Earnings Release • Oct 1, 2020
Earnings Release
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| Informazione Regolamentata n. 0260-51-2020 |
Data/Ora Ricezione 01 Ottobre 2020 10:27:07 |
MTA | ||
|---|---|---|---|---|
| Societa' | : | TISCALI | ||
| Identificativo Informazione Regolamentata |
: | 137585 | ||
| Nome utilizzatore | : | TISCALIN07 - Ilenia Loi | ||
| Tipologia | : | 1.2 | ||
| Data/Ora Ricezione | : | 01 Ottobre 2020 10:27:07 | ||
| Data/Ora Inizio Diffusione presunta |
: | 01 Ottobre 2020 10:27:09 | ||
| Oggetto | : | Tiscali S.p.A. - Approval of the Half-Yearly Report as at 30 June 2020 |
||
| Testo del comunicato |
Vedi allegato.
The Board of Directors of Tiscali S.p.A., which met today, approved all the items on the agenda and, in particular:
Renato Soru, Chief Executive Officer of the Group, commented as follows: "In this half-year – despite the general situation of criticality and uncertainty caused by the health emergency linked to the COVID-29 pandemic – Tiscali continued its growth in the UltraBroadband services segment with a strong focus on service quality, as well as productivity recovery thanks to the reduction in operating costs. In fact, there was a strong growth in operating profitability net of non-recurring items and a further organic reduction in overall debt, thanks also to the efficiency of investments. Finally, as previously announced, the recently signed commercial agreements will allow Tiscali to project itself in the coming years as a Smart Telco and Digital Service Operator, focused exclusively on Fibre services and digital applications on optical and 5G technology."
| Income statement | 1H 2020 | 1H 2019 |
|---|---|---|
| (EUR mln) | ||
| Revenue | 72.5 | 70.2 |
| Adjusted Gross Operating Result (EBITDA) | 7.3 | 14.9 |
| Operating Result (EBIT) | (12.1) | (8.1) |
| Result from held for sale and discontinued operations | 0.0 | 0.0 |
| Ner Result | (16.4) | (3.7) |
| Statement of financial position | 31 December 2019 | 31 December 2018 |
| (EUR mln) | ||
| Total assets (§) | 177.8 | 181.2 |
| Net Financial Debt | 74.2 | 87.0 |
| Net Financial Debt as per CONSOB | 75.0 | 87.8 |
| Shareholders' equity (§) | (67.2) | (56.0) |
| Investments | 18.3 | 43.4 |
| Operating figures | 31 December 2019 | 31 December 2018 |
| (thousands) | ||
| Total number of Clients | 677.2 | 668.2 |
| Broadband Fixed | 382.0 | 381.7 |
| of which Fibre | 198.6 | 163.7 |
| Broadband Wireless | 41.9 | 41.8 |
| of which LTE | 41.9 | 40.2 |
| Mobile | 253.3 | 244.7 |
As thoroughly described in the Consolidated Financial Report as at 31 December 2019, during 2019, the Company completed the financial strengthening thanks to the restructuring agreements of the Senior Loan (March 2019) and the issue and subsequent conversion of the 2019-2020 Convertible Bond.
The agreements with the main network operators allow Tiscali to be the Italian telecommunications operator with the highest UltraBroadband coverage available.
In the first half of 2020, Fibre clients grew by 21%, from 164 thousand units as at 31 December 2019 to 198 thousand units as at 30 June 2020.
With reference to the FTTH technology, the market grew by about 10% in the 2020 1Q as compared to December 2019; Tiscali grew twice as much as the market in the same period, equal to about
20%. Tiscali's market share as at 31 March 2020 in this segment amounted to 5.1%, with a 0.5% growth as compared to December 2019 (source AGCOM, report as at 31 March 2020).
During the first half of the year, in addition to the development, marketing and sales of UltraBroadband and Mobile services, Tiscali has kept up with the implementation of a development model focused on excellence in customer management, efficiency in reducing fixed costs and improving industrial margins, and optimisation of investments through the sharing of other operators' networks, in line with the new model of a company with low fixed investment intensity adopted from the 2019 second half.
