Published on April 16, 2013
Three years Plan 2013-2015Milan, 15 April 2013
Agenda Market Trends & Assumptions Strategic guidelines Financials Business Units focus Capital structure2
Market trends New technologies create greater digital opportunities while further worsening the weak trends in paper, especially for younger generations New digital users spend more time on mobile devices, on which they read news more frequently and increasingly request video content; emphasising higher tendency to buy on line and download and read more e-books Advertising markets are suffering and, in particular, print media is losing share in a shrinking market. Advertising expenditure is shifting from print to the following: online, mobile, new devices and platforms (e.g. smart TV, tablets) Competition is broadening from traditional peers to new digital players (broadcaster, social networks, OTT players) forcing traditional printing operators to accelerate digital 3 investments and right sizing their organisation
Key macro and sector trends underlying the PlanMacro-economic indicators 2013-2015 Inflation GDP Y/Y % Y/Y % 1,8 1,2 1,0 1,2 0,5 (1,0) 2,4 1,5 1,5 1,6 0,8 (1,5) 1,8 1,7 1,7 1,5 1,9 0,5 2013 2014 2015 2013 2014 2015Key market trends 2012-2015 Advertising market 1 Book market2 Daily newspaper circulation3 CAGR ’12-’15 CAGR ’12-’15 CAGR ’12-’15 number of copies Traditional Digital Traditional Digital Traditional Digital Total 11% 16% 150% 110% 38% Stable (8%) (8%) (5%) (2%) (10%) Mkt Mkt Mkt Mkt 34% Slight 6% 7% decline (4%) (5%) (9%) Mkt Mkt Source: RCS, Nielsen, Arce Media, MediaHotLine, EIU, IMF, WMM, internal estimates 4 1 In Italy and Spain Traditional includes newspapers and magazines; Digital excludes search and social 2 Market value at sell-out, RCS gross revenues 3 Traditional includes Newsstands, subscription, door-to-door and other promotional channels; Italy figures includes Corriere and Gazzetta; Spain figures includes El Mundo, Marca and Expansion
Agenda Market Trends & Assumptions Strategic guidelines Financials Business Units focus Capital structure5
RCS mission in the new contextOur strength Exceptionally strong assets in terms of quality, credibility, brand reach combined with superior publishing competencies.Our goal To keep on being recognised as an eminent, independent, reliable and relevant source of information, while expanding and tailoring RCS’s offer to enhance both readers and business customers in terms of relationship and loyalty; providing contents and services designed for the new digital context.Sense of urgency In order to succeed it is paramount to progress radically and rapidly on the following dimensions: new editorial offering and services, lean organisation, cost reduction, future oriented mindset.6
The transformation pillars Focus on publishing innovation and qualitative reinforcement of power brands Development and expansion of the digital offer Portfolio focus on current and potential leadership areas Strive for continuous efficiency Non core asset disposals7
RCS current digital footprint 30 million unique users connect each month to RCS digital properties … …through 85 million fixed line and mobile devices 8+ million RCS property fans on Social Networks 142 EUR million of digital revenue at the end of 20128
RCS path to growth Quality, Prestige, Independence, Relevance From … …and four dimensions of change … to Readers Customers 0,5 million of 5 million of profiled users Customer knowledge profiled customers Paper driven contents Digital first contents90% traditional journalists, 100% multimedia journalists Digital 10% on-line journalists Diverse portfolio Leader in selected areas 9% digital revenue Portfolio rethink 21% digital revenue Value control Focus only on core 3% EBITDA margin 10% EBITDA margin9 Speed and efficiency Ebitda before non recurring costs, Excluding Dada
The digital trajectories Profitability Low/Decreasing High/Increasing Services traditional services New Offer Content Digital content Traditional Digital Ebitda < 10% Channel 10
Digital strategy Focus on power brand publishing innovation Expansion of digital offerWeb Tablet e mobile Verticals New target developmentsProfiling Social engagement Video Digital Marketing Services Learning and multimedia Newsroom e content factory events for companies
