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In 2013, the ProSiebenSat.1 Group benefited from the generally positive economic climate
and increased its revenue and earnings figures to a record level. Especially in the Digital &
Adjacent segment, the Company achieved important interim goals on its way to becoming
a broadcasting, digital entertainment and commerce powerhouse. With the successful
launch of new television stations, the Group simultaneously expanded its customer base
and asserted its lead in the TV advertising market.
According to the International Monetary Fund (IMF), real economic growth in 2013 was 3.0 % (previous year: 3.1 %). After a moderate start, growth slowly sped up over the course of the year. Supported by a strongly expansionary monetary policy, industrialized nations like the USA in particular increased their gross domestic product. In contrast, important emerging countries fell short of the dynamic growth of the previous years.
In the euro zone, economic development in the past year continued to be negatively affected by consolidation measures in national budgets, accompanying structural reforms and high unemployment. In the fourth quarter, a slight upturn of 0.2 % is expected after a somewhat weaker previous quarter (-0.1 % vs. previous quarter). Although the outlook brightened toward the end of the year, the IMF estimates that the euro zone’s economic output shrank by 0.4 % in 2013 (previous year: -0.7 %). Some European countries are still in recession.
According to the latest calculations of the Federal Office of Statistics (Destatis), the German economy grew by 0.4 % in 2013, which is somewhat more moderate than in the previous year (+0.7 %). After a weak start to the year, in the second quarter economic growth, however, increased considerably by 0.7 % compared to the previous quarter. The upward trend continued in the second half of the year. Private consumption (+0.9 %) had the greatest positive effect on economic performance alongside stable labor market data, growing household incomes and moderate inflation. This was counteracted by a less dynamic development of exports in Germany (net exports: -0.3 percentage points), triggered by the ongoing crisis among major European trading partners and lower growth in emerging economies.
In 2013, the continuous growth of the gross TV advertising market was particularly attributable to higher a level of bookings from customers from the health and pharmaceutical, telecommunications, and business services industries. Nine of the top ten industries increased their gross TV advertising expenditure, four of which in double-digit percentage range. At the same time, the relevance of TV as an advertising medium continued to grow. In 2013, television gained 1.7 percentage points to 45.0 % in the media mix on a gross basis. Online media’s share increased by 0.2 percentage points to 11.1 %. The main loser was print media, which dropped 2.3 percentage points in the same period and reached a gross market share of 32.2 %.
The TV advertising markets in Austria and Switzerland developed in a mixed fashion in 2013. In Austria, ProSiebenSat.1 increased its gross advertising market share considerably to 34.8 % (previous year: 31.5 %).
|in percent||Change from previous year|
|The data presented are based on gross figures and therefore
only provide a limited view of what the associated net figures
will prove to be.|
Germany: gross, Nielsen Media Research.
Austria: gross, Media Focus.
Switzerland: gross, Media Focus.
The advertising market of in-stream video ads (i.e. all video advertising shown before, during, or after a video stream), which is particularily important for ProSiebenSat.1, continued to grow in 2013. The market grew by 45.4 % to a volume of EUR 308.7 million (previous year: EUR 212.3 million). By selling in-stream video ads, SevenOne Media generated gross revenues of EUR 146.7 million after EUR 104.1 million in the previous year. With a market share of 47.5 % (IP Deutschland: 32.5 %), SevenOne Media asserted its market leadership. In 2013, gross revenues of EUR 3.00 billion (previous year: EUR 2.86 billion) were generated in the German online advertising market, which also includes traditional banners and buttons. This is an increase of 4.8 %.
The ProSiebenSat.1 Group continued to expand its audience share in 2013. The six free TV stations ProSieben, SAT.1, kabel eins, sixx, SAT.1 Gold, and ProSieben MAXX achieved a combined market share of 28.1 % among viewers aged between 14 and 49 (previous year: 27.8 %). This means the station group has once again achieved its goal of being the leader in the German TV market. The RTL Group’s stations (RTL, VOX, SUPER RTL, RTL Nitro, n-tv) closed 2013 with a market share of 26.1 % and were thus 1.2 percentage points down on the previous year (2012: 27.3 %).
The ProSieben station generated a market share of 11.4 % of viewers aged 14 to 49 in 2013 (previous year: 11.3 %). In the relevant target group of 14 to 39 year olds, ProSieben is market leader again with an audience share of 16.0 % (previous year: 15.7 %), achieving its highest share for 15 years. Ratings highlights included the US series “Under the Dome” (up to 23.7 %, 14 – 49 year olds) and the Hollywood blockbuster “Die Tribute von Panem – The Hunger Games” (35.7 %, 14 – 49 year olds).
SAT.1 closed 2013 with an audience share of 9.4 % among 14 to 49 year olds (previous year: 9.9 %). In the second half of 2013, SAT.1 developed positively and increased its market share by 0.2 percentage points to 9.5 %. The station’s growth trend in the second half of the year was primarily due to the successful optimization of the afternoon (1 p.m. to 5 p.m.) with new shows like “Im Namen der Gerechtigkeit” (up to 15.7 %, 14 – 49 year olds) and “Anwälte im Einsatz” (up to 16.5 %, 14 – 49 year olds). In the fourth quarter of 2013, the afternoon market share increased to 10.9 % and was thus 1.5 percentage points higher than in the same quarter of the previous year. Prime time performance was just as good: With “The Voice Kids” (average of 19.8 %, 14-49 year olds) and “Got to Dance” (average of 15.1 %, 14 – 49 year olds), SAT.1 established two new hit shows on German television. In its relevant target group (14 – 59 year olds), the station achieved a market share of 9.5 % in 2013 after 10.1 % in the previous year. In the months to come, SAT.1 will focus on developing new formats for the early evening (5 p.m. to 8.15 p.m.). This time slot is particularly relevant for the overall daily market share due to the prime time period that starts straight afterwards.
