised over the period of the contract. – revenue from the sale of software products is recognised at the time title to the licenses changes hands. – revenue for software implementation and maintenance services is recognised according to the stage of completion.
Costs and revenue relating to the same transaction or to another event are recognized simultaneously, applying the matching principle.
When revenue components are significant, their nature and amount are shown separately.
Costs
Costs are recognized in the income statement when a decrease in future economic benefits has taken place involving a decrease in assets or an increase in liabilities that can be reliably measured.
In particular, a cost is recognized immediately when and to the extent that: – an expense does not result in any future economic benefit; – future economic benefits do not qualify, or cease to qualify, for recognition as assets on the statement of financial position; – a liability is incurred without an asset being recognized.
When cost components are significant, their nature and amount are shown separately.
Dividends
Dividends distributed are recognized in the financial year when shareholders approve distribution.
123 Gruppo 24 ORE
2009 annual financial report
Indication of the amount of the dividend paid during the financial year is accompanied by disclosure of the amount of the dividend per share. Assignment of dividends declared after the reporting date is not recognized as a liability. If such assignment is declared after the reporting date but before publication of the annual financial report is authorized, dividends are disclosed in the notes to the financial statements.
Earnings per share
Basic earnings per share (EPS), shown in the income statement for each period presented, is calculated by dividing the profit or loss attributable to the ordinary and special owners of the parent by the weighted average number of shares outstanding during the year.
Diluted EPS, again reported on the income statement for each period presented, is calculated by adjusting – in order to take account of all potential shares – both the earnings or losses attributable to ordinary and special owners of the parent and the weighted average number of ordinary and special shares outstanding during the financial year.
The dilutive effects of potential ordinary and special shares are those that reduce earnings or increase losses per share as a consequence of: – conversion of convertible instruments into ordinary and special shares; – exercise of options or warrants on ordinary shares; – issuance of new ordinary shares upon verification of certain conditions.
Guarantees
The arryingc amount of financial assets given as guarantee for liabilities or for contingent liabilities and clauses and conditions relating to such assets’ use are indicated separately in the notes to the financial statements. If the financial assets given as guarantee can be sold or newly pledged, their carrying amount is reclassified on the statement of financial position, separately from other assets.
For guarantees received that can be sold or newly pledged, fair value and the clauses and conditions associated with their use are shown separately.
If financial assets received as guarantee have been sold, a value is recognized equal to the selling price and a liability measured at fair value for the obligation to return the guarantee. The fair value of such transactions, together with the fair value of guarantees received and newly pledged, is illustrated in the notes to the consolidated financial statements.
124 Gruppo 24 ORE
2009 annual financial report
Hedging transactions
For each type of hedge, the notes to the consolidated financial statements separately describe: – the transaction; – the financial instruments designated as hedging instruments, also indicating their fair value as at the reporting date; – the nature of the risks hedged.
The notes to the consolidated financial statements also provide detailed information on cash-flow and fair-value hedges.
Fair value of financial instruments
For each class of financial asset and liability, whether recognized at fair value or measured by one of the other methods subsequent to their initial recognition as specified by IAS 39, the notes include separate indication of the fair value and the method of measurement used.
This information is provided for the purpose of comparing fair value with carrying amount and is always necessary, except in the following cases: – when carrying amount is a reasonable approximation of fair value; – for investments in equity instruments that do not have a listed market price on an active market.
Financial asset and liability classes have been grouped in a manner pertinent to the nature of supplementary information disclosed. Sufficient information has been provided to permit reconciliation with the carrying amount of items classified in the statement of financial position.
A ranking of financial assets and liabilities carried at fair value on the statement of financial position has been prepared, according to which the fair value measurement has been classified. This ranking, which reflects the material nature of the data used to make the measurements, is composed of the following three levels: – prices quoted on active markets for identical assets or liabilities – Level 1; – input data different from the quoted prices indicated at Level 1, but which are directly observable (prices for similar assets) or indirectly observable (derived from prices) – Level 2; – input data that are not based on observable data – Level 3.
For each class of financial instruments classified as financial assets and liabilities that are recognised at their fair value, the notes to the financial statements provide the information required underIFR S 7 for financial disclosure.
125 Gruppo 24 ORE
2009 annual financial report
6. Changes in accounting policies, errors, and changes in estimates
The accounting policies adopted are only changed from one year to the next if the change is required by an accounting standard or if it provides more pertinent and reliable information on the effects of transactions on the entity’s financial position, results of operations, or cash flows.
Changes in accounting policies are accounted for retroactively, recording the effect to opening equity of the earliest period being presented. Other comparative figures for each prior year are also adjusted as if the new policy had always been applied. The prospective approach is used only when it is impracticable to reconstruct comparative information.
The application of a new accounting standard or one that has been modified is accounted for as required by the standard concerned. If the standard does not regulate transition, the change is accounted for using the retrospective method, or, if the latter is impracticable, the prospective method.
In the case of material errors, the same policy is applied as for changes in the international accounting standards illustrated in section 5, Accounting Policies. In the case of non-material errors, accounting adjustments are made to the income statement in the period when the error is found.
Changes in accounting estimates are recognized prospectively on the income statement in the year when the change occurs if it only affects that one year, or in the year when the change occurs and in future years if the change also affects such years.
These are the Group’s first consolidated financial statements in which:IA S 1 Presentation of Financial Statements, IFRS 8 Operating Segments and IAS 23 Borrowing Costs have been applied at the reporting date. These accounting standards had already been applied in the half-year abbreviated consolidated financial statements.A pplication of IAS 1 and IFRS 8 relates solely to aspects of presentation and of disclosure to be provided in explanatory notes and therefore has no effect on calculation of the profit (loss) for the year and EPS. Given the nature of Group investments, the application of IAS 23 did not have any impact on determination of the profit (loss) for the year andEP S.
126 Gruppo 24 ORE
2009 annual financial report
7. Risk management
In order to provide disclosures that improve the reader’s understanding of the impact of financial instruments on the Group’s financial position, results of operations and cash flows, supplementary information is provided to facilitate evaluation of the size of the related risks.
The risks related to the financial instruments used by the Group are: – market risk, i.e. the risk of a financial instrument’s fair value or cash flows fluctuating following changes in market prices. This risk can be further broken down into: • foreign exchange risk, i.e. the risk that the value of a financial instrument might fluctuate as a result of movements in exchange rates; • interest rate risk on fair value, i.e. the risk that the value or future cash flows of a financial instrument might fluctuate as a result of changes in market interest rates; • price risk, i.e. the risk that the fair value of a financial instrument or its future cash flows might fluctuate as a result of changes in market prices; – credit risk, i.e. the risk that one of the parties to a financial instrument does not fulfil an obligation and causes a financial loss to the other; – liquidity risk, i.e. the risk of having problems in accessing funds to meet the commitments deriving from financial instruments.
For each type of risk stemming from financial instruments, qualitative information is provided about: – exposure to the risk and how it was generated; – objectives, procedures and processes for managing and controlling risks and the methods used to measure them; – any changes compared with the previous financial year.
In addition, for each type of risk stemming from financial risks, summary quantitative data are provided on risk exposure as at the reporting date. Detailed disclosure concerning analytical quantitative data has been prepared in compliance with the requirements of IFRS 7, highlighting the existence of any concentration of risk.
Financial risk
Financial risk management is performed following a principle of prudence and of minimization of the risks connected with financial assets and liabilities. The investment of surplus cash or the raising
127 Gruppo 24 ORE
2009 annual financial report
of necessary resources is carried out with the priority objective of neutralizing the risk of (a) loss of capital, avoiding speculation and (b) interest rate fluctuations, avoiding exposure of the operating profit (loss) to any unexpected increases in financial expenses.
The Group constantly monitors the financial risks to which it is exposed, in order to assess any negative impact and to take the appropriate steps to mitigate such risks. The Board of Directors has the overall responsibility for creating and supervising the Group’s risk management system, as well as for the development and control of risk management policies.
The Group’s risk management policies are intended to identify and analyse the risks to which the Group is exposed, defining appropriate limits and the monitoring systems for such risks. Policies and related systems are periodically reviewed in consideration of changes in market conditions and in Group activities.
Financial management of subsidiaries takes place through specific intercompany current accounts on which any cash surpluses are deposited or on which the parent provides the financial resources needed for the subsidiaries to conduct their business operations. The aim is also to optimize the impact on the income statement of the financial income and expenses accruing on these current accounts.
Centralized management of the Group’s finances also makes it possible to control and co-ordinate the operations of each subsidiary efficiently, also via more effective financial planning and control. This also provides useful input to ensure the best possible handling of the Group’s relationships with its main banks and credit institutions and to help monitor the Group’s financial risk and treasury movements in a systematic way.
Financial guarantees
Group policies envisage the issue of financial guarantees mainly in the following cases, i.e. for: – prize competitions, as regulated by Italian Presidential Decree 430/2001; – for Public Administration tenders/contracting, as required in tendering or adjudication rules; – as guarantee for use of group VAT consolidation procedures; – for rental contracts instead of guarantee deposits; – for special service supply contracts.
Group policy gives preference to issue of bank suretyships at parent level, avoiding their issue at subsidiary level.
128 Gruppo 24 ORE
2009 annual financial report
Market risk
Market risk is the risk of the fair market value or future cash flows of a financial instrument fluctuating following changes in market prices, due in turn to changes in interest rates, exchange rates, or in the market prices of equities. The objective of market-risk management is to manage the Group’s exposure to the risk and keep it within appropriate limits, whilst also optimizing the return of the investments to which such risk relates.
The Group uses derivative instruments during the normal course of its financial activity and also takes on financial liabilities to manage market risk. It performs these activities in accordance with the guidelines established by the Board of Directors. The Group performs hedging transactions to manage the volatility of results relating to financial instruments.
Foreign exchange risk
The Group is marginally exposed to foreign exchange risk on purchases denominated in currencies other than the functional currency of the various Group entities.
These transactions mainly refer to the following exchange rates: EUR/USD, EUR/GBP, and EUR/CHF.
The Group in any case has the policy of hedging foreign exchange risk for specific purchases of investment assets denominated in currencies other than the functional currency in order to preserve the margin of return projected for such investments. It is the Group’s policy to undertake full hedging, where possible, of significant exposures arising from receivables and payables denominated in currencies other than the euro.
Price risk
The main raw material used by the Group that could be exposed to significant price risk is paper.
Paper is handled centrally for all of the Group’s business units by means of careful procurement planning and inventory management. In line with best market practice, supply contracts are agreed
129 Gruppo 24 ORE
2009 annual financial report
with leading Italian and foreign paper companies for fixed quantities at fixed prices for the maximum period that the market currently permits, i.e. about one year.
The Group does not use hedges such as paper swaps, as they offer limited liquidity in terms both of counter-parties and of maturities.
Credit risk
Credit risk is the risk of a customer or of one of the counterparties of a financial instrument causing a financial loss by not honouring an obligation.
In the case of the Group, credit risk mainly relates to trade receivables from sales of products and services by the various business units, as well as to financial receivables in connection with the investment of surplus cash.
Considering the type of customers that the Group has for its products and services, management does not believe there is a high level of trade credit risk. As there is no high concentration of this risk, the policy is to limit sales to any customers that are considered insolvent or are unable to provide adequate guarantees.
Customer credit risk is controlled by grouping customers by type and business area, considering whether customers are advertising agencies, financial companies and institutions, public entities, professionals and natural persons, distributors and bookstores, or other customers. Other factors examined are geographical location, business sector, credit age, the due dates of invoices issued, and previous payment behaviour.
In the face of this risk, a specific provision for bad debts is made to cover any losses caused by non- collectability.
As regards financial receivables, it is believed that the Group is not exposed to significant risk as it invests surplus cash only with banks of premier standing, mainly using short-term investment instruments with maturities of not more than 3 months (on demand or term deposits).
130 Gruppo 24 ORE
2009 annual financial report
Liquidity risk
Liquidity risk is the risk of the Group having difficulty in meeting obligations associated with financial liabilities and therefore of having difficulty in accessing, at economical conditions, the financial resources necessary for its operations.
In managing the liquidity risk, the Group’s approach is to ensure, as far as possible, that there are always sufficient financial reserves to meet its obligations at maturity, both in normal conditions and in conditions of any financial stress.
Besides the trend in market interest rates, the main factors determining Group liquidity are (a) the cash flows generated or absorbed by operating and investing activities and (b) the flows relating to repayment of financial liabilities and cash-in of income relating to financial investments.
The Group has taken a series of actions designed to optimize management of financial resources and mitigate the liquidity risk. More specifically: – centralized management of Group liquidity via constant withdrawal of cash surpluses from subsidiaries and via coverage of the latters requirements with resources provided by the parent; – maintenance of an adequate reserve of available liquidity; – availability of adequate short-term lines of credit; – planning of the future financial position, also as regards the incidence of medium-/long-term debt on the overall net financial position; – utilization of an appropriate internal control system to assess available liquidity in relation to operational planning.
For coverage of any short-term financial requirements, as at 31 December 2009 the Group had the following credit facilities: – € 36.0 million relating to current-account overdrafts, subject to collection and unsecured, paid at an average interest rate of 5.35%; – € 32.9 million relating to revocable lines of credit that can be used for short-term temporary financial requirements, at an average cost equal toE uribor + 0.23%.
Management believes that the present financial resources and the credit lines available as mentioned above are sufficient to cover requirements relating to investing activity, management of working capital, and to ongoing repayment of medium-/long-term loans.
131 Gruppo 24 ORE
2009 annual financial report
Interest risk
The Group’s operating profit (loss) is exposed to fluctuations in market interest rates, with special reference to net financial expenses relating to facilitated medium-/long-term loans of the variable-rate type.
The return of financial investments, consisting of short-term cash investments with a maturity of not more than three months, is not affected by changes in interest rates.
To address the interest risk, the Group uses interest-rate derivatives – mainly interest rate swaps (IRSs) – to eliminate or mitigate, at acceptable economic conditions, the impact of interest rate fluctuations on profit performance.
As at 31 December 2009, 100% of exposure calculated for this risk in connection with medium-/ long-term liabilities was hedged.
The main way of raising financial resources from third parties the Group currently uses is medium-/ long-term facilitated loans, also because of the interest subsidies they envisage, which substantially reduce the cost of financial resources.
In 2005, the parent agreed three facilitated loans under Italian Law 62/2001 (Contributions to the Publishing Industry), with maturity date to 30 June 2015: – a loan of € 6,976 thousand from Credito Emiliano (100% used); – two loans from Intesa Sanpaolo in the amounts of € 3,595 thousand (100% used) and € 8,199 thousand (a loan issued according to project completion status and partly used out of a total authorized amount of € 10,530 thousand).
These loans are to be repaid in fixed amounts of principal every six months and were agreed at a floating rate of interest linked to 6-monthE uribor.
As part of the Group’s risk management policy, hedge contracts are in place to mitigate the risk of fluctuations in the interest rates on these loans.
On 17 January 2006, the parent signed three Payer Interest Rate Swaps - Forward Start (i.e. the hedge takes effect after the date theIR S contract was signed), for which it pays a fixed rate that transforms the interest rate on the underlying loan from floating to fixed, with an exchange of interest flows as from 31 December 2008 to 30 June 2015 (the maturity date).
Each IRS follows the trend of the repayment plan and of the interest settlement dates for the loan
132 Gruppo 24 ORE
2009 annual financial report
to which it refers. The value of the IRS hedging the loan for which the amount is defined on the basis of project completion status – and that had initially been signed for an amount equal to the maximum authorized loan amount – was also aligned during the year with the amount actually paid out, proceeding with a partial unwinding.
A delayed start to the IRSs was decided so as to benefit during the first 18 months of the loans from the expected positive differential between the expected trend of the 6-month Euribor and the fixed rate quoted in the IRSs.
The IRSs made it possible to convert the floating rate of the loans into a fixed rate of around 3.20%.
The parent has evaluated the effectiveness of the hedges, using the hedge accounting methodology based on the cash flow hedge model. This refers to hedging of exposure to the variability of cash flows, attributable to the particular risk associated with the underlying liability.
Based on this methodology, after determining the fair value of the derivative, the value of the effective part of the hedge is recognised under other components of comprehensive income, whereas the value of the ineffective part of the hedge is recognised in the income statement.
The effectiveness of the hedging relationship is measured by comparing the change in the clean fair value of the derivative with that of a hypothetical swap representing a synthetic fixed-rate bond at the market conditions existing when the hedge was agreed.
The ex ante effectiveness of the hedge of the instrument has been evaluated by analyzing critical items and by measuring the fair value of the hedging derivative and of the hypothetical derivative.
The retrospective effectiveness of the hedge (ex post effectiveness test) is evaluated regularly by calculating the change in the fair value of the hedging derivative compared with that of the hypothetical derivative, determined by the fluctuation that has occurred between the current interest rate curve compared with the rate curve at the date when the swap was agreed (cumulative based test).
The hedge is considered retrospectively effective if the ratio between the two variances, in absolute terms, lies within a range of 80-125%. This test is performed on a cumulative basis, performing calculations as at the date of the test and as at the start date.
The following tables show our exposure to interest risk. These are based on separate measurement of the impacts of changes in interest rates (sensitivity analysis) for (a) fixed-rate instruments, in terms of impact on fair value, and (b) floating-rate instruments, in terms of impact of expected cash flows.
133 Gruppo 24 ORE
2009 annual financial report
Financial income and expenses
FINANCIAL INCOME AND EXPENSES
(in thousands of euro) a 2009 a 2008 Recognized in income statement Interest income from unimpaired held-to-maturity financial assets 800 790 Interest income from available-for-sale financial assets 0 54 Interest income on bank deposits 2.234 10,690 Net foreign exchange gains 12 23 Financial income 3,046 11,557 Interest expenses from financial liabilities and other financial expenses (524) (1,277) Net foreign exchange losses (50) (42) Change in fair value of financial assets designated at fair value through profit or loss (FVTPL) – (8) Impairment losses on held-to-maturity securities (22) (22) Ineffective portion of changes in fair value of cash flow hedges 0 0 Financial expenses (596) (1,349) The financial income and expenses shown above include the following amounts relating to assets and liabilities not designated as FVTPL: Total interest income on financial assets 3,046 11,503 Total interest expenses on financial liabilities (588) (1,341) Recognised directly as other components of comprehensive income Effective portion of changes in fair value of cash flow hedges (459) (143)
Financial assets
OTHER FINANCIAL ASSETS
(in thousands of euro) a 31/12/2009 a 31/12/2008 Non-current financial assets Held-to-maturity financial assets 19,306 18,975 Current financial assets Cash & cash equivalents 95,277 150,129 Hedging instruments (459) (143) Total financial assets 114,124 168,961
Non-current financial assets held to maturity totalled € 19,306 thousand and refer to the Monte Paschi Vita insurance policy, to other securities, and to guarantee deposits.
Current financial assets amounted to € 94,818 thousand and refer to cash and cash equivalents and to the fair value of hedging instruments.
134 Gruppo 24 ORE
2009 annual financial report
Financial liabilities
LOAN AGREEMENTS
(in thousands of euro) a 31/12/2009 a 31/12/2008 Non-current liabilities Unsecured bank loans 10,886 14,141 Total non-current liabilities 10,886 14,141 Current liabilities Current portion of unsecured bank loans 3,254 3,193 Unsecured current-account advances 62 1,637 Total current liabilities 3,316 4,830
Loan contracts
This note describes the contactual conditions regulating the Group’s interest-bearing financial liabilities measured at their nominal value.
LOAN CONDITIONS AND REPAYMENT PLANS
(in thousands of euro) f 31/12/2009 f 31/12/2008 nominal year of nominal carrying nominal carrying interest rate maturity value amount value amount Unsecured bank loan 3.05% 2011 1,530 1,530 2,478 2,478 Unsecured bank loan Euribor+0.875% 2015 4,039 4,039 4,773 4,773 Unsecured bank loan Euribor+0.850% 2015 2,081 2,081 2,460 2,460 Unsecured bank loan Euribor+0.850% 2015 5,637 5,637 6,661 6,661 Unsecured bank loan (*) 3.00% 2015 469 469 540 540 Unsecured bank loan (*) 2.25% 2018 384 384 422 422 Total interest bearing liabilities 14,140 14,140 17,334 17,334
(*) loans related to companies consolidated during 2008.
The effectiveness of the hedges, which is determined using hedge accounting methods, made it possible to recognise the fair value of these IRSs in an equity reserve.
135 Gruppo 24 ORE
2009 annual financial report
Credit risk exposure
The carrying amount of financial assets and trade receivables represents the Group’s maximum exposure to credit risk. As at the reporting date, this exposure was as follows:
CREDIT RISK EXPOSURE
(in thousands of euro) a 31/12/2009 a 31/12/2008 Held-to-maturity assets 19,306 18,975 Trade receivables (*) 212,083 230,432 Cash and cash equivalents 95,277 150,129 Interest rate swap hedges: Assets 639 1,303 Total 327,305 400,839
(*) does not include: provision for bad debts, advances to suppliers, agents, and copyright royalties.
As at the reporting date, the Group’s maximum exposure to credit risk relating to trade receivables, by geographical area, was as follows:
BREAKDOWN BY GEOGRAPHICAL AREA
(in thousands of euro) a 31/12/2009 a 31/12/2008 Italy 204,838 219,460 Eurozone countries 4,162 8,244 United Kingdom 2,127 1,782 Other European countries 536 390 United States 180 260 Other 240 296 Total 212,083 230,432
As at the reporting date, the Group’s maximum exposure to credit risk relating to trade receivables, by customer type, was as follows:
BREAKDOWN BY CUSTOMER TYPE
(in thousands of euro) a 31/12/2009 a 31/12/2008 Advertising agencies 34,052 43,236 Companies and financial institutions 82,847 84,114 Public entities 12,995 15,915 Professionals and private individuals 30,151 26,510 Other customers 52,038 60,657 Total 212,083 230,432
136 Gruppo 24 ORE
2009 annual financial report
Impairment losses on trade receivables
The following table shows the age of trade receivables as at the reporting date:
AGING OF TRADE RECEIVABLES
(in thousands of euro) a 31/12/2009 a 31/12/2008 gross bad debts gross bad debts provision provision Not due 142,685 1,334 170,549 2,162 Past due 1-30 days 5,326 210 5,614 138 Past due 31-120 days 11,423 1,305 12,417 417 Past due 121 days -1 year 28,465 5,960 24,626 5,468 More than 1 year 24,184 15,236 17,226 11,896 Total 212,083 24,045 230,432 20,080
The following changes took place during the year in the provision for bad debts relating to trade receivables:
CHANGES IN PROVISION FOR BAD DEBTS
(in thousands of euro) a 31/12/2009 a 31/12/2008 Balance at 1 January 20,080 16,531 Loss for the year (3,688) (4,600) Additions 7,650 6,673 Other changes 8 1,476 Total 24,050 20,080
137 Gruppo 24 ORE
2009 annual financial report
Liquidity risk
The following table shows the contractual due dates of financial liabilities and trade payables:
LIQUIDITY RISK
(in thousands of euro) f31/12/2009 carrying projected cash up to 6-12 1-2 2-5 more than amount flows 6 months months years years 5 years Non-derivative financial liabilities Unsecured bank loans 14,140 (14,797) (1,791) (2,190) (2,551) (7,046) (1,219) Unsecured current-account advances 62 (62) (62) – – – – Trade & other payables 106,535 (106,535) (106,535) – – – – Derivative financial liabilities Interest rate swap hedges 1,098 (1,098) (189) (173) (287) (434) (15) Total 121,835 (122,492) (108,577) (2,363) (2,838) (7,480) (1,234) (in thousands of euro) f31/12/2008 carrying projected cash up to 6-12 1-2 2-5 more than amount flows 6 months months years years 5 years Non-derivative financial liabilities Unsecured bank loans 17,334 (20,648) (2,123) (1,955) (4,462) (8,251) (3,857) Unsecured current-account advances 1,637 (1,637) (1,637) – – – – Trade & other payables 118,044 (118,044) (118,044) – – – – Derivative financial liabilities Interest rate swap hedges 1,446 (1,446) (217) (201) (343) (601) (84) Total 138,461 (141,775) (122,021) (2,156) (4,805) (8,852) (3,941)
Cash flow hedging
Expected future cash flows, associated with hedging derivatives, are detailed in the table below:
CASH FLOW HEDGING
(in thousands of euro) f31/12/2009 carrying projected cash up to 6-12 1-2 2-5 more than amount flows 6 months months years years 5 years Interest rate swap hedges: Assets 639 639 56 59 157 353 14 Liabilities (1,098) (1,098) (189) (173) (287) (434) (15) Total (459) (459) (133) (114) (130) (81) (1) (in thousands of euro) 31/12/2008 carrying projected cash up to 6-12 1-2 2-5 more than amount flows 6 months months years years 5 years Interest rate swap hedges: Assets 1,303 1,303 215 180 299 532 77 Liabilities (1,446) (1,446) (217) (201) (343) (601) (84) Total (143) (143) (2) (21) (44) (69) (7)
138 Gruppo 24 ORE
2009 annual financial report
Interest rate risk – Profile
As at the reporting date, the profile of the interest rates applied to the Group’s interest-earning financial instruments was as follows:
INTEREST RATE RISK
(in thousands of euro) carrying amount balance at balance at 31/12/2009 31/12/2008 Fixed-rate financial instruments Financial assets 19,945 20,278 Financial liabilities (3,481) (4,886) Total 16,464 15,392 Variable-rate financial instruments Financial assets 94,960 150,129 Financial liabilities (11,819) (15,531) Total 83,141 134,598
Sensitivity analysis – Fair market value of fixed-rate instruments
As at 31 December 2009 the Group did not recognise any financial asset or liability at fair value through profit or loss F( VTPL) and did not account for hedging derivatives (interest rate swaps) using the fair value hedge accounting method. Consequently, any changes in interest rates as at the reporting date did not have any effect on the income statement.
Sensitivity analysis – Fair market value of variable-rate instruments
If interest rates had increased or decreased by 100 basis points (bps), as at the reporting date, equity and profit (loss) would have respectively increased or decreased by € 264 thousand and € 2,479 thousand, as shown in the following table:
SENSITIVITY ANALYSIS
(in thousands of euro) profit / loss equity increase of decrease of increase of decrease of 100 bps 100 bps 100 bps 100 bps 2009 Variable-rate financial instruments 2,479 (2,479) – – Interest rate swaps – – 264 (144) Net sensitivity of cash flows 2,479 (2,479) 264 (144) 2008 Variable-rate financial instruments 2,231 (2,231) – – Interest rate swaps – – 498 (404) Net sensitivity of cash flows 2,231 (2,231) 498 (404)
139 Gruppo 24 ORE
2009 annual financial report
Policies for calculation of fair value
Below we indicate the methods and main assumptions used to calculate the fair value of financial instruments.
Investments in equity instruments and debt instruments
The fair value ofF VTPL financial assets, of those held to maturity, and of those available for sale, is calculated based on the relevant bid price as at the reporting date.
Derivative financial instruments
The fair value of exchange rate futures is calculated according to their market price as at the reporting date, if available. If a market price is not available, fair value is estimated by discounting the difference between the contractual forward price and the current forward price for residual contract maturity, applying a risk-free interest rate (Italian government securities).
The fair value of interest rate swaps IR( Ss) is calculated on the basis of brokers’ prices, the fairness of which is checked by discounting future cash flows estimated based on the terms and maturity of each contract for each financial instrument, applying the market interest rate as at the reporting date for a similar financial instrument.
DERIVATIVE INSTRUMENT CONTRACTS
(in thousands of euro) f31/12/2009 f31/12/2008
interest expense year of national fair value national fair value rate maturity amount amount Interest rate swap 3.04% 2015 4,039 (155) 4,773 (47) Interest rate swap 3.30% 2015 2,081 (82) 2,460 (26) Interest rate swap 3.30% 2015 5,637 (222) 6,661 (70) Total 11,757 (459) 13,894 (143)
Non-derivative financial liabilities
Fair value is calculated based on the present value of the estimated future cash flows of principal and interest, discounted using the market interest rate as at the reporting date.
140 Gruppo 24 ORE
2009 annual financial report
Interest rates used to calculate fair value
Interest rates used to calculate projected cash flows, where applicable, are based on the yield curve of Italian government securities as at the reporting date plus an appropriate credit spread.
Fair value and carrying value
The following table shows – amount for each class of financial asset and liability and for trade receivables and payables – the carrying amount recognized on the statement of financial position and the related fair value:
FAIR VALUE
(in thousands of euro) f31/12/2009 f31/12/2008 carrying fair value carrying fair value amount amount Held-to-maturity assets 19,306 19,930 18,975 18,726 Trade receivables 212,083 211,784 230,432 229,651 Cash and cash equivalents 95,277 94,960 150,129 150,129 Interest rate swap hedges: Assets 639 639 1,303 1,303 Liabilities (1,098) (1,098) (1,446) (1,446) Secured bank loans – – – – Unsecured bank loans (14,140) (13,746) (17,334) (17,429) Unsecured current-account advances (62) (62) (1,637) (1,637) Trade & other payables (106,535) (106,535) (118,044) (118,044) Total 205,470 205,872 262,378 261,253 (Loss)/gain not recognized – 402 – (1,124)
Guarantees
The Group has bank suretyships outstanding for a total of € 13,096 thousand.
These suretyships are summarized below: – suretyships totalling € 1,539 thousand given by the parent to the tax authorities as guarantee for netting performed in Group consolidated VAT returns filed for 2006 and 2007; – suretyships for € 223 thousand granted by the subsidiary Innovare 24 S.p.A. to the Milan Inland Revenue Office as security for offsetting theAT V receivable claimed by the company for 2005 and 2006. The offsets were made as part of Group netting ofAT V in 2006 and 2007;
141 Gruppo 24 ORE
2009 annual financial report
– suretyships totalling € 6,440 thousand granted by the parent as security deposits on leases. In particular, there is one in favour of Stremmata, owner of the building on Via Monte Rosa in Milan, for a total of € 5,642 thousand, and one in favour of Finamo for lease of the property located at Piazza Indipendenza in Rome for € 670 thousand; – suretyships totalling € 4,296 thousand given by the parent to Italian government ministries, government entities, or municipalities as guarantee for prize competitions and service supply contracts, etc.; – suretyships totalling € 598 thousand given by the parent and its subsidiaries to private independent counterparties for trading operations and supply contracts, etc.
It should also be noted that some of the suretyships indicated above – for a total amount of € 1,619 thousand – have been issued as guarantee for the commitments of Group subsidiaries, against lines of credit under the parent’s signature.
8. Principal reasons for uncertainties in estimates
Estimates are used mainly to recognize impairment losses on assets, to calculate probable returns on publications that have been distributed, to determine the extent to which receivables and inventories should be written down, and to quantify the amounts to be provided for probable risks.
Estimates are also used in the actuarial calculation of post-employment benefits and to calculate the amount of income tax due, the fair value of financial instruments, the useful life of assets, and the recoverability of deferred tax assets.
These estimates and assumptions are reviewed at least once a year and the effects of each change are immediately reflected in the income statement.
In particular, estimates related to measuring the recoverable amount of goodwill and other intangible assets of indefinite useful life are made, with regard to value in use, using the discounted cash flow method and with the market multiples method for fair value measurements based on the assumptions specified in section (3)I ntangible assets of chapter 11 Notes to the consolidated financial statements.
In addition, the returns on publications are estimated using statistical techniques and updated monthly on the basis of actual figures.
The estimate of legal risks also takes the nature of the litigation into account.
142 Gruppo 24 ORE
2009 annual financial report
9. Scope of consolidation
SUBSIDIARIES CONSOLIDATED ON A LINE-BY-LINE BASIS
company name business headquarters currency share % of held by capital consolidation paid in Nuova Radio S.p.A. Radio station Milan EUR 16,120,000 100.0% Il Sole 24 ORE S.p.A. Il Sole 24 ORE Business Media S.r.l. Sector-specific publishing Milan EUR 16,000,000 100.0% Il Sole 24 ORE S.p.A. Innovare 24 S.p.A. Software solutions Milan EUR 5,672,000 100.0% Il Sole 24 ORE S.p.A. 24 ORE Cultura S.r.l. Art products Milan EUR 1,049,920 100.0% Il Sole 24 ORE S.p.A. Il Sole 24 ORE UK Ltd Sale of advertising space London EUR 50,000 100.0% Il Sole 24 ORE S.p.A. Photographs and Alinari 24 ORE S.p.A. exhibitions Florence EUR 1,500,000 55.0% Il Sole 24 ORE S.p.A. Newton Management Innovation S.p.A. Training services Milan EUR 160,000 60.0% Il Sole 24 ORE S.p.A. Shopping 24 S.r.l. E-commerce Milan EUR 10,000 100.0% H24 Software S.p.A. Data Ufficio S.p.A. Software solutions Rome EUR 1,550,000 100.0% Innovare 24 S.p.A. STR S.p.A. Software solutions Pegognaga (MN) EUR 504,766 100.0% Innovare 24 S.p.A. Esa Software S.p.A. Software solutions Rimini EUR 1,560,000 100.0% Innovare 24 S.p.A. Publishing – ceramic Il Sole 24 ORE Faenza Editrice Iberica S.L. sector Spain EUR 3,000 100.0% Business Media S.r.l. Cesaco S.r.l. Software solutions Vicenza EUR 90,000 60.0% Esa Software S.p.A. Blogosfere S.r.l. (1) Internet Milan EUR 21,571 80.0% Il Sole 24 ORE S.p.A. Il Sole 24 ORE Business Media Web S.r.l. (2) Internet Bologna EUR 100,000 60.0% Business Media S.r.l. Newton Management Newton Lab S.r.l. Training services Turin EUR 20,000 30.6% Innovation S.p.A.
(1) consolidated as from april 2009. (2) consolidated as from january 2009.
ASSOCIATES CONSOLIDATED AT EQUITY
company name business headquarters currency share % of held by capital consolidation paid in Diamante S.p.A. Software solutions Verona EUR 680,000 30.0% Il Sole 24 ORE S.p.A. Italia news S.r.l. Multimedia publishing Bologna EUR 100,000 20.0% Il Sole 24 ORE S.p.A. SoftLab S.r.l. Software solutions Ferrara EUR 90,000 40.0% Data Ufficio S.p.A. Newton Management Plus People S.r.l. Training services Milan EUR 2,500 30.0% Innovation S.p.A. Mondoesa Emilia S.r.l. Software solutions Parma EUR 20,800 40.0% Esa Software S.p.A. Mondoesa Lazio S.r.l. Software solutions Frosinone EUR 20,800 35.0% Esa Software S.p.A. Mondoesa Laghi S.r.l. Venegono (ex Mondoesa - Cedimega S.r.l.) Software solutions inferiore (VA) EUR 79,500 33.70% Esa Software S.p.A. Mondoesa Adige S.r.l. Software solutions Verona EUR 50,000 35.0% Esa Software S.p.A. Mondoesa Umbria S.r.l. Software solutions Gubbio (PG) EUR 35,000 32.0% Esa Software S.p.A. Mondoesa Ovest S.r.l. in liquidation Software solutions Fossano (CN) EUR 50,000 35.0% Esa Software S.p.A. Mondoesa Milano Nordovest S.r.l. (1) Software solutions Milan EUR 76,500 49.0% Esa Software S.p.A. E.veneto S.r.l. in liquidation Software solutions Costabissara (VI) EUR 10,000 30.0% Esa Software S.p.A. Aldebra S.p.A. Software solutions Trent EUR 1,137,148 20.62% Esa Software S.p.A.
(1) consolidated on a line-by-line basis until 30/11/2009. (2) last approved financial statements at 31/12/2008.
143 Gruppo 24 ORE
2009 annual financial report
Investments in subsidiaries
The changes in the scope of consolidation compared with 31 December 2008 were due to the following acquisitions: – Business Media Web S.r.l., acquired through subscription by the subsidiary Il Sole 24 ORE Business Media S.r.l. of the capital increase resolved by the company’s Extraordinary Shareholders’ Meeting on 24 January 2009. As a result of this acquisition, the company is 60% owned by the Group. The total cost of the acquisition was € 360 thousand. This cost has been provisionally allocated, posting goodwill of € 120 thousand in the consolidated financial statements. The company has been consolidated since the beginning of the year. In 2009 it contributed revenues of € 663 thousand, making a loss of € 122 thousand. – acquisition by the parent of a further 50% equity interest in Blogosfere S.r.l., completed on 10 March 2009, thus increasing its total stake to 80%. The total cost of the deal, including that relating to the first 30% tranche, was € 1,621 thousand.I n 2007 and 2008, when the investment was accounted for at equity, a total of € 193 thousand of our share of the investment’s losses were charged to the income statement.
The cost of this acquisition has been allocated by recognising € 1,224 thousand as goodwill.
Following execution at the beginning of 2010 of the contract for sale of the entire equity holding (80%), the subsidiary was consolidated beginning in April 2009 and classified as an asset held for sale at 31 December 2009.
Investments in associates and joint ventures
Changes occurring in 2009 of investments in associates and joint ventures are shown in the relevant section of the notes to the statement of financial position.N o new equity interests were acquired.
Non-controlling investments
The material changes in non-controlling interests regarded the companyE ditorial Ecoprensa S.A. For details, please see the available for sale financial assets section in the explanatory notes.
144 Gruppo 24 ORE
2009 annual financial report
10. Highlights of restated statements of financial position and income statements for subsidiaries, associates, and joint ventures
STATEMENT OF FINANCIAL POSITION
company note non- current total non- current total total total current assets assets current liabilities liabilities equity liabilities assets liabilities and equity
Innovare 24 S.p.A. 70,459 4,743 75,202 (52) (4,114) (4,166) (71,036) (75,202) Nuova Radio S.p.A. 16,120 1,900 18,020 (1,855) (1,855) (4,836) (11,329) (18,020) Il Sole 24 ORE UK Ltd (1) 13 2,379 2,392 – (148) (148) (2,244) (2,392) Il Sole 24 ORE Business Media S.r.l. 24,235 22,746 46,981 (7,017) (22,362) (29,379) (17,602) (46,981) 24 ORE Cultura S.r.l. (1) 1,143 5,793 6,936 (367) (7,045) (7,412) 476 (6,936) Data Ufficio S.p.A. 1,368 8,310 9,678 (1,118) (7,206) (8,324) (1,354) (9,678) STR S.p.A. 2,986 5,842 8,828 (1,068) (3,982) (5,050) (3,778) (8,828) Blogosfere S.r.l. (1) 56 452 508 – (189) (189) (319) (508) Newton Management Innovation S.p.A. (1) 178 1,314 1,492 (98) (1,173) (1,271) (221) (1,492) Faenza Editrice Iberica S.L. (1) 10 349 359 – (204) (204) (155) (359) Alinari 24 ORE S.p.A. (1) 578 5,012 5,590 (97) (4,604) (4,701) (889) (5,590) Esa Software S.p.A. (1) 9,143 9,575 18,718 (2,440) (10,510) (12,950) (5,768) (18,718) Cesaco S.r.l. (1) 45 354 399 (52) (157) (209) (190) (399) Business Media Web S.r.l. (1) 28 599 627 (93) (255) (348) (278) (626) Shopping 24 S.r.l. (1) – 42 42 – (4) (4) (38) (42) Newton Lab S.r.l. (2) 5 17 22 – (2) (2) (20) (22) Total subsidiaries 126,367 69,427 195,794 (14,257) (66,791) (81,048) (114,745) (195,793) Diamante S.p.A. (2) 760 780 1.540 (147) (718) (865) (675) (1,540) Italia news S.r.l. (2) 32 944 976 – (885) (885) (90) (975) SoftLab S.r.l. (2) 128 220 348 (75) (165) (240) (108) (348) Mondoesa Milano Nordovest S.r.l. (2) 17 912 929 (128) (789) (917) (12) (929) Plus People S.r.l. (2) 2 8 10 – – – (10) (10) Mondoesa Emilia S.r.l. (2) 211 986 1.197 (150) (983) (1,133) (63) (1,196) Mondoesa Lazio S.r.l. (2) 114 1,247 1,361 (214) (915) (1,129) (232) (1,361) Mondoesa Laghi S.r.l. (2) 59 985 1,044 (241) (365) (606) (438) (1,044) Mondoesa Adige S.r.l. (2) 38 435 473 (35) (556) (591) 118 (473) Mondoesa Umbria S.r.l. (2) 337 491 828 (42) (750) (792) (36) (828) Mondoesa Ovest S.r.l. in liquidazione (2) 3 55 58 – (75) (75) 17 (58) E. veneto S.r.l. in liquidazione (2) 32 80 112 (6) (88) (94) (17) (111) Aldebra S.p.A. (2) 2,258 10,820 13,078 (1,853) (9,237) (11,090) (1,988) (13,078) Total associates 3,991 17,963 21,954 (2,891) (15,526) (18,417) (3,534) (21,951) Total subsidiaries and associates 130,358 87,390 217,748 (17,148) (82,317) (99,465) (118,279) (217,744)
(1) statutory figures adjusted for the ifrss. (2) last available financial statements 2008.
145 Gruppo 24 ORE
2009 annual financial report
INCOME STATEMENT
company note revenue gross operating profit (loss) profit (loss) operating profit before the year profit (loss) (loss) tax Innovare 24 S.p.A. – (382) (382) (2,177) (2,233) Nuova Radio S.p.A. 13,081 (1,293) (3,027) (3,026) (2,492) Il Sole 24 ORE UK Ltd (1) 792 467 464 464 328 Il Sole 24 ORE Business Media S.r.l. 40,360 (7,138) (16,407) (16,370) (10,850) 24 ORE Cultura S.r.l. (1) 4,013 (3,281) (3,701) (3,756) (3,763) Data Ufficio S.p.A. 13,404 1,487 921 837 346 STR S.p.A. 12,541 2,338 1,791 1,778 1,125 Blogosfere S.r.l. (1) 717 177 152 153 131 Newton Management Innovation S.p.A. (1) 2,784 172 74 45 17 Faenza Editrice Iberica S.L. (1) 337 (151) (153) (154) (107) Alinari 24 ORE S.p.A. (1) 3,230 (1,524) (1,579) (1,602) (1,620) Esa Software S.p.A. (1) 26,447 3,508 2,961 1,796 1,247 Cesaco S.r.l. (1) 511 60 44 46 22 Business Media Web S.r.l. (1) 663 (93) (115) (115) (122) Shopping 24 S.r.l. (1) 33 28 28 28 28 Newton Lab S.r.l. (2) 27 1 – – – Total subsidiaries 118,940 (5,624) (18,929) (17,699) (13,477) Diamante S.p.A. (2) 1,161 374 60 40 (5) Italia news S.r.l. (2) 853 (1) (9) (6) (6) SoftLab S.r.l. (2) 605 54 36 43 15 Mondoesa Milano Nordovest S.r.l. (2) 1,936 12 4 (20) (63) Plus People S.r.l. (2) – – (1) (1) (1) Mondoesa Emilia S.r.l. (2) 2,055 45 10 9 (16) Mondoesa Lazio S.r.l. (2) 2,355 142 103 104 32 Mondoesa Laghi S.r.l. (2) 1,337 60 25 28 (4) Mondoesa Adige S.r.l. (2) 532 (162) (186) (211) (211) Mondoesa Umbria S.r.l. (2) 1,065 100 41 2 – Mondoesa Ovest S.r.l. in liquidazione (2) 18 (65) (66) (67) (67) E. veneto S.r.l. in liquidazione (2) 180 (4) (5) (6) (7) Aldebra S.p.A. (2) 28,918 1,040 283 200 (31) Total associates 41,015 1,595 295 115 (364) Total subsidiaries and associates 159,955 (4,029) (18,634) (17,584) (13,841)
(1) statutory figures adjusted for the ifrss. (2) last available financial statements 2008.
146 Gruppo 24 ORE
2009 annual financial report
11. Notes to the consolidated financial statements
Non-current assets
(1) Property, plant and equipment
At year end, the carrying amount of property, plant, and equipment was € 90,523 thousand. The following changes took place during the year:
PROPERTY, PLANT AND EQUIPMENT
(in thousands of euro) opening purchases disposals depreciation reclassi- other impairment changes in closing balance fications changes consolidated balance companies Historical cost: Land 2,870 – – – – – – – 2,870 Buildings 31,077 97 (2) – 3 – – – 31,174 Plant and equipment 122,165 3,796 (2,549) – 660 0 – (3,383) 120,690 Industrial and commercial equipment 51,524 2,638 (774) – (287) 88 – (210) 52,979 Other assets 1,001 24 (110) – (820) 18 (13) (4) 97 Total historical cost 208,637 6,556 (3,435) – (444) 106 (13) (3,596) 207,810 Accumulated depreciation: Buildings (13,341) – 1 (1,129) – – – – (14,469) Plant and equipment (57,873) – 1,995 (7,180) 40 (0) – 3,138 (59,881) Industrial and commercial equipment (41,016) – 825 (3,255) 386 (26) – 190 (42,896) Other assets (44) – – (1) 7 (0) – (4) (41) Total accumulated depreciation (112,274) – 2,821 (11,565) 433 (27) – 3,324 (117,287) Property, plant and equipment: Land 2,870 – – – – – – – 2,870 Buildings 17,736 97 (2) (1,129) 3 – – – 16,705 Plant and equipment 64,292 3,796 (553) (7,180) 700 0 – (245) 60,809 Industrial and commercial equipment 10,508 2,638 50 (3,255) 99 62 – (19) 10,083 Other assets 957 24 (110) (1) (813) 18 (13) (8) 55 Total 96,363 6,556 (614) (11,565) (11) 79 (13) (272) 90,523
During the year, investments totalling €6,556 thousand were made in the following: – € 97 thousand in temporary buildings; – € 3,796 thousand in plant and machinery, of which we highlight leasehold improvements (€ 1,600 thousand), mainly relating to the new Rome office, at Piazza Indipendenza (€ 1,579 thousand). Other investments relating to radio broadcasting equipment (€ 770 thousand) and production plant for the Milan and Carsoli factories (€ 711 thousand); – € 2,638 thousand in industrial and commercial equipment, and particularly € 1,329 thousand for hardware purchases, € 352 thousand for furnishing the new offices in Rome and € 186 thousand in terminals lent free of charge to customers of the Multimedia division.
