2006-11-09
Positive effects in the Third Quarter of the investments in product and sales method innovation made in the first part of the year
 

• CONSOLIDATED REVENUES IN THE QUARTER increased to € 414.5 million (+3.6% compared to the same period in 2005);
• CONSOLIDATED EBITDA FOR THE QUARTER increased 5.2% to € 218.5 million (€ 207.7 million in the third quarter of 2005), and profitability rose to 52.7% (51.9% in the third quarter of 2005), thanks to the growth in revenues, the progressive decrease towards normalised levels of costs incurred to support innovation, and improved efficiency in the core business;
• NET FINANCIAL DEBT further decreased to a total amount of € 101.2 million in the first nine months of 2006, despite a € 45.3 million dividend payout;
• INTEREST CHARGES decreased by 10% in the nine months, compared to the same period of 2005. This is due to the effect of lower average debt and the drop in the average cost of debt (5.95% compared to 6.33% in the same period of 2005) that has been achieved, despite the rise in market rates, thanks to effective debt management.
  

 
FORECASTS FOR FINANCIAL YEAR 2006 IN LINE WITH EXPECTATIONS
 

• 3-5% INCREASE IN CONSOLIDATED REVENUES FOR THE ENTIRE YEAR CONFIRMED, thanks to the fast growth of the online sector, the improved performance in print directories and the contribution of new DA services;
• FORECASTS FOR EBITDA GROWTH in the fourth quarter, sustained by the increase in revenues and the expected breakeven of new DA services (Italy and France);
• NET INCOME is expected to be reached both at individual and consolidated level.
  

The Board of Directors of SEAT Pagine Gialle S.p.A. - chaired by Enrico Giliberti - today has approved Third Quarter results for the period ended September 30, 2006, presented by Chief Executive Officer Luca Majocchi.


Revenue Performance

Consolidated revenues in the third quarter of 2006 totalled € 414.5 million, up 3.6% compared to the same period of the prior year (€ 400.2 million). This performance reflects the improvement in SEAT Pagine Gialle S.p.A. revenues (+2.3% thanks to the positive performance of online and voice services. The performance of the latter was driven also by the successful new subscriber information service 12.40 Pronto PAGINEBIANCHE®), the Thomson Directories Group revenues (+5.1%, due to the growth of online services), and the Telegate Group revenues (+26.9%, due to the development of activities in France and the growth achieved in Spain and Italy).

In the first nine months of 2006, consolidated revenues reached € 988.1 million, up 3.4% compared to the same period of the prior year (€ 956.0 million).

The breakdown by business unit is reported below:

• "Italian Directories" (SEAT Pagine Gialle S.p.A.): revenues reached € 721.7 million, up 1.2% compared to 30 September 2005 (€ 712.9 million), with an improvement compared to the result for the first half of the year (+0.5% compared to the same period of 2005), thanks to the improvement of print products and the growth of online and voice services;
• "Directories UK" (Thomson Directories Group): revenues amounted to € 108.8 million, substantially stable compared to the same period of the prior year. At constant exchange rate and number of directories published, revenues increased by 1.5% compared to the first nine months of 2005, driven by the good performance of online services (+50.6%);
• "Directory Assistance" (Telegate Group and Prontoseat S.r.l.): revenues increased by € 28.5 million to € 140.8 million compared to the first nine months of 2005. In the Telegate group revenues increased by 26.7% to € 133.9 million due to the contribution of the new service offered on the French market. Excluding this incremental component, the rise in revenues was 4.9%. Prontoseat S.r.l. showed positive results, up 6.2% to € 6.9 million, due to the good performance of the 89.24.24 Pronto PAGINEGIALLE® service.
• "Other activities" (Consodata S.p.A., Europages S.A. and Cipi S.p.A. ) amounted to € 55.9 million in the first nine months of 2006 (€ 47.0 million in the first nine months of 2005). This result mainly reflects the positive performance of Europages S.A., which increased 2.6% to € 28.1 million, compared to the same period of the prior year.
  

