Buongiorno SpA
Buongiorno SpA
Half-Year Report as of June 30, 2008
Page 1
Half-Year Report as of June 30, 2008
Global Reports LLC
Buongiorno SpA
General Contents
COMPANY BOARDS ................................................................................................................................................................3
ECONOMIC AND FINANCIAL HIGHLIGHTS OF THE BUONGIORNO GROUP .....................................................................4
STOCK PERFORMANCE AND CAPITALIZATION ..................................................................................................................5
1.
DIRECTORS' REPORT ON OPERATIONS ....................................................................................................................6
1.1
The Group at June 30, 2008 and Related Developments .......................................................................................................................... 6
1.2
Buongiorno’s Business............................................................................................................................................................................................... 8
1.3
Market Trend and Group Performance in the First Half of 2007 ........................................................................................................... 9
1.4
Report on Operations of the Buongiorno Group .......................................................................................................................................... 10
1.4.1
Profit and Loss Account Items for the First Half of 2008 ......................................................................................................................... 10
1.4.2
Profit and Loss Figures for the Second Quarter of 2008 .......................................................................................................................... 16
1.4.3
Investment Operations ................................................................................................................................................................................................... 18
1.4.4
Financial Operations......................................................................................................................................................................................................... 19
1.5
Financial Risk Management.................................................................................................................................................................................. 22
1.6
Transactions With Associates ............................................................................................................................................................................ 23
1.7
Foreseeable Evolution.............................................................................................................................................................................................. 24
1.8
Human Resources..................................................................................................................................................................................................... 24
1.9
Technological Innovation ........................................................................................................................................................................................ 25
1.10
Main Corporate Events in the Half-Year.......................................................................................................................................................... 26
1.11
Atypical and Unusual Transactions ................................................................................................................................................................... 27
1.12
Events Subsequent to June 30, 2008 ............................................................................................................................................................. 27
1.13
Main Shareholders ................................................................................................................................................................................................... 28
1.14
Report on the Stock Option Plan ........................................................................................................................................................................ 29
1.15
Treasury Stock ........................................................................................................................................................................................................... 30
2.
ACCOUNTING STATEMENTS...................................................................................................................................................................................... 31
2.1
Consolidated Balance Sheet of the Buongiorno Group as of June 30, 2008 .................................................................................. 31
2.2
Consolidated Profit and Loss Account of the Buongiorno Group as of June 30, 2008 (First Half 2008) .......................... 32
2.3
Consolidated Profit and Loss Account of the Buongiorno Group as of June 30, 2008 (Second Quarter 2008) .................. 32
2.4
Statement of Changes in Equity of the Buongiorno Group as of June 30, 2008........................................................................... 34
2.5
Consolidated Cash Flow Statement of the Buongiorno Group – First Half 2008.......................................................................... 35
3.
3.1
4.
NOTES TO THE CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS................................................................................................ 36
NOTES TO THE MAIN ITEMS................................................................................................................................................................................ 37
COMPANY DATA AND INFORMATION FOR SHAREHOLDERS .................................................................................................................... 51
Half-Year Report as of June 30, 2008
Global Reports LLC
Page 2
Buongiorno SpA
Company Boards
Board of Directors
Mauro Del Rio
Sant'Ilario d'Enza (Reggio Emilia) - Italy, 02/20/1964
Andrea Casalini
Parma – Italy, 05/02/1962
Holger Van Den Heuvel
Stuttgart – Germany, 11/15/1953
Riccardo Lia
La Spezia – Italy, 02/03/1965
Nevid Nikravan
Istanbul — Turkey, 04/30/1968
Wayne Pitout
Ladysmith - South Africa, 07/22/1961
Giorgio Ricchebuono
Savona – Italy, 06/10/1946
Anna Gatti
Pavia – Italy, 01/30/1972
Giovanni Massera
Parma – Italy, 04/22/1961
Anna Puccio
Udine – Italy, 03/10/1964
Felipe Fernandez Atela
Mexico City - Mexico, 03/01/1956
Chairman
Chief Executive Officer
Director
Director
Director
Director
Director
Independent Director
Independent Director
Independent Director
Independent Director
The current Board of Directors was appointed by the Shareholders’ Meeting held on May 2, 2007, except
for Directors Wayne Pitout and Giorgio Ricchebuono, who were appointed by the Shareholders’ Meeting
held on May 5, 2008. According to the one-tier system of governance adopted by Buongiorno SpA
(hereinafter “Buongiorno”, “B!” or “the Company”), control of operations is performed by a Supervisory
Committee within the Board of Directors comprised solely of independent members of the Board:
Giovanni Massera (Chairman), Anna Puccio and Felipe Fernandez Atela.
Independent Auditors
PricewaterhouseCoopers SpA
Executive in Charge of the Company's financial reporting
Carlo Frigato
Pursuant to Art. 154-bis, paragraph 2 of Legislative Decree 58 dated February 24, 1998, the Executive
in charge of the Company’s financial reports was appointed by the Board of Directors during the meeting
held on October 22, 2007.
Half-Year Report as of June 30, 2008
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Buongiorno SpA
Economic and Financial Highlights of the Buongiorno Group
The following table contains the consolidated economic and financial[1], balance sheet and operating
highlights of Buongiorno and its direct and indirect subsidiaries (hereinafter the “Buongiorno Group” or
the “Group”).
In the interest of permitting an accurate interpretation of these economic and financial highlights, it should
be noted that on December 28, 2007 Buongiorno SpA closed the acquisition of iTouch Ventures Limited
and its direct and indirect subsidiaries (hereinafter “iTouch”), which significantly modified the Group’s size.
In accordance with applicable accounting standards, the effects of the acquisition of iTouch have been
recognized from December 31, 2007. Consequently, the figures as of June 30, 2007 presented in this
Report for comparative purposes do not include the effects of this significant acquisition. The comparative
figures presented in this document refer to the Half-Year Report as of June 30, 2007 approved by the
Board of Directors on September 10, 2007, the 2007 Financial Statements approved by the
Shareholders’ Meeting on May 5, 2008, and the Quarterly Report as of June 30, 2007 approved by the
Board of Directors on August 3, 2007.
It should be noted that the balance sheet figures from the 2007 Financial Statements include the effects
of the acquisition of iTouch, whereas the economic figures refer to the Group’s activities prior to the
acquisition.
(in thousands of Euro)
H1 2008
Economic and Financial Highlights
Sales of Services
Value of Production
Added Value (Val. of prod. - Mat., cons. and services)
Industrial Added Value (IAV)
Normalized Gross Operating Margin
Normalized Operating Profit (Loss)
Financial Operations
Net non-recurrent earnings / (charges)
Profit (Loss) before Taxes
Profit (Loss) before Minority Interests
Balance Sheet highlights
Net invested capital
Net current assets
Capital and reserves
Net financial position
Earning ratios
Added value/Revenues
Gross Operating Margin/Revenues
Gross Operating Margin/Net invested capital
Financial Charges/Gross Operating Margin
Operating Result/Revenues (ROS)
Operating Result/Net invested capital (ROI)
Profit (Loss) before Minority Interests/Capital and reserve
Cost of staff
Staff (average of the period)
Annual Revenues/Average staff
H1 2007
Var. %
158.180
159.209
43.366
57.138
16.278
10.608
(4.380)
(1.878)
4.350
2.392
85.777
86.823
26.494
34.005
8.753
6.094
(1.044)
0
5.051
4.968
84%
83%
64%
68%
86%
74%
320%
218.600
(9.112)
145.574
73.026
88.318
(513)
104.995
16.677
148%
1.676%
39%
338%
27,4%
10,3%
7,4%
(26,9%)
6,7%
4,9%
1,6%
30,9%
10,2%
9,9%
(11,9%)
7,1%
6,9%
4,7%
(11%)
1%
(25%)
126%
(6%)
(30%)
(65%)
1.090
290
691
248
58%
17%
(14%)
(52%)
[1] The value of “Financing activities” is the sum of net finance income/expense and adjustments to financial assets. The “finance
expense” indicated in the ratio “Finance Income/Gross Operating Margin” includes expense/income relating to currency overlay.
Half-Year Report as of June 30, 2008
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Buongiorno SpA
Stock Performance and Capitalization
Sector
Market Segment
Ticker Symbol
Reuters Code
Bloomberg Code
Isin code
Specialist
No. of shares at June 30, 2008
Par Value
Price at June 30, 2008
Capitalization at June 30, 2008
Average Daily Volume
Media
STAR
BNG
BNI.MI
BNG IM
IT0001488607
Intermonte SIM SpA
106,353,675
Euro 0.26 each
Euro 1.4
Euro 148.9 mn
451,777
Buongiorno SpA is listed in the MTAX market, in the STAR segment of Borsa Italiana SpA BNG is a part of
the All STARS index.
During the first half of the year, Intermonte SIM SpA served as Specialist for Buongiorno. In terms of
coverage, the company’s stock was regularly analyzed by brokers including Banca IMI, Banca Akros,
Banca Aletti, Dresdner Kleinwort and Goldman Sachs.
As of June 30, 2008 the shareholders of Buongiorno SpA, in addition to Mauro Del Rio and Hoger Van
Den Huevel, include the investors Mitsui & Co Ltd (Japan), Goldman Sachs And Co., and Oak Investment
Partners. The free-float percentage of the Company’s stock is 57.3%.
During the first six months of 2008, the value of BNG stock fell from Euro 2.05 as of January 2, 2008 to
Euro 1.4 as of June 30, 2008. The average share price for the half-year was Euro 1.8, with a peak of Euro
2.1 recorded on February 14, 2008.
An average of 452 thousand shares was traded each day, down from 720 thousand in the first half of
2007.
Half-Year Report as of June 30, 2008
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Buongiorno SpA
1. Directors' Report on Operations
The Half-Year Report of the Buongiorno Group as of June 30, 2008 (hereinafter the “Half-Year Report”)
was prepared in accordance with article 154-ter of Legislative Decree no. 58/1998 and drafted in
compliance with applicable international accounting standards recognized in the European Community
pursuant to (EC) Regulation no.1606/2002 of the European Parliament and Council dated July 19,
2002, and, in particular, IAS 34 – Interim Financial Reporting, as well as the provisions issued in
implementation of article 9 of Legislative Decree no. 38/2005.
Consequently, this Half-Year Report refers to the consolidated situation of Buongiorno SpA and its direct
and indirect subsidiaries as of June 30, 2008, for the second quarter and first half of 2008, and includes
the condensed half-yearly financial statements, the interim report on operations, and the certification
required by article 154-bis, paragraph 5.
1.1
The Group at June 30, 2008 and Related Developments
On January 1, 2008 the consolidation area of the Buongiorno Group changed significantly with respect to
the situation as of June 30, 2007, primarily due to the acquisition of iTouch. The following table shows a
summary of the Buongiorno Group’s structure as of June 30, 2008. A list of the Group’s equity
investments is provided in Annex D.
Half-Year Report as of June 30, 2008
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Buongiorno SpA
The following mergers and acquisitions were completed in the period ended June 30, 2008:
i.
On January 8, 2008:
a) the subsidiary iTouch Spain Holdings SL (Spain) acquired from minority shareholders 25% of
the shares in iTouch Movilisto France SAS, gaining 100% control;
b) the subsidiary iTouch Spain Holdings SL (Spain) acquired from minority shareholders 30% of
the shares in Grupo iTouch Movilisto R srl (Romania), gaining 100% control;
c) the subsidiary iTouch Spain Holdings SL (Spain) acquired from minority shareholders 25% of
the shares in Grupo iTouch Movilisto Maroc Srl, gaining 100% control.
ii.
On January 31, 2008, the subsidiary iTouch South Africa Limited acquired the B2C business line
of Africell Limited (South Africa), including the Teljoy brand. As per the agreement, in addition to
the cash payment, the Group transferred 12.5% of the capital in iTouch South Africa Limited.
iii.
On February 5, 2008, subsidiary iTouch Spain Holding s.l. acquired 100% of the company
Producciones y Promociones Especiales de TV, s.l. and, through this, 100% control of Llama
Televisión, S.L. in Spain and Xama TV in Portugal. The Buongiorno Group already owned a minority
interest in Llama Televisión S.L. and Xama TV Televisao Interactiva LdA (Portugal) through Call TV
Holding Limited. These companies specialize in the creation, production and management of
interactive formats, and manage directly programs broadcast by Antenna 3 in Spain and TVI in
Portugal, respectively.
iv.
On February 25, 2008, the subsidiary iTouch Spain Holdings SL (Spain) acquired from minority
shareholders 15% of the shares in Grupo iTouch Movilisto México SA de CV, gaining 100%
control.
v.
On March 3, 2008, the subsidiary iTouch Spain Holdings SL (Spain) acquired from minority
shareholders 13% of the shares in Mobile Fun Sistemas de Informatica Ltda, gaining 100%
control.
vi.
Lastly, on May 13, 2008, the subsidiary Buongiorno Mylert (Spain) acquired 20% of Buongiorno
My Alert Servicios de Celulares Ltda (Brazil) for a total investment of approximately USD 1,200
thousand.
Half-Year Report as of June 30, 2008
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Buongiorno SpA
1.2
Buongiorno’s Business
Buongiorno is an Italian independent multinational, a leader in the digital mobile entertainment market on
an international level. Buongiorno works with the major telephone and Internet service providers and
media companies in 53 countries, designing and distributing a broad range of mobile digital content and
interactive applications: music, games, video, wallpapers, ringtones, user-generated services, chat, TV
voting, quizzes, and advertising. Buongiorno is present in all the major European countries, the United
States, Australia, and several countries in Central and South America, the Middle East, and Africa.
Through a joint-venture with Mitsui, it also operates in Russia, India, and Eastern Asia. In 2007,
Buongiorno/iTouch served more than 100 million customers directly and indirectly. The size of its
business, the extensiveness of its content and services portfolio and the geographical coverage provided
by its team of more than 1000 professionals have made Buongiorno the leader in digital mobile
entertainment.
Buongiorno operates with two business lines: value-added services for mobile and fixed-line telephone
users (Consumer Services – VAS) and relationship marketing services for businesses (Marketing
Services).
Valued added consumer services are sold directly under the Blinko brand and the Movilisto brand (direct
or B2C business line) and under the “white label” in partnership with the main telephone service providers
(carrier solutions business line or B2O), or with media groups (interactive TV or B2B business line).
The following chart provides an overview of the role played by Buongiorno on the market of mobile value
added services.
Buongiorno’s other business area is Marketing Services, responsible for multi-channel marketing
projects aimed at optimizing customer acquisition, retention, and value. In detail, the Group offers digital
advertising campaigns and digital relationship marketing projects based on new technologies, both the
Internet and mobile phones, supporting its customers in all phases of the project: conception and design
through consultancy and creativity; execution and delivery through the proprietary multi-channel
technology platform, strong technical skills and a dedicated experienced team; and tracking and
monitoring through sophisticated reporting tools.
Half-Year Report as of June 30, 2008
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Buongiorno SpA
1.3
Market Trend and Group Performance in the First Half of 2007
The global digital mobile entertainment market has developed rapidly in this decade. The market’s total
value is estimated to reach Euro 22 billion in 2008. Researchers and analysts concur in projecting
further growth over the coming years, albeit at a slower rate than in previous years and with significant
differences in growth rates between various countries and segments.
The market is going through a transition stage from demand mainly concentrated in mobile customization
services and content, such as ringtones and wallpaper (mobile content 1.0, or MC 1.0) to more
sophisticated demand revolving around music, videos, and social networking services (mobile content 2.0,
or MC 2.0). In Europe, in particular, two market events occurred in the first half of 2008 that are
contributing to an acceleration of this change: the introduction of the iPhone in various European markets
and the drive by carriers to disseminate fixed data rates aimed at facilitating the development of Mobile
Internet services. The new strategy employed by carriers is therefore more focused on Mobile Internet
and iPhone offers than on the promotion of Premium MC 1.0, resulting in a negative impact on large
content provision contracts.
During this transition, companies that, like Buongiorno, have achieved a significant position in MC 1.0 type
services are facing the challenge of launching new services, while at the same time maintaining stable
revenue levels from more traditional services/segments, which still represent the majority of their
business.
Consumer demand for the services offered by Buongiorno remains high. However, due in part to the
global macroeconomic situation, the frequency of situations in which the end consumer does not have
sufficient telephone credit to pay for the requested services, resulting in a decline in Buongiorno's effective
revenue, has increased.