In terms of network coverage, in the first half of 2020 Tiscali expanded its UltraBroadband coverage in Sardinia, reaching a further 170 municipalities; this piles up with the progressive extension of coverage through Open Fibre in the so-called "C and D" market areas.
The Tiscali.it portal recorded significant growth in average monthly traffic in the first half of 2020, with over 210 million page views and around 16 million unique browsers, continuing the strategy of valorising the portal through new e-commerce services.
As far as market communication activities are concerned, after the rebranding process launched last year, in the first half of 2020 two advertising campaigns were carried out on Fibre services, in order to support the Brand and marketing objectives. The first campaign was carried out in February on the radio, on all the main national networks; the second in March, on the radio and the main SKY channels, a broadcaster with a high affinity with the Tiscali target; this campaign counted on a significant increase in the estimated audience due to the lockdown period. A further 3-week communication flight in May, aired on Sky, made it possible to have a constant presence on these media.
In line with this strategy, performance campaigns on the web, Google and all social channels have also continued on an ongoing basis.
To complete the actions in support of the Brand and with the aim of increasing the brand's reputation and value towards a younger and more evolved target, Marketing Influencer actions were carried out in June and July on the social channels YouTube, Facebook and Instagram.
From a financial-equity point of view, the conversion of the 2019-2020 Convertible Bond for a nominal value of EUR 5.3 million was completed.
| Consolidated Income Statement | 1H 2020 | 1H 2019 |
|---|---|---|
| (EUR mln) | ||
| Revenue | 72.5 | 70.2 |
| Other income | 0.3 | 13.6 |
| Purchase of external materials and services | 51.7 | 51.0 |
| Personnel costs | 10.5 | 12.4 |
| Other operating expense (income) | 0.0 | 0.0 |
| Write-downs accounts receivable from customers | 3.4 | 5.5 |
| Gross Operating Result (EBITDA) | 7.3 | 14.9 |
| Restructuring costs | 0.0 | 2.2 |
| Depreciations & amortizations | 19.4 | 20.8 |
| Operating result (EBIT) | (12.1) | (8.1) |
| Result from the investments evaluated at equity method | (0.0) | (0.3) |
| Financial Income | 0.4 | 12.0 |
| Financial Expenses | 4.7 | 7.4 |
| Income (loss) before tax | (16.4) | (3.7) |
| Taxation | 0.0 | 0.0 |
| Net result from operating activities (ongoing) | (16.4) | (3.7) |
| Result from held for sale and discontinued operations | 0.0 | 0.0 |
| Net result for the period | (16.4) | (3.7) |
| Minority interests | 0.0 | 0.0 |
| Group Net Result | (16.4) | (3.7) |
| Consolidated Statement of Equity and Liabilities | 30 June 2020 | 31 December 2019 |
|---|---|---|
| (EUR mln) | ||
| Non-current assets | 119.5 | 120.5 |
| Current assets | 58.4 | 60.7 |
| Assets directly related to held for sales | 0.0 | 0.0 |
| Total Assets | 177.8 | 181.2 |
| Net equity of the Group | (67.2) | (56.0) |
| Net equity attributable to minority interests | 0.0 | 0.0 |
| Total net equity | (67.2) | (56.0) |
| Non-current liabilities | 33.5 | 101.3 |
| Current liabilities | 211.5 | 135.9 |
| Payables directly related to held for sale | (0.0) | (0.0) |
| Total Net equity and Liabilities | 177.8 | 181.2 |
The Tiscali Group's revenues in the first half of 2020 amounted to EUR 72.5 million, a 3.3% increase as compared to the first half of 2019, equal to EUR 70.2 million.
The EUR 2.3 million net change is mainly due to the following factors:
The trend of the customer base in the first half of 2020 is in line with the forecasts of the 2020 - 2022 Plan.