EBITDA Performance

In the quarter, operating income before depreciation, amortisation and net non-recurring and restructuring charges (EBITDA) increased 5.2% to € 218.5 million (€ 207.7 million in the third quarter of 2005), thanks to the growth in revenues and the progressive decrease towards normalised advertising investments to launch new directory assistance services in Italy and France and costs incurred for innovation. In the quarter, profitability increased to 52.7% (from 51.9% in the same period of 2005), due to the decrease towards normalised levels of costs incurred for innovation and to support new directory assistance services.

In the first nine months, EBITDA amounted to € 373.5 million (€ 421.1 million in the same period of 2005). The reduction compared to 2005 is attributable to one-off costs incurred in the first half of 2006 for product and sales method innovation, which led, in particular, to a € 39.0 million increase in advertising costs.
 
Performance of Operating Income (EBIT)

In the first nine months of 2006, operating income was € 217.9 million (€ 266.7 million in the first nine months of 2005), in line with the EBITDA performance.

Net result
Net incomefor the period was € 12.5 million (€ 25 million in the first nine months of 2005). This result decreased € 12.5 million compared to the first nine months of 2005, as a result of the impact on operating income of investments made in the first half of the year for the launch of the new voice directory assistance services in France and Italy. However, this rise in spending was largely offset by the reduction in net interest charges caused by efficient debt management.

Operating cash flow performance
The free operating cash flow generated in the first nine months of 2006 remained high in absolute terms (€ 358.2 million), albeit € 84.6 million lower than in the first nine months of 2005 (€ 442.8 million). This performance reflects the costs incurred for the launch of new products and services, which impacted EBITDA, and the contribution of working capital that, though positive, was lower than that recorded for the first nine months of 2005.

Performance of net financial debt
Net financial debt amounted to € 3,533.4 million at 30 September 2006 (€ 3,634.6 million at 31 December 2005), of which € 3,565.6 million non current debt, and decreased by € 101.2 million in the first nine months of 2006, despite a € 45.3 million dividend payout.

The first nine months of 2006 have been influenced by the business development initiatives and the innovation of sales methods implemented by the SEAT Pagine Gialle group between the second half of 2005 and the first half of 2006 that entailed significant one-off costs.

In Italy, initiatives included: the launch of the new subscriber information service 12.40 Pronto PAGINEBIANCHE®; printing of the new full-colour PAGINEBIANCHE® directories, whose distribution began in July; the start of advertising sales for the new PAGINEGIALLE® print directory, which will be published as of the first quarter of 2007; the start in September of advertising sales on the new Internet platform PAGINEGIALLE VISUAL. Product innovations have been accompanied by an ever-greater specialisation of the sales network by customer segment, further investments in training of personnel and agents and development of the ICT tools supporting sales activities.
In the foreignsubsidiaries, the Telegate Group entered the French Directory Assistance market, whereas Thomson started to strengthen its sales structure and offering.

The third quarter of 2006 was a turning point at which the innovation efforts made between the end of 2005 and the first half of 2006 started to impact positively in terms of increased revenues, whereas spending decreased to normalised levels, after the significant one-off costs incurred for innovation purposes.

The last months of the year will see a continuation of the trend of the third quarter of 2006 with reference to increased revenues and improved profitability. Revenue growth will be mainly sustained by the fast growth of the online sector, thanks to the new PAGINEGIALLE VISUAL service and the gradual improvement in print directories. Costs will instead benefit from the reduction in advertising spending in Italy and France, in consideration of the fact that the two Directory assistance markets are gradually becoming more mature.

Against this background, forecasts for consolidated EBITDA growth in the fourth quarter are confirmed. Net income forecasts for the year, both at individual and consolidated level, are also confirmed.

---

The Third Quarter 2006 results of the SEAT Pagine Gialle Group will be presented by Chief Executive Officer Luca Majocchi during the conference call to be held today, Thursday 9 November at 4:00 p.m. (CET).

Dowload full document with tables >>

---

Seat Pagine Gialle Communications
Tel. +39.011.435.3030 - Fax +39.011.435.3040
Comunicazione.stampa@seat.it

Seat Pagine Gialle Investor Relations
Tel. +39.011.435.2600
Investor.relations@seat.it

Seat Pagine Gialle S.p.A. Legal and Corporate Affairs
ufficio.societario@seat.it

Barabino & Partners
Tel. +39 02 72.02.35.35 - Fax +39 02 89.00.519
Federico Steiner - f.steiner@barabino.it