During the first half of the year, Buongiorno achieved substantial revenue stability primarily through the
launch and growth of MC 1.0 services in developing countries and careful management of its product
portfolio. Moreover, these ongoing changes are occurring more rapidly than was expected at the
beginning of the year. Consequently, Buongiorno was forced to revise its year-end forecasts downward
and react to the less favorable situation by identifying and implementing a series of tactical and strategic
initiatives aimed at facing the new challenges posed by the economy and the market.
The primary initiatives launched in the first half of 2008, the results of which will begin to be visible in the
second half of the year, include:
¾
Increased selection of business opportunities with focalized marketing expenses aimed at
supporting the growth of B2C in countries that offer higher return on investment and selective
cuts to marginal or unprofitable contracts in the B2B and B2O segments. This selection was
made possible by the new asset portfolio and business line management system, which improves
the monitoring of business lines and product performances, permitting the identification of the
services and contracts with the smallest margins.
¾
Complete renovation of the marketing approach in the United States through the appointment of
a new management team, the restructuring of the B2C business, and the expansion of
collaboration with Sprint and Verizon.
¾ Acceleration of the integration plan for iTouch, resulting in the achievement of important cost and
operating efficiency synergies.
¾
Significant investments in Mobile Content 2.0, including a 50% increase in dedicated personnel,
to develop a Mobile Social Networking solution, scheduled for launch in the third quarter.
Half-Year Report as of June 30, 2008
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Page 9
Buongiorno SpA
1.4
Report on Operations of the Buongiorno Group
Foreword
In the interest of permitting an accurate interpretation of economic and financial data, it should be noted
that Buongiorno closed its acquisition of iTouch on December 28, 2007. As a consequence, given that
insignificance of the pro-quota economic data arising from the acquisition during the half-year, the
transaction was recognized from December 31, 2007. The profit and loss, balance sheet and cash flow
figures as of June 30, 2007 contained in this Half-Year Report for comparative purposes exclude the
effects of the acquisition of iTouch and its subsidiaries.
The economic data for the Second Quarter of 2008 and the First Half of 2008 have been analyzed by
using a normalized Gross Operating Margin figure that excludes the non-recurring expenses recognized
due to the Group’s restructuring activities.
1.4.1
Profit and Loss Account Items for the First Half of 2008
The following table shows Buongiorno’s Profit and Loss Account as of June 30, 2008 and 2007. It should
be noted that the comparison between the two half-years is significantly influenced by the effects of the
acquisition of iTouch and the ensuing change in the consolidation area. As a consequence, when
assessing the profit and loss figures for the period, especially in relation to the scale of operations and the
associated costs, depreciation and amortization, and financial expenses, the reader must take account of
said change in the consolidation area.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
(in thousands of Euro)
H1 2008
H1 2007
Variance
SALES OF GOODS AND SERVICES
158.180
85.777
72.403
1.029
1.046
(17)
159.209
86.823
72.386
(115.843)
(60.328)
(55.515)
(27.088)
(17.742)
(9.346)
NORMALIZED GROSS OPERATING MARGIN
16.278
8.753
7.525
Amortization, depreciation and write-downs
(4.299)
(1.928)
(2.371)
(485)
Other income and increase of fixed assets for internal works
TOTAL VALUE OF PRODUCTION
Services, use of third-party assets, consumables and goods
Personnel costs
Allowance for bad debts and other provisions
(510)
(25)
Other operating costs
(861)
(705)
(156)
NORMALIZED OPERATING PROFIT / (LOSS)
10.608
6.095
4.513
Net financial earnings / (charges)
(3.381)
(4.425)
(1.044)
Value adjustments on financial assets
(4)
0
(4)
Earnings / (charges) from assets held for sale
49
0
49
(1.878)
0
(1.878)
4.350
5.051
(701)
(1.866)
(928)
(938)
(92)
845
(937)
2.392
4.968
(2.576)
Net non-recurrent earnings / (charges)
PROFIT (LOSS) BEFORE TAXATION
Current income taxes
Deferred income taxes
CONSOLIDATED PROFIT (LOSS) FOR THE PERIOD
Profit (loss) for the period attributable to Minority Interests
(9)
(56)
47
GROUP CONSOLIDATED PROFIT (LOSS) FOR THE PERIOD
Basic earnings per share (Basic EPS)
2.401
0,0225
5.024
0,0567
(2.623)
(0,0342)
Diluted earnings per share (Diluted EPS)
0,0217
0,0542
(0,0325)
The consolidated Value of Production for the First Half of 2008 amounted to Euro 159.2 million (Euro
86.8 million at June 30, 2007), with an 83.4% increase. Sales and service revenues generated by the
core business amounted to Euro 158.2 million (Euro 85.8 million at June 30, 2007), up by 84.3%.
Indicatively, the value of production in the First Half of 2008 was up by 1.1% on the aggregate pro-forma
figure for the Buongiorno iTouch Group in the First Half of 2007 (Euro 156.5 million). Normalized gross
operating margin was down on the 2007 pro-forma figure, which stood at Euro 17.4 million.
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Buongiorno SpA
Breakdown of Revenues by Geographical Area
The breakdown of revenues for the first half of 2008 is in accordance with IAS 14 Segment Reporting,
which requires reporting by business segments and geographic segments. To this end, we inform that our
primary segment refers to the breakdown of revenues and gross operating margin by geographical area;
the secondary segment refers to the breakdown of revenues by business line.
The following tables show a breakdown of the half-yearly results by geographical area, still the primary
segment by which to analyze the Group’s results. Following on the acquisitions of iTouch and the other
companies included in the consolidation area during 2007, Buongiorno’s operations were reorganized
into seven geographical macro areas:
−
−
−
−
−
−
−
The Italy & Mediterranean area includes Group businesses in Italy, Greece and Turkey;
France includes companies operating in France and North Africa;
The Iberian Peninsula (hereinafter “Iberia”) includes Spain and Portugal;
the German Area (hereafter “GSA”) includes Germany, Switzerland, Austria, and eastern
European countries;
South America (“Latam”) mainly includes Mexico, Argentina and Brazil and other minor countries
in the area;
The UK International area includes operations in the UK, Northern Europe (the Netherlands, and
Scandinavian countries) and also in South Africa, Australia and New Zealand; and
North America, including the US and Canada.
Annex B contains a table reconciling the revenue figures for the first half of 2008 with the new
organizational structure.
BREAKDOWN OF REVENUES BY GEOGRAPHICAL AREA
(in thousands of Euro)
H1 2008
H1 2007
VARIANCE
Var. %
ITALY & MED
21.003
18.534
2.469
13,3%
FRANCE
11.946
4.837
7.109
147,0%
IBERIA
54.994
27.610
27.384
99,2%
GERMANY, SWITZERLAND AND AUSTRIA (GSA)
5.662
2.521
3.141
124,6%
LATIN AMERICA (LATAM)
9.258
1.473
7.785
528,5%
UK & INTERNATIONAL
45.144
11.430
33.714
295,0%
NORTH AMERICA
10.025
19.253
-9.228
(47,9%)
OTHER
TOTAL REVENUES
148
119
29
24,5%
158.180
85.777
72.403
84,4%
In 2008, Buongiorno significantly expanded its presence in markets already served, with the exception of
North America, and it also expanded in markets previously not covered, the most important of which are
South Africa, Australia, and Argentina. Said expansion is primarily the result of the extension of the
consolidation area to all geographical areas, with the exception of the Mediterranean, where iTouch did
not have a significant presence.
As regards individual markets, in the first half of 2008, turnover in the “Italy & Mediterranean” market
was up 13.3% (Euro 21.0 million in the first half of 2008 compared to Euro 18.5 million in the first half of
2007), mainly attributable to innovative operations and services provided to telephone service providers in
Italy and Turkey, as well as the business expansion of the Marketing Services division in Italy. We reiterate
that on these markets the acquisitions made did not have major effects.
Revenues in France rose from Euro 4.8 million in the first half of 2007 to Euro 11.9 million in 2008,
primarily due to the effect of the consolidation of the operations of Mobivillage SA, a French company
belonging to the iTouch Group that specializes in the B2O segment, and Movilisto France, which
specializes in the B2C segment.
Revenues in the Iberia region increased 99.2% to Euro 55.0 million at June 30, 2008 from Euro 27.6
Half-Year Report as of June 30, 2008
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Buongiorno SpA
million in the same period of the previous year, mainly attributable to the consolidation of the B2C
business developed by the Movilisto companies in Spain and Portugal and the B2B businesses of the
Llama TV group of companies, interactive TV services in particular.
The GSA area (Germany, Switzerland and Austria) increased its turnover from Euro 2.5 million in the first
half 2007 to Euro 5.7 million at June 30, 2008, mainly attributable to SMS.at GmbH, an Austrian
company active in the B2C sector acquired through the iTouch transaction.
In South America (LATAM), turnover jumped from Euro 1.5 million in the first half 2007 to Euro 9.3
million, mainly attributable to the acquisition of the ByCycle group in Argentina, consolidated as of October
1, 2007, with turnover of approximately Euro 5.1 million, and the integration of the operations owned by
the iTouch group in Brazil and Mexico.
The change in the consolidation area in the UK International area was the primary reason behind the
increase in revenue on the first half of 2007. Moreover, effective from January 1, 2008, Buongiorno
expanded its markets of operation through the consolidation of iTouch’s B2O activities in Australia (Euro
12.9 million) and in the B2C segment in South Africa, where the Group now operates through iTouch. It
also expanded into the interactive TV business segment through the acquisition of Ostrich Media.
Furthermore, we point to the expansion of the Marketing Services business, also through the acquisitions
made in the first half 2007.
Lastly, the decline in overall revenue earned in North America in the first half of 2008 compared to the
first half of 2007 is attributable to the considerable fall in B2C operations undertaken by the subsidiary
Buongiorno USA, which was only partially offset by the strong performance of B2O and B2B activities,
primarily operated by Rocket Mobile Inc.
Breakdown of Revenues by Business Line
The following table shows an analysis of the results for the first half of the year by business line. Due to the
reorganization, the business lines have been partially redefined. The profit and loss figures for the first half
of 2007 have been restated to permit an accurate comparison. In particular, it should be noted that the
revenue earned by the subsidiary Rocket Mobile Inc. from January 1, 2008 has been reclassified among
Consumer Services inasmuch as it is attributable to the B2O channel. Revenues for the first half of 2007
restated as Consumer Services, as shown in the table, was Euro 3.4 million.
BREAKDOWN OF REVENUES BY BUSINESS LINE
(in thousands of Euro)
CONSUMER SERVICES
MARKETING SERVICES
TOTAL REVENUES
H1 2008
149.765
8.415
158.180
H1 2007
79.860
5.917
85.777
VARIANCE
69.905
2.498
72.403
In terms of business lines, the largest share of core-business revenues was earned by Consumer
Services, with Group revenues for the segment reaching Euro 149.8 million (95% of the Group total) in
the period. The share of the total accounted for by revenues from Marketing Services amounted to Euro
8.4 million, or 5%. Despite the approximately Euro 2.5 million increase in Marketing Services revenue in
absolute terms, Consumer Services increased from 92% to 94% of the total, primarily due to the effect of
the acquisition of iTouch, whose operations are focused in this segment.
The Marketing Services business reported Euro 8.4 million in revenue in the first half of the year (Euro 5.9
million in the first half of 2007), marking an increase of 42%. This increase was achieved in part due to
the development of commercial synergies between countries in the areas of mobile advertising and digital
relationship marketing projects with internationally renowned clients such as Subaru, Coca-Cola, Citibank,
L’Oreal, and P&G, in addition to effective strategic collaboration with telecommunications providers such
as Orange, Vodafone, and KPN. The company’s sales efforts and the strategic partnership with Mitsui
produced good results in terms of both networks with large customers and leading media agencies (Aegis
Group) as well as product innovations in areas such as mobile couponing and mobile advertising.
Other Revenues amounted to Euro 1.0 million in the first half of 2008, in line with the first half of 2007,
and refer primarily to the capitalization of internal technological research and development work on the
B!3A proprietary technology platform, including the creation of B!Wizard and the development of several
basic components of the architecture aimed at supporting the launch of Web 2.0 products.
Half-Year Report as of June 30, 2008
Global Reports LLC
Page 12
Var. %
88%
42%
84%
Buongiorno SpA
Industrial Added Value (IAV), calculated as core business revenues minus the variable cost of sales and
marketing expenses, was approximately Euro 58.2 million in the first half of 2008 (36.5 % on net
revenues) compared to Euro 34.0 million at June 30, 2007 (39.6 % on net revenues).
As regards operating costs, the main cost item for the Group was personnel costs. Personnel costs as a
percentage of sales decreased significantly compared to the First Half of 2007 (17.1% for the First Half
of 2008 vs. 20.6% at June 30, 2007) due to synergies developed following the acquisition of iTouch. In
absolute terms, personnel costs increased from Euro 17.7 million at June 30, 2007 to approximately
Euro 27 million in the first half 2008. This amount includes approximately Euro 1.1 million in nonmonetary costs serving the stock option plans (unchanged from June 30, 2007). The number of
employees decreased from 691 at June 30, 2007 (average) to 1,090 at the end of the reporting period.
In the First Half of 2008, costs for services and use of third-party assets were Euro 115.8 million, up
93.3% compared to Euro 60.3 million in the First Half of 2007. Costs for services stood at 73.2% of
revenue, up slightly on the first half of 2007 (70.3% as of June 30, 2007), primarily due to the effect of
marketing expenses incurred in relation to the launch of and supporting activities for B2C business in
emerging markets (Turkey, Brazil, Mexico, Argentina), as well as the different mix of services sold.
First Half 2008 closed with a normalized Gross Operating Margin (EBITDA) of approximately Euro 16.3
million, corresponding to 10.3% of revenues, compared to Euro 8.8 million in the same period of 2007
(10.2 % of net consolidated revenues).
Breakdown of Gross Operating Margin by Geographical Area
The following table provides a breakdown of normalized Gross Operating Margin (GOM) by geographical
area: Annex B contains a table reconciling the revenue figures for the first half of 2008 with the new
organizational structure.
GEOGRAPHICAL AREA
Italy & Med
France
Iberia
GSA
LATAM
UK &
International
North America
Other
Total
Total value of production
21.003
11.946
54.994
5.662
9.258
45.144
10.025
1.177
159.209
Total operative costs
(142.931)
(in thousands of Euro)
(16.252)
(9.423)
(44.956)
(4.652)
(8.586)
(38.940)
(10.480)
(9.643)
TOTAL GROSS OPERATING MARGIN AT 06.30.2008
4.751
2.523
10.038
1.010
672
6.204
(455)
(8.466)
16.277
Gross Operating Margin %
29,2%
15,5%
61,7%
6,2%
4,1%
38,1%
-2,8%
-52,0%
100,0%
TOTAL GROSS OPERATING MARGIN AT 06.30.2007
5.235
1.682
3.586
76
258
3.071
143
(5.298)
8.753
Gross Operating Margin %
59,8%
2,0%
4,2%
0,1%
0,3%
3,6%
0,2%
-6,2%
10,2%
In Italy and the Mediterranean, GOM fell from Euro 5.2 million in the first half of 2007 to Euro 4.8 million
as of June 30, 2008 due to greater advertising investments undertaken during the period, in Italy and
Turkey in particular, aimed at developing and supporting B2C activities in the area. In the French area,
GOM rose to Euro 2.5 million (Euro 1.7 million as of June 30, 2007), primarily due to B2C activities under
the Movilisto brand and the B2O contracts of Mobivillage. In the Iberian Peninsula, the Group achieved a
margin of Euro 10.0 million (Euro 6.5 million in the first half of 2007), marking an increase of 64%, due to
the inclusion of Movilisto in the consolidation area and the different mix of services offered in the area. In
the GSA region, margin increased from Euro 76 thousand to Euro 1,010 thousand due to the expansion
of the consolidation area and the contribution of the activities and services of the portal sms.at (Austria).
The Latin America area reported an increase in margin from Euro 258 thousand to Euro 672 thousand
at the end of the first half of 2008. The increase in the margin contributed by the UK International area
(Euro 6.2 million as of June 30, 2008 compared to Euro 3.1 million in the first half of 2007) derives
primarily from the expansion of the consolidation area, and, in particular, operations in South Africa and
Australia. The result in the United States area is still not material at the Group level but shows a
significant shift in the composition of margins, with B2C down and B2B and B2O up.
Half-Year Report as of June 30, 2008
Global Reports LLC
Page 13
Buongiorno SpA
Breakdown of GOM by Business Line
The following table provides a breakdown of GOM by business line.