147 Gruppo 24 ORE
2009 annual financial report
The disposals for € 614 thousand are due to sales, and particularly those for plant at the building at Via Monte Rosa, 91, where one floor was subleased € 330 thousand for plant no longer in use by the subsidiary Data Ufficio S.p.A. for € 270 thousand.
Annual depreciation on property, plant and equipment, based on their estimated useful life, totalled €11,565 thousand. Assets purchased during the year are depreciated as from the start of use.
The € 272 thousand changes in scope of consolidation resulted largely from disposal of the Grafica business unit by the subsidiary Ufficio S.p.A.
The following table shows the useful life of the assets included in the various categories shown on the statement of financial position:
USEFUL LIFE OF PROPERTY, PLANT AND MACHINERY
asset category useful life rate Land Indefinite – Buildings Industrial buildings 30-33 years 3% –3.33% Temporary buildings 10-12 years 8.33% –10% Plant and equipment Generic plant 10-20 years 5% –10% Plant (leasehold improvements) 3-15 years 6.66% –33.33% Rotary printing presses 15 years 6.50% Finishing machinery 15 years 6.50% Electronic photocomposition and photoreproduction systems 3-5 years 20% –33.33% Radio broadcasting plant 10 years 10.00% Other assets Hardware 4-5 years 20% –25% Furniture and fittings 5-8 years 12%–20% Electronic office machinery 5 years 20.00% Air-conditioning systems 5-20 years 5%–20% Internal means of transport 5-10 years 10%–20% Sundry tools & minor equipment items 4 years 25.00%
The following are the items of property, plant and equipment shown in the financial statements of the parent at 31 December 2009 that have undergone revaluation. The revaluations made to property, plant and equipment were based on specificI talian laws and not on the company’s individual will or discretion. The total value of revaluations as at year end is detailed below:
REVALUATIONS
(in thousands of euro) law 413/1991 law 342/2000 Land and buildings 1,105 1 Plant and equipment – 5,198 Other assets – 4,095 Total revaluations 1,105 9,294
148 Gruppo 24 ORE
2009 annual financial report
(2) Goodwill
Goodwill recognized on the statement of financial position amounted to € 72,867 thousand, for a total reduction of €7,153 thousand.
During the year, the Group revised its definition of operating segments in accordance with IFRS 8, as commented in chapter 12 Segment reporting. As part of this process, the Professional Area was subdivided into the following operating segments: – tax, Legal and PA – Sector-specific publishing – Software solutions – training.
Redefinition of the new breakdown of operating segments resulted in reallocation of goodwill that had been previously allocated to the Professional Area in the operating segments indicated hereinabove, on the basis of the values for the affected operating segments.
The amounts recognised on the statement of financial position and the associated change in goodwill attributed to the cash generating units (CGU) are illustrated as follows:
GOODWILL
(in thousands of euro) opening increase due impairment other closing balance to change in changes balance scope of consolidation Publishing 513 − − − 513 Tax, legal & PA 15,469 − − − 15,469 Sector-specific publishing 10,172 120 (7,921) − 2,371 Software solutions 50,387 − − 1,962 52,349 Training 2,150 − − 15 2,165 Culture 1,330 − (706) (624) − Total 80,021 120 (8,627) 1,353 72,867
Goodwill is subjected to impairment testing (see the related section for details).
The increases due to changes in the scope of consolidation stemmed from the allocation of € 120 thousand in purchase prices of Business Media Web S.r.l.
The decrease in goodwill for 24ORE Cultura was the result of the revision – favourable to the Group – of contractual agreements, which led to reduction of the price originally envisaged for acquisition of the remaining 43% of the company not yet owned.
149 Gruppo 24 ORE
2009 annual financial report
The increase in Software solutions goodwill is due to updating of the estimate of the price adjustment to be paid to the seller for acquisition of Data Ufficio S.p.A. and the changes made to allocation of the purchase price of Esa Software S.p.A.
The increase in Training goodwill reflects the costs incurred to acquire Newton Management Innovation S.p.A.
The impairments stem from the results of the impairment test, in regard to which reference is made to the section goodwill and intangible assets with an indefinite useful life.
(3) Intangible assets
Intangible assets amounted to € 100,511 thousand. The following changes took place during the year:
INTANGIBLE ASSETS
(in thousands of euro) opening purchases disposals amortization riclassi- other impairment changes closing balance fications changes in balance consoli- dated Historical cost: Publications 40,856 – – – (755) – (2,775) – 37,326 Trademark 3,363 1 – – – (180) – (3) 3,181 Radio broadcasting frequencies 101,780 3,128 (23) – – – – – 104,884 Other intangible assets 143,323 6,098 – – 1,884 1,736 (300) (39) 152,701 Assets under development & down payments 2,357 1,360 – – (1,938) 0 – 0 1,778
Total historical cost 291,679 10,587 (23) – (809) 1,556 (3.075) (43) 299,870
Accumulated amortization: Publications (19,962) – – (2,577) 169 – – – (22,369) Trademark (826) – 1 (157) – 0 – 2 (980) Radio broadcasting frequencies (70,779) – 20 (3,333) – – – – (74,092) Other intangible assets (88,213) – – (13,709) 13 0 – (9) (101,918)
Total accumulated amortization (179,780) – 21 (19,776) 182 0 – (7) (199,359)
Intangible assets: Publications 20,894 – – (2,577) (586) – (2,775) – 14,957 Trademark 2,537 1 1 (157) – (180) – (1) 2,201 Radio broadcasting frequencies 31,001 3,128 (3) (3,333) – – – – 30,792 Other intangible assets 55,110 6,098 – (13,709) 1,897 1,736 (300) (48) 50,783 Assets under development & down payments 2,357 1,360 – – (1,938) 0 – 0 1,778 Total 111,899 10,587 (2) (19,776) (627) 1,556 (3,075) (49) 100,510
150 Gruppo 24 ORE
2009 annual financial report
The value of publications at 31 December 2009 was € 14,957 thousand, amortization for the year totalled € 2,577 thousand, and impairment losses of € 2,775 thousand were recognised, as illustrated elsewhere herein.
Radio broadcasting frequencies totalled € 30,792 thousand on investments of the year of € 3,128 thousand.
Investments in other intangible assets totalled € 6,098 thousand and mainly reflect € 2,677 thousand for development of software products in the Professional and Multimedia Areas, € 724 thousand for administrative and management system projects, and € 716 thousand for infrastructure and platforms as part of the CRM project. Impairment losses of € 300 thousand were recognised for the websites in the sector-specific Publishing Area. Intangible assets in progress totalled € 1,778 thousand and mainly include investments in IT projects for administration and management and STR software systems to be completed and distributed on the market. In regard to the criticalities illustrated by the sector-specificP ublishing Area, the sustainability of the values of finite useful life assets was verified.
151 Gruppo 24 ORE
2009 annual financial report
Annual amortisation on intangible assets, based on their estimated useful life, totalled € 19,776 thousand. Assets purchased during the year are amortized as soon as they join the production cycle.
The following table shows the useful life of the assets included in the various categories shown on the statement of financial position:
USEFUL LIFE OF INTANGIBLE ASSETS
asset category useful life rate Publications Agrigiornale del Commercio 10 years 10.00% Colture Protette 10 years 10.00% Contoterzista 10 years 10.00% Frutticoltura 10 years 10.00% Informatore Zootecnico 10 years 10.00% Macchine & Motori 10 years 10.00% Obiettivi Veterinari 10 years 10.00% Suinicoltura 10 years 10.00% Terra e Vita 10 years 10.00% Vignevini 10 years 10.00% Ambiente e sviluppo 5 years 20.00% Area 20 years 5.00% D’A 3 years 33.30% Materia 5 years 20.00% Occhio Clinico 5 years 20.00% Bargiornale 20 years 5.00% GDO Wek 20 years 5.00% Other food publications 20 years 5.00% 01 Net.it (online publication) 20 years 5.00% Top Trade 20 years 5.00% Applicando 20 years 5.00% Eurosat 3 years 33.30% Millecanali 3 years 33.30% Other ICT publications 20 years 5.00% Mark up 20 years 5.00% Ambiente Cucina 20 years 5.00% Ceramica 20 years 5.00% Other building publications 20 years 5.00% Medicina 3 years 33.30% New marketing initiatives – ICT/Food Indefinite – Motta Architettura trademark Indefinite – Specialist publishing trademarks 10 years 10.00% Application software & management solutions Data Ufficio until 2011 20%-33% STR 3-5 years 20%-33% Esa Software 2-7 years 14.3%-50% Marchio Esa Software 15 years 6.70% Specific intangible assets Esa Software 10 years 10.00% Radio broadcasting frequencies until 2018 1%-9% Other intangible assets 3-5 years 20%-33%
152 Gruppo 24 ORE
2009 annual financial report
Impairment losses totalled € 3,075 thousand and resulted from the impairment test performed on the values of the publications and other intangible assets. The finite useful life intangible assets to be subjected to the impairment test have been identified on the basis of possible impairment losses connected with the downturn in advertising sales reported in 2009, whose effects will be felt over the following several years.
The following assets were written down: – publications in the medical field for € 30 thousand; – publications in the ceramics segment, for € 1,706 thousand; – publications in the bath segment, for € 454 thousand; – the publication Frames for € 349 thousand; – websites in the ICT segment for € 300 thousand; – the publication Obiettivi Veterinari for € 36 thousand; – the publication Area for € 200 thousand.
The other changes stem mainly from final allocation of the price paid for Esa Software S.p.A. and recognition of the business units sold to third parties as assets held for sale.
In particular, in regard to consolidation of Esa Software S.p.A., the Purchase Price Allocation (PPA) process identified and measured the amount of the following intangible assets:
INTANGIBLE ASSETS STEMMING FROM FINAL ALLOCATION OF THE PRICE PAID FOR ESA SOFTWARE
(in thousands of euro) amount useful life annual amor- tization Customer relations – indirect channel 12,700 10 years 1,309 Brand 2,318 15 years 155 Software 18,217 from 2 to 7 years 3,831 Total intangible assets 33,235 5,295 Goodwill recognised on consolidated statement of financial position 33,431 indefinite – Total goodwill 33,431 5,295 Total 66,666 10,590
153 Gruppo 24 ORE
2009 annual financial report
Goodwill and intangible assets with an indefinite useful life
The intangible assets identified as having an indefinite useful life and goodwill subjected to impairment testing are as follows: – Motta Architettura trademark – Goodwill: • publishing • tax, legal & PA • Sector-specific publishing • Software solutions • training
Intangible assets with an indefinite useful life are not amortized, but are tested for recoverability of carrying amount, i.e. impairment testing. This test is carried out on the value of the individual asset or of the cash-generating unit (CGU) to which it belongs. An impairment test is performed whenever it is felt that there may have been a loss in value, and in any case at least once a year.
The following table provides a list of the intangible assets with an indefinite useful life, together with their respective carrying amount. The values for goodwill reflect reallocation to the new operating segments identified pursuant toIFR S 8. The MottaA rchitettura brand belongs to the sector-specific Publishing Area.
ASSETS SUBJECT TO IMPAIRMENT TESTING
(in thousands of euro) a2009 a2008 Motta Architettura trademark 50 50 Goodwill: Publishing 513 513 Tax, legal & PA 15,469 15,469 Sector-specific publishing 2,371 10,172 Software solutions 52,348 50,387 Training 2,165 2,150 Culture – 1,330 Total 72,916 80,071
Impairment testing is carried out by comparing the carrying amount of the asset with its recoverable amount. Recoverable amount is the higher out of the asset’s fair value, net of any selling costs, and its value in use. It is sufficient for one of the two values to be higher than the carrying amount to demonstrate that the asset has not suffered a decline in value.
154 Gruppo 24 ORE
2009 annual financial report
The following table summarizes the characteristics and main parameters used to perform impairment testing.
ASSET AND MAIN ASSUMPTIONS
assets cgu impairment multiple time span post-plan pre-tax test used of the growth discount approach plan rate rate Motta Architettura trademark Sector-specific publishing Value in use n/a 2010-2015 1% 11% Goodwill Publishing Publishing Fair value n/a n/a n/a n/a Goodwill Tax, Legal & PA Tax, legal & PA Fair value 9 n/a n/a n/a Goodwill Sector-specific publishing Sector-specific publishing Value in use n/a 2010-2015 1% 11% Goodwill Software solutions Software solutions Value in use n/a 2010-2014 2% 11% Goodwill Training Training Fair value n/a n/a n/a n/a Goodwill Culture (Corporate) Culture Fair value n/a n/a n/a n/a
Cash flow projections, used to determine the value in use, are made by extrapolating management’s forecasts for a certain period of time, based on reasonable and sustainable assumptions, and using a growth rate for subsequent years that is in line with the development expectations of the market in question.
The discounting rate that is used reflects the weighted average cost of capital ACC(W ), which represents the minimum return required to remunerate the capital committed to the specific CGU. It is calculated by weighting the cost of risk capital and cost of debt to reflect the corresponding weighting in a target financial structure. The cost of capital that is determined on the basis of the capital assets pricing model includes not only a premium for the general market investment risk, but also a premium for the non-diversifiable or systemic risk attributable to the specific business.
The discounting rate (WACC) used to calculate the value in use was calculated according to the following parameters: – a risk-free rate of 3.7% (net yield on ten-year Italian treasury bonds); – a market risk premium of 6%; – Beta Levered of: • Sector-specific publishing: 0.96 • Software solutions: 0.81 • net Cost of Debt of 3.19% (IRS at 10 years + a spread of 100bps, net of tax) – Debt/Equity Structure • Sector-specific publishing: 0.98 • Software solutions: 0.54
155 Gruppo 24 ORE
2009 annual financial report
On the basis of these parameters, the following WACC was calculated: – Sector-specific publishing:N et WACC: 7.4%; Gross WACC: 11% – Software solutions: Net WACC: 8%; Gross WACC: 11%
Given the above, the following is also of note: – Publishing. The goodwill refers to the magazine Ventiquattro, a mandatory add-on to the newspaper. The current negative business cycle, which has hit advertising particularly hard, caused losses that can be recovered in future financial years; – Tax, Legal and PA. The results for this area fully justify the value of goodwill: OPG in 2009 was € 20,867 thousand, which was substantially confirmed in the 2010 budget. The market multiples of comparable businesses are around 9 times GOP; – Sector-specific publishing. The value in use was calculated on the basis of the plan prepared by management. The impairment of goodwill allocated to sector-specific publishing totalled € 7,921 thousand. The plan drafted for the 2010-2014 period foresees a contraction in 2010 revenue and a slow recovery beginning in 2011 (consistently with Idate forecasts). The total ratio of costs to revenue is expected to improve beginning in 2010, as the direct consequence of streamlining, which led to the closure of several loss-making publications and disposal of business units, and restructuring with a consequent reduction in personnel costs; – Software solutions. The goodwill derives from the combination of TR S S.p.A., Data Ufficio S.p.A. and Esa Software S.p.A. and refers to the development, production and sale of tax return and operating software for SMEs, which have close links and synergies with the parent’s existing activities on the operating software market. In February 2010, management developed a general plan for development of the sector on the basis of which the value in use was calculated. The plan envisages limited revenue growth, substantially in line with sector forecasts, and growing profit margins due to the synergies resulting from combination of the three acquired companies. The results of this assessment confirm the recognised value of goodwill. Changes, including material changes, in the principal assumptions, such as the post-plan growth rate and the discounting rate, would not have caused changes in the result of the impairment test; – Training. The results for this area fully justify the value of goodwill: OPG of € 1,663 thousand was recognised during the financial year, and growth is forecast for 2010.O n the basis of these results, there are no criticalities in supporting the value of goodwill; – Culture. The negative results for 2009 and the forecasts for 2010 do not allow maintaining the value of goodwill, which was fully impaired.
156 Gruppo 24 ORE
2009 annual financial report
(4) Investments in associates
Investments in associates totalled € 3,098 thousand, compared with € 4,652 thousand the previous year, after the following changes:
INVESTMENTS IN ASSOCIATES
(in thousands of euro) opening acquisitions changes in impairment other closing balance consolidated changes balance companies Investments in Associates Diamante S.p.A. 1,290 – – – – 1,290 Blogosfere S.r.l. 579 – (579) – – – Italia news S.r.l. 20 – – – – 20 SoftLab S.r.l. 400 – – – – 400 Mondoesa Varese S.r.l. 8 – – – (8) – (merged into Mondoesa Laghi S.r.l.) Mondoesa Emilia S.r.l. 8 – – – – 8 Mondoesa Lazio S.r.l. 181 – – – – 181 Mondoesa Laghi S.r.l. 207 – – – 8 215 (formerly Mondoesa Cedimega S.r.l.) Mondoesa Adige S.r.l. 32 – – – 59 91 Mondoesa Umbria S.r.l. 182 – – – – 182 Mondoesa Ovest S.r.l. in liquidation 4 – – (17) 13 – E.veneto S.r.l. in liquidation 3 – – – – 3 Aldebra S.p.A. 1,723 – – (1,141) – 582 Mondoesa Milano Nordovest S.r.l. – – 130 (9) – 121 (formerly Mondoesa Milano S.r.l.) Newton Lab S.r.l. 10 – – – (10) – (ex Newton Economics S.r.l.) Plus People S.r.l. 5 – – – – 5 Total 4,652 – (449) (1,167) 62 3,098
The most significant transactions were as follows: – Blogosfere S.r.l.: acquisition of a 50% equity interest in March, taking the stake up to 80%. The subsidiary has been consolidated on a line-by-line basis since April 2009, but it is measured and classified as an asset held for sale, following its sale for €1,568 thousand in January 2010. – Mondoesa Milano Nordovest S.r.l.: merger of Mondoesa Nordovest S.r.l. into Mondoesa Milano S.r.l. and simultaneous change of its name to Mondoesa Milano Nordovest S.r.l. The sale in December of 2% of the quota capital, reducing the equity investment to 49%, caused it to be reclassified as an associate rather than a subsidiary. – aldebra S.p.A.: an impairment loss of € 1,141 thousand was recognised. It was impaired on the basis of the associate’s performance and business prospects.
157 Gruppo 24 ORE
2009 annual financial report
(5) Available-for-sale financial assets
This item relates to non-controlling investments and amounted to € 2,903 thousand, with the following breakdown:
non-controlling INVESTMENTS
(in thousands of euro) opening acquisitions changes in impairment other closing balance consolidated balance companies Non-controlling investments Editorial Ecoprensa S.A. 2,766 – – (500) – 2,266 Ansa Soc. coop a r.l. 370 – – – – 370 Actinvest Group S.r.l. 225 – – – – 225 C.S.I.E.D. 10 – – – – 10 Immobiliare Editoriale Giornali S.r.l. 3 – – – – 3 S.F.C. Soc. consortile per azioni 1 – – – – 1 Audiradio S.r.l. 2 – – – (1) 1 Promingros 1 – – – (1) – Mondoesa Sud S.r.l. 8 – – – 19 27 Total 3,386 – – (500) 17 2,903
The equity investment inE ditoriale Ecoprensa S.A. was impaired by € 500 thousand. The amount of this impairment was determined by discounting prospective cash flows on the basis of the earnings projections set out in the 2007-2015 business plan approved by the company and revised by parent management in consequence of the reported deviations from 2009 actual figures and the new projection for 2010.
(6) Other non-current financial assets
Other non-current financial assets are shown in the statement of financial position at an amount of € 19,227 thousand, with an increase of € 577 thousand from the previous financial year.
This item is principally comprised of € 18,530 thousand relating to a with-profits endowment policy with a guaranteed minimum yield of 3% agreed with Monte Paschi Vita and with a maturity date of 1 April 2014.
(7) Other non-current assets
These are represented by € 773 thousand in security deposits.
158 Gruppo 24 ORE
2009 annual financial report
(8) Deferred tax assets and liabilities
These items show the impact of deferred tax assets and liabilities. These are respectively calculated on the deductible and taxable differences that temporarily emerge between financially reported amounts and their tax value.
The balances at 31 December 2009 and 2008 for deferred tax assets and liabilities are shown below:
DEFERRED TAX ASSETS
(in thousands of euro) f31/12/2009 f31/12/2008 change Deferred tax assets 29,617 15,087 14,531
DEFERRED TAX LIABILITIES
(in thousands of euro) f31/12/2009 f31/12/2008 change Deferred tax liabilities 20,997 26,674 (5,677)
The table below shows the changes for the year:
DEFERRED TAX ASSETS AND DEFERRED TAX provision
(in thousands of euro) deferred tax deferred tax net assets liabilities Balance at 31/12/2008 15,087 (26,674) (11,587) Income from alignment of accounting and tax values 5,607 – 5,607 Other effects on the separate income statement 8,923 5,590 14,514 Other effects recognised as other components of comprehensive income – 87 87 Balance at 31/12/2009 29,617 (20,997) 8,621
Reference is made to note 45 in regard to income from alignment of accounting and tax values.
159 Gruppo 24 ORE
2009 annual financial report
A breakdown of the balances at 31 December 2009 and 2008 for deferred tax assets and liabilities is shown in the table below:
Deferred tax assets/liabilities – GROUP
assets liabilities net (in thousands of euro) f31/12/2009 f31/12/2008 f31/12/2009 f31/12/2008 f31/12/2009 f31/12/2008 Property, plant and equipment 73 329 (34) (83) 39 246 Intangible assets 8,165 1,727 (20,093) (24,644) (11,929) (22,917) Receivables and provisions 8,755 9,932 (1,476) (1,565) 7,280 8,368 Other 3,435 4,024 (686) (1,668) 2,749 2,356 Loss carry-forwards 10,482 360 – – 10,482 360 Deferred tax assets/liabilities 30,910 16,373 (22,289) (27,960) (8,621) (11,587) Change in tax rate – – – – – – Netting of taxes (1,293) (1,286) 1,293 1,286 – – Net deferred tax assets/liabilities 29,617 15,087 (20,997) (26,674) 8,621 (11,587)
CHANGES IN DEFERRED TAX ASSETS/LIABILITIES – GROUP
f31/12/2009 f31/12/2008 recognised on recognised in the other the separate components of (in thousands of euro) income statement comprehensive income Property, plant and equipment 39 246 (207) – Intangible assets (11,929) (22,917) 11,426 – Receivables and provisions 7,280 8,368 (1,088) – Other 2,749 2,356 306 87 Loss carry forwards 10,482 360 8,375 – Deferred tax assets/liabilities 8,621 (11,587) 18,812 87
Deferred tax assets were recognised for carry forward losses of the parent company and its subsidiaries participating in the tax consolidation programme. These values are recognised on the basis of plans that forecast taxable income in future financial years that will permit the use and recovery of these deferred tax assets, resulting in lower tax liability for those years.
The deferred tax liabilities recognised in other components of comprehensive income refer to the measurement of derivative financial instruments. The taxes recognised in other components of comprehensive income total –€ 166 thousand, including € 87 thousand for the measurement of derivative financial instruments and –€ 253 thousand for current taxes on the actuarial gains of defined benefit plans, allocated to other components of comprehensive income that are immediately subject to taxation.
Furthermore, deferred tax assets increased against the income from alignment of accounting and tax values of goodwill that is commented on in detail in note 45.
160 Gruppo 24 ORE
2009 annual financial report
Current assets
(9) Inventories
INVENTORIES
(in thousands of euro) f31/12/2009 f31/12/2008 change Paper 9,010 10,057 (1,047) Ink 97 155 (58) Photographic material 374 397 (23) Raw materials 4 202 (198) Raw ancillary materials and consumables 9,485 10,811 (1,326) Work in progress and semi-finished products 57 104 (47) Books 5,176 7,885 (2,709) Software 58 67 (9) CDs 54 43 11 Other products 2,120 3,274 (1,154) Provision for obsolete & slow-moving finished products (1,897) (2,666) (769) Finished goods and merchandise 5,511 8,603 (3,092) Software purchased for resale 20 6 14 movimentazione imposte anticipate/differite gruppo Third-party books purchased for resale 116 138 (22) Other merchandise bought in 303 394 (91) Provision for obsolete & slow-moving merchandise (59) (68) 9 Finished products and merchandise 380 470 (90) Total 15,433 19,988 (4,555)
Inventories are shown net of the provisions for obsolete and slow-moving goods, which featured the following changes:
PROVISIONS for OBSOLETE AND SLOW-MOVING GOODS
(in thousands of euro) opening provisions use of reclassifications closing balance provisions and other balance changes Provision for obsolete and slow-moving finished products (2,666) (942) 1,541 170 (1,897) Provision for obsolete and slow-moving merchandise (68) (23) 1 31 (59) Total (2,734) (966) 1,542 201 (1,956)
161 Gruppo 24 ORE
2009 annual financial report
(10) Trade receivables
Trade receivables stem from the normal course of continuing operations and featured the following breakdown:
TRADE RECEIVABLES
(in thousands of euro) 31/12/2009 f31/12/2008 change Trade receivables 212,083 230,432 (18,349) Provision for returns to be received (5,271) (4,777) (494) Provision for bad debts (24,044) (20,080) (3,964) Net trade receivables 182,768 205,574 (22,806) Ordinary advances to suppliers 6,587 6,850 (263) Agents and agencies 4,177 3,149 1,028 Minor customers, associates, and affiliates 5 17 (12) Total 193,537 215,590 (22,053)
Trade receivables are shown net of the provision of € 5,271 thousand for book, newspaper and magazine returns to be received in the following year. Receivables are shown net of the provisions for bad debts in the amount of € 24,045 thousand.
Changes in these provisions were as follows:
PROVISION FOR RETURNS TO BE RECEIVED AND PROVISION FOR BAD DEBTS
(in thousands of euro) opening provisions use of reclassifications closing balance provisions and other balance changes Provision for returns to be received (4,777) (5,141) 4,647 – (5,271) Provision for bad debts (20,080) (7,650) 3,708 (22) (24,044) Total (24,857) (12,791) 8,354 (22) (29,315)
(11) Other receivables
OTHER RECEIVABLES
(in thousands of euro) f31/12/2009 f31/12/2008 change Current income tax 6,750 1,219 5,531 Tax receivables 2,199 649 1,550 Employee-related receivables 656 670 (14) Other receivables 2,912 2,108 804 Total 12,517 4,646 7,871
162 Gruppo 24 ORE
2009 annual financial report
The detail of tax receivables is shown below:
TAX receivables
(in thousands of euro) f31/12/2009 f31/12/2008 change VAT receivables 1,863 596 1,267 Receivables from subsidiaries excluded from tax consolidation programme 297 – 297 VAT receivables from foreign tax authorities 21 16 5 VAT pending rebate 16 14 2 Tax prepayments under Law 140/1997 2 – 2 Receivables from foreign tax authorities – 23 (23) Total 2,199 649 1,550
Receivables from employees, in the amount of € 655 thousand, relate to expense allowances and loans to employees.
Other receivables, in the amount of € 2,912 thousand as at 31 December 2009, mainly refer to the following:
OTHER RECEIVABLES
(in thousands of euro) f31/12/2009 f31/12/2008 change Receivable for sale of equity interest in Faenza Industrie Grafiche S.r.l. 352 510 (158) Receivables from Italian Post Office 380 388 (8) Receivable from Priverno S.r.l. for broadcast frequency transaction 360 360 – Receivables for European projects 364 214 150 Receivable for sale of Grafica Data Ufficio business unit 335 – 335 Receivables from Italian Post Office for three-year agreements 267 – 267 Advances to agents 114 53 61 Receivables from social security institutions 40 28 12 Insurance receivables 33 31 2 Other 666 524 142 Total 2,911 2,108 803
(12) Altre attività correnti
OTHER CURRENT ASSETS
(in thousands of euro) f31/12/2009 f31/12/2008 change Prepaid expenses 6,847 6,774 73 Total 6,847 6,774 73
163 Gruppo 24 ORE
2009 annual financial report
The breakdown of prepaid expenses is shown below:
PREPAID EXPENSES
(in thousands of euro) a31/12/2009 a31/12/2009 change Agents' commissions 2,799 2,489 310 Production costs for serial products 297 695 (398) Employee insurance premiums 850 592 257 Information and data expenses 113 517 (403) IT services 618 518 100 Hardware and software maintenance fees 328 438 (110) Royalty and copyright costs 172 360 (189) Other production services 186 297 (111) License fees 296 137 159 Insurance premiums 392 138 253 Property lease payments 87 129 (42) Conference organization expenses 100 114 (14) MPS life insurance policy 212 116 96 Miscellaneous 399 232 167 Total 6,848 6,774 74
(13) Cash and cash equivalents
Cash and cash equivalents amounted to € 95,277 thousand, decreasing by € 54,852 thousand from the previous year. They consist of cash in hand, valuables, and on demand or short-term bank deposits that are effectively available and immediately convertible into cash.
Cash and cash equivalents totalling € 92,058 thousand are reported on the statement of cash flows, net of current account overdrafts and instalments due within 12 months on bank borrowings (€ 3,633 thousand), plus the € 414 thousand in cash and cash equivalents that have been reclassified under assets held for sale of the company Blogosfere S.r.l., as illustrated below:
CLOSING CASH AND CASH EQUIVALENTS
(in thousands of euro) f31/12/2009 f31/12/2008 Cash and cash equivalents 95,277 150,129 Bank overdrafts and loans - due within one year (3,633) (4,830) Short-term net financial position 91,644 145,299 Cash and cash equivalents reclassified as assets held for sale 414 – Closing cash and cash equivalents 92,058 145,299
164 Gruppo 24 ORE
2009 annual financial report
Non-current assets held for sale
(14) Assets and liabilities held for sale
The assets and liabilities held for sale consist of the amounts recognised on the statement of financial position that pertain to the subsidiary Blogosfere S.r.l., which was sold in January 2010, and to the Information Technology business unit of Il Sole 24 ORE Business Media S.r.l., which was sold in February 2010.
ASSETS AND LIABILITIES HELD FOR SALE
(in thousands of euro) blogosfere information total technology Assets Non-current assets Property, plant and equipment 43 – 43 Goodwill 1,225 – 1,225 Intangible assets 10 586 596 Other non-current assets 3 – 3 Total 1,280 586 1,866 Current assets Inventories – 674 674 Trade receivables 25 – 25 Other receivables 11 – 11 Other current assets 2 – 2 Cash and cash equivalents 414 – 414 Total 452 674 1,126 Total assets 1,733 1,260 2,992 Liabilities Non-current liabilities Employee benefit obligations – 271 271 Total – 271 271 Current liabilities Trade payables 37 – 37 Other current liabilities 23 – 23 Other payables 106 35 141 Total 166 35 201 Total liabilities 166 306 472
Sale of the Information Technology business unit of Il Sole 24 ORE Business Media S.r.l. involved the following publications: – eDP line, including the Business Guide supplement – computer dealer & Var – reseller business – pc Open Studio – top Trade Informatica, including the website Toptrade.it
165 Gruppo 24 ORE
2009 annual financial report
Equity
(15) Share capital
Share capital, fully subscribed and paid in, amounts to € 35,123,787, divided into 133,333,213 shares, of which 90,000,000 ordinary shares (67.50% of share capital) and 43,333,213 special shares (32.50%), of which 4,894,693 treasury shares.
At the beginning of the year there were 5,811,476 treasury shares.
On 15 December 2009, in application of the stock granting plan, a total of 916,783 special shares were granted, free of charge, to employees. At 31 December 2009, there were 4,894,693 treasury shares.
(16) Equity reserves
Equity reserves, which totalled € 180,316 thousand, were established in 2007 upon listing of the special shares on the MTA, and are comprised by the share premium reserve.
(17) Revaluation reserves
REVALUATION RESERVES
(in thousands of euro) f31/12/2009 f31/12/2008 change Revaluation reserve – Law 342/2000 18,786 18,786 – Revaluation reserve – Law 350/2003 1,775 1,775 – Total 20,561 20,561 –
(18) Hedging and translation reserves
The hedging and translation reserve came to a negative € 333 thousand and covers the fair value of interest rate swaps, which were set up to hedge the risk of fluctuations in interest rates on three facilitated loans, net of related deferred tax assets. More specifically, the portion of fair value forming the reserve in question concerns the IRS contracts classified as cash flow hedges, the value of which amounts to a negative € 459 thousand (pre-tax) and which are considered effective for the purposes of IAS 39.
166 Gruppo 24 ORE
2009 annual financial report
(19) Other reserves
OTHER RESERVES
(in thousands of euro) f31/12/2009 f31/12/2008 change Negative goodwill 11,272 11,272 – Reserve for grants related to assets under Law 416/81 9,374 9,374 – Legal reserve 7,025 7,025 – Stock granting reserve 5,636 3,752 1,884 Post-employment benefit reserve (IFRS adjustment) 1,266 467 799 Other 388 388 – Total 34,961 32,278 2,683
The account “Other reserves” increased from € 32,278 thousand to € 34,961 thousand due to increases of: – € 799 thousand due to accounting treatment of post-employment benefits; – € 1,884 thousand for the fair value of the third tranche of shares distributed to employees to execute the bonus stock granting plan resolved by the Board of Directors of Il Sole 24 Ore S.p.A. on 30 October 2007.
The reserve for grants related to assets (€ 9,374 thousand) was established to cover the grants received by the parent pursuant to Article 8 of Law 416/81. These grants consist of what was paid until FY 1987 and financed the purchase of fully depreciated property, plant and equipment.A s laid down in this law, the reserve is taxable on distribution.
(20) Retained earnings
Retained earnings increased from € 72,817 thousand to € 78,799 thousand. The increase of € 5,982 thousand was due to the portion of the previous financial year’s profit not used for dividends.
During the year, the following dividends were distributed (total amount: € 10,130 thousand) as approved by the shareholders at their ordinary meeting of 28 April 2009: – € 3,677 thousand to owners of special shares in the amount of € 0.098 for each of the 37,521,737 special-category shares outstanding; – € 6,453 thousand to owners of ordinary shares in the amount of € 0.0717 for each of the 90 million ordinary shares outstanding.
(21) Loss for the year
The loss for the year amounted to € 53,343 thousand. The loss attributable to owners of the parent was € 52,564 thousand.
167 Gruppo 24 ORE
2009 annual financial report
The following tables provide reconciliation with the financial statements of the parent:
RECONCILIATION OF SEPARATE AND CONSOLIDATED PROFIT (LOSS) FOR THE YEAR
(in thousands of euro) a2009 a2008 Balance reported by the parent (46,436) 20,922 1. Subsidiaries’ profit/(loss) for year (14,291) 515 2. Amortization of frequencies from Nuova Radio S.p.A. acquisition (1,989) (1,989) 3. Use of deferred tax provision on amortization from acquisition of Nuova Radio S.p.A. 624 624 4. Amortization of intangible assets from acquisition of Business Media S.r.l. (1,459) (1,623) 5. Use of deferred tax provision on amortization of intangible assets from Business Media S.r.l. acquisition 458 509 6. Amortization of intangible assets from Data Ufficio S.p.A. acquisition (2,307) (2,307) 7. Use of deferred tax provision on amortization of intangible assets from Data Ufficio S.p.A. acquisition 724 724 8. Amortization of intangible assets from STR S.p.A. acquisition (1,639) (3,079) 9. Use of deferred tax provision on amortization of intangible assets from STR S.p.A. acquisition 515 967 10. Amortization of intangible assets from Esa Software S.p.A. acquisition (5,243) (889) 11. Use of deferred tax provision on amortization of intangible assets from Esa Software S.p.A. acquisition 1,647 279 12. Recognition of associates through equity: portion of loss attributable to the Sole 24 Ore Group – (81) 13. Goodwill impairment – (1,000) 14. Impairment of publications and other intangible assets net of tax effect (1,947) (2,058) 15. Derecognition of impairment losses of investments in associates in separate financial statements 20,215 4,622 16. Reversal of dividends paid by subsidiaries (2,775) – 17. Reversal of provisions for coverage of losses on investment in 24 ore Cultura 706 – 18. Other changes (146) (122) Consolidated balance reported for the year (53,343) 16,014
RECONCILIATION OF PARENT AND CONSOLIDATED EQUITY
(in thousands of euro) a31/12/2009 a31/12/2008 Balance reported by the parent 323,870 378,139 1. Difference in profit for the year (6,907) (4,908) 2. Change in Retained earnings (21,363) (16,553) 3. Consolidation reserve 132 132 4. Change in post-employment benefit reserve IFR( S adjustment) 353 196 5. Share of equity attributable to non-controlling interests 1,497 1,487 Consolidated balance reported 297,582 358,493
The following table illustrates the other components of comprehensive income and the associated tax effects:
e2009 e2008 (in thousands of euro) gross tax gross tax amount effect amount effect Other components of comprehensive income Actuarial gains (losses) of defined-benefit plans 1,051 (253) (841) 231 Effective portion of changes in fair value of cash flow hedges (316) 87 (812) 223 Fair value of Stock Granting 1,884 – 1,895 – Total 2,619 (166) 242 454
168 Gruppo 24 ORE
2009 annual financial report
Non-current liabilities
(22) Non-current financial liabilities
Non-current financial liabilities amounted to € 10,886 thousand (€ 14,140 thousand for the prior year) and relates to the long-term portion of the facilitated loans received by the parent under Italian publishing industry law and by the subsidiary Esa Software S.p.A. under the technological innovation law, as summarized in the following table:
MEDIUM-LONG TERM LOANS
date of current m/l residual amount bank facilitation interest rate maturity portion term value at paid out portion 31/12/2009 Law 416/81 Unicredit Banca d'Impresa S.p.A. Publishing Industry 7,747 3.05% 30/06/2011 1,005 525 1,530 Law 62/2001 Credito Emiliano S.p.A. Publishing Industry 6,976 6-mo. Euribor + 0.875% 30/06/2015 734 3,304 4,038 Law 62/2001 Intesa Sanpaolo S.p.A. Publishing Industry 3,595 6-mo. Euribor + 0.85% 30/06/2015 378 1,703 2,081 Law 62/2001 Intesa Sanpaolo S.p.A. Publishing Industry 8,199 6-mo. Euribor + 0.85% 30/06/2015 1,025 4,612 5,637 Minis. Ind. Att. Comm. (MICA) Law 46/82 Tech. innovation 739 3.00% 23/02/2015 73 396 469 Minis. Attivita Prod. (MAP) Law 46/82 Tech. innovation 423 2.25% 20/05/2018 39 345 384 Total 27,679 3,254 10,886 14,140
For the fixed-rate loans, no guarantees have been given, nor have covenants been requested.
Conversely, the floating-rate loans (at the 6-month Euribor plus a spread) have been hedged against interest-rate fluctuations using derivative instruments, as described above under section 7 – Risk management. These loans are not backed by collateral, but include specific covenants, which to date have always been met.
The decrease of € 3,254 thousand from the amount reported at 31 December 2008 was due to repayment of instalments on the loans.
169 Gruppo 24 ORE
2009 annual financial report
(23) Employee benefit obligations
EMPLOYEE BENEFIT OBLIGATIONS
(in thousands of euro) opening cost of financial actuarial uses and other closing balance labour income/(expenses) gains/(losses) changes balance Post-employment benefits 42,270 211 1,173 (1,130) (3,737) 38,786 Totale 42,270 211 1,173 (1,130) (3,737) 38,786
The main assumptions used in estimating the benefits to be awarded on termination of employment are as follows:
Demographic assumptions: – the SIM and SIF 2002 tables (mortality rates by individual age for Italian males and females based on 2002 census data) were used for mortality rates; – the annual probabilities of elimination for reasons other than death have been directly deduced from recent statistics of employee eliminations in the companies being evaluated by means of suitable equalizations; – the annual probability of a post-employment benefit advance being requested has been set at 2.44%, based on historical data of the companies being evaluated.
Economic and financial assumptions: – the discount rate was determined as the average of the Euro swap, bid and ask rates at 31 December 2006; – as regards the inflation rate, necessary for revaluation of post-employment provisions made, the rate applied was 2%; – the percentage of accrued post-employment benefits requested in advance was set at 66.75% based on historical figures.
(24) Provisions for risks and charges
PROVISIONS FOR RISKS AND CHARGES
(in thousands of euro) opening additions use of changes in closing balance provisions consolidated balance companies Provision for legal disputes 10,731 1,044 (4,194) 26 7,607 Provision for sundry risks 7,004 302 (1,917) – 5,389 Provision for agent indemnities 5,961 941 (618) (70) 6,213 Total 23,696 2,286 (6,729) (44) 19,209
170 Gruppo 24 ORE
2009 annual financial report
Provisions for legal disputes (€ 7,607 thousand) cover litigation risks known at the reporting date. Such risks relate in particular to personnel lawsuits (€ 1,457 thousand), lawsuits against the newspaper (€ 1,613 thousand) and disputes involving suppliers and contractors (€ 225 thousand), disputes with social security institutions (€ 3,814 thousand), forecast legal expenses (€ 363 thousand), and other litigation (€ 135 thousand).
The provisions for legal disputes were used for lawsuits that no longer require maintaining provisions, and principally for disputes involving suppliers and contractors (€ 2,190 thousand), lawsuits against the newspaper (€ 490 thousand) and personnel lawsuits (€ 1,367 thousand).
Provision for sundry risks (€ 5,389 thousand) is to cover the residual risks relating to the contractual obligations connected with construction of the building on Via Monte Rosa, Milan (€ 2,960 thousand) and other risks of a contractual nature (€ 2,428 thousand).
Uses of the provision for sundry risks resulted from reduction in the provisions for contractual obligations connected with construction of the building on Via Monte Rosa, Milan (€ 884 thousand) and other risks for which there is no longer any reason to maintain the associated provisions, for a total of € 1,033 thousand.
Agents’ indemnities are provisions to cover the risks deriving from early termination of the contract and those relating to discontinuation of the agency relationship as per Article 1751 of the Italian Civil Code.
The changes in the scope of consolidation refer to the provision for legal disputes for acquisition of Business Media Web S.r.l. and the provision for agent indemnities resulting from sale by the subsidiary Data Ufficio S.p.A. of the Grafica business unit.
(25) Other non-current liabilities
This item totals € 34 thousand, and fell by € 1,364 thousand following acquisition of 43% of 24ORE Cultura S.r.l. and elimination of the associated liability.
171 Gruppo 24 ORE
2009 annual financial report
Current liabilities
(26) Bank overdrafts and loans - due within one year
These amounted to € 3,633 thousand (€ 4,830 thousand for the previous year) and mainly include the short-term portion of medium-/long-term loans in the amount of € 3,254 thousand.
(27) Financial liabilities held for trading
Financial liabilities held for trading came to € 459 thousand, as described in the section Cash flow hedging of chapter 7 – Risk Management.
(28) Trade payables
TRADE PAYABLES
(in thousands of euro) f31/12/2009 f31/12/2008 change Suppliers 97,279 107,837 (10,558) Deferred income 54,542 56,900 (2,358) Amounts payable to associates 175 297 (122) Amounts payable to non-controlling interests 3 102 (99) Amounts payable to subsidiaries – 6 (6) Other trade payables 9,078 9,802 (724) Total 161,077 174,944 (13,867)
The breakdown of deferred income is shown below:
DEFERRED INCOME
(in thousands of euro) f31/12/2009 f31/12/2008 change Sale of magazines 21,666 24,403 (2,737) Il Sole 24 ORE newspaper subscriptions 15,360 16,731 (1,371) Online publications by subscription 12,880 11,550 1,330 IT services 2,972 2,755 217 Software by subscription 1,664 1,461 203 Total 54,542 56,900 (2,358)
Other trade payables amounted to € 9,078 thousand, of which € 7,287 thousand relating to amounts payable to agents.
172 Gruppo 24 ORE
2009 annual financial report
(29) Other current liabilities
OTHER CURRENT LIABILITIES
(in thousands of euro) f31/12/2009 f31/12/2008 change Deferred income 8,493 9,027 (534) Accrued liabilities 23 43 (20) Current tax liabilities 276 334 (58) Total 8,792 9,404 (612)
The breakdown of deferred income is shown below:
OTHER DEFERRED INCOME
(in thousands of euro) f31/12/2009 f31/12/2008 change Annual service contracts 3,397 4,055 (658) Conferences 2,913 2,867 46 Annual portion of grants related to assets 389 891 (502) Rental income 231 224 7 Interest on m/l financial payables to third parties 225 311 (85) Sales of software licenses 341 95 246 Other deferred income 997 584 413 Total 8,493 9,027 (534)
(30) Other payables
OTHER PAYABLES
(in thousands of euro) f31/12/2009 f31/12/2008 change Holiday accruals 11,830 16,129 (4,299) Social security institutions 19,056 13,208 5,848 Tax payables 9,279 11,382 (2,103) Other employee payables 17,127 7,133 9,994 13th and 14th-month salaries accrued and not yet paid 3,488 3,375 113 Miscellaneous payables 23,415 20,960 2,455 Total 84,195 72,187 12,008
Tax payables mainly refer to withholding tax on payroll and on freelancers’ invoices.
The provisions for restructuring charges include € 6 million in payables to social security institutions and € 9,780 thousand in other employee payables.
