MEDIASET GROUP Half Year Financial Report at 30 June 2015 WorldReginfo - 207dae83-4e38-4794-8ac2-00ebe851a54b
MEDIASET S.p.A. - via Paleocapa, 3 - 20121 Milan Share Capital Euros 614,238,333.28 fully paid up Tax Code, VAT number and inscription number in the Milan Enterprises Register: 09032310154 Website: www.mediaset.it WorldReginfo - 207dae83-4e38-4794-8ac2-00ebe851a54b INDEX
Corporate Bodies ...... 1
Financial Highlights ...... 2
Introduction ...... 3
Interim Report on Operations at 30 June 2015 ...... 3 Significant events in the first half of the year ...... 10 Performance by geographical area and business segment ...... 13 Financial results ...... 14 The Balance Sheet and Consolidated Financial Situations ...... 21 Group headcount ...... 24 Related Parties transactions ...... 24 Opt-out of obligation for publication of information documents in connection with significant operations ...... 24 Subsequent events ...... 25 Risks and uncertainties for the remaining part of the financial year ...... 26 Forecast for the year ...... 27
Interim Consolidated Financial Statements ...... 29 Consolidated Accounting Tables ...... 30 Explanatory Notes ...... 36
Statement concerning the Condensed Half-Year Financial Statements in compliance with Art. 154-bis of Italian Law Decree 58/98 ...... 59
Auditors’ review report on the interim condensed consolidated financial statements ...... 61
WorldReginfo - 207dae83-4e38-4794-8ac2-00ebe851a54b WorldReginfo - 207dae83-4e38-4794-8ac2-00ebe851a54b
CORPORATE BODIES
Board of Directors Chairman Fedele Confalonieri
Deputy Chairman and Chief Executive Officer Pier Silvio Berlusconi
Directors Giuliano Adreani Marina Berlusconi Franco Bruni Pasquale Cannatelli Mauro Crippa Bruno Ermolli Marco Giordani Fernando Napolitano Gina Nieri Michele Perini Alessandra Piccinino Niccolo' Querci Stefano Sala Carlo Secchi Wanda Ternau
Executive Committee Fedele Confalonieri Pier Silvio Berlusconi Giuliano Adreani Marco Giordani Gina Nieri
Risk and Control Committee Carlo Secchi (Chairman) Franco Bruni Fernando Napolitano
Compensation Committee Michele Perini (Chairman) Bruno Ermolli Fernando Napolitano
Governance and Carlo Secchi (Chairman) Appointments Committee Michele Perini Wanda Ternau
Committee of Independent Directors for Michele Perini (Chairman) Related-Party Transactions Alessandra Piccinino Carlo Secchi
Board of Statutory Auditors Mauro Lonardo (Chairman) Francesca Meneghel (Regular Auditor) Ezio Maria Simonelli (Regular Auditor) Massimo Gatto (Alternate Auditor) Flavia Daunia Minutillo (Alternate Auditor) Riccardo Perotta (Alternate Auditor)
Independent auditors Reconta Ernst & Young S.p.A.
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MEDIASET GROUP: FINANCIAL HIGHLIGHTS
Main Income Statement Data
FY 2014 1H 2015 1H 2014 mio € % mio € % mio € %
3,414.4 100% Total net Revenues 1,721.1 100% 1,724.8 100% 2,483.4 72.7% Italy 1,243.7 72.3% 1,257.4 72.9% 932.1 27.3% Spain 478.5 27.8% 468.0 27.1%
248.8 100% EBIT 137.5 100% 109.5 100%
104.4 42.0% Italy 27.0 19.6% 29.4 26.8% 144.8 58.2% Spain 111.0 80.7% 80.1 73.2% 138.7 Profit before Tax and Minority Interest 129.9 8.4
23.7 Net Result 24.3 (20.5)
Main Balance Sheet and Financial Data
31st December 2014 30th June 2015 30th June 2014 mio € mio € mio €
3,906.8 - Net Invested Capital 3,702.1 4,281.0
3,045.6 - Total Net Shareholders' Equity 3,073.9 3,254.7
2,322.8 - Net Group shareholders' Equity 2,363.8 2,346.2 722.7 - Minorities Shareholders' Equity 710.1 908.5 (861.3) - Net Financial Position (628.2) (1,026.4) 1,226.5 - Operating Cash Flow 646.2 606.4 1,705.2 - Investiments 450.3 1,494.4 - - Dividens paid by the Parent Company (22.7) - - - Dividens paid by Subsidiares (44.2) -
Personnel
FY 2014 1H 2015 1H 2014 % % %
5,559 100% Mediaset Group Personnel (headcount) 5,584 100% 5,748 100% 4,299 77.3% Italy 4,314 77.3% 4,465 77.7% 1,260 22.7% Spain 1,270 22.7% 1,283 22.3%
5,711 100% Mediaset Group Personnel (average) 5,610 100% 5,734 100% 4,437 77.7% Italy 4,345 77.5% 4,449 77.6% 1,274 22.3% Spain 1,265 22.5% 1,285 22.4%
Main Indicators
FY 2014 1H 2015 1H 2014
7.3% - EBIT/Net Revenues 8.0% 6.3% 4.2% - Italy 2.2% 2.3% 15.5% - Spain 23.2% 17.1% 4.1% - EBT/Net Revenues 7.5% 0.5% 0.7% - Net Profit/Net Revenues 1.4% -1.2% 0.02 - EPS (euro per share) 0.02 (0.02)
0.02 - Diluted EPS (euro per share) 0.02 (0.02)
2 WorldReginfo - 207dae83-4e38-4794-8ac2-00ebe851a54b INTRODUCTION
This Interim Financial Report, prepared pursuant to Art. 154-ter of Italian Legislative Decree no. 58/1998, includes the Report on Operations, the half-yearly condensed consolidated financial statements and the Certification pursuant to Article 154-bis of Italian Legislative Decree no. 58/98. The half-yearly condensed consolidated financial statements are prepared in accordance with International Accounting Standards (IAS/IFRS) applicable under the EC Regulation 1606/2002 of the European Parliament and of the Council dated 19 July 2002 and in particular IAS 34 - Interim Financial Reporting, as well as the regulations issued to implement Article 9 of Italian Legislative Decree no. N.38/2005. The presentation of the reclassified consolidated financial statements and of the statutory financial statements provided in this Interim Financial Report corresponds to the presentation adopted for the annual financial statements. The notes have been prepared in accordance with the content prescribed by IAS 34 - Interim Financial Reporting, also taking into account the provisions issued by Consob Communication No. 6064293 dated 28 July 2006. As such, the information disclosed in this report is not comparable to that of complete financial statements prepared in accordance with IAS 1.
INTERIM REPORT ON OPERATIONS AS AT 30 JUNE 2015
Group Highlights The first half of the financial year saw a strengthening of the trend in operating performance for the Group's main activities that had already emerged in first quarter. Specifically, in Italy, the performance of advertising revenue gradually normalised itself in the second quarter, which, together with the ongoing and robust growth of advertising revenue in Spain - now unabated for seven quarters in a row - and coupled with a stringent cost control policy in both territories, enabled the Group to deliver significant growth in terms of both operating results and profitability. Operating performance, together with the reduction in financial expenses and improvement in the earnings of investees, enabled the achievement of a positive consolidated net profit, compared to the net loss recorded in the same period of 2014. During the half-year, moreover, the Group further strengthened its content availability and completed the repositioning exercise that, starting from July 1, led to the launch of Premium Mediaset, the Group's revamped editorial and commercial Pay offering focussed on high-end, exclusive content for the next seasons. Premium Mediaset, as a matter of fact, will offer live broadcasts of Serie A League matches of the best clubs, with exclusivity over images, comments and pre-match, post-match and pitch interviews, exclusivity over the entire Champions League, the best International film offering since 2016 thanks to exclusive multi-platform agreements with Warner and Universal and the best national film offering, guaranteed by the subsidiaries Medusa and Taodue: all the above delivered both in linear and non-linear mode and enriched by a cutting-edge application for simplified web access to all high-definition contents, with the creation of a unique and distinctive Pay offering on the national market.
3 WorldReginfo - 207dae83-4e38-4794-8ac2-00ebe851a54b Half Year Financial Report at 30 June 2015 – Interim Report on Operations Key consolidated financial figures for the half-year compared to the corresponding period of the previous year are provided below. Consolidated net revenues amounted to EUR 1,721.1 million, essentially stable on the EUR 1,724.8 million for 2014.
EBITDA amounted to EUR 667.1 million, up from the EUR 668.3 million recorded in 2014.
EBIT was equal to EUR 137.5 million, compared to EUR 109.5 million recorded in the same period of the previous year. Operating profitability rose to 8.0% from 6.3% recorded in 2014.
Income from continuing operations, net of tax and minority interests, reached EUR 129.9 million compared to EUR 8.4 million at June 30, 2014, a result that had been heavily impacted by EUR -47.4 million due to an adjustment of a carrying amount for the investment in Digital Plus recorded following the sale agreement for the aforementioned investment. The effect on consolidated net profit/(loss) for the Group arising from this value adjustment was equal to EUR -12.3 million.
Net earnings of the Group amounted to EUR 24.3 million, compared to the EUR -20.5 million consolidated loss posted in the first half of 2014.
Consolidated net financial debt decreased from EUR 861.3 million at 31 December 2014 to EUR 628.2 million at 30 June 2015 due to the high free cash flow in the period amounting to EUR 283.1 million and the receipt of EUR 100 million from the sale of 11.1% of Mediaset Premium S.p.A. to Telefónica in January.
Performance review by geographical area: Italy
In the first quarter of 2015 consolidated net revenues from the Group’s Italian operations totalled EUR 1,243.7 million, down from the EUR 1,257.4 million posted in the corresponding period of the previous year.
The performance of advertising revenues in the first six months of the year was affected by market conditions still characterised by a weak and irregular recovery of the appetite for investment on the part of operators, within a domestic economic context that, prior to the intensification of the Greek crisis, had already started to show positive signals in terms of domestic market demand and private consumption. Against this backdrop, the commercial strategy of the agency Publitalia ‘80 remained focused on safeguarding profitability, without resorting to the price cutting tactics of some competitors. In the second quarter, gross advertising revenue for the media licensed to the group (free-to-air and pay television channels and the relative share of sub-licensing on websites) was substantially in line with that for the previous year (-0.1%), reducing the loss for the half-year as a whole to -0.8%: a figure that consolidates the slow, but progressive recovery process compared to previous quarters. In the same period of 2014 advertising revenues fell by -3.9% over the first half of 2013, while in the first quarter of 2015 it fell by -1.6%. According to the latest figures released by Nielsen, in the first half, the advertising market as a whole fell by -2.8% year- on-year.
Core revenues for Pay TV from the sale of subscriptions, prepaid cards and revenues from the "Infinity" on demand service amounted to EUR 265.4 million, compared to EUR 274.3 million in the first half of 2014. In the first six months of 2015, the Mediaset Premium
4 WorldReginfo - 207dae83-4e38-4794-8ac2-00ebe851a54b Half Year Financial Report at 30 June 2015 – Interim Report on Operations offering did not include Champions League events (in the same period, Mediaset broadcast on a free-to-air basis an exclusive match per week, as well as the semifinals and the final with the participation of Juventus), which, instead, had been available on a non-exclusive basis for the same period of 2014. As at 30 June 2015 the customer base of Mediaset Premium was at any rate substantially stable compared to 31 December 2014.
Revenues for EI Towers from external customers came to EUR 29.5 million, an increase over the EUR 26.6 million figure for the same period of 2014.
In the reporting half-year, overall operating costs of the Italian business (personnel expenses, purchasing and service costs and other expenses, amortisation and write-downs of rights and other fixed assets) decreased by 0.9% compared to the total in the same period of 2014; this performance reflects the process of structural reduction in operating costs and investments achieved through efficiency measures implemented over the last three years.
Total EBIT from operations in Italy amounted to EUR 27.0 million, compared to EUR 29.4 million as at June 30, 2014. Operating profitability at the end of the reporting period came to 2.2%, compared to the 2.3% posted in 2014. Total audience over the 24-hour period averaged 10 million and 911 thousand viewers in the first half of 2015. Auditel statistics show that Mediaset networks as a whole, including both free-to-air and pay television (Premium Calcio) channels broadcast over the digital terrestrial network, obtained an audience share of 33.3% over the 24-hour period, 33.3% in the Day Time slot and 34.8% in Prime Time.
The table below shows the breakdown of audience share by network for the reporting period.
(Source: Auditel)
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The Group is the affirmed market leader with the commercial target audience for all three of its general interest channels and as broadcaster in all three time slots. Notably, Canale 5 ranks in top spot and Italia 1 in third spot in all time slots with the 15–64 year-old viewer target.
First Half 2015 % COMMERCIAL TARGET SHARE 15-64 years old
37.2 35.5 35.4 34.7 32.1 31.7
24 hours Day Time Prime Time Mediaset RAI
Mediaset’s general interest channels held an audience share in the spring season of 27.6% over the 24-hour period, 27.4% in the Day Time slot and 28.8% in Prime Time. Adding to the Group's digital channels, total audience share over the 24-hour period came to 34.0% of all viewers, 33.7% in the Day Time slot and 35.7% in Prime Time. A positive contribution also came from the Multichannel Free and Pay networks, which added more than six points of audience share for overall viewers and seven points for the commercial target audience.
GUARANTEE PERIOD: SPRING 2015 (from11/01 to 06/06) % COMMERCIAL TARGET SHARE 15-64 years old
38.1 36.2 31.6 36.0 31.4 34.0
24 hours Day Time Prime Time
Mediaset RAI
6 WorldReginfo - 207dae83-4e38-4794-8ac2-00ebe851a54b Half Year Financial Report at 30 June 2015 – Interim Report on Operations
The following tables show the broadcasting hours of the linear multichannel free-to-air and pay television offers broken down by type, in the first half of the two financial years under review.
Mediaset Networks Schedule - Broadcasted 1H 2015 Total Mediaset Types Generalist Networks Multi-Channel Pay-tv Networks Networks
Film 2,118 16.3% 4,116 13.5% 24,282 34.6% 30,516 26.9%
Fiction 4,032 30.9% 10,338 34.0% 18,219 25.9% 32,589 28.7%
Cartoons 428 3.3% 8,442 27.8% 8,853 12.6% 17,723 15.6% Total tv rights 6,578 50.5% 22,896 75.3% 51,354 73.1% 80,828 71.1%
News 2,880 22.1% 853 2.8% 1,480 2.1% 5,213 4.6%
Sport 469 3.6% 490 1.6% 4,905 7.0% 5,864 5.2%
Entertainment 2,501 19.2% 4,111 13.5% 3,577 5.1% 10,189 9.0%
Education 147 1.1% 1,336 4.4% 8,896 12.7% 10,379 9.1%
Teleshopping 457 3.5% 721 2.4% - 0.0% 1,178 1.0% Total in-house productions 6,454 49.5% 7,511 24.7% 18,858 26.9% 32,823 28.9%
Total 13,032 100.0% 30,407 100.0% 70,212 100.0% 113,651 100.0%
Mediaset Networks Schedule - Broadcasted 1H 2014 Total Mediaset Types Generalist Networks Multi-Channel Pay-tv Networks Networks
Film 2,031 15.6% 3,825 12.6% 19,620 26.6% 25,476 21.7%
Fiction 4,252 32.6% 9,778 32.2% 22,922 31.1% 36,952 31.5%
Cartoons 72 0.6% 8,251 27.1% 8,709 11.8% 17,032 14.5% Total tv rights 6,355 48.8% 21,854 71.9% 51,251 69.4% 79,460 67.8%
News 2,853 21.9% 831 2.7% 1,264 1.7% 4,948 4.2%
Sport 412 3.2% 692 2.3% 4,786 6.5% 5,890 5.0%
Entertainment 2,621 20.1% 3,934 12.9% 7,545 10.2% 14,100 12.0%
Education 327 2.5% 2,150 7.1% 8,974 12.2% 11,451 9.8%
Teleshopping 464 3.6% 947 3.1% - 0.0% 1,411 1.2% Total in-house productions 6,677 51.2% 8,554 28.1% 22,569 30.6% 37,800 32.2%
Total 13,032 100.0% 30,408 100.0% 73,820 100.0% 117,260 100.0%
7 WorldReginfo - 207dae83-4e38-4794-8ac2-00ebe851a54b Half Year Financial Report at 30 June 2015 – Interim Report on Operations
Performance review by geographical area: Spain
Consolidated net revenues for Mediaset España Group at the end of the first half of 2015 amounted to EUR 478.5 million, increasing by 2.3% compared to the corresponding period of the previous year.