The number of Fibre clients continued to increase significantly during the period, from around 121 thousand units as at 30 June 2019 to around 198 thousand units as at 30 June 2020, confirming the progressive shift in demand towards Fibre connections;
The customer portfolio grew by 15% as compared to the first half of 2019, from about 220 thousand units as at 30 June 2019 to about 253 thousand units as at 30 June 2020. In terms of average number of customers during the period, there was an 18.9% increase in the number of clients (about 249 thousand average customers in the first half of 2020 as compared to about 209 thousand in the first half of 2019).
Indirect operating costs in the first half of 2020 amounted to EUR 16.6 million, down by EUR 4.1 million as compared to the first half of 2019 (EUR 20.7 million).
Indirect operating costs include:
Other (income)/expenses, amounting to a positive EUR 0.3 million, mainly include income from transactions on debt positions.
In the first half of 2019, this item, which amounted to EUR 13.6 million, mainly included income from the sale of the property in Sa Illetta, as well as income from transactions on debt positions and other contingent assets.
The provision for doubtful accounts amounted to EUR 3.4 million in the first half of 2020, as compared to EUR 5.5 million in the first half of 2019.
Amortisation and depreciation for the period amounted to EUR 19.4 million, down by EUR 1.4 million as compared to EUR 20.8 million recorded in the first half of 2019.
In the first half of 2020, provisions for risks and charges amounted to EUR 49 thousand as compared to EUR 2.2 million recorded in the first half of 2019.
The operating result (EBIT), net of provisions, write-downs and restructuring costs, was a negative EUR 12.1 million, as compared to a negative EUR 8.1 million in the first half of 2019. The figure for the first half of 2019, as mentioned above, was affected by non-recurring items of EUR 10.7 million, while in the first half of 2020 non-recurring items were nil.
Net financial charges amounted to EUR 4.7 million as compared to EUR 7.4 million in the first half of 2019.
Financial income amounted to EUR 0.4 million and related to the release of the value of the put option, following the conversion of the Bond Loan realised in 2020. In the first half of 2019, financial income, amounting to EUR 12 million, was entirely related to non-recurring items, mainly consisting of the discounting income of the new senior Loan.
| Net Financial Position | Note | 30 June 2020 |
31 December 2019 |
|---|---|---|---|
| (EUR 000) | |||
| A. Cash and bank deposits | 19.8 | 11.7 | |
| B. Cash equivalents | |||
| C. Securities held for trading | |||
| D. Cash and cash equivalents (A) + (B) + (C) | 19.8 | 11.7 | |
| E. Current financial receivables | |||
| F. Non-current financial receivables | 0.9 | 0.9 | |
| G. Current bank payables | 0.0 | 0.1 | |
| H. Current portion of bonds issued | (1) | 0.0 | 5.2 |
| I. Current part of long-term loans | (2) | 67.3 | 0.2 |
| J. Other current financial payables | (3) | 7.2 | 6.8 |
| K. Current financial indebtedness (G) + (H) + (I) + (J) | 74.5 | 12.5 | |
| L. Net current financial indebtedness (K)-(D)-(E)-(F) | 53.8 | (0.1) | |
| M. Non-current bank loans | (4) | 3.5 | 67.9 |
| N. Bonds issued | |||
| O. Other non-current financial payables | (5) | 16.8 | 19.1 |
| P. Non-current financial indebtedness (M)+(N)+(O) | 20.3 | 87.0 | |
| Q. Net financial indebtedness (L)+(P) | 74.2 | 87.0 |
Notes:
The Group's Net Loss amounted to EUR 16.4 million, as compared to the figure for the first half of 2019, a negative EUR 3.7 million. The worsening of the period, equal to EUR 12.7 million, is due to the combined effect of:
As at 30 June 2020, the Tiscali Group had cash and cash equivalents of EUR 19.8 million (EUR 11.7 million as at 31 December 2019), while its net financial position at the same date is a negative EUR 74.2 million (EUR 87 million as at 31 December 2019).