BREAKDOWN OF GROSS OPERATING MARGIN BY BUSINESS LINE
(in thousands of Euro)
H1 2008
CONSUMER SERVICES
15.152
MARKETING SERVICES
1.125
TOTAL GROSS OPERATING MARGIN
16.277
H1 2007
8.453
300
8.753
VARIANCE
6.699
825
7.524
Var. %
79%
275%
86%
The Marketing Services business line reported a sharp increase in profitability (GOM +275%) due to the
increase in higher-margin activities, the contributions of the companies acquired in the first half of 2007,
and the simultaneous significant operating efficiency gains achieved by improving the creation and
management of projects through the rationalization of platforms and the sharing of the business unit’s
technical and operational resources.
Consumer Services posted GOM of Euro 15.2 million in absolute terms, representing approximately 93%
of the total (96% in the first half of 2007), whereas the Marketing Services division reported GOM of Euro
1.1 million, or 7% of the total (4% in the first half of 2007).
Operating profit for the First Half of 2008 amounted to approximately Euro 10.6 million, accounting for
6.7% of net revenues (Euro 6.1 million in 2007, accounting for 7.1% of net revenues for the First Half of
2007).
Depreciation and amortization increased from Euro 1.9 million in the First Half of 2007 to around Euro
4.3 million at June 30, 2008. Said increase is attributable to the expansion of the consolidation area. In
particular, Euro 1.4 million is associated with the amortization of trademarks and other intangible assets
recognized from June 30, 2008 subsequent to the measurement of the iTouch Group’s assets and
liabilities at their fair values. The valuation process concluded in the second quarter of 2008 and
therefore all accounting effects of the amortization were taken to the Profit and Loss Account with the
quarterly figures.
Other operating expenses amounted to Euro 861 thousand (Euro 705 thousand in the first half of
2007), showing very limited growth with respect to the Group’s new size.
The item non-recurring expenses refers to costs and expenses not covered by provisions considered
extraordinary and non-recurring that the Group incurred during the period in relation to the restructuring
activities contained in the Group’s reorganization plan enacted following the acquisition and integration of
iTouch. The following table shows the costs recognized in the Profit and Loss Account for the first half of
2008:
(in thousands of Euro)
06/30/2008
Redundancy costs
Data center and platform restructuring
Legal entities closing
Other restructuring costs
Total
766
902
162
48
1.878
Net interest expense amounted to approximately Euro 4.4 million for the period (Euro 1.0 million for the
First Half of 2007). The increase in financial charges was primarily due to the interest accrued on the
short-term loan issued by Banca IMI for the acquisition of iTouch, which represented approximately Euro 4
million of the total.
Pre-tax Profit came to approximately Euro 4.4 million in the reporting period (2.7% of net revenues),
down by approximately Euro 5.1 million on the first half of 2007 (5.8% of net revenues), primarily due to
depreciation and amortization, non-recurring restructuring expenses, and finance expenses.
Half-Year Report as of June 30, 2008
Global Reports LLC
Page 14
Buongiorno SpA
Current taxes were estimated on the basis of the profit and loss account figures of individual companies
and refer primarily to the effect of IRAP (regional production tax) in Italy and the income taxes of several
companies controlled by iTouch.
At the consolidated level, Profit for the First Half of 2008 amounted to approximately Euro 2.4 million
compared to Euro 5.0 million in the First Half of 2007. The Loss Attributable to Minority Interests for
the reporting period was approximately Euro 9 thousand; consequently, the Consolidated Profit
Attributable to the Group totaled Euro 2.4 million in the First Half of 2008.
EARNINGS PER SHARE
Basic earnings per share (Basic EPS)
Diluted earnings per share (Diluted EPS)
Average No. of shares
Average No. of shares + No. of options and bonds convertible into shares
Interest payable on the convertible bond
06/30/2008
(6 months)
0,0225
0,0217
106.353.675
111.085.675
21.990
06/30/2007
(6 months)
0,0560
0,0536
88.664.054
95.130.805
133.091
Basic
Basic EpS is calculated by dividing the net Group profit for the period by the average number of ordinary
shares in circulation during the period, namely 106,353,675 in the first half of 2008 (88,664,054 in the
First Half of 2007).
Diluted
Diluted EpS is calculated by dividing the Group profit for the period, gross of interests on the convertible
bond, by the average number of ordinary shares in circulation during the period plus the number of
options (or other instruments potentially convertible into ordinary shares) outstanding at the end of the
period, a total of 111,085,675 in the First Half of 2008 (95,130,805 in the First Half of 2007).
Half-Year Report as of June 30, 2008
Global Reports LLC
Page 15
Buongiorno SpA
1.4.2
Profit and Loss Figures for the Second Quarter of 2008
This Report includes the Profit and Loss Account for the second quarter of 2008, as Buongiorno has
decided not to publish the results of the second quarter of 2008 separately. It should be noted that the
comparison between the two half-years is significantly influenced by the effects of the acquisition of iTouch
and the ensuing change in the consolidation area. As a consequence, when assessing the profit and loss
figures for the period, especially in relation to the scale of operations and the associated costs,
depreciation and amortization, and financial expenses, the reader must take account of said change in the
consolidation perimeter.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
(in thousands of Euro)
Q2 2008
Q2 2007
Variance
79.135
43.343
35.792
509
623
(114)
79.644
43.966
35.678
Services, use of third-party assets, consumables and goods
(58.170)
(30.810)
(27.360)
Personnel costs
(13.433)
(9.054)
(4.379)
(1.025)
0
(1.025)
7.016
4.102
2.914
(2.947)
(1.017)
(1.930)
(513)
SALES OF GOODS AND SERVICES
Other income and increase of fixed assets for internal works
TOTAL VALUE OF PRODUCTION
Personnel and other non-recurrent costs
GROSS OPERATING MARGIN
Amortization, depreciation and write-downs
Allowance for bad debts and other provisions
(534)
(21)
Other operating costs
(468)
(499)
31
Other non-recurrent costs
(296)
0
(296)
2.771
2.565
206
(2.215)
(212)
(2.003)
OPERATING PROFIT / (LOSS)
Net financial earnings / (charges)
Value adjustments on financial assets
(2)
0
(2)
Earnings / (charges) from assets held for sale
24
0
24
(1.775)
PROFIT (LOSS) BEFORE TAXATION
578
2.353
(1.246)
(443)
(803)
(92)
835
(927)
(760)
2.745
(3.505)
31
(6)
37
GROUP CONSOLIDATED PROFIT (LOSS) FOR THE PERIOD
Basic earnings per share (Basic EPS)
(791)
(0,0071)
2.751
0,0306
(3.542)
(0,0377)
Diluted earnings per share (Diluted EPS)
(0,0068)
0,0290
(0,0358)
Current income taxes
Deferred income taxes
CONSOLIDATED PROFIT (LOSS) FOR THE PERIOD
Profit (loss) for the period attributable to Minority Interests
It should be noted that the net profit for the second quarter of 2008 is only partially indicative, inasmuch
as it was significantly affected by the amortization of the intangible assets that emerged from the
purchase price allocation of the iTouch goodwill. Due to the completion of the valuation and fair value
estimation procedures for said assets at the end of the second quarter, the effect of the above
amortization (approximately Euro 1.4 million) was recognized entirely in the second quarter. Moreover, an
accurate estimate of taxes was only undertaken at the end of the half-year, resulting in a greater impact
on the second half of 2008. Net of said effects and the increase in restructuring costs, business
performance and operating profit in the second quarter were essentially in line with the first quarter of
2008.
Half-Year Report as of June 30, 2008
Global Reports LLC
Page 16
Buongiorno SpA
CONSOLIDATED PROFIT AND LOSS ACCOUNT
(in thousands of Euro)
SALES OF GOODS AND SERVICES
Q1 2008
Q2 2008
Variance
79.045
79.135
(90)
520
509
11
(79)
Other income and increase of fixed assets for internal works
TOTAL VALUE OF PRODUCTION
79.565
79.644
Services, use of third-party assets, consumables and goods
(57.673)
(58.170)
497
Personnel costs
(13.655)
(13.433)
(222)
NORMALIZED GROSS OPERATING MARGIN
Amortization, depreciation and write-downs
8.237
8.041
196
(1.352)
(2.947)
1.595
24
(534)
558
(393)
(468)
75
Allowance for bad debts and other provisions
Other operating costs
NORMALIZED OPERATING PROFIT / (LOSS)
6.516
4.092
2.424
(2.210)
(2.215)
5
Value adjustments on financial assets
(2)
(2)
0
Earnings / (charges) from assets held for sale
25
24
1
Net financial earnings / (charges)
Net non-recurrent earnings / (charges)
PROFIT (LOSS) BEFORE TAXATION
(557)
(1.321)
764
3.772
578
3.194
(620)
(1.246)
626
0
(92)
92
3.152
(760)
3.912
Current income taxes
Deferred income taxes
CONSOLIDATED PROFIT (LOSS) FOR THE PERIOD
Profit (loss) for the period attributable to Minority Interests
(40)
31
(71)
GROUP CONSOLIDATED PROFIT (LOSS) FOR THE PERIOD
Basic earnings per share (Basic EPS)
3.192
0,0300
(791)
(0,0071)
3.983
0,0371
Diluted earnings per share (Diluted EPS)
0,0288
(0,0068)
0,0356
Breakdown of Revenues by Geographical Area and Business Line
BREAKDOWN OF REVENUES BY GEOGRAPHICAL AREA
(in thousands of Euro)
ITALY & MED
FRANCE
IBERIA
GERMANY, SWITZERLAND AND AUSTRIA (GSA)
LATIN AMERICA (LATAM)
UK & INTERNATIONAL
NORTH AMERICA
OTHER
TOTAL REVENUES
BREAKDOWN OF REVENUES BY BUSINESS LINE
(in thousands of Euro)
CONSUMER SERVICES
MARKETING SERVICES
TOTAL REVENUES
Q2 2008
Q2 2007
VARIANCE
Var. %
10.712
9.510
1.202
12,6%
5.945
2.398
3.547
147,9%
28.716
13.557
15.159
111,8%
2.762
1.192
1.570
131,7%
4.299
684
3.615
528,5%
21.850
6.140
15.710
255,9%
4.488
9.825
-5.337
(54,3%)
363
37
326
881,1%
79.135
43.343
35.792
82,6%
Q2 2008
76.109
3.026
79.135
Q2 2007
40.838
2.505
43.343
VARIANCE
35.271
521
35.792
Var. %
86%
21%
83%
Turning to the operating performance of the business, in the second quarter of 2008 there were no
significant changes with respect to the first quarter of the year. For an analysis of revenue performance
by geographical area and business line, the reader is referred to the half-year analysis presented in
paragraph 1.5.1 above.
Half-Year Report as of June 30, 2008
Global Reports LLC
Page 17
Buongiorno SpA
1.4.3
Investment Operations
The Buongiorno Group’s reclassified consolidated balance sheet at June 30, 2008 is shown in the table
below.
RECLASSIFIED CONSOLIDATED BALANCE SHEET
(in thousands of Euro)
06.30.2008
12.31.2007
Variance
Intangible fixed assets
FIXED ASSETS
213.003
3.148
27.653
243.804
200.942
2.914
26.699
230.556
12.061
234
954
13.248
NET WORKING CAPITAL
1.513
73.374
12.634
(78.612)
(18.021)
(9.112)
1.958
62.140
18.397
(64.804)
(20.092)
(2.400)
(445)
11.234
(5.763)
(13.808)
2.071
(6.712)
NET INVESTED CAPITAL
(1.087)
(6.891)
(8.114)
218.600
(1.141)
(2.561)
(11.541)
212.912
54
(4.330)
3.427
5.688
CAPITAL AND RESERVES
27.065
104.396
2.401
11.712
145.574
27.652
92.800
13.858
11.938
146.248
(587)
11.596
(11.457)
(226)
(674)
SHORT-TERM BORROWINGS
9.274
(64.855)
128.607
63.752
11.109
(69.871)
125.426
55.555
(1.835)
5.016
3.181
8.197
NET FINANCIAL POSITION
73.026
66.664
6.362
TOTAL SHAREHOLDERS' EQUITY AND BORROWINGS
218.600
212.912
5.688
Tangible fixed assets
Financial fixed assets
Inventories
Trade receivables
Other assets
Trade payables
Other liabilities
SEVERANCE INDEMNITY FUND
DEFERRED TAX LIABILITIES
PROVISION FOR RISKS AND CHARGES
Paid-up capital
Reserves and profits (losses) carried forward
Group profit (loss) for the period
Minority interests
MEDIUM AND LONG-TERM BORROWINGS
Cash and equivalents(*)
Debt to banks and other financial istitutions
(*) if negative, it constitutes an asset for the Company
At June 30, 2008, the Buongiorno Group’s Net Invested Capital amounted to Euro 218.6 million,
including: Net Fixed Assets of Euro 243.8 million; a negative Net Working Capital of Euro 9.1 million; and
Funds for Risks and Charges and Severance Indemnity Funds (TFR) totaling approximately about Euro
16.1 million.
The detailed breakdown of movements in the main balance sheet items shows that:
-
-
-
Net Intangible Assets were up by approximately Euro 13.2 million, primarily due to the effect of the
value of the intangible assets, including the goodwill deriving from the acquisition of Llama TV, the
acquisition of exclusive rights to competitions in South American countries, and, to a lesser extent,
the capitalization of research and development costs for the proprietary platform;
Net Working Capital was down, primarily due to the impact of the greater efficiency of working
capital management, which led to a decrease in the balance by approximately Euro 6.7 million;
Employee Benefits for salaried employees remained substantially unchanged on 2007;
Provisions for Risks and Contingencies were down by Euro 3.4 million, declining from Euro 11.5
million at the end of 2007 to approximately Euro 8.1 million as of June 30, 2008 due to the release
thereof for restructuring activities during the period;
the Provision for Deferred Taxes increased by Euro 4.3 million, rising from Euro 2.6 million at the
end of 2007 to approximately Euro 6.9 million as of June 30, 2008 due to the recognition of various
intangible assets arising from the acquisition of iTouch.
Net Invested Capital was covered by Consolidated Equity, which remained substantially unchanged on
December 31, 2007, and by net financial debt, which came to Euro 73.0 million at the end of the halfyear.
Half-Year Report as of June 30, 2008
Global Reports LLC
Page 18
Buongiorno SpA
Pursuant to CONSOB Communication No. 6064293 of July 28, 2007, attachment C shows the
reconciliation of consolidated capital and reserves and profit with those of the Parent Company,
Buongiorno.
1.4.4
Financial Operations
The following table shows the consolidated Net Financial Debt of Buongiorno at June 30, 2008:
NET CONSOLIDATED FINANCIAL POSITION
(in thousands of Euro)
TOTAL CASH AND OTHER FINANCIAL ASSETS
Total payables to banks
Total bank loans - current share
Total other current financial liabilities
TOTAL CURRENT FINANCIAL LIABILITIES
CONSOLIDATED NET CURRENT FINANCIAL POSITION
Total bank loans - non-current share
Guaranted convertible bond
Total other non-current financial liabilities
TOTAL NON-CURRENT FINANCIAL LIABILIITES
NET FINANCIAL DEBT (POSITION)
30/06/2008
31/12/2007
64.855
69.871
(1.874)
(116.454)
(10.279)
(128.607)
(850)
(115.267)
(9.309)
(125.426)
(63.752)
(55.555)
(6.084)
(955)
(2.235)
(9.274)
(7.402)
(946)
(2.761)
(11.109)
(73.026)
(66.664)
The Buongiorno Group ended the First Half of 2008 with consolidated Net Financial Debt of Euro 73.0
million, compared to net financial position negative at Euro 66.7 million at December 31, 2007. As
evidenced by the cash flow statement, the increase in Net Financial Debt during the period is mainly
attributable to acquisitions of minority interests in companies belonging to the iTouch Group, which was
acquired in 2007.
Cash and cash equivalents stood at Euro 64.8 million and consisted mainly of cash deposited in current
accounts denominated primarily in euro and in U.S. dollars, pounds sterling, Australian dollars, South
African rand, and Argentine pesos, in addition to investments in money market funds denominated in euro
and managed by leading financial institutions with maturities in the short term and immediate liquidity.
The item Amounts due to banks mainly refers to bank overdrafts in Columbian pesos and Turkish lira.
Short-term bank loans consist primarily of the balance of the secured loan issued by Banca IMI SpA
(Intesa SanPaolo Group) in the amount of Euro 114 million and used to acquire iTouch and refinance the
pre-existing debt of the acquired company and the Group. The loan was disbursed on December 28,
2007, has a maturity of 12 months, and may be extended, upon a simple request from the Company, for
a further six months up to a maximum of Euro 100 million. The loan was secured by shares of the
acquired company, iTouch, and several operating companies within the Buongiorno Group; the loan
agreement also calls for compliance with certain covenants.