Gross television advertising revenues amounted to EUR 473.2 million, up 6.0% year-on- year. Mediaset España confirmed its leadership position on the TV advertising market, with a 43.2% share. According to the latest figures released by Infoadex, total advertising investments on the Spanish market went up by 7%, and the television advertising segment during the reporting period increased 9.9% year-on-year. This represents a 51.5% share of the Spanish TV advertising market, also according to Infoadex figures.
Total costs, amounting to EUR 367.5 million in the first half 2015 fell by 5.3% on the first half of the previous year. Over the last five years the cost optimisation policies have resulted in a cumulative reduction in operating costs of EUR 143.8 million (-28.4%) without however affecting the quality of the television product offered.
As a result of the above performance EBIT came to EUR 111.0 million, compared to EUR 80.1 million in the same period of 2014, corresponding to an operating profitability of 23.2% compared to 17.1% in the first half of 2014.
Mediaset España Group’s free-to-air multichannel television offering at 30 June 2015 included Telecinco and Cuatro, as well as the thematic channels Factoría De Ficción, Boing, Divinity and Energy. In terms of audience figures, Mediaset España consolidated its leadership position in the period. In particular, Mediaset España Group's average audience share over the 24-hour segment in the half-year under review was 31.4% of all viewers and 33.5% of the commercial target audience. Telecinco was also the audience leader for the daytime slot overall, with a 15% share of all viewers over the 24-hour segment and 14.5% of the commercial target audience.
Mediaset España also consolidated its web leadership position also in the half-year under review, in terms of unique visitors and pages visited.
8 WorldReginfo - 207dae83-4e38-4794-8ac2-00ebe851a54b Half Year Financial Report at 30 June 2015 – Interim Report on Operations Reported below is the breakdown of audience share for Mediaset España Group's general interest channels and thematic channels.
The following table shows the programming schedule of the multi-channel offer in the first half of the two financial years under review.
Mediaset España schedules - Broadcasted 1H 2015 Types Generalist Networks Multi-Channel Total Mediaset Film 655 7.5% 657 3.8% 1,312 5.0% Fiction 1,662 19.1% 6,329 36.4% 7,991 30.7% Cartoons 14 0.2% 4,073 23.4% 4,087 15.7% Total tv rights 2,331 26.8% 11,059 63.6% 13,390 51.4% News 1,160 13.3% 223 1.3% 1,383 5.3% Sport 100 1.2% 32 0.2% 132 0.5% Entertainment 1,380 15.9% 2,399 13.8% 3,779 14.5% Education 3,716 42.8% 3,664 21.1% 7,380 28.3% Teleshopping - 0.0% - 0.0% - 0.0% Total in-house productions 6,356 73.2% 6,318 36.4% 12,674 48.6% Total 8,688 100.0% 17,376 100.0% 26,064 100.0%
Mediaset España schedules - Broadcasted 1H 2014 Types Generalist Networks Multi-Channel Total Mediaset Film 567 6.5% 801 3.4% 1,368 4.3% Fiction 1,970 22.7% 8,077 34.5% 10,047 31.3% Cartoons - 0.0% 4,069 17.4% 4,069 12.7% Total tv rights 2,537 29.2% 12,947 55.3% 15,484 48.3% News 1,224 14.1% 414 1.8% 1,638 5.1% Sport 204 2.3% 393 1.7% 597 1.9% Entertainment 1,219 14.0% 3,401 14.5% 4,620 14.4% Education 3,504 40.3% 6,277 26.8% 9,781 30.5% Teleshopping - 0.0% - 0.0% - 0.0% Total in-house productions 6,151 70.7% 10,485 44.8% 16,636 51.9% Total 8,688 100.0% 23,432 100.0% 32,120 100.1%
9 WorldReginfo - 207dae83-4e38-4794-8ac2-00ebe851a54b Half Year Financial Report at 30 June 2015 – Interim Report on Operations Significant events in the first half of the year The table below shows significant events and transactions in the first half of the year broken down by areas. Television Operations On 13 January 2015 the agreement was completed through which the Spanish operator Telefónica (via the subsidiary Telefónica de Contenidos) acquired 11.1% of the shares of Mediaset Premium S.p.A. for a price of EUR 100 million. The positive difference deriving from the sale of the stake and the minority interests of the company determined at the transaction date (including the adjustment of net debt to the target values established in the contract), amounting, net of tax effects, to EUR 82.9 million, qualifying the transaction as the sale of a minority interest in a subsidiary, was recognised at the consolidated level as an increase in the specific Group shareholders' equity reserve. In March, an agreement was signed with Infront Italy S.r.l. for the acquisition by Mediaset Premium of access for the period from 1 July 2015 to 30 June 2018 to the exclusive use for the Pay-TV market in Italy of archive rights and promotion and advertising rights relating to the tenders for the next three seasons 2015/2018 of the Serie A Championship, in addition to the historical archive for pre-2008 seasons and starting from 2008/2009 to today. From 1 July 2015 and the subsequent three years, Mediaset Premium, therefore, will hold archive rights for 360 matches over 380 matches in total for 15 Serie A teams, 210 of which as an exclusive: this includes matches that have already been played and the goals scored by any club from its inception to the present day, as well as all highlights of future matches up to 30 June 2018. On 22 May 2015 Mediaset Premium also obtained the exclusive for the "C Package" of the Serie A Tender up to 2018, which will enable Mediaset Premium customers to also watch, as an exclusive - apart from the match - also the first pre- and post-match interviews, changing room and pitch access tunnel footage, commentary from pitchside reporters near both benches, feed from the reporters' stations both in the bus garage-parking lot and on the pitch, as well as the on-pitch flash interview between the first and second half. In March, R.T.I. S.p.A. signed two volume deal agreements with Warner Bros International Television Distribution Inc. and Universal, which together account for approx. 40% of film production and 50% of television production in the Major world. The agreements signed will provide Mediaset Group the exclusive access for Italy of films and TV series distributed by the two US majors for the periods 2016-2020 and 2016-2018, respectively, for all television platforms and exploitation windows, both in linear (Free/Pay) and non-linear pay (SvoD, On Demand) mode. In quantitative terms, the Group will be able to count on over 900 hours of un-aired serial product and more than 2,400 hours of library product, as well as new films distributed in cinemas and major library films. On 29 April 2015 the Ordinary Shareholders' Meeting of Mediaset S.p.A. resolved to approve the establishment of a medium-long term incentive and retention plan for some managers of the Company, for the period 2015-2016-2017. The Shareholders' Meeting granted the Board of Directors the broadest powers necessary for the implementation of the Plan. Subsequently, on 14 July 2015, the Board of Directors, after consulting the Compensation Committee, identified the recipients and determined the rights due for the 2015 financial year based on the criteria set out by the aforementioned Plan approved by the Board of Directors on 12 May 2015. The rights entitle each recipient to the free allocation of an ordinary share for each right assigned,
10 WorldReginfo - 207dae83-4e38-4794-8ac2-00ebe851a54b Half Year Financial Report at 30 June 2015 – Interim Report on Operations subject to the achievement of performance targets as well as the existence of an Employment Relationship with the Company at the end of the vesting period.
EI Towers Group On 27 January 2015, following the preliminary agreement signed on 13 June 2014, EI Towers S.p.A. signed two final agreements with Cairo Network S.r.l., a company wholly owned by Cairo Communication S.p.A.. The agreements related respectively: to the design and implementation of a new national digital terrestrial multiplex intended to operate on the national frequency in UHF technology, for which Cairo Network S.r.l. obtained assignment of the corresponding user rights (the “MUX”) from the Ministry of Economic Development; and to the subsequent multi-year technical operation of the MUX in full service mode (hospitality, service and maintenance, use of broadcasting infrastructures, etc.). The agreements provide for a transitional phase, during which implementation, commissioning and an initial period of operation of the MUX will take place, which will run from the date of signing of the agreements to 31 December 2017, followed by a fully operational phase of the MUX lasting 17 years (from 2018 to 2034). On 24 February 2015, EI Towers S.p.A. made a takeover bid for 100% of the ordinary shares of Rai Way S.p.A., listed on the electronic stock exchange of Milan. For further information on the bid, please refer to the Report on Operations of the 2014 Consolidated Financial Statements (Subsequent Events) and the announcements made to the market during the period. On 21 April 2015, the Shareholders' Meeting of EI Towers S.p.A., upon proposal by the majority shareholder Elettronica Industriale S.p.A. and with respect to the developments of the cash and stock takeover bid promoted on Rai Way S.p.A. shares, resolved on the payment of a dividend of EUR 1.10 per share through the partial distribution of the profit earned in 2014. It should be noted that the Board of Directors had proposed that the Shareholders' Meeting should allocate the profit for the year wholly to the extraordinary reserve. With reference to the above mentioned cash and stock takeover bid, on 22 April 2015, the Board of Directors of EI Towers S.p.A., having examined the press release of 16 April with which RAI S.p.A., controlling shareholder of Rai Way S.p.A., stated that it would not have agreed in any way to the bid, consequently acknowledged that, even prior to the bid period, the conditions for its continuation did not exist. On 5 May 2015, upon initiative of the Public Prosecutor's Office of Milan, the Finance Police seized a document concerning the cash and stock takeover bid concerning Rai Way S.p.A. shares. The offence is classified pursuant to Article 185 of the Consolidated Finance Law. As already communicated to the market, EI Towers S.p.A. stresses once again the absolute propriety of its conduct and that of its managers, which has always been dictated by compliance with legislation, transparency and completeness of information issued to the market. On 24 April 2015 Towertel S.p.A. entered into a preliminary agreement for the purchase of 100% of the share capital of Tecnorad Italia S.p.A., a company that manages 134 transmission stations mainly hosting mobile telecommunications operators, paying an advance on the agreed price of EUR 5 million. The transaction was completed on July 10, as further detailed in the section Events after 30 June 2015.
11 WorldReginfo - 207dae83-4e38-4794-8ac2-00ebe851a54b Half Year Financial Report at 30 June 2015 – Interim Report on Operations During June, Towertel S.p.A. signed binding agreements for the purchase of 13 companies that manage 171 transmission stations mainly hosting mobile telecommunications operators, as well as a binding agreement for the purchase of 16 plots of land with transmission stations. The acquisitions are expected to be perfected by the end of this financial year.
Mediaset España Group As at 31 December 2014 three appeals against the renewal of the concession of eight digital channels, including four by Mediaset España, were pending before the “Sala Tercera de lo Contencioso Administrativo del Tribunal Supremo”. On 30 June 2015, the aforementioned appeals were archived, which resulted in no change in current channel allocation with respect to the past. On 18 April 2015 the Government issued an invitation to tender for the award of licenses for six new channels: three in standard definition and three in high definition. The deadline for project submission was 28 May and the final decision should be taken by 18 October 2015. Mediaset España formalised its participation in the tender with the objective of obtaining two channels (the maximum allowed under the conditions of the tender). On 15 April 2015, the Shareholders' Meeting of Mediaset España Comunicación S.A. approved the resolution to cancel shares in portfolio as at 31 March 2015 amounting to 10% of share capital, by a corresponding reduction in share capital. Moreover, on 6 May 2015, the Board of Directors of Mediaset España (subsequently endorsed by the Board Meeting on 30 June 2015) approved a treasury shares repurchase plan based on the Shareholders' resolution of 15 April 2015 and in implementation of resolution of the Board of Directors of 3 July 2014, which envisaged a treasury shares repurchase plan in order to remunerate shareholders following the sale of DTS Distribuidora de Television Digital in the third quarter of 2014. This new plan, which shall apply up to 16 December 2015, provides for a maximum purchase of shares that may not exceed 3.86% of the share capital (14,137,500 shares) and shall entail a maximum expenditure of EUR 170 million for the Group. As at 30 June Mediaset España had repurchased 4,427,619 treasury shares, equal to 1.21% of the share capital for a total amount of EUR 52.0 million. On 30 April 2015, Promotora de Informaciones S.A. (Prisa) announced completion of the sale of the majority stake of 56% of Distribuidora de Television Digital S.A. (Digital Plus-DTS) to Telefónica S.A. after having obtained the necessary authorisations from the competent regulatory bodies. As a result of this event, on 4 May 2015, Mediaset España, as envisaged by the agreements signed on 4 July 2014 concerning the sale to Telefónica of the 22% stake in DTS, received from Telefónica the further amount of EUR 10 million as an adjustment to the price of EUR 325 million received in the third quarter of 2014 from the sale of the equity investment.
As part of the AD4Venture operations, the following transactions were carried out during the half-year:
sale by Mediaset España of the 11.82% stake held in Grupo Yamm Comida a Domicilio S.L. realising a gain of EUR 5.4 million;
subcription by R.T.I. S.p.A. and Mediaset España of 2.98% of the share capital of Wimdu Gmbh, an online platform for apartment rental throughout the world;
12 WorldReginfo - 207dae83-4e38-4794-8ac2-00ebe851a54b Half Year Financial Report at 30 June 2015 – Interim Report on Operations
subscription of the increase in the capital of the company Westwing Group Gmbh (formerly Jade 1290 Gmbh) by R.T.I. S.p.A.;
subscription of 0.63% of share capital of the company Westwing Group Gmbh (formerly Jade 1290 Gmbh) by Mediaset España Comunicación S.A.;
subscription of 4.45% and 8.89% of the share capital of the company Deporvillage S.L., an on-line platform for the purchase of sports goods, by R.T.I. S.p.A. and Mediaset España respectively.
Performance by geographical area and business segment
In this section we give a breakdown of the consolidated income statement, balance sheet and cash flow statement to show the contribution to Group performance of the two geographical areas of business, Italy and Spain. For each geographical area, revenues and operating performance are reported, broken down by business segment. The presentation of the income statement, balance sheet and cash flow figures shown below corresponds to the presentation adopted in the Report on Operations accompanying the Annual Consolidated Financial Statements. As such the figures are restated with respect to the financial statements attached, in order to highlight the intermediate aggregates considered most significant for understanding the performance of the Group and of the individual business units. Although not required by law, the criteria adopted in preparing the aggregates and notes referring the reader to the relevant statutory financial statement items have been disclosed in accordance with guidance provided by Consob Communication 6064293 of 28 July 2006 and the CESR Recommendation on alternative performance measures (or non-GAAP measures) dated 3 November 2005 (CESR/05-178b). The performance figures provided refer to progressive totals at the end of the first half of 2015 and 2014; balance sheet figures are stated at 30 June 2015 and at 31 December 2014.