In 2013, kabel eins achieved a stable audience share of 5.6 % among viewers aged between 14 and 49 (previous year: 5.6 %). Particularly popular formats were “Rosins Restaurants” (up to 10.0 %, 14 – 49 year olds) and the “ran UEFA Europa League” (up to 12.4 %, 14 – 49 year olds). The two women’s stations, sixx and SAT.1 Gold, performed extremely well in 2013: sixx crossed the one-percent threshold with an annual market share of 1.2 % in the target group of 14 to 49 year olds (previous year: 1.0 %). In the relevant target group of women aged between 14 and 39, sixx grew by 0.6 percentage points to 2.1 % (previous year: 1.6 %). Ratings highlights were the baking show “Sweet & Easy — Enie backt” (up to 2.9 %, 14 – 49 year olds) and the US hit series “Hart of Dixie” (up to 4.1 %, 14 – 49 year olds) and “Vampire Diaries” (up to 4.5 %, 14 – 49 year olds). SAT.1 Gold closed its first year of broadcasting with 0.4 % (14 – 49 year olds) and 0.5 % in the relevant target group (women aged 40 – 64). SAT.1 Gold launched in January and continually increased its market shares over the course of the year. Viewers’ favorites included the telenovela “Verliebt in Berlin” (up to 2.0 %, 14 – 49 year olds) and the magazine “ServiceAKTE” (up to 1.0 %, 14 – 49 year olds).
On September 3, 2013, the new free TV station ProSieben MAXX launched successfully. In its first four months, the station achieved an average market share of 0.6 % both among 14 to 49 year olds and in its relevant target group (men aged 30 – 59). Ratings highlights were blockbuster movies like “Cowboys & Aliens” (3.2 %, 14 – 49 year olds) and “Captain America: The First Avenger” (2.8 %, 14 – 49 year olds). In 2013, the ProSiebenSat.1 Group continued to expand its complementary station portfolio with ProSieben MAXX and SAT.1 Gold, gaining access to new target groups in the audience and TV advertising market.
The Austrian station group ProSiebenSat.1 PULS 4 with SAT.1 Österreich, ProSieben Austria, kabel eins austria, sixx Austria, and PULS 4 increased its group market share by 0.3 percentage points to 21.2 % in 2013 (previous year: 20.9 %). The station family thus remains no. 1 in the private TV market. Particularly PULS 4 grew in comparison with the same period of the previous year (+0.3 percentage points) and achieved an annual market share of 4.0 % among 12 to 49 year olds. Among viewers over 12, PULS 4 asserted itself as the most successful private Austrian station. The ratings highlights included the UEFA Champions League semi-final (FC Bayern Munich vs. FC Barcelona) with an average market share of 33.6 % among 12 to 49 year olds. The women’s station sixx also performed very well in Austria: Year on year, sixx Austria gained 0.6 percentage points among 12 to 49 year olds, reaching 1.1 % (previous year: 0.5 %).
The Swiss station group, comprising the stations SAT.1 Schweiz, ProSieben Schweiz, kabel eins Schweiz, and sixx Schweiz, achieved a market share of 17.6 % in 2013. The styling show “FACES Studio” (average of 6.2 %, 15 – 49 year olds) and the cooking show “Flavorites” (average of 4.9 %, 15 – 49 year olds) on ProSieben Schweiz were particularly popular. sixx Schweiz went on air in January 2013 and achieved an average market share of 0.9 % among 15 to 49 year olds over the year.
|in percent||Q4 2013||Q4 2012||2013||2012|
|Figures are based on 24 hours (Mon – Sun).|
Germany: SAT.1, ProSieben, kabel eins, sixx, SAT.1 Gold (from January 17, 2013), ProSieben MAXX (from September 3, 2013); 14 – 49 year olds; D + EU;
source: AGF in cooperation with GfK/TV Scope/ SevenOne Media Committees Representation.
Austria: SAT.1 Österreich, ProSieben Austria, kabel eins austria, sixx Austria (since July 2012), PULS 4; 12 - 49 years old;
source: AGTT/GfK Fernsehforschung/Evogenius Reporting.
Switzerland: SAT.1 Schweiz, ProSieben Schweiz, kabel eins Schweiz, sixx Schweiz; 15 – 49 years old; D–CH;
source: Mediapulse TV Panel. Disclosure of previous years’ figures and previous-year comparison is omitted due to methodological differences in the TV panel.
ProSiebenSat.1 Networld is one of the leading online networks in Germany. The portfolio
strong brands like the websites of the TV stations, games portals and the Internet
platform MyVideo. With a monthly average of 28.0 million
We closed 2013 with new record figures, at the same time achieving crucial interim targets in
our growth plan. The German economy grew moderately in 2013. Against this backdrop, advertising
investments in Germany developed positively. The ProSiebenSat.1 Group benefited from
this and again grew more strongly than its competitors in the market for TV advertising. At the
same time, the company made decisive progress on the way to becoming an integrated broadcasting,
digital entertainment and commerce powerhouse by expanding its digital business. The
sale of the international holdings in Northern and Eastern Europe was likewise an important
interim goal in the attainment of our strategic targets. The integration of our high-reach TV
stations in the German-speaking region with the dynamically growing digital services offers us
the greatest revenue and synergy potential in the long term. This is the basis of our profitable
and sustainable value creation.
Against this backdrop, consolidated revenues increased by 10.6 % to EUR 2.605 billion in 2013. Recurring EBITDA grew by 6.1 % and also reached a new record of EUR 790.3 million. Underlying net income rose by 6.8 % or EUR 24.2 million to EUR 379.7 million. All segments contributed to this, with the Digital & Adjacent and Content Production & Global Sales segments performing particularly dynamically. But we did not just increase our profitability in 2013 — we also reduced the net financial debt to less than EUR 1.5 billion. A significantly higher free cash flow, in spite of various corporate acquisitions, of EUR 330.1 million has also contributed to this. Alongside the high operating cash flow, the Group received net cash inflow of EUR 1.312 billion due to closing the sale of the Northern European portfolio. We used part of the proceeds for the prepayment of financial liabilities and consequently extended the remaining portion of our loans to 2018. The Group thus has a solid financing structure and a sound financial position with an equity ratio of 16.4 %. As of the end of the year, the leverage factor amounted to 1.8, remaining within the target range (1.5 to 2.5). We thus achieved all relevant financial targets for 2013. At the time the Group management report was compiled, the ProSiebenSat.1 Group stood on a stable foundation. We remain on course for growth and started well in the new 2014 financial year.
The ProSiebenSat.1 Group announces its targets for relevant financial and non-financial performance indicators in the Annual Report. If necessary, they can be adjusted during the year. In view of the good business performance, the Group raised its revenue growth targets for 2015 in the third quarter of 2013 and specified the Group´s revenue forecast for 2013.