These covenants are:
-
The ratio of Consolidated Gross Operating Margin (EBITDA) to consolidated net borrowing costs;
-
The ratio of Consolidated Net Financial Debt to Consolidated Gross Operating Margin;
-
The ratio of Consolidated Net Financial Debt to Consolidated Equity.
Said covenants were complied with at all quarterly measurements conducted from March 2008 to the
reporting date.
The decision to finance the acquisition of iTouch through a short-term loan that may be renegotiated
through the end of 2008 was made by assessing the expedience of being able to combine the financial
resources already offered by Group companies and those generated by operations during the period with
the flexibility provided by the possibility of renegotiating the debt as a function of the effective operating
requirements. Negotiations are currently underway with leading financial institutions to establish a new
loan agreement with the aim of extending the duration of the debt and scheduling the repayment thereof
Half-Year Report as of June 30, 2008
Global Reports LLC
Page 19
Buongiorno SpA
on the basis of future debt servicing capacity, estimated according to the cash flow that the Company
expects to generate through its typical operations.
Other current financial liabilities amounted to Euro 10.3 million and consist mainly of amounts due in
relation to recent mergers and acquisitions. The most significant items include:
-
-
-
financial liabilities amounting to Euro 0.2 million relating to the acquisition of minority
shareholdings in companies controlled by iTouch Spain Holding;
financial liabilities to the shareholders of Produciones y Promociones Especiales de TV S.L. (the
parent company of Llama TV SL) and minority-interest shareholders of XamaTV Televisao
Interactiva LdA, for a total of Euro 6.0 million, in relation to the deferred payment of the price of
sale and contractually established earn-out clauses. It should be noted that a part of the earn-out
(Euro 3,011 thousand) was paid to the sellers in the form of Buongiorno treasury shares
subsequent to the end of the half-year;
Euro 2.1 million due to the Call TV Holdings Ltd (parent company of Ostrich Media Limited)
shareholders in relation to the deferred payment of the sale price and earn-out clauses provided
in the acquisition contract. It should be noted that a part of the earn-out (Euro 1,008 thousand)
was paid to the sellers in the form of Buongiorno treasury shares subsequent to the end of the
half-year;
Euro 0.6 million due to the former Axis Mundi SA (By-Cycle group) shareholders in relation to the
deferred payment of the sale price and earn-out clauses provided in the acquisition contract.
Euro 1.2 million payable to former iTouch Ventures Limited shareholders as established at the
closing of the transaction.
The Company’s medium/long-term financial debt at the end of the half-year period amounted to Euro 9.2
million (Euro 11.1 million at December 31, 2007), mainly consisting of:
-
-
-
the remaining balance of the convertible bond (Euro 1.0 million compared to an original value of
Euro 12 million) underwritten on September 22, 2005 by Mitsui & Co Ltd and Banca IMI and
maturing in 2010. The balance at June 30, 2008 refers to the amount held by Banca IMI, net of
the value of the underlying option;
the approximately Euro 0.6 million long-term, fixed-rate loan issued at a subsidized rate by
Simest SpA (as per Italian Law 394/81 on internationalization projects);
Euro 1.7 million representing the medium-term portion of the floating-rate loan issued by Credito
Emiliano SpA in the total amount of Euro 3.0 million;
Euro 3.8 million long-term representing the medium/long-term portion of the unsecured loan
issued by MCC SpA (Unicredit banking group) in the total amount of Euro 5.0 million;
financial liabilities amounting to Euro 2.2 million associated with the deferred payment of the sale
price of Axis Mundi SA (By-Cycle Group) to former shareholders.
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Buongiorno SpA
The following table sets out the Reclassified Cash Flow Statement for the First Half of 2008:
RECLASSIFIED CONSOLIDATED CASH FLOW STATEMENT
06.30.2008
(in thousands of Euro)
NET FINANCIAL POSITION AT PERIOD START
12.31.2007
Var.
(66.664)
6.968
(73.632)
2.401
4.299
(55)
904
984
8.533
13.858
4.749
(412)
11.432
(2.272)
27.355
6.710
(2.982)
(11.457)
(450)
357
(10.528)
3.256
(18.822)
0
9.692
(13.614)
(1.155)
(861)
0
0
(15.630)
(148.282)
(2.088)
(2.878)
0
0
(153.248)
134.668
933
2.017
0
0
137.618
0
(2.369)
(2.369)
26.685
(921)
25.764
(26.685)
(1.448)
(28.133)
(1.824)
(1.566)
(216)
(3.606)
0
29.487
(8)
29.479
(73.026)
(66.664)
(1.824)
(31.053)
(208)
(33.085)
0
(6.362)
Cash Flow from operating activities
Consolidated Group result
Amortization, depreciation and write-off
Net change in the severance indemnity fund
Net change in funds for risks and charges
Other ordinary activities items
Change in working capital
Cash Flow from Investing activities
Intangible fixed assets
Tangible fixed assets
Investments
Changes in consolidation area
Non-current assets held for sale
Cash Flow from Financing activities
Paid capital increase
Other changes
Other Changes in the Equity and financial situation that
do not entail cash flows
Acquisition of companies through issuing of stocks
Capital incread through contribution in-kind
Minority interests
NET FINANCIAL POSITION AT PERIOD END
The Group’s consolidated net debt amounted to approximately Euro 73.0 million as of June 30, 2008,
compared to net debt of approximately Euro 66.7 million as of December 31, 2007.
This change was mostly attributable to:
-
-
-
cash flow generated by core business operations amounting to Euro 8.5 million;
an around Euro 6.7 million change in net working capital;
approximately Euro 15.6 million in investment activities aimed primarily at the acquisition of
minority interests in the Movilisto Group during the half-year, the acquisition of interests in the Call
TV and Llama TV Group, and the investment by MyAlert Spain to acquire exclusive rights to provide
services and conduct campaigns in South American countries;
the buy-back of a total of Euro 4.1 million in own shares during the half-year;
Euro 2.3 million in other changes in equity.
Half-Year Report as of June 30, 2008
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Buongiorno SpA
1.5
Financial Risk Management
General Risk Management Principles
The principles that make up the Buongiorno Group’s risk management policy are based on preventing the
main risks associated with the Group’s objectives and relate to the Company’s strategic, operative and
financial areas. The purpose of risk management within the Buongiorno Group is to determine the
opportunities and threats that might impact the achievement of long-term objectives, as opposed to
safeguarding a single event. As set out in the individual policies and corporate processes, management of
the Group's exposure to risks is based on the principle according to which operating and financial risks
are managed by the process owner. The main risks are reported and discussed by the Group’s top
management in order to create the conditions necessary to ensure their coverage, obtain the necessary
insurance and evaluate the residual risk.
Specific guidelines exist for the main financial risks, including interest rate risks and credit risks.
Operating Risks
The Buongiorno Group takes steps to ensure that operating and product risks, as well as any losses that
could be incurred by the Group or its customers, are constantly monitored, managed or insured. For this
purpose, the Buongiorno Group has formulated a plan with a major international insurance broker that
provides optimal coverage for risks that may be associated with the Group’s main assets, including
intangible assets (brand and intellectual property) and material investments. The plan also covers liabilities
that might arise as a result of product or software malfunctions experienced by customers or the Group's
companies.
Financial Risks
The Buongiorno Group’s priorities are value creation, sustainable growth, profitability and the minimization
of risks. Accordingly, the Group's financial structures are focused on guaranteeing the utmost efficiency in
using credit lines for developing its business and in minimizing financial risks associated with industrial
management (adverse risk). The Group’s Financial Department, which is located in Milan, is governed by
operating policies regarding interest rate, exchange rate, liquidity, credit and price risks.
Exchange Rate Risk
The Group is exposed to market risk deriving from fluctuations in exchange rates, insofar as it operates in
an international context in which transactions are carried out in currencies other than the Euro.
Moreover, the Buongiorno Group has subsidiaries in non-Euro areas; as such, the value of its
shareholdings (and related equity) is affected by fluctuations in exchange rates denominated in local
currencies. Changes in net capital and reserves as a result of exchange rate fluctuations are charged to a
reserve called the “conversion reserve” in the consolidated balance sheet.
Interest Rate Risk
Risks associated with changes in cash flows due to interest rate fluctuations arise mainly as a result of
existing financing. Variable-rate financing exposes the Buongiorno Group to the risk of cash flow variations
relating to interest charges. Fixed-rate financing exposes the Buongiorno Group to the risk that the fair
value of the loans received will change.
The Buongiorno group may make use of derivative contracts to hedge its interest rate risk, typically
Interest Rate Swaps, which allow floating rate exposure to be transformed into fixed rate exposure.
Currently, the Group has not exchange rate hedging contracts.
Buongiorno Group’s exposure to the risk of changes in fair value is associated with its fixed-rate soft loans;
accordingly, the effects of changes in the fair value of these loans could have a marginal impact on the
Buongiorno Group’s financial position.
Price Risk
The Group is not exposed to the price risk generated by commodity purchases, given the nature of the
business which characterizes it.
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Buongiorno SpA
The Buongiorno Group invests its short-term cash resources in monetary instruments listed on regulated
markets that are measured at their market prices.
Credit Risk
Trade receivables are reported in the balance sheet net of the write-down calculated on the basis of the
default risk of the individual counterparties. In accordance with Group policy, financing is not granted to
customers, and rigorously defined terms are imposed for normal accounts receivable collection. On a
monthly basis, the Group’s Financial Department monitors the risks associated with expired accounts
receivable collection (aging) and the exposure of the main customers of each of the Group’s companies.
Such information is reported to the CFO of Buongiorno, who defines the guidelines to follow in monitoring
the risk and any credit safeguard policies.
Liquidity Risk
The liquidity risk to which the Group might be exposed is the failure to secure financial resources sufficient
for its operations and the development of its industrial and commercial activities. The two main factors
that determine the Group’s liquidity situation are the resources provided by or used in operating and
investing activities and the maturity and extension of debt or the liquidity of financial investments and
market conditions. The cash flows and liquidity of the Group's operating companies are monitored by the
finance department of the parent company with the objective of guaranteeing effective management of
financial resources.
As of June 30, 2008 the Group had access to a significant amount of liquidity immediately available for
company purposes and immediately available sufficient lines of credit issued by several banks and
factoring companies. The Group believes that the currently available funds and lines of credit, in addition to
the resources that will be generated by operating and financing activities, will permit it to satisfy its
investment, working capital management, and debt-servicing needs at their natural maturities.
With regard to its short-term debt, Buongiorno has already initiated discussions with leading financial
counterparties to refinance the secured loan of Euro 115 million issued by Banca IMI SpA (Intesa San
Paolo Group), maturing December 28, 2008, even though there is no urgent need to do so, inasmuch as
the agreement calls for a period of extension of a further six months, up to the amount of Euro 100
million, upon the Company’s request. On the basis of such discussions and its business plan, the Company
is confident that it will be able to structure a financial transaction to replace said loan and extend the
duration of the debt and repayment schedule according to a reasonable projection of its future debtservicing capacity on the strength of the cash flow that the Company expects to generate through its
typical operations.
1.6
Transactions with Associates
At June 30, 2008, the Buongiorno Group maintained relationships with companies qualifying as related
parties within the meaning of the Code for Related-party Transactions:
Companies or parties holding rights in Group companies:
−
−
Mitsui & Co. Ltd., which holds a 19.96% interest in the share capital of Buongiorno USA Inc. and,
consequently, in Rocket Mobile Inc.. Mitsui & Co. Ltd. also owns a 40% stake in the share capital
of Buongiorno Marketing Services BV.
Nevid Nikravan, Director of Buongiorno, holds, directly or indirectly, a 20.34% stake in the share
capital of Buongiorno Dijital Iletisim A.S (Turkey).
Commercial transactions pertaining to the core business of companies included in the consolidation area,
were realized with the said companies at arm’s length during the course of the period. The transactions
made between Buongiorno and the said related parties, may be summarized as follows (amounts
expressed in thousands of Euro):
Affiliated company
Buongiorno USA
Buongiorno Dijital Iletisim A.Ş.
Buongiorno Marketing Services BV
Half-Year Report as of June 30, 2008
Global Reports LLC
Turnover
247
Re-debiting
of personnel
costs
Direct/Indirect
costs
Financial
charges/income
Other
1
26
229
-
78
3
16
-
-
144
118
-
-
-
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Buongiorno SpA
The Group holds a non-controlling interest in Buongiorno Hong Kong Ltd, in which Mitsui & Co. Ltd. holds
51% stake and Buongiorno a 49% stake, and which was consolidated using the shareholders’ equity
method. The Buongiorno Group effects, at arm’s length, commercial transactions pertaining to its core
business, with the same company and/or its subsidiaries. Transactions made during the first half of
2008 are illustrated in the following table:
Affiliated company
Buongiorno Hong Kong Ltd.
Turnover
Re-debiting of
personnel
costs
-
Direct/Indirect
costs
-
87
Financial
charges/income
Other
-
-
At June 30, 2008, the Company held 35% of the share capital of the company Inches Music S.r.l.. The
latter is partly owned by Capital B!, in which Mauro Del Rio — Buongiorno’s reference shareholder — holds
the majority stake. The company’s purpose is to manage and sell “Artist community” songs. This
shareholding during the half-year period underwent no movement, and no financial or economic
transactions were effected with the said company.
With regard to related-party transactions, including inter-company transactions, it must be pointed out
that the same do not qualify as either atypical or unusual, since they were effected in the normal course of
the business operations of the Group companies in question, and concluded at arm’s length, in light of the
features of the goods and services involved.
1.7
Foreseeable Evolution
Management continues to believe that the mobile entertainment market offers good long-term growth
opportunities even though the transitional phase the market is passing through and the unfavorable
circumstances reduce growth opportunities in the near term.
To account for this situation, on July 7, 2007 the Company updated its projections for the year,
estimating revenue on the order of Euro 325-335 million (compared to the previous projection of Euro
330-350 million) and a GOM of Euro 35-40 million (compared to the projection of Euro 41-45 million).
The Company deems that traditional European markets will remain stable in the second half of the year,
with the favorable impact of a number of seasonal factors in the fourth quarter. Growth compared to the
first half of the year will be generated primarily by B2C services in the emerging countries and contracts
with telephone service providers for the outsourcing of widely deployed services, such as the
Supercontest in Latin America.
Factors contributing to improved profitability compared to the first half of 2008 will include the
rationalization of certain unprofitable services and completion of the plan for integrating iTouch.
In terms of cash flow, on the basis of the current plan and the discussions being held with Banca Imi, the
Company believes that the covenants applicable to the loan issued by the bank for the acquisition of iTouch
will be complied with, despite the higher financial expenses resulting from interest rate increases.
1.8
Human Resources
At June 30, 2008, Buongiorno had a total of 1,084 employees and staff (691 at June 30, 2007; 1,160
at December 31, 2007). At June 30, 2008, employees and staff in Italy totaled 182, of which 159 in
Buongiorno and 23 in Buongiorno Marketing Services, based in the offices in Milan and Parma.
From the standpoint of human resources, the first half of 2008 was characterized by the reorganization
and restructuring of the Group, which, inter alia, permitted a decrease in the overall workforce, despite
the hiring of new resources to develop next generation services and the integration of Llama TV during
the half-year (14 employees).
Buongiorno’s professionals hail from all around the world and are driven by their passion and the global
culture required to best support the local spirit. Continual expansion in new countries represents a
constant challenge in Resource management and an opportunity to enhance knowledge and enrich
expertise.
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Buongiorno SpA
The workforce’s average age (slightly above 30) and high level of education (75% of employees have a
university degree or equivalent) contribute to a young and dynamic environment that is always open and
receptive to new professional challenges and guarantees a strong capacity for innovation, flexibility, and an
effective understanding of the logic underlying the consumption of the Company’s services.
At Buongiorno, we privilege the hiring of young, high-potential resources, who, after a period of mentoring
under the tutelage of expert managers, may experiment in the field with the knowledge they have acquired
during their studies, and who are immediately involved in international projects. This approach allows us to
increase the motivation of our new resources, optimize the time required to integrate them into the
company, and promote the sharing of knowledge, thereby ensuring the continuity of the new company’s
operations. We also provide specific relocation and international career plans for our most talented
employees.
Spreading and promoting the Group’s culture and sense of belonging have been, and remain, crucial toppriority goals during the globalization process and the integration of new resources. The values of synergy,
quality, innovation and commitment have steered the establishment of shared management and control
tools so that the Group’s resources, wherever in the world they may be, can count on the same support
and identify with the same management style and criteria of internal equity.