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Group Performance The consolidated income statement reported below shows the intermediate aggregates making up earnings before interest, taxes, depreciation and amortisation (EBITDA) and earnings before interest and taxes (EBIT). EBITDA measures the difference between consolidated net revenues and operating costs, including costs of a non-monetary nature relating to amortisation, depreciation and write-downs (net of any write-backs) of current and non-current assets. EBIT is measured by deducting from EBITDA costs of a non-monetary nature relating to amortisation, depreciation and write-downs (net of any write-backs) of current and non-current assets.
(values in EUR million) Mediaset Group: Income Statement 1H 2nd Quarter 2015 2014 2015 2014 Total consolidated net revenues 1,721.1 1,724.8 892.3 904.0 Personnel expenses 269.8 276.0 135.7 137.3 Purchases, services, other costs 784.2 780.6 396.2 421.2 Operating costs 1,054.0 1,056.5 531.9 558.5 EBITDA 667.1 668.3 360.4 345.5 Rights amortisations 464.7 482.4 235.6 225.1 Other amortisations and depreciations 64.9 76.4 33.2 40.5 Amortisations and depreciations 529.6 558.8 268.8 265.6 EBIT 137.5 109.5 91.6 79.9 Financial income/(losses) (23.2) (40.5) (10.1) (18.0) Income/(expenses) from equity investments 15.6 (60.7) 10.9 (56.0) EBT 129.9 8.4 92.3 5.8 Income taxes (41.1) (7.2) (29.9) (2.8) Net profit from continuing operations 88.8 1.1 62.4 3.0 Net profit from discontinued operations - - - - Minority interests in net profit (64.6) (21.7) (38.8) (11.1) Mediaset Group net profit 24.3 (20.5) 23.6 (8.1)
The following table shows key Group income statement figures stated as a percentage of consolidated net revenues.
1H 2nd Quarter 2015 2014 2013 2012 Total consolidated net revenues 100.0% 100.0% 100.0% 100.0% Operating costs 61.2% 61.3% 59.6% 61.8% EBITDA 38.8% 38.7% 40.4% 38.2% Amortisation, depreciation and write-downs 30.8% 32.4% 30.1% 29.4% EBIT 8.0% 6.3% 10.3% 8.8% EBT 7.5% 0.5% 10.3% 0.6% Net profit 1.4% -1.2% 2.6% -0.9% Tax rate (EBT %) 31.6% 86.4% 32.4% 48.7% Below we look at the breakdown of the income statement by geographical area to report the contribution to performance of the Group's Italian and Spanish operations.
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Breakdown by geographical area: Italy The following is a condensed income statement of Mediaset Group's domestic business: (values in EUR million)
Italy: Income Statement 1H 2nd Quarter 2015 2014 2015 2014 Total consolidated net revenues 1,243.7 1,257.4 635.1 636.5 Personnel expenses 218.6 223.8 110.4 111.0 Purchases, services, other costs 560.9 554.2 283.0 291.0 Operating costs 779.5 778.0 393.5 402.0 EBITDA 464.2 479.3 241.7 234.5 Rights amortisations 380.8 381.5 189.2 175.4 Other amortisations and depreciations 56.3 68.4 29.2 36.8 Amortisations and depreciations 437.2 449.9 218.4 212.1 EBIT 27.0 29.4 23.2 22.4 Financial income/(losses) (23.5) (39.6) (9.8) (17.7) Income/(expenses) from equity investments (0.6) (1.4) (0.4) (3.2) EBT 2.9 (11.6) 13.0 1.5 Income taxes (11.2) (8.4) (11.4) (7.0) Net profit from continuing operations (8.3) (20.0) 1.7 (5.5) Net profit from discontinued operations - - - - Minority interests in net profit (12.3) (9.3) (6.2) (6.1) Mediaset Group net profit (20.6)- (29.3)- (4.5) (11.6)
The following table shows key income statement figures stated as a percentage of consolidated net revenues.
1H 2nd Quarter 2015 2014 2013 2012 Total consolidated net revenues 100.0% 100.0% 100.0% 100.0% Operating costs 62.7% 61.9% 62.0% 63.2% EBITDA 37.3% 38.1% 38.1% 36.8% Amortisation, depreciation and write-downs 35.2% 35.8% 34.4% 33.3% EBIT 2.2% 2.3% 3.7% 3.5% EBT 0.2% -0.9% 2.0% 0.2% Net profit -1.7% -2.3% -0.7% -1.8% Tax rate (EBT %) n.s. n.s. 87.3% n.s. Below we report the performance of the Group’s Italian operations broken down by business segment.
. Integrated Television Operations, including free-to-air and pay television broadcasting and accessory operations consisting of Web publishing, teleshopping, publishing, licensing and merchandising, and movie production and distribution. . EI Towers including hosting, maintenance and management operations in relation to radio, television and wireless telecommunications networks run by the listed company EI Towers S.p.A..
15 WorldReginfo - 207dae83-4e38-4794-8ac2-00ebe851a54b Half Year Financial Report at 30 June 2015 – Interim Report on Operations The two abridged statements that follow report revenues and EBIT for the business segments identified.
Revenues 1H 2nd Quarter Business segments 2015 2014 changes % changes 2015 2014 changes % changes breakdown
Integrated Television Operations 1,214.2- 1,230.8- -16.6 -1.4% 620.1- 622.8- -2.7 -0.4% EI Towers 119.5- 116.7- 2.8 2.4% 60.1- 58.8- 1.3 2.2% Eliminations (90.0)- (90.1)- -0.1 -0.1% (45.0)- (45.0)- 0.0 0.0% Total 1,243.7 1,257.4 -13.7 -1.1% 635.2 636.6 -1.4 -0.2%
Operating Result 1H 2nd Quarter Business segments 2015 2014 changes % changes 2015 2014 changes % changes breakdown Integrated Television Operations (7.7)- (3.7)- -4.0 - -109.7% 6.0- 5.4- 0.5 9.8% EI Towers 34.7 33.1 1.6 5.0% 17.3 17.0 0.3 2.0%
Total 27.0 29.4 -2.4 -8.1% 23.3 22.4 0.9 3.8%
Reported below are the income statements for the two areas identified.
1H 2nd Quarter Integrated Television 2015 2014 changes % changes 2015 2014 changes % changes Operations
Gross advertising revenues 1,011.0 1,019.2 (8.2) -0.8% 526.4 526.9 (0.4) -0.1% Agency discounts (147.9) (148.8) 1.0 0.6% (77.0) (76.9) (0.1) -0.2% Total net advertising revenues 863.2 870.4 (7.2) -0.8% 449.4 450.0 (0.6) -0.1%
Revenues from subscriptions/pre-paid cards 265.4 274.3 (9.0) -3.3% 128.9 131.5 (2.6) -2.0% Other revenues 85.6 86.1 (0.4) -0.5% 41.8 41.3 0.5 1.2% Total Revenues 1,214.2 1,230.8 (16.6) -1.4% 620.1 622.8 (2.7) -0.4%
Personnel expenses 195.8 200.8 (5.0) -2.5% 98.7 99.2 (0.5) -0.5% Operating costs 518.8 516.4 2.3 0.5% 262.1 272.6 (10.5) -3.8% TV and movie rights amortisation 380.8 381.5 (0.7) -0.2% 189.2 175.4 13.9 7.9% Other amortisation and depreciation 38.1 47.3 (9.2) -19.4% 20.0 26.1 (6.1) -23.3% Inter-segment costs 88.4 88.4 - 0.0% 44.2 44.2 - 0.0% Total Costs 1,221.9 1,234.4 (12.6) -1.0% 614.2 617.4 (3.2) -0.5%
Operating result (7.7) (3.7) (4.0) -109.7% 6.0 5.4 0.5 9.4% % on revenues -0.6% -0.3% 1.0% 0.9% EBIT from television broadcasting in the reporting period was driven by lower revenues, as reported earlier. The reduction in total costs is mainly due to lower amortization of television rights and other investments following the reduction in investments of previous years. In the same period there was also a reduction in personnel expenses, mainly due to a lower average number.
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(values in EUR million)
1H 2nd Quarter EI Towers 2015 2014 changes % changes 2015 2014 changes % changes
Revenues towards third parties 29.5 26.6 2.9 11.0% 15.0 13.7 1.3 9.8% Inter-segment revenues 90.0- 90.1- (0.1)- -0.1%0.0% 45.0- 45.0- - -0.1%0.0% Total revenues 119.5 116.7 2.8 2.4% 60.1 58.8 1.3 2.2%
Personnel expenses 22.8 23.0 (0.2) -0.9% 11.8 11.8 - -0.4% Operating Costs 42.1 37.8 4.3 11.4% 20.9 18.4 2.5 13.5% Other amortisation and depreciation 18.2 21.1 (2.9) -13.7% 9.2 10.7 (1.5) -14.0% Inter-segment costs 1.6 1.7 - -2.4% 0.9 0.9 - 4.5% Total costs 84.7 83.6 1.2 1.4% 42.8 41.8 1.0 2.3%
Operating result 34.7 33.1 1.7 0 5.0%0 17.3 0 17.0 0.3 0 2.0%0 - - % on revenues 29.0% 28.4% 28.8% 28.9% In the half-year under review the EI Towers Group recorded a EUR 34.7 million increase in earnings and a 29% increase in operating earnings. This was achieved thanks to increased revenues generated by infrastructure contracts and provision of services to wireless telecommunications operators, mainly deriving from the contribution of the acquisitions, made during the previous year, of Sart S.r.l. (subsequently merged with Towertel S.p.A.), Hightel S.p.A. (now NewTelTowers S.p.A.) and Torre di Nora S.r.l. (subsequently merged into NewTelTowers S.p.A.) and the start of the design and execution phase for the national multiplex for the Cairo Communication Group. Inter-segment revenues, relating to hosting, assistance, maintenance and logistics services, broadcasting infrastructure use and engineering services provided to the subsidiary Elettronica Industriale were stable at EUR 90.0 million. Costs of EUR 1.8 million were recognised during the period mainly attributable to the costs relating to the cash and stock takeover bid of Rai Way S.p.A. mentioned above. Excluding those costs, operating costs would have been essentially stable compared to the same period of the previous year.
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Breakdown by geographical area: Spain The following is an abridged income statement of the Group’s Spanish business; figures are those of the Mediaset España Group (consolidated figures). (values in EUR million)
Spain: Income Statement 1H 2nd Quarter 2015 2014 2015 2014
Total consolidated net revenues 478.5 468.0 257.8 267.6 Personnel expenses 51.2 52.2 25.3 26.3 Purchases, services, other costs 223.8 226.9 113.2 130.4 Operating costs 275.0 279.0 138.5 156.7 EBITDA 203.5 189.0 119.3 110.9 Rights Amortisations 84.0 100.9 46.5 49.8 Others amortisations and depreciations 8.6 8.0 4.0 3.7 Amortisations and depreciations 92.5 108.9 50.5 53.5 EBIT 111.0 80.1 68.9 57.5 Financial income/(losses) 0.3 (0.8) (0.3) (0.4) Income/(expenses) from equity investments 16.2 (59.3) 11.3 (52.7) EBT 127.5 20.0 79.8 4.3 Income taxes (29.9) 1.1 (18.5) 4.1 Net profit from continuing operations 97.6 21.1 61.3 8.5 Net profit from discontinued operations - - - - Minority interests in net profit 0.2 0.3 0.1 0.1 - - Mediaset Group net profit 97.8 21.4 61.5 8.6
The following table shows key income statement figures stated as a percentage of consolidated net revenues from Spanish operations.
1H 2nd Quarter 2015 2014 2013 2012 Total consolidated net revenues 100.0% 100.0% 100.0% 100.0% Operating costs 57.5% 59.6% 53.7% 58.6% EBITDA 42.5% 40.4% 46.3% 41.4% Amortisation, depreciation and write-downs 19.3% 23.3% 19.6% 20.0% EBIT 23.2% 17.1% 26.7% 21.5% EBT 26.6% 4.3% 31.0% 1.6% Net profit 20.4% 4.6% 23.9% 3.2% Tax rate (EBT %) 23.4% n.s. 23.2% n.s. Tax rate (EBT %)
18 WorldReginfo - 207dae83-4e38-4794-8ac2-00ebe851a54b Half Year Financial Report at 30 June 2015 – Interim Report on Operations The breakdown of Mediaset España Group's revenues is shown below: (values in EUR million)
1H 2nd Quarter % % 2015 2014 2013 2012 change change
Gross advertising revenues 473.2 446.5 6.0% 256.7 251.9 1.9%
Agency discounts (19.3) (20.4) -5.8% (10.4) (9.6) 8.3%
Net advertising revenues 454.0 426.1 6.5% 246.2 242.3 1.6%
Other revenues 24.6 41.9 -41.4% 11.6 25.3 -54.1%
Total net consolidated revenues 478.5 468.0 2.3% 257.8 267.6 -3.6%
The increase reported in item Other revenues mainly refers to revenues from the distribution of movie co-productions and revenues from gambling and merchandising.
1H 2nd Quarter
2015 2014 changes % changes 2015 2014 changes % changes
Operating costs 367.5 387.9 -20.4 -5.3% 189.0 210.2 -21.2 -10.1%
Personnel expenses 51.2 52.2 -1.0 -1.9% 25.3 26.3 -1.0 -3.8%
Purchases, services, other costs 223.8 226.9 -3.0 -1.3% 113.2 130.4 -17.1 -13.1%
TV and movie rights amortisation 84.0 100.9 -16.9 -16.8% 46.5 49.8 -3.3 -6.6%
Other amortisation and write-downs 8.6 8.0 0.6 7.5% 4.0 3.7 0.3 7.3%
Total costs for the Mediaset España Group in the first half of 2015, decreased EUR 20.4 million over the first half of the previous year, thanks to concerted cost optimisation and control policies and also in view of the fact that in this period the costs related to the main matches of the first round of Brazil 2014 World Cup. As at 30 June 2015, EBIT from Spanish operations totalled EUR 111.0 million, up from EUR 80.1 million in the first half of 2014, with an operating profitability of 23.2%.
Other income statement components for the Mediaset Group as a whole are shown below.
1H 2nd Quarter
2015 2014 changes % changes 2015 2014 changes % changes Financial income/(losses) -23.2 -40.5 17.2 42.6 -10.1 -18.0 7.9 44.0
The significant reduction in financial expenses in the first half of 2015 compared to the same period of the previous year was mainly due to the lower average financial debt in the two periods. In 2014, this item reflected the effect of the charges and commissions connected to the early termination of certain medium and long term committed credit facilities.
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1H 2nd Quarter
2015 2014 changes % changes 2015 2014 changes % changes Result from equity investments 15.6 -60.7 76.3 n.s. 10.9 -56.0 66.9 n.s.
In the first half of 2015, the result of investments benefited from proceeds of EUR 10 million pertaining to amount received by Mediaset España as a price adjustment for the sale of its 22% stake in Digital Plus (DTS) to Telefonica at the beginning of the third quarter of the last financial year. In the same period of the previous year, the item included the loss resulting from the value adjustment of the equity investment held in Digital Plus to its estimated realisable value, concerning the part of the negotiated price unconditioned on future events, on the basis of the sale agreements with Telefonica S.A. signed early in July this year. In the first half of 2015 Income from equity investments also includes a profit of EUR 5.4 million made by Mediaset España following the divestment of the equity interest held in the company Grupo Yamm Comida a Domicilio S.L., purchased in 2014 as part of the Ad4Ventures business.