In the reporting for the third quarter of 2013, the Group announced an increase in consolidated revenues in the range of a high-single-digit percentage. Previously, the Company had only forecast growth by a mid- or mid- to high-single-digit percentage for 2013. The Group’s revenues actually achieved a 10.6 % increase to EUR 2.605 billion.
The fourth quarter of 2012 was one of the strongest quarters in the history of ProSiebenSat.1. Nevertheless, the German free TV family also succeeded in increasing its advertising revenues and exceeding market growth in the final quarter of 2013. Over the year as a whole, the Broadcasting German-speaking segment increased its revenues by a low-single-digit percentage as expected. In the Digital & Adjacent and Content Production & Global Sales segments, revenues continued to rise dynamically. The Group thus achieved or even slightly exceeded its revenue targets for 2013. This is also true for the earnings forecasts. Here, the Group expected further growth of recurring EBITDA and underlying net income as a result of the positive revenue performance. At the end of the year, both recurring EBITDA at EUR 790.3 million (previous year: EUR 744.8 million) and underlying net income at EUR 379.7 million (previous year: EUR 355.5 million) reached new record levels. All segments made a contribution here. Due to investments in growth areas, costs were higher than in the previous year as expected, especially in the fourth quarter of 2013. Despite greater investments, the Group’s yield strength is above the industry average. With a recurring EBITDA margin of 30.3 % (previous year: 31.6 %), ProSiebenSat.1 is one of the most profitable media corporations in Europe.
Net financial debt also continued to improve in the past financial year. As of the end of the year, it had fallen below EUR 1.5 billion to EUR 1.446 billion (previous year: EUR 1.780 billion). A significantly higher free cash flow, in spite of various corporate acquisitions, of EUR 330.1 million (previous year: EUR 256.3 million) has also contributed to this. The leverage factor decreased to 1.8 (previous year: 2.0) and was thus likewise within the target range (1.5 to 2.5). The Group therefore achieved all the financial targets announced for 2013. This also applies to the development of viewer ratings — the Group’s central non-financial parameter. In 2013, the German station family had a combined market share of 28.1 % (previous year: 27.8 %) and remained the market leader among viewers.
|EUR m||Actual figures 2012||Actual figures 2013||Change||Forecast 2013|
|Revenues||2,356.2||2,605.3||+10.6 %||Growth by a|
|Operating costs||1,624.6||1,835.8||-13.0 %||Increase|
|Underlying net income||355.5||379.7||+6.8 %||Increase|
|Net financial debt (as of December 31)||1,780.41||1,446.32||-18.8 %||<1.5 billion|
|Leverage factor||2.0||1.8||1.5 - 2.5|
|1 Before reclassification of cash and cash equivalents from the Northern and
Eastern European business. The key figure is calculated as financial liabilities
(EUR 2,573.1 million) netted against cash and cash equivalents including the
Northern and Eastern European operations (EUR 792.7 million).|
2 After reclassification of cash and cash equivalents from the Eastern European business. The key figure is calculated as financial liabilities (EUR 1,842.0 million) netted against cash and cash equivalents from continuing operations (EUR 395.7 million).
|in percent||Revenues||Recurring EBITDA|
|Forecast||Actual 2013||Forecast||Actual 2013|
|Broadcasting German-speaking||Slight increase by a low single-digit percentage||+3.7 %||Stable development||+2.0 %|
|Digital & Adjacent2||Significant increase||+44.5 %||Significant increase||+24.2 %|
|Content Production & Global Sales2||Significant increase||+29.7 %||Significant increase||>+100 %|
|1 The figures relate to continuing operations.|
2 As of the end of the 2011 financial year, the activities were still shown in the Diversification segment. This was the basis for the forecast “significant increase.”
The Group continued its profitable growth in 2013 and achieved new highs in revenues and earnings. The expansion of the growth areas was advanced more quickly than planned. In the Digital & Adjacent and Content Production & Global Sales segments, revenues and recurring EBITDA rose rapidly. Against this backdrop, the Group will achieve the majority of its 2015 growth targets early. For consolidated revenues, the Company originally expected growth totaling EUR 600 million compared with 2010 and now assumes a revenue potential of at least EUR 800 million up to 2015. By 2018, Group revenues are expected to increase by EUR 1 billion compared with 2012 to more than EUR 3.356 billion. In 2013, the Group had already achieved 25 % of this target and is also on track with regard to recurring EBITDA. The latter climbed 6.1 % year-on-year. By 2018, the Group expects an annual growth rate in operating earnings by a mid single-digit percentage.
Reporting on the basis of continuing operations. The ProSiebenSat.1 Group sold its Northern European TV and radio portfolio (Norway, Sweden, Finland, Denmark) to Discovery Communications at the end of 2012. On April 9, 2013, the transaction was completed and the corresponding companies were deconsolidated. Following the disposal of the Northern European business, the Group also put its Eastern European TV and radio portfolio up for sale. The activities in Hungary were sold on December 20, 2013 and the subsidiaries in Romania on December 19 and 23, 2013. The closing of the sale of the Hungarian activities is expected to take place on February 25. The closing of the sale of the Romanian activities and the corresponding deconsolidation is expected in the second quarter of 2014. In accordance with IFRS 5, the Eastern European activities are classified as discontinued operations.
The following analysis of revenue and earnings performance for the Group and its segments is based on continuing operations, i.e. excluding the disposed Northern European activities and the Eastern European portfolio that is held-for-sale until the transaction is completed. As a result of the requirements of IFRS 5, the Northern European companies disposed of and the Eastern European companies held-for-sale in the reporting year are posted separately as “discontinued operations” both in the income statement and in the cash flow statement for the 2013 financial year. Consequently, earnings contributions and cash flows of these activities are not contained in the individual items of the income statement and the cash flow statement but are recognized as “Results from discontinued operations” and “Cash flow from discontinued operations.” Discontinued operations for the fourth quarter of 2013 only include the revenue and earnings contributions of the held-for-sale activities in Eastern Europe. In contrast, discontinued operations for the year as a whole include not only the ongoing earnings contribution from the Eastern European companies but also the Northern European business up to its deconsolidation on April 9, 2013, and its deconsolidation result.