Over the last two years, HR Recruiting has taken important action in terms of forming contacts with the
academic world and participating in events aimed at promoting the Company’s visibility and attracting new
talent with a passion for technology, such as job fairs and a presence in publications with a target
readership consisting of recent graduates.
1.9
Technological Innovation
In the first half of 2008, Buongiorno made considerable investments in the following technological/application-development projects:
-
-
-
-
B3A Platform: The Group defined a strategy to be followed through the first half of 2009 for the
development of its proprietary technology platform “B!3A” and completed the first two phases of the
plan with the creation of “B!Wizard,” a tool that allows marketing personnel to make changes directly
to web/wap sites without involving technical staff. The tool will allow the Group to reduce its time-tomarket and react more quickly to customer needs. Other releases planned for the next three
quarters will provide commercial users with additional functionality and bring certain key architectural
components up to Web 2.0 standards.
Online Subscriber Acquisition: The Group created “technological environments” to assist in the
acquisition of new subscribers, both directly and through marketing partners (affiliate networks). This
set of tools and methodologies allows marketing personnel to plan and design "splash pages" and link
them directly to information on new-user acquisitions. It enables the Group to act on the results of
acquisition campaigns by allowing personnel to easily change the related parameters in order to
improve efficiency and reduce the average cost per acquisition (CPA).
Integrated B!3A modules for new services: The Group developed specialized Customer Relationship
Management and AD Serving modules for mobile phone providers and a module allowing the creation
of SuperContests for mobile phone providers and B2B partners. The modules will allow the Group to
develop high value-added services for its customers with fewer customizations.
Social Networking Platform (Blinko): The Group invested in resources and tools for the development
of a Mobile Social Networking platform (Blinko). The platform is designed to meet the requirements of
Mobile Content 2.0 and is based on methodologies and technologies that meet the collaboration
standards of WEB 2.0. The platform is currently in beta test and will be further developed in coming
quarters. It is based on a high-performance infrastructure that provides the scalability necessary to
increase the Group’s processing capacity to handle the large traffic volumes expected on this service.
Upgrading and enhancement of technology infrastructure. The Group invested in software and
hardware that meet the criteria for state-of-the-art operations. Investments were aimed at “virtualizing”
the company’s operating systems and included purchases of modern, high-performance multiprocessor
servers and storage farms based on Storage Area Network technology. In terms of software, Buongiorno
strengthened its contractual relationships with the leading technology suppliers to enable its global
support to meet the Group’s development and operations needs.
Upgrading and enhancement of management applications. The Group invested in the improvement of
its business-support applications. In the first half of 2008, the Group completed the standardization of
software packages on the basis of international accounting methods, including purchase management.
The Group also completed a global application based on Microsoft Sharepoint that manages timesheets
Half-Year Report as of June 30, 2008
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Buongiorno SpA
and expense notes and allows a greater level of granularity in associating costs and revenues by job and
business line. The first project using the Cognos platform to manage the company’s consolidated financial
statements was also completed, and SAP HR was chosen as the standard platform for global human
resource management. These initiatives will increase the efficiency of the operations of the Group’s
companies while improving the accuracy of data and increasing processing speed.
Lastly, with reference to the Group’s technological restructuring and rationalization initiatives, during
the period ended June 30, 2008, Buongiorno invested in resources and methodologies to migrate its
platforms towards Group standards. The migration program involves 34 projects, 7 of which were
completed in the first half of 2008. Most of the projects will be completed in the second half of 2008,
while some of the more complicated ones will be started in the second half of 2008 and completed in the
first half of 2009. To support the technological aspects of the migrations, the Group is using the support
of external consultants in Spain, France, Italy and Austria. The rationalization of the Group’s operating
costs as a result of the first seven migrations and consolidation activities can already be seen —
particularly in the closing of one of the Group’s data centers in Paris (Oleane) and the data centers in
Turin and Mexico City.
1.10 Main Corporate Events in the Half-Year
The main corporate events that occurred during the period being reviewed are detailed below.
i.
On January 8, 2008:
a) the subsidiary iTouch Spain Holdings SL (Spain) acquired from minority shareholders 25% of
the shares in iTouch Movilisto France SAS, gaining 100% control;
b) the subsidiary iTouch Spain Holdings SL (Spain) acquired from minority shareholders 30% of
the shares in Grupo iTouch Movilisto R srl (Romania), gaining 100% control;
c) the subsidiary iTouch Spain Holdings SL (Spain) acquired from minority shareholders 25% of
the shares in Grupo iTouch Movilisto Maroc Srl, gaining 100% control.
ii.
on January 22, 2008 the buy-back plan, authorized by the Ordinary Shareholders’ Meeting of
Buongiorno on May 2, 2007, was initiated. The purchases were made within the framework of
the plan authorized by the Ordinary Shareholders’ Meeting of Buongiorno of May 2, 2006, which
allows for the possibility of purchasing a maximum of 8,500,000 ordinary shares of Buongiorno
stock with a value of Euro 0.26 each, or 8% of the current share capital, by November 2, 2008.
During the half-year, the Company acquired a total of 2,256,500 ordinary shares for a total value
of Euro 4.1 million on the screen-based market operated by Borsa Italiana. Own shares in
portfolio as of June 30, 2008 represented 2.12% of Buongiorno’s share capital.
iii.
On January 31, 2008, subsidiary iTouch South Africa (Pty) Ltd. acquired a business line
specializing in the distribution of mobile digital content from South African telephone provider
Africell (Pty) for a total investment of Rand 45 million (approximately Euro 4 million).
iv.
On February 5, 2008, subsidiary iTouch Spain Holding s.l. acquired 100% of the company
Producciones y Promociones Especiales de TV, s.l. and indirect control of Llama Televisión, S.L. in
Spain and Xama TV in Portugal. The Buongiorno Group already owned a minority interest in
Llama Televisión S.L. and Xama TV through Call TV Holding Limited. These companies specialize
in the creation, production and management of interactive formats, and manage call-TV shows
broadcast by Antenna 3 and TVI, respectively.
v.
On February 15, 2008, the Board of Directors of Buongiorno approved the Quarterly Report as
of December 31, 2007.
vi.
On March 3, 2008, the subsidiary iTouch Spain Holdings SL (Spain) acquired from minority
shareholders 13% of the shares in Mobile Fun Sistemas de Informatica Ltda, gaining 100%
control.
vii.
The General Shareholders’ Meeting — which met on May 5, 2008 in ordinary session — approved
the separate and consolidated Financial Statements of Buongiorno. During the same session, the
Ordinary Shareholders’ Meeting also increased the number of the members of the Board of
Directors from nine to eleven and appointed two new directors, Wayne Pitout and Giorgio
Ricchebuono.
viii.
In addition, the Ordinary Shareholders’ Meeting of Buongiorno SpA also approved a new stock-
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Buongiorno SpA
option plan for employees, directors, and/or staff members not considered salaried employees
of the Company, Group Companies, and Associates.
ix.
Finally, on May 5, 2008, the Extraordinary Shareholders’ Meeting of Buongiorno authorized a
splittable capital increase without option rights pursuant to section 2441, paragraph 4, sentence
2, of the Italian Civil Code, of a maximum of Euro 1,300,000 through the issue in one or more
tranches of a maximum of 5,000,000 ordinary shares with a nominal value of Euro 0.26 each
and regular dividend rights in service of the stock-option plan, approved in ordinary session.
1.11 Atypical and Unusual Transactions
During the First Half of 2008, no atypical or unusual transactions were undertaken, which in terms of
their significance, the nature of the counterparties, the object of the transaction, or method by which the
price was set may give rise to concerns as to the accuracy or completeness of this accounting notice, a
conflict of interest, the safeguarding of corporate assets, and the protection of minority shareholders.
1.12 Events Subsequent to June 30, 2008
The main events that occurred after the end of the half year are as follows:
i.
The buy-back plan authorized by the Ordinary Shareholders’ Meeting of Buongiorno on May 2,
2007 continued in July. Subsequent to the end of the half year, a further 630,500 ordinary
shares (0.60%.) were purchased, for a total investment of Euro 666 thousand.
ii.
On July 7 Buongiorno’s Board of Directors announced a series of initiatives aimed at dealing with
the challenges posed by the economy and the market and preserving business margins. It also
revised projections for the year downwards.
iii.
On July 30, 2008, the Group closed the acquisitions of equity investments in 100% of
Produciones y Promocciones Especiales de TV SL (the parent company of Llama TV, Spain, which
holds a 70% interest in said company) and 49% of Call TV Holdings Limited (the parent company
of Ostrich Media Limited) and made partial payment of the earn-outs (a variable component of
the price of purchase calculated on the basis of earnings reported during a given period of
observation). As provided in the agreement, the payment was made partly in cash and partly
through the transfer of own shares that the Company had previously acquired on the market. On
July 30, 2008, a total of 2,885,512 shares, representing 2.71% of Buongiorno’s share capital,
were transferred to the sellers. The sellers of the equity investments, and consequently the
parties who received Buongiorno shares, include Wayne Pitout, a member of Buongiorno’s Board
of Directors. The average transfer price of Buongiorno's own shares, as stated in the purchase
agreement, was Euro 1.788. The average price of purchase of said shares was Euro 1.670.
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Buongiorno SpA
1.13 Main Shareholders
(Holdings as per the Share Register and/or disclosures pursuant to Article 120 of Legislative Decree
58/1998)
The chart below shows the equity investments of the shareholders who, at June 30, 2008, owned more
than 2% of Buongiorno SpA’s Share Capital.
% of ordinary
share capital
SHAREHOLDER
NO. OF SHARES
Mauro Del Rio*
21,667,871
20.37%
Buongiorno SpA
2,256,500
2.12%
OAK Investment Partners XII LLP
5,746,700
5.40%
Mitsui & Co Ltd
3,528,100
3.32%
Selin SpA
3,172,075
2.98%
The Goldman Sachs Group inc
Market
3,512,862
3.30%
66,469,567
62.50%
(*) 17.19% held directly, 3.18% through Capital B Lux SARL
As described in paragraph 1.12 above, subsequent to the end of the half-year Buongiorno transferred its
package of treasury stock as part of the closure of the purchase of Call TV Holdings Limited and
Promociones e Producciones TV. Following said transaction, main shareholders as of the date of the
meeting of the Board of Directors that approved the Half-Year Report as of June 30, 2008 were as
follows:
SHAREHOLDER
NO. OF SHARES
Mauro Del Rio *
21,667,871
% of ordinary
share capital
20.37%
OAK Investment Partners XII LLP
5,746,700
5.40%
Mitsui & Co Ltd
3,528,100
3.32%
Selin SpA
3,172,075
2.98%
72,237,441
Market
67.92%
(*) 17.19% held directly, 3.18% through Capital B Lux SARL
Mauro Del Rio *
OAKInvestment Partners
XII LLP
Mitsui & Co Ltd
Selin SpA
Mercato
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Buongiorno SpA
1.14 Report on the Stock Option Plan
Buongiorno has always favored the possibility of implementing stock option plans, feeling that they are an
appropriate tool in building relationships between the Company and its employees/directors by providing
an incentive to create a professional, long-lasting relationship. As such, over the years various equitybased incentive plans have been implemented, in compliance with CONSOB notice No. 11508 of February
15, 2000 regarding stock option plans, as described below.
Compared to June 30, 2007, it should be noted that the stock option plans “2003-2007” reached
maturity on December 31, 2007, with the result that all the options left unexercised on such date, were
cancelled.
The Shareholders’ Meeting of May 5, 2008 approved a new stock option plan (Plan 7) that supplements
the residual Plan 6 (“2006-2012”).
As a consequence, the following Plans were in force as of June 30, 2008:
2006-2012 Stock Option Plan (Plan 6)
In the Shareholders’ Meeting of May 2, 2006, Buongiorno defined an increase in share capital for the
purposes of assigning options to employees and directors.
The objective of this plan, just as for previous plans, is to offer the Company the possibility of assigning new
stock options to the employees and directors of the Company and Group companies and to employees
who are newly recruited or arriving from acquired companies and who merit special professional
recognition.
A reserved capital Increase, of a maximum of 4,500,000 new issue shares, has been approved to cover
this plan.
Characteristics of the Incentive Plan
The Plan is regulated by a Regulation, issued by the Board of Directors on May 10, 2006 on the basis of
those already existing for the previous plans.
Some of the most important terms and conditions are as follows:
−
−
−
−
plan expiry: December 31, 2012 with the possibility for the Board to establish different dates, but
always prior to December 31, 2012, as the latest date for exercising specific assignments;
deadline for allotting stock options: June 30, 2011;
stock option maturity: upon reaching objectives and/or following a minimum time of
employment/ director service with the Company;
determination of the stock option issue price: the exercise price for each option, to be paid to the
Company in order to obtain the relevant new issue share, will be the price that the Board of
Directors has determined, when attributing the options, for each beneficiary or category of
beneficiaries, and in any event will not be below the market value of the stock on the assignment
date as laid down in the resolution of the Company’s Extraordinary Shareholders’ Meeting on May
2, 2006.
Stock Option Plan (Plan 7)
At the Shareholders’ Meeting of May 5, 2008, Buongiorno approved a new stock-based incentive plan
with a maximum of 5 million shares. The Plan is intended for the employees, directors and/or staff of the
Company, Group companies, and their affiliates. The strike price of the options will be set when said
options are assigned to the beneficiaries and may not be lower than the arithmetic mean official price of
the ordinary shares on each day of the effective listing thereof on the Stock Exchange, as surveyed during
the period from the date of assignment of the options through the same day of the previous solar month.
The Board of Directors had yet to make any assignments under Plan 7 as of the date of this Half-Year
Report.
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Buongiorno SpA
Summary of Active Stock Option Plans as of June 30, 2008
Further details on the stock option plans in effect as of the end of the year period are provided in the table
below.
Plan 6 (based on Buongiorno SpA Shareholders' resolution of May 2, 2006)
strike
1H 2008
12.31.2007
price (€)
Not exercised
Assigned
Exercised
1.15
5,16
4
3,86
2,79
1,94
1,94
1.816.000
271.000
35.000
75.000
2.225.000
Total
4.422.000
60.000
60.000
06.30.2008
Expired
-
Total
-
-
1.816.000
271.000
35.000
75.000
2.225.000
60.000
-
4.482.000
Treasury Stock
As described above, on January 22, 2008 a buy-back plan was initiated, as authorized by the Ordinary
Shareholders’ Meeting of Buongiorno SpA on May 2, 2007. During the half-year to June 30, 2008 the
Company acquired 2,256,500 ordinary shares with a total value of Euro 4,153 thousand on the ordinary
market. Between June 30, 2008 and July 15, 2008, Buongiorno purchased an additional 630,500
ordinary shares, bringing its ownership of Buongiorno share capital to a total of 2.71% for an overall
investment of Euro 4,819 thousand.
Lastly, on July 30, 2008, the company sold its treasury stock (through subsidiaries iTouch Spain Holding
SA and iTouch Limited) as a portion of the payment of the earn-out clauses for the acquisition of
Producciones y Promociones Especiales de TV (parent company of Llama TV SL) and Call TV Holdings
Limited (parent company of Ostrich Media Limited).
At the date of the Meeting of the Board of Directors approving the financial statements for the period
ended June 30, 2008, Buongiorno held 1,488 own shares.
On behalf of the Board of Directors of Buongiorno SpA
The Chairman
Mauro Del Rio
**********
Half-Year Report as of June 30, 2008
Global Reports LLC
Page 30
Buongiorno SpA
2. Accounting Statements
2.1
Consolidated Balance Sheet of the Buongiorno Group as of June 30, 2008
CONSOLIDATED BALANCE SHEET
(in thousands of Euro)
NON-CURRENT ASSETS
06.30.2008
31.12.2007
Variance
177.434
35.569
3.148
2.883
1.162
23.608
243.804
189.002
11.940
2.914
3.340
2.017
21.342
230.556
-11.568
23.629
234
-457
-855
2.266
13.248
1.513
86.008
20
64.835
152.376
396.180
145.574
1.958
80.550
10.290
59.567
152.365
382.920
146.248
-445
5.458
-10.270
5.268
11
13.260
-674
9.274
6.891
2.329
18.494
11.109
2.561
4.430
18.101
-1.835
4.330
-2.101
393
LIABILITIES DIRECTLY ATTRIBUTABLE TO NON-CURRENT ASSETS HELD FOR SALE
94.094
2.539
12.153
116.454
6.872
232.112
-
80.535
4.359
124.289
1.137
8.252
218.572
-
13.559
-1.820
-112.136
115.317
-1.380
13.540
-
TOTAL LIABILITIES AND CAPITAL AND RESERVES
396.180
382.920
13.260
Goodwill
Other intangible assets
Tangible fixed assets
Shareholdings in associates
Other investments
Deferred tax assets
CURRENT ASSETS
Inventories
Trade and other receivables
Other financial assets
Cash and cash equivalents
NON-CURRENT ASSETS HELD FOR SALE
TOTAL ASSETS
CAPITAL AND RESERVES
NON-CURRENT LIABILITIES
Long-term borrowings
Deferred taxes
Non-current funds
CURRENT LIABILITIES
Trade and other creditors
Current tax payables
Short-term borrowings
Long-term borrowings (current share)
Current funds
(*) Effective as of January 1, 2008, the balance of other financial assets represented by investments in
money market funds with maturities of less than three months has been reclassified among cash and
cash equivalents.