1H 2nd Quarter
2015 2014 changes % changes 2015 2014 changes % changes
EBT 129.9 8.4 121.6 n.s. 92.3 5.8 86.5 n.s.
Income taxes -41.1 -7.2 -33.9 n.s. -29.9 -2.8 -27.1 n.s. Tax Rate (%) 31.6% 86.4% 32.4% 48.7%
Net profit from discontinued operations - - - n.s. - - - n.s.
Minority interests in net profit -64.6 -21.7 -42.9 n.s. -38.8 -11.1 -27.8 n.s.
Group net profit 24.3 -20.5 44.8 n.s. 23.6 -8.1 31.7 n.s. Earnings for the reporting period are stated net of income taxes in accordance with the recognition criteria set forth by IAS 34, applying the estimated income tax rate that will be applied at year end. In calculating IRAP tax, estimated taxes took into account the deductibility of the cost of employees with an open-ended contract, according to the new provisions in force from 2015, and in Spain of the reduction in the ordinary tax rate from 30% to 28%. Minority Interests refers to the share of consolidated net earnings of Mediaset España, El Towers, and, includes minority interests of Mediaset Premium S.p.A. from the first quarter of 2015 (11.1%)
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Statement of Financial Position The Group’s balance sheet and its breakdown by geographical area are reported below in abridged form, restated to show the two main aggregates Net Invested Capital and Net Financial Position; the latter consisting of Total Financial Debt, Cash and Other Cash Equivalents and Other Financial Assets. Details of the items making up the net financial position are provided in Note 4.9. The following tables therefore differ in their layout from the statutory balance sheet, which primarily distinguishes current from non-current assets and liabilities. Equity Investments and Other Financial Assets include assets recognised in the consolidated statement of financial position as investments in subsidiaries and other companies, and non-current equity investments and financial receivables recognised in the consolidated statement of financial position as Other Financial Assets (thus excluding hedging derivatives, which are included as Net Working Capital and Other Assets/Liabilities). Net Working Capital and Other Assets/Liabilities include current assets (apart from cash and cash equivalents and current financial assets included in the Net Financial Position), deferred tax assets and liabilities, non-current assets held for sale, provisions for risks and charges, trade payables and taxes payable. (values in EUR million)
Balance Sheet Summary 30/06/2015 31/12/2014 TV and movie rights 2,520.6 2,581.4 Goodwill 934.4 934.4 Other tangible and intangible non current assets 1,076.8 1,092.3 Equity investments and other financial assets 91.1 70.3 Net working capital and other assets/(liabilities) (831.8) (674.6) Post-employment benefit plans (88.9) (96.9) Net invested capital 3,702.1- 3,906.8- Group shareholders' equity 2,363.8 2,322.8 Minority interests 710.1 722.7 Total Shareholders' equity 3,073.9- 3,045.6- Net financial position 628.2 861.3
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The breakdown of the balance sheet by geographical area (Italy and Spain) is shown below.
(values in EUR million)
Balance Sheet Summary Italy Spain (geographical breakdown) 30/06/2015 31/12/2014 30/06/2015 31/12/2014 TV and movie rights 2,274.1 2,370.2 247.6 211.8 Goodwill 283.9 283.9 287.4 287.4 Other tangible and intangible non current assets 799.3 809.5 277.4 282.8 Equity investments and other financial assets 1,014.8 1,006.8 29.1 16.3 Net working capital and other assets/(liabilities) (910.6) (800.2) 78.8 125.5 Post-employment benefit plans (88.9) (96.9) - - Net invested capital 3,372.5- 3,573.2- 920.2- 923.7- Group shareholders' equity 2,405.4 2,362.2 1,157.2 1,181.1 Minority interests 94.0 84.0 7.9 8.3 Total Shareholders' equity 2,499.5- 2,446.3- 1,165.1- 1,189.4- Net financial position 873.0 1,127.0 (244.8) (265.7)
The table below shows the breakdown of the Group balance sheet as at 30 June 2015 to show the effect of the line-by-line consolidation of Mediaset España.
(values in EUR million)
Balance Sheet Summary Eliminations/ Mediaset Italy Spain (geographical breakdown) Adjustments Group
TV and movie rights 2,274.1 247.6 (1.1) 2,520.6 Goodwill 283.9 287.4 363.2 934.4 Other tangible and intangible non current assets 799.3 277.4 0.0 1,076.8 Equity investments and other financial assets 1,014.8 29.1 (952.7) 91.1 Net working capital and other assets/(liabilities) (910.6) 78.8 (0.0) (831.8) Post-employment benefit plans (88.9) - - (88.9) Net invested capital 3,372.50.0 920.20.0 (590.6)0.0 3,702.10.0 Group shareholders' equity 2,405.4 1,157.2 (1,198.8) 2,363.8 Minority interests 94.0 7.9 608.2 710.1 Total Shareholders' equity 2,499.50.0 1,165.10.0 (590.6)0.0 3,073.90.0 Net financial debt 873.0 (244.8) 0.0 628.2
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The following table is an abridged cash flow statement broken down by geographical area, showing cash flows over two periods. Items have been restated with respect to the standard IAS 7 layout used to prepare the statutory cash flow statement in order to show changes in Net Financial Position, considered the most significant indicator of the Group’s ability to meet its financial obligations.
(values in EUR million)
Cash Flow Statement Mediaset Group Italy Spain as at 30 June 2015 2014 2015 2014 2015 2014 Net Financial Position at the beginning of the year (861.3)- (1,459.0)- (1,127.0)- (1,552.5)- 265.7- 93.5- Free Cash Flow 283.1 165.2 189.3 104.3 93.8 60.9 - Cash Flow from operating activities (*) 646.2 606.4 435.5 433.3 211.3 173.1 - Investments in fixed assets (450.3) (1,494.4) (327.6) (1,371.0) (123.2) (123.5) - Disposals of fixed assets 0.2 - 0.1 - 0.1 - - Changes in net working capital and other current assets/liabilities 87.1 1,053.2 81.3 1,042.0 5.6 11.2
Change in the consolidation perimeter (6.8) (3.3) (6.8) (3.3) - - Own share's sell/buyback (71.6) - - - (71.6) - Equity investments/Invesment in other financial assets 93.0- 268.2- 90.4- 271.8- 2.7- (3.5)- Cashed-in dividends 2.2- 2.5- 22.4- (113.6)0.6 1.8- 1.9- Dividends paid (66.9)- - (41.3)- - (47.5)- -
Financial Surplus/Deficit 233.0- 432.7- 253.9- 373.4- (20.9)- 59.2- Net Financial Position at the end of the period (628.2) (1,026.4) (873.0) (1,179.1) 244.8 152.7 (*): Net profit +/- minority interests + amortisations +/- net provisions +/- valuation of investments recorded using the net equity method + changes in valuation reserves - gains/losses on equity investments
The Group’s free cash flow amounted to EUR 283.1 million. In particular, in Italy, free cash flow amounted to EUR 189.3 million compared to 104.3 in the first half of 2014. The table below shows the increase of fixed assets reported in the cash flow statement.
Increase in fixed assets Mediaset Group Italy Spain from 1/1 to 30/6 2015 2014 2015 2014 2015 2014
Investments in TV and movie rights (405.8) (1,480.4) (286.6) (1,354.9) (119.8) (125.6) Changes in advances on TV rights (15.8) (1.4) (16.4) (6.3) 0.6 4.8
TV and movie rights: investments and advances (421.6) (1,481.8) (303.1) (1,361.1) (119.1) (120.7) Investments in other fixed assets (28.6) (12.6) (24.5) (9.9) (4.1) (2.7) Total investments in fixed assets (450.3) (1,494.4) (327.6) (1,371.0) (123.2) (123.5) The change in the item Investments in television and movie broadcasting rights in 2015 mainly relates to the purchase of Serie A archive rights for the 2015-2018 season, for an amount of approx. EUR 70.2 million; in the same period of 2014 it included the purchase of broadcasting rights for the Serie A championship for the 2015-2018 seasons for an amount of around EUR 1,110 million. Both acquisitions were offset in working capital. The negative cash flow of EUR 6.8 million related to the item Change in consolidation area refers to the cash disbursement of the subsidiary Towertel S.p.A. for completion of the acquisition of Hightel S.p.A. (now called NewTelTowers S.p.A.) in 2014 and the payment of EUR 5 million as an advance for the purchase of the company Tecnorad Italia S.p.A.. The item Purchase/sale of treasury shares relates to the disbursement of EUR 71.6 million for the purchase of treasury shares by Mediaset España. The item Investments/other financial assets mainly includes, in the first half of 2015, proceeds of EUR 100 million from the sale of 11.1% of the subsidiary Premium S.p.A. to the Telefónica Group and investments and disinvestments as part of the Ad4Ventures business, as detailed in note 4.2.
23 WorldReginfo - 207dae83-4e38-4794-8ac2-00ebe851a54b Half Year Financial Report at 30 June 2015 – Interim Report on Operations Dividends distributed in 2015 relate to income distributed by Mediaset S.p.A. for EUR 22.7 million and by the subsidiaries EI Towers for EUR 18.6 million and Mediaset España for EUR 25.6 million.
Group headcount At 30 June 2015 the Mediaset Group headcount came to 5,584 employees (5,748 at 30 June 2014 and 5,559 at 31 December 2014). The increase compared to 31 December is exclusively due to the higher number of employees on fixed-term contracts used in the Group's television production operations in Italy. The following tables show the change in the workforce for the reporting period, broken down by employment grade for the two geographical areas of operation.
Number of employees ITALY SPAIN (including temporary staff) as at 30 June 2015 2014 2015 2014 Managers 284 302 119 115 Journalists 348 328 142 146 Middle managers 840 859 83 78 Office workers 2,795 2,908 902 921 Industry workers 47 68 24 23 Total 4,314 4,465 1,270 1,283
Average workforce ITALY SPAIN (including temporary staff) 1H 2015 2014 2015 2014 Managers 289 303 120 115 Journalists 328 329 143 145 Middle managers 847 861 81 78 Office workers 2,837 2,910 897 924 Industry workers 44 46 24 23 Total 4,345 4,449 1,265 1,285
Related-party transactions Transactions conducted with related parties do not qualify as "atypical" or "unusual", and are part of the normal course of business of the Group companies. Such transactions are conducted at arm's length, considering the nature of the goods and services provided. Detailed information on the impact on Group performance, financial position and cash flow of transactions conducted with holding companies, associates, joint ventures and affiliates is provided in Note 7, together with the disclosures required by the Consob Communication of 29 July 2006.
Right to opt-out of the obligation to publish reports in the event of significant transactions Pursuant to Article 3 of Consob Resolution no. 18079 of 20 January 2012, on 13 November 2012 the Board of Directors decided to apply the opt-out mechanism established in Article 70, paragraph 8 and Article 71, paragraph 1-bis of Consob Regulation no. 11971/99, as amended, thereby taking advantage of the right to opt-out of obligations to publish the reports required in the event of significant transactions such as mergers, spin-offs, and share capital issues through the transfer of assets in kind, acquisitions and disposals.
24 WorldReginfo - 207dae83-4e38-4794-8ac2-00ebe851a54b Half Year Financial Report at 30 June 2015 – Interim Report on Operations Subsequent events On 9 July 2015 Vodafone Italia and Mediaset Premium signed an agreement for the launch of a number of joint promotions that combine Vodafone’s mobile offering (mobile voice, SMS and data traffic) to Premium's exclusive contents ( Serie A, Uefa Champions League, TV Series, Sports, Documentaries, Premium Play, Premium HD). The customers who subscribe to this offer will be able to watch all these events live on their television thanks to the brand-new PREMIUM SMART CAM and their mobile devices thanks to the Premium Play streaming service and Vodafone's 4G network, now available in over 4,700 municipalities covering 88% of the population, and on the 4G+ 225 Mps network available in over 450 municipalities. On 10 July 2015, Towertel S.p.A., a wholly-owned subsidiary of El Towers S.p.A., perfected the acquisition of 100% of the share capital of Tecnorad Italia S.p.A., a company that manages 134 transmission stations mainly hosting mobile telecommunications operators, for a provisional price of approx EUR 12.6 million, after deduction of the net financial position estimated at approx. EUR 4 million, on the basis of net operating profitability estimated at around EUR 1.9 million. The final price shall be determined in the 60 days following the closing based on net operating profitability and the net financial position of the target company on the acquisition date. On 24 July 2015, the Shareholders' Meetings of Towertel S.p.A. and Tecnorad Italia S.p.A. resolved on the merger by incorporation of the latter into its own immediate parent entity. On 24 July 2015, moreover, Towertel S.p.A. purchased 100% of the share capital of DAS Immobiliare S.r.l., a company that manages 11 transmission stations mainly hosting mobile telecommunications operators; the provisional price was set at approx. EUR 3 million, including the positive net financial position, estimated at approx. EUR 0.1 million, on the basis of net operating profitability estimated at around EUR 0.35 million. The final price shall be determined in the 60 days following the closing based on net operating profitability and the net financial position of the target company on the acquisition date. On 14 July 2015 Tiscali and Mediaset signed an agreement for the broadcasting of the videos of the television broadcaster on the Tiscali.it and Istella.it portals. Mediaset will make available a selection of the best entertainment, drama and news programmes of Videomediaset.it in embedding mode. Broadcast content will be index by the istella search engine and will enhance the multi-media content offering of the Tiscali.it portal. The Mediamond agency (a Publitalia ‘80 S.p.A. and Mondadori Pubblicità S.p.A. joint venture) will be responsible for advertising sales for “pre-roll” and “post-roll” formats in the videos that are the subject of the agreement, whilst Tiscali's agency, Veesible, shall continue to be responsible for advertising sales for the two portals Tiscali.it and Istella.it as a whole. On 20 July 2015 Mediaset Premium was granted exclusive broadcasting rights for the French (Ligie 1) and Scottish (Scottish Premiership) leagues for the three-year period 2015-2016, 2016- 2017, 2017-2018. On 30 July 2015 the Board of Directors, having examined the results of the related due diligence process and recorded the support of the Independent Committee for relations with related parties and pursuant to Consob Regulation 17221 of 12 March 2010, as subsequently modified and integrated and in line with the relative procedures adopted, authorised the subsidiary R.T.I. S.p.A. to finalise the acquisition of an 80% stake in the share capital of Monradio S.r.l., a wholly-owned subsidiary of Arnoldo Mondadori Editore S.p.A., which is the owner of the radio station R101. The operation will be finalised by 20 September 2015.