In the Group balance sheet, the assets and the liabilities of the held-for-sale operations in Eastern Europe are reported as “Assets held for sale” and “Liabilities in connection with assets held for sale” respectively. An adjustment of the previous year’s figures is not provided according to IFRS 5. Therefore, the comparative figures as of December 31, 2012, additionally include the assets and liabilities of the sold and deconsolidated Northern European operations in the aforementioned balance sheet items.
Adjustment of the segment structure as of January 1, 2013. On the basis of continuing operations, the Group has reported since January 1, 2013 in the Broadcasting German-speaking, Digital & Adjacent and Content Production & Global Sales segments. The Group’s basic pay TV activities are reported in the Broadcasting German-speaking segment in line with the adjusted internal management and reporting structure. Previously, the basic pay TV activities were recognized in the Digital & Adjacent segment. The prior year figures have been adjusted accordingly.
Explanatory notes on reporting figures. For the ProSiebenSat.1 Group, recurring EBITDA, underlying net income, i.e. consolidated profit after non-controlling interests from continuing activities, before the effects of purchase price allocations and other special items, and the leverage factor are key financial indicators. Recurring EBITDA is defined as earnings before interest, taxes, depreciation and amortization adjusted for non-recurring effects. Therefore, the development of these key financial indicators is also described in the following presentation of the Group’s financial position and performance and in the outlook report.
Due to rounding, it is possible that single figures in these Group financial statements do not exactly add to the totals shown and that the percentage figures given do not exactly reflect the absolute figures they relate to. Change rates are based on a business perspective. Improvements are shown with a plus (+), deterioration with a minus (-).
ProSiebenSat.1 does not report on the basis of order volumes. Free TV financed by advertising is our core business. There are framework agreements on volumes to be taken and the conditions underlying these with a large number of our advertising customers. In so-called program screenings, the ProSiebenSat.1 Group informs its customers about the direction of the station planning. Advertising customers use this preview as an important basis for making decisions about their advertising investments for the subsequent year. The price level is primarily based on the factors of audience shares, reach, broadcast time, demand and number of available advertising inventory. As is customary in this business, the final budgets are confirmed on a month-by-month basis — sometimes, however, only in the short term. Only then is the revenue level transparent. Furthermore, additional advertising budgets are granted at short time notice towards the end of the year. In the Content Production & Global Sales segment, the development and production of programming content as well as the worldwide distribution through new or re-commissioning is made, as it is customary in the industry, in the short term and continuously throughout the year. Therefore, ProSiebenSat.1 does not report on the basis of order volumes.
At 70.5 % (previous year: 75.7 %), the ProSiebenSat.1 Group generated the largest portion of its revenues in 2013 from the traditional sale of TV advertising. 89.4 % (previous year: 89.7 %) of the revenues from TV advertising were attributable to the German TV advertising market, the Group’s most important market in terms of revenues. The ProSiebenSat.1 Group further extended its leading position in the TV advertising market and benefited from the continuing positive price development. The Group also expanded its business with new customers, gaining around 60 new customers with its three youngest stations sixx, SAT.1 Gold and ProSieben MAXX. The Group also consolidated its position in the German audience market and stayed ahead of its competitors. The ProSiebenSat.1 Group’s free TV stations increased their combined market share to 28.1 % among viewers aged between 14 and 49 (previous year: 27.8 %).
The performance of the advertising markets closely correlates to macroeconomic conditions. In 2013, the most important indicators showed that the German economy remained robust. Against this backdrop, the advertising industry also developed positively. Frequently, the advertising market reacts pro-cyclically to macroeconomic developments. For this reason, advertising industry budgets are often allocated at very short notice. In recent years, ProSiebenSat.1 has therefore systematically secured itself access to new markets with strong, long-term growth prospects. The Group has thus established new revenue sources, which strengthen the independence from advertising markets that are sensitive to the development of the general economy. In 2013, the ProSiebenSat.1 Group already generated 29.5 % of its revenues (previous year: 24.3 %) outside the traditional TV advertising business. The growth segment Digital & Adjacent contributed 59.8 % to the Group’s revenue growth and is expected to contribute around 25 to 30 % of consolidated revenues by 2018.
In addition to the comparatively low market visibility, the advertising business is subject to strong seasonal fluctuation like virtually no other industry: The ProSiebenSat.1 Group generates a disproportionately high share of its annual advertising revenues from the TV business in the fourth quarter, because both television use and propensity to spend rise significantly during the Christmas season. Generally, as in 2013, approximately one third (2013: 32.3 %) of annual revenues and approximately 40 % (2013: 38.2 %) of annual recurring EBITDA are generated in the final quarter.
The majority of the ProSiebenSat.1 Group’s revenues are realized in the German-speaking regions. The chart below shows the regional distribution of revenues in the past financial year:
With its subsidiary Red Arrow Entertainment, the ProSiebenSat.1 Group is one of the world’s
leading program production and distribution companies. However, the Group generates the
majority of its revenues (92.3 %) in the euro zone (previous year: 92.9 %). Therefore,
have only a limited influence on revenue and earnings performance. Furthermore,
exchange rate fluctuations, which could arise in particular from the
purchase of licensed programs in the USA, by using derivative financial instruments. As well as
currency-related effects, changing interest rates could impact the earnings situation. However,
the majority of non-current loans and borrowings are secured against risks from the change of
variable interest rates with various hedging instruments in the form of
Disposal of operations in Northern and Eastern Europe. Linking the core business of TV in the German-speaking area with digital activities offers the ProSiebenSat.1 Group the biggest growth and synergy potential in the long term. For this reason, we disposed our international TV and radio stations in Northern Europe (Norway, Sweden, Finland, Denmark) to Discovery Communications at the end of 2012. The sale was completed on April 9, 2013, and the respective companies were deconsolidated. Underlying the transaction was an enterprise value of EUR 1.325 billion. As part of the completion of the disposal, the ProSiebenSat.1 Group received a net cash inflow of EUR 1.312 billion. The Group reinvested a significant portion of the proceeds from the sale in the Group’s operating business, including in programming assets and strategic initiatives. At the same time, financial liabilities of EUR 500.0 million were repaid. As a result, the cash flow from operating business was largely available for other purposes, such as the dividend payment.
With the sale of the Northern European portfolio, the Group had also put its Eastern European TV and radio portfolio up for sale in December 2012. The subsidiaries in Hungary were sold on December 20 and the subsidiaries in Romania on December 19 and 23, 2013. The closing of the sale of the Hungarian activities is expected to take place on February 25. The closing of the sale of the Romanian activities and the corresponding deconsolidation are expected in the second quarter of 2014.