Digital strategy : today and tomorrow Mostly PC- and text- Mostly banner based content and ‘page view-based’ digital advertising TODAY Consumers’ «share of needs» Companies’ «share of needs» Multi-device multi-media Multi-device multi- content, with focus on media advertising, mobile and video with strong Content- related digital audience profiling services (e.g. e- B2B digital services commerce) (marketing, New ‘digital only’ targets learning) (e.g. teens, tech) TOMORROW 12
Organisation and publishing process redesign Extended outsourcing of non core activities Strengthening of digital skills and competencies Creation of integrated newsrooms Creation of content factories with focus on Verticals 13
Agenda Market Trends & Assumptions Strategic guidelines Financials Business Units focus Capital structure14
Key consolidated financial projectionsEUR million EBITDA Margin (%) ▪ Consolidated revenue are expected 1.513 ~ 1.500 to remain broadly flat over the Plan period, excluding impact from Revenue discontinued assets 2012 (1) 2013 2014 2015 ▪ EBITDA is expected to expand from 3% ~10% 49 million in 2012 to ~150 million in 2015 through: ~150 – new products and services with EBITDA2 49 higher profitability – significant cost reduction 2012 (1) 2013 2014 2015 – product and process efficiencies 15 1 Proforma (excluding Dada) 2 Ebitda before non recurring costs
Revenue evolutionEUR million Digital Digital Revenue Traditional ~170 Revenue ~310 CAGR: Digital +30 % Traditional -5 % 1.513 ~1.500 142 2012 (1) Inertial Projects 2015 Traditional Revenue ~-180 1.371 2012 (1) 2013 2014 2015 ~50 ~1.190% Digital Revenue 9% 21% 2012 (1) Inertial Perimeter 201516 1 Proforma (excluding Dada)
Advertising revenue evolutionEUR million Digital Digital Advertising Revenue Traditional CAGR Advertising Revenue +20% 586 ~100 2012 (1) Inertial Projects 2015 Traditional Advertising Revenue CAGR -10% ~490 2012 (1) 2013 2014 2015% Digital Advertising Revenue 17% 33% 2012 (1) Inertial Perimeter 201517 1 Proforma (excluding Dada)
Publishing and other revenue evolutionEUR million Digital Digital Publishing and other Revenue Traditional CAGR Publishing and other Revenue +49% 927 ~40 2012 (1) Inertial Projects 2015 Traditional Publishing and other Revenue -3% ~885 2012 (1) 2013 2014 2015% Digital Publishing and other Revenue 5% 15% 2012 (1) Inertial Perimeter 201518 1Proforma (excluding Dada(
Strong commitment on cost reduction EUR millionThe group continues its efforts to reduce the cost base: the Plan includes EUR 145million costreduction within the 2013-15 period. ~2.000 ~300 • Product and process • Organization • Personnel cost (roughly 80 million 180 in 2013) ~1.520 ~145 Cost base 2008 Efficiencies Volume Cost base 2012 Efficiencies Volume Cost base 2015 ’09-’12 ’13-’15 19
Efficiency drivers Product redesign for economic sustainability, in terms of: DESIGN TO VALUE Content costs Publishing offer Process redesign to obtain further cost efficiencies in: Distribution and logistic PROCESS EFFICIENCY Production Sales force Scope synergies research with other players Staff reorganisation and reduction to obtain a leaner and more agile organisation AGILE ORGANISATION20
Non recurring costs timeline EUR millionThe required actions to realise the efficiency program will cost 120 million of EUR1, heavilyfrontloaded, affecting all business units. ~120 ~80 2013 2014 2015 Cumulated 1 Cash out 21
Investments EUR millionThe Plan includes 160 million of EUR of Investments over the 2013-15 period, of which morethan 72% are in the digital area. ~160 Traditional 28% 72% Digital 2013 2014 2015 Cumulated 22
Agenda Market Trends & Assumptions Strategic guidelines Financials Business Unit focus Capital structure23
BU: Newspapers ItalyPillars of change Revenue (EUR million)• Innovation of user experience for multimedia usage, with Single digit introduction of new vertical and premium content decline +2% 563• Strong growth of the digital edition with improved offer and new distribution channels (e.g. newsstand in consortium)• Launch of social communities to enhance the user engagement 2012 2013 2014 2015• Further boost of video offering through specific program Ebitda1 margin scheduling and multi device adaptation of user experience• Enrichment of the editorial offer with contextual and 11% ~15% innovative digital services: • Ecommerce (e.g. Professionals) • Classified (e.g. readers offer) • Entertainment (e.g. video on demand)24 1 Ebitda before non recurring costs