25 WorldReginfo - 207dae83-4e38-4794-8ac2-00ebe851a54b Half Year Financial Report at 30 June 2015 – Interim Report on Operations
Risks and uncertainties for the remaining part of the year The evolution of the domestic economy and whether or not it is able to generate an appreciable and sustainable turnaround in the advertising market is still the main risk factor and uncertainty for the Group's activities over the coming months. Another persistent uncertainty in Italy is the extreme commercial aggression of our main competitors. In response to this, the strategy of the group's internal advertising sales houses will remain focused on defending profitability and developing the integrated multiplatform commercial model. In this scenario, the Mediaset's overall broadcast offering, both free-to-air and pay (which in the next will rely on exclusive on the exclusive availability of the), and linear and non-linear, will be further strengthened in the coming months across all the main genres. As a result, it will be able to able cope effectively with the distribution strategies of Mediaset's competitors and any newcomers to the media industry across all platforms, maintaining the consolidated leadership position in the advertising market and audience share and supporting the beginning of a path of growth in the pay market. In Spain, the positive economic trend is likely to carry on in the coming months, continuing to support growth in advertising spending, unless parliamentary elections in the second half of the year lead to major policy shifts. In any event, the Mediaset España Group's consolidated management flexibility and ability to implement an effective strategy of commercial and editorial segmentation enable the consolidation over the remainder of the year of the growth in profit margins seen the first half of the year. The regulatory and competitive environment in Spain is expected to remain stable in the coming months, even considering the allocation, this autumn, of six new channels free-to-air channels, two of which Mediaset España applied for in the first half of the year. As usual, the consolidated annual results will be subject to impairment testing of goodwill and other company assets; these measurement processes will be conducted in full when preparing the draft financial statements as at December 31, when the information contained in the updated multiannual plans of the respective Cash Generating Units will also be available. At the date of this half year report, consideration of the main external and internal factors has not, in any case, led to the revision of the measurements arising from the plans approved while preparing the last consolidated financial statements. A detailed analysis of the risks to which the Group is structurally exposed in performing its activities – deriving both from external factors and from strategic decisions and internal operational risks – is provided in the dedicated section of the Directors’ Report on Operations to the Consolidated Financial Statements at 31 December 2014, which may be referred to together with the following Business Outlook section of this Report.
26 WorldReginfo - 207dae83-4e38-4794-8ac2-00ebe851a54b Half Year Financial Report at 30 June 2015 – Interim Report on Operations
FORECAST FOR THE YEAR
In an international economic scenario that continues to be unstable, albeit for the moment able to absorb the possible negative impact of the crisis in Greece, the estimates of leading observers confirm an expectation of growth in Italian GDP in 2015 of less than 1%. Given this situation, it remains very difficult to make predictions about the evolution of the Italian advertising market over the full year. Based on currently available indicators, the trend in the group's advertising sales in July and August remain positive, confirming the gradual stabilisation of market conditions. In Spain, meanwhile, where a more solid economic recovery is underway, the trend recorded by Mediaset España in the first half of the year is expected to continue. For the moment, the unpredictability of the markets of reference and the high level of volatility in the economic cycle make it difficult to make precise forecasts about the group's results for the full year. The results will be depend on the dynamic in advertising sales in Italy and Spain as well as the trend in subscriptions to Mediaset Premium in the coming months.In this period the group will continue to pursue opportune commercial and content strategies aimed at increasing its share in both the advertising and pay TV markets through the enhanced Premium offer, launched on 1 July and focused of the exclusive three-year coverage of the Champions League, starting in the next season.
for the Board of Directors the Chairman
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Mediaset Group Interim Consolidated Financial Statements and Explanatory Notes
WorldReginfo - 207dae83-4e38-4794-8ac2-00ebe851a54b
MEDIASET GROUP
INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION (EUR million)
Notes 30/6/2015 31/12/2014
ASSETS
Non current assets
Property, plant and equipment 4.1 443.0 455.8
Television and movie rights 4.1 2,520.6 2,581.4
Goodwill 4.1 934.4 934.4
Other intangible assets 4.1 633.8 636.4
Investments in associates 4.2 37.6 32.5
Other financial assets 4.2 53.6 50.0
Deferred tax assets 4.3 458.2 471.7
TOTAL NON CURRENT ASSETS 5,081.1 5,162.2
Current assets
Inventories 36.3 42.7
Trade receivables 4.4 1,448.4 1,489.8
Tax receivables 4.5 49.3 75.3
Other receivables and current assets 306.0 278.8
Current financial assets 4.9 49.7 73.2
Cash and cash equivalents 4.9 480.8 457.3
TOTAL CURRENT ASSETS 2,370.5 2,417.1
Non current assets held for sale - -
TOTAL ASSETS 7,451.6 7,579.2
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MEDIASET GROUP
INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION (EUR million)
Notes 30/6/2015 31/12/2014
LIABILITIES AND SHAREHOLDERS' EQUITY
Share capital and reserves
Share capital 614.2 614.2
Share premium reserve 275.2 275.2
Treasury shares (416.7) (416.7)
Other reserves 4.6 834.3 755.4
Valuation reserve 4.7 (22.7) (4.0)
Retained earnings 1,055.1 1,074.9
Net profit for the period 24.3 23.7
Group Shareholders' Equity 2,363.8 2,322.8
Minority interests in net profit 64.6 53.4
Minority interests in share capital, reserves and retained earnings 645.5 669.3
Minority interests 710.1 722.7
TOTAL SHAREHOLDERS' EQUITY 3,073.9 3,045.6
Non current liabilities
Post-employment benefit plans 88.9 96.9
Deferred tax liabilities 4.3 63.2 67.7
Financial liabilities and payables 4.9 1,106.7 1,093.8
Provisions for non current risks and charges 4.8 56.4 54.5
TOTAL NON CURRENT LIABILITIES 1,315.2 1,312.9
Current liabilities
Financial payables 4.9 3.6 210.4
Trade and other payables 2,671.4 2,589.1
Provisions for current risks and charges 4.8 54.3 74.3
Current tax liabilities 9.3 5.8
Other financial liabilities 4.9 68.7 72.2
Other current liabilities 255.1 269.0
TOTAL CURRENT LIABILITIES 3,062.4 3,220.8
Liabilities related to non current assets held for sale - -
TOTAL LIABILITIES 4,377.6 4,533.7
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 7,451.6 7,579.2
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MEDIASET GROUP
INTERIM CONSOLIDATED INCOME STATEMENT (EUR million)
STATEMENT OF INCOME 1H 2015 1H 2014 Notes
Sales of goods and services 1,704.6 1,705.8 Other revenues and income 16.5 19.1
TOTAL NET CONSOLIDATED REVENUES 1,721.1 1,724.8
Personnel expenses 269.8 276.0 Purchases, services, other costs 784.2 780.6 Amortisation, depreciation and write-downs 529.6 558.8 Impairment losses and reversal of impairment on fixed assets - -
TOTAL COSTS 1,583.6 1,615.3
EBIT 137.5 109.5
Financial expenses 4.10 (23.2) (40.5) Income/(expenses) from equity investments 15.6 (60.7)
EBT 129.9 8.4
Income taxes 4.11 41.1 7.2
NET PROFIT FROM CONTINUING OPERATIONS 88.8 1.1
Net Gains/(Losses) from discontinued operations - -
NET PROFIT FOR THE PERIOD 88.8 1.1
Attributable to: - Equity shareholders of the parent company 24.3 (20.5) - Minority Interests 64.6 21.7
Earnings per share 4.12 - Basic 0.02 (0.02)
- Diluted 0.02 (0.02)
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MEDIASET GROUP
INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (EUR million)
Note 1H 2015 1H 2014
PROFIT OR (LOSS) FOR THE PERIOD 88.8 1.1
OTHER COMPREHENSIVE INCOME RECYCLED TO PROFIT AND LOSS (25.3) 2.5
Changes arising from translating the financial statement of foreign operations - -
Effective portion of gains and losses on hedging instruments (cash flow hedge) 4.7 (29.5) 3.4
Gains and losses on available-for-sale financial assets 4.6 (5.4) -
Other gains and losses of associates valued by equity method - -
Other gains and losses - -
Tax effects 9.6 (0.9) OTHER COMPREHENSIVE INCOME NOT RECYCLED TO PROFIT AND LOSS 3.2 (5.2)
Changes in revaluation surplus - -
Actuarial gains and losses on defined benefit plans 4.7 4.5 (7.2)
Other gains and losses of associate valued by equity method - -
Other gains and losses - -
Tax effects (1.2) 2.0
TOTAL OTHER COMPREHENSIVE INCOME FOR THE PERIOD NET OF TAX EFFECTS (B) (22.1) (2.7)
TOTAL COMPREHENSIVE INCOME (A)+(B) 66.8 (1.6) attributable to:
- owners of the parent 4.0 (22.8)
- non controlling interests 62.8 21.2
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MEDIASET GROUP
INTERIM CONSOLIDATED CASH FLOWS STATEMENT (EUR million)
Notes 1H 2015 1H 2014
CASH FLOW FROM OPERATING ACTIVITIES: Operating profit before taxation 137.5 109.5 + Depreciation and amortisation 529.6 558.8 + Other provisions and non-cash movements 8.9 1.7 + Change in trade receivables 41.4 31.7 + Change in trade payables 133.9 69.0 + Change in other assets and liabilities (67.6) (30.8) - Interests (paid)/received (0.9) (1.7) - Income tax paid (18.9) (46.8)
Net cash flow from operating activities [A] 764.0 691.4
CASH FLOW FROM INVESTING ACTIVITIES: Proceeds from the sale of fixed assets 0.2 0.3 Proceeds from the sale of equity investments 10.8 - Interests (paid)/received 0.3 - Purchases in television rights (405.8) (1,480.4) Changes in advances for television rights (15.8) (1.4) Purchases of other fixed assets (28.6) (12.6) Equity investments (8.8) (7.2) Changes in payables for investing activities 5.1 (51.7) 980.4 Proceeds/(Payments) for hedging derivatives 41.5 (5.9) Changes in other financial assets 15.7 (0.5) Dividends received 2.2 2.5 Business Combinations net of cash acquired 5.2 (6.8) (3.3) Changes in consolidation area 5.3 100.0 280.2
Net cash flow from investing activities [B] (346.7) (247.9)
CASH FLOW FROM FINANCING ACTIVITIES: Change in treasury shares 5.4 (71.6) - Changes in financial liabilities (209.4) (395.7) Corporate bond - - Dividends paid (66.9) - Changes in other financial assets/liabilities 2.1 1.0 Interests (paid)/received (48.0) (40.0)
Net cash flow from financing activities [C] (393.8) (434.7)
CHANGE IN CASH AND CASH EQUIVALENTS [D=A+B+C] 23.5 8.8
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD [E] 457.3 197.6
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD [F=D+E] 480.8 206.4
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MEDIASET GROUP
INTERIM CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (EUR million)
Share Share Legal Company's Valuation Retained Profit/ Total Total TOTAL capital premium reserve treasury reserve earnings/ (loss) Group shareholders' SHARE- reserve and other shares (accumulated for the shareholders' equity HOLDERS' reserves losses) period equity attributable EQUITY to minority interests
Balance at 1/1/2014 614.2 275.2 504.7 (416.7) (13.9) 1,147.4 8.9 2,119.9 857.8 2,977.7
Allocation of the parent company's 2013 net profit - - - - - 8.9 (8.9) - - -
Dividends paid by the parent company ------
Stock Option plan valuation - - - - (1.1) 1.1 - - - -
(Purchase)/sale of treasury shares ------Profits/(losses) from negotiation of treasury shares ------
Change in consolidation perimeter - - 248.8 - - (0.5) - 248.3 28.4 276.7
Other changes - - - - - 0.9 - 0.9 1.1 2.0
Comprehensive income/(loss) - - - - (2.3) - (20.5) (22.8) 21.2 (1.6)
Balance at 30/06/2014 614.2 275.2 753.4 (416.7) (17.3) 1,157.9 (20.5) 2,346.2 908.5 3,254.7
Balance at 1/1/2015 614.2 275.2 755.4 (416.7) (4.0) 1,074.9 23.7 2,322.8 722.7 3,045.6
Allocation of the parent company's 2014 net profit - - - - - 23.7 (23.7) - - -
Dividends paid by the parent company - - (2.1) - - (20.6) - (22.7) (44.2) (66.9)
Stock Option plan valuation ------
(Purchase)/sale of treasury shares ------Profits/(losses) from negotiation of treasury shares ------
Change in consolidation perimeter - - 82.9 - (0.2) (21.9) - 60.8 (30.1) 30.7
Other changes - - - - - (1.1) - (1.1) (1.1) (2.2)
Comprehensive income/(loss) - - (1.8) - (18.5) - 24.3 4.0 62.8 66.8
------Balance at 30/06/2015 614.2 275.2 834.3 (416.7) (22.7) 1,055.1 24.3 2,363.8 710.1 3,073.9
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EXPLANATORY NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS AT 30 JUNE 2015
1. Basis of preparation These half-yearly condensed consolidated financial statements, prepared in accordance with IAS 34 - Interim Financial Reporting - are based on the same accounting standards and measurement criteria adopted in preparing the consolidated financial statements at 31 December 2014, to which reference is made, except for the adoption of new standards, amendments and interpretations effective from 1 January 2015 and for some complex measurement processes, including the impairment tests designed to ascertain any impairment of fixed assets. In the absence of indicators, events, or circumstances such as to change the measurements previously made, these tests are generally carried out when preparing the annual financial statements, when the information is available for this process to be completed in a comprehensive manner. Finally, actuarial valuations needed to determine employee benefits provisions are normally drawn up on a semi-annual basis. These half-yearly condensed consolidated financial statements do not contain all information and disclosures required for the annual financial statements and should therefore be read in conjunction with the Consolidated Financial Statements at 31 December 2014. The preparation of the interim financial statements requires management to make estimates and assumptions that affect the reported amounts of revenues, costs, assets and liabilities and the disclosure of contingent assets and liabilities at the reporting date. Income taxes for the period were recognised based on the best estimate of the weighted average tax rate expected for the entire year. The consolidated interim results of the Mediaset Group are affected by the seasonal nature of advertising revenues, traditionally more concentrated in the first half of the year. The values of the items in the Consolidated Financial Statements, in view of their size, are shown in millions of Euros. These half-yearly condensed consolidated financial statements have been subject to limited audit by the independent auditors Ernst & Young S.p.A..
2. New accounting standards, amendments and interpretations effective from 1 January 2015 From 1 January 2015, some new accounting standards and/or amendments and interpretations to previously effective standards have applied, which have had no significant impacts for the Group.
IFRIC 21 – Levies The interpretation provides guidance on when to recognise a liability for a levy (other than income tax) imposed by a government agency. The standard addresses the liabilities for levies that come under the scope of IAS 37 - Provisions, contingent liabilities and contingent assets, as well as those whose timing and amount are certain. This is not relevant for the Group.
36 WorldReginfo - 207dae83-4e38-4794-8ac2-00ebe851a54b Half Year Financial Report at 30 June 2015 – Explanatory Notes
IAS 19 “Defined Benefit Plans: Employee Contributions” The amendment aims to present the contributions (relating only to the service provided by the employee during the year) made by employees or third parties to defined benefit plans as a reduction in service cost for the year in which the contribution is paid. The need for this proposal arose from the introduction of the new IAS 19, where it is considered that such contributions are to be interpreted as part of a post-employment benefit, rather than a short- term benefit and, therefore, that this contribution must be spread over the years of service of the employee. This amendment had no impacts for the Group.