173 Gruppo 24 ORE
2009 annual financial report
The breakdown of these liabilities is shown below:
miscellaneous payables
(in thousands of euro) f31/12/2009 f31/12/2008 change Payable for ESA Software S.p.A. acquisition 18,120 18,179 (59) Payable for STR S.p.A. acquisition 649 649 – Payable for Data Ufficio S.p.A. acquisition 3,000 500 2,500 Other payables 1,646 1,632 14 Total 23,415 20,960 2,455
The payables for acquisition of the TR S S.p.A. and Data Ufficio S.p.A. equity investments are related to the estimates of the balancing payment to be made to the selling shareholders. The € 2,500 thousand increase stems from the updated estimate of the adjustment for Data Ufficio S.p.A.
The payable for the Esa Software S.p.A. acquisition is related to the estimate of the price to be paid for the remaining 30% stake, in relation to the put option granted to the seller and the call option granted to Il Sole 24 ORE S.p.A.
174 Gruppo 24 ORE
2009 annual financial report
consolidated Income Statement
(31) Revenue from newspapers, books and magazines
REVENUE FROM NEWSPAPERS, BOOKS AND MAGAZINES
(in thousands of euro) a2009 a2008 change change % Newspaper 74,456 82,303 (7,847) –9.5% Magazines 57,387 64,943 (7,543) –11.6% Add-ons 10,069 27,376 (17,307) –63.2% Books 13,531 16,772 (3,240) –19.3% Total 155,443 191,380 (35,937) –18.8%
(32) Revenue from advertising
Revenue from advertising totalled € 187,559 thousand, down by € 57,071 thousand.
(33) Other revenue
OTHER REVENUE
(in thousands of euro) a2009 a2008 change change % Software 64,319 40,564 23,755 58.6% Digital publications 31,786 30,024 1,762 5.9% IT products 26,268 28,633 (2,365) –8.3% Revenue from other products and services 21,173 22,859 (1,686) –7.4% Revenue from conferences and training 16,154 14,931 1,223 8.2% Total 159,700 137,011 22,689 16.6%
(34) Other operating income
OTHER OPERATING INCOME
(in thousands of euro) a2009 a2008 change change % Prior year income 4,723 7,080 (2,357) –33.3% Sundry expense recoveries 2,886 2,321 565 24.3% Rental income 2,719 1,974 745 37.7% Grants 1,454 552 902 163.6% Other 2,577 3,594 (1,017) –28.3% Total 14,359 15,521 (1,162) –7.5%
175 Gruppo 24 ORE
2009 annual financial report
(35) Personnel expense
PERSONNEL EXPENSE
(in thousands of euro) a2009 a2008 change change % Wages & salaries 129,348 119,237 10,111 8.5% Social security charges & pension contributions 42,512 38,772 3,740 9.6% Post-employment benefits 9,729 9,794 (65) –0.7% Holiday accruals (3,635) 2,603 (6,238) –239.6% Overtime 3,795 3,694 101 2.7% Other personnel expense 21,458 1,758 19,700 1120.6% Total 203,207 175,858 27,349 15.6%
Personnel expense increased by € 27,349 thousand due mainly to the changes in consolidated companies in the amount of € 10,880 thousand. On a comparable consolidation basis, the increase was € 16,469 thousand, mainly due to restructuring charges of € 20,248 thousand, including € 4,468 thousand for costs paid during the financial year.
(36) Purchases of raw materials and consumables
PURCHASES OF RAW MATERIALS AND CONSUMABLES
(in thousands of euro) a2009 a2008 change change % Paper 24,961 32,995 (8,034) –24.3% Goods for resale 4,241 1,967 2,274 115.6% Photographic material and ink 1,614 1,983 (369) –18.6% Plant maintenance materials 1,397 1,308 89 6.8% Stationery & printed materials 490 522 (32) –6.1% Spare parts 362 502 (140) –27.9% Fuel 439 385 54 14.0% Packaging materials 177 202 (25) –12.4% Other sundry costs 618 473 145 30.6% Total 34,299 40,337 (6,038) –15.0%
176 Gruppo 24 ORE
2009 annual financial report
(37) Services
SERVICES
(in thousands of euro) a2009 a2008 change change % Distribution 32,016 41,702 (9,686) –23.2% Printing 29,215 39,272 (10,057) –25.6% Commissions & other selling expenses 35,980 35,564 416 1.2% Advisory services-freelancers 29,877 26,626 3,251 12.2% Advertising & promotion 20,256 25,669 (5,413) –21.1% Editorial costs 20,569 23,772 (3,203) –13.5% Set-up costs 7,808 8,873 (1,065) –12.0% News purchase 7,358 7,963 (605) –7.6% Advertising costs for publishers 7,788 7,837 (49) –0.6% Utilities (telephone, electricity, water, etc.) 7,099 6,575 524 8.0% Miscellaneous production costs 6,617 5,656 961 17.0% Personnel expense refunds (employees, freelancers, agency workers and interns) 5,401 5,925 (524) –8.8% Conferences 6,776 5,687 1,089 19.2% Maintenance & repairs 4,999 4,920 79 1.6% General facility services 5,671 4,883 788 16.1% Packing costs 2,124 3,990 (1,866) –46.8% Employee services (canteen, meal vouchers, and training courses, etc.) 3,482 3,668 (186) –5.1% Press agencies 2,783 2,899 (116) –4.0% Product warehousing costs 2,001 1,962 39 2.0% Insurance 1,415 1,391 24 1.7% Software development 3,201 1,543 1,658 107.5% Bank expenses 777 629 148 23.5% Transmission 392 400 (8) –2.0% Total 243,605 267,405 (23,800) –8.9%
(38) Use of third party assets
Use of third party assets
(in thousands of euro) a2009 a2008 change change % Rental costs 18,765 16,348 2,417 14.8% Royalties 3,957 6,811 (2,854) –41.9% Copyright royalties 3,459 3,637 (178) –4.9% Car rental for company/private use 4,367 3,906 461 11.8% Rental of radio transmission equipment 1,147 961 186 19.3% Other fees 1,218 941 277 29.5% Hardware leasing/rental costs 157 176 (19) –10.8% Other sundry costs 373 336 37 11.0% Total 33,443 33,116 327 1.0%
177 Gruppo 24 ORE
2009 annual financial report
(39) Other operating costs
Other operating costs
(in thousands of euro) a2009 a2008 change change % VAT borne by publisher 2,666 3,220 (554) –17.2% Prior year costs 5,140 1,166 3,974 340.7% Purchase of newspapers and magazines 1,218 1,345 (127) –9.4% Entertainment expenses 1,020 1,133 (113) –10.0% Miscellaneous taxes (excluding income tax) 843 836 7 0.8% Association membership dues 611 476 135 28.4% Purchase of books and magazines for promotional purposes 2 13 (11) –83.8% Other miscellaneous expenses 2,790 2,329 461 19.8% Total 14,290 10,518 3,772 35.9%
(40) Impairment losses on goodwill and intangible assets
The impairment losses on goodwill and intangible assets total € 11,716 thousand and refer to: – impairment losses on goodwill for sector-specificP ublishing in the amount of € 7,921 thousand; – impairment losses on publications for € 3,075 thousand; – impairment losses on goodwill for Cultura in the amount of € 706 thousand.
For more information, see notes 1, 2 and 3 above.
(41) Gains/losses on disposal of non-current assets
These capital gains and losses were realised on the disposal of non-current assets, which in 2009 amounted to € 272 thousand. They mainly related to capital gains on the disposal of plant and equipment.
178 Gruppo 24 ORE
2009 annual financial report
(42) Financial income/(expenses)
Financial income/(expenses)
(in thousands of euro) a2009 a2008 change change % Financial income from investment of surplus cash 2,774 11,352 (8,578) –75.6% Other financial income 260 182 78 42.9% Foreign exchange gains 12 23 (11) –47.9% Total income 3,046 11,556 (8,511) –73.6% Foreign exchange losses (50) (42) (8) –19.0% Financial expenses on short-term borrowings (207) (67) (140) –207.5% Financial expenses on medium-/long-term borrowings (260) (885) 625 70.6% Other financial expenses (79) (355) 276 77.6% Total expenses (596) (1,349) 753 55.8% Total 2,450 10,207 (7,758) –76.0%
Net financial income amounted to € 2,450 thousand and is broken down as follows: – financial income of € 3,046 thousand on cash resources and on short-term cash investments. It was € 8,511 thousand lower than in 2008 because of lower average liquidity in the period and the decline in interest rates; – financial expenses in the amount of € 596 thousand related to medium and long-term facilitated loans and other financial expenses. This was € 753 thousand lower than in the previous financial year, due to lower interest expenses for trade payables and tax payables, and medium and long-term facilitated loans, reflecting the fall in interest rates and received grants.
(43) Other income/(expenses) from investment assets and liabilities
OTHER INCOME (EXPENSES)
(in thousands of euro) a2009 a2008 change change % Subsidiaries (54) – (54) – Associates 6 17 (11) –64.6% Non-controlling investments (507) (2,498) 1,991 79.7% Non-captive – 1 (1) –147.0% Total (555) (2,480) 1,925 77.6%
The expenses for subsidiaries refer to adjustment of the value of the equity investment in Blogosfere S.r.l. to its sale price.
The expenses on non-controlling investments mainly include € 500 thousand related to the impairment of the equity investment in Editorial Ecoprensa S.A.
179 Gruppo 24 ORE
2009 annual financial report
(44) Share of gains (losses) on equity-accounted investees
GAINS (LOSSES) ON equity-accounted investees
(in thousands of euro) a2009 a2008 change Aldebra S.p.A. (1,141) – (1,141) Mondoesa Ovest S.r.l. in liquidation (18) – (18) Blogosfere S.r.l. – (82) 82 Mondoesa Milano Nordovest S.r.l. (9) – (9) HS24 S.r.l. in liquidation – (104) 104 Total (1,168) (186) (982)
(45) Income taxes
The main components of income taxes for the years ended 31 December 2009 and 2008 were the following:
INCOME TAXES
(in thousands of euro) a2009 a2008 change IRES (corporate income tax) 1,937 (10,547) 12,484 IRAP (regional business tax) (4,227) (6,743) 2,516 Substitute taxes (3,287) (4,892) 1,605 Foreign income tax (89) (290) 201 Total (5,666) (22,472) 16,806 Deferred tax assets/liabilities arising from accounting/tax alignment 6,735 10,287 (3,552) Other deferred tax assets/liabilities 12,077 2,408 9,669 Deferred tax assets/liabilities 18,812 12,695 6,117 Prior year’s taxes 254 448 (194) Total 13,399 (9,330) 22,729
2009 taxes led to income of € 13,400 thousand.
This income results mainly from two phenomena: – recognition of the tax losses that can be carried forward for five years and that are deemed recoverable over that period. – effect of realignment of goodwill.
This last income reflects the positive result of realignment of goodwill. During the period, these companies realigned the goodwill recognised during previous extraordinary transactions (Article 176 of the Consolidated Law on Income Tax [TUIR] and Article 15 of Decree Law 185). Consistently with the accounting treatment recommended by the OIC [the Italian Professional Accountancy Organisation, a standard-setter], this led to the off setting in the income statement of ordinary taxes that will be withheld (deferred tax assets of € 6,735 thousand) against the substitute tax (tax payables
180 Gruppo 24 ORE
2009 annual financial report
of € 3,286 thousand), which in to a book benefit of € 3,449 thousand. This benefit will be realised through deduction of amortisation on outside accounts.
There are no material differences in the tax rates applied to the various companies of the Group.
The foreign entities are operating companies and do not receive preferential tax treatment. For the foreign shareholdings, Italian taxes have been allocated and are to be paid upon the distribution of dividends.
The Company has not calculated taxes on reserves taxable on distribution as there are no plans for their distribution.
The parent has set up a tax consolidation (or netting) programme with the participation of Nuova Radio S.p.A., Il Sole 24 ORE Business Media S.r.l., Data Ufficio S.p.A., STR S.p.A., Innovare24 S.p.A. and 24 ORE Cultura S.r.l. By means of this procedure, the parent receives (pays) a monetary amount equal to the transferred loss (profit) valued at the current IRES (corporate income tax) rate. Consequently, no carry-forward tax losses are recognised.
The net effect of tax netting resulted in an aggregate benefit for the subsidiaries and recognition of additional carry-forward losses of € 1,747 thousand.
The following table shows the reconciliation between the parent’s theoretical and effective tax rates.
RECONCILIATION OF APPLICABLE AND EFFECTIVE TAX RATE
(in thousands of euro) f31/12/2009 rate f31/12/2008 rate difference rate Theoretical income taxes (20,957) 31.4% 7,958 31.4% (28,915) – Tax effect of permanent differences 11,470 – 6,940 27.4% 4,530 – Personnel expense 5,682 – 5,016 19.8% 666 – Non-deductible financial expenses 5 – – 0.0% 5 – Charges on investments 538 – 279 1.1% 259 – Car & telephone costs 352 – 334 1.3% 18 – Non-deductible depreciation & amortization 84 – 374 1.5% (290) – Difference between taxable bases for IRES (corporate income 734 tax) and IRAP (regional productivity tax) – 22 0.1% 712 – Other permanent differences (additions) 2,919 – 1,050 4.1% 1,869 – Income from investments (486) 0.7% 40 0.2% (526) 0.6% Grants (256) 0.4% (64) – (192) 0.6% Other permanent differences (deductions) (429) 0.6% (425) – (4) 2.3% Goodwill impairment 2.326 – 314 1.2% 2,012 – Prior-year income taxes (258) 0.4% (419) – 161 2.0% Tax effect of different foreign tax rates (0) 0.0% (6) – 6 0.0% Deferred taxes not provisioned – 0.0% – 0.0% – 0.0% Use of tax losses – 0.0% (104) – 104 0.4% Tax differences previously not recognized (201) 0.3% 24 0.1% (225) 0.2% Alignment with new tax rates (7) 0.0% 333 1.3% (340) – Effect of realignment (3,447) 5.2% (5,397) – 1,950 26.5% Reported income taxes (13,400) 20.1% 9,329 36.8% (22,729) –
181 Gruppo 24 ORE
2009 annual financial report
The biggest divergences between the theoretical and effective tax rate relate to: – The different taxable base for IRAP (regional business tax), which, in practice, does not allow deduction of personnel expense, financial expenses, and losses for bad debts. This results in a disproportionate tax base and, therefore, an increase in the tax rate in the event of a decline in earnings. It should also be noted that the legal IRAP tax rate may be increased or decreased in the various Italian regions in which the company operates. – The non-deductibility of impairment of goodwill.
Consolidated statement OF cash flowS
(46) Purchases of investments in subsidiaries
In 2009, investment in subsidiaries had an overall financial impact of € 936 thousand:
PURCHASE OF INVESTMENTS IN SUBSIDIARIES
item blogosfere s.r.l. business total media web s.r.l. Intangible assets 13 42 55 Property, plant and equipment 63 8 71 Goodwill 1,590 120 1,710 Inventories – 2 2 Trade receivables 171 182 353 Trade payables (88) (247) (335) Other current assets/liabilities (43) (44) (87) Provisions for risks and charges – (26) (26) Employee benefit obligations – (75) (75) Change in non-controlling interests – (160) (160) Other non-current assets 6 – 6 Effect of changes in investments in associates (578) – (578) Sub-total 1,134 (198) 936 Change in cash & cash equivalents 66 558 624 Total outflow 1,200 360 1,560
12. Segment reporting
Segment reporting has been prepared in such a way as to provide the information necessary to evaluate the nature and financial effects of operating activities and of the economic environments concerned.
The operating segments for which separate information is provided have been identified based on
182 Gruppo 24 ORE
2009 annual financial report
business operating activities (a) generating revenues and costs, (b) whose results are regularly reviewed at the highest operating decision-making level to decide on resource allocation and assess results, and (c) for which discrete financial information is available.
In terms of identifying an operating segment, separate segment information is disclosed when the following quantitative levels are exceeded: ‒ the segment’s reported revenue, from both external customers and inter-segment sales, accounts for at least 10% of the combined total revenues of all operating segments; ‒ its reported profit or loss accounts for at least 10% of the greater, in absolute amount, of (i) the combined reported profit of all operating segments that reported a profit and (ii) the combined reported loss of all operating segments that reported a loss; ‒ its assets account for at least 10% of the combined assets of all operating segments.
If the above quantitative thresholds have not been exceeded, but corporate management has deemed it useful to provide separate disclosure to aid evaluation of the nature and financial effects of the related operating activities, further operating segments have been subjected to detailed disclosure.
Based on the above criteria, the operating segments for which the Group provides separate reporting are as follows: ‒ Publishing, which heads the daily newspaper Il Sole 24 ORE, its bundled add-on products, theme magazines such as English24, I Viaggi del Sole, the monthlies Ventiquattro and IL – il maschile de Il Sole 24 ORE, plus a number of primary processes (printing and distribution) also managed for other Group segments. ‒ System, which acts as the advertising sales agency for the Group’s main media – except for sector- specific publishing, which has its own network (Business Media) – and for some third-party media. ‒ Professionals, which targets professionals (mainly chartered accountants, lawyers, and employment consultants), the public administration, and SMEs with broad-spectrum publishing solutions comprising magazines, books, databases, online services, training courses, and management software. Compared with the primary segmentation presented pursuant to IAS 14 in the annual financial statements as at 31 December 2008, application of IFRS 8 has mainly involved division of the Professionals area into the following operating segments. ‒ Tax, Legal & PA, which develops systems of print and electronic products generally connected with magazines published by the Group dedicated to the themes of tax, accounting and reporting, employment, law and public administration, economics and management; ‒ Sector-specific Publishing, which manages the B2B integrated communication activity targeting SMEs in specific sectors, including agrifood, retail distribution, building,ICT and welfare, directly managing dedicated advertising sales forces; ‒ Software Solutions, which creates and markets software covering the operating, accounting,
183 Gruppo 24 ORE
2009 annual financial report
regulatory and tax compliance of professionals, the PA, and SMEs with software marketed under the Via Libera and Impresa24 brands, and that comprises the software companies ESA Software S.p.A., Data Ufficio S.p.A., and STR S.p.A.; ‒ Training, which markets training and refresher course services, also customised, targeting professionals, companies and young university graduates; ‒ Multimedia, which is comprised of three distinct business lines: (i) the real-time financial news services business, involved in the production and distribution, in digital format, of specific news content for financial institutions, investors and companies; (ii) the online business, which manages the www. ilsole24ore.com portal and the Shopping24 e-commerce channel; and (iii) the Radiocor press agency. ‒ TheRadio Area manages the national radio station Radio24, a news & talk radio with an editorial format alternating news and entertainment programmes based exclusively on speech.
The following information is provided: ‒ revenue from external customers, as regularly presented to the highest operating decision-making level, for evaluation of segment profit or loss; ‒ inter-segment revenues, as regularly presented to the highest operating decision-making level, for evaluation of segment profit or loss; ‒ impairment and depreciation, as regularly presented to the highest operating decision-making level, for evaluation of segment profit or loss; ‒ measurement of segment profits and losses, consisting of OP G (gross operating profit) and Operating Profit; ‒ the activities of each segment are show as they are periodically presented to the highest operating decision making level, for assessment of segment performance, and specifically concern property, plant and equipment, intangible assets, depreciation and amortization, and trade receivables.
The accounting policies used to recognise segment revenue, profits or losses, and assets are consistent with the accounting standards adopted to prepare the Group’s consolidated financial statements
Information broken down on a regional basis is not provided, insofar as the Group’s activities are concentrated primarily in Italy, with its activities in other countries being immaterial. In regard to disclosures about company customers, there are no external customers who individually represent more than 10% of the Group’s total trading revenues.
As indicated in section 6 – Changes to Accounting Policies, errors and changes in estimates and segment disclosures on the last annual consolidated financial statements have been presented in comparative format and restated in accordance with IFRS 8 – Operating Segments, which came into force on 1 January 2009. In particular, goodwill has been reallocated to the new operating segments, which are identified according to the values of the new segments.
184 Gruppo 24 ORE
2009 annual financial report
INCOME STATEMENT AND ACTIVITY BROKEN DOWN BY SEGMENT
segment non- revenue total gop/gol amortization impairment gains/ operating property, goodwill intangible trade captive between revenue losses profit plant and assets receivables revenue segments (loss) equipment
Publishing 31/12/2009 87,224 100,134 187,358 (4,561) 5,090 – 40 (9,610) 46,907 513 830 10,061 31/12/2008 113,483 137,478 250,961 24,694 (4,696) (1,197) (1) 19,997 50,943 513 137 10,482 System 31/12/2009 158,166 31 158,197 (10,541) (4) – – (10,544) 1 – 6 81,655 31/12/2008 204,146 – 204,146 (2,655) (4) – – (2,659) 2 – 1 99,596 Tax & legal 31/12/2009 89,392 243 89,635 20,867 (8) – – 20,859 – 15,470 – 24,901 31/12/2008 94,048 38 94,086 24,102 (17) – 0 24,085 – 15,470 – 25,545 Sector-specific publishing 45,479 3,346 48,825 (5,073) (3,147) (7,636) 3 (15,853) 567 2,371 17,947 20,572 31/12/2009 31/12/2008 58,701 2,512 61,213 2,235 (3,372) (3,000) (1) (4,138) 721 10,172 24,433 26,383 Software solutions 31/12/2009 74,430 197 74,626 10,176 (10,755) (13) (135) (729) 1,228 52,349 32,638 27,541 31/12/2008 51,226 132 51,358 9,199 (7,404) – (63) 1,731 2,057 50,387 40,305 33,164 Training 31/12/2009 12,087 813 12,900 1,832 (109) – – 1,723 50 2,165 97 5,953 31/12/2008 11,070 1,078 12,148 2,228 (43) – – 2,185 68 2,150 28 6,309 Professionals 31/12/2009 33 – 33 (1,257) (13) – – (1,270) 136 – 6 123 31/12/2008 15 – 15 (626) (26) – – (653) 121 – 86 142 Multimedia 31/12/2009 29,217 7,171 36,389 (2,438) (224) – – (2,662) 457 – 24 9,402 31/12/2008 31,883 7,376 39,259 650 (342) – – 307 504 – 25 9,387 Radio 31/12/2009 277 12,804 13,081 (1,293) (3,901) – 178 (5,016) 2,328 – 30,794 74 31/12/2008 204 12,797 13,001 (1,327) (3,543) – 68 (4,802) 1,821 – 31,041 269 Corporate and centralized services 6,396 2,150 8,546 (32,398) (8,090) (706) 185 (41,009) 38,848 0 18,169 13,253 31/12/2009 31/12/2008 8,245 1,273 9,518 (9,216) (6,845) (1,000) 6 (18,252) 40,128 1,330 15,843 4,312 Consolidated 31/12/2009 502,702 0 502,702 (24,685) (31,340) (11,716) 272 (67,470) 90,523 72,867 100,511 193,537 31/12/2008 573,022 (0) 573,022 49,283 (26,292) (5,197) 8 17,801 96,363 80,021 111,899 215,590
13. Other information
13.1 Related-party transactions
Related-party transactions are limited to those with subsidiaries and associates concerning commercial, administrative and financial services. These transactions form part of normal business operations and of the core business of each of the companies involved, and are regulated at market conditions.
185 Gruppo 24 ORE
2009 annual financial report
RELATED-PARTY TRANSACTIONS company trade financial trade financial revenue costs financial financial receivables receivables payables (net liabilities and income expenses of deferred operating income) income Confederazione Generale dell’Industria Italiana (Confederation of Italian Industry) 1 – – – 44 – – – Total ultimate parent entity 1 – – – 44 – – – Nuova Radio Spa – 1,603 – – 2,753 (12,768) 4 (2) Il Sole 24 Ore Business Media Srl 1,134 5,505 – – 6,164 (3,820) 100 (1) Innovare24 SpA 10 – – (4,162) 46 (635) – (11) 24 Ore Cultura Srl – 4,440 – – 108 (30) 40 – Data Ufficio Spa – 4,588 – – 34 (237) 90 – Str S.p.A. – 767 – – 47 (291) 1 – Alinari 24 Ore Spa – 2,914 (56) – 38 (644) 25 – Il Sole 24 Ore UK Ltd – – (304) – – (816) – – Faenza Editrice Iberica SL – – – – – – – – Newton Managment Innovation SpA 5 – (21) – 12 (74) – – Newton LAB Srl – – – – – – – – ESA Software Spa – 1,603 – – 54 – 5 – Mondoesa Milano Srl – – – – – – – – Cesaco Srl – – – – – – – – Blogosfere S.r.l. – – – – 9 (585) – – Business Media web S.r.l. – – – – – – – – Total subsidiaries 1,149 21,420 (381) (4,162) 9,265 (19,900) 265 (14) Italia news S.r.l. – – (1,064) – – (2,229) – – Editorial Ecoprensa S.A. – – – – 36 (32) – – Diamante S.p.A. – – (77) – 1 (251) – – SoftLab S.r.l. – – (13) – – (48) – – Plus People S.r.l. – – – – – – – – Total associates – – (1,154) – 37 (2,560) – – Sipi S.r.l. – – (252) – 204 (606) – – Total other related parties – – (252) – 204 (606) – – Total related parties 1,150 21,420 (1,787) (4,162) 9,550 (23,066) 265 (14) Change vs. previous year 170 5,161 (79) 989 – – – – Total in Group consolidated financial statements 193,537 – (161,077) – 517,061 (531,812) 3,046 (596) Total in parent’s separate financial statements 149,408 21,420 (140,244) (4,162) 420,807 (432,482) 3,199 (472) % impact on parent’s separate financial statements 0.8% 100.0% 1.3% 100.0% 2.3% 5.3% 8.3% 3.0% Net cash used in Group operating activities (23,196) – (23,196) – (23,196) (23,196) – – Net cash used in parent’s operating activities (26,730) – (26,730) – (26,730) (26,730) – – % impact on net cash from (used in) parent’s operating activities –4.3% – 6.7% – –35.7% 86.3% – – Net cash used in Group financing activities – (9,612) – (9,612) – – (9,612) (9,612) Net cash used in parent’s financing activities – (8,525) – (8,525) – – (8,525) (8,525) % impact on cash from (used in) parent’s financing activities – –251.3% – 48.8% – – –3.1% 0.2% % impact on parent’s equity 0.4% 6.6% –0.6% –1.3% – – – – % impact on parent’s profit (loss) – – – – –20.6% 49.7% –0.6% 0.0%
186 Gruppo 24 ORE
2009 annual financial report
13.2 Subsequent events
The Board of Directors of Il Sole 24 ORE S.p.A. meeting on 1 February 2010 approved the project for merger of the wholly owned subsidiary Il Sole 24 ORE Business Media S.r.l. into the parent.
The purpose of this operation is to simplify the current chain of control underI l Sole 24 ORE S.p.A., in accordance with the structural cost containment plan adopted by the company. Final approval for the merger, which will be retroactively effective to 1 January 2010 for legal, accounting and tax purposes, will take place in May 2010.
In January, the Group disposed of its equity investment in the company Blogosfere S.r.l., equal to 80% of the quota capital, for a total price of € 1.6 mn.
On 12 March 2010, the Board of Directors of Il Sole 24 ORE S.p.A. resolved to appoint Donatella Treu as Chief Executive Officer, granting her the authority associated with that position.
13.3 dISClosure pursuant to CONSOB Regulation no. 11971, as amended
Compensation
Pursuant to Article 78(1) of CONSOB Regulation no. 11971, implementing Italian Legislative Decree 58/1998 (the Consolidated Law on Finance), below is a summary of the compensation paid to members of the Board of Directors and the Board of Statutory Auditors, to general managers, and to key managers, for both the parent and its subsidiaries. For key managers, compensation is indicated as an aggregate figure.
187 Gruppo 24 ORE
2009 annual financial report
COMPENSATION 2009
last name, first name office held period for which end of office fees for bonuses other office was held office and other compensation incentives from to (amounts in € 000) Shareholders’ meeting for approval Cerutti Giancarlo Chairman 1/1/2009 31/12/2009 30.0 – – of 2009 financial statements Chief Executive Shareholders’ meeting for approval Calabi Claudio 1/1/2009 14/12/2009 – – 944.4 Officer (1) of 2009 financial statements Shareholders’ meeting for approval Abete Luigi Director 1/1/2009 31/12/2009 25.0 – – of 2009 financial statements Shareholders’ meeting for approval Beretta Maurizio Director (2) 1/1/2009 31/12/2009 2.3 – – of 2009 financial statements Shareholders’ meeting for approval Bracco Diana Director (3) 1/1/2009 31/12/2009 30.0 – – of 2009 financial statements Shareholders’ meeting for approval De Bartolomeo Nicola Director 1/1/2009 31/12/2009 25.0 – – of 2009 financial statements Shareholders’ meeting for approval Favrin Antonio Director 1/1/2009 31/12/2009 25.0 – – of 2009 financial statements Shareholders’ meeting for approval Galli Giampaolo Director 20/3/2009 31/12/2009 19.7 – – of 2009 financial statements Shareholders’ meeting for approval Lamberti Paolo Director 1/1/2009 31/12/2009 25.0 – – of 2009 financial statements Shareholders’ meeting for approval Lettieri Giovanni Director 1/1/2009 31/12/2009 25.0 – – of 2009 financial statements Shareholders’ meeting for approval Maccaferri Gaetano Director 1/1/2009 31/12/2009 25.0 – – of 2009 financial statements Shareholders’ meeting for approval Profumo Francesco Director (3)(4) 1/1/2009 31/12/2009 30.0 – – of 2009 financial statements Shareholders’ meeting for approval Salomoni Marco Director (3)(4) 1/1/2009 31/12/2009 30.0 – – of 2009 financial statements Shareholders’ meeting for approval Tacconi Luca Director 1/1/2009 31/12/2009 25.0 – – of 2009 financial statements Shareholders’ meeting for approval Vago Marino Director (4) 1/1/2009 31/12/2009 30.0 – – of 2009 financial statements Shareholders’ meeting for approval Weigmann Marco Director 1/1/2009 31/12/2009 25.0 – – of 2009 financial statements
Chairman, Board of Shareholders’ meeting for approval Silvani Maria 1/1/2009 31/12/2009 65.2 – – Statutory Auditors of 2009 financial statements Standing statutory Shareholders’ meeting for approval Minuto Demetrio 1/1/2009 31/12/2009 43.6 – – auditor of 2009 financial statements Standing statutory Shareholders’ meeting for approval Usuelli Alberto 1/1/2009 31/12/2009 43.5 – – auditor of 2009 financial statements Key managers (5) 1/1/2009 31/12/2009 – 478.1 1,778.8
(1) claudio calabi resigned on 14/12/2009. (2) maurizio beretta resigned on 3 february 2009. (3) member of the compensation committee. (4) member of the internal control committee. (5) key managers include the managers of the business areas, the human resources director and the group cfo.
188 Gruppo 24 ORE
2009 annual financial report
Stock option
STOCK OPTIONS GRANTED TO DIRECTORS, GENERAL MANAGERS, AND KEY MANAGERS recipient office options held at start options granted during options exercised no. options held at held at of the year the year during the year options year end the time maturing no. of avg. vesting no. of avg. vesting no. of avg. avg. in the no. of avg. exercise options strike period options strike period options strike market year options strike period price (mm/yy) price (mm/yy) price price price when exercised Key managers (1) – – – 990,000 5.623 1/11-6/12 – – – – 990,000 5.623 1/11-6/12
(1) key managers include the managers of the business areas, the human resources director and the group cfo.
Following departure of several beneficiaries from the Group, including the CEO Claudio Calabi, at 31 December 2009, there were 1,170,000 granted and exercisable options.
Exercise of the options is subject to the condition precedent that Group GOP (gross operating profit) for 2008-2009-2010 equal or exceed the sum of the budgeted amounts for Group consolidated GOP in those financial years as approved by the Board of Directors on 30 October 2007. The target will be met even if the sum of the final 2008-2009-2010 OPG is 3% less than the aforementioned sum of budget targets.
Costs connected with these options have not been recognized in these financial statements because, given the current economic crisis and changing outlook, the business plan used to establish the aforementioned GOP targets is no longer relevant.
Stock granting plan for employees
On 30 October 2007, the Board of Directors and the shareholders approved a plan for the granting of free special-category shares of Il Sole 24 ORE S.p.A. open to all employees of the parent and of Nuova Radio S.p.A. for the years 2007, 2008, 2009 and 2010.
The shares are granted to all employees who, on the last day of the second month prior to the month when the shares are actually granted (the “grant date”), have an indefinite-term or fixed-term employment relationship with Il Sole 24 ORE S.p.A. or Nuova Radio S.p.A.
On 15 December 2009, employees were granted 916,783 special shares for the 2009 tranche, in addition to the 331,694 shares granted for 2007 and 742,649 special shares for 2008. The number of shares for the second tranche was based on the reference price calculated using the average closing
189 Gruppo 24 ORE
2009 annual financial report
prices of the special-category shares on the MTA for the thirty calendar days prior to the grant date (i.e. € 2.055 per share).
Therefore, as at 31 December 2009, a total of 1,991,126 special shares had been granted, free of charge, to employees.
Fees for services rendered by the auditing company and other entities within its network
The following table – prepared pursuant to Article 149(12) of CONSOB’s Rules for Issuers – shows 2009 fees for independent auditing services and for services other than independent auditing provided by the auditing company and by other entities within its network.
FEES TO THE INDEPENDENT AUDITORS
service provided service provider recipient fees for 2009 Auditing KPMG S.p.A. Il Sole 24 ORE S.p.A. 120 KPMG S.p.A. Subsidiaries 153 Certification services KPMG S.p.A. Il Sole 24 ORE S.p.A. – KPMG network Il Sole 24 ORE S.p.A. – Other services KPMG S.p.A. 15 Total 288
190 Gruppo 24 ORE
2009 annual financial report
13.4 dISClosures pursuant to CONSOB Resolution no. 15519 of 27 July 2006
Consolidated Statement of financial position pursuant to CONSOB resolution no. 15519 of 27 July 2006
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(in thousands of euro) note (*) f31/12/2009 of which f31/12/2008 of which related related parties parties ASSETS Non-current assets Property, plant and equipment (1) 90,523 – 96,363 – Goodwill (2) 72,867 – 80,021 – Intangible assets (3) 100,511 – 111,899 – Investments in associates and joint ventures (4) 3,098 – 4,652 – Available-for-sale financial assets (5) 2,903 – 3,386 – Other non-current financial assets (6) 19,227 – 18,650 – Other non-current assets (7) 773 – 994 – Deferred tax assets (8) 29,617 – 15,087 – Total 319,519 – 331,052 – Current assets Inventories (9) 15,433 – 19,988 – Trade receivables (10) 193,537 1 215,590 144 Other receivables (11) 12,517 – 4,646 – Other current assets (12) 6,847 – 6,774 – Cash and cash equivalents (13) 95,277 – 150,129 – Total 323,611 1 397,127 144 Cash and cash equivalents (14) 2,992 – – – TOTAL ASSETS 646,122 1 728,179 144
(*) section 11 of the explanatory notes (notes to the consolidated financial statements).
191 Gruppo 24 ORE
2009 annual financial report
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (cont.)
(in thousands of euro) note (*) f31/12/2009 of which 31/12/2008 of which related related parties parties EQUITY AND LIABILITIES Equity Total equity attributable to owners of the parent Share capital (15) 35,124 – 35,124 – Equity reserves (16) 180,316 – 180,316 – Revaluation reserves (17) 20,561 – 20,561 – Hedging and translation reserves (18) (333) – (104) – Other reserves (19) 34,961 – 32,278 – Retained earnings (20) 78,799 – 72,817 – Profit (loss) attributable to owners of the parent (21) (52,564) – 16,111 – Total 296,864 – 357,103 – Equity attributable to non-controlling interests Capital and reserves attributable to non-controlling interests – 1,497 – 1,487 – Profit (loss) attributable to non-controlling interests (21) (779) – (97) – Total equity 718 – 1,390 – Total 297,581 – 358,493 – Non-current liabilities Non-current financial liabilities (22) 10,886 – 14,140 – Employee benefit obligations (23) 38,786 – 42,270 – Deferred tax liabilities (8) 20,997 – 26,674 – Provisions for risks and charges (24) 19,209 – 23,696 – Other non-current liabilities (25) 34 – 1,398 – Total 89,912 – 108,178 – Current liabilities Bank overdrafts and loans - due within one year (26) 3,633 – 4,830 – Financial liabilities held for trading (27) 459 – 143 – Trade payables (28) 161,077 1,406 174,944 1,239 Other current liabilities (29) 8,792 – 9,404 – Other payables (30) 84,196 – 72,187 – Total 258,156 1,406 261,508 1,239 Liabilities held for sale (14) 472 – – – Total liabilities 348,540 1,406 369,686 1,239 TOTAL EQUITY AND LIABILITIES 646,122 1,406 728,179 1,239
(*) section 11 of the explanatory notes (notes to the consolidated financial statements).
192 Gruppo 24 ORE
2009 annual financial report
Consolidated income Statement pursuant to CONSOB Resolution no. 15519 of 27 July 2006
Consolidated INCOME STATEMENT
(in thousands of euro) note (*) f2009 of which of which f2008 of which of which related non- related non- parties recurring parties recurring operations operations 1) Continuing operations Revenue from newspapers, books and magazines (31) 155,443 44 – 191,380 – – Revenue from advertising (32) 187,559 241 – 244,631 271 – Other revenue (33) 159,700 – – 137,011 10 – Total revenue 502,702 285 – 573,022 281 – Other operating income (34) 14,359 – – 15,521 7 – Personnel expense (35) (203,207) – 20,248 (175,858) – – Change in inventories (9) (2,966) – – (1,414) – – Purchase of raw materials and consumables (36) (34,299) – – (40,337) – – Services (37) (243,605) (3,166) – (267,405) (1,576) – Use of third party assets (38) (33,443) – – (33,116) – – Other operating costs (39) (14,290) – – (10,518) – – Provisions (23) (2,286) – – (3,939) – – Provisions for bad debts (10) (7,650) – – (6,673) – – Gross operating profit (loss) (24,685) (2,881) 20,248 49,283 (1,288) – Amortization of intangible assets (3) (19,776) – – (15,226) – – Depreciation of property, plant and equipment (1) (11,565) – – (11,067) – –
Impairment losses on property, plant and equipment (11,716) and on intangible assets (40) – – (5,197) – – Capital gains/(losses) on disposal of non-current assets (41) 272 – – 8 – – Operating profit (loss) (67,470) (2,881) 20,248 17,801 (1,288) – Financial income (42) 3,046 – – 11,557 – – Financial expenses (42) (596) – – (1,349) – – Total financial income (expenses) 2,450 – – 10,208 – – Other income from investment assets and liabilities (43) (555) – – (2,480) – – Gains/(losses) from equity accounted investes (44) (1,168) (1,168) – (186) (186) – Profit (loss) before tax (66,743) (4,499) 20,248 25,343 (1,474) – Income taxes (45) 13,400 – – (9,329) – – Net profit (loss) from continuing operations (53,343) (4,499) 20,248 16,014 (1,474) – 2) Discontinued operations Profit (loss) for the year (53,343) (4,499) 20,248 16,014 (1,474) – Profit (loss) attributable to non-controlling – – interests (779) – (97) – Profit (loss) attributable to owners of the parent (52,564) (4,499) 20,248 16,111 (1,474) –
(*) section 11 of the explanatory notes (notes to the consolidated financial statements).
193 Gruppo 24 ORE
2009 annual financial report
Consolidated Statement of Cash Flows pursuant to CONSOB Resolution no. 15519 of 27 July 2006
CONSOLIDATED STATEMENT of cash flows
(in thousands of euro) note (*) f2009 of which f2008 of which related related parties parties A) Cash flows from ordinary activities Profit (loss) attributable to owners of the parent (21) (52,564) – 16,111 – Adjustments for: Dividends charged to income statement (6) – (21) – Depreciation of property, plant and equipment (1) 11,565 – 11,067 – Amortization of intangible assets (3) 19,776 – 15,226 – Impairment losses on other fixed assets and goodwill (40) 11,716 – 5,197 – Impairment losses on non-current assets (43)(44) 1,722 – 2,687 – (Gain) loss on sale of property, plant and equipment (41) (63) – 78 – (Gain) loss on sale of intangible assets (41) (184) – (73) – (Gain) loss on sale of business units (41) (25) – (13) – Increase (decrease) in provisions for risks and charges (24) (4,442) – (1,636) – Increase (decrease) in employee benefits (2,791) – (31) – Increase (decrease) in deferred tax assets/liabilities (8) (20,208) – (13,269) – Changes in consolidation scope of operating provisions (213) – – – Annual instalment of substitute tax 4,928 – 1,457 – Income statement effects of acquisitions – – (22) – Net financial income (42) (2,450) – (10,208) – Cash flows from ordinary activities prior to change – – in net working capital (33,239) 26,550 (Increase) decrease in inventories 2,966 – 1,414 – (Increase) decrease in trade receivables (22,006) 143 (24,877) (144) Increase (decrease) in trade payables (13,923) 167 (16,716) 1,239 Income taxes paid (16,265) – (13,729) – (Increase) decrease in other assets/liabilities 15,318 – 6,341 – Changes in consolidation scope of working capital (59) – – – Changes in net working capital 10,043 310 (47,567) 1,095 NET CASH used in operating ACTIVITIES (A) (23,196) 310 (21,017) 1,095
194 Gruppo 24 ORE
2009 annual financial report
CONSOLIDATED STATEMENT OF CASH FLOWS (CONT.)
(in thousands of euro) note (*) f2009 of which f2008 of which related related parties parties B) Cash flows from investing activities Dividends received 6 – 21 – Proceeds on sale of property, plant and equipment (1) 678 – 152 – Proceeds on sale of intangible assets (3) 186 – 188 – Proceeds on sale of business units 600 – 13 – Investments in property, plant and equipment (1) (6,556) – (13,422) – Investments in intangible assets (3) (10,587) – (12,864) – Other changes in property, plant and equipment (1) (79) – – – Other changes in intangible assets (3) (1,556) – – – Other increases in goodwill (2) (1,353) – (500) – Purchase of investments in associates – – (420) – Purchase of investments in subsidiaries (46) (936) – (45,424) – Other decreases (increases) in investments in associates (4) (62) – (104) – Other decreases (increases) in other non-current assets and liabilities (803) – (728) – Purchases of available-for-sale financial assets (5) (17) – (300) – Change in scope of investing activities 46 – – – NET CASH USED IN INVESTING ACTIVITIES (B) (20,433) – (73,388) – FREE CASH FLOW (A + B) (43,629) – (94,405) – C) Cash flows from financing activities Dividends paid (20) (10,249) – (13,911) – Registering (repayment) of long-term bank loans (3,114) – (3,133) – Change in other non-current financial assets (583) – (1,240) – Change in financial assets/liabilities held for trading (27) 316 – 812 – Net financial interest received (42) 2,450 – 10,208 – Change in equity attributable to non-controlling interests (779) – (97) – Other changes in reserves 2,453 – 8,492 – Changes in scope of financing activities (106) – – – NET CASH FROM (USED IN) FINANCING ACTIVITIES (C) (9,612) – 1,131 – NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (A+B+C) (53,241) – (93,274) – OPENING CASH AND CASH EQUIVALENTS 145,299 – 238,573 – CLOSING CASH AND CASH EQUIVALENTS (13) 92,058 – 145,299 – INCREASE (DECREASE) FOR THE YEAR (53,241) – (93,274) –
(*) section 11 of the explanatory notes (notes to the consolidated financial statements).
195 Gruppo 24 ORE
2009 annual financial report
13.5 Net financial position
The following table details the components of the net financial position:
NET FINANCIAL POSITION
(in thousands of euro) f31/12/2009 f31/12/2008 Cash and cash equivalents 95,277 150,129 Bank overdrafts and loans - due within one year (3,633) (4,830) Short-term net financial position 91,644 145,299 Non-current financial liabilities (10,886) (14,140) Non-current financial assets and fair value changes in financial hedging instruments 18,071 17,847 Medium/long-term net financial position 7,185 3,707 Net financial position 98,829 149,006
13.6 Employees
The average number of employees by contractual category was as follows:
AVERAGE HEADCOUNT OF SOLE 24ORE GROUP
average headcount e2009 e2008
number % number % Managers 111.7 5.0 112.2 5.5 Journalists 467.2 20.9 471.8 23.1 White Collars 1,496.2 67.1 1,291.9 63.4 Blue-collars 155.3 7.0 162.7 8.0 Total headcount 2,230.4 100.0 2,038.6 100.0
13.7 New accounting standards
It should be noted that the IASB and the IFRIC have approved a number of changes to the IFRSs currently in effect, and have also issued new IFRSs and new IFRIC interpretations. As the effective date of these standards and interpretations is deferred, they have not been adopted for the preparation of these financial statements.
The main changes relate to the following items: 1. IAS 24 Related Party Disclosures has been thoroughly revised. This revision was necessitated by the problems encountered in practical application of the standard, especially in those countries where
196 Gruppo 24 ORE
2009 annual financial report
the national government directly controls the bulk of economy activity. Two principal changes have been introduced to address these needs: • the definition of related party has been simplified and rendered more consistent; • partial exemption from the disclosure requirement was introduced for companies that are controlled or heavily influenced by the state, either directly or indirectly. Information that is costly to obtain and of inconsequential utility to the end user of the financial statements must be highlighted only if it refers to transactions that are material when considered individually or as a group.
The revised version of IAS 24 will be applicable beginning 1 January 2011 and has not yet been endorsed by the EU.