Dividend payment of EUR 1.201 billion. The payment of a dividend of EUR 5.65 per dividend entitled bearer preference share and EUR 5.63 per dividend entitled registered common share for the 2012 financial year was resolved at the Annual General Meeting of ProSiebenSat.1 Media AG on July 23, 2013. The dividend of EUR 1.201 billion was paid on July 24, 2013. Accordingly, the equity base decreased by the end of the year.
Acquisition of majority interests in the websites billiger-mietwagen.de and mydays.de. On March 28, 2013, the ProSiebenSat.1 Group acquired a majority interest in SilverTours GmbH, operator of the website billiger-mietwagen.de, via its subsidiary SevenVentures. The transaction was closed on May 13, 2013. The platform is the largest portal for car rental price comparisons in Germany. The company was fully consolidated in June 2013. ProSiebenSat.1 also acquired a majority interest in mydays, one of the leading providers of event presents in Germany. The transaction was closed on May 28, 2013. The company has been fully consolidated from July 2013. With these acquisitions, the Group has significantly strengthened its digital commerce portfolio.
Beyond that, there were no events in the 2013 financial year that had a significant impact on the scope of consolidation or the earnings, financial position and performance of the ProSiebenSat.1 Group and its segments. However, the ProSiebenSat.1 Group augmented its portfolio, among other things, with additional digital commerce investments. This includes not only strategic acquisitions, but also venture investments in the form of media services. On December 4, 2013, the Group took over another online travel provider when it acquired COMVEL GmbH, which operates the travel sites weg.de and ferien.de. The transaction was closed on January 7, 2014. As one of the largest ecommerce markets, the internet travel market is an attractive growth area for the ProSiebenSat.1 Group and benefits greatly from TV advertising. The Group’s travel portfolio already includes the online tour operator Tropo GmbH and online travel agency reise.com. The objective is to establish a so-called “house of travel” that reflects the entire travel cycle.
|Broadcasting German-speaking segment||Launch of the new free TV station SAT.1 Gold in January 2013|
Launch of the new free TV station ProSieben MAXX in September 2013
|Broadcasting International segment||Completion of the sale of the TV and radio activities in Norway, Sweden,
Finland and Denmark in April 2013|
> Deconsolidation in April 2013
|Digital & Adjacent segment||Majority interest in SilverTours GmbH, operator of the price comparison
website billiger-mietwagen.de, in May 2013|
> Fully consolidated since June 2013
Majority interest in mydays Holding GmbH, operator of the event present website mydays.de, in May 2013
> Fully consolidated since July 2013
Establishment of the music platform AMPYA in June 2013
Majority interest in MMP Veranstaltungs- und Vermarktungs-GmbH in August 2013
> Fully consolidated since September 2013
Founding of the multi-channel network Studio71 in September 2013
Majority interest in COMVEL GmbH, operator of the travel websites weg.de and ferien.de
> Purchase agreements signed on December 4, 2013, legal completion of the transaction on January 7, 2014
|Content Production & Global Sales segment||Sale of the shares in the British production company
Mob Film Holdings Ltd.|
> Deconsolidation in September 2013
|Broadcasting German-speaking segment||Acquisition of the private Austrian station Austria 9 TV in March 2012 (relaunch as
sixx Austria on July 3, 2012)|
> Fully consolidated since April 2012
|Broadcasting International segment||Launch of the new free TV station VOX in Norway in January 2012|
Acquisition of three new radio stations (Radioselskabet af 1/7 2007 ApS, Newradio ApS and Radio Klassisk ApS) by the Danish SBS radio group in June 2012
> Fully consolidated since August 2012
Launch of the new free TV station Kutonen in Finland in September 2012
Launch of the new free TV station Super TV2 in Hungary in November 2012
Disposal of the TV and radio activities in Norway, Sweden, Finland and Denmark.
> Purchase agreements signed on December 14, 2012
|Digital & Adjacent segment||Foundation of the SugarRay GmbH creative agency (wholly owned subsidiary)|
> Fully consolidated since February 2012
Majority interest in the Munich-based search engine marketing company Booming GmbH in May 2012
> Fully consolidated since May 2012
Launch of the new basic pay TV station ProSieben FUN in June 2012
Majority interest in the online travel business Tropo GmbH in August 2012
> Fully consolidated since September 2012
Majority interest in the price comparison site preis24.de GmbH in September 2012
> Fully consolidated since September 2012
Majority interest in Covus Ventures GmbH, a company jointly owned by SevenVentures and the Covus Group
> Fully consolidated since October 2012
|Content Production & Global Sales segment||Majority interest in British production company CPL Productions Ltd. in
> Fully consolidated since March 2012
Majority interest in the British TV and film production company Endor Productions Ltd. in March 2012
> Fully consolidated since April 2012
Majority interest in the British production company New Entertainment Research and Design Ltd. (NERD TV) in May 2012
> Fully consolidated since June 2012
Majority interest in the Israeli production company July August Communications and Productions Ltd. in May 2012
> Fully consolidated since June 2012
Majority interest in the US production company Left/Right Holdings LLC in August 2012
> Fully consolidated since August 2012
Red Arrow International opens branch in Hong Kong
> Fully consolidated since December 2012
The following analysis of the revenue and earnings performance in 2013 relates to the continuing operations of the ProSiebenSat.1 Group, unless otherwise indicated.