Annual Improvements to IFRSs: 2010-2012 Cycle:
IFRS 2 Share Based Payments – Definition of vesting condition. Amendments have been made to the definitions of vesting condition and market condition and further definitions have been added for performance condition and service condition (previously included within the definition of vesting condition);
IFRS 3 Business Combinations – Accounting for contingent consideration. This amendment clarifies that contingent consideration within business combinations classified as a financial asset or liability must be remeasured at fair value at each reporting date and that the changes in fair value must be recognised through profit or loss or under the items of comprehensive income on the basis of the requirements of IAS 39 (or IFRS 9);
IFRS 8 Operating segments – Aggregation of operating segments. The amendments require an entity to provide disclosure regarding the assessments made by management in applying the criteria for aggregating operating segments, including a description of the aggregated operating segments and economic indicators considered in determining whether these operating segments have similar economic characteristics;
IFRS 8 Operating segments – Reconciliation of total of the reportable segments’ assets to the entity’s assets. The amendments clarify that a reconciliation of the total of the reportable segments' assets to the entity's assets should be disclosed only if the total of the reportable segments' assets is regularly reviewed by the chief operating decision maker of the entity;
IFRS 13 Fair Value Measurement – Short-term receivables and payables. The Basis for Conclusions for this standard have been amended to clarify that with the issuance of IFRS 13, and consequential amendments to IAS 39 and IFRS 9, the ability remains for the entity to measure short-term trade receivables and payables without discounting, when the effect of not discounting is immaterial ;
IAS 16 Property, plant and equipment and IAS 38 Intangible Assets – Revaluation method: proportionate restatement of accumulated depreciation/amortisation. The amendments have eliminated the inconsistencies in the recognition of accumulated depreciation and amortisation when property, plant and equipment or intangible assets are revalued. The requirements established by the amendments clarify that the gross carrying amount is adjusted in a manner that is consistent with the revaluation of the carrying amount of the asset and that the accumulated depreciation/amortisation is calculated as the difference between the gross carrying amount and the carrying amount of the asset after taking into account accumulated impairment losses;
37 WorldReginfo - 207dae83-4e38-4794-8ac2-00ebe851a54b Half Year Financial Report at 30 June 2015 – Explanatory Notes
IAS 24 Related Parties Disclosures – Key management personnel. Clarification has been provided that when key management personnel services are provided by an entity (and not by a natural person), that entity must be considered a related party. Annual Improvements to “Annual Improvements to IFRSs: 2011-2013 Cycle:
IFRS 3 Business Combinations – Scope exception for joint ventures. The amendment clarifies that paragraph 2(a) of IFRS 3 contains a scope exception from IFRS 3 for the formation of all types of joint arrangement, as defined by IFRS 11;
IFRS 13 Fair Value Measurement – Scope of portfolio exception (par. 52). The amendment clarifies that the portfolio exception included in paragraph 52 of IFRS 13 applies to all contracts included within the scope of IAS 39 (or IFRS 9) even if they do not meet the definitions of financial assets or financial liabilities provided in IAS 32; The changes and amendments reported above had have no significant impacts at Group level.
3. Key information relating to the scope of consolidation The main changes in the scope of consolidation during the period under review are summarised below. With regard to the subsidiaries, associate and joint control companies, we note that: - on 13 January 2015 the sale was completed of 11.11% of the share capital of the company Mediaset Premium S.p.A. to the Spanish operator Telefónica through the company Telefónica de Contenidos S.A. As a result of this sale ownership interest in Mediaset Premium S.p.A. decreased from 100% to 88.89%; - on 2 March 2015 a deed was signed for the merger of the company Torre di Nora S.r.l. into the holding company Hightel S.p.A. (which subsequentely changes its company name with NewTelTower S.p.A.). This transaction takes statutory effect from 4 March 2015, with accounting and tax effects from 1 January 2015. This transaction had no impact on the scope of consolidation; - on 9 March 2015 the subsidiary Mediaset España Comunicación S.A. sold its 30% held interest in the company Editora Digital de Medios; - on 27 May 2015 the subsidiary Mediaset España Comunicación S.A. purchased 40% of the share capital of Emissions Digital de Catalunya S.A., a company that manges the local channel Catalunya 8TV. This company is classed into joint control investments and recognised at equity. - On 3 June 2015, the subsidiary Mediaset España Comunicación S.A. sold it investment, equal to 30% of the share capital, in the company 60DB Entertainment; - On 19 June 2015, the subsidiary Mediaset España Comunicación S.A. sold it investment, equal to 30% of the share capital, in the company BigBang Media S.L.; - during the half-year, following the purchase of treasury shares and the exercise of the option right by the stock option plan beneficiaries, Mediaset Group's ownership interest in the subsidiary Mediaset España Comunicación, increased from 45.993% at 31 December 2014 to 46.734% in the first half of 2015. With regard to minority interests within the framework of the AD4Venture operations, we note that:
38 WorldReginfo - 207dae83-4e38-4794-8ac2-00ebe851a54b Half Year Financial Report at 30 June 2015 – Explanatory Notes
- On 26 January 2015, the subsidiary Mediaset España sold its 11.82% holding in Grupo Yamm Comida a Domicilio S.L., a company offering home catering services on-line; - on 2 February 2015, the subsidiary R.T.I. S.p.A. subscribed for 2.98% of the share capital of the company Wimdu Gmbh, an online platform for apartment rental throughout the world. Subsequently, on 4 February 2015, the subsidiary Mediaset España Comunicación S.A. also subscribed for 2.98% of the share capital of that company. - On 24 March 2015 the subsidiary R.T.I. S.p.A. subscribed for an increase in the capital of the company Westwing Group Gmbh (formerly Jade 1290 Gmbh). As a result, its investment increased from 2.22% to 2.29%. - On 16 April 2015 the subsidiary Mediaset España subscribed 0.63% of the share capital of the company Westwing Group Gmbh (formerly Jade 1290 Gmbh). - On 16 June 2015 the subsidiaries R.T.I. S.p.A. and Mediaset España Comunicación S.A. subscribed the 4.45% and 8.89% respectively of the share capital of the company Deporvillage S.L., an on-line platform for the purchase of sports equipment.
4. Comments on the main changes in assets, liabilities, revenues and expenses 4.1 Tangible and intangible fixed assets, Television and movie broadcasting rights
Property, plant Television and Other intangible Goodwill and equipment movie rights assets
Balance at 31/12/2014 455.8 2,581.4 934.4 636.4
Additions 26.0 372.6 - 51.8
Other changes (1.2) 31.2 - (32.6)
Disposals (0.1) - - (0.0) Amortisation, depreciation and write-downs (37.6) (464.7) - (21.8) Balance at 30/06/2015 443.0 2,520.6 934.4 633.8 The main changes with respect to the figures shown in the consolidated financial statements as at 31 December 2014 are summarised below:
increases in television and movie broadcasting rights of EUR 405.8 million, of which EUR 372.6 million for purchases in the period and EUR 33.2 million for capitalisation of advances paid to suppliers (recognised as Assets in progress and advances at 31 December 2014). Other changes include decreases and cancellations of previously recognised rights.
increases in property, plant and equipment of EUR 26.0 million, mainly attributable to advance payments for the construction of digital transmission systems for EUR 5.0 million, to WiFi CAM purchase for EUR 4.4 million and the construction of digital transmission sites and equipment, building work on Group-owned properties and upgrading of the quality standards of existing production facilities;
increases in other intangible fixed assets totalling EUR 51.8 million, primarily consisting of increases in assets in progress and advances for advances on future purchases of rights. As already commented for Television and movie broadcasting rights, the item Other changes
39 WorldReginfo - 207dae83-4e38-4794-8ac2-00ebe851a54b Half Year Financial Report at 30 June 2015 – Explanatory Notes
includes decreases of EUR 33.2 million relating to the capitalisation as broadcasting rights of advances paid to suppliers.
With respect to impairment assessment processes, the audit carried out on 30 June both compared to the management performance of Cash Generating Units for the period and key external indicators did not highlight facts that would have led to a change in the estimate of recoverable values made during the preparation of the Consolidated Financial Statements as at 31 December 2014. With respect to external indicators in particular, it should be noted that the market capitalisation of Mediaset, Mediaset España and EI Towers as at 30 June 2015 was greater than the carrying amount of the relevant assets and that the value of the financial parameters assumed when determining the discount rate were lower than those used when preparing the Financial Statements as at 31 December 2014.
4.2 Equity Investments in associates and joint ventures and other financial assets
Balance at Write-ups / Other Balance at Additions Disposals 31/12/2014 (Write-offs) changes 30/06/2015
Equity investments in jointly-controlled 32.5 8.8 (1.2) 0.5 (3.0) 37.6 and affiliated companies
Equity investments 21.7 11.5 (8.0) - - 25.3
Receivables and other financial assets 28.2 7.9 (5.5) - (2.4) 28.3
Total 82.4 28.2 (14.7) 0.5 (5.4) 91.2
With respect to the item Investments in associates and joint companies, period increases refer to the 40% investment of the share capital of the company Emissions Digital de Catalunya S.A., (company that manages the local channel Catalunya 8TV) carried out by the subsidiary Mediaset España. Decreases for the period refer to the sale by the subsidiary Mediaset España S.A. of the following investments:
EUR 0.1 million for the sale of 30% of the share capital held in the associate Editora Digital de Medios;
EUR 0.4 million for the sale of 30% of the share capital held in the associate Editora 60 DB Entertainment;
EUR 0.7 million for the sale of 30% of the share capital held in the associate BigBang Media S.L. The item Other changes includes dividends distributed by associates and joint ventures. Increases in the item Investments in other companies for a total amount of EUR 11.5 million refer to the equity investment inititiative called AD4Venture as reported in the section Key information relating to the scope of consolidation. The decrease in the item relates to the sale, in January this year, of the investment held by Mediaset España in the company Grupo Yamm Comida a Domicilio S.L. for EUR 5.4 million.
40 WorldReginfo - 207dae83-4e38-4794-8ac2-00ebe851a54b Half Year Financial Report at 30 June 2015 – Explanatory Notes
The main changes in the item Receivables and other financial assets relate to the reclassification to the item Other Receivables and Current Assets of the current portion of the receivables due in one year from the associate Boing S.p.A., to the non-current portion of the fair value of foreign exchange hedging derivatives and the increases in financial receivables.
4.3 Deferred Tax Assets and Liabilities
The decrease in Deferred tax assets of EUR 13.5 million, mainly relates to uses generated by the temporary mismatch of the tax and financial values of assets and liabilities and the recognition of deferred tax assets generated during the period by the transfer of tax losses as at 30 June from companies scoped in for Italian tax consolidation purposes. As at 30 June 2015, based on the estimate of deferred and current taxes for the period in accordance with IAS 34, deferred tax assets relative to tax losses carried forward for an unlimited period for IRES tax purposes amounted to EUR 62.4 million. These amounts were recoverable within the time horizon of Group's most recent business plans. The decrease in Deferred tax liabilities of EUR 4.5 million, mainly relates to uses generated by the temporary mismatch of the tax and financial values of assets and liabilities .
4.4 Trade receivables
Balance at Balance at 30/06/2015 31/12/2014
Receivables from customers 1,416.6 1,454.5 Receivables from related parties 31.8 35.3
Total 1,448.4 1,489.8 The item receivables from customers includes receivables from Sky Italia S.r.l., amounting to EUR 604.1 million (EUR 637.5 million at 31 December 2014), relating to the sub-license for the D package for 132 matches of the broadcasting rights for Serie A Championship for the 2015- 2018 seasons. The breakdown of receivables from related parties is reported in Note 7 (Related-Party Transactions).
4.5 Tax credits
This item, amounting to EUR 49.3 million (EUR 75.3 million at 31 December 2014) includes EUR 36.0 million relating to net credits due from the tax authorities to the Group's Italian companies scoped in for Italian tax consolidation purposes. The main change refers to the use of the tax credit of the subsidiary Mediaset España S.A. and the use of tax credits (relating to the subsidiary R.T.I. S.p.A) arising due to the conversion of deferred tax assets on the impairment of intangible assets carried out in the year 2012 as discussed in the financial statements as at 31 December 2014. This credit was used as an offset pursuant to article 17 of Italian Legislative Decree 241/1997 as per article 2.57 of Italian Decree Law no. 225/2010.
41 WorldReginfo - 207dae83-4e38-4794-8ac2-00ebe851a54b Half Year Financial Report at 30 June 2015 – Explanatory Notes
4.6 Other reserves
30/06/2015 31/12/2014
Legal reserve 122.8 122.8 Equity investment evaluation reserve - - Consolidation reserve (78.9) (78.9) Reserves for minority transactions 466.2 383.3 Other reserves 324.2 328.1
Total 834.3 755.4 The change in the first half in the item Reserves for minority transactions, relates to the recognition of the gain, net of tax effects of EUR 82.9 million, originating from the sale of 11.11% of the capital of the company Mediaset Premium S.p.A. to the Telefónica Group as discussed in section Significant events and transactions in the first half. The change in the item Other reserves mainly relates to the transfer to the income statement of the Group's portion of the Valuation reserve for available-for-sale assets recognised on 31 December 2014, following the sale of the investment Grupo Yamm Comida a Domicilio S.L. and the use of the extraordinary reserve following the payment of dividends by the Parent Mediaset S.p.A.
4.7 Valuation reserves
30/06/2015 31/12/2014
Cash flow hedge reserve (12.6) 8.8 Stock option plans 11.2 11.4 Actuarial Gains/(Losses) (21.3) (24.3)
Total (22.7) (4.0)
The table below shows the changes occurred during the period.
Opening Through balance Balance at Increase/ Fair Value Deferred tax Balance at Valuation reserves Profit and adjustments 1/1 (Decrease) adjustments effect 30//06 Loss Account of the hedged item Financial assets for cash flow hedging purpose 8.8 2.7 0.1 (21.1) (11.2) 8.1 (12.6) of which: - FOREX rate risk 12.1 2.7 0.0 (21.1) (11.5) 8.2 (9.6)
- interest rate risk (3.3) - 0.1 - 0.3 (0.1) (3.0)
Stock option plans 11.4 (0.2) - - - - 11.2 Actuarial Gains/(Losses) on defined benefit plans (24.2) 4.0 - - - (1.1) (21.3) Total (4.0) 6.5 0.1 (21.1) (11.2) 7.0 (22.7)
The Valuation reserve for financial assets for cash flow hedging purposes is connected with valuations of derivative instruments designated as hedges against the foreign exchange risk associated with the acquisition of television and movie broadcasting rights in foreign currencies, or as hedges against the interest rate risk associated with medium and long-term financial liabilities.
42 WorldReginfo - 207dae83-4e38-4794-8ac2-00ebe851a54b Half Year Financial Report at 30 June 2015 – Explanatory Notes
The reserve for stock option plans consists of debit entries for costs pertaining to the past years accruing at 30 June 2015, measured in accordance with IFRS 2, in connection with stock options assigned by Mediaset under three-year stock option plans and by the subsidiary Mediaset España Comunicación for the portion attributable to the Group. The Reserve for actuarial gains and losses consists of components arising from the actuarial valuation of defined benefit plans, recognised directly through shareholders' equity. The change in the Valuation reserve for financial assets for cash flow hedging purposes and the Valuation reserve for actuarial gains and losses, before tax, is shown in the Comprehensive Income Statement.
4.8 Provisions for risks and contingent liabilities
The decrease in risk provisions, mainly attributable to the Mediaset España Group relates to the use of provisions recognised as at 31 December 2014 as a result of the corresponding liabilities occurring during the first half of the year. The main updates are provided below on the lawsuits pending and contingent liabilities associated with them, which were reported in the financial statements as at 31 December 2014. With regard to the issue concerning state aid for the purchase of digital terrestrial decoders, for which a risk provision of EUR 6.0 million had been made in the 2009 financial statements, the Court of Rome, following Mediaset's application for resumption of the suspended proceedings and following the ruling of the EU Court of Justice, set the deadline for submission of statements and the discussion at 30 September 2015. With regard to the procedures for the determination of the contribution fees due from the subsidiary Elettronica Industriale for the use of the digital terrestrial user rights, 20 May 2015 and in a subsequent memo of 4 June 2015 the Italian Ministry of Economic Development has asked for a supplementation to the amount paid for the year 2013. On 2 July 2015 the Regional Administrative Court (TAR) upheld the summary petition made against the ministry's request for the supplementation of the fees, suspending its effects and setting the hearing on the merits for 10 February 2016. It is also noted that on 17 June 2015 the Group became aware of the investigation by the Public Prosecutor of Rome, with the company Videotime S.p.A. as the injured party, against the service provider companies ascribable to Mr. Biancifiori. The Group swiftly responded to provide its cooperation to the investigators. The Group has also implemented all the internal procedures aimed at ascertaining the facts and any potential liability. These activities are still being carried out and based on the evidence currently available there are is not enough information to be able to assess the potential impacts of an economic nature. .