2. IAS 27 Consolidated and Separate Financial Statements, IAS 28 Investments in Associates, and IAS 31 Interests in Joint Ventures have been amended in accordance with the new version of IFRS 3 Business Combinations. The principal changes concern IAS 27, particularly with regard to the recognition of the following: • partial sales of investments in subsidiaries where control over the investee is maintained. Such transactions are to be recognized in equity, with no effect on the profit (loss) for the year; • partial sales of investments in subsidiaries where control over the investee is lost. Such sales, which are governed in detail, has effects on the income statement.F ollowing loss of a controlling interest, the investment is measured as an associate or non-controlling interest, depending on the influence being exercised; • purchase of additional interests in companies in which a controlling interest is already held. Such transactions are to be recognized in equity, with no effect on the profit (loss) for the year.
The revised versions ofIA S 27, IAS 28 and IAS 31, as approved in EC Regulation 494/2009, will be applicable for financial years beginning on or after 1 January 2010.
Introduction of the changes in regulation of the accounting of equity investments in subsidiaries envisaged in IAS 27 caused a change in the statement of changes in equity as set out in IAS 1. This change, approved with EC Regulation 494/2009, shall be applicable for financial years beginning on or after 1 January 2010;
3. IAS 32 Financial Instruments: Disclosure and Presentation was changed in 2009, in regard to the accounting of rights issued (i.e. bona fide rights, options and warrants) that are denominated in a currency other than the functional currency used by the entity. These issues of rights, which are currently represented as derivative liabilities, if they comply with the established conditions, must be recognised as equity instruments, regardless of the foreign currency in which the exercise price is
197 Gruppo 24 ORE
2009 annual financial report
denominated. This change, endorsed byEC Regulation 1293/2009, will be applicable for financial years beginning on or after 1 January 2011;
4. IAS 39, Financial Instruments: Recognition and Measurement, introduces a clarification on aspects concerning the recognition of hedging instruments. In particular, it clarifies that: • it is not possible for an inflation component of a fixed-rate loan in a fair-value hedge to be designated as a hedged element, because such component cannot be separately identified or reliably measured; • when an acquired option is designated, as a whole, as a hedging instrument on the change in cash flows or fair value of a hedged element above or below a given price or other variable, only the intrinsic value of said option, and not its time value, is to be a component of the planned transaction impacting on the income statement.
These changes, endorsed by EC Regulation 839/2009, will be applicable for financial years beginning on or after 1 January 2010;
5. IFRS 2 Share-based Payment was changed in 2009, on the basis of comments received in regard to specific details. Specifically, the case of a subsidiary of a group that acquires goods or services in transactions with share-based payment are analysed. In this case, regardless of who settles the payment – be it the subsidiary itself or the parent – and regardless of how the transaction is actually settled, be it in equity instruments or cash, the acquired goods and services must always be recognised on the separate financial statements of the subsidiary. These changes, which shall come into force on 1 January 2010 with retroactive effect, resulted in the voidance from that same date of IFRIC 8 – Scope of IFRS 2, and IFRIC 11 – Group and Treasury Share Transactions.
6. IFRS 3, Business Combinations, has been completely revised. The main changes relate to the following items: • the costs of acquisition; • the contingent conditions; • goodwill and non-controlling interests; • the previous relationships between the parties and the rights reacquired; • intangible assets; • business combinations taking place in multiple stages; • the scope of application (mutual entities and combinations without consideration or dual-listed shares are included); • transitory measures and the effective date, which is allowed, but not encouraged, only in the event of prospective application.
198 Gruppo 24 ORE
2009 annual financial report
The revised version of IFRS 3, endorsed by EC Regulation 495/2009, will be applicable for financial years beginning on or after 1 January 2010;
17. ifrS 9 Financial Instruments is the new international financial reporting standard issued on 12 November 2009, which completes the first phase of a three-step project leading to complete replacement of IAS 39 Financial Instruments: Recognition and Measurement. The first phase, which was completed with publication of this first document, was focused on the classification and measurement of financial assets. The second phase, focused on the methods for determining impairment of financial assets, and the third phase, focused on hedging transactions, should be completed in 2010. IFRS 9 addresses the need to improve the ability of investors and other users of financial disclosures to comprehend the mechanisms used to account for financial assets, reducing their complexity. Specifically, the new standard uses a single approach to determine whether a financial asset must be measured at its amortised cost or fair value, thereby replacing many different rules set out in IAS 39. The basic concept is based on the business model used by the company to manage its financial instruments and determine the characteristics of related contractual cash flows. IFRS 9 does not address the classification and measurement of financial liabilities, insofar as these topics will be addressed by the IASB during 2010. The mandatory date by which IFRS 9 must come into force is 1 January 2013. The EU Committee in charge of approving IFRSs has given notice that it interrupted the process of endorsement of IFRS 9, for the purpose of approval with the EC Regulation, on the same day it was published by IASB. This choice was justified by the Commissioner for Internal Market and Services, who pointed out that IFRS 9 is only the first step in the revision of IAS 39. The Commission has decided to examine the adoption of IFRS 9 once the other two phases are completed, which is expected sometime in 2010, for thorough revision and replacement of IAS 39.
18. ifric 12, Service Concession Arrangements, provides guidelines on certain valuation and measurement issues relating to the recognition of service concession contracts between public and private entities. IFRIC 12, endorsed by EC Regulation 254/2009, will be applicable beginning 1 January 2010;
19. ifric 14, IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and Their Interaction, endorsed by EC Regulation 1263/2008 and came into force on 1 January 2009, was modified during 2009. In particular, it was specified that if minimum contribution requirements must be satisfied, and these contributions are paid in advance, the prepayment must be treated as an asset. The changes to IFRIC 14 must be adopted by 1 January 2011;
10. ifric 15, Agreements for the Construction of Real Estate, illustrates the issues related to the
199 Gruppo 24 ORE
2009 annual financial report
recognition of the sale of real estate, e.g. apartments or houses, by construction companies before construction has been completed. The interpretation provides specific instructions for determining whether the main object of the construction agreement is for the provision of a finished product – in which case IAS 18 is to be applied – or for the provision of a project which the buyer has helped to prepare – in which case IAS 11 is to be applied. IFRIC 15, endorsed by EC Regulation 636/2009, will be retroactively applicable beginning 1 January 2010;
11. ifric 16 Hedges of a Net Investment in a Foreign Operation clarifies three sets of problems associated with the hedging of a net investment in a foreign operation: whether the presentation currency of the parent represents an exposure that must be hedged, who must hold the hedging instruments within the group and how the amounts to be restated from equity to income must be determined if the net investment in a foreign operation is eliminated. IFRIC 16, endorsed by EC Regulation 460/2009, will be prospectively or retroactively applicable beginning 1 January 2010, as preferred by the entity;
12. ifric 17, Distributions of Not-cash assets to Owners, illustrates the methods and timing with which non-cash dividends are to be distributed to owners. In particular, it clarifies that the difference between the dividend paid and the carrying amount of the non-cash asset distributed must be recognized on the income statement. Additional information is to be provided in the event that the non-cash asset, which is held for distribution to owners, is equivalent to discontinued operations. IFRIC 17, endorsed by EC Regulation 1142/2009, will be prospectively applicable beginning 1 January 2010;
13. ifric 18 Transfers of Assets from Customers addresses the issue of accounting for agreements whereby an entity receives from a customer an item of property, plant and equipment to be used to hook up the customer with a network or provide him with continuous access to the supply of goods or services. First of all, it must be determined whether the item received through the transfer satisfies the definition of asset set out in the systematic framework. If it does, the component that is covered by the definition of asset must be recognised by determining its fair value cost at the initial recognition date, and the resulting book contra entry must be recognised in compliance with IAS 18 Revenues. IFRIC 18, endorsed by EC Regulation 1164/2009, will be prospectively applicable beginning 1 January 2010;
14. ifric 19 Extinguishing Financial Liabilities with Equity Instruments illustrates the cases where, as part of renegotiation of the terms of a contract whose object is a financial liability, the creditor accepts the shares or other equity instruments of the debtor company in full or partial discharge of the financial liability. In particular, it clarifies that the difference between the carrying amount
200 Gruppo 24 ORE
2009 annual financial report
of the extinguished financial liability and the initial value of the issued equity instruments is recognised in the profit (loss) for the year of the debtor company. IFRIC 19 will be applicable from 1 January 2011. IFRIC has not yet been endorsed by the European Commission.
In 2008, the IASB began another series of revisions of the existing IFRSs, the main goal of which is to clarify and expand upon a number of concepts which, in the original versions, appear not to have been sufficiently explained.
The first document published within the scope of this process, i.e. Improvements to International Financial Reporting Standards, was released on 22 May 2008 and includes 35 changes to the IFRSs, divided into two sections: • Part I – amendments that result in accounting changes for presentation, recognition or measurement purposes; • Part II – amendments that are terminology or editorial changes only.
The principal changes included in this first document, endorsed by EC Regulation 70/2009, came into force on 1 January 2009, with the exception of the changes regarding IFRS 5 Non-current Assets held for Sale and Discontinued Operations. This change clarifies that assets and liabilities of a subsidiary should be classified as held for sale if the parent is committed to a plan involving loss of control of the subsidiary, regardless of whether the entity will retain a non-controlling interest after the sale. This change, endorsed by EC Regulation 70/2009, will be prospectively applicable from 1 January 2010.
The second document, which was prepared as part of the process entitled Improvements to International Financial Reporting Standards, was issued on 16 April 2009 and consists of 16 changes to 12 IFRSs. This second collection of changes, issued as part of the annual IFRSs revision process, focuses primarily on non-urgent details. There are two changes that will have a material impact on measurement and presentation practices. These affect:
‒ iaS 1 Presentation of Financial Statements. A liability that may be extinguished through issuance of equity instruments upon request by the counterparty (conversion option) must no longer be classified as a current liability, on condition that the company has the unconditional right to defer settlement in cash or other assets for at least 12 months after the reference accounting period; ‒ IAS 17 Leasing. Leases of land must be classified as finance or operating leases in accordance with the general rules set out in IAS 17. The existing specific rule, which envisaged recognition of leases of land with an indefinite life as operating leases, is inconsistent with the basic principle underlying IAS 17. This change must be applied retroactively, provided that the necessary information is available.
201 Gruppo 24 ORE
2009 annual financial report
The modifications included in this second document will come into force on 1 January 2010, with one exception. This regards a modification to IAS 39 Financial Instruments: Recognition and Measurement, addressing confirmation of the rule against recognition of intercompany hedges on the separate financial statements. This change was issued effective 1 January 2009, but it has not yet been endorsed by any EC Regulation.
The Group has begun to assess the impact resulting from introduction of the new standards and interpretations that must be applied beginning 1 January 2010. On the basis of initial assessments, it does not appear that they are significant.
Milan, 12 March 2010
Chairman of the Board of Directors GIANCARLO CERUTTI
202 Gruppo 24 ORE
2009 annual financial report
Certification of consolidated financial statements pursuant to Article 81-ter of CONSOB Regulation no. 11971 of 14 May 1999, as amended
1. The undersigned Giancarlo Cerutti, in his capacity as Chairman of the Board of Directors, and Giuseppe Crea, in his capacity as Corporate Financial Reporting Manager of Il Sole 24 Ore S.p.A., hereby certify, pursuant to, inter alia, the provisions of Article 154-bis, paragraphs 3 and 4, of Italian Legislative Decree no. 58 of 24 February 1998 [the Italian Consolidated Law on Finance]: – the adequacy in relation to the entity’s characteristics; and • the effective application of administrative and accounting procedures for preparation of the consolidated financial statements during 2009. 2. The adequacy of administrative and accounting procedures used to prepare the consolidated financial statements as at and for the year ended 31 December 2009 has been assessed based on the methodological rules defined by Il Sole 24 Ore S.p.A. and consistent with the “Internal Control – Integrated Framework” model issued by the Committee of Sponsoring Organizations of the Treadway Commission, which is a benchmark framework for the internal control system generally accepted internationally. 3. They further certify that: 3.1 the consolidated financial statements: a) have been drafted in compliance with the applicable International Financial Reporting Standards recognised in the European Union pursuant to EC Regulation 1606/2002 of the European Parliament and Council of 19 July 2002; b) are consistent with the corporate books and accounting records; c) give a fair and true view of the financial position, and results of operations of the issuer and of the companies included in the scope of consolidation. 3.2 The management report includes a reliable analysis of the performance, results of operations and standing of the issuer and of the companies included in the scope of consolidation, as well as a description of the principal risks and uncertainties to which they are exposed.
Milan, 12 March 2010
chairman of the Board of Directors Corporate financial reporting manager
Giancarlo cerutti Giuseppe CREA
203 Gruppo 24 ORE Report2009 annual financial report of the Independent Auditor on the consolidated financial statements at 31 Dece204 mber 2009 Gruppo 24 ORE Report of t2009h annual financial report e Independent
Auditor on tReporht of thee Independent Auditor on the consolidated consolidatefinandcial statements at financial 31 December 2009 statements at 31 December 2009205 Gruppo 24 ORE
2009 annual financial report
206 Gruppo 24 ORE
2009 annual financial report
207 Gruppo 24 ORE Report2009 annual financial report of the Board of Statutory Auditors on the consolidated financial statements as at 31 Dece208 mber 2009 Gruppo 24 ORE Report of th2009 annual financiale report Board of Statutory Report of the Board of Auditors on tStatuthory e Auditors on the consolidated financial consolidatedstatements as at financial 31 December 2009 statements as at 31 December 2009209 Gruppo 24 ORE
2009 annual financial report
210 Gruppo 24 ORE
2009 annual financial report
24 ORE GROUP
REPORT OF THE BOARD OF STATUTORY AUDITORS TO THE SHAREHOLDERS ON THE CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2009
To the Shareholders, The consolidated financial statements of Il Sole 24 Ore S.p.A. for the 2009 financial year, which include the Consolidated Statement of Financial Position, Consolidated Statement of Income, Consolidated Statement of Changes in Equity, Consolidated Statement of Cash Flows and Notes to the Consolidated Financial Statements and which have been presented to you by the Board of Directors, show a net loss of 52.564 million and equity attributable to owners of the parent of 296.865 million, net of the loss for the year. They were prepared in accordance with the International Financial Reporting Standards (IFRSs) and the reference standards issued pursuant to EU Regulation 1126/2008. The accompanying report sufficiently describes the consolidated financial position and operating results of Il Sole 24 Ore S.p.A and of its subsidiaries for 2009 and developments for the Group subsequent to the reporting date, while also providing a breakdown of the significant figures for the main business segments and of consolidated results. In our view, this report is consistent with the consolidated financial statements. Determination of the scope of consolidation and selection of the principles for consolidation of shareholdings and of the procedures adopted for such purpose comply with the IFRSs. Therefore, the structure of the consolidated financial statements is deemed to be technically correct and, on the whole, complies with relevant laws and regulations. In addition to the parent, the scope of consolidation includes the 16 subsidiaries consolidated on a line-by-line basis and 13 associates consolidated according to the equity method.
211 Gruppo 24 ORE
2009 annual financial report
The audits conducted by KPMG S.p.A., the independent auditor, have also verified that the figures on the 2009 consolidated financial statements correspond to the account balances of the parent and the annual financial statements of the subsidiaries, while also taking account of the information provided by these companies. These financial statements have been audited by the independent auditor as part of the procedures followed in consolidating the figures of the shareholdings, so as to enable the auditing of the consolidated financial statements. Verification by the Board of Statutory Auditors did not extend to the financial statements of the consolidated companies. On 24 March 2010, KPMG S.p.A., the auditing firm hired to audit the consolidated financial statements of Il Sole 24 Ore S.p.A., issued its report in which the company states that, in their opinion, the consolidated financial statements of the 24 ORE Group as 31 December 2009 comply with the laws and regulations governing their preparation.
Milan, 25 March 2010
THE STANDING STATUTORY AUDITORS
212 Gruppo 24 ORE
2009 annual financial report
213 Gruppo 24 ORE SEPARATE2009 annual financial report FINANCIAL STATEMENTS OF the parent IL SOLE 24 ORE S.P.A. AS AT AND FOR THE YEAR ENDED 31 DECE214 MBER 2009 Gruppo 24 ORE SEPARATE 2009 annual financial report FINANCIAL STATEMENTS OF SEPARATE FINANCIAL the parent STATEMENTS OF the parent IL SOLE 24 ORE S.P.A. AS AT AND FOR IL SOLE 24 ORE S.THE YPEAR. ENDAED . AS AT AND FOR 31 DECEMBER 2009 THE YEAR ENDED 31 DECEMBER 2009215 Gruppo 24 ORE
2009 annual financial report
separate Financial statements
Statement of financial position
STATEMENT OF FINANCIAL POSITION
(in thousands of euro) note (*) f31/12/2009 f31/12/2008 ASSETS Non-current assets Property, plant and equipment (1) 86,125 91,508 Goodwill (2) 513 513 Intangible assets (3) 18,915 16,407 Investments in associates and joint ventures (4) 1,320 2,091 Available-for-sale financial assets (5) 2,875 3,375 Other non-current financial assets (6) 19,168 18,577 Other non-current assets (7) 150,668 167,431 Deferred tax assets (8) 18,092 9,935 Total 297,676 309,837 Current assets Inventories (9) 10,770 12,612 Trade receivables (10) 149,408 159,252 Other receivables (11) 8,291 1,670 Other current financial assets (12) 21,420 16,258 Other current assets (13) 5,459 5,611 Cash and cash equivalents (14) 87,383 143,205 Total 282,731 338,608 Non-current assets held for sale (15) 15,591 – Total assets 581,998 648,445
(*) section 8 of the explanatory notes (notes to the financial statements). as required by consob resolution no. 15519 of 27 july 2006, the effects of related-party transactions on the statement of financial position, income statement, and statement of cash flows of the parent il sole 24 ore s.p.a. are reported in section 9.5 and detailed in section 9.2.
216 Gruppo 24 ORE
2009 annual financial report
STATEMENT OF FINANCIAL POSITION (CONT.)
(in thousands of euro) note (*) f31/12/2009 f31/12/2008 EQUITY AND LIABILITIES Equity (16) Share capital (17) 35,124 35,124 Equity reserves (18) 180,316 180,316 Revaluation reserves (19) 20,561 20,561 Hedging and translation reserves (20) (333) (104) Other reserves (21) 35,358 32,860 Retained earnings (22) 99,252 88,460 Profit (Loss) for the year (23) (46,436) 20,922 Total equity 323,869 378,139 Non-current liabilities Non-current financial liabilities (24) 10,144 13,287 Employee benefit obligations (25) 32,041 34,522 Deferred tax liabilities (8) 740 1,547 Provisions for risks and charges (26) 13,717 16,475 Other non-current liabilities (27) 34 34 Total 56,676 65,865 Current liabilities Bank overdrafts and loans - due within one year (28) 3,143 3,085 Other current financial liabilities (29) 4,162 5,151 Financial liabilities held for trading (30) 459 143 Trade payables (31) 140,244 149,285 Other current liabilities (32) 4,398 4,852 Other payables (33) 49,047 41,925 Total 201,453 204,441 Liabilities held for sale – – Total liabilities 258,129 270,306 TOTAL EQUITY AND LIABILITIES 581,998 648,445
(*) section 8 of the explanatory notes (notes to the financial statements). as required by consob resolution no. 15519 of 27 july 2006, the effects of related-party transactions on the statement of financial position, income statement, and statement of cash flows of the parent il sole 24 ore s.p.a. are reported in section 9.5 and detailed in section 9.2.
217 Gruppo 24 ORE
2009 annual financial report
Separate income statement
INCOME STATEMENT OF THE PARENT COMPANY
(in thousands of euro) note (*) a2009 a2008 1) Continuing operations Revenue from newspapers, books and magazines (34) 146,642 180,218 Revenue from advertising (35) 161,554 208,968 Other revenue (36) 99,007 97,009 Total revenue 407,203 486,196 Other operating income (37) 13,604 15,051 Personnel expense (38) (153,756) (141,315) Change in inventories (9) (1,842) (1,268) Purchase of raw materials and consumables (39) (28,596) (36,802) Services (40) (213,046) (237,087) Use of third party assets (41) (25,680) (27,448) Other operating costs (42) (9,561) (7,632) Provisions (26) (2,396) (2,572) Provisions for bad debts (10) (5,623) (5,358) Gross operating profit (loss) (19,693) 41,765 Amortization of intangible assets (3) (3,369) (2,253) Depreciation of property, plant and equipment (1) (10,005) (9,652) Impairment losses on property, plant and equipment and on intangible assets (1) – (1,197) Capital gains/(losses) on disposal of non-current assets (43) 225 2 Operating profit (loss) (32,842) 28,665 Financial income (44) 3,199 12,034 Financial expenses (44) (472) (1,394) Total financial income 2,727 10,640 Other income (expenses) from investment assets and liabilities (45) (20,642) (7,123) Gains (losses) from equity-accounted investees – (104) Profit (loss) before tax (50,757) 32,078 Income taxes (46) 4,322 (11,156) Net profit (loss) from continuing operations (46,435) 20,922 2) Discontinued operations Profit from discontinued operations – – Profit (loss) for the year (46,435) 20,922
(*) section 8 of the explanatory notes (notes to the financial statements). as required by consob resolution no. 15519 of 27 july 2006, the effects of related-party transactions on the statement of financial position, income statement, and statement of cash flows of the parent il sole 24 ore s.p.a. are reported in section 9.5 and detailed in section 9.2. income components stemming from non-recurring events or transactions, or from transactions or events that do not recur frequently, are also reported in section 9.5.
218 Gruppo 24 ORE
2009 annual financial report
statement of Comprehensive income
STATEMENT OF COMPREHENSIVE INCOME
(in thousands of euro) note (*) a2009 a2008 Profit (loss) for the year (46,435) 20,922 Other components of comprehensive income Effective portion of changes in fair value of cash flow hedges (316) (812) Actuarial gains (losses) of defined-benefit plans 885 (730) Fair value of Stock Granting 1.884 1,896 Taxes on other components of comprehensive income (157) 424 Other components of comprehensive income after tax 2,296 778 Total comprehensive income (expense) for the year (44,139) 21,700
(*) section 8 of the explanatory notes (notes to the financial statements). as required by consob resolution no. 15519 of 27 july 2006, the effects of related-party transactions on the statement of financial position, income statement, and statement of cash flows of the parent il sole 24 ore s.p.a. are reported in section 9.5 and detailed in section 9.2. income components stemming from non-recurring events or transactions, or from transactions or events that do not recur frequently, are also reported in section 9.5.
219 Gruppo 24 ORE
2009 annual financial report
statement OF cash flows
STATEMENT OF CASH FLOWS
(in thousands of euro) note (*) a2009 a2008 A) CASH FLOWS FROM ORDINARY ACTIVITIES Profit (Loss) for the year (23) (46,436) 20,922 Adjustments for: Dividends charged to income statement (45) (128) – Depreciation of property, plant and equipment (1) 10,005 9,652 Amortization of other intangible assets (3) 3,369 2,253 Impairment losses on other intangible assets and goodwill – 1,197 Impairment losses on non-current assets (45) 20,770 7,227 (Gain) loss on sale of property, plant and equipment (43) (225) (2) Increase (decrease) in provisions for risks and charges (26) (2,758) (1,612) Increase (decrease) in employee benefits (25) (2,481) (90) Increase (decrease) in deferred tax assets/liabilities (8) (8,964) (8,843) Annual instalment of substitute tax 1,899 1,424 Net financial income (44) (2,727) (10,640) Cash flows from ordinary activities prior to change in net working capital (27,676) 21,488 (Increase) decrease in inventories (9) 1,842 1,268 (Increase) decrease in trade receivables (10) 9,844 (17,908) Increase (decrease) in trade payables (31) (9,041) (21,613) Income taxes paid (9,669) (10,577) (Increase) decrease in other assets/liabilities 7,970 2,940 Changes in net working capital 946 (45,891) NET CASH USED IN operating ACTIVITIES (A) (26,730) (24,402)
220 Gruppo 24 ORE
2009 annual financial report
STATEMENT OF CASH FLOWS (CONT.)
(in thousands of euro) note (*) a2009 a2008 B) CASH FLOWS FROM INVESTING ACTIVITIES Dividends received 178 – Proceeds on sale of property, plant and equipment (1)(43) 555 63 Proceeds on sale of intangible assets – 103 Investments in property, plant and equipment (1) (4,953) (12,374) Investments in intangible assets (3) (5,877) (8,244) Other changes in property, plant and equipment 0 – Purchase of investments in associates – (20) Purchase of investments in subsidiaries (7) (1,600) (44,868) Other decreases (increases) in investments in associates – (104) Other decreases (increases) in other non-current assets and liabilities (1,185) (7,318) Purchases of available-for-sale financial assets 0 (302) Decreases (increases) in assets and liabilities held for sale (15) (1,591) – Net CASH USED IN INVESTING ACTIVITIES (B) (14,473) (73,064) free cash flow (A + B) (41,203) (97,465) C) CASH FLOWS FROM FINANCING ACTIVITIES Dividends paid (22) (10,130) (13,911) Registering (repayment) of long-term bank loans (24) (3,143) (3,085) Change in other non-current financial assets (6) (592) (1,248) Change in financial assets/liabilities held for trading (30) 316 812 Net financial interest received (44) 2,727 10,640 Other changes in reserves (20)(21) 2,297 8,574 NET CASH FROM (USED IN) FINANCING ACTIVITIES (C) (8,525) 1,782 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (A+B+C) (49,728) (95,682) OPENING CASH AND CASH EQUIVALENTS 151,227 246,910 CLOSING CASH AND CASH EQUIVALENTS 101,499 151,227 INCREASE (DECREASE) OF THE YEAR (49,728) (95,682)
(*) section 8 of the explanatory notes (notes to the financial statements). as required by consob resolution no. 15519 of 27 july 2006, the effects of related-party transactions on the statement of financial position, income statement, and statement of cash flows of the parent il sole 24 ore s.p.a. are reported in section 9.5 and detailed in section 9.2.
221 Gruppo 24 ORE
2009 annual financial report
Statement of changes in equity
Statement of changes in equity
(in thousands of euro) share equity revaluations hedging and other retained profit equity capital reserves reserves translation reserves earnings (loss) for reserves the year Balance at 1 January 2008 35,124 180,316 20,561 485 29,669 58,980 37,419 362,554 Income/expenses recognized directly in equity Reserve for post-employment benefits forIFR S adjustment – – – – (730) – – (730) Fair value changes in hedging instruments – – – (812) – – – (812) Fair value of Stock Granting – – – – 1,896 – – 1,896 Taxes on expenses and income recognized in equity – – – 223 201 – – 424 Income/expenses recognized directly in – – – (589) 1,367 – – 778 equity Profit for the year – – – – – – 20,922 20,922 Total income/expenses allocated in the year – – – (589) 1,367 – 20,922 21,700 Allocation of 2007 profit – – – – – 37,419 (37,419) – Distribution of dividends/reserves – – – – – (13,911) – (13,911) IPO: Gross proceeds of greenshoe – – – – – 7,796 – 7,796 Transfers between reserves – – – – 1,824 (1,824) – – Balance at 31 December 2008 35,124 180,316 20,561 (104) 32,860 88,460 20,922 378,139 Income/expenses recognized directly in equity Reserve for post-employment benefits forIFR S adjustment – – – – 885 – – 885 Fair value changes in hedging instruments – – – (316) – – – (316) Fair value of Stock Granting – – – – 1,884 – – 1,884 Taxes on expenses and income recognized in equity – – – 87 (244) – – (157) Income/expenses recognized directly in equity – – – (229) 2,525 – – 2,296 Loss for the year – – – – – – (46,436) (46,436) Total income/expenses allocated in the year – – – (229) 2,525 – (46,436) (44,140) Allocation of 2008 profit – – – – – 20,922 (20,922) – Distribution of dividends/reserves – – – – – (10,130) – (10,130) Transfers between reserves – – – – – – – – Balance at 31 December 2009 35,124 180,316 20,561 (333) 35,385 99,252 (46,436) 323,869
(*) section 8 of the explanatory notes (notes to the financial statements).
Milan, 12 March 2010
Chairman of the Board of Directors GIANCARLO CERUTTI
222 Gruppo 24 ORE
2009 annual financial report
223 Gruppo 24 ORE
2009 annual financial report
EXPLANATORY NOTES
1. General information
Il Sole 24 ORE S.p.A., parent of the 24 ORE Group, is both a holding company that owns controlling interests in Group companies, and an operating company on the business and financial news market that targets professionals, businesses and financial institutions.
The registered and administrative offices Iof l Sole 24 ORE S.p.A. are located in Milan (Italy) at Via Monte Rosa 91. Confindustria (theC onfederation of Italian Industry) controls the parent.
The share capital of the parent totals € 35,124 thousand, 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; ‒ 38,438,520 special-class shares listed on the Milan Bourse screen-based equity market (MTA – Mercato Telematico Azionario) of Borsa Italiana S.p.A. in the Standard segment (Class 1), accounting for 28.8% of all shares; ‒ 4,894,693 special-class treasury shares, accounting for 3.7% of all shares.
The company’s by-laws contain rules based on which the controlling ownership of Il Sole 24 ORE S.p.A. cannot be changed. More specifically, underA rticle 8, shareholders may not own a number of special-category shares exceeding one-fiftieth of share capital plus one share, with the exception of the Company itself, which may own them as treasury shares.
The stock’s identification codes are:
STOCK IDENTIFICATION CODES Name Il Sole 24 ORE S.p.A. ISIN IT00004269723 Alphanumerical code S24.MI Reuters code S24.MI Bloomberg code S24 IM
On 12 March 2010, the Board of Directors approved the financial statements of Il Sole 24 ORE S.p.A. as at and for the financial year FY( ) ended 31 December 2009 and also authorized their publication.
224 Gruppo 24 ORE
2009 annual financial report
2. Format, content, and International financial reporting Standards
These separate financial statements have been prepared in compliance with the International Accounting Standards (IASs) and International Financial Reporting Standards (IFRSs), supplemented by related interpretations of the Standing Interpretations Committee (SIC) and International Financial Reporting Interpretations Committee (IFRIC), as approved and published by the International Accounting Standards Board (IASB).
Both the IFRSs and the relevant Interpretations have been endorsed by Regulation (EC) 1126/2008 of the European Commission, which, so as to simplify EC legislation and improve its clarity and transparency, unifies the principles contained in the previously applicableR egulation (EC) 1725/2003 as amended. Regulation (EC) 1126/2008, which, effective as at 2 December 2008, replacesR egulation (EC) 1725/2003 of the European Commission (as amended), adopts the IFRSs in compliance with Regulation (EC) 1606/2002 of the European Parliament and the Council.
The International Financial Reporting Standards (referred to hereinafter as “IFRSs”) applied to financial statements as at and for the year ended 31 December 2009 and the comparative figures as at and for the year ended 31 December 2008 are those endorsed by the European Commission as at the reporting date of these financial statements.
The separate financial statements have been approved by the Board of Directors.
It should also be noted that the currency used to present these separate financial statements is the euro and that amounts are expressed in thousands of euro (€‘000).
3. Structure of financial statements
Il Sole 24 ORE S.p.A. has prepared the statement of financial position sheet by classifying current and non-current assets and liabilities separately.
Each asset and liability item that includes amounts falling due both within and beyond 12 months is analyzed so as to show the amount that is expected to be recovered or paid beyond 12 months.
All of the details needed for full and accurate disclosure are provided in the notes in the form of additional sub-classifications of the items shown on the statement of financial position.
225 Gruppo 24 ORE
2009 annual financial report
In compliance with the new version of IAS 1, in effect from 1 January 2009, all revenue and cost items are recognised on two statements: ‒ the Separate income statement, which shows the components of profit (loss) for the year, and its final line item is definedProfit (Loss) for the year; ‒ a second statement, entitled Statement of Comprehensive income, which begins with the profit (loss) for the year reported in the separate income statement and illustrates the items of the statement Other components of comprehensive income. The final line on the Statement of Comprehensive income is defined asTotal comprehensive income.
The separate income statement shows all income and cost items, excluding the components that are not counted towards the profit (loss) for the current year pursuant to specificIFR S rules.
The components that are recognised separately from the profit (loss) for the current year pursuant to specific IFRS provisions are presented in the statement of other components of comprehensive income. These components reflect the change in the reserve for: ‒ post-employment benefits TFR( ) for the actuarial gains and losses resulting from defined benefit plans; ‒ gains and losses resulting from restatement of available-for-sale financial assets; ‒ the effective part of gains and losses on cash flow hedging instruments.
The items of the statement of Other components of comprehensive income are presented net of the associated tax effects.
The amounts previously recognised on the statement of Other components of comprehensive income that are reclassified during the year as items of the profit (loss) for the year shown on the separate income statement are defined as reclassification adjustments. These adjustments are recognised under the appropriate item on the statement of other components of comprehensive income, in order to avoid counting them twice in total comprehensive income.
Items are classified in the separate income statement according to their nature.
Information concerning the breakdown of any intermediate balances on the separate income statement and comprehensive income statement has also been provided.
Unless stated otherwise, when the term “income statement” is used in these consolidated financial statements, it means the separate income statement.
226 Gruppo 24 ORE
2009 annual financial report
Cash flow information is provided in the statement of cash flows, which is an integral part of these separate financial statements.
The indirect method has been used for presenting cash flows, according to which the profit (loss) for the year has been adjusted for the effects of: ‒ changes in inventories, receivables and payables generated by operating activities; ‒ non-cash operations ‒ all other elements whose cash effects are cash flows involved in investing or financing activities.
As required by the relevant regulations, a reconciliation has also been prepared of amounts in the statement of cash flows with the equivalent items shown in the statement of financial position.
The table illustrating net financial position has been conceived on the basis of the guidance provided by the Committee of European Securities Regulators (CESR) on 10 February 2005 –“Recommendations for consistent implementation of the EU Commission’s Regulation on Prospectuses.” The table details the main components of net financial position and indicates payable/receivable positions vis-à-vis related parties.
The statement of changes in equity shows: 1. Total comprehensive income (expense) for the year; 2. for each equity item, any effects of retroactive application or retroactive restatement recognised pursuant to IAS 8; 3. for each equity item, reconciliation of the carrying amount at the beginning and at the end of the financial year, with separate indication of the changes resulting from: ‒ profit or loss; ‒ each item of the statement of other components of comprehensive income; ‒ transactions with shareholders, with separate indication of the contributions made by shareholders and payments of equity to shareholders.
In addition, the items on the balance sheet include specific indications as to their origin, potential use and distribution, and their actual uses in previous periods.
At the bottom of the statement of financial position, separate income statement, statement of comprehensive income and statement of cash flows, reference is made to a specific section where a statement illustrates the sub-items for the amounts of positions or transactions with related parties, as distinguished from the reference items, with indication of the effects on the statement of financial position, profit (loss) for the year and statement of cash flows of the Company. This indication by
227 Gruppo 24 ORE
2009 annual financial report
individual item is omitted only when it is not significant for comprehension of the Company’s financial position, profit or loss for the year and cash flows.
At the bottom of the separate income statement and the statement of comprehensive income, reference is made to a specific section where a statement illustrates the sub-items (if they are of a material amount) of the components of income resulting from non-recurring events or transactions or from infrequent transactions, with indication of the effects on the statement of financial position, the profit (loss) for the year and statement of cash flows of theC ompany. These income items are shown separately in the cost or revenue items to which they refer.
If atypical and/or unusual transactions – other than mergers, demergers and asset contributions – have been carried out during the year, a statement is prepared summarising key information to clarify the impact on equity, cash flows and profit (loss) associated with such transactions.
A specific table, which is an integral part of the separate financial statements, lists the companies in which the parent holds a controlling interest, indicating their name, registered office, share capital, and equity interests directly or indirectly owned. Also shown are shareholdings exceeding 2% of share capital in listed companies and exceeding 10% of share capital in unlisted companies, or in private limited liability companies, including foreign companies.
The notes to the financial statements are presented in a systematic manner. For each of the items shown in the statement of financial position, separate income statement, statement of comprehensive income, statement of cash flows and statement of changes in equity, there is a specific cross-reference to the detailed disclosure provided in the notes.
Comparative information with the previous financial year is provided for all amounts shown in these financial statements.C omparative information is also provided in regard to the commentary and illustrative notes, if this is material to comprehension of the financial statements for the current year.
The presentation and classification of the items on the financial statements remain consistent from one year to the next, with the exception of cases where, in accordance with Section 5 – Changes in accounting policies, changes in accounting estimates, and errors, following a significant change in the nature of the transaction or a reassessment of the financial statements, a different presentation or classification has become necessary, in order to provide more relevant information for the purpose of making financial decisions, as well as more reliable information for the purposes faithfully presenting the financial position, results and cash flows of theC ompany.
228 Gruppo 24 ORE
2009 annual financial report
When accounting standards are applied retroactively, or specific financial statement items are restated, or financial statement items are reclassified, at least three statements of the statement of financial position are presented in regard to: ‒ the end of the current financial year; ‒ the end of the previous financial year; ‒ the beginning of the first comparative financial year.
In cases in which the presentation or classification of separate financial statements items have changed, the comparative figures have been changed accordingly, and nature, amount and reasons for the reclassification have been provided.
4. Accounting policies
The financial statements ofI l Sole 24 ORE S.p.A. have been prepared in compliance with IFRSs.
This section provides a summary of the main accounting standards applied, indicating the key accounting policies used in preparing the financial statements and any other accounting principles used if they are considered significant for comprehension of the financial statements.
Non-current assets
Property, plant and equipment
This item includes the property, plant and equipment owned for use in production, to provide goods and services and for administrative purposes, and which are expected to be used for more than one financial year.
It also includes any spare parts that can only be used in connection with a specific non-current asset, as well as spare parts and related equipment of a certain value that are expected to be used for more than one year.
Only those components that are likely to generate future economic benefits and which have a cost that can be reliably determined are recognized as non-current assets.
229 Gruppo 24 ORE
2009 annual financial report
Non-current assets are initially recognized at cost.
Cost includes the purchase or construction cost, ancillary charges and any costs directly attributable for bringing the asset to the place and condition necessary for it to function.
Financial expenses directly attributable to the purchase, construction or production of an item of property, plant and equipment are included in the asset’s cost if they will lead to future economic benefits and can be reliably determined (directly attributable).F inancial expenses are those that would not have been incurred if there had been no expenditure for the item of property, plant and equipment to which they refer.
Routine maintenance costs are charged to the income statement.
The costs relating to components of property, plant and equipment that are used to replace parts removed from the same property, plant and equipment are accounted for as non-current assets, when it is likely that they will generate future economic benefits and their cost can be reliably determined. The carrying amount of the parts that have been removed is derecognized.
After initial recognition, the cost method is adopted, under which non-current assets are shown in the statement of financial position at cost, net of accumulated depreciation and any impairment losses.
Each non-current asset component is depreciated on a straight-line basis over its estimated useful life on the assumption that its residual value is zero. Depreciation commences when the asset is available for use.
Land is of unlimited useful life and, therefore, it is not depreciated.
Non-current assets that are not yet available for use are not depreciated.
Depreciation terminates on the more recent of two dates: when the item of property, plant and equipment is classified as held for sale (see the paragraph entitled N“ on-current assets classified as held for sale”) and the date on which the asset is derecognized.
Depreciation is not interrupted just because the asset is not being used.
230 Gruppo 24 ORE
2009 annual financial report
A non-current asset is derecognized when it is disposed of or when no future economic benefit can be expected either from its use or from its disposal.
The eriodp and method of depreciation of each component of property, plant and equipment are reviewed at the end of each year.
A check is carried out at each reporting date to see if there are any signs that assets are impaired. If there is any indication that this is the case, an estimate is made of the asset’s recoverable amount.
This impairment test is carried out by comparing the carrying amount of the asset with its recoverable amount.
The recoverable amount is the higher out of the asset’s fair value, net of any selling costs, and its value in use.
Fair value is determined on the basis of the best information available at the time to reflect the amount that the company could obtain at the reporting date by disposing of the asset in an arm’s length transaction between knowledgeable, willing parties.
The value in use is calculated by estimating the net present value of the future cash flows expected to be generated by the asset being tested for impairment.
Impairment losses are recognized immediately in the income statement.
Impairment losses that have already been recognized are reviewed at the end of each year in order to evaluate whether they are still justified or should be reversed.I f there is any such indication that this is the case, an estimate is made of the asset’s recoverable amount.
The original value of an asset that suffered an impairment loss in previous years is only reinstated if there is a change in the valuations used to calculate the asset’s recoverable amount. In questo caso il valore contabile viene aumentato fino al valore netto recuperabile. This recoverable amount cannot be higher than the carrying amount that would have applied if no impairment loss had been recognized in previous years.
Reversals of impairment losses are recognized in the income statement.
231 Gruppo 24 ORE
2009 annual financial report
Finance leases
Assets purchased under finance lease arrangements are recognized as property, plant and equipment at the present value of the minimum payments due under the lease contract, even if ownership of the leased asset has not been acquired, and are depreciated on a straight-line basis over their useful life.
The present value of the minimum payments due under the lease contract are also recognized initially as a payable in “Finance lease payables due in more than one year” under non-current liabilities.
Government grants
Government grants, including non-monetary grants measured at fair value, are not recognized until there is reasonable certainty that the conditions to obtain them will be respected and the grants will effectively be received.
Government grants related to assets, obtained in connection with non-current assets, are recognized as deferred income and then transferred to the income statement under “Other operating income,” on a systematic and rational basis that spreads them appropriately over the asset’s useful life.
Government grants offsetting costs or losses already incurred or to provide immediate financial support, without there being any related future costs, are recognized in the income statement as income for the year in which they become collectable.
The benefits stemming from a public loan at an interest rate lower than the going market rate have been recognised as government grants, in compliance with the policies specified above. These benefits have been calculated by measuring the difference between the loan’s initial carrying amount, calculated according to the amortised cost method established by IAS 39, and the amounts received.
Goodwill and business combinations
All business combinations for which IFRS 3 is applicable are accounted for applying the purchase method. In accordance with this method, all identifiable assets, liabilities and contingent liabilities of
232 Gruppo 24 ORE
2009 annual financial report
the business acquired that qualify for accounting recognition, are recognized at their respective fair value as at the acquisition date.
Any excess cost paid for the business combination over and above the interest acquired in the net fair value of its identifiable assets, liabilities and contingent liabilities that qualify for accounting recognition is recognized as goodwill.
Goodwill, as an asset that produces future economic benefits, but that cannot be individually identified nor accounted for separately, is initially recognized at cost.
Goodwill is not amortized, but subjected to annual impairment testing. For the purposes of impairment testing, goodwill acquired as part of a business combination is allocated to the cash-generating units (CGUs) that are expected to benefit from the synergies created by the combination.
TheC GUs to which the goodwill is allocated are checked annually for any impairment. If there is any indication of impairment, their carrying amount is compared with their recoverable amount.
Impairment tests are carried out more frequently if specific events or changed circumstances suggest that goodwill has suffered impairment.I f goodwill is initially recognized during the current year, an impairment test is carried out prior to the end of the same year.
The recoverable amount is the greater of fair value net of any selling costs and value in use, calculated by estimating the present value of the future cash flows expected to derive from theC GU being tested for impairment.
If the CGU’s recoverable amount is lower than its carrying amount, an impairment loss is recognized.
An impairment loss recognized for goodwill cannot be reversed in future years.
If the interest acquired in the net fair value of the identifiable assets, liabilities and contingent liabilities that qualify for accounting recognition exceeds the cost of the business combination at the date of acquisition, the excess is recognized in the income statement.
Any temporary differences emerging between the net fair value of identifiable assets, liabilities and contingent liabilities that qualify for accounting recognition and their value recognized for tax purposes give rise to deferred tax assets and/or liabilities.
233 Gruppo 24 ORE
2009 annual financial report
Intangible assets
Intangible assets recognized are non-monetary assets that have no physical substance, which have to be: – identifiable, in other words separable or arising from contractual or other legal rights; – under the company’s control as a result of past events; – likely to generate future economic benefits for the company; – and with a cost that can be measured reliably.
Initial recognition is at cost.
The cost of intangible assets not acquired through business combinations includes the purchase price and any other direct cost to prepare the asset for use.
The cost of intangible assets acquired through business combinations is their fair value at the date of acquisition.
The process of formation of intangible assets generated internally distinguishes between the research and development phases. No intangible asset deriving from the research phase is recognized. Intangible assets deriving from the development phase are recognized if they satisfy the conditions listed above.
Trademarks, publications and publishing rights generated internally are not recognized as intangible assets.
The cost of intangible assets generated internally is represented by the sum of the cost incurred from the date on which the intangible asset first satisfies the conditions for accounting recognition.
Financial expenses directly attributable to the purchase, construction or production of an intangible asset are included in the asset’s cost if they will lead to future economic benefits and can be reliably determined. Financial expenses (directly attributable) are those that would not have been incurred if there had been no expenditure for the intangible asset to which they refer.
After initial recognition, the cost method is adopted.
Intangible assets with a finite useful life are shown in the statement of financial position at cost, net of accumulated amortisation and impairment losses.
234 Gruppo 24 ORE
2009 annual financial report
The cost of intangible assets with a finite useful life is amortized on a straight-line basis over their estimated useful life on the assumption that their residual value is zero. Amortization commences when the asset is available for use.
Intangible assets with a finite useful life that are not yet available for use are not amortized.
The period and method of amortization of intangible assets with a finite useful life are reviewed at the end of each financial year.
Amortization terminates on the more recent of two dates: when the intangible asset is classified as held for sale (see the paragraph entitled “Non-current assets classified as held for sale”) and the date on which the asset is derecognized.
An intangible asset is derecognized when it is disposed of or when no future economic benefit can be expected either from its use or from its disposal.
Intangible assets with an indefinite useful life are not amortized.
An intangible asset has an indefinite useful life when, based on certain determinant factors, there is no foreseeable limit to the period in which it is expected to generate net cash inflows.