The reconciliation below gives an overview of selected key figures in the income statement, taking into account the disposed Northern European operations which were deconsolidated on April 9, 2013, and the held-for-sale Eastern European activities.
|EUR m||ProSiebenSat.1 including discontinued operations||Discontinued operations||ProSiebenSat.1 continuing operations|
|Cost of sales||1,680.0||1,607.3||248.2||340.9||1,431.8||1,266.4|
|Other operating expenses||10.0||111.7||9.2||83.1||0.8||28.6|
|Consolidated net profit attributable to shareholders of ProSiebenSat.1 Media AG||312.1||295.0||-47.3||-29.7||359.5||324.7|
|Underlying net income4||340.1||415.1||-39.6||59.6||379.7||355.5|
|ProSiebenSat.1 including discontinued operations||Discontinued operations||ProSiebenSat.1 continuing operations|
|EUR m||Q4 2013||Q4 2012||Q4 2013||Q4 2012||Q4 2013||Q4 2012|
|Cost of sales||520.2||492.7||97.9||105.3||422.3||387.4|
|Other operating expenses||3.5||74.8||3.0||74.7||0.5||0.1|
|Consolidated net profit |
attributable to shareholders of
ProSiebenSat.1 Media AG
|Underlying net income4||65.7||174.0||-93.1||10.1||158.9||163.8|
|1 Total costs excluding depreciation/amortization and
2 EBITDA before non-recurring (exceptional) items.
3 Non-recurring expenses netted against non-recurring income.
4 Consolidated profit for the period after non-controlling interests from continuing operations, before the effects of purchase price allocations and other special items.
|Explanation of reporting principles in the fourth quarter or the 2013 financial year. The figures for the fourth quarter of 2013 and the year as a whole relate to the key figures from continuing operations in line with IFRS 5, i.e. not including the revenues and earnings contributions of the disposed Northern European activities which were deconsolidated on April 9, 2013, and the Eastern European activities classified as held-for-sale until the closing of the sale transaction. For the income statement and cash flow statement, the figures for the previous year are presented on a comparable basis. The income statement items of the entities concerned are grouped as a single line item, ‘result from discontinued operations’, and reported separately. The result from discontinued operations includes both the net profit generated by the companies sold or held for sale and the gain on disposal of the Northern European subsidiaries and is presented after taxes.|
In 2013, the ProSiebenSat.1 Group continued on its successful course and increased its consolidated revenues by EUR 249.1 million to EUR 2.605 billion. This is a considerable growth in revenues by 10.6 %. In the fourth quarter, which is seasonally the most important, the Group generated 32.3 % of its annual revenues (previous year: 33.5 %) and 38.2 % of its recurring EBITDA (previous year: 38.4 %). All segments to contributed to the profitable growth.
In 2013, the Digital & Adjacent activities again made the biggest contribution to the increase of consolidated revenues. Once again, the strongest growth driver was SevenVentures’ Digital Commerce business. In addition to the existing holdings, the companies acquired and fully consolidated for the first time in the reporting year made major contributions to revenues. The Digital Entertainment business also showed very positive revenue performance, which is particularly attributable to the Group’s online offerings, the VoD portal maxdome and the Adjacent-business Music. The Digital & Adjacent segment’s share in consolidated revenues thus rose to 18.6 % or EUR 483.7 million (previous year: 14.2 % or EUR 334.8 million). The Content Production & Global Sales segment also posted double-digit growth rates in 2013. In the core business of TV, the ProSiebenSat.1 Group generated total revenues of EUR 1.998 billion (previous year: EUR 1.926 billion). This corresponds to a share of 76.7 % (previous year: 81.7 %) of consolidated annual revenues.
Additional revenue shares have thus shifted to the Digital & Adjacent and Content Production & Global Sales segments. The Group’s target is to expand new revenue models that are independent of the traditional TV advertising business.
Other operating income amounted to EUR 25.4 million after EUR 13.4 million in the comparative period (+89.2 %). In addition to income from value-added tax refunds for previous years and recharges, a positive effect resulted mainly from deconsolidation gains and higher earnings from the disposal of fixed assets.
The ProSiebenSat.1 Group consistently invests in its growth areas such as the expansion of its Digital & Adjacent activities, new TV stations, and the program production and distribution business. As a result, costs increased as expected in the reporting period. Total costs of the Group, comprising cost of sales, selling expenses and administrative expenses, as well as other operating expenses, increased to EUR 1.962 billion in 2013. This equates to an increase of 10.9 % or EUR 193.1 million. The major part of the cost increase can be attributed to higher cost of sales, which increased by 13.1 % or EUR 165.4 million to EUR 1.432 billion, primarily due to growth. The main reasons for this were the investments and acquisitions made in the Digital & Adjacent segment both in 2013 and 2012. The consumption of programming assets, which is included in cost of sales and is usually the Group’s largest cost item, increased by 2.4 % to EUR 858.7 million year-on-year (previous year: EUR 838.7 million). Programming assets are usually amortized depending on the number of broadcasts permitted or planned. In addition, cost of sales includes an increase in the provision for additional payments to bestseller authors from EUR 6.1 million to EUR 13.8 million. Administrative expenses increased by 17.2 % or EUR 41.8 million to EUR 285.7 million, primarily due to the expansion of business activities and the companies fully consolidated for the first time in the reporting period and the 2012 financial year. Consequently, selling expenses increased by 6.0 % to EUR 243.5 million (previous year: EUR 229.9 million). By contrast, other operating expenses decreased to EUR 0.8 million (previous year: EUR 28.6 million). The comparatively high figure from the previous year includes one-off expenses of EUR 27.7 million relating to the antitrust proceedings concluded at the end of 2012.
Operating costs amounted to EUR 1.836 billion (previous year: EUR 1.625 billion), adjusted for non-recurring expenses of EUR 37.1 million (previous year: EUR 64.7 million) and depreciation and amortization of EUR 88.9 million (previous year: EUR 79.5 million). This equates to an increase of 13.0 %.
|Depreciation and amortization1||-88.9||-79.5|
|1 Depreciation/amortization and impairment of intangible assets and property, plant and equipment.|
The following table shows a reconciliation of EBITDA before and after non-recurring effects:
|Profit before income taxes||526.9||456.5|
|Depreciation and amortization1||88.9||79.5|
|Thereof from purchase price allocations||8.0||4.4|
|1 Depreciation/amortization and impairment of intangible assets
and property, plant and equipment.|
2 Non-recurring expenses of EUR 37.1 million (previous year: EUR 64.7 million) less non-recurring income of EUR 4.5 million (previous year: EUR 0.2 million).
The financial result amounted to minus EUR 142.0 million after minus EUR 144.4 million in the previous year (+1.7 %). The slight improvement of the financial result is due to contrary effects: Lower interest expenses of EUR 135.0 million (+13.6 % year-on-year) due to the lower average level of Group debt and lower interest rates overall had a positive effect on the interest result. It improved by 16.1 % or EUR 24.7 million to minus EUR 128.5 million. By contrast, the other financial result fell to minus EUR 18.6 million (previous year: minus EUR 1.5 million). This is mainly due to impairments on financial investments, particularly on the shares in ZeniMax Media Inc. of EUR 12.4 million, and other financing expenses. By contrast, the fair-value measurement of earn-out provisions and put options on the reporting date had a positive effect on the other financial result. Earnings from investments accounted for using the equity method decreased to EUR 5.1 million (previous year: EUR 10.3 million).