43 WorldReginfo - 207dae83-4e38-4794-8ac2-00ebe851a54b Half Year Financial Report at 30 June 2015 – Explanatory Notes
4.9 Net Financial Position
Below is a breakdown of the consolidated net financial position as required by Consob communication no. 6064293 dated 28 July 2006; the Group's current and non-current financial debt is detailed separately in the table. For a breakdown of changes in the net financial position over the period, see the section on the Group's balance sheet and financial structure in the Interim Report on Operations.
30/06/2015 31/12/2014
Cash in hand and cash equivalents 0.1 0.1 Bank and postal deposits 480.6 457.2 Securities and other current financial assets 11.6 10.5 Total liquidity 492.4 467.8
Current financial receivables 24.6 46.7
Due to banks (0.9) (207.5) Current portion of non current debt (39.3) (44.7) Other current payables and financial liabilities (17.3) (27.3) Current financial debt (57.6) (279.5)
Current Net Financial Position 459.4 234.9
Due to banks (197.7) (197.5) Corporate bond (878.5) (893.4) Other non current payables and financial liabilities (11.4) (5.2) Non current financial debt (1,087.6) (1,096.2)
Net Financial Position (628.2) (861.3)
The item Bank and postal deposits included EUR 118.1 million for the EI Towers Group and EUR 265.0 million for the Mediaset España Group. Securities and other current financial assets consist of bonds held by the subsidiary Mediaset Investments S.a.r.l. amounting to EUR 9.3 million (EUR 9.0 million as at 31 December 2014) and the fair value of foreign exchange derivatives for the amount exceeding the change in payables in currency hedged. Current financial receivables include EUR 21.7 million (EUR 19.9 million as at 31 December 2014) in government subsidies for movie productions made by Medusa Film S.p.A. and Taodue, which had been approved but not paid at the reporting date; EUR 2.8 million (EUR 26.7 million as at 31 December 2014) in relation to current accounts managed by the parent Mediaset S.p.A. on behalf of associates and joint ventures; and EUR 0.1 million in financial receivables held by Mediaset España Group. Due to banks (current) refer to short term credit lines. The decrease in the first half of EUR 206.6 million refers to a reduced use of this type of financing. The current portion of non-current financial debt primarily consists of the current portion of corporate bonds for EUR 35.0 million (EUR 40.7 million as at 31 December 2014), the current portion of the term loan for EUR 2.7 million (EUR 2.9 million as at 31 December 2014)
44 WorldReginfo - 207dae83-4e38-4794-8ac2-00ebe851a54b Half Year Financial Report at 30 June 2015 – Explanatory Notes and the current portion of the fair value of derivatives designated as hedges against the risk of interest rate fluctuations, amounting to EUR 1.6 million (EUR 1.1 million as at 31 December 2014). Other current payables and financial liabilities mainly include current accounts managed by the parent Mediaset S.p.A. on behalf of associates and joint ventures totalling EUR 13.0 million (EUR 18.7 million as at 31 December 2014 ), amounts owed to factoring companies totalling EUR 1.3 million (EUR 4.8 million at 31 December 2014), and loans totalling EUR 1.2 million received to finance film development, distribution and production operations (EUR 3.6 million at 31 December 2014). Due to banks (non current) refers to the portion of committed credit facilities (revolving) maturing beyond 12 months and relating to Mediaset S.p.A.. These payables are recognised in the financial statements using the amortised cost method. As already reported in the financial statements at 31 December 2014, existing loans and credit facilities are subject to financial covenants on a consolidated basis (semi-annual and annual), which, if not met, would result in a refund of the portion used. To date, these requirements have been met. The item Bond issue refers to the non-current portion of bonds issued by Mediaset Group, as set out below:
bonds issued by Mediaset S.p.A. on 1 February 2010 for a total nominal value of EUR 300.0 million, whose amortised cost (including the current portion) amounted to EUR 305.0 million,
bonds issued by Mediaset S.p.A. on 23 October 2013 for a total nominal value of EUR 375.0 million, whose amortised cost (including the current portion) amounted to EUR 379.8 million;
and the bonds issued by the subsidiary EI Towers S.p.A. on 26 April 2013 for a total nominal value of EUR 230.0 million, whose amortised cost (including the current portion) amounted to EUR 228.8 million. Non-current financial liabilities and payables primarily consist of loans received to finance film development, distribution and production operations for EUR 1.0 million (EUR 1.3 million as at 31 December 2014) and the non-current portion of the fair value of collar derivatives designated as hedges against the risk of interest rate fluctuations, for EUR 4.0 million.
45 WorldReginfo - 207dae83-4e38-4794-8ac2-00ebe851a54b Half Year Financial Report at 30 June 2015 – Explanatory Notes
4.10 Financial income and expenses
1H 2015 1H 2014 Interests on financial assets 2.0 1.4 Interests on financial liabilities (24.0) (29.2) Other financial income/(losses) (6.4) (12.4) Foreign exchange gains/(losses) 5.2 (0.3)
Total financial income/(losses) (23.2) (40.5) The reduction in the item financial income/(expenses) is due to the lower average financial debt in the in the first half of 2015 compared to the same period of the previous year. The item Interest expense on financial liabilities includes the interest expense for the first half on bonds issued by the Mediaset Group and the EI Towers Group totalling EUR 22.5 million (EUR 22.6 million at 30 June 2014). The item Other financial income/(charges) included financial expenses as at 30 June 2014 resulting from the early pay-off of a credit facility during the first half of 2014. The change in the item Foreign exchange gains/(losses) mainly relates to the ineffective part of the hedges (accounted on the income statement) on the new volume deal agreements.
4.11 Taxes for the period
1H 2015 1H 2014 IRES and IRAP tax expenses 1.3 1.9 Tax expenses (foreign companies) 10.1 25.3 Deferred tax expense 29.6 (20.0) Total 41.1 7.2 The item IRES and IRAP taxes includes costs relative to the estimate of IRAP tax for the half year and the estimate of IRES tax for companies that are not part of the tax consolidations scheme and income of EUR 14.3 million resulting from a negative consolidated taxable base in the period for IRES purposes for Mediaset Group companies that are part of the Italian tax consolidation scheme, with a corresponding amount being recognised in the balance sheet as deferred tax assets. The item deferred tax assets and liabilities comprises the financial movements for the period for the posting and/or use generated by the impact of the progress of temporary differences between the values for tax and accounting purposes. In the same period of the previous year this item included EUR 18 million for the tax benefit recognised following the impairment of DTS Distribuidora de Televisión Digital S.A. in the first half of 2014, in relation to the sale of the investment. The taxes of foreign companies primarily include charges for current taxes recognised by companies of the Mediaset España Group.
46 WorldReginfo - 207dae83-4e38-4794-8ac2-00ebe851a54b Half Year Financial Report at 30 June 2015 – Explanatory Notes
4.12 Profit/loss per share
The calculation of basic and diluted earnings per share is based on the following data:
1H 2015 1H 2014
Net result for the period (millions of euro) 24.3 (20.5) Weighted average number of ordinary shares (without own shares) 1,136,402,064 1,136,402,064 Basic EPS 0.02 (0.02) Weighted average number of ordinary shares for the diluted EPS computation 1,136,402,064 1,136,402,064 Diluted EPS 0.02 (0.02)
The figure for earnings per share is calculated using the ratio of the Group's net profit/loss to the weighted average number of shares in circulation during the period, net of treasury shares. The figure for earnings per diluted share is calculated using the number of shares in circulation and the potential diluting effect from the allocation of treasury shares to the beneficiaries of vested stock option rights.
5. Cash flow statement
5.1 Change in payables for investments
In the first half of 2014 this item included EUR 1,110.0 million related to payables to Lega Calcio following the assignment of the Serie A league championship broadcasting rights net of trade receivables for the amount arising from the sub-licensing of such rights to Sky Italia.
5.2 Business combinations net of cash and cash equivalents acquired
For the half year under review this item related to the impact on cash and cash equivalents of the period for the outlay incurred for the completion of the acquisition of NewTelTowers S.p.A. (formerly Hightel S.p.A.) in the second quarter of 2014 and the payment as an advance for the acquisition of the company Tecnorad Italia S.p.A.. In the same period of the previous year this item related to the impact on cash and cash equivalents from the purchase of 100% of the company capital of the company Assistenza ripetitori televisivi S.r.l.
5.3 Changes in stakes in subsidiaries
The amount for the first half of 2015 relates to the proceeds from the sale of the 11.11% ownership interest of the subsidiary Mediaset Premium S.p.A., whereas for the same period of the previous year it related to the net proceeds from the sale of the 25% ownership interest in the subsidiary EI Towers S.p.A.
47 WorldReginfo - 207dae83-4e38-4794-8ac2-00ebe851a54b Half Year Financial Report at 30 June 2015 – Explanatory Notes
5.4 Change in treasury Shares
The amount relates to the outflow of EUR 71.6 million for the buyback of treasury shares by Mediaset España as part of the share buyback programme approved by the Board of Directors of the Company.
6. Segment reporting As required under IFRS 8, the following information relates to the operating segments identified on the basis of the Group's present organisational structure and internal reporting system. The Group's main operating segments, already included in the analysis of results contained in the Interim Report on Operations, are the same as the geographical areas (Italy and Spain) identified according to the location of operations. These operations are then segmented further, to monitor the performance of the business areas operating in each country. In relation to Spain, which corresponds to the Mediaset España Group, no significant areas have been identified other than the core business of television, which is therefore the same as that entity. The following paragraphs contain the information and reconciliations required under IFRS 8 in relation to profits, losses, assets and liabilities, based on this segmentation process. The information can be extrapolated from the two sub-consolidated financial statements prepared at that level, while the information provided for the three operating segments based in Italy has been given with reference to the earnings and operational activities directly attributable to them.
Geographical sectors The following tables report key financial information for the two geographical operational areas of Italy and Spain, as at 30 June 2015 and 2014 respectively. The tables have been prepared on the basis of specific sub-consolidated financial statements in which the carrying amount of the equity investments held by companies belonging to a segment in companies belonging to another segment have been kept at their respective purchase cost and eliminated upon consolidation. Likewise, in the sector income statement, income and expenses (relating to any dividends received from these investments) have been included under Income from other equity investments. The inter-segment assets figures mainly relate to the elimination of equity investments recognised under the assets of the Italy geographic sector in Mediaset España and Mediacinco Cartera (25%-owned, and already fully consolidated into the Spain area, which owns 75% of it) and the loan granted to Mediacinco Cartera S.L. by Mediaset Investment S.a.r.l., which amounted to EUR 11.3 million at 30 June 2015. Non-monetary costs relate to the provisions for risks and charges.
48 WorldReginfo - 207dae83-4e38-4794-8ac2-00ebe851a54b Half Year Financial Report at 30 June 2015 – Explanatory Notes
Eliminations/ MEDIASET ITALY SPAIN 1H 2015 Adjustments GROUP
MAIN INCOME STATEMENT FIGURES Revenues from external customers 1,243.7 477.4 - 1,721.1 Inter-segment revenues - 1.1 (1.1) - Consolidated net revenues 1,243.7 478.5 (1.1) 1,721.1 % 72% 28% 0.0 100%
EBIT 27.0 111.0 (0.5) 137.5
% 20% 81% 0% 100%
Financial income/(losses) (23.5) 0.3 - (23.2) Income/(expenses) from equity investments (0.7) 0.7 - (0.0) valued with the equity method Income/(expenses) from other equity investments 22.1 15.6 (22.0) 15.7
EBT 24.9 127.5 (22.5) 129.9
Income taxes (11.2) (29.9) - (41.1)
NET PROFIT FROM 13.7 97.6 (22.5) 88.8 CONTINUING OPERATIONS
Net Gains/(Losses) from discontinued operations - - - -
NET PROFIT FOR THE PERIOD 13.7 97.6 (22.5) 88.8
Attributable to: - Equity shareholders of the parent company 1.4 97.8 (74.9) 24.3 - Minority Interests 12.3 (0.2) 52.5 64.6
OTHER INFORMATION Assets 6,566.8 1,489.3 (604.5) 7,451.6
Liabilities 4,067.3 324.2 (13.9) 4,377.6 Investments in tangible and intangible non current assets 327.6 123.2 (0.5) 450.3 Amortization 437.2 92.5 (0.1) 529.6 Other non monetary expenses 5.9 4.8 - 10.6
(*) Includes the change in "Advances for the purchase of broadcasting rights"
49 WorldReginfo - 207dae83-4e38-4794-8ac2-00ebe851a54b Half Year Financial Report at 30 June 2015 – Explanatory Notes
Eliminations/ MEDIASET ITALY SPAIN 1H 2014 Adjustments GROUP
MAIN INCOME STATEMENT FIGURES Revenues from external customers 1,256.9 468.0 - 1,724.8 Inter-segment revenues 0.5 - (0.5) - Consolidated net revenues 1,257.4 468.0 (0.5) 1,724.8 % 73% 27% 0.0 100%
EBIT 29.4 80.1 - 109.5
% 27% 73% 0% 100%
Financial income/(losses) (39.6) (0.8) - (40.5) Income/(expenses) from equity investments (1.3) (11.9) - (13.2) valued with the equity method Income/(expenses) from other equity investments (0.1) (47.4) - (47.5)
EBT (11.6) 20.0 - 8.4
Income taxes (8.4) 1.1 - (7.2)
NET PROFIT FROM (20.0) 21.1 - 1.1 CONTINUING OPERATIONS
Net Gains/(Losses) from discontinued operations - - - -
NET PROFIT FOR THE PERIOD (20.0) 21.1 - 1.2
Attributable to: - Equity shareholders of the parent company (29.3) 21.4 (12.7) (20.5) - Minority Interests 9.3 (0.3) 12.7 21.7
OTHER INFORMATION Assets 6,793.1 1,789.8 (611.4) 7,971.5 Liabilities 4,403.3 335.3 (21.7) 4,716.8 Investments in tangible and intangible non current assets 1,371.0 123.5 - 1,494.4 Amortization 449.9 108.9 - 558.8 Other non monetary expenses 2.0 (0.2) - 1.7
(*) Includes the change in "Advances for the purchase of broadcasting rights"
50 WorldReginfo - 207dae83-4e38-4794-8ac2-00ebe851a54b Half Year Financial Report at 30 June 2015 – Explanatory Notes
Italy: Operating segments Operating segments have been reported in the Interim Report on Operations, where details on performance for the period can be found.