Among the key factors playing a significant role in determining the existence of indefinite useful life, we have considered: – the asset’s expected utilization; – the productive life cycles typical of the asset, also based on information in the public domain concerning estimated useful lives of asset categories used in similar ways; – technical, technological and any other type of obsolescence; – the stability of the economic sector in which the asset operates and changes in demand for the products and services originated by the asset; – actions that will presumably be taken by competitors; – the level of maintenance costs necessary to obtain the future economic benefits expected from the asset; – the period of control over the asset and the legal limits to its utilization; – the dependence of useful life on the useful life of other assets.
The useful life of intangible assets that are not amortized is reviewed at the end of each financial year to ascertain whether the key factors mentioned above still support the assumption of an indefinite useful life.
235 Gruppo 24 ORE
2009 annual financial report
A check is carried out at each reporting date in order to see whether intangible assets have suffered impairment.
Intangible assets with an indefinite useful life and those that are still not available for use are subjected to annual impairment testing, whether or not there are signs of a loss in value.
This impairment test is carried out by comparing the carrying amount of the intangible asset with its recoverable amount.
The recoverable amount is the higher of fair value net of any selling costs and value in use, calculated by estimating the present value of the future cash flows expected to derive from the intangible asset that is being tested for impairment.
If it is not possible to estimate the recoverable amount of the individual asset, the recoverable amount of the CGU to which the asset belongs is calculated. This recoverable amount is then compared with the CGU’s carrying amount.
Impairment losses are recognized immediately in the income statement.
Impairment losses that have already been recognized are reviewed at the end of each year in order to evaluate whether they are still justified or should be reversed.I f there is any such indication that this is the case, an estimate is made of the asset’s recoverable amount.
The original value of an intangible asset that suffered an impairment loss in previous years is only reinstated if there is a change in the valuations used to calculate the asset’s recoverable amount. If this is the case, the carrying amount of the investment is increased to its recoverable amount. This recoverable amount may not exceed the carrying amount that would have been determined had no impairment loss been recognized for the investment in prior years.
Reversals of impairment on intangible assets are recognized in the income statement.
Investments in associates and joint ventures
Associates are those companies over which the parent exercises significant influence, even if it does not hold a controlling interest.
236 Gruppo 24 ORE
2009 annual financial report
Investments in associates are accounted for using the cost method.
Each investment in associates is tested at every reporting date to determine whether it has suffered an impairment loss.
If there is an indication of a potential impairment loss, the entire carrying amount of the investment is tested for impairment, by comparing its recoverable amount with its carrying amount. The recoverable amount, which is the higher out of the fair value less selling costs and the value in use, is calculated for each investment in an associate.
Fair value is the amount obtainable from the sale of the investment in the associate in an arm’s-length transaction between knowledgeable and willing parties, less the costs of disposal.
The value in use is calculated by estimating the parent’s interest in the future cash flows that are expected to derive from the associate, including the cash flows stemming from its operating activities and the proceeds from final disposal of the investment.
Impairment losses are recognized immediately in the income statement.
Impairment losses that have already been recognized are reviewed at the end of each year in order to evaluate whether they are still justified or should be reversed. If such an indication exists, the recoverable amount of that asset is estimated.
The original value of an investment in an associate that suffered an impairment loss in previous years is only reinstated if there is a change in the valuations used to calculate its recoverable amount. If this is the case, the carrying amount of the investment is increased to its recoverable amount. This recoverable amount may not exceed the carrying amount that would have been determined had no impairment loss been recognized for the investment in prior years.
Reversals of impairment on investments in associates are recognized in the income statement.
The dividends paid by associates are recognised as “Other income (expenses) from investment assets and liabilities, once the right to receive the dividend has been ascertained.
237 Gruppo 24 ORE
2009 annual financial report
Available-for-sale financial assets
Investments in other companies, over which the company has neither control nor considerable influence, are classified in this category.
Initial measurement of these investments is at fair value on the trading date (identifiable as the purchase cost), net of transaction costs directly attributable to the purchase.
After initial recognition: – investments consisting of equity instruments that do not have a market price listed on an active market and whose fair value cannot be measured reliably are valued at cost; – investments consisting of equity instruments that have a market price listed on an active market are valued at fair value, i.e. the value at which each investment could be exchanged in an arm’s-length transaction between knowledgeable and independent parties. The gains and losses resulting from changes in fair value are recognised directly in equity, with the exception of impairment losses and foreign exchange gains and losses, and are shown in the statement of other components of comprehensive income and the statement of comprehensive income.
An individual review is carried out at each reporting date to see if there is any objective evidence that investments have suffered an impairment loss.
If there is objective evidence that there has been an impairment loss: – for investments valued at cost, the amount of the loss is measured as the difference between the investment’s carrying amount and the present value of the expected future cash flows discounted at a current market rate of return for a similar financial asset. Impairment losses are recognized immediately in the income statement and can never be reserved; – for investments measured at fair value, the amount of the loss is measured as the difference between the investment’s purchase cost and its current fair value. Any impairment losses are recognized in the income statement, as are any losses charged against equity. The latter have to be reversed and cumulatively recognized in the income statement. La perdita per riduzione di valore non è mai ripristinata con effetto aC onto economico.
Dividends from investments in other companies are recognised among “Other income (expenses) from investment assets and liabilities” when the shareholders’ right to receive the payment has been established.
238 Gruppo 24 ORE
2009 annual financial report
Other non-current financial assets
This category includes all medium-/long-term receivables and financial instruments that are held to maturity.
Initial measurement of non-current financial assets is at fair value on the trading date (identifiable as the purchase cost), net of transaction costs directly attributable to the purchase.
After initial recognition, both medium-/long-term receivables and financial instruments held to maturity are measured at amortized cost using the effective interest method.
The effective rate of interest is the rate that exactly discounts the future cash flows expected over the estimated life of the financial instrument to its net carrying amount.
An individual review is carried out at each reporting date to see if there is any objective evidence that any non-current financial asset has suffered impairment loss.
If there is objective evidence that the impairment loss has occurred, the amount of the loss is measured as the difference between the carrying amount of the medium-/long-term receivable or the investment held to maturity and the present value of the expected future cash flows discounted at the original effective rate of interest of the financial asset.
The amount of the loss is recognized immediately in the income statement.
If in a subsequent year, the amount of the impairment loss decreases and this decrease is linked to an event that took place after recognizing the loss, it is reversed and reflected in the income statement.
Other non-current assets
This category includes: – investments in subsidiaries; – guarantee deposits; – tax receivables still to be refunded.
Each investment in associates is tested at every reporting date to determine whether it has suffered an impairment loss.
239 Gruppo 24 ORE
2009 annual financial report
If there is an indication of a potential impairment loss, the entire carrying amount of the investment is tested for impairment, by comparing its recoverable amount with its carrying amount. The recoverable amount, which is the higher out of the fair value less selling costs and the value in use, is calculated for each investment in an associate.
Fair value is the amount obtainable from the sale of the investment in the associate in an arm’s-length transaction between knowledgeable and willing parties, less the costs of disposal.
The value in use is calculated by estimating the parent’s interest in the future cash flows that are expected to derive from the associate, including the cash flows stemming from its operating activities and the proceeds from final disposal of the investment.
Impairment losses are recognized immediately in the income statement.
Impairment losses that have already been recognized are reviewed at the end of each year in order to evaluate whether they are still justified or should be reversed. If such an indication exists, the recoverable amount of that asset is estimated.
The original value of an investment in an associate that suffered an impairment loss in previous years is only reinstated if there is a change in the valuations used to calculate its recoverable amount. If this is the case, the carrying amount of the investment is increased to its recoverable amount. This recoverable amount may not exceed the carrying amount that would have been determined had no impairment loss been recognized for the investment in prior years.
Reversals of impairment on investments in associates are recognized in the income statement.
The dividends paid by associates are recognised as “Other income (expenses) from investment assets and liabilities, once the right to receive the dividend has been ascertained.
Initial recognition of the tax receivables still to be refunded and of the guarantee deposits is at fair value at the transaction date, net of any directly attributable transaction costs.
After initial recognition, both the tax receivables still to be refunded and the guarantee deposits are measured at amortized cost, using the effective interest method, calculated as indicated in the paragraph on “Other non-current financial assets” of the section on non-current assets.
240 Gruppo 24 ORE
2009 annual financial report
An individual review is carried out at each reporting date to see if there is any objective evidence that other non-current assets have suffered a loss in value.
If there is objective evidence that there has been an impairment loss, the amount is determined.
The amount of the loss is measured as the difference between the carrying amount and the present value of the expected future cash flows discounted at the original effective rate of interest of the non- current asset in question.
The amount of the loss is recognized in the income statement.
If in a subsequent year, the amount of the impairment loss decreases and this decrease is linked to an event that took place after recognizing the loss, it is reversed and reflected in the income statement.
Deferred tax assets
Deferred tax assets are portions of income tax that will be recovered in future years, relating to: – deductible temporary differences; – unutilized tax losses carried forward; – unutilized tax receivables carried forward.
Deductible temporary differences are differences between the carrying amount of an asset or liability shown in the statement of financial position and the value that is recognised for tax purposes. When calculating the taxable income of future years, these will translate into deductibles when the carrying amount of the asset or liability is realised or extinguished.
Deferred tax assets are recognized on all deductible temporary differences and on all unutilized tax losses and tax credits carried forward, if it is probable that sufficient taxable income will be generated in future years to offset them.
Deferred tax assets are measured at the tax rates that are expected to apply during the year when the tax asset will presumably be realized, based on the measures in force at the reporting date.
Deferred tax assets are not discounted to their present value.
The tax benefit of deferred tax assets is recognized in the income statement, unless the tax derived
241 Gruppo 24 ORE
2009 annual financial report
from a transaction or event that was recognized as other component of comprehensive income or directly in equity or came from a business combination.
Deferred tax assets resulting from items that are credited or debited as other component of comprehensive income or directly to equity are also credited or debited as other component of comprehensive income or directly to equity.
Current assets
Inventories
Inventories include saleable goods, such as items bought for resale and items produced internally, as well as goods that are used in their production as part of the company’s normal operations, such as semi-finished goods, work in progress, raw and ancillary materials, and consumables.
Inventories are valued at the lower out of historical cost and market value.
The cost of inventories includes all purchase costs, transformation costs and any other costs incurred to bring stocks to their current position and condition.
When determining the purchase cost, account is taken of the price effectively paid, including directly applicable ancillary costs such as transport and customs duty, net of any trade discounts.
For goods already produced or being processed internally, the historical cost used is manufacturing cost.
The calculation of manufacturing cost takes into account the purchase cost, as mentioned previously, plus all production or transformation expenses, i.e. direct costs and a reasonable allocation of indirect costs for the period in question.
The transformation costs of semi-finished goods, work in progress and finished products are obtained by means of a cost accounting system that establishes the actual cost of each job order.
Purchase cost and manufacturing cost do not include any distribution or selling expenses.
Goods purchased for resale, items produced internally, semi-finished goods and work in progress are valued based on specific identification of actual cost.
242 Gruppo 24 ORE
2009 annual financial report
Raw and ancillary materials and consumables are measured at their weighted average cost for the period, taking the value of opening inventory into account.
If it is no longer possible to measure inventories at historical cost as explained above, due to a decrease in selling prices, deterioration of goods, or the presence of obsolete or slow-moving goods, net realizable value is used. This value is based on market trends for goods, finished products, semi-finished goods produced internally and work in progress. In the case of raw and ancillary materials and consumables and bought- in semi-finished goods replacement cost is used.
Each item of inventory is reviewed to check the existence of one or more events described above as cause of the reduction in the original utility or functionality, and for determining, for each class of inventory, the realizable value or the replacement cost.
Net realizable value represents the selling price under normal business conditions, net of any costs to completion and direct selling costs that can be reasonably expected.
Replacement cost represents the cost at which a certain item of inventory can be repurchased or reproduced, under normal business conditions.
The adjustment to replacement cost for raw materials is carried out directly, whereas the adjustment to net realizable value for finished products is done by setting up a suitable provision, which is then deducted directly from the nominal value shown under assets.
Given the nature of the inventories, it is highly unlikely that the circumstances that caused the write- down itself will change in subsequent years.
Trade receivables
Trade receivables include amounts due from customers and advances to suppliers.
Trade receivables are initially recognized at their fair value on the transaction date, i.e. for the amount expected to be received less any directly attributable transaction costs.
After initial recognition, trade receivables are shown at their estimated realizable value. The initial recognition value of trade receivables is adjusted to the estimated realizable value through a provision for bad debts.
243 Gruppo 24 ORE
2009 annual financial report
The adjustment to estimated realizable value is achieved by reducing the face value of the receivables, taking account of losses due to non-collection, returns and billing adjustments, discounts and allowances not accrued and any other reasons why a lower amount is likely to be received. Billing adjustments also include estimates of books and newspapers likely to be returned in the future. The provision is determined by analyzing the individual receivables and any other present or future factors likely to affect them.
If receivables are factored definitively (i.e. on a non-recourse basis), they are derecognised and the profit or loss is recognised for the difference between the amount received and the carrying amount.
When the collection of trade receivables is deferred for more than 12 months and the transaction effectively constitutes a form of financing, the fair value of the proceeds is determined by discounting all future inflows at a hypothetical interest rate.
Advances to supplier refer to advance payments for physical goods to which the right of access does not yet exist or for services not yet received. The right of access to physical goods arises when ownership is achieved or when the supplier makes them available in accordance with the terms agreed. Services are considered to have been received when the supplier has performed them in compliance with a service agreement.
Other receivables
Other receivables include the following: – italian and EU VAT credits for which a refund has been claimed, as well as the tax credits for the publishing industry and the tax prepayment on post-employment benefits I( talian acronym: “TFR”); – payments on account and advances to employees that will not have to be reimbursed in the future as they will offset amounts to be paid, and loans to employees; – receivables from others, on transactions that do not generate revenue. This account group also includes advances to suppliers for the purchase of property, plant and equipment and intangible assets.
Other receivables are initially recognized at their fair value on the transaction date, i.e. for the amount expected to be received less any directly attributable transaction costs.
244 Gruppo 24 ORE
2009 annual financial report
Current tax assets
Current tax assets are only shown in this item if, and only if, the amount already paid for the current year and for previous years exceeds the amount due, unless a refund has already been requested for the latter.
Other current financial assets
This item includes short-term financial receivables and current-account dealings between Group companies that have an asset balance.
Other current financial receivables are initially recognized at their fair value on the transaction date, i.e. the amount expected to be received less any directly attributable transaction costs.
This item also includes hedging instruments for which a hedging relationship has been established for the element being hedged.
Hedging instruments are designated derivatives whose cash flows are expected to offset changes in the cash flows of a designated element hedged. A position is designated as a hedging relationship when there is formal documentation supporting management of the risk and the related hedging strategy and when the hedge is highly effective and reliably measurable.
As financial receivables, derivatives designated as hedging instruments are initially recognized at their fair value, i.e. at the transaction price of the consideration given or received, less any directly attributable transaction costs.
Following initial recognition, recognition of hedging transactions entails an equal and opposite recognition through profit or loss of the changes in the fair value of the hedging instrument and of the element hedged.
Designated hedging relationships are considered cash flow hedges, i.e. hedges for exposure to the variability of cash flows due to a particular risk associated with a recognized asset or liability which could have an impact on the income statement.
In designated cash flow hedge relationships, the portion of the profit or loss on the hedging instrument, which is considered an effective hedge, is recognized directly on the statement of
245 Gruppo 24 ORE
2009 annual financial report
other components of comprehensive income and on the statement of comprehensive income. The ineffective portion of the profit or loss on the hedging instrument is to be recognized on the separate income statement.
If the value of a financial instrument used as a designated hedging instrument and recognised as a financial asset measured at fair value drops to below zero, it is recognised as a financial liability in accordance with the rules given for the item “Other current financial liabilities” in the C“ urrent liabilities” section.
Other current assets
Other current assets comprise accrued income and prepaid expenses.
Accrued income and prepaid expenses represent portions of costs or revenue that relate to two or more periods. They measure revenue and charges that have to be accounted for earlier or later than the event that gives rise to their original recognition. The fundamental condition for them to be recognized is that the amount of these portions of costs and revenue that are common to several periods varies on a time basis.
The amount to be spread over two or more periods is split on a time basis by counting the months, in order to allocate the correct portion to the current year in the case of accruals, or to postpone a portion to subsequent years in the case of prepaid expenses.
Accrued income measures the portions of revenue due to be received in full in a future period, but partially applicable to the year to which the financial statements refer.
Prepaid expenses reflect portions of costs recognized entirely during the current year, or in previous years, and represent the part that is being deferred to one or more future years.
Cash and cash equivalents
These include bank and post office deposits, as well as cash in hand and cash equivalents.
Bank and post office deposits, cash in hand and cash equivalents in national functional currency are shown at face value.
246 Gruppo 24 ORE
2009 annual financial report
Cash and deposit accounts include all movements that took place up to the reporting date. Accrued interest and related charges due at the reporting date are included, even if actual receipt takes place subsequently.
Collections received after the reporting date are not included in this item, even if backdated.
Cash payments made or requested after the reporting date are not taken into consideration.
Assets held for sale
All non-current assets and disposal groups classified as held for sale are shown separately from other assets in the statement of financial position.
The carrying amount of non-current assets and disposal groups classified as held for sale will be recovered mainly by selling them off, rather than by using them on an ongoing basis.
The carrying amount is considered as being recoverable mainly by selling off the assets when management has decided on a disposal plan. The sale is expected to be completed within one year of the reclassification and at a reasonable price with respect to the current fair value of the assets concerned.
Non-current assets classified as held for sale are measured at the lower out of their carrying amount and their fair value net of selling costs. Such assets are not depreciated.
Held-for-sale non-current assets which represent a significant autonomous business segment or geographic area, or which are investments in subsidiaries acquired solely for subsequent sale, are classified as discontinued operations.
The profit or loss resulting from discontinued operations, as well as the related capital gains or losses on the discontinued operations, which are recognized at fair value net of costs of the sale, are shown separately under a single item on the income statement.
All gains or losses deriving from non-current assets classified as held for sale, other than discontinued operations, are included in the profit (loss) from continuing operations.
247 Gruppo 24 ORE
2009 annual financial report
Equity
This represents the difference between the all assets and liabilities, determined according to the applied recognition and measurement criteria.
Equity includes the items listed below:
Capital, i.e. the par value of the amount paid by shareholders on the date of establishment or for subsequent capital increases plus the value of reserves converted into share capital over time, net of the par value of any amounts due from shareholders for capital subscribed and not yet called up and for capital called up but not yet paid in.
Equity reserves, which include: – capital injections, i.e. reserves made up of new contributions made by shareholders; – the share previsins reserve, i.e. the difference between the issue price of the shares and their par value; – equity transaction costs, i.e. all costs associated with the purchase or issue of new shares, including the costs originated by the procedure for listing on a regulated market incurred by the parent during the year.
Revaluation reserves, which include: – reserves for asset revaluations envisaged by specific laws; – profits and losses arising from changes in the fair value of recognized available-for-sale financial assets, except for impairment losses and foreign exchange gains and losses. Pursuant to Article 6, paragraphs 1 and 4, of Italian Legislative Decree 38/2005, these revaluation reserves, set up as a result of fair-value measurements, are not available for distribution.
The hedging reserve, which consists of the cash flow hedging reserve, relating to the part of the profit or loss on cash flow hedging instruments that is considered an effective hedge.
The hedging reserve, which was set up following changes in the fair value of cash flow hedging instruments, is not available for distribution, in accordance with Article 6, paragraphs 1 and 4 of Italian Legislative Decree 38/2005.
Other reserves, which include: – the legal reserve, which is an obligatory reserve under Article 2430 of the Italian civil code, which requires that at least 5% of the profit for the year has to be set aside in the legal reserve until it reaches one fifth of the share capital.U p to this limit, the reserve is not available for distribution;
248 Gruppo 24 ORE
2009 annual financial report
– the reserve for grants related to assets, for grants that are meant to integrate equity. These grants were paid until 1987, in accordance with Article 8 of Italian law 416/1981, and are taxable on distribution; – the negative goodwill reserve. This is an adjustment to equity relating to the merger of companies in prior years; – the fair value reserve for stock grants and stock options. This is an equity adjustment related to equity instruments assigned for transactions involving share-based payments, i.e. the corresponding entry for the cost recognized for equity instruments assigned to employees. The shares, stock options and other equity instruments assigned to employees as part of their pay package are measured at the fair value of the equity instruments assigned, calculated as at the grant date. In the interval between the grant date – i.e. the date on which the right arises to receive the shares, stock options, and equity instruments once given conditions have been met– and vesting date – i.e. the date when the conditions envisaged on the grant date have effectively materialized – no change is made to the fair value calculated on the grant date. Vesting conditions other than market conditions are not considered in the estimate of fair value made on the grant date. These non-market conditions are instead considered when adjusting the number of equity instruments calculated on grant date, so that the amount recognized is based on the number of equity instruments that definitively qualify for vesting; – the post-employment benefits adjustment reserve reflects recognition of the actuarial gains and losses on post-employment benefits. This item reflects changes in the present value of this liability as a result of the program evolving differently from how it was initially envisaged from an actuarial point of view. The Group has adopted the rule of recognising actuarial gains and losses in the financial year that they occur, as other components of comprehensive income; – the IFRS first-time application reserve, which is made up of the adjustments deriving from the transition to the IFRSs related to the value of treasury shares. This reserve has a corresponding entry of equal value in the non-available treasury share reserve. Subsequent adjustments related to the transition to the IFRSs have been reclassified as retained earnings; – the non-available reserve consisting of earnings recognized on the income statement representing capital gains – net of the related tax effect – stemming from application of the fair-value or equity method and that do not relate to financial assets and liabilities at fair value through profit or loss, or to hedging instruments, as required by Article 6, paragraphs 1 and 2, of Italian Legislative Decree 38/2005.
Retained earnings, i.e. prior years’ profits or losses that have not been distributed or allocated to other reserves. This also includes all amounts related to theIFR S FTA reserve, with the exception of amounts related to treasury shares.
Profit (Loss) for the year, i.e. the financial performance for the year, as shown in the corresponding item of the income statement.
249 Gruppo 24 ORE
2009 annual financial report
Non-current liabilities
Non-current financial liabilities
This item essentially includes the amounts due to banks for medium-/long-term bank loans.
The initial measurement of non-current financial liabilities is at fair value as at the trading date, net of directly attributable transaction costs.
After initial recognition, non-current financial liabilities are measured at amortized cost using the effective interest method.
Employee benefit obligations
This caption comprises the post-employment benefit provision accrued for all contractual categories of employees at the reporting date.
Following the amendments made to Italian post-employment benefit (“TFR”) regulations by Law 296 of 27 December 2006 (the 2007 national budget law) and by subsequent implementing decrees and regulations (i.e. the pension reform) enacted during 2007, the Group adopted the following accounting policy: – the post-employment benefits accrued at 31 December 2006 are considered defined benefit plans pursuant to IAS 19, consistently with their recognition and classification in previous financial years. The guaranteed post-employment benefits that are paid upon termination of the employment relationship are recognised in the period when the tight accrues. The related liability is calculated on the basis of actuarial assumptions and of the actual debt accruing and not paid as at the end date of the period in question, applying the criteria envisaged by IAS 19 for defined-benefit plans, based on when the Company retains actuarial and investment risk; – the process of discounting to present value – based on demographic and financial assumptions – is performed by professional actuaries, applying the accrued benefit approach by means of the projected unit credit method; – the discounting approach, based on demographic and financial assumptions, was implemented by applying the accrued benefits method with the projected unit credit method determined by professional actuaries. This method is based on assessments that give the average discounted value of pension liabilities accrued according to the time in service of the worker until the assessment is made, considering demographic variables such as staff rotation and mortality, and financial variables, such as the discount rate. In consequence of the changes introduced by the reform, the
250 Gruppo 24 ORE
2009 annual financial report
component tied to expected future wage increases was excluded from the discounting calculation beginning from 1 January 2007; – the actuarial gains and losses are recognised in the post-employment benefit Adjustment reserve, classified under Other reserves, as indicated in the Equity section, and shown on the statement of other components of comprehensive income and on the statement of comprehensive income.
For post-employment benefits accruing as from 1 January 2007, reference should be made to Other Payables in the Current Liabilities section.
Deferred tax liabilities
Deferred tax liabilities are portions of income taxes due in future years because of taxable temporary differences.
Taxable temporary differences are differences between the carrying amount of an asset or liability shown in the statement of financial position and the value that is recognised for tax purposes. When calculating the taxable income of future years, they will translate into taxable amounts when the carrying amount of the asset or liability is realised or extinguished. Deferred tax liabilities are recognized for all taxable temporary differences except in those cases where the liability derives from: – initial recognition of goodwill, or – initial recognition of an asset or liability in an operation that is not a business combination and that does not have any effect either on the reported profit (loss) for the year or that for tax purposes at the date of the operation.
Deferred tax liabilities are also recognized for the taxable temporary differences deriving from investments in associates, except in the case where the following two conditions exist simultaneously: (a) the parent is able to control when taxable temporary differences are eliminated, and (b) it is probable that the temporary differences will be eliminated in the foreseeable future.
Deferred tax liabilities are valued at the tax rates that are expected to apply during the year when the tax liability will presumably be extinguished, based on the tax rates enacted at the reporting date.
Deferred tax liabilities are not discounted to present value.
The tax charge relating to deferred tax liabilities is recognized in the income statement, unless the tax
251 Gruppo 24 ORE
2009 annual financial report
derived from a transaction or event that was recognized as other component of comprehensive income or directly in equity or came from a business combination.
Deferred tax liabilities resulting from items that are credited or debited as other component of comprehensive income or directly to equity are also credited or debited as other component of comprehensive income or to equity.
Deferred tax liabilities are offset by deferred tax assets only if the two items refer to the same tax and the same period.
Provisions for risks and charges
This item includes the various provisions made for risks and charges.
These provisions are set up to cover liabilities whose amount or timing is uncertain, which arise from legal or constructive obligations, and that exist at the reporting date as the result of a past event.
These obligations, which derive from contractual provisions, legal regulations, long-standing models of corporate practice or public assumptions of responsibility, mean that the company has no real alternative than to comply.
Obligations are recognized in accounts when they effectively exist, based on a past event, and when compliance will probably mean using economic or financial resources for an amount that can be estimated with a certain degree of accuracy.
Provisions are measured at the value that represents the best estimate of the amount required to extinguish the obligation or to transfer it to third parties at the reporting date.
If discounting for the cost of money has a significant effect because of the expected timing of the obligation, the amount of the provision is equal to the present value of the outflow expected to be needed to extinguish the liability.
The financial component of the discounted provisions is recognized in the income statement under financial expenses.
The current portions of provisions for risks and charges are reclassified to C “ urrent portions of provisions for risks and charges” in the section devoted to current liabilities.
252 Gruppo 24 ORE
2009 annual financial report
Contingent liabilities
Contingent liabilities are obligations deriving from past events: – whose existence will be confirmed by future events, or – the extinction of which is unlikely to involve an outlay of economic or financial resources, or – the amount of which cannot be estimated with sufficient accuracy.
Contingent liabilities are not recognised in the accounts, but rather described exactly in the explanatory notes to the financial statements. If possible, calculation of the financial effects, the uncertainties regarding the amount and the estimate when it is likely that the event causing the contingent liability is likely to occur are also specified in the notes.
Finance lease payments – due after one year
This category includes the amounts due for items of property, plant and equipment acquired under finance leases.
Initial recognition of these payables, as well as their subsequent measurement after initial recognition, follows the same accounting treatment as was explained in the note on property, plant and equipment in the section on non-current assets.
The current portions of finance lease obligations are reclassified toF “ inance lease payments – due within one year” in the section on current liabilities.
Other non-current liabilities
This category includes guarantee deposits received that will have to be reimbursed.
Guarantee deposits are initially recognized at their fair value on the transaction date, net of any directly attributable transaction costs.
253 Gruppo 24 ORE
2009 annual financial report
Current liabilities
Bank overdrafts and loans
This item includes the bank current accounts with an overdraft balance, as well as the current portions of amounts due to banks for medium-/long-term loans which are expected to be settled within twelve months of the reporting date.
Other current financial liabilities
This category includes: – short-term financial payables; – current-account dealings between Group companies that have an asset balance; – the financial expenses accrued on these payables.
Short-term financial payables are initially recognized at their fair value on the transaction date, i.e. for the amount expected to be paid less any directly attributable transaction costs.
Financial expenses are recognized in the same way as the other accruals in “Other current liabilities” in the section on current liabilities.
This item also includes hedging instruments for which a hedging relationship has been established for the element being hedged.
Hedging instruments are designated derivatives whose cash flows are expected to offset changes in the cash flows of a designated element hedged. Designated hedging relationships are considered cash flow hedges, i.e. hedges for exposure to the variability of cash flows due to a particular risk associated with a recognized asset or liability which could have an impact on the income statement. A position is designated as a hedging relationship when there is formal documentation supporting management of the risk and the related hedging strategy and when the hedge is highly effective and reliably measurable.
As financial liabilities, derivatives designated as hedging instruments are initially recognized at their fair value, i.e. at the transaction price of the consideration given or received, less any directly attributable transaction costs.
Following initial recognition, recognition of hedging transactions entails an equal and opposite recognition through profit or loss of the changes in the fair value of the hedging instrument and of the element hedged.
254 Gruppo 24 ORE
2009 annual financial report
In designated cash flow hedge relationships, the portion of the profit or loss on the hedging instrument, which is considered an effective hedge, is recognized directly in equity and disclosed on the statement of other components of comprehensive income and on the statement of comprehensive income. The ineffective portion of the profit or loss on the hedging instrument is to be recognized through profit or loss.
Current tax liabilities
This category includes the current direct taxes for the year and previous years, to the extent that they have not already been paid.
The amount in the statement of financial position is shown net of advance payments of tax, withholding taxes and tax credits, unless a rebate has been claimed.
Current income taxes are measured for the amount expected to be paid to the tax authorities, applying current tax rates and regulations, or substantially enacted as at the reporting date.
Current taxes are recognised as an expense on the income statement, with the exception of taxes that result from transactions or events recognised as other component of comprehensive income or in equity, which are also charged as other component of comprehensive income or equity.
Trade payables
Trade payables include the amounts due to suppliers, the liabilities to be paid for goods and services received and invoiced, the advances received from customers for goods and services still to be rendered, and deferred income relating to products sold on a subscription basis.
The amounts due to suppliers and the advances from customers are recognized at fair value at the transaction date, i.e. at the amount formally agreed with the counterparty, net of any trade discounts and adjusted for returns or other billing adjustments.
The deferred income relating to products sold on a subscription basis is recognized in the same way as explained for deferred income in “Other current liabilities” in the section on current liabilities.
When the payment of trade payables is deferred and the transaction effectively constitutes a form of financing, after initial recognition, they are measured at amortized cost using a hypothetical interest rate.
255 Gruppo 24 ORE
2009 annual financial report
Current portions of provisions for risks and charges
This item includes the current portions of P“ rovisions for risks and charges” in the section on non- current liabilities, which are expected to be settled within twelve months of the reporting date.
Other current liabilities
Other current liabilities include accrued liabilities other than those relating to financial expenses, which are classified under O“ ther current financial liabilities”, and deferred income other than income on products sold on a subscription basis, which are classified under “Trade payables” in the section on current liabilities.
As already explained for accrued income and prepaid expenses, accrued liabilities and deferred income also represent portions of costs or revenue that relate to two or more years.
Accrued liabilities measure the portions of costs due to be paid in full in a future year, but partially applicable to the year to which the financial statements refer.
Deferred income reflects portions of revenue recognized entirely during the current year, or in previous years, and represents the part that is being deferred to one or more future years.
Deferred income includes the deferral of grants related to assets obtained for investments in property, plant and equipment and intangible assets, treated in the way explained in the paragraph on grants related to assets under “Property, plant and equipment” in the section on non-current assets.
Other payables
Other payables include: – the amounts due to social security institutions for social security charges and pension contributions; – tax liabilities other than for direct taxes classified under “current tax liabilities” in the current liabilities section, such as the taxes payable for tax assessments or disputes that have been settled, for tax withheld as a withholding agent and for tax claims of any kind in the hands of collection agencies. The amount in the statement of financial position is shown net of advance payments of tax, withholding taxes and tax credits, unless a rebate has been requested for them;
256 Gruppo 24 ORE
2009 annual financial report
– amounts due to employees for wages and salaries, expense reports to be reimbursed, accrued vacation and additional months’ pay; – dividends payable to shareholders; – other payables that cannot be classified under any other current liability caption.
Other payables are initially recognized at their fair value on the transaction date, i.e. for the amount agreed with the counterparty, less any directly attributable transaction costs.
Because of their nature and duration, other payables do not have a set discount rate. As established by IAS 39, after initial recognition these payables are shown at their original value, as discounting would have an insignificant effect.
As from the financial year beginning 1 January 2007, this category also includes: – amounts payable to supplementary pension funds, relating to the accrued portions of employees post-employment benefits and not yet paid to the funds; – amounts payable to the central treasury fund set up with INPS (the Italian state pension & welfare agency) relating to the portions of employees’ post-employment benefit accruing and not yet paid to the fund.
Following the pension reform mentioned above in relation to employee benefit obligations, the portions of post-employment benefits accumulated as from 1 January 2007 have been, at the employee’s discretion: – allocated to forms of supplementary pension provision; – held within the company, which transfers these portions of post-employment benefit to the central treasury fund set up with INPS.
Both those portions of post-employment benefits allocated, as from 1 January 2007, to supplementary pension provision and those allocated, as of the same date, to the central treasury fund with INPS, are recognized as post-employment benefits and classified among defined-contribution plans.
As required by IAS 19, contributions to be paid to a defined-contribution plan are accounted for on an accruals basis as amounts payable to supplementary pension funds and/or to the INPS treasury fund, against service rendered by employees. More specifically, the liability for benefit portions payable to the INPS treasury fund does not include the cost of revaluation, which is instead incumbent on the INPS.
Finance lease payments – due within one year
This item includes the current portions of “Finance lease payments”, in the section on non-current liabilities, which are expected to be settled within 12 months of the reporting date.
257 Gruppo 24 ORE
2009 annual financial report
Effects of fluctuations in foreign exchange rates
At each reporting date, all monetary elements in foreign currency, i.e. all assets and liabilities that will be collected or paid in a fixed or determinable quantity of foreign currency, are translated at the year-end spot exchange rate.
Exchange differences deriving from the translation of monetary elements at a different rate from the one used at the time of initial recognition during the year or on previous financial statements are taken to profit or loss in the year that they arise.
At each reporting date, all non-monetary elements measured at purchase cost in a foreign currency are translated at the exchange rate in force on the date of the purchase. All non-monetary elements measured at fair value in a foreign currency are translated at the exchange rate in force on the date that the fair value was determined.
When the carrying amount of a non-monetary element expressed in foreign currency is determined by comparing two or more amounts, the exchange rate applied to the amounts used for the comparison with the original carrying amount is the rate prevailing at the time the comparison is made.
This means that if, the carrying amounts to be recognised is one of the amounts being used in the comparison, any exchange differences that arise are recognised in profit or loss, in the same way as for monetary elements.
If a designated fair value hedging relationship has been set up between a hedging instrument and an element being hedged in foreign currency, the accounting treatment applied is the same as for hedges, as explained under “Other current financial assets” in the section on current assets.
Revenue
Revenue from the sale of goods is recognized in the income statement when: – a significant portion of the risks and benefits of ownership of the goods have been transferred to the buyer; – the revenue amount can be measured reliably; – there is no longer any effective control over the goods sold; – it is probable that there will be economic benefits from the transaction; – related transaction costs can be reliably determined.
258 Gruppo 24 ORE
2009 annual financial report
Revenue from the provision of services is recognized in the income statement with reference to the stage of completion of the transaction at the reporting date when: – the revenue amount can be reliably measured; – it is probable that there will be economic benefits from the transaction; – the stage of completion of the transaction can be reliably measured; – the costs incurred and to be incurred can be reliably calculated.
More specifically: – revenue from the sale of goods is considered earned when ownership is transferred, which is generally considered as coinciding with shipment, both for daily newspapers and magazines sold individually, and for book publications that are sold on firm-sale basis (i.e. no returns). Revenue is recognized net of a reasonable estimate of returns; – revenue from the sale of newspapers and magazines on a subscription basis is recognized over the period of the subscription; – revenue from the sale of advertising space is recognized on the basis of the date of publication of the publicity insert or advertisement; – revenue from the sale of services with a contractual duration, such as online, master-course, and database subscription services, is recognized over the period of the contract.
Costs and revenue relating to the same transaction or to another event are recognized simultaneously, applying the matching principle.
When revenue components are significant, their nature and amount are shown separately.
Costs
Costs are recognized in the income statement when a decrease in future economic benefits has taken place involving a decrease in assets or an increase in liabilities that can be reliably measured.
In particular, a cost is recognized immediately when and to the extent that: – an expense does not result in any future economic benefit; – future economic benefits do not qualify, or cease to qualify, for recognition as assets on the statement of financial position; – a liability is incurred without an asset being recognized.
When cost components are significant, their nature and amount are shown separately.
259 Gruppo 24 ORE
2009 annual financial report
Dividends
Dividends distributed are recognized in the financial year when shareholders approve distribution. Indication of the amount of the dividend paid during the financial year is accompanied by disclosure of the amount of the dividend per share. Assignment of dividends declared after the reporting date is not recognized as a liability. If such assignment is declared after the reporting date but before publication of the annual financial report is authorized, dividends are disclosed in the notes to the financial statements.
Earnings per share
Basic earnings per share (EPS), shown in the income statement for each period presented, is calculated by dividing the profit or loss attributable to the ordinary and special owners of the parent by the weighted average number of shares outstanding during the year.
Diluted EPS, again is reported on the income statement for each period presented, is calculated by adjusting – in order to take account of all potential shares – both the earnings or losses attributable to ordinary and special owners of the parent and the weighted average number of ordinary and special shares outstanding during the financial year.
The dilutive effects of potential ordinary and special shares are those that reduce earnings or increase losses per share as a consequence of: – conversion of convertible instruments into ordinary and special shares; – exercise of options or warrants on ordinary shares; – issuance of new ordinary shares upon verification of certain conditions.
Guarantees
The carrying amount of financial assets given as guarantee for liabilities or for contingent liabilities and clauses and conditions relating to such assets’ use are indicated separately in the notes to the financial statements. If the financial assets given as guarantee can be sold or newly pledged, their carrying amount is reclassified on the statement of financial position, separately from other assets.
260 Gruppo 24 ORE
2009 annual financial report
For guarantees received that can be sold or newly pledged, fair value and the clauses and conditions associated with their use are shown separately.
If financial assets received as guarantee have been sold, a value is recognized equal to the selling price and a liability measured at fair value for the obligation to return the guarantee. The fair value of such transactions, together with the fair value of guarantees received and newly pledged, is illustrated in the notes to the financial statements.
Hedging transactions
For each type of hedge, the notes separately describe: – the transaction; – the financial instruments designated as hedging instruments, also indicating their fair value as at the reporting date; – the nature of the risks hedged.
The notes to the financial statements also provide detailed information on cash-flow and fair-value hedges.
Fair value of financial instruments
For each class of financial asset and liability, whether recognized at fair value or measured by one of the other methods subsequent to their initial recognition as specified by IAS 39, the notes include separate indication of the fair value and the method of measurement used.
This information is provided for the purpose of comparing fair value with carrying amount and is always necessary, except in the following cases: – when carrying amount is a reasonable approximation of fair value; – for investments in equity instruments that do not have a listed market price on an active market.
Financial asset and liability classes have been grouped in a manner pertinent to the nature of supplementary information disclosed. Sufficient information has been provided to permit reconciliation with the carrying amount of items classified in the statement of financial position.
261 Gruppo 24 ORE
2009 annual financial report
A ranking of financial assets and liabilities carried at fair value on the statement of financial position has been prepared, according to which the fair value measurement has been classified. This ranking, which reflects the material nature of the data used to make the measurements, is composed of the following three levels: – prices quoted on active markets for identical assets or liabilities – Level 1; – input data different from the quoted prices indicated at Level 1, but which are directly observable (prices for similar assets) or indirectly observable (derived from prices) – Level 2; – input data that are not based on observable data – Level 3.
For each class of financial instruments classified as financial assets and liabilities that are recognised at their fair value, the notes to the financial statements provide the information required underIFR S 7 for financial disclosure.
5. Changes in accounting policies, errors, and changes in estimates
The accounting policies adopted are only changed from one year to the next if the change is required by an accounting standard or if it provides more pertinent and reliable information on the effects of transactions on the entity’s financial position, results of operations, or cash flows.
Changes in accounting policies are accounted for retroactively, recording the effect to opening equity of the earliest period being presented. Other comparative figures for each prior year are also adjusted as if the new policy had always been applied. The prospective approach is used only when it is impracticable to reconstruct comparative information.
The application of a new accounting standard or one that has been modified is accounted for as required by the standard concerned. If the standard does not regulate transition, the change is accounted for using the retrospective method, or, if the latter is impracticable, the prospective method.
In the case of material errors, the same policy is applied as for changes in the international accounting standards illustrated in section 4, Accounting Policies. In the case of non-material errors, accounting adjustments are made to the income statement in the period when the error is found.
Changes in accounting estimates are recognized prospectively in the income statement in the year
262 Gruppo 24 ORE
2009 annual financial report
when the change occurs if it only affects that one year, or in the year when the change occurs and in future years if the change also affects the latter.
These are theC ompany’s first financial statements in whichIA S 1 Presentation of financial statements and IAS 23 Borrowing Costs have been applied. Application of IAS 1 relates solely to aspects of presentation and of disclosure to be provided in explanatory notes and therefore has no effect on calculation of the profit (loss) for the year andEP S. Given the nature of Company investments, the application of IAS 23 did not have any impact on determination of the profit (loss) for the year andEP S.
6. Risk management
In order to provide disclosures that improve the reader’s understanding of the impact of financial instruments on the Company’s financial position, results of operations and cash flows, supplementary information is provided to facilitate evaluation of the size of the related risks.
The risks related to the financial instruments used by the company are: – market risk, i.e. the risk of a financial instrument’s fair value or cash flows fluctuating following changes in market prices. This risk can be further broken down into: • foreign exchange risk, i.e. the risk that the value of a financial instrument might fluctuate as a result of movements in exchange rates; • interest rate risk on fair value, i.e. the risk that the value or future cash flows of a financial instrument might fluctuate as a result of changes in market interest rates; • price risk, i.e. the risk that the fair value of a financial instrument or its future cash flows might fluctuate as a result of changes in market prices; – credit risk, i.e. the risk that one of the parties to a financial instrument does not fulfil an obligation and causes a financial loss to the other; – liquidity risk, i.e. the risk of having problems in accessing funds to meet the commitments deriving from financial instruments.
For each type of risk stemming from financial instruments, qualitative information is provided about: – exposure to the risk and how it was generated; – objectives, procedures and processes for managing and controlling risks and the methods used to measure them; – any changes compared with the previous financial year.
263 Gruppo 24 ORE
2009 annual financial report
In addition, for each type of risk stemming from financial risks, summary quantitative data are provided on risk exposure as at the reporting date. Detailed disclosure concerning analytical quantitative data has been prepared in compliance with the requirements of IFRS 7, highlighting the existence of any concentration of risk.
Financial risk
Financial risk management is performed following a principle of prudence and of minimization of the risks connected with financial assets and liabilities. The investment of surplus cash or the raising of necessary resources is carried out with the priority objective of neutralizing the risk of (a) loss of capital, avoiding speculation and (b) interest rate fluctuations, avoiding exposure of the operating profit (loss) to any unexpected increases in financial expenses.
The company constantly monitors the financial risks to which it is exposed, in order to assess any negative impact and initiate appropriate mitigation action. The Board of Directors has the overall responsibility for creating and supervising the company’s risk management system, as well as for the development and control of risk management policies.
The company’s risk management policies are intended to identify and analyze the risks to which the company is exposed, defining appropriate limits and monitoring systems for such risks. Policies and related systems are periodically reviewed in consideration of changes in market conditions and in company activities.
Financial management of subsidiaries takes place through specific intercompany current accounts on which any cash surpluses are deposited or on which the parent provides the financial resources needed for the subsidiaries to conduct their business operations. The aim is also to optimize the impact on the income statement of the financial income and expenses accruing on these current accounts.
Centralized management of the Group’s finances also makes it possible to control and co-ordinate the operations of each subsidiary efficiently, also via more effective financial planning and control. This also provides useful input to ensure the best possible handling of the Group’s relationships with its main banks and credit institutions and to help monitor the Group’s financial risk and treasury movements in a systematic way.
264 Gruppo 24 ORE
2009 annual financial report
Financial guarantees
The company issues financial guarantees mainly in the following cases, i.e. for: – prize competitions, as regulated by Italian Presidential Decree 430/2001; – for Public Administration tenders/contracting, as required in tendering or adjudication rules; – as guarantee for use of group VAT consolidation procedures; – for rental contracts instead of guarantee deposits; – for special service supply contracts.
Group policy gives preference to issue of bank suretyships at parent level, avoiding their issue at subsidiary level.
Market risk
Market risk is the risk of the fair market value or future cash flows of a financial instrument fluctuating following changes in market prices, due in turn to changes in interest rates, exchange rates, or in the market prices of equities. The objective of market-risk management is to manage the Company’s exposure to the risk and keep it within appropriate limits, whilst also optimizing the return on the investments to which such risk relates.
The Company uses derivative instruments during the normal course of its financial activity and also takes on financial liabilities to manage risk. It performs these activities in accordance with the guidelines established by the Board of Directors. The company performs hedging transactions to manage the volatility of results relating to financial instruments.