With reference to the accounting classification of the Senior Loan, provided by Intesa SanPaolo and Banco BPM (hereinafter referred to as the "Lending Institutions"), it should be noted that, as a result of negotiations started in May, on 28 September 2020, an amending agreement was signed on the Senior Loan, which provides, inter alia, that the financial covenants are not subject to verification as at 30 June 2020 (hereinafter referred to as the "Amendment Agreement"). Therefore, based on the provisions of IAS 1, since the Amendment Agreement was signed after the end of the first half of the year, the financial liability related to the Senior Loan was entered as a current liability.
| 30 June 2020 | 31 December 2019 | |
|---|---|---|
| (EUR mln) | ||
| Consolidated net financial debt | 74.2 | 87.0 |
| Non-current financial receivables Consolidated net financial debt prepared on the basis of |
0.9 | 0.9 |
| Consob communication No. DEM/6064293 dated 28 July 2006 |
75.0 | 87.8 |
The table reported above includes guarantees deposits under "Other cash and cash equivalents" and under "Non-current financial receivables". For the purpose of providing complete information, the indication of the reconciliation of the financial position above with the financial position prepared in accordance with CONSOB communication No. DEM/6064293 dated 28 July 2006.
However, it is reiterated that, at the date of publication of this report, thanks to the provisions included in the Amendment Agreement, no cause of default had occurred with respect to 30 June 2020 and that, therefore, at the date of publication of this report, the Senior Loan is a non-current financial liability. Thus, as provided in the Senior Loan Agreement and as supplemented by the Amendment Agreement, at the date of this report the Senior Loan shall be repaid at the due date starting in 2022 and with a deadline for full repayment in 2024.
In addition, it should be noted that it was agreed with the Lending Institutions to update the Tiscali Group Business Plan to reflect the changed economic environment. This new Business Plan will be
subject to the assessment and in-depth analysis — also with the possible support of third parties of the banks, also in order to verify its consistency with the provisions of the loan agreement.
Significant events during the first half of 2020 follow:
On 30 January 2020, the Board of Directors and the Bondholders 'Meeting, the latter meeting held in full, resolved to change the maturity of the Tiscali Conv 2019 - 2020 convertible bond issue, extending it from 31 January 2019 to 30 June 2020.
On 31 January 2020, the subsidiaries Veesible S.r.l. and Aria S.r.l. were merged by incorporation into Tiscali Italia Spa.
Please refer to the paragraph "Assessment of the business as an ongoing concern" for further considerations on the matter.
Please refer to the concerning Press Release.
Please refer to the concerning Press Release.
On 23 June 2020, a total of 26 bonds referred to in the Tiscali Conv. 2019-2020 bond issue was converted by ICT Holding Ltd and 268,317,853 shares with no par value were issued with the same characteristics as those outstanding, subscribed and paid for an amount of EUR 2,600,000. On June 30, 2020, a total of 27 bonds referred to in the Tiscali Conv. 2019-2020 bond issue were
converted by ICT Holding Ltd. On 15 July 2020, 284,210,526 unlisted shares without par value with the same characteristics as those in circulation were converted, subscribed and paid for an
amount of EUR 2,700,000. These unlisted shares were subsequently admitted to listing in July and September.
On 27 August 2020, the Company signed a Memorandum of Understanding with TIM concerning the definition of a strategic partnership for the development of the Ultra-Broadband market through Tiscali's commercial participation in the FiberCop co-investment project, a newly established vehicle, in which the transfer of TIM's secondary network, the participation of the KKR Infrastructure fund, and the existing activities in FlashFiber, the joint-venture between TIM and Fastweb, are foreseen.
This new agreement will bring about a decisive transformation for Tiscali, which will tend to focus exclusively on Fibre services, positioning itself, the first in Italy, as Smart Telco and Digital Service Operator, focused on the provision of digital services and applications on optical and 5G technology.
For the Company, the advantages of this strategic change are extremely positive and significant:
In the assumption of the stipulation of binding agreements, some economic effects will take effect in the last quarter of 2020; therefore, it will be necessary to update the Business Plan to reflect the new hypotheses deriving from the above-described agreements.