Half-Year Report as of June 30, 2008
Global Reports LLC
Page 31
Buongiorno SpA
2.2 Consolidated Profit and Loss Account of the Buongiorno Group as of June 30, 2008 (First Half
2008)
(in thousands of Euro)
H1 2008
Economic and Financial Highlights
Sales of Services
Value of Production
Added Value (Val. of prod. - Mat., cons. and services)
Industrial Added Value (IAV)
Normalized Gross Operating Margin
Normalized Operating Profit (Loss)
Financial Operations
Net non-recurrent earnings / (charges)
Profit (Loss) before Taxes
Profit (Loss) before Minority Interests
Balance Sheet highlights
Net invested capital
Net current assets
Capital and reserves
Net financial position
Earning ratios
Added value/Revenues
Gross Operating Margin/Revenues
Gross Operating Margin/Net invested capital
Financial Charges/Gross Operating Margin
Operating Result/Revenues (ROS)
Operating Result/Net invested capital (ROI)
Profit (Loss) before Minority Interests/Capital and reserve
Cost of staff
Staff (average of the period)
Annual Revenues/Average staff
H1 2007
Var. %
158.180
159.209
43.366
57.138
16.278
10.608
(4.380)
(1.878)
4.350
2.392
85.777
86.823
26.494
34.005
8.753
6.094
(1.044)
0
5.051
4.968
84%
83%
64%
68%
86%
74%
320%
218.600
(9.112)
145.574
73.026
88.318
(513)
104.995
16.677
148%
1.676%
39%
338%
27,4%
10,3%
7,4%
(26,9%)
6,7%
4,9%
1,6%
30,9%
10,2%
9,9%
(11,9%)
7,1%
6,9%
4,7%
(11%)
1%
(25%)
126%
(6%)
(30%)
(65%)
1.090
290
691
248
58%
17%
(14%)
(52%)
2.3 Consolidated Profit and Loss Account of the Buongiorno Group as of June 30, 2008 (Second
Quarter 2008)
Half-Year Report as of June 30, 2008
Global Reports LLC
Page 32
Buongiorno SpA
(in thousands of Euro)
Q2 2008
Economic and Financial Highlights
Sales of Services
Value of Production
Added Value (Val. of prod. - Mat., cons. and services)
Industrial Added Value (IAV)
Normalized Gross Operating Margin
Normalized Operating Profit (Loss)
Financial Operations
Net non-recurrent earnings / (charges)
Profit (Loss) before Taxes
Profit (Loss) before Minority Interests
Balance Sheet highlights
Net invested capital
Net current assets
Capital and reserves
Net financial position
Earning ratios
Added value/Revenues
Gross Operating Margin/Revenues
Gross Operating Margin/Net invested capital
Financial Charges/Gross Operating Margin
Operating Result/Revenues (ROS)
Operating Result/Net invested capital (ROI)
Profit (Loss) before Minority Interests/Capital and reserve (ROE)
Cost of staff
Staff (average of the period)
Annual Revenues/Average staff
Half-Year Report as of June 30, 2008
Global Reports LLC
Q2 2007
Var. %
79.135
79.644
21.474
28.110
8.041
4.092
(2.170)
(1.321)
578
(760)
43.343
43.966
13.156
16.148
4.102
2.565
(212)
0
2.353
2.745
(75%)
(128%)
218.600
(9.112)
145.574
73.026
88.318
(513)
104.995
16.677
148%
1.676%
39%
338%
27,1%
10,2%
3,7%
(27,0%)
5,2%
1,9%
(0,5%)
30,4%
9,5%
4,6%
(5,2%)
5,9%
2,9%
2,6%
(11%)
7%
(21%)
422%
(13%)
(36%)
(120%)
1.068
296
693
250
54%
18%
Page 33
83%
81%
63%
74%
96%
60%
924%
Buongiorno SpA
2.4
Statement of Changes in Equity of the Buongiorno Group as of June 30, 2008
Currency: Euro
DESCRIPTION
Balance at period-start
- Allocation of profit (loss) for the period:
- (-) Own shares
- Reserve of assigned stock options
- Capital increase and Stock Option Plan, exercised
- Change in % ownership
- Exchange differences
- Due Shareholders payments
- Other movements due to reclassification
- Profit (loss) for the period
Balance at period-end
STATEMENT OF CHANGES AT 06/30/2008
Share
Other
premium
reserves
Share capital
account
27.651.955
80.455.616
(586.690)
26.364.089
Profit
(Loss)
carried forward
(14.020.083)
13.858.371
Profit
(Loss)
of the Group
13.858.371
(13.858.371)
(3.583.067)
1.085.833
1.596.327
(299.451)
27.065.265
(11.192.878)
(1.565.824)
503.655
12.445.644
(1.252.766)
70.348.571
34.164.497
(117.601)
2.401.750
2.401.750
Total capital
and reserves
of the Group
Capital
Profit
and reseves of
(Loss) of
minority interests minority interests
134.309.949
(4.169.757)
1.085.833
1.596.327
(299.451)
(1.565.824)
503.655
2.401.750
133.862.482
12.088.786
(151.065)
(151.065)
151.065
228.047
299.451
(743.907)
11.721.312
(9.042)
(9.042)
Total Capital
and reserves of
minority interests
11.937.721
228.047
299.451
(743.907)
(9.042)
11.712.270
Total consolidated
capital and
reserves
146.247.670
(4.169.757)
1.085.833
1.824.374
(2.309.731)
503.655
2.392.708
145.574.752
Statement of changes in consolidated Capital and Reserves at 12/31/2007
Valuta: Euro
DESCRIPTION
STATEMENT OF CHANGES AT 31/12/2007
Share
Other
premium
reserves
Share capital
account
Balance at period-start
22.595.977
34.763.396
13.838.787
- Allocation of profit (loss) for the period:
- Reserve for derivative instruments (IRS))
Profit
Total capital
(Loss)
and reserves
of the Group
of the Group
(11.503.905)
12.292.489
12.292.489
(12.292.489)
(16.537)
- Reserve of assigned stock options
2.215.113
- Reserve for convertible bond
- Capital increase and Stock Option Plan, exercised
Profit
(Loss)
carried forward
(245.735)
5.055.978
- Change in % ownership
(525.287)
310.581
(310.581)
reserves
3.095.827
-
75.082.571
-
(16.537)
-
(16.537)
2.215.113
-
2.215.113
(771.022)
9.001.299
13.333.334
(1.068.762)
(424.616)
(424.616)
(1.493.378)
416.276
416.276
(503.655)
14.097.719
80.455.616
26.364.089
-
(771.022)
9.001.299
(503.655)
(14.266.843)
- Profit (loss) for the period
Global Reports LLC
310.581
capital and
4.332.035
(1.068.762)
Half-Year Report as of June 30, 2008
-
2.785.247
Total consolidated
44.693.937
(247.152)
27.651.955
71.986.744
Total Capital
and reserves of
minority interests
4.332.035
- Due Shareholders payments
Balance at period-end
Profit
(Loss) of
39.637.960
- Exchange differences
- Other movements due to reclassification
Capital
and reseves of
minority interests minority interests
(14.020.083)
(416.276)
13.858.371
13.858.371
13.858.371
134.309.949
-
12.088.786
44.693.937
(503.655)
-
(151.065)
(151.065)
13.707.306
(151.065)
11.937.721
146.247.670
Page 34
Buongiorno SpA
2.5
Consolidated Cash Flow Statement of the Buongiorno Group – First Half 2008
The Consolidated Cash Flow Statement was prepared using the indirect method.
(in thousands of Euro)
H1 2008
H1 2007
Cash and cash equivalent at period start
59.567
30.222
A) Cash flow generated by (used for) ordinary activities
Profit (loss) attributable to the Group and Minority Interest
Depreciation and amortization
Write-downs of fixed assets
Write-downs of unconsolidated equity investments
Net change in employee benefits
Net change in provision for risks and charges
Minority interest
Change in deferred taxes
(Gains) losses and other non-monetary accounts
(Increase) / decrease in trade receivables
(Increase) / decrease in trade payables
Change in other current asset items
15.253
2.401
4.254
45
0
-55
904
-9
-92
1.086
-11.288
13.807
4.201
15.253
14.093
13.858
4.007
-8
750
-412
1.167
-151
-4.336
2.215
-23.940
29.240
-8.296
14.093
Cash flow generated by ordinary activities
B) Cash flow generated by (used for) investing activities
iTouch Ventures Limited Group Acquisition
Net (investments) disinvestments in:
- intangible assets
- property and equipment
- investments
Net change in current securities (*)
-5.361
-
-117.443
88.984
-13.614
-1.155
-861
10.270
-5.361
-22.972
-481
-2.662
-2.344
-117.443
Cash flow generated by financing activities
-4.624
3.190
-1.838
-1.566
-4.410
-4.624
132.695
94.503
-17.051
26.685
-1.068
29.626
132.695
Cash flow for the period (A+B+C)
5.268
29.345
64.835
59.567
Cash flow generated by investing activities
C) Cash flow generated by (used for) financing activities
Net change in other financial assets/liabilities
Net change in medium and long-term borrowings
Capital increase (reimbursement)
Exchange rate gains (losses)
Other changes in equity
Cash and cash equivalent at period end
(*) Effective as of January 1, 2008, the balance of other financial assets represented by investments in
money market funds with maturities of less than three months has been reclassified among cash and
cash equivalents.
Half-Year Report as of June 30, 2008
Global Reports LLC
Page 35
Buongiorno SpA
3. NOTES TO THE CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS
General Principles Followed in Preparing the Consolidated Half-Year Report and Reference
Accounting Standards
These consolidated Half-Year Financial Statements, which consist of the Balance Sheet, Profit and Loss
Account, Cash Flow Statement, Statement of Changes in Equity and Notes to the Consolidated Financial
Statements, were drafted in compliance with the requirements of the “Regulations for Implementing
Legislative Decree No. 58 of February 24, 1998 Regarding Issuers” (CONSOB Resolution No. 11971 of
May 14, 1999 and subsequent amendments), European Community Regulations No. 1606 of July 19,
2002, on International Accounting Principles. The Consolidated Half-Year Financial Statements
(hereinafter the “Half-Year Report”) at June 30, 2008 have been prepared in accordance with the
international accounting standards (IAS/IFRS) for interim financial statements. The financial statements
have been prepared in accordance with IAS 1, whilst the notes have been prepared in condensed format
as permitted by IAS 34 and hence do not include all the information required for annual financial
statements prepared in accordance with the IFRS standards.
The accounting principles and criteria adopted in these Half-Year Report may not coincide with IFRS
provisions in force as at December 31, 2008 as a result of future European Commission guidelines
regarding the approval of the international accounting standards or the issue of new standards,
interpretations or implementation guidelines by the International Accounting Standards Board (IASB) or
International Financial Reporting Interpretation Committee (IFRIC).
Figures are expressed in thousands of euro and any other currencies are specifically indicated.
The Buongiorno Group has adopted the IAS/IFRS that were issued by the International Accounting
Standards Board and approved by the European Commission following the entry into force, As of January
1, 2005, of European Regulation No. 1606 of July 2002. As of January 1, 2005 and January 1, 2007,
the separate Financial Statements Report of the Company have also been prepared in accordance with
IAS/IFRS.
The preparation of interim financial statements in accordance with IAS 34, Interim Financial Reporting,
requires judgments, estimates and assumptions that have an impact on assets, liabilities, costs and
revenue. Final results may differ from those obtained through these estimates.
The accounting standards are those described in the consolidated Financial Statements as of December
31, 2007 and have been applied consistently for all the Group companies and all the periods presented.
Page 36
Half-Year Report as of June 30, 2008
Global Reports LLC
Buongiorno SpA
3.1
NOTES TO THE MAIN ITEMS
Goodwill
Changes in “Goodwill” are given in the following table:
(in thousands of Euro)
12.31.2007
Increase
189.002
5.795
Goodwill
Write-downs and other
movements
(17.363)
06.30.2008
177.434
The balance at June 30, 2008 was broken down as follows (amounts in thousands of euro):
Cash Generating Unit
iTouch Ventures Ltd
06/30/2008
102,510
Rocket Mobile Inc
15,120
Freever – Chat
13,965
Llama TV group
7,249
Axis Mundi (By-Cycle group)
7,496
MyAlert.com S.A.
6,912
Gsmbox Srl
6,142
Tutch Media Mobile BV
5,989
HotSMS.com BV
4,080
Buongiorno MS Uk Ltd (formerly Flytxt Ltd)
3,894
DioraNews Sas
2,151
Inventa Production Ltd
1,128
Buongiorno Brasile
Total
798
177,434
The increases reported during the half-year refer primarily to the goodwill created through the acquisition
of Llama TV upon the payment of earn-out clauses. As for goodwill originated in foreign currencies, the
goodwill of Rocket Mobile Inc amounted to USD 23,836 thousand. The adjustment towards the exchange
value at year-end led to an exchange gain of Euro 1,072 thousand, which was recognized in the
translation reserve.
In accordance with IAS/IFRS, and, specifically, IAS 38, instead of systematically amortizing goodwill (IAS
38), goodwill is subject to impairment testing within one year of acquisition, and on a yearly basis
thereafter, in order to detect any permanent decreases in value. The goodwill associated with the
acquisitions of iTouch (Group) and Axis Mundi (By-Cycle Argentina Group), both of which were undertaken
in the second half of 2007, will be subjected to impairment testing in the second half of 2008, barring the
occurrence of events that raise doubt as to the existence of impairment.
The goodwill created by the acquisition of the iTouch Group came to Euro 102.5 million as of June 30,
2008 and reflects the difference between the price of acquisition (consisting of the consideration paid in
cash and the market value of the Buongiorno shares issued for transfer as of the closing date, in addition
to accessory expenses) and the fair value of iTouch’s assets and liabilities as of the date of acquisition.
During the half-year, the Company, with the aid of independent consultants, measured the fair value of the
assets and liabilities arising from the acquisition of iTouch in accordance with applicable accounting
standards. Following this valuation, goodwill was reduced by Euro 17.3 million to account for an
adjustment to the carrying value of certain assets and liabilities with respect to the figures temporarily
disclosed in the Financial Statements as of December 31, 2007. The following table provides a
breakdown of said adjustments:
Item
Movilisto
Half-Year Report as of June 30, 2005
37
Global Reports LLC
in thousands
of Euro
15,111
Pag
Buongiorno SpA
SMS.AT
2,247
17,358
Total brands
Customer relationship management
1,185
Software
1,945
Prepaid taxes
2,980
Deferred taxes
(6,105)
Total
17,363
As of June 30, 2008 Management also undertook an overall valuation of the impairment of the goodwill
created by the acquisition of iTouch. In this regard, it should be noted that the decrease in the recognized
cost of acquisition with respect to the originally negotiated values of the transaction due to the
appreciation of the euro/dollar exchange rate and the decline in the value of the Buongiorno shares
issued in exchange resulted in a carrying value of the acquisition that was significantly below the original
valuations and the independent experts’ valuations, despite the positive final figures substantially in line
with the projections, which had formed the basis of said valuations.
Lastly, turning to the goodwill created by the acquisitions of Axis Mundi (By-Cycle Group) and Llama TV, we
report that Buongiorno’s Board of Directors has initiated the procedures required to conduct a fair value
measurement of the assets and liabilities acquired in accordance with international accounting standards.
The appraisal will be completed by the end of the year. As a result, the value of the assets and liabilities
related to the acquisition and, therefore, the amount of goodwill may change during the valuation process,
which will require the involvement of independent consultants.
Other Intangible Assets
The net values of the intangible assets and the changes for the period are listed below:
(in thousands of Euro)
R&D Costs
Patents and intellectual property rights
Concessions, licenses, trademarks and sim.rights
Other intangible assets
Total
12.31.2007
Increase
Amortization
Other
movements
92
196
4.099
7.553
11.940
140
170
17.884
12.734
30.928
(278)
(219)
(1.213)
(1.622)
(3.332)
2.640
239
(2.291)
(4.555)
(3.967)
06.30.2008
2.594
386
18.479
14.110
35.569
"R&D costs” refer to the capitalization of internal costs and, specifically, they are attributable to the
Research & Development personnel.