BU: Newspapers Spain Pillars of change Revenue (EUR million) • Innovation of user experience for multimedia usage, Single digit decline with introduction of new vertical and premium 3+% content 415 • Reinforcement of the web, tablet and mobile presence • Expansion of video on-line, e-commerce and entertainment sectors 2012 2013 2014 2015 • Expansion of international presence (e.g. LatAm Ebitda1 margin partnership for Marca) • Further boost of e-learning services 1% ~11%25 1 Ebitda before non recurring costs
BU: Verticals (Magazines and Digicast) Pillars of change Revenue (EUR million) Double digit • Evolution from a portfolio of titles to vertical decline 8+% multimedia ecosystems around selected 195 targets: women, lifestyle, home/design, infancy • Selected international expansion (e.g. design 2012 2013 2014 2015 and infancy) Ebitda1 margin • Strengthening of the video and e-commerce offer -1% ~13%26 1 Ebitda before non recurring costs
BU: Books Pillars of change Revenue (EUR million) • Focus on editorial innovation of the publishing Slight decline houses +3/4% 273 • Strong investments to boost the e-book growth • Greater interaction with readers, through social community development 2012 2013 2014 2015 • Education: evolution from books to multimedia Ebitda1 margin learning ecosystems with innovative platforms for 3% ~8% students and teachers27 1 Ebitda before non recurring costs
Agenda Market Trends & Assumptions Financials Economic elements Business Units focus Capital structure28
Capital increase Recapitalisation ‒ Recapitalisation up to a maximum of €600 million ‒ A capital increase of at least €400 million following the ordinary share capital reduction with a subsequent reverse stock Capital increase of split in relation to losses as resulting from the Financial a minimum of Statements as of 31 December 2012 and 31 March 2013 (ex €400 million art. 2446 of the Italian Civil Code). The rights issue is expected to be executed by July 2013 Subsequent ‒ Further delegation to the BoD for subsequent capital increase capital increase up to a maximum amount of €200 million (by 31 December delegation 2015)29
Debt refinancing A term sheet with Intesa Sanpaolo S.p.A., UBI Banca (Banca Popolare di Bergamo e Banca Popolare Commercio e Industria), UniCredit S.p.A., BNP Paribas Succursale Italia, S.p.A., Banca Popolare di Milano S.c.a r.l. e Mediobanca – Banca di Credito Finanziario S.p.A. has being agreed for a total amount of EUR 575 million in order to refinance the existing long term facilities worth a total of EUR 800 million. The termsheet foresees a club deal, composed of three lines of credit: a line of credit for EUR 200 million, expiring in three years, to be repaid on a bullet basis using part of the cash flow arising from disposal of non core assets; a line of credit for EUR 275 million, expiring in five years, to be repaid on an amortising basis with a three year pre-amortisation period; a revolving line of credit for EUR 100 million, expiring in five years. The financing is subject to perfection and subscription in cash of a share capital increase of RCS for an amount not lower than EUR 400 million.30
Economics and financialsEUR million 1.513 ~1.500 Revenue ~280 2012 (1) 2013 2014 2015 ~150 EBITDA2 49 2012 (1) 2013 2014 2015 13-15 Investments ~160 Disposals ~250 250+ PFN (846) PFN/EBITDA2 4/4,5x 31 1 Proforma (excluding Dada) 2 Ebitda before non recurring costs
DisclaimerThis presentation contains management preliminary estimates and forward-looking statements, including informationrelated to RCS MediaGroup projected financial performance and the expected development of the publishing industry,in particular in the newspaper, magazine, book and new media segments. These statements are based on estimatesand assumptions made by management of the company and are believed to be reasonable, as of this date, though bytheir nature future estimates are uncertain and subject to variations due to possible changes in the market. Actualresults or experience could differ materially from the information contained herein.This communication does not constitute an offer or solicitation for the sale, purchase or acquisition of securities of anyof the companies mentioned in any jurisdiction and is directed to professionals of the financial community.For further information, please contact our Investor Relations Department Selene Litta Modignani +39 02 2584 3390 firstname.lastname@example.org 33
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