In September, Tiscali signed two main football sponsorship contracts:
As part of the risk management operations carried out by the Directors, they carried out a careful assessment of the situation and, despite the uncertainty inherent in the case, resulting primarily from the lack of knowledge of the COVID-19 virus within the scientific community, they highlighted, in the current scenario, the possible repercussions related to the spread of the COVID-19 and the measures taken by governments to slow down its spread
In particular, the impacts on the Group, which occurred during the first half of 2020 and assessed by management, although difficult to quantify in the medium-to-long term, can be classified as:
The Directors analysed these possible effects and prepared a management and response document concerning these risks. Although they have prepared these plans with extreme diligence, the above-mentioned effects may not be mitigated, or only partially mitigated, by the actions of the Directors since the multiple hypotheses considered are not under their control.
The Directors, in this 2020 Half-Year Consolidated Financial Report as at 30 June 2020, with regard to the recurrence of the assumption of going concern and the application of the accounting principles of a company in operation, point out that the Group:
Recorded a negative consolidated operating result of EUR 16.4 million, which, although showing a worsening in absolute value as compared to the result of the first half of 2019, showed an improvement of EUR 10 million as compared to the result adjusted for the nonrecurring effects related to that period;
Recorded a consolidated EBITDA of EUR 7.3 million, an improvement by EUR 5.2 million as compared to the consolidated EBITDA recorded as at 30 June 2019 adjusted for the nonrecurring effects recorded in that period;
In this situation, the management reiterates that the achievement of a medium- and long-term equity, economic and financial equilibrium of the Group is in general always subject to i) the achievement of the results expected in the 2020-2022 Business Plan, which foresees the achievement of economic equilibrium in 2021 and ii) the realisation of the forecasts and assumptions contained therein in a market context characterised by strong competitive pressure, a macroeconomic context of difficulty linked to recent events linked to the diffusion in Italy of the COVID-19 pandemic, as well as iii) the Group's ability and possibility to raise the financial and equity resources necessary to pursue the 2020-2022 Business Plan.
In the face of these uncertainties, the Directors point out that the Group:
Furthermore, the Directors have drawn up a cash plan for a 12-month period from the date of approval of this document, which also takes into account the financial effects of obtaining extraordinary finance. On the basis of this cash flow plan, the Group, assuming compliance with the 2020-2022 Business Plan — for which the expected results are substantially in line with the current ones — and assuming that it obtains further extraordinary finance —for which there are some ongoing negotiations which are expected to be concluded by early 2021 — would be able to
meet its obligations while maintaining a level of past due payment substantially in line with the current one.
The Directors, therefore, think that the actions undertaken in the first half of 2020 allow the Group and the Company to continue along the virtuous path undertaken and are such as to suggest that — even in the presence of the aforementioned situations of uncertainty about the implementation of the 2020-2022 Business Plan over the next twelve months in the above-mentioned context, and about obtaining the extraordinary financial resources, linked to the existence of uncontrollable exogenous variables which may cause results to be worse than those forecast — the short-term financial and equity balance and the going concern connected with it is not at risk.
It is therefore on this basis that the Directors have a reasonable expectation that the Company will continue as a going concern over the next 12 months and that the Group will be able to use the accounting principles of a going concern in the preparation of this Report.
This determination is, of course, the result of a subjective opinion, which compared the degree of probability of their occurrence with the opposite situation to the events listed above.
It should be stressed that the prognostic judgement underlying the Board of Directors' determination could be contradicted by further developments. Precisely because it is aware of the intrinsic limits of its determination, the Board of Directors will maintain constant monitoring of the evolution of the factors taken into consideration (as well as of any further circumstances that may acquire importance), so that it can promptly take the necessary measures.
Consistent with the above, and in line with the objectives of the Business Plan, in the coming months the Group's commitment will be focused on the full implementation of the plan itself, with particular focus on:
Co-optation of a member of the Board of Directors and integration of the Appointments and Remuneration Committee
The Board of Directors of Tiscali also unanimously resolved today, after consulting the Appointments Committee, to co-opt Ms Cristiana Procopio and to appoint her as a member of the Appointments and Remuneration Committee. Ms Procopio does not hold any Tiscali shares. The co-optation follows the resignation of Director Sara Polatti, whom the Company thanks for the activities carried out in recent months in the Board and in the Appointments Committee.
Press Office Ilenia Loi +39 07046011 [email protected]
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