The Mondadori Group’s financial situation as of 31 December 2010 showed a deficit of €342.4 million, an improvement of over €30 million on the figure for the previous year.
| Net financial position |
|
|
|---|---|---|
| (in €m) | 31/12/2010 | 31/12/2009 |
| Cash and other equivalent liquid assets | 84.9 | 119.6 |
| Financial investments at fair value | - | - |
| Financial assets available for sale | 26.2 | 35.7 |
| Gains (losses) from derivatives | (5.3) | (4.7) |
| Other financial gains (losses) | (9.8) | (14.6) |
| Loans (short & medium/long term) | (438.4) | (508.9) |
| Net financial position | (342.4) | (372.9) |
It should be noted that the net financial position calculated according to Consob recommendations (see Note 13) would be a negative €344.3 million, in that it would exclude “Non-current financial assets”.
Trends in interest and exchange rates
The global growth recorded mainly in the first part of 2010 varied across the different geographic areas: robust in emerging economies and modest in the eurozone, with the sole exception of Germany.
Over the year the flows of international trade returned to the levels before the financial crisis, while the increase in the cost of raw materials, above all in the final quarter, has heightened concerns about possible inflationary pressures.
Expectations for 2011 consequently converge on a performance largely in line with last year, despite persisting concerns of a slowdown in advanced economies. In fact, weaknesses in labour markets and the need to re-balance public debt could have a negative impact on already weak consumer spending trends as well as on investments.
The prevailing tendency in monetary policy in 2010 remained essentially expansive in western economies. Official interest rates remained unchanged, at the historical lows reached in 2009. Extraordinary measures to support economies could be withdrawn, despite the debt crisis in some peripheral countries in Europe still not having been definitively resolved.
Over 2010 the 3-month Euribor went from a minimum of 0.634% at the end of March to a maximum of 1.050% in early November, ending the year at 1.006%. The average for the year was 0.814%.
Meanwhile, the average cost of money for the Mondadori Group was 3.77%.
Changes in the exchange rate of the Euro against the US dollar and the GB pound reflected concerns linked to the financial situation of certain European countries: the euro weakened until June as a result of the crisis in Greece, strengthened till early November and then slipped back again towards the end of the year.
The average euro/dollar rate for the year was 1.326, reaching a minimum of 1.194 in June and a maximum of 1.456 in January.
The average euro/sterling rate was 0,858, with a minimum of 0.810 in June and a maximum of 0.911 in March.
The overall credit lines available to the Group at 31 December 2010 came to €1,106.5 million, €750.3 of which was committed.
The Group’s short-term borrowing facilities, worth a total of €356.2 million and made up of current account overdrafts and advances on invoices, were not utilised as of 31 December 2010.
Medium-long-term lines comprise:
- a €320 million five-year variable rate bank loan (maturity 2014) organised by a pool of leading international banks; it is made up of a €150 million term loan (fully used as of 31 December) and a €170 million revolving credit facility, not utilised as of 31 December. It should be noted that interest rate swaps have been applied on this term loan, transforming the variable into a fixed rate;
- a €150.0 million variable interest loan provided by Intesa Sanpaolo and maturing in May 2013, made up in equal measure by a term loan and a revolving facility; as of 31 December only the term loan was utilised; an interest rate swap, which expires at the end of July 2011, has been applied to part of the term loan (€50 million);
- a €100.0 million variable rate loan provided by Intesa Sanpaolo and maturing in December 2015, made up of a term loan of €35 million and a revolving facility of €65 million; as of 31 December only the term loan was utilised.
During 2010, the Mondadori Group replaced €180 million of committed lines with the following:
- a €130 million amortising variable rate bank term loan, organised by a pool of leading Italian banks (maturity 2015); and, in August a contract was stipulated for an amortising interest rate swap on a notional sum of € 50 million;
- a €50 million variable rate bullet bank term loan, provided by Mediobanca (maturity December 2017); and, in August a contract was stipulated for an interest rate swap, completely covering the loan, with a forward rate in July 2011.
This replacement operation has enabled the Mondadori Group to benefit from improved conditions, as well as extending the average maturity of its available credit lines.