Foreign exchange risk
TheC ompany is marginally exposed to foreign exchange risk on purchases denominated in currencies other than the functional currency.
These transactions mainly refer to the following exchange rates:EUR /USD, EUR/GBP, and EUR/CHF.
The company in any case has the policy of hedging foreign exchange risk for specific purchases of
265 Gruppo 24 ORE
2009 annual financial report
investment assets denominated in currencies other than the functional currency in order to preserve the margin of return projected for such investments. It is the company’s policy to undertake full hedging, where possible, of significant exposures arising from receivables and payables denominated in currencies other than the euro.
Price risk
The main raw material used by the company that could be exposed to significant price risk is paper.
Paper is handled centrally for all of the Group’s business units by means of careful procurement planning and inventory management. In line with best market practice, supply contracts are agreed with leading Italian and foreign paper companies for fixed quantities at fixed prices for the maximum period that the market currently permits, i.e. about one year.
The company does not use hedges such as paper swaps, as they offer limited liquidity in terms both of counterparties and of maturities.
Credit risk
Credit risk is the risk of a customer or of one of the counterparties of a financial instrument causing a financial loss by not honouring an obligation.
In the case of the Company, credit risk mainly relates to trade receivables from sales of products and services by the various business units, as well as to financial receivables in connection with the investment of surplus cash.
Considering the type of customers that the company has for its products and services, management does not believe there is a high level of trade credit risk. As there is no high concentration of this risk, the policy is to limit sales to any customers that are considered insolvent or are unable to provide adequate guarantees.
Customer credit risk is controlled by grouping customers by type and business area, considering whether customers are advertising agencies, financial companies and institutions, public entities,
266 Gruppo 24 ORE
2009 annual financial report
professionals and natural persons, distributors and bookstores, or other customers. Other factors examined are geographical location, business sector, credit age, the due dates of invoices issued, and previous payment behaviour.
In the face of this risk, a specific provision for bad debts is made to cover any losses caused by non- collectability.
As regards financial receivables, it is believed that the company is not exposed to significant risk as it invests surplus cash only with banks of premier standing, mainly using short-term investment instruments with maturities of not more than 3 months (on demand or term deposits).
Liquidity risk
Liquidity risk is the risk of the company having difficulty in meeting obligations associated with financial liabilities and therefore of having difficulty in accessing, at economical conditions, the financial resources necessary for its operations.
In managing the liquidity risk, the company’s approach is to ensure, as far as possible, that there are always sufficient financial reserves to meet its obligations at maturity, both in normal conditions and in conditions of any financial stress.
Besides the trend in market interest rates, the main factors determining company liquidity are (a) the cash flows generated or absorbed by operating and investing activities and (b) the flows relating to repayment of financial liabilities and cash-in of income relating to financial investments.
The company has taken a series of actions designed to optimize management of financial resources and mitigate the liquidity risk. More specifically: – centralized management of Group liquidity via constant withdrawal of cash surpluses from subsidiaries and via coverage of the latters requirements with resources provided by the parent; – maintenance of an adequate reserve of available liquidity; – availability of adequate short-term lines of credit; – planning of the future financial position, also as regards the incidence of medium-/long-term debt on the overall net financial position; – utilization of an appropriate internal control system to assess available liquidity in relation to operational planning.
267 Gruppo 24 ORE
2009 annual financial report
For coverage of any short-term financial requirements, as at 31 December 2009 the company had the following credit facilities: – € 24.5 million relating to current-account overdrafts, subject to collection and unsecured, paid at an average interest rate of 6.37%; – € 32.9 million relating to revocable lines of credit that can be used for short-term temporary financial requirements, at an average cost equal toE uribor + 0.23%.
Management believes that the present financial resources and the credit lines available as mentioned above – together with cash flow generated by operating activities – are sufficient to cover requirements relating to investing activities, management of working capital, and to ongoing repayment of medium-/long-term loans.
Interest risk
The company’s operating profit (loss) is exposed to fluctuations in market interest rates, with special reference to net financial expenses relating to special facilitated medium-/long-term loans of the variable-rate type.
The return of financial investments, consisting of short-term cash investments with a maturity of not more than three months, is not affected by changes in interest rates.
To address the interest risk, the company uses interest-rate derivatives – mainly interest rate swaps (IRSs) – to eliminate or mitigate, at acceptable economic conditions, the impact of interest rate fluctuations on profit performance.
As at 31 December 2009, 100% of exposure calculated for this risk in connection with medium-/ long-term liabilities was hedged.
The main way of raising financial resources from third parties the company currently uses is medium-/ long- term facilitated loans, also because of the interest subsidies they envisage, which substantially reduce the cost of financial resources.
In 2005, the Company agreed three facilitated loans under Italian Law 62/2001 (Contributions to the Publishing Industry), with maturity date to 30 June 2015: – a loan of € 6,976 thousand from Credito Emiliano (100% used);
268 Gruppo 24 ORE
2009 annual financial report
– two loans from Intesa Sanpaolo in the amounts of € 3,595 thousand (100% used) and € 8,199 thousand (a loan issued according to project completion status and partly used out of a total authorized amount of € 10,530 thousand).
These loans are to be repaid in fixed amounts of principal every six months and were agreed at a floating rate of interest linked to 6-monthE uribor.
As part of the Group’s risk management policy, hedge contracts are in place to mitigate the risk of fluctuations in the interest rates on these loans.
On 17 January 2006, the company signed three Payer Interest Rate Swaps - Forward Start (i.e. the hedge takes effect after the date the IRS contract was signed), for which it pays a fixed rate that transforms the interest rate on the underlying loan from floating to fixed, with an exchange of interest flows as from 31 December 2008 to 30 June 2015 (the maturity date).
Each IRS follows the trend of the repayment plan and of the interest settlement dates for the loan to which it refers. The value of the IRS hedging the loan for which the amount is defined on the basis of project completion status – and that had initially been signed for an amount equal to the maximum authorized loan amount – was also aligned during the year with the amount actually paid out, proceeding with a partial unwinding.
A delayed start to the IRSs was decided so as to benefit during the first 18 months of the loans from the expected positive differential between the expected trend of the 6-month Euribor and the fixed rate quoted in the IRSs.
The IRSs made it possible to convert the floating rate of the loans into a fixed rate of around 3.20%.
The company has evaluated the effectiveness of the hedges, using the hedge accounting methodology based on the cash flow hedge model. This refers to hedging of exposure to the variability of cash flows, attributable to the particular risk associated with the underlying liability.
Based on this methodology, after determining the fair value of the derivative, the value of the effective part of the hedge is recognized in a special equity reserve, whereas the value of the ineffective part of the hedge is recognized in the income statement.
The effectiveness of the hedging relationship is measured by comparing the change in the clean fair value of the derivative with that of a hypothetical swap representing a synthetic fixed-rate bond at the market conditions existing when the hedge was agreed.
269 Gruppo 24 ORE
2009 annual financial report
The ex ante effectiveness of the hedge of the instrument has been evaluated by analyzing critical items and by measuring the fair value of the hedging derivative and of the hypothetical derivative.
The retrospective effectiveness of the hedge (ex post effectiveness test) is evaluated regularly by calculating the change in the fair value of the hedging derivative compared with that of the hypothetical derivative, determined by the fluctuation that has occurred between the current interest rate curve compared with the rate curve at the date when the swap was agreed (cumulative based test).
The hedge is considered retrospectively effective if the ratio between the two variances, in absolute terms, lies within a range of 80-125%. This test is performed on a cumulative basis, performing calculations as at the date of the test and as at the start date.
The following tables show our exposure to interest risk. These are based on separate measurement of the impacts of changes in interest rates (sensitivity analysis) for (a) fixed-rate instruments, in terms of impact on fair value, and (b) floating-rate instruments, in terms of impact of expected cash flows.
FINANCIAL INCOME AND EXPENSES
(in thousands of euro) a2009 a2008 PRecognizedroventi e in oneri income finanziari statement Interest income from unimpaired held-to-maturity financial assets 1,021 1,556 Interest income from available-for-sale financial assets – 54 Interest income on bank deposits 2,156 10,402 Net foreign exchange gains 23 22 Financial income 3,200 12,034 Interest expenses from financial liabilities carried at face value and other financial expenses (408) (1,324) Net foreign exchange losses (43) (40) Change in fair value of financial assets designated at fair value through profit or loss (FVTPL) – (8) Impairment losses on held-to-maturity securities (22) (22) Ineffective portion of changes in fair value of cash flow hedges – – Financial expenses (473) (1,394) The financial income and expenses shown above include the following amounts relating to assets and liabilities not designated as FVTPL: Total interest income on financial assets 3,200 11,980 Total interest expenses on financial liabilities (465) (1,386) Recognized directly in equity Effective portion of changes in fair value of cash flow hedges (459) (143)
270 Gruppo 24 ORE
2009 annual financial report
Financial assets
FINANCIAL ASSETS
(in thousands of euro) a31/12/2009 a31/12/2008 Non-current financial assets Held-to-maturity financial assets 18,956 18,678 Current financial assets Loans to subsidiaries 2,147 7,399 Financial receivables from subsidiaries 19,273 8,859 Cash & cash equivalents 87,383 143,205 Hedging instruments (459) (143) Total financial assets 127,300 177,998
Non-current financial assets held to maturity refer to the MonteP aschi Vita life insurance policy, and guarantee deposits.
Current financial assets refer to cash and cash equivalents, financial receivables from subsidiaries, and the fair value of hedging instruments.
Financial liabilities
FINANCIAL LIABILITIES
(in thousands of euro) a31/12/2009 a31/12/2008 Non-current liabilities Secured bank loans – – Unsecured bank loans 10,144 13,287 Total non-current liabilities 10,144 13,287 Current liabilities Current portion of secured bank loans – – Current portion of unsecured bank loans 3,143 3,085 Financial payables to subsidiaries 4,162 5,151 Total current liabilities 7,305 8,236 Total financial liabilities 17,449 21,523
271 Gruppo 24 ORE
2009 annual financial report
Loan contracts
This note illustrates the contractual conditions regulating the company’s interest-bearing financial liabilities, measured at amortized cost.
LOAN CONDITIONS AND REPAYMENT PLANS
(in thousands of euro) f31/12/2009 f31/12/2008 nominal interest year of nominal carrying nominal carrying rate maturity value amount value amount Unsecured bank loan 3.05% 2011 1,530 1,530 2,478 2,478 Unsecured bank loan Euribor+0.875% 2015 4,038 4,038 4,773 4,773 Unsecured bank loan Euribor+0.850% 2015 2,081 2,081 2,460 2,460 Unsecured bank loan Euribor+0.850% 2015 5,637 5,637 6,661 6,661 Total 13,286 13,286 16,372 16,372
The effectiveness of the hedges, which is determined using hedge accounting methods, made it possible to recognise the fair value of these IRSs in an equity reserve.
DERIVATIVE INSTRUMENT CONTRACTS
(in thousands of euro) f31/12/2009 f31/12/2008 interest expense year of national fair national fair rate maturity value value value value Interest Rate Swap 3.04% 2015 4,039 (155) 4,773 (47) Interest Rate Swap 3.30% 2015 2,081 (82) 2,460 (26) Interest Rate Swap 3.30% 2015 5,637 (222) 6,661 (70) Total 11,757 (459) 13,894 (143)
Credit risk exposure
The carrying amount of financial assets and trade receivables represents the company’s maximum exposure. As at the reporting date, this exposure was as follows:
CREDIT RISK EXPOSURE
(in thousands of euro) a31/12/2009 a31/12/2008 Held-to-maturity assets 18.956 18.678 Trade receivables (*) 161.830 169.654 Loans to subsidiaries 2.147 7.399 Financial receivables from subsidiaries 19.273 8.859 Cash and cash equivalents 87.383 143.205 Interest rate swap hedges: Assets 639 1.303 Total 290.228 349.098
(*) does not include: provision for bad debts, advances to suppliers, agents, and copyright royalties.
272 Gruppo 24 ORE
2009 annual financial report
As at the reporting date, the company’s exposure relating to trade receivables, by geographical area, was as follows:
BREAKDOWN BY GEOGRAPHICAL AREA
(in thousands of euro) a31/12/2009 a31/12/2008 Italy 155,954 160,356 Eurozone countries 3,394 7,121 United Kingdom 1,790 1,495 Other European countries 477 368 United States 134 136 Other 81 178 Total 161,830 169,654
As at the reporting date, the company’s exposure relating to trade receivables, by customer type, was as follows:
BREAKDOWN BY CUSTOMER TYPE
(in thousands of euro) a31/12/2009 a31/12/2008 Advertising agencies 33,870 41,797 Companies and financial institutions 65,499 66,135 Public entities 10,388 8,973 Professionals and private individuals 29,180 25,790 Other customers 22,893 26,959 Total 161,830 169,654
Impairment losses on trade receivables
The following table shows the age of trade receivables as at the reporting date:
AGING OF TRADE RECEIVABLES
(in thousands of euro) f31/12/2009 f31/12/2008 gross provision for gross provision for bad debts bad debts Not due 111,790 1,041 131,880 1,773 Past due 1-30 days 3,594 174 3,121 94 Past due 31-120 days 7,474 1,141 4,080 217 Past due 121 days - 1 year 21,258 5,016 18,594 4,207 More than 1 year 17,714 10,348 11,979 8,531 Total 161,830 17,720 169,654 14,822
273 Gruppo 24 ORE
2009 annual financial report
The following changes took place during the year in the provision for bad debts relating to trade receivables:
CHANGES IN PROVISION FOR BAD DEBTS
(in thousands of euro) a31/12/2009 a31/12/2008 Balance at 1 January 14,822 13,586 Loss for the year (2,725) (4,122) Additions 5,623 5,358 Total 17,720 14,822
Liquidity risk
The following table shows the contractual due dates of financial liabilities and trade payables:
LIQUIDITY RISK
(in thousands of euro) f31/12/2009 carrying projected cash up to 6-12 1-2 2-5 more than amount flows 6 months months years years 5 years Non-derivative financial liabilities Unsecured bank loans 13,287 (13,851) (1,657) (2,190) (2,283) (6,644) (1,077) Financial payables subsidiaries 4,162 (4,162) (4,162) – – – – Trade & other payables 86,689 (86,689) (86,689) – – – – Derivative financial liabilities Interest rate swap hedges 1,098 (1,098) (189) (173) (287) (434) (15) Total 105,236 (105,800) (92,697) (2,363) (2,570) (7,078) (1,092) (in thousands of euro) f31/12/2008 carrying projected cash up to 6-12 1-2 2-5 more than amount flows 6 months months years years 5 years Non-derivative financial liabilities Unsecured bank loans 16,372 (19,565) (1,989) (1,955) (4,328) (7,761) (3,532) Financial payables subsidiaries 5,151 (5,151) (5,151) – – – – Trade & other payables 93,600 (93,600) (93,600) – – – – Derivative financial liabilities Interest rate swap hedges 1,446 (1,446) (217) (201) (343) (601) (84) Total 116,569 (119,762) (100,957) (2,156) (4,671) (8,362) (3,616)
274 Gruppo 24 ORE
2009 annual financial report
Cash flow hedging
Expected future cash flows, associated with hedging derivatives, are detailed in the table below:
CASH FLOW HEDGING
(in thousands of euro) f31/12/2009 carrying projected cash up to 6-12 1-2 2-5 more than amount flows 6 months months years years 5 years Interest rate swap hedges: Assets 639 639 56 59 157 353 14 Liabilities (1.098) (1.098) (189) (173) (287) (434) (15) Total (459) (459) (133) (114) (130) (81) (1) (in thousands of euro) f31/12/2008 carrying projected cash up to 6-12 1-2 2-5 more than amount flows 6 months months years years 5 years Interest rate swap hedges: Assets 1,303 1,303 215 180 299 532 77 Liabilities (1,446) (1,446) (217) (201) (343) (601) (84) Total (143) (143) (2) (21) (44) (69) (7)
Interest rate risk – Profile
As at the reporting date, the profile of the interest rates applied to the company’s interest-earning financial instruments was as follows:
INTEREST RATE RISK
(in thousands of euro) carrying amount f31/12/2009 f31/12/2008 Fixed-rate financial instruments Financial assets 19,595 19,981 Financial liabilities (2,628) (3,924) Total 16,967 16,057 Variable-rate financial instruments Financial assets 108,803 159,463 Financial liabilities (15,919) (19,045) Total 92,884 140,418
Sensitivity analysis – Fair market value of fixed-rate instruments
As at 31 December 2009 the Company did not post any financial asset or liability at fair value through profit or loss F( VTPL) and did not account for hedging derivatives (interest rate swaps) using the fair-value hedge accounting method. Consequently, any changes in interest rates as at the reporting date did not have any effect on the income statement.
275 Gruppo 24 ORE
2009 annual financial report
Sensitivity analysis – Fair market value of variable-rate instruments
If interest rates had increased or decreased by 100 basis points (bps), as at the reporting date, equity and profit (loss) for the year would have respectively increased or decreased by € 264 thousand and € 2,692 thousand, as shown in the following table:
SENSITIVITY ANALYSIS
(in thousands of euro) profit / loss equity increase of decrease of increase of decrease of 100 bps 100 bps 100 bps 100 bps 2009 Variable-rate financial instruments 2,692 (2,692) – – Interest rate swaps – – 264 (144) Net sensitivity of cash flows 2,692 (2,692) 264 (144) 2008 Variable-rate financial instruments 2,322 (2,322) – – Interest rate swaps – – 498 (404) Net sensitivity of cash flows 2,322 (2,322) 498 (404)
Policies for calculation of fair value
Below we indicate the methods and main assumptions used to calculate the fair value of financial instruments.
Investments in equity instruments and debt instruments
The fair value ofF VTPL financial assets, of those held to maturity, and of those available for sale, is calculated based on the relevant bid price as at the reporting date.
Derivative financial instruments
The fair value of exchange rate futures is calculated according to their market price as at the reporting date, if available. If a market price is not available, fair value is estimated by discounting the difference between the contractual forward price and the current forward price for residual contract maturity, applying a risk-free interest rate (Italian government securities).
The fair value of interest rate swaps IR( Ss) is calculated on the basis of brokers’ prices, the fairness of
276 Gruppo 24 ORE
2009 annual financial report
which is checked by discounting future cash flows estimated based on the terms and maturity of each contract for each financial instrument, applying the market interest rate as at the reporting date for a similar financial instrument.
Non-derivative financial liabilities
Fair value is calculated based on the present value of the estimated future cash flows of principal and interest, discounted using the market interest rate as at the reporting date.
Interest rates used to calculate fair value
Interest rates used to calculate projected cash flows, where applicable, are based on the yield curve of Italian government securities as at the reporting date plus an appropriate credit spread.
Fair value and carrying amount
The following table shows – for each class of financial asset and liability and for trade receivables and payables – the carrying amount recognized on the statement of financial position and the related fair value:
FAIR VALUE
(in thousands of euro) f31/12/2009 f31/12/2008 carrying fair value carrying fair value amount amount Held-to-maturity assets 18,956 19,580 18,678 18,429 Trade receivables 161,830 161,611 169,654 169,111 Loans to subsidiaries 2,147 2,120 7,399 7,557 Financial receivables from subsidiaries 19,273 19,273 8,859 8,859 Cash and cash equivalents 87,383 87,383 143,205 143,205 Interest rate swap hedges: Assets 639 639 1,303 1,303 Liabilities (1,098) (1,098) (1,446) (1,446) Secured bank loans – – – – Unsecured bank loans (13,287) (12,758) (16,372) (17,456) Financial payables to subsidiaries (4,162) (4,162) (5,151) (5,151) Trade & other payables (86,689) (86,689) (93,600) (93,600) Total 184,992 185,899 232,529 230,811
277 Gruppo 24 ORE
2009 annual financial report
Guarantees
The company has bank suretyships outstanding for a total of € 13,096 thousand.
These suretyships are summarized below: – Suretyships totalling € 1,539 thousand given to the tax authorities as guarantee for netting performed in Group consolidated VAT returns filed for 2006 and 2007; – Suretyships for € 223 thousand to the Milan Inland Revenue Office as security for offsetting the VAT receivable claimed by the subsidiary Innovare 24 S.p.A. for 2005 and 2006. The offsets were made as part of Group netting of VAT in 2006 and 2007; – Suretyships totalling € 6,440 thousand granted by as security deposits on leases. In particular, there is one in favour of Stremmata, owner of the building on Via Monte Rosa in Milan, for a total of € 5,642 thousand, and one in favour of Finamo for lease of the property located at Piazza Indipendenza in Rome for € 670 thousand; – Suretyships totalling € 4,296 thousand given to Italian government ministries, government entities, or municipalities as guarantee for prize competitions and service supply contracts, etc.; – Suretyships totalling € 598 thousand given to private independent counterparties for trading operations and supply contracts, etc.
It should also be noted that some of the suretyships indicated above – for a total amount of € 1,619 thousand – have been issued as guarantee for the commitments of Group subsidiaries, against lines of credit under the parent’s signature.
278 Gruppo 24 ORE
2009 annual financial report
7. Principal reasons for uncertainties in estimates
Estimates are used mainly to recognize impairment losses on assets, to calculate probable returns on publications that have been distributed, to determine the extent to which receivables and inventories should be written down, and to quantify the amounts to be provided for probable risks.
Estimates are also used in the actuarial calculation of post-employment benefits and to calculate the amount of income tax due, the fair value of financial instruments, the useful life of assets, and the recoverability of deferred tax assets.
In the present economic and financial environment, featuring significant volatility of the main market factors and profound uncertainty as regards the economic outlook, the utmost attention has been dedicated to providing appropriate and exhaustive information concerning the reasons underlying decisions taken, the evaluations performed, and the estimation policies applied.
These estimates and assumptions are reviewed at least once a year and the effects of each change are immediately reflected in the income statement.
In particular, the returns on publications are estimated using statistical techniques and updated monthly on the basis of actual figures. The estimate of legal risks also takes the nature of the litigation into account.
279 Gruppo 24 ORE
2009 annual financial report
8. Notes to the separate financial statements
Non-current assets
(1) Property, plant and equipment
At year-end the carrying amount of property, plant, and equipment was € 86,125 thousand. Changes were as follows:
PROPERTY, PLANT AND EQUIPMENT
(in thousands of euro) opening purchases disposals depreciation reclassi- closing balance fications balance Historical cost: Land 2,870 – – – – 2,870 Buildings 30,913 97 (4) – 3 31,011 Plant and equipment 107,902 2,659 (1,514) – 656 109,705 Industrial and commercial equipment 39,262 2,173 (456) – 134 41,113 Other assets 824 24 – – (793) 55 Total historical cost 181,771 4,953 (1,974) – (0) 184,754 Accumulated depreciation: Buildings (13,217) – 2 (1,109) – (14,325) Plant and equipment (46,618) – 1,193 (6,388) 0 (51,814) Industrial and commercial equipment (30,428) – 448 (2,508) 0 (32,490) Total accumulated depreciation (90,263) – 1,643 (10,005) 0 (98,629) Property, plant and equipment: Land 2,870 – – – – 2,870 Buildings 17,696 97 (3) (1,109) 3 16,686 Plant and equipment 61,284 2,659 (321) (6,388) 656 57,891 Industrial and commercial equipment 8,834 2,173 (7) (2,508) 134 8,623 Other assets 824 24 – – (793) 55 Total 91,508 4,953 (331) (10,005) 0 86,125
During the year, investments totalling € 4,953 thousand were made in the following: – € 97 thousand in buildings; – € 2,659 thousand in plant and machinery, of which we highlight leasehold improvements (€ 1,940 thousand), mainly relating to the new Rome office, atP iazza Indipendenza (€ 1,579 thousand); € 711 thousand in production plants for the Milan and Carsoli plants; – € 2,173 thousand in industrial and commercial equipment, and particularly € 1,329 thousand for hardware purchases, € 352 thousand for furnishing the new offices in Rome and € 186 thousand in terminals lent free of charge to customers of the Multimedia division; – assets under construction in the amount of € 24 thousand.
Disposals totalled € 331 thousand, which resulted in € 225 thousand in gains/losses (note 43).
280 Gruppo 24 ORE
2009 annual financial report
Annual depreciation on property, plant and equipment, based on their estimated useful life, totalled € 10,005 thousand. Assets purchased during the year are depreciated as from the start of use.
The following table shows the useful life of the assets included in the various categories shown on the statement of financial position:
USEFUL LIFE OF PROPERTY, PLANT AND MACHINERY
asset category useful life rate Land Indefinite – Buildings Industrial buildings 30-33 years 3% –3.33% Temporary buildings 10-12 years 8.33% –10% Plant and equipment Generic plant 10-20 years 5% –10% Plant (leasehold improvements) 3-15 years 6.66% –33.33% Rotary printing presses 15 years 6.50% Finishing machinery 15 years 6.50% Electronic photocomposition and photoreproduction systems 3-5 years 20% –33.33% Radio broadcasting plant 10 years 10.00% Other assets Hardware 4-5 years 20% –25% Furniture and fittings 5-8 years 12%–20% Electronic office machinery 5 years 20,00% Air-conditioning systems 5-20 years 5%–20% Internal means of transport 5-10 years 10%–20% Sundry tools & minor equipment items 4 years 25.00%
The following are the items of property, plant and equipment shown in the financial statements of the parent at 31 December 2009 that have undergone revaluation. The revaluations made to property, plant and equipment were based on specificI talian laws and not on the company’s individual will or discretion. The total value of revaluations as at year end is detailed below:
REVALUATIONS
(in thousands of euro) law 413/1991 law 342/2000 Land and buildings 1,105 1 Plant and equipment – 5,198 Other assets – 4,095 Total revaluations 1,105 9,294
(2) Goodwill
The value of goodwill was € 513 thousand and is unchanged from the previous year.
The goodwill refers to the magazine Ventiquattro, a mandatory add-on to the newspaper. The current negative business cycle, which has hit advertising particularly hard, causes losses that can be recovered in future financial years.
281 Gruppo 24 ORE
2009 annual financial report
(3) Intangible assets
Intangible assets totaled € 18,915 thousand. The following changes took place during the year:
INTANGIBLE ASSETS
(in thousands of euro) opening purchases disposals amortization riclassifi- closing balance cations balance Historical cost: Publications 8,773 – – – – 8,773 Other intangible assets 84,210 5,564 – – 577 90,351 Intangible assets in progress & down payments 969 313 – – (577) 705 Total historical cost 93,952 5,877 – – (0) 99,829 Accumulated amortization: Publications (8,709) – – (21) – (8,730) Other intangible assets (68,836) – – (3,348) 0 (72,184) Total accumulated amortization (77,545) – – (3,369) 0 (80,914) Intangible assets Publications 64 – – (21) – 43 Other intangible assets 15,374 5,564 – (3,348) 577 18,167 Intangible assets in progress & down payments 969 313 – – (577) 705 Total 16,407 5,877 – (3,369) – 18,915
Investments in other intangible assets totalled € 5,877 thousand in 2009 and mainly reflect € 2,514 thousand for development of software products in the Professional and Multimedia Areas, € 776 thousand for administrative and management system projects, € 524 thousand for infrastructure and platforms as part of the CRM project, and € 494 thousand for the purchase of licenses.
Amortization amounted to € 3,369 thousand. Expected useful life is 3-5 years.
(4) Investments in associates
INVESTMENTS IN ASSOCIATES
(in thousands of euro) opening changes in closing balance consolidated balance companies Diamante S.p.A. 1,300 – 1,300 Blogosfere S.r.l. 771 (771) – Italia news S.r.l. 20 – 20 Total 2,091 (771) 1,320
The acquisition in March 2009 of 50% of the quota capital of Blogosfere S.r.l. raised theC ompany’s interest therein to 80%, resulting in its being reclassified as a subsidiary, under O“ ther non-current assets.”
282 Gruppo 24 ORE
2009 annual financial report
(5) Available-for-sale financial assets
This item relates to non-controlling investments and amounted to € 2,875 thousand, with the following breakdown:
non-controlling INVESTMENTS
(in thousands of euro) opening impairment closing balance balance Editorial Ecoprensa S.A. 2,766 (500) 2,266 Ansa Soc. Coop a r.l. 370 – 370 Actinvest Group S.r.l. 225 – 225 C.S.I.E.D. 10 – 10 Immobiliare Editoriale Giornali S.r.l. 3 – 3 S.F.C. Soc. consortile per azioni 1 – 1 Total 3,375 (500) 2,875
The equity investment inE ditoriale Ecoprensa S.A. was impaired by € 500 thousand. The amount of this impairment was determined by discounting prospective cash flows on the basis of the earnings projections set out in the 2007-2015 business plan approved by the company and revised by the management of Il Sole 24 ORE S.p.A. in consequence of the reported deviations from 2009 actual figures and the new projection forFY 2010.
(6) Other non-current financial assets
Other non-current financial assets are shown in the statement of financial position at an amount of € 19,168 thousand, for an increase of € 591 thousand over the previous year.
This item refers to an insurance policy with consolidation of the results and minimum guaranteed return of 3% agreed with Monte Paschi Vita and expiring on 1 April 2014. The increase in 2009 from 2008 refers to this consolidation.
(7) Other non-current assets
OTHER NON-CURRENT ASSETS
(in thousands of euro) a31/12/2009 a31/12/2008 change Guarantee deposits 426 687 (259) Investments in subsidiaries 150,242 166,744 (16,503) Total 150,668 167,431 (16,763)
283 Gruppo 24 ORE
2009 annual financial report
The list of investments in subsidiaries and changes in 2009 are shown below:
INVESTMENTS IN SUBSIDIARIES
(in thousands of euro) opening acquisitions changes in other impairment reclassification closing balance consolidated changes to non-current balance companies assets held for sale Nuova Radio S.p.A. 43,469 – – – – – 43,469 Newton Management Innovation S.p.A. 2,325 – – (35) – – 2,290 Il Sole 24 ORE Business Media S.r.l. 48,392 – – – (14,225) – 34,167 Innovare 24 S.p.A. 69,154 – – – – – 69,154 24 ORE Cultura S.r.l. 942 740 – 2,998 (4,680) – – Il Sole 24 ORE UK Ltd 662 – – – – – 662 Alinari 24 ORE S.p.A. 1,800 – – – (1,311) – 489 Shopping 24 S.r.l. – 10 – – – – 10 Blogosfere S.r.l. – 850 771 – (54) (1,567) – Total 166,744 1,600 771 2,963 (20,270) (1,567) 150,241
The most significant transactions were as follows: – il Sole 24 Ore Business Media S.r.l. Following the forecasts contained in the business plan of the subsidiary Il Sole 24 ORE Business Media S.r.l. and the related future cash flows, the equity investment was written down by € 14,225 thousand, bringing the carrying amount of the investment in line with the value of the intangible assets on the consolidated financial statements. Also in regard to this equity investment and in order to streamline Group activities, on 1 February 2010 the company Board of Directors approved the merger of Il Sole 24 Ore Business Media S.r.l. into the parent. – 24 Ore Cultura S.r.l.: the entire equity holding owned by Federico Motta Editore S.p.A., or 43% of the company, was acquired in April 2009 for € 740 thousand. The amount of € 2,998 thousand was charged to the carrying amount of this investment as a result of the resolution passed by the 31 July 2009 shareholders’ meeting to cover losses. This value was then fully impaired because the 2009 financial statements of 24 Ore Cultura showed a net deficit. Provisions of € 706 thousand were recognised to cover these losses, equal to the amount of the net deficit to be covered. – Blogosfere S.r.l.: a further 50% equity interest in Blogosfere S.r.l. was acquired on 10 March 2009, thus increasing the Company’s total stake to 80%. The total cost of the deal, including that relating to the first 30% tranche, was € 1,621 thousand. Following execution at the beginning of 2010 of an agreement to sell the entire equity holding (80%), the subsidiary was measured and classified as a non-current asset held for sale. – Shopping 24 S.r.l.: 100% of the equity of the subsidiary Data Ufficio S.p.A. was acquired. The firm will operate the Company’s e-commerce activity. – alinari 24 Ore S.p.A.: its carrying amount was impaired due to the losses realised in 2008 and 2009 and the company’s earnings prospects.
284 Gruppo 24 ORE
2009 annual financial report
(8) Deferred tax assets and liabilities
These items show the impact of deferred tax assets and liabilities. These are calculated on the deductible and taxable differences that temporarily emerge between financially reported amounts and their tax value.
The balances at 31 December 2009 and 2008 for deferred tax assets and liabilities are shown below:
DEFERRED TAX ASSETS
(in thousands of euro) f31/12/2009 f31/12/2008 change Deferred tax assets 18,092 9,935 8,157
DEFERRED TAX LIABILITIES
(in thousands of euro) f31/12/2009 f31/12/2008 change Deferred tax liabilities 740 1,547 (807)
The table below shows the changes for the year:
DEFERRED TAX ASSETS AND deferred tax provision
(in thousands of euro) deferred tax deferred tax net assets provision Balance at 31/12/2008 9,935 (1,547) 8,388 Other income-statement effects 6,410 720 7,130 Other effects charged to equity – 87 87 Carry-forward losses from tax consolidation system 1,747 – 1,747 Balance at 31/12/2009 18,092 (740) 17,352
A breakdown of the balances at 31 December 2009 and 2008 for deferred tax assets and liabilities is shown in the table below:
Deferred tax assets/liabilities
assets liabilities net (in thousands of euro) f31/12/2009 f31/12/2008 f31/12/2009 f31/12/2008 f31/12/2009 f31/12/2008 Property, plant and equipment 73 329 (34) (38) 39 291 Intangible assets 138 438 – – 138 438 Receivables and provisions 6,806 6,883 (1,390) (1,389) 5,416 5,494 Other 2,329 3,571 (603) (1,406) 1,725 2,165 Loss carry-forwards 8,285 – – – 8,285 – Loss carry-forwards from tax consolidation system 1,747 – – – 1,747 – Deferred tax assets/liabilities 19,378 11,221 (2,026) (2,833) 17,352 8,389 Netting of taxes (1,286) (1,286) 1,286 1,286 – – Net deferred tax assets/liabilities 18,092 9,935 (740) (1,547) 17,352 8,389
285 Gruppo 24 ORE
2009 annual financial report
changes in dEFERRED TAX ASSETS AND LIABILITIES
(in thousands of euro) f31/12/2009 f31/12/2008 recognised recognised from tax change in in income in equity consolidation consolidation statement system scope Property, plant and equipment 39 291 (252) – – – Intangible assets 138 438 (300) – – – Receivables and provisions 5,416 5,493 (57) – – – Other 1,725 2,165 (526) 87 – – Loss carry-forwards 8,285 – 8.285 – – – Loss carry-forwards from tax consolidation system 1,747 – – – 1,747 – Deferred tax assets/liabilities 17,351 8,389 7,151 87 1,747 – Change in tax rate – – – – – – Net deferred tax assets/liabilities 17,351 8,389 7,151 87 1,747 –
The parent reported negative taxable income subject to IRES (corporate income tax), for which € 8,285 thousand in deferred tax assets were recognised.
The deferred taxes recognised in other components of comprehensive income refer to the measurement of derivative financial instruments. The taxes recognised in other components of comprehensive income totalled –€ 156 thousand and stem from the € 87 thousand balance of measurement of derivative instruments and current taxes on the actuarial gains stemming from post-employment benefits of –€ 243 thousand, with the latter being immediately recognisable for tax purposes and thus allocated to current taxes.
Furthermore, the parent recognised deferred tax assets for € 1,747 thousand on the taxable loss transferred by the subsidiaries as part of the tax consolidation programme.
The carry-forward losses totalling € 10,011 thousand were deemed to be recoverable by the five-year time-limit on the their use. This value is recognised on the basis of plans that forecast taxable income in future financial years that will permit the use and recovery of these deferred tax assets, resulting in lower tax liability for those years. The company does not have carry-forward losses from previous periods.
286 Gruppo 24 ORE
2009 annual financial report
Current assets
(9) Inventories
Inventories amounted to € 10,770 thousand and are broken down as follows:
INVENTORIES
(in thousands of euro) f31/12/2009 f31/12/2008 change Paper 9,010 10,025 (1,015) Ink 97 155 (58) Photographic material 374 397 (23) Raw ancillary materials and consumables 9,481 10,577 (1,096) Work in progress and semi-finished products 43 16 27 Books 1,849 2.225 (376) Software 58 45 13 CDs 54 44 10 Other products 35 33 2 Provision for obsolete & slow-moving finished products (818) (450) (368) Finished goods and merchandise 1,178 1,897 (719) Other merchandise bought-in 94 126 (32) Provision for obsolete & slow-moving merchandise (26) (4) (22) Finished products and merchandise 68 122 (54) Total 10,770 12,612 (1,842)
Inventories are shown net of the provisions for obsolete and slow-moving goods, which featured the following changes:
PROVISIONS for obsolete and slow-moving goods
(in thousands of euro) opening additions use of reclassifications closing balance provisions and other balance changes Provision for obsolete and slow-moving finished products (449) (525) 156 − (818) Provision for obsolete and slow-moving merchandise (4) (23) 1 − (26) Total (453) (548) 157 – (844)
287 Gruppo 24 ORE
2009 annual financial report
(10) Trade receivables
Trade receivables amounted to € 149,408 thousand and are broken down as follows:
TRADE RECEIVABLES
(in thousands of euro) f31/12/2009 f31/12/2008 change Trade receivables 161,830 169,654 (7,824) Provision for returns to be received (5,130) (4,645) (485) Provision for bad debts (17,720) (14,822) (2,898) Net trade receivables 139,980 150,187 (11,207) Ordinary advances to suppliers 6,502 6,491 10 Agents and agencies 2,792 1,721 1,071 Customers of non-controlling investments, associates, and affiliates 5 17 (12) Customers of subsidiaries 1,129 836 293 Total 149,408 159,252 (9,844)
Trade receivables are shown net of the € 5,130 thousand provision for returns to be received in the following year.
Receivables are also shown net of the provision for bad debts of € 17,720 thousand.
Changes in these provisions were as follows:
PROVISIONS FOR BAD DEBTS
(in thousands of euro) opening additions use of reclassifications closing balance provisions and other balance changes Provision for returns to be received (4,645) (5,130) 4,645 – (5,130) Provision for bad debts (14,822) (5,623) 2,725 – (17,720) Total (19,467) (10,753) 7,370 – (22,850)
(11) Other receivables
The item totalled € 8,291 thousand and is broken down as follows:
OTHER RECEIVABLES
(in thousands of euro) a31/12/2009 a31/12/2008 change Current income tax 6,018 740 5,278 Tax receivables 1,047 168 879 Employee-related receivables 592 614 (22) Other receivables 634 148 486 Total 8,291 1,670 6,621
288 Gruppo 24 ORE
2009 annual financial report
“Employee-related receivables” relate to expense allowances and loans to employees.
Tax receivables total € 1,047 thousand and are largely comprised by € 1,024 thousand for the VAT receivable.
(12) Other current financial assets
These include financial receivables from subsidiaries.
OTHER CURRENT FINANCIAL ASSETS
(in thousands of euro) f31/12/2009 f31/12/2008 change Il Sole 24 ORE Business Media S.r.l. 5,505 6,081 (576) Data Ufficio S.p.A. 4,588 6,110 (1,522) 24 ORE Cultura S.r.l. 4,440 2,532 1,908 Alinari 24 ORE S.p.A. 2,914 1,430 1,484 Esa Software S.p.A 1,603 – 1,603 Nuova Radio S.p.A. 1,603 105 1,498 STR S.p.A. 767 – 767 Total 21,420 16,258 5,162
Financial receivables relate to: ‒ a loan to Il Sole 24 ORE Business Media S.r.l. This loan was granted on 30 March 2007 to replace two previous bank loans, for an initial amount of € 8,588 thousand. The applied interest rate is the 365-day 6-month Euribor. The loan falls due on 31 December 2010, and is to be repaid in semi-annual instalments of € 1,073 thousand. At 31 December 2008, the balance of the loan was € 4,294 thousand. During the year, a partial repayment in the amount of € 2,147 thousand was made. The payable of Il Sole 24 ORE Business Media S.r.l. consists of the remainder of the loan (€ 2,147 thousand) and of the intercompany current-account balance (€ 3,358 thousand); ‒ current-account relationships with the subsidiaries 24 ORE Cultura S.r.l., Alinari 24 ORE S.p.A., Esa Software S.p.A., Data Ufficio S.p.A., Nuova Radio S.p.A. and STR S.p.A. to optimise the yield of subsidiaries’ cash balances. To its receivable balances, the parent applies an interest rate of 1-month Euribor/365 basis;
289 Gruppo 24 ORE
2009 annual financial report
(13) Other current assets
The item amounted to € 5,459 thousand and consisted of prepaid expenses detailed below:
PREPAID EXPENSES
(in thousands of euro) a31/12/2009 a31/12/2008 change Agents’ commissions 2,799 2,489 310 Production costs for serial products 297 695 (398) Employee insurance premiums 446 518 (72) Information and data expenses 113 517 (404) Royalty and copyright costs 113 334 (221) Hardware and software maintenance fees 203 197 6 Other production services 152 179 (27) License fees 296 137 159 Insurance premiums 205 130 75 MPS life insurance policy 212 116 96 Conference organization expenses 100 114 (14) IT services 387 56 331 Miscellaneous 136 129 7 Total 5,459 5,611 (152)
(14) Cash and cash equivalents
Cash and cash equivalents amounted to € 87,383 thousand, decreasing by € 55,822 thousand from the previous year. They consist of cash in hand, cash equivalents and on demand or short-term bank deposits that are effectively available and immediately convertible into cash.
The statement of cash flows shows cash and cash equivalents of € 101,499 thousand, net of current account overdrafts, € 3,143 thousand for bank loans due within 12 months (note 28) and intercompany current account relationships of € 17,259 thousand (notes 12 and 29).
Non-current assets held for sale
(15) Non-current assets held for sale
Non-current assets held for sale total € 1,591 thousand and substantially refer to the fair value of the equity investment in Blogosfere S.r.l.
290 Gruppo 24 ORE
2009 annual financial report
Equity
(16) Equity
Below we provide information concerning the breakdown of equity items as regards their nature, formation, availability, and distributability:
BREAKDOWN OF THE COMPONENTS OF EQUITY
equity component amount of which: of which: of which: possibility available distributable profit from taxable on of use (*) (**) portion portion capital distribution Ordinary shares subscribed and paid up 26,000 23,031 207 2,762 − − − Special shares subscribed and paid up 9,124 − 9,124 − − − − Share capital 35,124 23,031 9,331 2,762 − − − Share premium reserve 180,316 − − − A,B,C 180,316 − Reserve for grants related to assets 9,374 − − 9,374 A,B,C 9,374 9,374 Capital injections − − − − − − − Goodwill reserve 11,272 9,047 − 2,225 A,B,C 11,272 9,047 Payments to cover losses − − − − − − − Legal reserve 7,025 7,025 − − B − − Non-distributable reserve from revaluation of investments (Article 2426 Italian civil code) 1,165 − − 1,165 A,B 1,165 − Revaluation reserve – Law 342/00 18,786 − − 18,786 A,B 18,786 − Revaluation reserve – Law 350/03 1,776 − − 1,776 A,B 1,776 − Retained earnings 100,526 100,526 − − A,B,C 99,252 99,252 Capital and profit reserves 330,240 116,598 − 33,326 A,B,C 321,941 117,673 Reserve for post-employment benefits for adjustment IFRS 913 − − − − − − Reserve for fair value of Stock granting 5,636 − − − − − − Reserve for eff. part of cash flow hedges under IAS 39 P95A (333) − − − − − − Retained earnings (1,274) − − − − − − IFRS reserves 4,942 − − − − − − Total capital and reserves 370,306 136,629 9,331 36,088 321,941 117,673
(*) use of reserves distributable upon taxation has effects on taxation of the company and shareholders. (**) legend: A for capital increase. B for coverage of losses. C distribution to shareholders.
During 2007-2009, the reserves were not used either to cover losses or pay-outs.
(17) Share capital
Share capital, fully subscribed and paid in, amounts to € 35,123,787, divided into 133,333,213 shares, of which 90,000,000 ordinary shares (67.50% of share capital) and 43,333,213 special shares (32.50%), of which 4,894,693 treasury shares as at 31 December 2009.
291 Gruppo 24 ORE
2009 annual financial report
At the beginning of 2009, treasury shares numbered 5,811,476.
On 15 December 2009, in application of the stock granting plan, a total of 916,783 special shares were granted, free of charge, to employees. At the end of 2009, treasury shares numbered 4,894,693.
(18) Equity reserves
Equity reserves amounted to €180,316 thousand and underwent no change from 2008.
(19) Revaluation reserves
REVALUATION RESERVES
(in thousands of euro) f31/12/2009 f31/12/2008 change Revaluation reserve – Law 342/2000 18,786 18,786 – Revaluation reserve – Law 350/2003 1,776 1,776 – Total 20,561 20,561 –
(20) Hedging and translation reserves
The hedging and translation reserve came to a negative € 333 thousand and concerns the fair value of interest rate swaps, which were set up to hedge the risk of fluctuations in interest rates on three facilitated loans, net of related deferred tax assets. The portion of fair value forming the reserve in question concerns the IRS contracts classified as “cash flow hedges”, the value of which decreased by € 316 thousand (pre-tax) from the previous year, and which are considered effective forIA S 39 purposes.