Patents and intellectual property rights include costs of purchasing management and accounting
software developed and sold by third parties.
“Concessions, licenses and trademarks” include residual costs sustained for the registration of
trademarks in Italy and around the world, as well as costs related to the purchase of Internet domains for
the Group (“Buongiorno” and “Blinko” in particular). The increase reported during the quarter refers to the
allocation of the value of the trademarks Movilisto and sms.at ensuing from the valuation of the assets
acquired through iTouch at their current values, as described in the foregoing paragraph. The
amortization schedule of said trademarks was set at 10 years.
The item “Other assets” also includes:
• the costs incurred to develop technology. In particular, during the half-year investments were
made in the development of new modules for the internally developed proprietary platform known
as “B!3A” (approximately Euro 520 thousand) and to create a Mobile Social Networking platform
(Blinko) (approximately Euro 320 thousand);
• approximately Euro 5 million paid by MyAlert SA (Spain) to Telefonica (Spain) in return for the
exclusive right to conduct prize competitions in South America beginning in July 2008. Said right
has a duration of 18 months and will be amortized over the same period;
• approximately Euro 3.7 million paid by iTouch South Africa to acquire rights associated with
agreements with a local telephone service provider for the distribution of digital contents on the
South African market;
Half-Year Report as of June 30, 2005
Pag
38
Global Reports LLC
Buongiorno SpA
•
•
approximately Euro 1.2 million associated with the valuation of the Customer Relationship
Management acquired through iTouch and based on the calculation of the current value of
iTouch’s assets;
approximately Euro 2.0 million associated with the valuation of the software acquired through
iTouch and based on the calculation of the current value of iTouch’s assets.
Property and Equipment
Below is a description of the changes to property and equipment in terms of historical cost, accumulated
depreciation, and net value.
(in thousands of Euro)
Historical cost
Cumulated
depreciation
06.30.2008
Plant and machinery
Industrial and commercial equipment
Other assets
Total tangible fixed assets
1.578
38
12.114
13.730
-1.182
-8
-9.392
-10.582
Net value
Net value
06.30.2008
06.30.2008
396
30
2.722
3.148
118
13
2.783
2.914
No purchases of significant amounts were made during the reporting period.
Deferred Tax Assets
The item totaled Euro 23,608 thousand (Euro 21,342 thousand as of December 31, 2007). Of this total,
Euro 13,628 thousand is represented by assets arising from the accounting treatment of tax losses
associated with the core business that may be carried forward indefinitely in accordance with IAS/IFRS
and that are believed likely to be used to offset future taxable income (for the purposes of IRES — Italian
corporate income tax — or other equivalent foreign income taxes), Euro 7,000 thousand in assets arising
from the accounting treatment of tax losses incurred by Group companies that may be carried forward
indefinitely and are believed likely to be recovered, and Euro 2,980 thousand arising from the
determination of the current value of the assets deriving from the acquisition of iTouch.
It should be noted that the Group has cumulative tax losses carryforwards totaling Euro 180 million, of
which only Euro 75 million have been recognized as deferred tax assets.
Receivables from Subsidiaries and Associates
At June 30, 2008, receivables from subsidiaries and associates amounted to Euro 622 thousand (at
December 31, 2007 these amounted to Euro 506 thousand). These receivables relate mainly to
Buongiorno Hong Kong Ltd.
Half-Year Report as of June 30, 2005
39
Global Reports LLC
Pag
Buongiorno SpA
Tax Receivables
This item includes:
(in thousands of Euro)
Tax receivables
06.30.2008
5.204
06.30.2008
2.563
Tax receivables amounted to Euro 5,204 thousand (Euro 2,563 thousand at December 31, 2007) and
relate principally to recoverable VAT for Euro 3,277 thousand, to withholding tax prepayments for Euro
1,303 thousand and, for the remaining part (Euro 624 thousand), to receivables for withholding tax paid.
The increase in the item with respect to the balance from the previous year is primarily due to tax credits
deriving from the subsidiaries Buongiorno France SA, iTouch Movilisto France and Axis Mundi.
Other Receivables
This item is broken down as follows:
(in thousands of Euro)
Trade debtors and receivables from employees for advances
Other receivables
Total
06.30.2008
4.229
1.153
5.382
06.30.2008
1.547
494
2.041
Trade debtors include Euro 1,275 thousand in advances paid for the purchase of prizes for competitions
launched in South American countries.
Cash and Cash Equivalents
Cash and cash equivalents amounted to Euro 64,855 thousand as of June 30, 2008 and consisted of the
balance of liquid current accounts denominated in euro as well as U.S. dollars, pounds sterling, Australian
dollars, South African rand, Argentine pesos, and other minor currencies, in addition to immediately liquid
investments in money market funds.
Investment flows relating to the first half of 2008 are shown and explained in the consolidated Cash Flow
Statement.
For the notes on net financial debt see Paragraph 1.4.3 of the Directors’ Report on Operations.
Cash and cash equivalents include a balance of Euro 1.2 million on deposit with a Spanish bank to secure
a guarantee provided on behalf of a subsidiary and Euro 250 thousand given in pledge by the Company to
secure a bank bond issued by a credit institution in favor of Simest SpA.
EQUITY
Annex C details the reconciliation between Equity and the results of Buongiorno with the same items for
the Group, while movements of the items composing the consolidated equity are shown in the Statement
of Changes in Equity (attached to the consolidated Balance Sheet and Profit and Loss Account).
Share Capital
Half-Year Report as of June 30, 2005
40
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Pag
Buongiorno SpA
As of June 30, 2008, share capital amounted to Euro 27,065,265 Euro, composed of 104,097,175
ordinary shares with a par value of Euro 0.26 each. The recognized balance is net of Euro 586,690,
consisting of 2,256,500 treasury stock held by the Parent Company, Buongiorno, with a nominal value of
Euro 0.26 each.
There were no changes to share capital during the half-year.
Minority Interests
Minority interests may be broken down as follows:
(in thousands of Euro)
Equity attributable to the Group
Equity attributable to Minority interest
Consolidated equity and profit for the period
06.30.2008
133.862
11.712
145.574
12.31.2007
134.310
11.938
146.248
EARNINGS PER SHARE
Basic
Basic EpS is calculated by dividing the net Group profit for the period by the average number of ordinary
shares in circulation during the period, namely 106,353,675 in the first half of 2008 (88,664,054 in the
First Half of 2007).
Diluted
Diluted EpS is calculated by dividing the Group profit for the period, gross of interests on the convertible
bond, by the average number of ordinary shares in circulation during the period plus the number of
options (or other instruments potentially convertible into ordinary shares) outstanding at the end of the
period, a total of 111,085,675 in the First Half of 2008 (95,130,805 in the First Half of 2007).
Long-term Borrowings
The Company’s medium/long-term financial debt at the end of the half-year period amounted to Euro 9.3
million (Euro 11.1 million at December 31, 2007), consisting of:
-
-
-
the remaining balance of the convertible bond (Euro 1.0 million compared to an original value of
Euro 12 million) underwritten on September 22, 2005 by Mitsui & Co Ltd and Banca IMI and
maturing in 2010. The balance at June 30, 2008 refers to the amount held by Banca IMI, net of
the value of the underlying option;
the approximately Euro 0.6 million long-term, fixed-rate loan issued at a subsidized rate by
Simest SpA (as per Italian Law 394/81 on internationalization projects);
Euro 1.7 million representing the medium-term portion of the floating-rate loan issued by Credito
Emiliano SpA in the total amount of Euro 3.0 million;
Euro 3.8 million long-term representing the medium/long-term portion of the unsecured loan
issued by MCC SpA (Unicredit banking group) in the total amount of Euro 5.0 million;
financial liabilities amounting to Euro 2.2 million associated with the deferred payment of the sale
price of Axis Mundi SA (By-Cycle Group) to former shareholders.
Convertible bonds, like other long-term financial liabilities, are valued at amortized cost, which is calculated
bearing in mind all related costs and using a market interest rate for equivalent non-convertible bonds or
financial liabilities (IAS 32, Paragraphs 64, 28 and 31). The net interest rate used was 4.5%, which
corresponds to the rate obtained by the banking system on medium- and long-term loans at the date the
bond was issued (September 2005).
Half-Year Report as of June 30, 2005
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Buongiorno SpA
Deferred Taxes
The balance of deferred tax liabilities stood at Euro 6,891 thousand as of June 30, 2008 (Euro 2,561
thousand as of December 31, 2007). This balance derives primarily from the tax effects of the fair value
measurement of the assets and liabilities arising from the iTouch acquisition (Euro 5,710 thousand) and
the recognition of intangible assets during previous years following the acquisition of Rocket Mobile (Euro
1,149 thousand).
Provisions for Contingencies and Charges (Current and Non-current)
This item mainly includes the provision for restructuring charges, the provision covering losses of
unconsolidated subsidiaries, the provisions to cover future costs or losses arising from completed
operations, and the funds for legal practices or commercially-related contractual risks.
The following table provides a breakdown of funds for risks and charges (current):
(in thousands of Euro)
Provisions for legal contingencies
Other provisions
Total provision for risks and charges (current)
12.31.2007
increase
decrease
other changes
06.30.2008
93
8.159
8.252
24
530
554
-2
-4.188
-4.190
0
2.255
2.255
115
6.756
6.871
The item “Other provisions” had a balance of Euro 6,756 thousand as of June 30, 2008 and refers to
reserves intended for the current restructuring plan and the coverage of contingencies related to the risk
of future expenses generated by business operations. A total of Euro 4.2 million was drawn down from the
reserves during the half-year.
The following table provides a breakdown of reserves for risks and charges (non-current):
(in thousands of Euro)
Provisions for legal contingencies
Other provisions
Total provision for risks and charges (non current)
12.31.2007
increase
decrease
other changes
06.30.2008
335
2.954
3.289
367
0
-158
-158
-2.255
-2.255
702
541
1.243
367
The Provision for legal contingencies includes contingencies related to certain ongoing disputes. The
change with respect to the end of 2007 refers to the estimate of expenses associated with certain
ongoing litigation to which subsidiaries are parties.
The item “Other provisions” had a balance of Euro 541 thousand and refers to funds intended for the
current restructuring plan. Several funds associated with restructuring (for a total of Euro 2,255
thousand) were reclassified as current provisions effective from June 30, 2008.
At June 30, 2008 several Group companies were undergoing audits by the Italian tax authority In further
detail, the Parent Company was the object of an ordinary periodic audit by Italy’s tax police. At the
conclusion of this audit, Buongiorno received a report of findings, primarily regarding dealings with certain
foreign subsidiaries. The report of findings was under assessment by the Italian Revenue Service as of the
date of the meeting of Board of Directors that approved this Half-Year Report. On the basis of the
analyses conducted with the aid of their consultants, the Directors believe that the company will be able to
respond to any developments with more than sufficient evidence. Consequently, no sums were set aside
on the Financial Statements.
Short-term Borrowings
Short-term borrowings consist primarily of the balance of the secured loan issued by Banca IMI SpA
(Intesa SanPaolo Group) in the amount of Euro 114 million and used to pay the price of acquisition of
iTouch and refinance the acquired company’s pre-existing debt.
The loan was disbursed on December 28, 2007, has a maturity of 12 months, and may be extended,
upon a simple request from the Company, for a further six months up to a maximum of Euro 100 million.
The loan agreement calls for compliance with several financial covenants, breach of which may trigger a
request for immediate repayment.
Half-Year Report as of June 30, 2005
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Buongiorno SpA
These covenants are:
-
The ratio of Consolidated Gross Operating Margin to consolidated net borrowing costs;
-
The ratio of Consolidated Net Financial Debt to Consolidated Gross Operating Margin;
-
The Ratio of Consolidated Net Financial Debt to Consolidated Equity.
Said covenants were complied with at all quarterly measurements conducted from March 2008 to the
reporting date.
Shares of the acquired company iTouch Ventures Limited and other Buongiorno Group companies were
pledged to secure the loan.
Payables to Other Lenders
Payables to other lenders refer primarily to liabilities of a financial nature in relation to recent acquisitions
and corporate actions. The reader is referred to the Directors’ Report on Operations for a breakdown of
these positions as of June 30, 2008 (Paragraph 1.4.4).
Personnel Costs
This item includes the costs for employees, including provisions required by the law and by collective
contracts, as well as the cost of holidays that had matured but were still unused at June 30, 2008. The
reader is referred to paragraph 1.8 of the Directors’ Report on Operations for an analysis of human
resources.
Personnel costs include the notional cost, amounting to Euro 1,085 thousand, relating to the issue of
options under the stock option plans existing at the period-end in favor of employees, collaborators and
directors (IFRS 2).
The summary of the stock option plans existing at period-end is shown in paragraph 1.14 of the Directors’
Report on Operations.
Depreciation, Amortization and Impairment Losses
(in thousands of Euro)
Amortization of intangible fixed assets
Depreciation of tangible fixed assets
Total amortization and depreciation
Other fixed assets write-downs
Write-downs of bad debt and other provisions
Total amortization, depreciation and other write-downs
06.30.2008
3.332
922
4.254
45
510
4.809
06.30.2007
1.407
506
1.913
15
25
1.953
The increase during the period is a function of the allocation of values to trademarks following the
completion of the measurement of the assets and liabilities associated with the iTouch Group, as
illustrated above, at their current values.
Half-Year Report as of June 30, 2005
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Buongiorno SpA
Non-recurring Charges
(in thousands of Euro)
06/30/2008
Redundancy costs
Data center and platform restructuring
Legal entities closing
Other restructuring costs
Total
766
902
162
48
1.878
Non-recurring charges refer to the expenses incurred by Group companies in relation to the
restructuring activities initiated in early 2008 that were not covered by provisions as of December 31,
2007. The balance of these restructuring costs includes Euro 766 thousand in redundancy incentives
paid, Euro 902 thousand in technological costs incurred for various activities in support of the
rationalization and reorganization of technology platforms, and Euro 162 thousand associated with the
cessation of operations in the Nordic regions.
FINANCIAL EARNINGS AND CHARGES
Other Finance Income
This item is broken down as follows:
(in thousands of Euro)
Bank interest incomes
Other financial incomes
Totale
06.30.2008
680
92
772
06.30.2007
772
11
783
06.30.2008
4.460
159
167
411
5.197
06.30.2007
788
657
376
6
1.827
Interest and Other Finance Expense
This item is broken down as follows:
(in thousands of Euro)
Interests and other financial expenses on non current liabilities
Interests and other financial expenses on current liabilities
Net exchange differences
Other financial charges
Totale
The change in finance expense is primarily attributable to the interest on the loan of Euro 115 million
issued by Banca IMI SpA to the Parent Company Buongiorno on December 27, 2007 for the acquisition
of iTouch.
INCOME TAXES FOR THE HALF-YEAR
With reference to the current period, taxes have been accrued based on the best estimates calculated
using the average tax rates relating to tax on income to be applied at the end of the period (Euro 1,866
thousand at June 30, 2008).
Deferred taxes were also calculated for the main temporary and taxable differences arising from the
differences between the book value of consolidated balance-sheet assets and liabilities and the values for
tax purposes. The impact on the Profit and Loss Account amounted to approximately Euro 92 thousand.
Half-Year Report as of June 30, 2005
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CONSOLIDATED PROFIT (LOSS) FOR THE PERIOD
The Group’s result for the period net of Minority interests amounted to Euro 2,401 thousand as against a
net profit for the previous period of Euro 5,024 thousand.