The developments described caused earnings before taxes to rise by 15.4 % or EUR 70.4 million to EUR 526.9 million. After income taxes of EUR 162.2 million (previous year: EUR 127.4 million), the Group generated net income from continuing operations of EUR 364.6 million (previous year: EUR 329.1 million). The tax rate was 30.8 % (previous year: 27.9 %). The higher tax rate is primarily due to lower tax income relating to other periods year-on-year that was generated in the fourth quarter of 2012. The net profit after taxes and non-controlling interests from continuing operations reached EUR 359.5 million and thus exceeded the previous year figure by 10.7 % or EUR 34.7 million.
|Consolidated net profit (after non-controlling interests)||359.5||324.7|
|Amortization from purchase price allocations (after tax) 1||5.4||3.1|
|Impairment of shares in ZeniMax||12.4||- / -|
|Impairments on non-controlling interests||2.4||- / -|
|Expenses from the concluded antitrust proceedings||- / -||27.7|
|Underlying net income||379.7||355.5|
|1 Amortization of purchase price allocations before tax:|
EUR 8.0 million (previous year: EUR 4.4 million).
Earnings after taxes from discontinued operations amounted to minus EUR 47.6 million (previous year: minus EUR 30.2 million). In addition to the earnings contribution from the Eastern European business, this also includes the earnings contribution from the Northern European operations until their deconsolidation on April 9, 2013, and the tax-free gain on disposal of EUR 77.0 million from the sale of the Northern European portfolio. In addition, the earnings from discontinued operations after taxes include impairments of EUR 77.1 million in Hungary and EUR 51.9 million in Romania. As well as the earnings contribution from the Eastern European operations, the prior-year figure also includes the earnings contribution from the Northern European business.
Risk control and centralized management are key principles of the ProSiebenSat.1 Group’s financial management. Financial management is centrally managed by the Group Finance & Treasury department at ProSiebenSat.1 Media AG. This department manages the Group’s financing activities and is the contact for all managing directors and employees in the Group responsible for finance. The prevailing objectives of our financial management are:
to ensure that the entire ProSiebenSat.1 Group remains solvent by managing its liquidity efficiently across the organization,
to secure its financial flexibility and stability, in other words, maintaining and optimizing its funding ability,
to manage its financial risks by using
The Group financial management covers the capital structure management and Group-wide funding, cash and liquidity management, and the management of market price risks, counterparty risks and credit default risks.
The aim of capital structure management is to optimize the way in which the Group’s capital
structure and funding are organized by employing a range of financial instruments. These
include equity or equity-like instruments as well as debt instruments. In its choice of suitable
instruments, the Company takes into account factors such as the level of market receptivity,
funding terms and conditions, flexibility or restrictions, diversification of the investor base
and maturity profiles. The ProSiebenSat.1 Group raises and manages its debt funding on a
centralized basis. This enables the Group to obtain economies of scale and optimize its cost
of capital. In connection with the capital management structure at the ProSiebenSat.1 Group,
As part of its cash and liquidity management, the Group optimizes and centralizes cash flows and secures liquidity across the Group. Cash pooling is an important tool here. Using rolling, Group-wide liquidity planning the ProSiebenSat.1 Group captures and forecasts both operating cash flows and cash flows from non-operating activities, thus deriving liquidity surpluses or requirements. Liquidity requirements are covered either by existing cash positions or the revolving credit facility (RCF).
The management of counterparty and credit default risks centers on trading relationships and creditor exposure to financial institutions. When entering into trading transactions, the ProSiebenSat.1 Group pays attention to ensuring that business is widely diversified involving counterparties of sufficiently high credit quality. For this purpose, the Group draws on external ratings supplied by international agencies. The Group’s risk with respect to financial institutions primarily arises from its investment of cash and cash equivalents and from its use of derivatives as part of its interest-rate and currency management activities.
As of December 31, 2013, 62.0 % or EUR 1.842 billion of the financial debt of the ProSiebenSat.1 Group (according to IFRS) comprised non-current loans and borrowings (December 31, 2012: 59.9 %). As of the reporting date in December, there were no current loans and borrowings (December 31, 2012: 5.9 %).
In April and June 2013, the ProSiebenSat.1 Group prepaid loans and borrowings and at the same time extended the remaining term loans expiring in July 2015 and July 2016 respectively (Term Loan C and D) to July 2018. Due to the repayment totaling EUR 500.0 million, Term Loan B was repaid in full, and Term Loans C and D were repaid and/or extended. The Group used a part of the proceeds from the disposal of the Northern European TV and radio activities for the repayment.
Group-wide corporate financing. As of December 31, 2013, the ProSiebenSat.1 Group’s secured syndicated facilities agreement includes a term loan (Term Loan D) and a revolving credit facility (RCF). The RCF was extended to July 2018 in November 2013 and now has a facility amount of EUR 600.0 million. It replaces the two previous revolving credit facilities (RCF 1 and RCF 2) with maturities in July 2014 and July 2016 respectively.
After repayment and extension of the loans, the nominal amount of Term Loan D amounts to EUR 1.860 billion on December 31, 2013. On December 31, 2012, the Group’s then Term Loans B, C, and D totaled EUR 2.360 billion.
As of December 31, 2013, the revolving credit facility (RCF) amounts to EUR 600.0 million. No cash drawings were made. On December 31, 2012, the Group had total available facilities of EUR 359.4 million.
The interest rates payable on the term loans and the amounts drawn under the available revolving credit facility are variable and are based on Euribor money market rates plus an additional credit margin:
Risks from the change of variable interest rates are hedged with various hedging instruments
in the form of
As of December 31, 2013, the credit margin for Term Loan D was 2.75 % per annum. The credit margin for the revolving credit facility depends on the leverage factor. As of December 31, 2013, it amounted to 1.5 % per annum for the RCF.