Income Statement Summary INTEGRATED EI ELIMINATIONS GEOGRAPHICAL 1H 2015 TELEVISION TOWERS / SEGMENT OPERATIONS ADJUSTMENTS ITALY
Revenues from external customers 1,214.2 29.5 - 1,243.7 Inter-segment revenues - 90.0 (90.0) - Consolidated net revenues 1,214.2 119.5 (90.0) 1,243.7 % 98% 10% -7% 100%
Operating costs from thrid parties (714.6) (64.9) - (779.5) Inter-segment operating costs (88.4) (1.6) 90.0 - Total Operating Costs (803.0) (66.5) 90.0 (779.5) Amortisation, depreciation and write-downs (418.9) (18.2) - (437.2) EBIT (7.8) 34.7 - 27.0
Income Statement Summary INTEGRATED EI ELIMINATIONS GEOGRAPHICAL 1H 2014 TELEVISION TOWERS / SEGMENT OPERATIONS ADJUSTMENTS ITALY
Revenues from external customers 1,230.8 26.6 - 1,257.4 Inter-segment revenues - 90.1 (90.1) - Consolidated net revenues 1,230.8 116.7 (90.1) 1,257.4 % 98% 9% -7% 100%
Operating costs from thrid parties (717.2) (60.8) - (778.0) Inter-segment operating costs (88.4) (1.7) 90.1 - Total Operating Costs (805.6) (62.5) 90.1 (778.0) Amortisation, depreciation and write-downs (428.8) (21.1) - (449.9) EBIT (3.7) 33.1 - 29.4
51 WorldReginfo - 207dae83-4e38-4794-8ac2-00ebe851a54b Half Year Financial Report at 30 June 2015 – Explanatory Notes
Operating Assets and Investments INTEGRATED EI ELIMINATIONS GEOGRAPHICAL 30th June 2015 TELEVISION TOWERS / SEGMENT OPERATIONS ADJUSTMENTS ITALY Television rights 2,274.1 - - 2,274.1 Other tangible and intangible non current assets 517.3 283.2 (1.2) 799.3 Goodwill 142.8 476.2 (335.1) 283.9 Trade receivables 1,280.7 31.4 - 1,312.1 Inventories 28.5 2.5 - 30.9 Operating assets 4,243.3 793.3 (336.3) 4,700.2
Investments in television rights (*) 286.6 - - 286.6 Other investments 16.6 7.9 - 24.5 Investments in tangible and intangible assets 303.2 7.9 - 311.1 (*) Not including the change in “Advances for the purchase of broadcasting rights”
Operating Assets and Investments INTEGRATED EI ELIMINATIONS GEOGRAPHICAL 30th June 2014 TELEVISION TOWERS / SEGMENT OPERATIONS ADJUSTMENTS ITALY Television rights 2,579.7 - - 2,579.7 Other tangible and intangible non current assets 584.4 300.9 (1.6) 883.7 Goodwill 142.8 457.9 (335.1) 265.5 Trade receivables 1,325.5 29.6 - 1,355.2 Inventories 30.8 2.6 - 33.4 Operating assets 4,663.2 791.0 (336.7) 5,117.5
Investments in television rights (*) 1,354.9 - - 1,354.9 Other investments 6.4 3.5 - 9.9 Investments in tangible and intangible assets 1,361.3 3.5 - 1,364.7
(*) Not including the change in “Advances for the purchase of broadcasting rights”
The main operating assets allocated to the Italy sector include television and movie broadcasting rights assigned to the Integrated Television Operations segment, the library (films, dramas, mini-series, TV films and cartoons), long-running self-produced drama series, and entertainment, news and sport rights serving both the free-to-air and Mediaset Premium channels. In particular, sports broadcasting rights include the broadcasting rights for the Serie A League championship for Italy’s leading soccer clubs for the seasons from 2015 to 2018 seasons. Other tangible and intangible assets mainly relate to:
for the Integrated Television Operations segment, television frequency user rights for DTT Multiplex and related transmission equipment, equipment supporting television production centres, IT systems, and the upgrading of management offices and other properties and investments relating to development of the Mediaset Premium subscription- based pay-TV platform;
for EI Towers, they include land, buildings and the equipment related to the broadcasting network.
52 WorldReginfo - 207dae83-4e38-4794-8ac2-00ebe851a54b Half Year Financial Report at 30 June 2015 – Explanatory Notes
7. Related-party transactions The following summary table shows, for the main income statement and balance sheet groupings, the details of the companies that are the counterparties of these transactions (identified in accordance with IAS 24 and grouped by type of relation):
Financial Other Trade Revenues Operating costs income/ Trade payables receivables receivables (charges) /(payables)
CONTROLLING ENTITY
Fininvest S.p.A. 0.1 2.5 - 0.1 0.0 0.2
ASSOCIATED ENTITIES A.C. Milan S.p.A.* 0.1 0.2 - 0.1 2.2 - Alba Servizi Aerotrasporti S.p.A. 0.0 0.4 - 0.3 0.3 - Arnoldo Mondadori Editore S.p.A.* 5.0 0.3 - 4.2 1.1 (0.0) Fininvest Gestione Servizi S.p.A. 0.0 - - 0.0 - - Isim S.p.A. ------Mediobanca S.p.A. - 0.0 (2.2) 0.0 - (198.0) Mediolanum S.p.A.* 1.6 - - 0.7 - - Trefinance S.A.* - 0.0 - - - -
Other associated 0.0 0.4 - 0.0 0.0 -
Total associated 6.8 1.4 (2.2) 5.3 3.6 (198.0)
JOINT CONTROLLED AND AFFILIATED ENTITIES 60 DB Entertainment S.L. ------
Furia de Titanes II A.I.E. ------Auditel S.p.A. - 2.5 - - - - Beigua S.r.l. ------Big Bang Media S.L. - (0.0) - - - - Boing S.p.A. 4.9 15.6 0.1 3.3 9.3 8.9 Editora Digital de Medios S.L. 0.0 0.0 - - - - Emissions Digitals Catalunya SA 0.0 - - 0.0 - - Fascino Produzione Gestione Teatro S.r.l. 0.2 26.6 (0.0) 0.3 18.4 (9.0) La Fabbrica De la Tele SL 0.0 11.7 - - 7.4 - Mediamond S.p.A. 13.8 3.4 0.2 19.8 2.3 2.9 MegaMedia Televisión SL 0.1 2.2 - 0.0 0.5 0.1 Nessma Lux S.A.** - - 0.1 0.0 - 2.3 Pegaso Television INC** - - 0.7 2.0 - 3.9 Produciones Mandarina SL 0.0 7.5 - 0.0 5.8 - Supersport Televisión SL 0.8 5.1 - 0.4 0.9 0.3 Titanus Elios S.p.A. - 2.2 - 0.0 - 5.7 Tivù S.r.l. 0.8 0.7 - 0.6 0.5 0.3
Total joint controlled and affiliated entities 20.6 77.4 1.0 26.4 45.2 15.3
KEY STRATEGIC MANAGERS*** - 2.2 - - - (0.3)
PENSION FUNDS (Mediafond) - - - - - (0.9)
OTHER RELATED PARTIES**** 0.0 0.0 0.0 0.0 - -
TOTAL RELATED PARTIES 27.4 83.4 (1.2) 31.8 48.8 (183.7) * The figure includes the company and its subsidiaries, associates or jointly controlled companies ** The figure includes the company and its subsidiaries *** The figure includes the directors of Mediaset S.p.A. and of Fininvest S.p.A., their close family members and companies in which these persons exercise control, joint control or significant influence or in which they hold, either directly or indirectly, a significant stake of no less than 20%, of the voting rights **** The figure includes transactions with several consortia that mainly carry out activities connected with the television signal transmission operational management.
53 WorldReginfo - 207dae83-4e38-4794-8ac2-00ebe851a54b Half Year Financial Report at 30 June 2015 – Explanatory Notes
Revenues and trade receivables due from associated entities mainly relate to the sales of television advertising space. The costs and the related trade payables mainly refer to purchases of television productions and broadcasting rights and to the fees paid to associates for the sale of advertising space managed through exclusive concessions by Group companies. The item other receivables/(payables) mainly refers to payables for loans and credit facilities due to affiliate companies, intercompany current accounts and loans given to associates. The other receivables due from Boing S.p.A. mainly relate to the remaining consideration due to R.T.I. S.p.A. for the disposal of the business unit carried out on 1 April 2013. The payables for loans and credit facilities due to other affiliates amounting to EUR 200.4 million mainly relate to contracts with Mediobanca (an associate of the Fininvest Group) and refer to the draw down of the revolving facility with a term of 8 years granted by Mediobanca in May 2011. The main impacts on the consolidated cash flows generated by related-party transactions involved outflows for the acquisition of rights regarding the company Milan A.C. of EUR 12.0 million and outflows for the payment of dividends to the holding company of Fininvest S.p.A. of EUR 7.9 million. During the half year dividends were also received from associates and joint ventures for a total of EUR 2.2 million.
54 WorldReginfo - 207dae83-4e38-4794-8ac2-00ebe851a54b Half Year Financial Report at 30 June 2015 – Explanatory Notes
8. Personal guarantees given and commitments The total value of guarantees received, primarily bank guarantees, in relation to receivables due from third-party counterparties is EUR 14.9 million, of which EUR 10.1 million relating to the Mediaset España Group. In addition, bank guarantees in favour of third party companies were issued for a total amount of EUR 91.7 million. Of this amount EUR 77.0 million were issued by the Mediaset España Group (EUR 56.4 million at 31 December 2014). The main commitments of the Mediaset Group can be summarised as follows:
commitments for the acquisition of television and movie broadcasting rights, totalling EUR 1,418.2 million (EUR 584.5 million at 31 December 2014). These future commitments relate mainly to volume deal contracts of the Mediaset Group with some of the leading American TV producers. The increase for the period mainly relates to the new volume deal agreements signed with Warner Bros International Television Distribution Inc. and Nbc Universal.
commitments for content and program rental contracts totalling EUR 736.7 million, of which 25.1 to associates. This items includes the commitments for the purchase of the exclusive broadcasting rights on all platforms for the Champions League for the years 2015- 2018;
commitments for artistic projects, television productions and press agency contracts of approximately EUR 106.2 million, of which EUR 17.5 million due to Related Parties;
commitments for digital broadcasting capacity services of EUR 230.3 million;
contractual commitments for the use of satellite capacity of EUR 72.7 million;
commitments for the purchase of new equipment, works and supplies for the companies' head offices, multi-year rents and leases, the supply of EDP services and commitments to trade associations for the use of intellectual property rights totalling EUR 275.3 million.
55 WorldReginfo - 207dae83-4e38-4794-8ac2-00ebe851a54b Half Year Financial Report at 30 June 2015 – Explanatory Notes
9. Movements resulting from atypical and/or unusual transactions Pursuant to Consob communication no. DEM/6064296 of 28 July 2006 it is hereby stated that in the first half of 2015 no atypical and unusual transactions were carried out by the Group as defined by the above Communication.
for the Board of Directors the Chairman
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LIST OF THE EQUITY INVESTMENTS IN THE CONSOLIDATED ACCOUNTING STATEMENTS AT 30 JUNE 2015
(values in EUR million)
% held by the Companies consolidated on a line-by-line basis Registered Office Currency Share capital Group (*)
Mediaset S.p.A. Milan EUR 614.2 - Publitalia '80 S.p.A. Milan EUR 52.0 100.00% Digitalia '08 S.r.l. Milan EUR 10.3 100.00% Promoservice Italia S.r.l. Milan EUR 6.7 100.00% Publieurope Ltd. London GBP 5.0 100.00% R.T.I. S.p.A. Rome EUR 500.0 100.00% Videotime S.p.A. Milan EUR 52.0 99.17% Elettronica Industriale S.p.A. Lissone (MB) EUR 363.2 100.00% E.I. Towers S.p.A. Lissone (MB) EUR 2.8 40.00% Towertel S.p.A. Lissone (MB) EUR 22.0 40.00% NewTelTowers S.p.A. Rome EUR 0.2 40.00% Medusa S.p.A. Rome EUR 120.0 100.00% Taodue S.r.l. Rome EUR 0.1 100.00% Mediashopping S.p.A. Milan EUR 10.0 100.00% Mediaset Premium S.p.A. Milan EUR 30.0 88.89% Mediaset Investment S.a.r.l. Luxembourg EUR 50.5 100.00% Mediaset España Comunicaciòn S.A. Madrid EUR 183.1 46.73% Publiespaña S.A.U Madrid EUR 0.6 46.73% Publimedia Gestion S.A.U. Madrid EUR 0.1 46.73% Integracion Transmedia S.A.U. Madrid EUR 0.1 46.73% Netsonic S.L Barcelona EUR 0.0 17.78% Grupo Editorial Tele 5 S.A.U. Madrid EUR 0.1 46.73% Telecinco Cinema S.A.U. Madrid EUR 0.2 46.73% Conecta 5 Telecinco S.A.U. Madrid EUR 0.1 46.73% Mediacinco Cartera S.L. Madrid EUR 0.1 60.05% Premiere Megaplex S.A. Madrid EUR 0.2 46.73% Sogecable Editorial S.L.U. Madrid EUR 0.0 46.73% Sogecable Media S.L.U. Madrid EUR 0.0 46.73%
% held by the Joint control and affiliated companies Registered Office Currency Share capital Group Agrupacion de interés Economico Furia de Titanes II A.I.E. Santa Cruz de Tenerife EUR 0.0 15.89% Auditel S.r.l. Milan EUR 0.3 26.67% Beigua S.r.l. Rome EUR 0.1 9.80% Boing S.p.A. Milan EUR 10.0 51.00% Emissions Digital Catalunya S.A. Barcelona EUR 3.3 18.69% Fascino Produzione Gestione Teatro S.r.l. Rome EUR 0.0 50.00% La Fabrica De La Tele S.L. Madrid EUR 0.0 14.02% Mediamond S.p.A. Milan EUR 1.5 50.00% Megamedia Television S.L. Madrid EUR 0.1 14.02% Nessma S.A. Luxembourg EUR 11.3 34.12% Nessma Broadcast S.a.r.l. Tunisi TND 1.0 20.06% Pegaso Television INC Miami (Florida) USD 83.3 20.43% Producciones Mandarina S.L. Madrid EUR 0.0 14.02% Titanus Elios S.p.A. Rome EUR 5.0 29.75% Tivù S.r.l. Rome EUR 1.0 48.16% Supersport Television S.L. Madrid EUR 0.1 14.02%
% held by the Equity investments held as "Available for sale" Registered Office Currency Share capital Group Aprok Imagen S.L. (winding-up ) Madrid EUR 0.3 1.43% Ares Film S.r.l. Rome EUR 0.1 5.00% ByHours Travel S.L. Madrid EUR 0.0 3.15% Cinecittà Digital Factory S.r.l. Rome EUR 6.0 15.00% Class CNBC S.p.A. Milan EUR 0.6 10.90% Deporvillage S.L. Barcelona EUR 0.2 8.60% Farman Newco S.r.l. Milan EUR 0.0 7.81% Grattacielo S.r.l. Milan EUR 0.1 10.00% Kirch Media GmbH & Co. Kommanditgesellschaft auf Aktien Unterföhring (Germany) EUR 55.3 2.28% Private Griffe Milan EUR 0.2 14.10% Radio e Reti S.r.l. Milan EUR 1.0 10.00% Romaintv S.p.A. (winding-up ) Rome EUR 0.8 9.68% Sportsnet Media Limited George Town (Grand Cayman) USD 0.1 12.00% Springlane Gmbh Dusseldorf EUR 0.1 11.83% Westwing Group Gmbh (Jade 1290 Gmbh) Monaco EUR 0.1 2.58% Wimdu Gmbh Berlin EUR 0.1 4.37% (*) Group’s stake calculated not considering parent companies’ own shares
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Mediaset Group Auditors’ review report on the interim condensed consolidated financial statements
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