On behalf of the Board of Directors of Buongiorno SpA
The Chairman
Mauro Del Rio
**********
Half-Year Report as of June 30, 2005
45
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Pag
Buongiorno SpA (Annex A)
Consolidated Reporting Statements for Primary Segment (Geographical Area) and Secondary Segment (Line of Business) as of June 30, 2008
BREAKDOWN OF REVENUES BY GEOGRAPHICAL AREA
(in thousands of Euro)
H1 2008
H1 2007
VARIANCE
Var. %
ITALY & MED
21.003
18.534
2.469
13,3%
FRANCE
11.946
4.837
7.109
147,0%
IBERIA
54.994
27.610
27.384
99,2%
GERMANY, SWITZERLAND AND AUSTRIA (GSA)
5.662
2.521
3.141
124,6%
LATIN AMERICA (LATAM)
9.258
1.473
7.785
528,5%
UK & INTERNATIONAL
45.144
11.430
33.714
295,0%
NORTH AMERICA
10.025
19.253
-9.228
(47,9%)
148
119
29
24,5%
158.180
85.777
72.403
84,4%
OTHER
TOTAL REVENUES
BREAKDOWN OF REVENUES BY BUSINESS LINE
(in thousands of Euro)
CONSUMER SERVICES
MARKETING SERVICES
TOTAL REVENUES
H1 2008
149.765
8.415
158.180
H1 2007
79.860
5.917
85.777
(Annex B)
Half-Year Report as of June 30, 2005
Global Reports LLC
Pag 46
VARIANCE
69.905
2.498
72.403
Var. %
88%
42%
84%
Buongiorno SpA Breakdown of Revenues for the First Half of 2007 by Geographical Area
(in thousands of Euro)
ITALY & MED
FRANCE
IBERIA
GSA
RCE
RILA
RNA
18.534
0
0
0
0
4.837
0
0
0
0
4.837
0
27.610
0
0
0
27.610
2.521
18.534
2.521
0
0
0
0
0
1.473
0
0
0
1.473
UK & INTERNATIONAL
0
0
0
11.430
0
11.430
NORTH AMERICA
0
0
19.253
0
0
19.253
Total
0
0
0
0
119
119
25.892
29.083
19.253
11.430
119
85.777
LEGEND
At June 30, 2007 the geographical areas were as follows:
Italia, Germania, Austria, Grecia, Turchia, Francia
Spagna, Sudamerica
Nord America e Canada
Regno Unito, Olanda, Sud Africa, Australia e Nuova Zelanda, Nord America
Half-Year Report as of June 30, 2005
Global Reports LLC
Total
LATAM
Netting+Shared Service
RCE
RILA
RNA
RNE
Netting+
Shared
Service
RNE
Pag 47
Buongiorno SpA
(Annex C)
Reconciliation Between the Financial Statements of Buongiorno SpA and the Consolidated Financial
Statements: Equity, and Consolidated Profit (Loss) of Buongiorno SpA at June 30, 2008
Reconciliation between the Financial Statements of Buongiorno S.p.A. and the Consolidated Financial Statements:
Buongiorno S.p.A. and Consolidated Capital and Reserves and Consolidated Profit (Loss)
(in thousands of Euro)
Capital and Reserves
12/31/2007
Buongiorno S.p.A.
135.101
Elimination of equity investments
Movements in
capital and reserves
Change
consolidation area
(2.580)
Profit (Loss)
for the period
-
911
133.432
1.025
(167.664)
(176.855)
8.465
Consolidated goodwill
189.002
(11.568)
-
Other lesser items
(12.938)
3.133
-
134.310
(2.550)
(299)
11.938
(516)
299
(9)
11.712
146.248
(3.066)
0
2.392
145.574
Capital and reserves and profit (loss) of the Group
Capital and reserves and profit (loss) of Minority interests
Consolidated capital and reserves and profit (loss)
(299)
Capital and Reserves
06/30/2008
177.434
465
(9.340)
2.401
133.862
Page 48
Half-Year Report as of June 30, 2008
Global Reports LLC
Buongiorno SpA
(Annex D)
LIST OF COMPANIES INCLUDED IN THE CONSOLIDATION AREA
(Consolidated line-by-line)
Denominazione sociale
Buongiorno S.p.a.
Akumiitti Content Services Ltd
Akumiitti Oy
Axis Mundi Sa
Buongiorno Deutscheland Gmbh
Buongiorno Dijtal Iletisim A.S.
Buongiorno France Sas
Buongiorno Hellas
Buongiorno Marketing Services Deutchland GmbH
Buongiorno Marketing Services Espana s.l.u.
Buongiorno Marketing Services France Sa
Buongiorno Marketing Services GmbH AT
Buongiorno Marketing Services Italia s.r.l.
Buongiorno Marketing Services Netherlands B.V.
Buongiorno Marketing Services UK Ltd
Buongiorno Marketing Services USInc
Buongiorno MyAlert Bolivia
Buongiorno MyAlert Brasil Servicios Celulares Ltd
Buongiorno MyAlert Colombia S.R.L.
Buongiorno MyAlert Ecuador S.A.
Buongiorno MyAlert Perù
Buongiorno Myalert S.A.
Buongiorno MyAlert Servicios de Telecomunicaciones Chile Ltd
Buongiorno UK Ltd
Buongiorno USInc
BY Cycle Perù SAC
Call TV Holdings Limited
Corporacion Crossbow SL
Dioranews Sas
Fleck capital Gmbh
Freever UK Limited
Group iTouch Movilisto Espana SL
Groupo iTouch Movilisto Maroc SARL
Grupo iTouch Movilisto Mexico SA de CV
Grupo iTouch Movilisto Mexico Servicios, S.A de CV
Grupo iTouch Movilisto R.S.R.L
HotSMS.com B.V.
Inicitivas Especiales SL
Inventa Productions Limited
iTouch (UK) Ltd
iTouch Australia Pty Ltd
iTouch Denmark AS
iTouch Finance 1 Ltd
iTouch Finance 2 Ltd
iTouch Global Concepts Nigeria Ltd
iTouch Holdings Ltd
iTouch Ltd
iTouch Movilisto France S.A.S
iTouch Movilisto Portugal Lda
iTouch New Zealand Ltd
iTouch Nordics AS
iTouch South Africa (Pty) Ltd
iTouch Spain Holdings SL
itouch Technologies Ltd (t/ a iTouch Ireland)
iTouch Ventures Limited
Jippii Holding BV
Jippii Mobile Entertainment Oy
Jippii Schweiz AG
Jippii Spain SL
Kunno Systems SL
LlamaTV S.L.
Mobile Fun Sistemas de Informatica Ltda
Mobilnet AS
Mobivillage SA
Movilisto SA
Movilisto TV
MyAlert S. de R.L. de CV
Ostrich Media Limited
Pajala BV
Peoplesound.com Limited
Producciones y promotiones especiales de TV sl
Rainbow development sa
Rivertam sa
Rocket Mobile Inc
SMSCosmos AS
sms.at Holding AG
sms.at Mobile Internet Services GmbH
sms.ch AG
Telequity Pty Ltd
Telitas Belgium BV
Telitas Netherlands NV
Telitas Sweden AB
Tutch Mobile Media B.V.
Xama TV Lda
Buongiorno SpA
Global Reports LLC
Paese
Sede legale
Italia
Parma
Finlandia
Helsinki
Finlandia
Helsinki
Argentina
Buenos Aires
Germania
Berlino
Turchia
Istanbul
Francia
Parigi
Grecia
Atene
Germania
Monaco
Spagna
Madrid
Francia
Parigi
Austria
Vienna
Italia
Parma
Olanda
Amstelveen
Regno Unito Londra
Stati Uniti
New York
Bolivia
La Paz
Brasile
San Paolo
Colombia
Bogota
Ecuador
Quito
Perù
Lima
Spagna
Madrid
Cile
Santiago
Regno Unito Londra
Stati Uniti
Miami
Perù
Lima
Regno Unito Londra
Spagna
Madrid
Francia
Parigi
Germania
Francoforte
Regno Unito Londra
Spagna
Madrid
Marocco
Casablanca
Messico
Città del Messico
Messico
Città del Messico
Romania
Bucarest
Olanda
Amstelveen
Spagna
Madrid
Regno Unito Londra
Regno Unito Londra
Australia
Sydney
Danimarca
Hellerup
Regno Unito Londra
Regno Unito Londra
Nigeria
Lagos
Regno Unito Londra
Regno Unito Londra
Francia
Parigi
Portogallo
Lisbona
Nuova Zelanda Auckland
Norvegia
Oslo
Sud Africa
Città del Capo
Spagna
Madrid
Irlanda
Dublino
Regno Unito Londra
Olanda
Amsterdam
Finlandia
Helsinki
Svizzera
Buchs
Spagna
Madrid
Spagna
Madrid
Spagna
Madrid
Brasile
San Paolo
Norvegia
Oslo
Francia
Marsiglia
Spagna
Madrid
Spagna
Madrid
Messico
Città del Messico
Regno Unito Londra
Olanda
Amsterdam
Regno Unito Londra
Spagna
Madrid
Argentina
Buenos Aires
Urugay
Montevideo
Stati Uniti
Los Gatos
Norvegia
Oslo
Austria
Graz
Austria
Graz
Svizzera
Buchs
Australia
Sydney
Belgio
Amsterdam
Olanda
Amsterdam
Svezia
Stoccolma
Olanda
L'Aia
Portogallo
Lisbona
Capitale
sociale
27.651.956
nd
28.665
12.000
100.000
500.000
117.312
18.000
25.000
30.235
37.000
86.000
119.000
23.051.333
65.380
182.080
40.400
4.400.000
500.241.280
5.000
2.445.920
1.000.000
516.000
10
3.000
1.402
618.385
145.324
25.000
1
4.660.600
8.714
50.000
50.000
4.000
19.200
3.005
1.000
4.000.000
14.300.000
600.000
10.000.001
20.914.530
10.000.000
170.136.343
4.082.131
37.000
5.000
4.500.100
11.954.378
312
2.510.576
5.713.821
10.610
18.000
100.000
150.000
3.005
3.010
3.100
2.000
350.900
904.342
122.708
3.100
3.000
107
75.700
7.894
3.100
12.000
525.000
0
100.000
70.000
35.000
100.000
2.261.342
128.200
125.000
18.000
5.000
Valuta
EUR
EUR
EUR
ARS
EUR
TRY
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
GBP
USD
BOB
BRL
COP
ECS
PEN
EUR
CLP
GBP
USD
PE2
GBP
EUR
EUR
EUR
GBP
EUR
EUR
MXN
MXN
RON
EUR
EUR
GBP
GBP
AUD
DKK
EUR
EUR
NGN
GBP
GBP
EUR
EUR
NZD
NOK
ZAR
EUR
EUR
EUR
EUR
EUR
CHF
EUR
EUR
EUR
BRL
NOK
EUR
EUR
EUR
MXN
GBP
EUR
GBP
EUR
ARS
UYU
USD
NOK
EUR
EUR
CHF
AUD
EUR
EUR
SEK
EUR
EUR
Patrimonio
netto (Euro)
128.660.514
nd
239.472
2.375.841
75.334
(1.072.323)
16.844.977
21.464
146.027
1.136.064
51.384
70.501
315.486
21.938.139
720.444
(128.003)
(8.118)
253.425
148.726
(50.286)
0
6.359.133
1.208
4.394.258
17.694.620
176.419
70.214
768.232
3.259.140
4.061
364.951
19.923.824
(81.272)
163.462
(75.402)
(7.398)
(90.321)
873.561
4.457
(37.291.690)
2.080.937
44.521
70.553.120
22.361.503
(1.043.784)
65.148.620
32.943.398
911.101
268.498
(1.259)
(541.999)
1.175.800
5.417.552
4.135.470
45.634.124
4.877
(8.077.823)
291.599
(924.440)
4.447
919.673
846.622
488.143
3.640.025
57.950.802
416.404
(930.875)
1.035.470
14.400.895
1.646.467
2.106
13
46.953
2.864.444
2.674.660
669.731
7.126.374
101.147
1.104.340
0
(103.689)
37.234
1.193.189
897.928
% di
controllo
% di
consolid.
Controllante diretta
100,00%
100,00%
99,91%
100,00%
79,66%
100,00%
100,00%
60,00%
60,00%
60,00%
60,00%
60,00%
60,00%
60,00%
60,00%
99,91%
99,91%
99,91%
99,91%
99,91%
99,91%
99,91%
100,00%
81,04%
99,91%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
60,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
80,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
87,50%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
99,91%
100,00%
100,00%
100,00%
100,00%
99,91%
99,91%
81,04%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
80,00%
100,00%
100,00%
Controllante
Akumiitti Oy
iTouch Nordics AS
Buongiorno Myalert SA
Buongiorno SpA
Buongiorno SpA
Buongiorno SpA
Buongiorno SpA
Buongiorno Marketing Services Netherland BV
Buongiorno Marketing Services Netherland BV
Buongiorno Marketing Services Netherland BV
Buongiorno Marketing Services Netherland BV
Buongiorno Marketing Services Netherland BV
Buongiorno SpA
Buongiorno Marketing Services Netherland BV
Buongiorno Marketing Services Netherland BV
Buongiorno Myalert SA
Buongiorno Myalert SA
Buongiorno Myalert SA
Buongiorno Myalert SA
Buongiorno Myalert SA
Buongiorno SpA
Buongiorno Myalert SA
Buongiorno SpA
Buongiorno SpA
Axis Mundi SA
iTouch Ltd
Movilisto TV
Buongiorno France sa
iTouch Ltd
Buongiorno UK Ltd
iTouch Spain Holdings SL
iTouch Ltd
iTouch Spain Holdings SL
iTouch Spain Holdings SL
iTouch Spain Holdings SL
Buongiorno Marketing Services Netherland BV
iTouch Limited
Buongiorno UK Ltd
iTouch Limited
Pajala BV
iTouch Nordics AS
Movilisto SA
Group iTouch Movilisto Espana SL
iTouch SA
iTouch Ventures Limited
iTouch Holdings Ltd
iTouch Spain Holdings SL
Group iTouch Movilisto Espana SL
Pajala BV
iTouch Holdings Ltd
Pajala BV
SMSCosmos
Pajala BV
Buongiorno SpA
Jippii Mobile Entertainment Oy
iTouch Spain Holdings SL
Jippii Mobile Entertainment Oy
Jippii Mobile Entertainment Oy
Inicitivas Especiales SL
Producciones y Promociones Especiales de Television S.L.
iTouch Spain Holdings SL
My Mobile AS
iTouch Holdings Ltd
iTouch Spain Holdings SL
SMSCosmos
Buongiorno Myalert
Call TV Holding Ltd
iTouch Limited
Buongiorno UK Ltd
Itouch Spain Holding
Buongiorno Myalert SA
Axis Mundi SA
Buongiorno USA INC
iTouch Limited
iTouch Limited
sms.ch AG
sms.at Holding AG
iTouch Australia Pty Ltd
iTouch Nordics AS
iTouch Nordics AS
iTouch Nordics AS
Buongiorno SpA
Llama tv
Half-Year Report as of June 30, 2008
100,00%
100,00%
100,00%
100,00%
79,66%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
60,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
99,91%
100,00%
100,00%
81,04%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
80,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
87,50%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
80,00%
100,00%
100,00%
49
Buongiorno SpA
(Annex E)
Attestation of the Condensed Half-year Report Pursuant to Art.154 bis of Legislative Decree 58/98
The undersigned Andrea Casalini, in his capacity as Chief Executive Officer, and Carlo Frigato, in his
capacity as Executive in charge of the company’s financial reports of Buongiorno SpA, hereby declare,
taking into account the provisions set out in article154-bis, paragraphs 3 and 4 of the Legislative Decree
No. 58 of February 24, 1998, that the administrative and accounting procedures followed in preparing
the condensed half-year financial statements during 2008:
-
are appropriate in light of the features of the company, and
have been consistently applied.
The undersigned further declare that
1. the condensed half-year financial statements
were prepared in accordance with the International Financial Reporting Standards adopted
by the European Union pursuant to EC Regulation No. 1606/2002 of the European
Parliament and Council of July 19, 2002, IAS 34 – Interim Financial Reporting, as well as
provisions implementing art. 9 of Legislative Decree 38/2005;
reflect the accounting books and records;
provide a true and fair view of the assets, liabilities and profit or loss and financial position of
the issuer and consolidated companies;
2. The half-year report on operations makes reference to important events occurred in the first six
months of the year, and to their impact on the condensed half-year financial statements; it also
includes a description of the main risks and uncertainties regarding the coming six months of the
year, as well as information on significant third-party transactions.
August 29, 2008
Chief Executive Officer
Andrea Casalini
Buongiorno SpA
Global Reports LLC
Executive in charge of
the company’s financial reports
Carlo Frigato
Half-Year Report as of June 30, 2008
50
Buongiorno SpA
4. Company Data and Information for Shareholders
Buongiorno SpA
Registered office and headquarters:
Borgo Masnovo 2
43100 Parma, Italy
Offices:
Via Cosimo Del Fante 10
20122 Milan, Italy
www.buongiorno.com
Fully subscribed and paid-up capital stock: Euro 27,651,955.50 (as of August 28, 2008)
Tax code and Register of Companies of Parma No. 02699820045
Court of Parma - VAT code 07863930017
Investor Relations:
Email: [email protected]
Tel: +39 02 58213.1
Fax: +39 02 58431008
Buongiorno SpA
Global Reports LLC
Half-Year Report as of June 30, 2008
51