(21) Other reserves
OTHER RESERVES
(in thousands of euro) f31/12/2009 f31/12/2008 change Negative goodwill 11,272 11,272 – Reserve for grants related to assets under Law 416/1981 9,374 9,374 – Legal reserve 7,025 7,025 – Stock granting reserve 5,636 3,752 1,884 Post-employment benefit reserve (IFRS adjustment) 913 271 642 Other 1,165 1,166 – Total 35,385 32,860 2,525
292 Gruppo 24 ORE
2009 annual financial report
“Other reserves” increased from € 32,860 thousand to € 35,385 thousand due to increases of: – € 1,884 thousand for the fair value of shares distributed to employees in execution of the stock granting bonus plan approved by the Board of Directors of Il Sole 24 ORE S.p.A. on 30 October 2007; – € 642 thousand due to the accounting treatment of post-employment benefit obligations.
(22) Retained earnings
“Retained earnings” rose from € 88,460 thousand to € 99,252 thousand. The increase of € 10,792 thousand was due to the portion of the previous financial year’s profit not used for dividends.
During the year, the following dividends were distributed, as approved by the shareholders in their ordinary meeting of 28 April 2009: – € 3,677 thousand to owners of special shares in the amount of € 0.098 for each of the 37,521,737 special-category shares outstanding; – € 6,453 thousand to owners of ordinary shares in the amount of € 0.0717 for each of the 90 million ordinary shares outstanding.
(23) Loss for the year
The loss for the year amounted to € 46,436 thousand. 2008 ended with a profit of € 20,922 thousand.
The following table illustrates the other components of comprehensive income and the associated tax effects:
(in thousands of euro) e2009 e2008 gross tax gross tax amount effect amount effect Other components of comprehensive income Actuarial gains (losses) of defined-benefit plans 885 (243) (730) 201 Effective portion of changes in fair value of cash flow hedges (316) 87 (812) 223 Fair value of Stock Granting 1,884 0 1,896 0 Total 2,453 (156) 354 424
293 Gruppo 24 ORE
2009 annual financial report
Non-current liabilities
(24) Non-current financial liabilities
“Non-current financial liabilities” amounted to € 10,144 thousand at year-end (€ 13,287 thousand at the end of 2008). They relate to the long-term portion of the facilitated loans received under the Italian Publishing Industry Law, as summarized in the following table:
MEDIUM-LONG TERM loans
bank facilitation amount interest rate date of current m/l residual paid out maturity portion term value at portion 31.12.2009 Law 416/81 UniCredit Banca Impresa S.p.A. 7,747 3,05% 30.06.2011 1,005 525 1,530 Publishing Industry Law 62/2001 Credito Emiliano S.p.A. 6,976 6-mo. Euribor + 0,875% 30.06.2015 734 3,304 4,038 Publishing Industry Law 62/2001 Intesa Sanpaolo S.p.A. 3,595 6-mo. Euribor +0,85% 30.06.2015 378 1,703 2,081 Publishing Industry Law 62/2001 Intesa Sanpaolo S.p.A. 8,199 6-mo. Euribor +0,85% 30.06.2015 1,025 4,612 5,637 Publishing Industry Total 26,517 3,142 10,144 13,286
For the fixed-rate loan, no guarantees have been given, nor have covenants been requested.
Conversely, the floating-rate loans (at the 6-month Euribor plus a spread) have been hedged against interest-rate fluctuations using specific derivative instruments, as described above under section 6 – Risk management. These loans are not backed by collateral, but include specific covenants, which to date have always been met.
The decrease of € 3,142 thousand compared with the figure as at 31 December 2008 was due to repayment of semi-annual instalments on the loans.
294 Gruppo 24 ORE
2009 annual financial report
(25) Employee benefit obligations
EMPLOYEE BENEFIT OBLIGATIONS
(in thousands of euro) opening cost of financial actuarial uses and closing balance labour income/ gains/ other balance (expenses) (losses) changes Post-employment 34,522 – 975 (965) (2,491) 32,041 Total 34,522 – 975 (965) (2,491) 32,041
The main assumptions used in estimating the benefits to be awarded on termination of employment are as follows:
Demographic assumptions: – the SIM and SIF 2002 tables (mortality rates by individual age for Italian males and females based on 2002 census data) were used for mortality rates; – the annual probabilities of elimination for reasons other than death have been directly deduced from recent statistics of employee eliminations in the companies being evaluated by means of suitable equalizations; – the annual probability of a post-employment benefit advance being requested has been set at 2.44%, based on historical data of the companies being evaluated.
Economic and financial assumptions: – the discount rate was determined as the average of the Euro swap, bid and ask rates at 31 December 2006; – as regards the inflation rate, necessary for revaluation of post-employment provisions made, the rate applied was 2%; – the percentage of accrued post-employment benefits requested in advance was set at 66.75% based on historical figures.
295 Gruppo 24 ORE
2009 annual financial report
(26) Provisions for risks and charges
PROVISIONS FOR RISKS AND CHARGES
(in thousands of euro) opening additions use of closing balance provisions balance Provision for legal disputes 8,035 900 (3,730) 5,205 Provision for sundry risks 3,872 – (912) 2,960 Provision for agents’ indemnities 4,568 790 (513) 4,846 Provision for losses at subsidiaries – 706 – 706 Total 16,475 2,396 (5,154) 13,717
Provisions for legal disputes (€ 5,205 thousand) cover litigation risks known at the reporting date. Such risks relate in particular to personnel lawsuits (€ 1,211 thousand), lawsuits against the newspaper (€ 1,613 thousand), disputes with social security institutions (€ 1,963 thousand), forecast legal expenses (€ 323 thousand), and other litigation (€ 95 thousand).
The provision for sundry risks (€2,960 thousand) covers the remaining risks on the contractual obligations connected with construction of the building at Via Monte Rosa in Milan.
Agents’ indemnities are provisions to cover the risks deriving from early termination of the contract and those relating to discontinuation of the agency relationship as per Article 1751 of the Italian Civil code.
The provision for losses at subsidiaries accounts for the accrual of € 706 thousand to cover the net deficit reported on the financial statements of the subsidiary 24O re Cultura S.r.l.
(27) Other non-current liabilities
The € 34 thousand balance was unchanged from the previous year.
296 Gruppo 24 ORE
2009 annual financial report
Current liabilities
(28) Bank overdrafts and loans - due within one year
These amounted to € 3,143 thousand (€ 3,085 thousand for the previous year) and included the short- term portion of medium-/long-term loans.
(29) Other current financial liabilities
This item refers to intercompany current account relationships, as detailed below:
OTHER CURRENT FINANCIAL LIABILITIES
(in thousands of euro) f31/12/2009 f31/12/2008 change Innovare24 S.p.A. 4,162 1,333 2,829 Nuova Radio S.p.A. – 3,621 (3,621) STR S.p.A. – 197 (197) Total 4,162 5,151 (989)
(30) Financial liabilities held for trading
Financial liabilities held for trading came to € 459 thousand, as described in the section Cash flow hedging of chapter 6 – Risk Management.
(31) Trade payables
TRADE PAYABLES
(in thousands of euro) f31/12/2009 f31/12/2008 change Suppliers 78,604 86,119 (7,515) Deferred income 53,555 55,684 (2,129) Amounts payable to associates 175 297 (122) Amounts payable to non-controlling interests 3 102 (99) Amounts payable to subsidiaries 361 475 (114) Other trade payables 7,546 6,608 938 Total 140,244 149,285 (9,041)
297 Gruppo 24 ORE
2009 annual financial report
The breakdown of deferred income is shown below:
DEFERRED INCOME
(in thousands of euro) a31/12/2009 a31/12/2008 change Sale of magazines 20,684 23,204 (2,520) Il Sole 24 ORE newspaper subscriptions 15,360 16,732 (1,372) Online publications by subscription 12,875 11,532 1,343 IT services 2,972 2,755 217 Software by subscription 1,664 1,461 203 Total 53,555 55,684 (2,129)
(32) Other current liabilities
OTHER current liabilities
(in thousands of euro) a31/12/2009 a31/12/2008 change Deferred income 4,376 4,852 (476) Current tax liabilities 22 – 22 Total 4,398 4,852 (454)
The breakdown of deferred income is shown below:
OTHER DEFERRED INCOME
(in thousands of euro) a31/12/2009 a31/12/2008 change Conferences 2,913 2,867 46 Annual portion of grants related to assets 370 224 146 Rental income 231 890 (659) Interests on m/l financial payables to third parties 225 95 130 Sales of software licenses 341 311 30 Other deferred income 296 465 (169) Total 4,376 4,852 (476)
(33) Other payables
OTHER PAYABLES
(in thousands of euro) a31/12/2009 a31/12/2008 change Holiday accruals 10,193 14,287 (4,094) Social security institutions 16,492 10,477 6,015 Tax payables 6,923 8,690 (1,767) Other employee payables 11,228 4,738 6,490 13th and 14th-month salaries accrued and not yet paid 2,968 2,884 84 Miscellaneous payables 1,243 849 394 Total 49,047 41,925 7,122
Tax payables mainly refer to withholding tax on payroll and on freelancers’ invoices.
298 Gruppo 24 ORE
2009 annual financial report
Income Statement
(34) Revenue from newspapers, books and magazines
REVENUE FROM NEWSPAPERS, BOOKS AND MAGAZINES
(in thousands of euro) a2009 a2008 change change % Newspaper 74,560 82,389 (7,829) –9.5% Magazines 52,581 59,074 (6,493) –11.0% Add-ons 10,069 27,376 (17,307) –63.2% Books 9,431 11,380 (1,949) –17.1% Total 146,642 180,218 (33,578) –18.6%
(35) Revenue from advertising
Advertising revenue amounted to € 161,554 thousand, with decrease of € 47,415 thousand, or 22.7%, from the previous year.
(36) Other revenue
OTHER REVENUE
(in thousands of euro) a2009 a2008 change change % Software 19,504 17,765 1,739 9.8% Digital publications 31,754 29,983 1,771 5.9% IT products 26,262 28,655 (2,393) –8.4% Revenue from other products and services 9,212 8,524 688 8.1% Revenue from conferences and training 12,275 12,082 193 1.6% Total 99,007 97,009 1,998 2.1%
(37) Other operating income
OTHER OPERATING INCOME
(in thousands of euro) a2009 a2008 change change % Prior year income 2,440 5,385 (2,945) –54.7% Sundry expense recoveries 6,505 5,577 928 16.6% Rental income 2,579 1,933 646 33.4% Grants 413 206 207 100.4% Other 1,667 1,950 (283) –14.5% Total 13,604 15,051 (1,447) –9.6%
“Grants” relate to the annual portion for 2009 of grants related to assets paid out in previous years.
299 Gruppo 24 ORE
2009 annual financial report
(38) Personnel expense
PERSONNEL EXPENSE
(in thousands of euro) a2009 a2008 change change % Wages & salaries 96,240 94,197 2,043 2.2% Social security charges & pension contributions 33,130 31,889 1,241 3.9% Post-employment benefits 7,409 7,940 (531) –6.7% Holiday accruals (3,658) 2,247 (5,905) –262.8% Overtime 3,588 3,526 62 1.8% Other personnel expense 17,047 1,516 15,531 1,024.4% Total 153,756 141,315 12,441 8.8%
Personnel expense increased by € 12,441 thousand. The change is due to € 16 million in restructuring charges offset by use of employee holiday accruals.
(39) Purchases of raw materials and consumables
PURCHASES OF RAW MATERIALS AND CONSUMABLES
(in thousands of euro) a2009 a2008 change change % Paper 24,339 31,920 (7,581) –23.8% Goods for resale 65 224 (159) –71.1% Photographic material and ink 1,614 1,983 (369) –18.6% Plant maintenance materials 1,123 1,105 18 1.6% Stationery & printed materials 385 379 6 1.6% Spare parts 362 502 (140) –27.9% Fuel 374 318 56 17.6% Packaging materials 175 198 (23) –11.6% Other sundry costs 159 173 (14) –8.1% Total 28,596 36,802 (8,206) –22.3%
300 Gruppo 24 ORE
2009 annual financial report
(40) Services
SERVICES
(in thousands of euro) a2009 a2008 change change % Distribution 28,406 38,006 (9,600) –25.3% Printing 23,125 31,012 (7,887) –25.4% Commissions & other selling expenses 32,212 30,993 1,219 3.9% Advisory services-freelancers 23,917 22,614 1,303 5.8% Advertising & promotion 16,901 22,224 (5,323) –24.0% Editorial costs 14,952 18,024 (3,072) –17.0% Set-up costs 6,275 6,580 (305) –4.6% News purchase 7,358 7,962 (604) –7.6% Advertising costs for publishers 23,221 21,703 1,518 7.0% Utilities (telephone, electricity, water, etc.) 4,596 4,640 (44) –0.9% Miscellaneous production costs 4,264 2,982 1,282 43.0% Employee expense refunds 3,613 4,608 (995) –21.6% Conferences 3,954 4,235 (281) –6.6% Maintenance & repairs 3,730 3,883 (153) –3.9% General facility services 4,295 3,805 490 12.9% Packing costs 1,542 3,266 (1,724) –52.8% Employee services (canteen, meal vouchers, and training courses, etc.) 3,060 3,206 (146) –4.6% Press agencies 2,601 2,628 (27) –0.1% Product warehousing costs 1,761 1,713 48 2.8% Insurance 1,025 1,063 (38) –3.6% Software development 593 945 (352) –37.3% Bank expenses 615 489 126 25.8% Transmission 392 400 (8) –2.0% Intragroup centralized services 640 106 534 506.2% Total 213,046 237,087 (24,039) –10.1%
(41) Use of third party assets
USE OF THIRD PARTY ASSETS
(in thousands of euro) a2009 a2008 change change % Rental costs 14,923 13,862 1,061 7.7% Royalties 2,803 5,753 (2,950) –51.3% Copyright royalties 3,345 3,393 (48) –1.4% Car rental for company/private use 3,258 3,329 (71) –2.1% Other fees 1,021 804 217 27.0% Other sundry costs 330 307 23 7.5% Total 25,680 27,448 (1,768) –6.4%
301 Gruppo 24 ORE
2009 annual financial report
(42) Other operating costs
OTHER OPERATING COSTS
(in thousands of euro) a2009 a2008 change change % VAT borne by publisher 2,429 2,948 (519) –17.6% Prior year costs 2,752 246 2,506 1,019.6% Purchase of newspapers and magazines 1,604 1,196 (132) –11.0% Entertainment expenses 685 870 (185) –21.3% Miscellaneous taxes (excluding income tax) 501 643 (142) –22.1% Association membership dues 392 347 45 13.0% Purchase of books and magazines for promotional purposes – 11 (11) 100.0% Other miscellaneous expenses 1,738 1,371 367 26.8% Total 9,561 7,632 1,929 25.3%
(43) Gains/losses on disposal of non-current assets
Net capital gains realized on the disposal of non-current assets and liabilities amounted to € 225 thousand.
The gains of € 298 thousand are principally represented by the sale of a printing plant at the Milan production centre and € 191 thousand for miscellaneous equipment.
The losses of € 73 thousand refer to disposal of miscellaneous assets.
(44) Financial income/(expenses)
FINANCIAL INCOME/(EXPENSES)
(in thousands of euro) a2009 a2008 change change % Financial income from investment of surplus cash 2,695 11,064 (8,369) –75.6% Other financial income 481 948 (467) –49.3% Foreign exchange gains 23 22 1 4.5% Total income 3,199 12,035 (8,836) –73.4% Foreign exchange losses (43) (40) (3) –7.5% Financial expenses on short-term borrowings (141) (7) (134) 1,840.0% Financial expenses on medium-/long-term borrowings (235) (863) 628 72.8% Other financial expenses (53) (484) 431 89.1% Total expenses (471) (1,393) 922 66.2% Total 2,727 10,640 (7,914) –74.4%
302 Gruppo 24 ORE
2009 annual financial report
Net financial income amounted to € 2,727 thousand and was formed as follows: – financial income of € 3,199 thousand on cash resources and on short-term cash investments; – financial expenses in the amount of € 471 thousand related to medium and long-term facilitated loans and other financial expenses.
(45) Other income/(expenses) from investment assets and liabilities
OTHER INCOME (EXPENSES)
(in thousands of euro) a2009 a2008 change change % Subsidiaries (20,142) (4,622) (15,520) –335.8% Non-controlling investments (500) (2,501) 2.001 80.0% Total (20,642) (7,123) (13,519) –189.8%
The net expenses from investment assets and liabilties were € 20,642 thousand and are principally comprised of: – impairment losses on the equity investment in the subsidiary 24 ORE Cultura S.r.l. of € 4,679 thousand; – impairment losses on the equity investment in the subsidiary Il Sole 24 ORE Business Media S.r.l. of € 14,225 thousand; – impairment losses on the equity investment in the subsidiary Alinari S.r.l. of € 1,312 thousand; – impairment losses on € 54 thousand on the company Blogosfere S.r.l., for fair value adjustment of the equity investment; – impairment losses on the non-controlling investment in Editorial Ecoprensa S.A. of € 500 thousand.
303 Gruppo 24 ORE
2009 annual financial report
(46) Income taxes
The main components of income taxes for the years ended 31 December 2009 and 2008 were the following:
INCOME TAXES
(in thousands of euro) f31/12/2009 f31/12/2008 change IRES (corporate income tax) (243) 9,737 (9,980) IRAP (regional productivity tax) 3,129 5,482 (2,353) Substitute taxes – 4,734 (4,734) Prior year’s taxes (79) (378) 299 Total 2,807 19,575 (16,768) Deferred taxes for accounting/tax alignment – (9,904) 9,904 Deferred tax assets/liabilities (7,129) 1.485 (8,614) Total (4,322) 11,156 (15,478)
2009 taxes led to income of € 4,322 thousand. This income is principally the result of recognition of the tax losses that can be carried forward for five years and that are deemed recoverable over that period.
The result for 2009 reflects termination of the one-off effect of readjustment of the goodwill recognised in 2008 for previous extraordinary transactions (Article 176 of the Consolidated Law on Income Tax [TUIR] and Article 15 of Decree Law 185).
The Company has not calculated taxes on reserves taxable on distribution as there are no plans for their distribution.
The parent has set up a tax consolidation (or netting) programme with the participation of the subsidiaries Nuova Radio S.p.A., Il Sole 24 ORE Business Media S.r.l., Data Ufficio S.p.A., STR S.p.A., Innovare24 S.p.A. and 24 ORE Cultura S.r.l. By means of this procedure, the parent receives (pays) a monetary amount equal to the transferred loss (profit) valued at the currentIRE S (corporate income tax) rate.
The net effect of tax netting resulted in an aggregate benefit for the subsidiaries and recognition of additional carry-forward losses of € 1,747 thousand.
304 Gruppo 24 ORE
2009 annual financial report
The following table shows the reconciliation between the parent’s theoretical tax rate applicable and the effective tax rate.
RECONCILIATION OF APPLICABLE AND EFFECTIVE TAX RATE
(in thousands of euro) a2009 % a2008 % change % Theoretical income taxes (15,938) 31.4% 10,073 31.4% (26,011) 0.0% Tax effect of permanent differences 11,658 –23.0% 6,331 19.7% 5,327 –42.7% Personnel expense 4,526 –8.9% 4,111 12.8% 415 –21.7% Non-deductible financial expenses – – – – – – Charges on investments 5,906 –11.6% 1,988 6.2% 3,918 –17.8% Car & telephone costs 193 –0.4% 269 0.8% (77) –1.2% Non-deductible depreciation & amortization – – – – – –
Difference between taxable bases for IRES 699 (corporate income tax) and IRAP (regional productivity tax) –1.4% (133) –0.4% 832 –1.0% Other permanent differences (additions) 588 –1.2% 362 1.1% 226 –2.3% Income from investments (33) 0.1% – – (33) 0.1% Grants (90) 0.2% (57) –0.2% (33) 0.4% Other permanent differences (deductions) (130) 0.3% (209) –0.7% 79 0.9% Goodwill impairment – – – – – – Prior-year income taxes (79) 0.2% (378) –1.2% 299 1.3% Tax differences previously not recognized 34 –0.1% 20 0.1% 14 –0.1% Alignment with new tax rates 2 –0.0% 280 0.9% (278) –0.9% Effect of realignment – – (5,170) –16.1% 5,170 16.1% Reported income taxes (4,322) 8.5% 11,156 34.8% (15,478) –26.3%
The biggest divergences between the theoretical and effective tax rate relate to: – The different taxable base for IRAP (regional business tax), which, in practice, does not allow deduction of wages and salaries paid to employees, financial expenses, and losses for bad debts. This results in a disproportionate tax base and, therefore, an increase in the tax rate in the event of a decline in earnings. It should also be noted that the legal IRAP tax rate may be increased or decreased in the various Italian regions in which the company operates. – tax irrelevance of the impairments subject to participation exemption treatment.
305 Gruppo 24 ORE
2009 annual financial report
9. Other information
9.1 List of equity investments in subsidiaries and associates
LIST OF EQUITY INVESTMENTS IN DIRECTLY AND INDIRECTLY OWNED SUBSIDIARIES
company name business headquarters currency share capital % held by paid in shareholding Nuova Radio S.p.A. Radio station Milan EUR 16,120,000 100.0% Il Sole 24 ORE S.p.a. Il Sole 24 ORE Sector-specific Business Media S.r.l. publishing Milan EUR 16,000,000 100.0% Il Sole 24 ORE S.p.a. Innovare 24 S.p.A. Software solutions Milan EUR 5,672,000 100.0% Il Sole 24 ORE S.p.a. 24 ORE Cultura S.r.l. Art products Milan EUR 1,049,920 100.0% Il Sole 24 ORE S.p.a. Il Sole 24 ORE UK Ltd Sale of advertising space London EUR 50,000 100.0% Il Sole 24 ORE S.p.a. Photographs and Alinari 24 ORE S.p.A. exhibitions Florence EUR 1,500,000 55.0% Il Sole 24 ORE S.p.a. Newton Management Innovation S.p.A. Training services Milan EUR 160,000 60.0% Il Sole 24 ORE S.p.a. Shopping 24 S.r.l. e-Commerce Milan EUR 10,000 100.0% Il Sole 24 ORE S.p.a. Data Ufficio S.p.A. Software solutions Rome EUR 1,550,000 100.0% Innovare 24 S.p.A. STR S.p.A. Software solutions Pegognaga (MN) EUR 504,766 100.0% Innovare 24 S.p.A. Esa Software S.p.A. Software solutions Rimini EUR 1,560,000 100.0% Innovare 24 S.p.A. Publishing – ceramic Il Sole 24 ORE Faenza Editrice Iberica S.L. sector Spain EUR 3,000 100.0% Business Media S.r.l. Cesaco S.r.l. Software solutions Vicenza EUR 90,000 60.0% Esa Software S.p.A. Blogosfere S.r.l. (1) Internet Milan EUR 21,571 80.0% Il Sole 24 ORE S.p.a. Il Sole 24 ORE Business Media Web S.r.l. (2) Internet Bologna EUR 100,000 60.0% Business Media S.r.l. Newton Management Newton Lab S.r.l. Training services Turin EUR 20,000 51.0% Innovation S.p.A.
(1) subsidiary from april 2009 and subsequently held for sale. (2) subsidiary as from january 2009.
306 Gruppo 24 ORE
2009 annual financial report
LIST OF EQUITY INVESTMENTS IN DIRECTLY AND INDIRECTLY OWNED ASSOCIATES
company name business headquarters currency share capital % held by paid in shareholding Diamante S.p.A. Software solutions Verona EUR 680,000 30.0% Il Sole 24 ORE S.p.A. Italia news S.r.l. Multimedia publishing Bologna EUR 100,000 20.0% Il Sole 24 ORE S.p.A. SoftLab S.r.l. Software solutions Ferrara EUR 90,000 40.0% Data Ufficio S.p.A. Newton Management Plus People S.r.l. Training services Milan EUR 1,250 30.0% Innovation S.p.A. Mondoesa Emilia S.r.l. Software solutions Parma EUR 20,800 40.0% Esa Software S.p.A. Mondoesa Lazio S.r.l. Software solutions Frosinone EUR 20,800 35.0% Esa Software S.p.A. Mondoesa Laghi S.r.l. (ex Mondoesa - Cedimega Software solutions Venegono EUR 79,500 33.70% Esa Software S.p.A. S.r.l.) inferiore (VA) Mondoesa Adige S.r.l. Software solutions Verona EUR 50,000 35.0% Esa Software S.p.A. Mondoesa Umbria S.r.l. Software solutions Gubbio (PG) EUR 35,000 32.0% Esa Software S.p.A. Mondoesa Ovest S.r.l. in liquidation Software solutions Fossano (CN) EUR 50,000 35.0% Esa Software S.p.A.
Mondoesa Milano Nordovest S.r.l. (1) Software solutions Milan EUR 76,500 49.0% Esa Software S.p.A. E.veneto S.r.l. in liquidation Software solutions Costabissara (VI) EUR 10,000 30.0% Esa Software S.p.A. Aldebra S.p.A. Software solutions Trent EUR 1,137,148 20.62% Esa Software S.p.A.
(1) reclassified from subsidiary to associate since december 2009.
9.2 Related-party transactions
Related-party transactions are limited to those with subsidiaries and associates concerning commercial, administrative and financial services. These transactions form part of normal business operations and of the core business of each of the companies involved, and are regulated at market conditions.
307 Gruppo 24 ORE
2009 annual financial report
RELATED PARTIES
company trade financial trade financial revenue costs financial financial receivables receivables payables liabilities and income expenses (net of operating deferred income income) Confederazione Generale dell’Industria Italiana (Confederation of Italian Industry) 1 – – – 44 – – – Total ultimate parent entity 1 – – – 44 – – – Nuova Radio S.p.A. – 1,603 – – 2,753 (12,768) 4 (2) Il Sole 24 ORE Business Media S.r.l. 1,134 5,505 – – 6,164 (3,820) 100 (1) H24 Software S.p.A. 10 – – (4,162) 46 (635) – (11) 24 ORE Motta Cultura S.r.l. – 4,440 – – 108 (30) 40 – Data Ufficio S.p.A. – 4,588 – – 34 (237) 90 – STR S.p.A. – 767 – – 47 (291) 1 – Alinari 24 ORE S.p.A. – 2,914 (56) – 38 (644) 25 – Il Sole 24 ORE UK Ltd – – (304) – – (816) – – Faenza Editrice Iberica S.L. – – – – – – – – Newton Management Innovation S.p.A. 5 – (21) – 12 (74) – – Newton Edutainment S.r.l. – – – – – – – – Newton Lab S.r.l. – – – – – – – – Esa Software S.p.A. – 1,603 – – 54 – 5 – Mondoesa Milano S.r.l. – – – – – – – – Cesaco S.r.l. – – – – – – – – Blogosfere S.r.l. – – – – 9 (585) – – Business Media Web S.r.l. – – – – – – – – Total subsidiaries 1,149 21,420 (381) (4,162) 9,265 (19,900) 265 (14) Italia News S.r.l. – – (1,064) – – (2,229) – – Editoria Ecoprensa S.A. – – – – 36 (32) – – Diamante S.p.A. – – (77) – 1 (251) – – Softlab S.r.l. – – (13) – – (48) – – Plus People S.r.l. – – – – – – – – Total associates – – (1,154) – 37 (2,560) – – Sipi S.r.l. – – (252) – 204 (606) – – Total other related parties – – (252) – 204 (606) – – Total related parties 1,150 21,420 (1,787) (4,162) 9,550 (23,066) 265 (14) Change vs. previous year 170 5,161 (79) 989 – – – – Total in Group consolidated financial statements 193,537 – (161,077) – 517,061 (531,812) 3,046 (596) Total in parent’s separate financial statements 149,408 21,420 (140,244) (4,162) 420,807 (432,482) 3,199 (472) % impact on parent’s separate financial statements 0.8% 100.0% 1.3% 100.0% 2.3% 5.3% 8.3% 3.0% Net cash used in Group operating activities (23,196) – (23,196) – (23,196) (23,196) – – Net cash used in parent’s operating activities (26,730) – (26,730) – (26,730) (26,730) – – % impact on net cash from (used in) parent’s operating activities –4.3% – 6.7% – –35.7% 86.3% – – Net cash used in Group financing activities – (9,612) – (9,612) – – (9,612) (9,612) Net cash used in parent’s financing activities – (8,525) – (8,525) – – (8,525) (8,525) % impact on cash parent’s from (used in) financing activities – –251.3% – 48.8% – – –3.1% 0.2% % impact on parent’s equity 0.4% 6.6% –0.6% –1.3% – – – – % impact on parent company’s profit (loss) – – – – –20.6% 49.7% –0.6% 0.0%
For comments concerning related-party transactions, see section 13.2, Related-party transactions, of the notes to the consolidated financial statements.
308 Gruppo 24 ORE
2009 annual financial report
9.3 subsequent Events
The Board of Directors of Il Sole 24 ORE S.p.A. meeting on 1 February 2010 approved the project for merger of the wholly owned subsidiary Il Sole 24 ORE Business Media S.r.l. into the parent.
The purpose of this operation is to simplify the current chain of control underI l Sole 24 ORE S.p.A., in accordance with the structural cost containment plan adopted by the company. Final approval for the merger, which will be retroactively effective to 1 January 2010 for legal, accounting and tax purposes, will take place in May 2010.
In January, the Group disposed of its equity investment in the company Blogosfere S.r.l., equal to 80% of the quota capital, for a total price of € 1.6 mn.
On 12 March 2010, the Board of Directors of Il Sole 24 ORE S.p.A. resolved to appoint Donatella Treu as Chief Executive Officer, granting her the authority associated with that position.
9.4 dISClosure pursuant to CONSOB Regulation no. 11971 as Subsequently amended
Compensation
Pursuant to Article 78(1) of CONSOB Regulation no. 11971, implementing Italian Legislative Decree 58/1998 (the Consolidated Law on Finance), below is a summary of the compensation paid to members of the Board of Directors and the Board of Statutory Auditors, to general managers, and to key managers, for both the parent and its subsidiaries. For key managers, compensation is indicated as an aggregate figure.
309 Gruppo 24 ORE
2009 annual financial report
COMPENSATION 2009
last name, first name office held period for which end of office fees for bonuses other office was held office and other compensation incentives from to (amounts in € 000) Shareholders’ meeting for approval Cerutti Giancarlo Chairman 1/1/2009 31/12/2009 30.0 – – of 2009 financial statements Chief Executive Shareholders’ meeting for approval Calabi Claudio 1/1/2009 14/12/2009 – – 944.4 Officer (1) of 2009 financial statements Shareholders’ meeting for approval Abete Luigi Director 1/1/2009 31/12/2009 25.0 – – of 2009 financial statements Shareholders’ meeting for approval Beretta Maurizio Director (2) 1/1/2009 31/12/2009 2.3 – – of 2009 financial statements Shareholders’ meeting for approval Bracco Diana Director (3) 1/1/2009 31/12/2009 30.0 – – of 2009 financial statements Shareholders’ meeting for approval De Bartolomeo Nicola Director 1/1/2009 31/12/2009 25.0 – – of 2009 financial statements Shareholders’ meeting for approval Favrin Antonio Director 1/1/2009 31/12/2009 25.0 – – of 2009 financial statements Shareholders’ meeting for approval Galli Giampaolo Director 20/3/2009 31/12/2009 19.7 – – of 2009 financial statements Shareholders’ meeting for approval Lamberti Paolo Director 1/1/2009 31/12/2009 25.0 – – of 2009 financial statements Shareholders’ meeting for approval Lettieri Giovanni Director 1/1/2009 31/12/2009 25.0 – – of 2009 financial statements Shareholders’ meeting for approval Maccaferri Gaetano Director 1/1/2009 31/12/2009 25.0 – – of 2009 financial statements Shareholders’ meeting for approval Profumo Francesco Director (3)(4) 1/1/2009 31/12/2009 30.0 – – of 2009 financial statements Shareholders’ meeting for approval Salomoni Marco Director (3)(4) 1/1/2009 31/12/2009 30.0 – – of 2009 financial statements Shareholders’ meeting for approval Tacconi Luca Director 1/1/2009 31/12/2009 25.0 – – of 2009 financial statements Shareholders’ meeting for approval Vago Marino Director (4) 1/1/2009 31/12/2009 30.0 – – of 2009 financial statements Shareholders’ meeting for approval Weigmann Marco Director 1/1/2009 31/12/2009 25.0 – – of 2009 financial statements
Chairman, Board of Shareholders’ meeting for approval Silvani Maria 1/1/2009 31/12/2009 65.2 – – Statutory Auditors of 2009 financial statements Standing statutory Shareholders’ meeting for approval Minuto Demetrio 1/1/2009 31/12/2009 43.6 – – auditor of 2009 financial statements Standing statutory Shareholders’ meeting for approval Usuelli Alberto 1/1/2009 31/12/2009 43.5 – – auditor of 2009 financial statements Key managers (5) 1/1/2009 31/12/2009 – 478.1 1,778.8
(1) claudio calabi resigned on 14/12/2009. (2) maurizio beretta resigned on 3 february 2009. (3) member of the compensation committee. (4) member of the internal control committee. (5) key managers include the managers of the business areas, the human resources director and the group cfo.
310 Gruppo 24 ORE
2009 annual financial report
Stock option
STOCK OPTIONS GRANTED TO DIRECTORS, GENERAL MANAGERS, AND KEY MANAGERS recipient office options held at start options granted during options exercised no. options held at held at of the year the year during the year options year end the time maturing no. of avg. vesting no. of avg. vesting no. of avg. avg. in the no. of avg. exercise options strike period options strike period options strike market year options strike period price (mm/yy) price (mm/yy) price price price when exercised Key managers (1) – – – 990,000 5.623 1/11-6/12 – – – – 990,000 5.623 1/11-6/12
(1) key managers include the managers of the business areas, the human resources director and the group cfo.
Following departure of several beneficiaries from the Group, including the CEO Claudio Calabi, at 31 December 2009, there were 1,170,000 granted and exercisable options.
Exercise of the options is subject to the condition precedent that Group GOP (gross operating profit) for 2008-2009-2010 equal or exceed the sum of the budgeted amounts for Group consolidated GOP in those financial years as approved by the Board of Directors on 30 October 2007. The target will be met even if the sum of the final 2008-2009-2010 OPG is 3% less than the aforementioned sum of budget targets.
Costs connected with these options have not been recognized in these financial statements because, given the current economic crisis and changing outlook, the business plan used to establish the aforementioned GOP targets is no longer relevant.
Stock granting plan for employees
On 30 October 2007, the Board of Directors and the shareholders approved a plan for the granting of free special-category shares of Il Sole 24 ORE S.p.A. open to all employees of the parent and of Nuova Radio S.p.A. for the years 2007, 2008, 2009 and 2010.
The shares are granted to all employees who, on the last day of the second month prior to the month when the shares are actually granted (the “grant date”), have an indefinite-term or fixed-term employment relationship with Il Sole 24 ORE S.p.A. or Nuova Radio S.p.A.
On 15 December 2009, employees were granted 916,783 special shares for the 2009 tranche, in addition to the 331,694 shares granted for 2007 and 742,649 special shares for 2008. The number
311 Gruppo 24 ORE
2009 annual financial report
of shares for the second tranche was based on the reference price calculated using the average closing prices of the special-category shares on the MTA for the thirty calendar days prior to the grant date (i.e. € 2.055 per share).
Therefore, as at 31 December 2009, a total of 1,991,126 special shares had been granted, free of charge, to employees.
Fees for services rendered by the auditing company and other entities within its network
The following table – prepared pursuant to Article 149(12) of CONSOB’s Rules for Issuers – shows 2009 fees for independent auditing services and for services other than independent auditing provided by the auditing company and by other entities within its network.
FEES TO THE INDEPENDENT AUDITORS
service provided service provider recipient fees for 2008 Auditing KPMG S.p.A. Il Sole 24 ORE S.p.A. 120 KPMG S.p.A. Società controllate 153 Certification services KPMG S.p.A. Il Sole 24 ORE S.p.A. – KPMG network Il Sole 24 ORE S.p.A. – Other services KPMG S.p.A. 15 Total 288
312 Gruppo 24 ORE
2009 annual financial report
9.5 Disclosures pursuant to CONSOB resolution no. 15519 of 27 July 2006
Statement of financial position pursuant to CONSOB resolution no. 15519 of 27 July 2006
STATEMENT OF FINANCIAL POSITION
(in thousands of euro) note (*) f31/12/2009 of which f31/12/2008 of which related related parties parties ASSETS Non-current assets Property, plant and equipment (1) 86,125 – 91,508 – Goodwill (2) 513 – 513 – Intangible assets (3) 18,915 – 16,407 – Investments in associates and joint ventures (4) 1,320 1,320 2,091 2,091 Available-for-sale financial assets (5) 2,875 – 3,375 – Other non-current financial assets (6) 19,168 – 18,577 – Other non-current assets (7) 150,668 150,241 167,431 166,744 Deferred tax assets (8) 18,092 – 9,935 – Total 297,676 151,561 309,837 168,835 Current assets Inventories (9) 10,770 – 12,612 – Trade receivables (10) 149,408 1,150 159,252 980 Other receivables (11) 8,291 – 1,670 – Other current financial assets (12) 21,420 23,537 16,258 16,258 Other current assets (13) 5,459 – 5,611 – Cash and cash equivalents (14) 87,383 – 143,205 – Total 282,731 24,687 338,608 17,238 Assets held for sale (15) 1,591 – – – TOTAL ASSETS 581,998 352,496 648,445 186,073
(*) section 8 of the explanatory notes (notes to the financial statements).
313 Gruppo 24 ORE
2009 annual financial report
STATEMENT OF FINANCIAL POSITION (cont.)
(in thousands of euro) note (*) f31/12/2009 of which f31/12/2008 of which related related parties parties EQUITY AND LIABILITIES a) Equity Total equity Share capital (17) 35,124 – 35,124 – Equity reserves (18) 180,316 – 180,316 – Revaluation reserves (19) 20,561 – 20,561 – Hedging and translation reserves (20) (333) – (104) – Other reserves (21) 35,386 – 32,860 – Retained earnings (22) 99,252 – 88,460 – Profit (Loss) for the year (23) (46,436) – 20,922 – Total equity 323,869 – 378,139 – B) Non-current liabilities Non-current financial liabilities (24) 10,144 – 13,287 – Employee benefit obligations (25) 32,041 – 34,522 – Deferred tax liabilities (8) 740 – 1,547 – Provisions for risks and charges (26) 13,717 – 16,476 – Other non-current liabilities (27) 34 – 34 – Total 56,676 – 65,866 – C) Current liabilities Bank overdrafts and loans - due within one year (28) 3,143 – 3,085 – Other current financial liabilities (29) 4,162 4,162 5,151 5,151 Financial liabilities held for trading (30) 459 – 143 – Trade payables (31) 140,244 1,787 149,284 1,708 Other current liabilities (32) 4,398 – 4,852 – Other payables (33) 49,047 – 41,925 – Total 201,453 5,949 204,440 6,859 Liabilities held for sale – – – – Total liabilities 258,129 5,949 270,305 6,859 TOTAL EQUITY AND LIABILITIES 581,998 5,949 648,445 6,859
(*) section 8 of the explanatory notes (notes to the financial statements).
314 Gruppo 24 ORE
2009 annual financial report
Income Statement pursuant to CONSOB Resolution no. 15519 of 27 July 2006
INCOME STATEMENT OF THE PARENT
(in thousands of euro) note (*) f2009 of which of which f2008 of which of which related non- related non- parties recurring parties recurring operations operations 1) Continuing operations Revenue from newspapers, books and magazines (34) 146,642 179 – 180,218 95 – Revenue from advertising (35) 161,554 3,253 – 208,968 4,233 – Other revenue (36) 99,007 1,557 – 97,009 1,087 – Total revenue 407,203 4,989 – 486,196 5,415 – Other operating income (37) 13,604 4,563 – 15,051 3,697 – Personnel expense (38) (153,756) – (15,960) (141,315) – – Change in inventories (9) (1,842) – – (1,268) – – Purchase of raw materials and consumables (39) (28,596) (115) – (36,802) (127) – Services (40) (213,046) (22,293) – (237,087) (18,372) – Use of third party assets (41) (25,680) (658) – (27,448) (547) – Other operating costs (42) (9,561) – – (7,632) – – Provisions (26) (2,396) – – (2,572) – – Provisions for bad debts (10) (5,623) – – (5,358) – – Gross operating profit (loss) 19,693 (13,514) (15,960) 41,765 (9,933) – Amortization of intangible assets (3) (3,369) – – (2,253) – – Depreciation of property, plant and equipment (1) (10,005) – – (9,652) – – Impairment losses on property, plant and – equipment and on intangible assets (1) – – (1,197) – – Capital gains (losses) on disposal of 225 non-current assets (43) – – 2 – – Operating profit (loss) (32,842) (13,514) (15,960) 28,664 (9,933) – Financial income (44) 3,199 265 – 12,034 769 – Financial expenses (44) (472) (14) – (1,394) (277) – Total financial income 2,727 251 – 10,640 491 – Other income (expenses) from investment assets (20,642) and liabilities (45) – – (7,123) – – Gains (losses) from equity-accounted investees – – – (104) – – Profit (loss) before tax (50,757 (13,263) (15,960) 32,078 (9,442) – Income taxes (46) 4,322 – – (11,156) – – Net profit on continuing operations (46,435) (13,263) (15,960) 20,922 (9,442) – Profit (loss) for the year (46,435) (13,263) (15,960) 20,922 (9,442) – Profit attributable to owners of the parent (46,435) (13,263) (15,960) 20,922 (9,442) –
(*) section 8 of the explanatory notes (notes to the financial statements).
315 Gruppo 24 ORE
2009 annual financial report
Statement of Cash Flows pursuant to CONSOB Resolution no. 15519 of 27 July 2006
STATEMENT OF CASH FLOWS OF THE PARENT
(in thousands of euro) note (*) f2009 of which f2008 of which related related parties parties A) Cash flows from ordinary activities Profit (Loss) for the year (23) (46,436) – 20,922 – Dividends charged to income statement (45) (128) – – – Depreciation of property, plant and equipment (1) 10,005 – 9,652 – Amortization of intangible assets (3) 3,369 – 2,253 – Impairment losses on other intangible assets and goodwill – – – 1,197 – Impairment losses on non-current assets (45) 20,770 – 7,227 – (Gain) loss on sale of property, plant and equipment (43) (225) – (2) – Increase (decrease) in provisions for risks and charges (26) (2,758) – (1,612) – Increase (decrease) in employee benefits (25) (2,481) – (90) – Increase (decrease) in deferred tax assets/liabilities (8) (8,964) – (8,843) – Annual instalment of substitute tax – 1,899 – 1,424 – Net financial income (44) (2,727) – (10,640) – Cash flows from ordinary activities prior to change in net working capital 27,676 – 21,488 – (Increase) decrease in inventories (9) 1,842 – 1,268 – (Increase) decrease in trade receivables (10) 9,844 (170) (17,908) (846) Increase (decrease) in trade payables (31) (9,041) 102 (21,613) 398 Income taxes paid (9,669) – (10,577) – (Increase) decrease in other assets/liabilities 7,970 – 2.940 – Changes in net working capital 946 (68) (45,891) (448) NET CASH used in operating ACTIVITIES (A) (26,730) (68) (24,402) (448)
316 Gruppo 24 ORE
2009 annual financial report
STATEMENT OF CASH FLOWS OF THE PARENT (CONT.)
(in thousands of euro) note (*) f2009 of which f2008 of which related related parties parties B) Cash flows from investing activities Dividends received 178 – – – Proceeds on sale of property, plant and equipment (1)(43) 555 – 63 – Proceeds on sale of intangible assets – – 103 – Investments in property, plant and equipment (1) (4,953) – (12,374) – Investments in intangible assets (3) (5,877) – (8,244) – Other changes in property, plant and equipment – – – – Purchase of investments in associates – – (20) – Purchase of investments in subsidiaries (7) (1,600) – (44,868) – Other decreases (increases) in investments in associates – – (104) – Other decreases (increases) in other non-current assets and liabilities (1,185) – (7,318) – Purchases of available-for-sale financial assets – – (302) – Decreases (increases) in assets and liabilities held for sale (15) (1,591) – – – NET CASH USED IN INVESTING ACTIVITIES (B) (14,473) – (73,064) – FREE CASH FLOW (A + B) (41,203) (68) (97,465) (448) C) Cash flows from financing activities Dividends paid (22) (10,130) – (13,911) – Registering (repayment) of long-term bank loans (24) (3,143) – (3,085) – Change in other non-current financial assets (6) (592) – (1,248) – Change in financial assets/liabilities held for trading (30) 316 – 812 – Net financial interest received (44) 2,727 – 10,640 – Other changes in reserves (20)(21) 2,297 – 8,574 – NET CASH From (USED IN) FINANCING ACTIVITIES (C) (8,525) – 1,782 – NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (A+B+C) (49,728) (68) (95,682) (448) OPENING CASH AND CASH EQUIVALENTS 151,227 11,107 246,910 14,233 CLOSING CASH AND CASH EQUIVALENTS 101,499 17,258 151,227 11,107 INCREASE (DECREASE) FOR THE YEAR (49,728) 6,151 (95,682) (3,126)
(*) section 8 of the explanatory notes (notes to the financial statements).
317 Gruppo 24 ORE
2009 annual financial report
9.6 Net financial position
The following table details the components of the net financial position:
NET FINANCIAL POSITION
(in thousands of euro) f31/12/2009 f31/12/2008 Cash and cash equivalents 87,383 143,205 Bank overdrafts and loans - due within one year (3,143) (3,085) Other short-term financial liabilities (4,162) (5,151) Short-term financial receivables 21,420 16,258 Short-term net financial position 101,498 151,227 Non-current financial liabilities (10,144) (13,287) Non-current financial assets and fair value changes in financial hedging instruments 18,071 17,847 Medium/long-term net financial position 7,927 4,560 Net financial position 109,425 155,787
9.7 Employees
The average number of employees by contractual category was as follows:
EMPLOYEES
average headcount e2009 e2008 number % number % Managers 76.8 5.3 82.0 5.6 Journalists 379.4 26.4 383.3 26.4 White Collars 825.3 57.4 820.8 56.5 Blue-collars 126.7 8.8 120.7 8.3 Total 1,408.2 97.9 1,406.8 96.8
318 Gruppo 24 ORE
2009 annual financial report
9.8 Key restated statement of financial positions and income statement highlights of subsidiaries, associates, and joint ventures
statement of financial position
company note non- current total non- current total total total current assets assets current liabilities liabilities equity liabilities assets liabilities and equity Innovare 24 S.p.A. 70,459 4,743 75,502 (52) (4,114) (4,166) (71,036) (75,202) Nuova Radio S.p.A. 16,120 1,900 18,020 (1,855) (4,836) (6,691) (11,329) (18,020) Il Sole 24 ORE UK Ltd (1) 13 2,379 2,392 – (148) (148) (2,244) (2,392) Il Sole 24 ORE Business Media S.r.l. 24,235 22,746 46,981 (7,017) (22,362) (29,379) (17,602) (46,981) 24 ORE Cultura S.r.l. (1) 1,143 5,793 6,936 (367) (7,045) (7,412) 476 (6,936) Data Ufficio S.p.A. 1,368 8,310 9,678 (1,118) (7,206) (8,324) (1,354) (9,678) STR S.p.A. 2,986 5,842 8,828 (1,068) (3,982) (5,050) (3,778) (8,828) Blogosfere S.r.l. (1) 56 452 508 – (189) (189) (319) (508) Newton Management Innovation S.p.A. (1) 178 1,314 1,492 (98) (1,173) (1,271) (221) (1,492) Faenza Editrice Iberica S.L. (1) 10 349 359 – (204) (204) (155) (359) Alinari 24 ORE S.p.A. (1) 578 5,012 5,590 (97) (4,604) (4,701) (889) (5,590) Esa Software S.p.A. (1) 9,143 9,575 18,718 (2,440) (10,510) (12,950) (5,768) (18,718) Cesaco S.r.l. (1) 45 354 399 (52) (157) (209) (190) (399) Business Media web S.r.l. (1) 28 599 627 (93) (255) (348) (278) (626) Shopping 24 S.r.l. (1) – 42 42 – (4) (4) (38) (42) Newton Lab S.r.l. (2) 5 17 22 – (2) (2) (20) (22) Total subsidiaries 126,367 69,427 195,794 (14,257) (66,791) (81,048) (114,745) (195,793) Diamante S.p.A. (2) 760 780 1.540 (147) (718) (865) (675) (1,540) Italia news S.r.l. (2) 32 944 976 – (885) (885) (90) (975) Softlab S.r.l. (2) 128 220 348 (75) (165) (240) (108) (348) Mondoesa Milano Nordovest S.r.l. (2) 17 912 929 (128) (789) (917) (12) (929) Plus People S.r.l. (2) 2 8 10 – – – (10) (10) Mondoesa Emilia S.r.l. (2) 211 986 1,197 (150) (983) (1,133) (63) (1,196) Mondoesa Lazio S.r.l. (2) 114 1,247 1,361 (214) (915) (1,129) (232) (1,361) Mondoesa Laghi S.r.l. (2) 59 985 1,044 (241) (365) (606) (438) (1,044) Mondoesa Adige S.r.l. (2) 38 435 473 (35) (556) (591) 118 (473) Mondoesa Umbria S.r.l. (2) 337 491 828 (42) (750) (792) (36) (828) Mondoesa Ovest S.r.l. in liquidazione (2) 3 55 58 – (75) (75) 17 (58) E.veneto S.r.l. in liquidazione (2) 32 80 112 (6) (88) (94) (17) (111) Aldebra S.p.A. (1) 2.258 10,820 13,078 (1,853) (9,237) (11,090) (1,988) (13,078) Total associates 3,991 17,963 21,954 (2,891) (15,526) (18,417) (3,534) (21,951) Total subsidiaries and associates 130,358 87,390 217,748 (17,148) (82,317) (99,465) (118,279) (217,744)
(1) statutory figures adjusted for the ifrss. (2) last available financial statements 2008.
319 Gruppo 24 ORE
2009 annual financial report
income statement
company note revenue gross operating profit (loss) profit (loss) operating profit (loss) before tax for the year profit (loss) Innovare 24 S.p.A. – (382) (382) 2.177 2.233 Nuova Radio S.p.A. 13,081 (1,293) (3,027) (3,026) (2,492) Il Sole 24 ORE UK Ltd (1) 792 467 464 464 328 Il Sole 24 ORE Business Media S.r.l. 40,360 (7,138) (16,407) (16,370) (10,850) 24 ORE Cultura S.r.l. (1) 4,013 (3,281) (3,701) (3,756) (3,763) Data Ufficio S.p.A. 13,404 1,487 921 837 346 STR S.p.A. 12,541 2,338 1,791 1,778 1,125 Blogosfere S.r.l. (1) 717 177 152 153 131 Newton Management Innovation S.p.A. (1) 2,784 172 74 45 17 Faenza Editrice Iberica S.L. (1) 337 (151) (153) (154) (107) Alinari 24 ORE S.p.A. (1) 3,230 (1,524) (1,579) (1,602) (1,620) Esa Software S.p.A. (1) 26,447 3,508 2,961 1,796 1,247 Cesaco S.r.l. (1) 511 60 44 46 22 Business Media web S.r.l. (1) 663 (93) (115) (115) (122) Shopping 24 S.r.l. (1) 33 28 28 28 28 Newton Lab S.r.l. (2) 27 1 – – – Total subsidiaries 118,940 (5,624) (18,929) (17,699) (13,477) Diamante S.p.A. (2) 1,161 374 60 40 (5) Italia news S.r.l. (2) 853 (1) (9) (6) (6) Softlab S.r.l. (2) 605 54 36 43 15 Mondoesa Milano Nordovest S.r.l. (2) 1,936 12 4 (20) (63) Plus People S.r.l. (2) – – (1) (1) (1) Mondoesa Emilia S.r.l. (2) 2,055 45 10 9 (16) Mondoesa Lazio S.r.l. (2) 2,355 142 103 104 32 Mondoesa Laghi S.r.l. (2) 1,337 60 25 28 (4) Mondoesa Adige S.r.l. (2) 532 (162) (186) (211) (211) Mondoesa Umbria S.r.l. (2) 1,065 100 41 2 – Mondoesa Ovest S.r.l. in liquidation (2) 18 (65) (66) (67) (67) E.veneto S.r.l. in liquidation (2) 180 (4) (5) (6) (7) Aldebra S.p.A. (1) 28,918 1,040 283 200 (31) Total associates 41,015 1,595 295 115 (364) Total subsidiaries and associates 159,955 (4,029) (18,634) (17,584) (13,841)
(1) statutory figures adjusted for the ifrss. (2) last available financial statements 2008.
320 Gruppo 24 ORE
2009 annual financial report
9.9 New accounting standards
It should be noted that the IASB and the IFRIC have approved a number of changes to the IFRSs currently in effect, and have also issued new IFRSs and new IFRIC interpretations. As the effective date of these standards and interpretations is deferred, they have not been adopted for the preparation of these financial statements.
The main changes relate to the following items: 1. IAS 24 Related Party Disclosures has been thoroughly revised. This revision was necessitated by the problems encountered in practical application of the standard, especially in those countries where the national government directly controls the bulk of economy activity. Two principal changes have been introduced to address these needs: • the definition of related party has been simplified and rendered more consistent; • partial exemption from the disclosure requirement was introduced for companies that are controlled or heavily influenced by the state, either directly or indirectly. Information that is costly to obtain and of inconsequential utility to the end user of the financial statements must be highlighted only if it refers to transactions that are material when considered individually or as a group.
The revised version of IAS 24 will be applicable beginning 1 January 2011 and has not yet been endorsed by the EU.
2. IAS 27 Consolidated and Separate Financial Statements, IAS 28 Investments in Associates, and IAS 31 Interests in Joint Ventures have been amended in accordance with the new version of IFRS 3 Business Combinations. The principal changes concern IAS 27, particularly with regard to the recognition of the following: • partial sales of investments in subsidiaries where control over the investee is maintained. Such transactions are to be recognized in equity, with no effect on the profit (loss) for the year; • partial sales of investments in subsidiaries where control over the investee is lost. Such sales, which are governed in detail, has effects on the income statement.F ollowing loss of a controlling interest, the investment is measured as an associate or non-controlling interest, depending on the influence being exercised; • purchase of additional interests in companies in which a controlling interest is already held. Such transactions are to be recognized in equity, with no effect on the profit (loss) for the year.
The revised versions ofIA S 27, IAS 28 and IAS 31, as approved in EC Regulation 494/2009, will be applicable for financial years beginning on or after 1 January 2010.
321 Gruppo 24 ORE
2009 annual financial report
Introduction of the changes in regulation of the accounting of equity investments in subsidiaries envisaged in IAS 27 caused a change in the statement of changes in equity as set out in IAS 1. This change, approved with EC Regulation 494/2009, shall be applicable for financial years beginning on or after 1 January 2010;
3. IAS 32 Financial Instruments: Disclosure and Presentation was changed in 2009, in regard to the accounting of rights issued (i.e. bona fide rights, options and warrants) that are denominated in a currency other than the functional currency used by the entity. These issues of rights, which are currently represented as derivative liabilities, if they comply with the established conditions, must be recognised as equity instruments, regardless of the foreign currency in which the exercise price is denominated. This change, endorsed byEC Regulation 1293/2009, will be applicable for financial years beginning on or after 1 January 2011;
4. IAS 39, Financial Instruments: Recognition and Measurement, introduces a clarification on aspects concerning the recognition of hedging instruments. In particular, it clarifies that: • it is not possible for an inflation component of a fixed-rate loan in a fair-value hedge to be designated as a hedged element, because such component cannot be separately identified or reliably measured; • when an acquired option is designated, as a whole, as a hedging instrument on the change in cash flows or fair value of a hedged element above or below a given price or other variable, only the intrinsic value of said option, and not its time value, is to be a component of the planned transaction impacting on the income statement.
These changes, endorsed by EC Regulation 839/2009, will be applicable for financial years beginning on or after 1 January 2010;
5. IFRS 2 Share-based Payment was changed in 2009, on the basis of comments received in regard to specific details. Specifically, the case of a subsidiary of a group that acquires goods or services in transactions with share-based payment are analysed. In this case, regardless of who settles the payment – be it the subsidiary itself or the parent – and regardless of how the transaction is actually settled, be it in equity instruments or cash, the acquired goods and services must always be recognised on the separate financial statements of the subsidiary. These changes, which shall come into force on 1 January 2010 with retroactive effect, resulted in the voidance from that same date of IFRIC 8 – Scope of IFRS 2, and IFRIC 11 – Group and Treasury Share Transactions.
322 Gruppo 24 ORE
2009 annual financial report
6. IFRS 3, Business Combinations, has been completely revised. The main changes relate to the following items: • the costs of acquisition; • the contingent conditions; • goodwill and non-controlling interests; • the previous relationships between the parties and the rights reacquired; • intangible assets; • business combinations taking place in multiple stages; • the scope of application (mutual entities and combinations without consideration or dual-listed shares are included); • transitory measures and the effective date, which is allowed, but not encouraged, only in the event of prospective application.
The revised version of IFRS 3, endorsed by EC Regulation 495/2009, will be applicable for financial years beginning on or after 1 January 2010;
7. IFRS 9 Financial Instruments is the new international financial reporting standard issued on 12 November 2009, which completes the first phase of a three-step project leading to complete replacement of IAS 39 Financial Instruments: Recognition and Measurement. The first phase, which was completed with publication of this first document, was focused on the classification and measurement of financial assets. The second phase, focused on the methods for determining impairment of financial assets, and the third phase, focused on hedging transactions, should be completed in 2010. IFRS 9 addresses the need to improve the ability of investors and other users of financial disclosures to comprehend the mechanisms used to account for financial assets, reducing their complexity. Specifically, the new standard uses a single approach to determine whether a financial asset must be measured at its amortised cost or fair value, thereby replacing many different rules set out in IAS 39. The basic concept is based on the business model used by the company to manage its financial instruments and determine the characteristics of related contractual cash flows. IFRS 9 does not address the classification and measurement of financial liabilities, insofar as these topics will be addressed by the IASB during 2010. The mandatory date by which IFRS 9 must come into force is 1 January 2013. The EU Committee in charge of approving IFRSs has given notice that it interrupted the process of endorsement of IFRS 9, for the purpose of approval with the EC Regulation, on the same day it was published by IASB. This choice was justified by the Commissioner for Internal Market and Services, who pointed out that IFRS 9 is only the first step in the revision of IAS 39. The Commission has decided to examine the adoption of IFRS 9 once the other two phases are completed, which is expected sometime in 2010, for thorough revision and replacement of IAS 39.
323 Gruppo 24 ORE
2009 annual financial report
18. ifric 12, Service Concession Arrangements, provides guidelines on certain valuation and measurement issues relating to the recognition of service concession contracts between public and private entities. IFRIC 12, endorsed by EC Regulation 254/2009, will be applicable beginning 1 January 2010;
19. ifric 14, IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and Their Interaction, endorsed by EC Regulation 1263/2008 and came into force on 1 January 2009, was modified during 2009. In particular, it was specified that if minimum contribution requirements must be satisfied, and these contributions are paid in advance, the prepayment must be treated as an asset. The changes to IFRIC 14 must be adopted by 1 January 2011;
10. ifric 15, Agreements for the Construction of Real Estate, illustrates the issues related to the recognition of the sale of real estate, e.g. apartments or houses, by construction companies before construction has been completed. The interpretation provides specific instructions for determining whether the main object of the construction agreement is for the provision of a finished product – in which case IAS 18 is to be applied – or for the provision of a project which the buyer has helped to prepare – in which case IAS 11 is to be applied. IFRIC 15, endorsed by EC Regulation 636/2009, will be retroactively applicable beginning 1 January 2010;
11. ifric 16 Hedges of a Net Investment in a Foreign Operation clarifies three sets of problems associated with the hedging of a net investment in a foreign operation: whether the presentation currency of the parent represents an exposure that must be hedged, who must hold the hedging instruments within the group and how the amounts to be restated from equity to income must be determined if the net investment in a foreign operation is eliminated. IFRIC 16, endorsed with EC Regulation 460/2009, will be prospectively or retroactively applicable beginning 1 January 2010, as preferred by the entity;
12. ifric 17, Distributions of Not-cash assets to Owners, illustrates the methods and timing with which non-cash dividends are to be distributed to owners. In particular, it clarifies that the difference between the dividend paid and the carrying amount of the non-cash asset distributed must be recognized on the income statement. Additional information is to be provided in the event that the non-cash asset, which is held for distribution to owners, is equivalent to discontinued operations. IFRIC 17, endorsed by EC Regulation 1142/2009, will be prospectively applicable beginning 1 January 2010;
13. ifric 18 Transfers of Assets from Customers addresses the issue of accounting for agreements whereby an entity receives from a customer an item of property, plant and equipment to be
324 Gruppo 24 ORE
2009 annual financial report
used to hook up the customer with a network or provide him with continuous access to the supply of goods or services. First of all, it must be determined whether the item received through the transfer satisfies the definition of asset set out in the systematic framework. If it does, the component that is covered by the definition of asset must be recognised by determining its fair value cost at the initial recognition date, and the resulting book contra entry must be recognised in compliance with IAS 18 Revenues. IFRIC 18, endorsed by EC Regulation 1164/2009, will be prospectively applicable beginning 1 January 2010;
14. ifric 19 Extinguishing Financial Liabilities with Equity Instruments illustrates the cases where, as part of renegotiation of the terms of a contract whose object is a financial liability, the creditor accepts the shares or other equity instruments of the debtor company in full or partial discharge of the financial liability. In particular, it clarifies that the difference between the carrying amount of the extinguished financial liability and the initial value of the issued equity instruments is recognised in the profit (loss) for the year of the debtor company. IFRIC 19 will be applicable from 1 January 2011. IFRIC 19 has not yet been endorsed by the European Commission.
In 2008, the IASB began another series of revisions of the existing IFRSs, the main goal of which is to clarify and expand upon a number of concepts which, in the original versions, appear not to have been sufficiently explained.
The first document published within the scope of this process, i.e. Improvements to International Financial Reporting Standards, was released on 22 May 2008 and includes 35 changes to the IFRSs, divided into two sections: ‒ part I – amendments that result in accounting changes for presentation, recognition or measurement purposes; ‒ part II – amendments that are terminology or editorial changes only.
The principal changes included in this first document, endorsed by EC Regulation 70/2009, came into force on 1 January 2009, with the exception of the changes regarding IFRS 5 Non-current Assets held for Sale and Discontinued Operations. This change clarifies that assets and liabilities of a subsidiary should be classified as held for sale if the parent is committed to a plan involving loss of control of the subsidiary, regardless of whether the entity will retain a non-controlling interest after the sale. This change, endorsed with EC Regulation 70/2009, will be prospectively applicable from 1 January 2010.
The second document, which was prepared as part of the process entitled Improvements to International Financial Reporting Standards, was issued on 16 April 2009 and consists of 16 changes
325 Gruppo 24 ORE
2009 annual financial report
to 12 IFRSs. This second collection of changes, issued as part of the annual IFRSs revision process, focuses primarily on non-urgent details. There are two changes that will have a material impact on measurement and presentation practices. These affect: ‒ iaS 1 Presentation of Financial Statements. A liability that may be extinguished through issuance of equity instruments upon request by the counterparty (conversion option) must no longer be classified as a current liability, on condition that the company has the unconditional right to defer settlement in cash or other assets for at least 12 months after the reference accounting period; ‒ iaS 17 Leasing. Leases of land must be classified as finance or operating leases in accordance with the general rules set out in IAS 17. The existing specific rule, which envisaged recognition of leases of land with an indefinite life as operating leases, is inconsistent with the basic principle underlying IAS 17. This change must be applied retroactively, provided that the necessary information is available.
The modifications included in this second document will come into force on 1 January 2010, with one exception. This regards a modification to IAS 39 Financial Instruments: Recognition and Measurement, addressing confirmation of the rule against recognition of intercompany hedges on the separate financial statements. This change was issued effective 1 January 2009, but it has not yet been endorsed by any EC Regulation.
The Company has begun to assess the impact resulting from introduction of the new standards and interpretations that must be applied beginning 1 January 2010. On the basis of initial assessments, it does not appear that they are significant.
Milan, 12 March 2010
Chairman of the Board of Directors GIANCARLO CERUTTI
326 Gruppo 24 ORE
2009 annual financial report
Certification of financial statements pursuant to Article 81-ter of CONSOB Regulation no. 11971 of 14 May 1999 as amended
1. The undersigned Giancarlo Cerutti, in his capacity as Chairman of the Board of Directors, and Giuseppe Crea, in his capacity as Corporate Financial Reporting Manager of Il Sole 24 Ore S.p.A., hereby certify, pursuant to, inter alia, the provisions of Article 154-bis, paragraphs 3 and 4, of Italian Legislative Decree no. 58 of 24 February 1998 [the Italian Consolidated Law on Finance]: – the adequacy in relation to the entity’s characteristics; and – the effective application of administrative and accounting procedures for formation of separate financial statements during 2009. 2. The adequacy of administrative and accounting procedures used to prepare the separate financial statements as at and for the year ended 31 December 2009 has been assessed based on the methodological rules defined by Il Sole 24 Ore S.p.A. and consistent with the “Internal Control – Integrated Framework” model issued by the Committee of Sponsoring Organizations of the Treadway Commission, which is a benchmark framework for the internal control system generally accepted internationally. 3. They further certify that: 3.1 the separate financial statements: a) have been drafted in compliance with the applicable International Financial Reporting Standards recognised in the European Union pursuant to EC Regulation 1606/2002 of the European Parliament and Council of 19 July 2002; b) are consistent with the corporate books and accounting records; c) give a fair and true view of the financial position, and results of operations of the issuer and of the companies included in the scope of consolidation. 3.2 The management report includes a reliable analysis of the performance, results of operations and standing of the issuer, as well as a description of the principal risks and uncertainties to which they are exposed.
Milan, 12 March 2010
chairman of the Board of Directors Corporate financial reporting manager
Giancarlo CERUTTI Giuseppe CREA
327 Gruppo 24 ORE
2009 annual financial report Report of the Independent Auditor on financial statements of the il sole 24 ore s.p.a. as at 31328 December 2009 Gruppo 24 ORE
2009 annual financial report Report of the Independent
Auditor on Report of the Independent Auditor on financial financial statements of the il sole 24 ore s.p.a. as statements ofat 31t Decehmber 2009e il sole 24 ore s.p.a. as at 31 December329 2009 Gruppo 24 ORE
2009 annual financial report
330 Gruppo 24 ORE
2009 annual financial report
331 Gruppo 24 ORE Report2009 annual financial report of the Board of Statutory Auditors to the shareholders on financial statements as at 31 Dece332 mber 2009 Gruppo 24 ORE Report of th2009 annual financiale report Board of Statutory Report of the Board of Auditors to tStatuthory e Auditors to the shareholders on financial shareholdersstatements as at on financial 31 December 2009 statements as at 31 December 2009333 Gruppo 24 ORE
2009 annual financial report
334 Gruppo 24 ORE
2009 annual financial report
24 ORE GROUP
REPORT OF THE BOARD OF STATUTORY AUDITORS TO THE SHAREHOLDERS PURSUANT TO ARTICLE 153 OF LEGISLATIVE DECREE 58/98 AND ARTICLE 2429(3) OF THE CIVIL CODE CONCERNING THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2009
To the Shareholders, During the 2009 financial year, the Board of Statutory Auditors of Il Sole 24 ORE S.p.A. performed the oversight activities required by law, while also taking account of the principles of conduct recommended by the Italian national board of chartered accountants and of CONSOB communications concerning corporate audits and the responsibilities of a board of statutory auditors. It should be noted that on 30 July 2007 the shareholders assigned the role and responsibilities of independent auditing to the auditing firm KPMG S.p.A. for the period 2007-2015. Its report has been included with these financial statements. It should also be noted that the current Board of Statutory Auditors was appointed by the shareholders on 26 April 2007. However, on 10 September 2008, the role of chairwoman was taken over by Maria Silvani, formerly alternate auditor of the company, following the resignation of Piergiorgio Re on 29 August 2008. In April 2009 the shareholders confirmed Maria Silvani as chairwoman until expiration of the three-year term of the Board of Statutory Auditors, which will occur upon approval of the financial statements at 31 December 2009. Therefore, the shareholders are now called upon to elect the Board of Statutory Auditors for the next three years. The members of the Board of Statutory Auditors have not exceeded the limit on the total number of positions that they may hold pursuant to Article 144 terdecies of CONSOB Regulation no. 11971 (the “Issuers Regulation”). The list of positions held by them pursuant to Article 153 of Legislative Decree 58/98 is provided in an appendix to this report.
335 1
Gruppo 24 ORE
2009 annual financial report
Based on the audits conducted and the data gathered, we are in a position to provide the information below. The transactions with the greatest impact on the financial position and operating result in 2009, including transactions through subsidiaries, include the following: – the loss-making free press daily newspaper 24 minuti was shut down; – restructuring of the Group’s permanent staff began: this programme will affect about 200 employees, and was made possible by agreements with labour unions; – in January 2009 a 60% equity interest was acquired for 360,000 in Bologna Fiere Web S.r.l., now Business Media Web S.r.l., by the subsidiary Il Sole Ore Business Media S.r.l.; – in March 2009, an additional 50% stake in the company Blogosfere S.r.l. was acquired for 850,000, bringing the equity interest owned by the 24 ORE Group to 80% of the share capital; this entire stake was sold in January 2010 for 1,569,000; – in April 2009 an additional 43% equity interest was acquired in 24 Ore Motta Cultura S.r.l. for 740 thousand, so that this company is now 100% owned by the 24 ORE Group; – the subsidiary Nuova Radio S.p.A. acquired 13 new frequencies for 3.2 million to extend its coverage in certain areas; – in July 2009 the subsidiary Data Ufficio S.p.A. sold the Grafica business unit for 1.2 million, effective 1 September 2009, as part of the process to dispose of marginal and low-profit or loss-making activities; – the subsidiary H24 Software S.p.A. resolved on the merger through incorporation of the wholly-owned subsidiaries STR S.p.A. and Data Ufficio S.p.A., effective 1 January 2010, and changed its company name to Innovare 24 S.p.A.
In our assessment, these transactions were conducted in observance of applicable laws and of the articles of association, as well as in accordance with the resolutions of the Board of Directors. Adequate information on such transactions
336 2
Gruppo 24 ORE
2009 annual financial report
has also been provided in the management report for the year ended 31 December 2009. Furthermore, significant changes in the Group’s top management also took place during 2009: – Ferruccio de Bortoli, editor of the daily newspaper, resigned and was replaced by Gianni Riotta; – the Chief Executive Officer, Claudio Calabi, resigned as member of the Board of Directors in December 2009. In fulfilling our responsibilities of oversight and control for the 2009 financial year, the Board of Statutory Auditors: – met on a regular basis and held 8 auditing sessions; – met on multiple occasions with the heads of the most significant functions and with our colleagues at the independent auditing firm; – examined matters falling directly under its jurisdiction through interviews, observations and collection of information from the heads of corporate functions and meetings with the internal control and auditing manager; – met with members of the Board of Statutory Auditors at the principal subsidiaries and exchanged adequate information with them concerning the activity of Group companies and coordination of oversight activity and control activity; – attended all of the meetings of the Board of Directors (of which there were 9), of the Internal Control & Audit Committee (3), and of the Compensation Committee (1), and received the information needed to assess the significant transactions carried out by the company and its subsidiaries and to evaluate their impact on financial position and the operating result. Such transactions were executed in observance of the law and of the articles of association and did not appear to be imprudent or excessively risky, or in conflict with the interests of the company or with the resolutions of the shareholders, or such that they could compromise the integrity of the company’s business value; – did not encounter atypical and/or unusual transactions of any kind; – found intercompany transactions to be in line with the company’s interests and, in any event, conducted on the basis of contractual agreements and within the
337 3
Gruppo 24 ORE
2009 annual financial report
scope of ordinary operations and administration. The same may be said for related-party transactions, which were all of an ordinary nature and conducted at arm’s length and were first examined individually by the Internal Control & Audit Committee, which reported to the Board of Directors. Amounts transacting between the companies of the Group, as well as the nature of the relations concerned, have been reported in the notes to the financial statements; – met with the management of the auditing firm KPMG S.p.A., the independent auditor, in order to exchange information, and during such meetings no facts emerged that are worthy of mention in this report. We have also noted that the report of the independent auditor on the 2009 consolidated and separate financial statements contains no issues of note and verifies that the two sets of financial statements have been prepared in a clear manner and truthfully and accurately present the financial position and operating result of both the Company and the Group, including related cash flows and changes in equity; – acknowledged that the independent auditor has been assigned responsibility both for the auditing of the separate and consolidated financial statements (for a fee of 82,500) and for the following: • Auditing of the half-year report (for a fee of 37,000); • Auditing of the accounts of the subsidiaries (for a fee of 112,500); • Auditing of the half-year reports of the subsidiaries (for a fee of 32,750); • Auditing of the tax returns of the subsidiaries (for a fee of 8,000). There were no professional services assigned to parties connected to the independent auditor on an ongoing basis, and in the opinion of the Board of Statutory Auditors, the responsibilities listed above do not compromise the independence of the auditing firm. No complaints were received from third parties in 2009. Instead, the Board of Statutory Auditors did receive three complaints (pursuant to Article 2408 of the Italian Civil Code) from one shareholder and another complaint from a second shareholder in 2009. In the first complaint, the shareholder alleged that appointment of the Representative of Special-Category Shareholders was unnecessary and/or unlawful. The lawfulness and necessity of appointing such a Representative are
338 4
Gruppo 24 ORE
2009 annual financial report
manifestly clear pursuant to Article 20 of the Articles of Association and the provisions of Article 147 bis of Legislative Decree no. 58/1998 and Article 2376 of the Italian Civil Code. As requested by the shareholder, the costs of this Representative are illustrated as follows: – 10,000 per annum paid by the company as an expense account for protection of special-category shareholders; this expense account is also used to pay the Representative’s annual compensation of 5,000 (as resolved by the special- category shareholders on 7 November 2008); – about 30,000 upon appointment of the Representative for notary public fees, securities service and various formalities associated with appointment of the Representative. In response to the shareholder’s request that the Board of Statutory Auditors report on the activity performed by the Representative, Angelo Miglietta, the Board believes that it does not have the authority to investigate the performance of the Representative of Special-Category Shareholders. The Board of Statutory Auditors received another request from the same shareholder that it assess the consistency of trade in certain products with the company purpose. According to the shareholder, those products were allegedly sold by the company on the website shopping24.it. The shareholder’s complaint continues by listing the supervisory bodies whose members were allegedly chosen from outside the company. In yet another complaint, the shareholder asks the Board of Statutory Auditors to investigate the outsourcing of purchases and contracts for any amount, insofar as the shareholder believes that “the friends of friends” are favoured in those outsourcing relationships. The Board of Statutory Auditors has found that the products mentioned by the shareholder, who alleges that they were sold by the company on the website shopping24.it (wine and similar products), were actually sold by third parties unrelated to the company, who purchased space on the company website to advertise their own products, which are sold directly by the producers. The sale of advertising space is perfectly compatible with the company’s publishing activity. The Board of Statutory Auditors does not believe that the complaint is valid in
339 5
Gruppo 24 ORE
2009 annual financial report
regard to the assignment of positions on supervisory bodies to outsiders, since the independence and professional qualifications of the persons holding those positions are more important than their prior affiliation with the company. It also observes that the law imposes the obligation that certain persons and bodies (the independent auditor and the Board of Statutory Auditors) be independent and come from outside the company. In regard to the outsourcing of purchasing and contracts, it has been learned that the internal auditing unit has never found any anomalies or unprotected areas at specific risk. In any event, the procedure for purchasing from specific parties was reviewed with the internal auditing unit and found to function properly. A spot check of certain purchasing procedures was also carried out. Given the generic nature of the complaint, whose vagueness does not allow targeted investigation of specific cases or areas, the Board of Statutory Auditors believes that the results of the investigations as described currently suffice to say that the complaint is groundless. The Board of Statutory Auditors received a complaint from a second shareholder, who noted that the minutes of the shareholders’ meeting that approved the 2008 annual report was not filed with Borsa Italiana S.p.A. The complaint addressed to the Board of Statutory Auditors was followed by a complaint to Consob by this shareholder in regard to the same matter. Consob asked the Board of Statutory Auditors to report on its findings. The Board of Statutory Auditors found that the 2008 Annual Financial Report was approved by the shareholders on 28 April 2009, and the minutes of the meeting were drafted by Dr Zabban, notary public, on 11 May 2009. The investigation revealed that the minutes of the aforementioned shareholders’ meeting, which were duly registered with the Italian Revenue Agency on 19 May 2009, were published on the corporate website of Il Sole 24 ORE S.p.A. on 21 May 2009 and simultaneously made available at the company’s registered office, as well as being filed with the Milan Companies Register on 27 May 2009. Furthermore, the minutes were filed with Consob by means of the Teleraccolta system by the legal deadline, i.e. within 15 days after the day on which the
340 6
Gruppo 24 ORE
2009 annual financial report
shareholders’ meeting was held. This formality was satisfied with particular urgency, given that the minutes drafted by the notary public, Dr Zabban, were received the day before expiration of the legal deadline. It was also found that the minutes were published on NIS on 29 July 2009 and, in the opinion of the Board of Statutory Auditors, the delay in satisfying this requirement resulted from a pardonable error, insofar as the company filed the minutes with the NIS prior to the CONSOB letter of 6 August 2009. Furthermore, the minutes were promptly published in the additional forms indicated hereinabove, in regard to their being uploaded on the website of Borsa Italiana. Therefore, in the opinion of the Board of Statutory Auditors, no material violations of the laws and regulations governing transparency were committed.
During 2009 the Board of Statutory Auditors: – issued opinions as required by law only as concerned the co-opting of one member of the Board of Directors; – oversaw observance of the principles of proper administration by attending the meetings of the Board of Directors and through the information obtained from the heads of the various internal functions and meetings held with the independent auditor, and has no observations to make in that regard; – oversaw the appropriateness of the organisational structure and, within the scope of the board’s responsibilities has no observations to make in that regard, having verified the functioning of the of the organisational chart of delegated corporate functions and the appropriateness of the company’s size and plans. In particular, it confirmed that the organisational, management and control model pursuant to Legislative Decree 231/2001 previously implemented by the company was updated in October 2009 to reflect recent changes in legislation. The Board of Statutory Auditors fulfilled its responsibilities as the delegated supervisory body in regard to compliance with the model and amendments thereto as necessary; – verified the adequacy of internal controls, which is centred around the internal auditing audit. This unit, in turn, makes use of procedures that we deem to be adequate based on period meetings by the Board of Statutory Auditors with the
341 7
Gruppo 24 ORE
2009 annual financial report
head of the unit. The company has also established an Internal Control and Audit Committee, whose members include the independent directors, and a Compensation Committee. Areas of potential risk to the company are also comprehensively monitored by the heads of the various business segments, within the scope of their responsibilities. – deemed the system of accounting and administration to be adequate. This system makes use of procedures that provide the necessary information in preparing the separate and consolidated financial statements, the budget, the preliminary year-end reports, and the performance numbers for the various business segments, as well as providing the information needed or otherwise helpful in making decisions and defining operating plans based on reliable data. Therefore, the system of accounting and administration is suited to representing and monitoring the facts of operations, to providing data for the various reporting periods, and to identifying, preventing and managing risks of a financial or operational nature and any fraud that could damage the company; – monitored the adequacy of the instructions given by the company to its subsidiaries as required by Article 144(2) of Legislative Decree 58/1998. With the exception of those that are relatively insignificant due to their small size, the subsidiaries follow the same principles of ethics and disclosure as those of the parent in the areas of administration and management. However, it is important to note that the process of integration remains to be completed for certain recently acquired shareholdings; – verified adoption by the company of the Corporate Governance Code for Listed Companies imposed by stock market regulations (see the report on corporate governance prepared by the Board of Directors for more information), and monitored proper implementation of the related rules. In particular, it verified the procedures implemented in regard to access to insider information pursuant to Article 115-bis of Legislative Decree 58/1998 and the disclosure obligations imposed by Article 114(7) of that same statute.
In conclusion, the Board of Statutory Auditors, in the execution of its responsibilities of control and oversight, has verified the existence of management
342 8
Gruppo 24 ORE
2009 annual financial report
guidelines and an organisational system that are adequate for compliance with the law, regulations and the company’s articles of association and aimed at updating and improving the system itself. In particular, the Board of Statutory Auditors verified that: – the security policy document was updated in 2009 as required by the code of personal data protection; – a new risk assessment document has been prepared in accordance with Legislative Decree 106/2008 concerning workplace safety; – the company’s activities are carried out in compliance with environmental protection regulations and are constantly monitored to that end; – the measures adopted by the Board of Directors for the assessment and verification of independent directors’ independence have been properly applied; – there were no reports of violations of the organisational, management and control model pursuant to Legislative Decree 231/01 submitted by the supervisory body; – there were no irregularities or other significant events that would require reporting to the supervisory bodies or that are worthy of mention in this report; – the Corporate Financial Reporting Manager has confirmed that the separate and consolidated financial statements correspond to the account balances shown in the corporate books and accounting records; – the laws governing preparation of the draft financial statements, notes to the financial statements and management report have been complied with. Based on the assessment carried out with the assistance of the function heads and the information provided by the independent auditor, the Board of Statutory Auditors has no comments to make in this regard. In analysing the financial statements, the Board focused specific attention on the measurement of goodwill and transactions related to intangible assets with a definite and indefinite useful life, and has granted its approval to those account entries; – the financial statements as at 31 December 2009, as well as those for the previous year, have been prepared in accordance with the International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board (IASB) and related interpretations issued by the Standing
3439
Gruppo 24 ORE
2009 annual financial report
Interpretations Committee (SIC), based on the text published in the Official Journal (OJ) of the European Union. Finally, the Board of Statutory Auditors has no observations or recommendations to make as envisaged by Article 153(2) of Legislative Decree 58/1998 concerning other matters within the scope of its responsibilities. On the basis of the foregoing comments and summarising the oversight and auditing activities it has conducted, the Board has no observations to make concerning the separate financial statements for 2009 or their accompanying documents, and therefore find them, together with the proposal to cover the loss for the year, to be suitable for your approval.
Milan, 25 March 2010
THE STANDING STATUTORY AUDITORS
344 10
Gruppo 24 ORE
2009 annual financial report
345 Gruppo 24 ORE
2009 annual financial report
ENCLOSURE TO REPORT OF THE BOARD OF STATUTORY AUDITORS OF IL SOLE 24 ORE S.P.A. PURSUANT TO ARTICLE 153 OF ITALIAN LEGISLATIVE DECREE NO. 58/98 Pursuant to Article 144-quinquiesdecies of the Issuer Regulations Dott.ssa Maria Silvani (Chairman of the board of statutory auditors) N. Company’s name Commission Expiry 01 Biotronik Seda SpA Regular auditor Financial statement 31.12.2009 02 Carlo Barbera & C. SpA Regular auditor Financial statement 31.12.2009 03 Eliship srl in liquidazione Liquidator Unlimited 04 ES.EL. SpA Regular auditor Financial statement 31.12.2009 Chairman of the board of 05 FEI SpA statutory auditors Financial statement 31.12.2010 Chairman of the board of 06 Finanziaria Har Srl statutory auditors Financial statement 31.12.2010 Chairman of the board of 07 Fiditalia srl statutory auditors Financial statement 31.12.2010 Fondazione "Il Collegio delle Università Chairman of the board of 08 Milanesi" statutory auditors Financial statement 31.12.2009 09 Forseda SpA Regular auditor Financial statement 31.12.2011 Chairman of the board of 10 Fral Srl statutory auditors Financial statement 31.12.2011 Chairman of the board of 11 Ganafin Sapa statutory auditors Financial statement 31.12.2011 Chairman of the board of 12 Il Sole 24 Ore SpA statutory auditors Financial statement 31.12.2009 Chairman of the board of 13 Imm.re Vitrex SpA statutory auditors Financial statement 31.12.2011 14 Impredile SpA Regular auditor Financial statement 31.12.2011 Chairman of the board of 15 Isolfin SpA statutory auditors Financial statement 31.12.2010 16 Lamapa Srl Sole director Sine revocation 17 Master SpA Regular auditor Financial statement 31.12.2010 Chairman of the board of 18 Ma.va. Srl statutory auditors Financial statement 31.12.2010 Chairman of the board of 19 Presse Ross SpA statutory auditors Financial statement 31.12.2010 Chairman of the board of 20 Revitalia srl statutory auditors Financial statement 31.12.2010 21 Seda SpA Regular auditor Financial statement 31.12.2009 22 Sertre Srl Director Sine revocation Chairman of the board of 23 Sirc Srl statutory auditors Financial statement 31.12.2011 Chairman of the board of 24 Vel Srl statutory auditors Financial statement 31.12.2011 Chairman of the board of 25 Vertes SpA statutory auditors Financial statement 31.12.2010 26 Vetroasfalto SpA Regular auditor Financial statement 31.12.2010 Chairman of the board of 27 Vitrex SpA statutory auditors Financial statement 31.12.2010 Number of commissions of iusser's society 1 Overall number of commissions 27
Milan, 25 March 2010
346 Gruppo 24 ORE
2009 annual financial report
Enclosure to report of the board of Statutory Auditors of Il Sole 24 Ore S.p.A. pursuant to article 153 of Italian legislative decree no. 58/98 Pursuant to Article 144-quinquiesdecies of the Issuer Regulations Dott. Demetrio Minuto (Regular auditor) N. Company’s name Commission Expiry 01 Il Sole 24 Ore spa Regular auditor Financial statement 31.12.2009 02 Società Azionaria Casermaggi spa Regular auditor Financial statement 31.12.2009 Chairman of the board of 03 Fineldo spa statutory auditors Financial statement 31.12.2009 Chairman of the board of 04 Novella spa statutory auditors Financial statement 31.12.2009 Chairman of the board of 05 Censis Servizi spa statutory auditors Financial statement 31.12.2010 Chairman of the board of 06 Fondazione Censis statutory auditors Financial statement 31.12.2011 Chairman of the board of 07 Biagiotti RE spa statutory auditors Financial statement 31.12.2010 Chairman of the board of 08 Nautica Cala Galera spa statutory auditors Financial statement 30.09.2010 09 Nautica Due spa Regular auditor Financial statement 31.12.2011 Chairman of the board of 10 Ariston Thermo spa statutory auditors Financial statement 31.12.2011 Chairman of the board of 11 Poligrafici Real Estate spa statutory auditors Financial statement 31.12.2010 Chairman of the board of 12 Fiera di Roma srl statutory auditors Financial statement 31.12.2009 Chairman of the board of 13 Unione Servizi srl statutory auditors Financial statement 31.12.2011 14 Aluiss Ente Promotore Università Luiss Regular auditor December 2010 15 S.S. Golf Marco Simone p.a. Regular auditor Financial statement 31.12.2009 Chairman of the board of 16 FASI Fondo Assistenza Sanitaria Integrativa statutory auditors March 2011 Chairman of the board of 17 Altaroma s.c.p.a. statutory auditors 28.12.2010 18 Quadrifoglio Verde spa Regular auditor Financial statement 31.12.2011 Chairman of the board of 19 Fondazione Pro Musica e Arte Sacra statutory auditors 21.06.2012 Chairman of the board of 20 LDM Comunicazione spa statutory auditors Financial statement 31.12.2010 21 Fondazione Musica per Roma Regular auditor Financial statement 31.12.2011 Chairman of the board of 22 Fondazione Parco Biomedico S. Raffaele statutory auditors Financial statement 31.12.2011 23 Trascom Expo srl Regular auditor Financial statement 31.12.2011 Chairman of the board of 24 Expo Blu srl statutory auditors Financial statement 31.12.2011 25 Expo Globe srl in liquidazione Regular auditor Financial statement 31.12.2011 26 Biagiotti Group spa Consigliere Financial statement 31.12.2010 Chairman of the board of 27 Ros srl statutory auditors Financial statement 31.12.2009 Chairman of the board of 28 Courtial Viaggi srl statutory auditors Financial statement 31.12.2010 29 Holding Camera srl Regular auditor Financial statement 31.12.2010 Chairman of the board of 30 Palombi & C. spa statutory auditors Financial statement 31.12.2011 Number of commissions of iusser's society 1 Overall number of commissions 30
Milan, 25 March 2010
347 Gruppo 24 ORE
2009 annual financial report
Enclosure to report of the board of Statutory Auditors of Il Sole 24 Ore S.p.A. pursuant to article 153 of Italian legislative decree no. 58/98 Pursuant to Article 144-quinquiesdecies of the Issuer Regulations Dott. Alberto Usuelli (Regular auditor) N. Company’s name Commission Expiry Chairman of the board of 01 Innovare 24 SpA statutory auditors Financial statement 31.12.2011 Chairman of the board of 02 Perotti SpA statutory auditors Financial statement 31.12.2009 Chairman of the board of 03 Immobiliare Permanente SpA statutory auditors Financial statement 31.12.2010 Chairman of the board of 04 Edizioni Curci SpA statutory auditors Financial statement 31.12.2009 Chairman of the board of 05 REDI Srl statutory auditors Financial statement 31.12.2010 Chairman of the board of 06 W. & H. Italia Srl statutory auditors Financial statement 31.08.2012 Chairman of the board of 07 Candeggio Gallaratese SpA statutory auditors Financial statement 31.12.2011 Chairman of the board of 08 Golf Developments SpA statutory auditors Financial statement 31.12.2010 Chairman of the board of 09 Lantero Srl statutory auditors Financial statement 31.12.2011 10 Mipark SpA Regular auditor Financial statement 31.12.2009 11 Il Sole 24 Ore SpA Regular auditor Financial statement 31.12.2009 12 Niggeler & Kupfer SpA Regular auditor Financial statement 31.12.2010 13 Crea SpA Regular auditor Financial statement 31.12.2010 14 Giovanni Lanfranchi SpA Regular auditor Financial statement 31.12.2009 15 Golfmarc SpA Regular auditor Financial statement 31.12.2010 16 Ildia SpA Regular auditor Financial statement 31.12.2009 17 Metalinox Srl Regular auditor Financial statement 31.12.2009 18 F.C. Internazionale SpA Regular auditor Financial statement 30.06.2011 19 Selecta SpA Regular auditor Financial statement 30.09.2010 20 Divinna Srl Regular auditor Financial statement 31.12.2009 21 Project for People ONLUS Revisore Financial statement 31.12.2010 22 Jair Srl Sole director Financial statement 31.12.2010 23 Trinacria Monforte Nona Srl Sole director Sine revocation 24 Tusco Cine Srl Sole director Sine revocation 25 CMC SpA Adviser Financial statement 31.12.2009 Number of commissions of iusser's society 1 Overall number of commissions 25
Milan, 25 March 2010
348 Gruppo 24 ORE
2009 annual financial report
349 Gruppo 24 ORE
2009 annual financial report
350 Gruppo 24 ORE
2009 annual financial report
Published by Il Sole 24 ORE S.p.A.
Graphic design Carmi & Ubertis
Printing Azienda Grafica Modulimpianti - Grezzago (MI)
Printing ended in June 2010
351 Gruppo 24 ORE
2009 annual financial report
352