Furthermore, the ProSiebenSat.1 Group has concluded lease contracts for property at the Unterföhring site. In line with IFRS, these are largely classified as finance leases. This real estate is capitalized as property, plant and equipment and the respective leasing obligations are recognized as other financial liabilities. The real estate leases end in 2019 at the earliest. There are also smaller-scale leases for technical equipment. The ProSiebenSat.1 Group reported liabilities under finance leases totaling EUR 91.7 million as of December 31, 2013 (previous year: EUR 98.8 million). There were no other significant off-balance sheet financing instruments.
|The ProSiebenSat.1 Group entered into the loans
with an original facilities amount of EUR 4.2 billion in
the course of the acquisition of the SBS Broadcasting
Group in 2007. In 2011, the ProSiebenSat.1 Group
loans amounting to EUR 1.2 billion with the
proceeds from the disposal of the Belgian and Dutch
activities and agreed an extension of maturities in the
amount of EUR 2.1 billion until July 2016 for the majority
of the remaining loans (EUR 2.4 billion). In May 2013,
the Group agreed with its lenders various amendments
to the syndicated facilities agreement in connection
with the prepayment totaling EUR 500.0 million
(Term Loan B repaid, Term Loans C and D repaid
and/or extended) and the maturity
extension for EUR
1.860 billion (Term Loan D) until July 2018. The amendments
provide the Group with more flexibility in its
operating business and for future financing.
credit facility (RCF) was extended
2013 and has a volume of EUR 600.0 million maturing
in 2018. The RCF replaces the two previous
revolving credit facilities (RCF 1 and RCF 2).|
The syndicated facilities agreement for Term Loan D and the revolving credit facility (RCF) requires the ProSiebenSat.1 Group to comply with certain key financial ratios. Thus the ProSiebenSat.1 Group has to maintain a specific ratio of net financial debt to EBITDA. The ratio of consolidated EBITDA to the consolidated net interest result is also defined in the agreement. Compliance with the key financial covenants is reviewed quarterly for the respective previous twelve-month period.
The ProSiebenSat.1 Group complied with the contractual requirements in the reporting period. Non-compliance
|with the contractual financial ratios would
give cause for early termination.|
In the case of impending or incurred breaches of the key financial covenants, the ProSiebenSat.1 Group’s facilities agreement also allows the contribution of equity or equity-like funds in the form of subordinated loans within certain periods. Such an addition of equity or equity-like funds — a so-called equity cure — is treated as an increase in consolidated EBITDA for the purposes of calculating compliance with the financial covenantsFinancial covenants Obligations in the context of loan contracts. These relate primarily to key financial indicators that the borrower has to comply with..
In the event that ownership control of the ProSiebenSat.1 Media AG changes (change of control), the lenders may demand a termination of the facilities agreement and repayment of all outstanding amounts within a certain period after the change of control takes place. In addition, the facilities agreement includes a number of standard market obligations which, subject to extensive exceptions and among other elements, limit ProSiebenSat.1 Group’s ability to provide other security interests in its present or future assets, to assume further financial liabilities, to sell assets, to acquire business operations in whole or in part, or to provide guarantees, declarations of indemnification, or liability declarations outside the normal course of business. The facilities agreement also contains a number of customary default clauses. The default clauses provide that the lenders may demand immediate repayment of all amounts outstanding under the facilities agreement if breaches of contract defined in more detail under the agreement occur and if those breaches (assuming they are curable) are not remedied within a specified period.
As of December 31, 2013,
The reduction in net financial debt is the result of significantly higher free cash flow from continuing operations amounting to EUR 330.1 million (December 31, 2012: EUR 256.3 million) and reflects the Group’s earnings power.
Alongside the good operating performance, the ProSiebenSat.1 Group received net cash inflow of EUR 1.312 billion due to the closing of the sale of the Northern European operations in April 2013. The Group reinvested a significant portion of the proceeds from the sale in the Group’s operating business, including in investments in programming assets and strategic initiatives. At the same time, financial liabilities of EUR 500.0 million were repaid. As a result, the cash flow from operating business was largely available for other purposes, such as the dividend payment. Cash and cash equivalents amounting to EUR 1.201 billion were used to pay the dividend in July 2013.
The ProSiebenSat.1 Group’s
Unless otherwise stated, the following textual analysis of liquidity and capital expenditure relates to cash flow from continuing operations of the ProSiebenSat.1 Group. The reconciliation below provides an overview of selected key figures in the cash flow statement, taking into account the discontinued television and radio activities in Northern and Eastern Europe.
|EUR m||Q4 2013||Q4 2012||2013||2012|
|Profit from continuing operations||156.7||162.8||364.6||329.1|
|Profit from discontinued operations (net of income taxes)||-95.6||-63.7||-47.6||-30.2|
|Change in working capital||62.9||51.0||-14.8||-32.8|
|Income tax paid||-32.2||-38.5||-135.6||-129.1|
|Cash flow from operating activities of continuing operations||529.8||470.3||1,348.3||1,202.1|
|Cash flow from operating activities of discontinued operations||9.3||124.1||58.4||363.1|
|Cash flow from investing activities of continuing operations||-223.4||-207.5||-1,018.3||-945.8|
|Cash flow from investing activities of discontinued operations||-17.0||-100.6||1,181.9||-317.9|
|Free cash flow from continuing operations||306.4||262.8||330.1||256.3|
|Free cash flow from discontinued operations||-7.6||23.5||1,240.3||45.2|
|Free cash flow (total)||298.8||286.3||1,570.4||301.5|
|Cash flow from financing activities of continuing operations||-105.0||1.2||-30.9|
|Cash flow from financing activities of discontinued operations||0.0||-0.4||-2.3||-0.8|
|Effect of foreign exchange rate changes of continuing operations on cash and cash equivalents||0.5||-0.7||-0.9||2.5|
|Effect of foreign exchange rate changes of discontinued operations on cash and cash equivalents||0.0||0.1||-2.2||2.4|
|Change in cash and cash equivalents total||194.3||286.4||-388.2||274.8|
|Cash and cash equivalents at beginning of reporting period||210.21||506.3||792.61||517.9|
|Cash and cash equivalents classified under assets held for sale at end of reporting period||-8.8||-90.4||-8.8||-90.4|
|Cash and cash equivalents at end of reporting period||395.7||702.3||395.7||702.3|
|1 Includes the cash and cash equivalents of the companies held for sale|
Cash flow from operating activities: In the 2013 financial year, operating cash flow from the
ProSiebenSat.1 Group’s continuing operations was EUR 1.348 billion after EUR 1.202 billion in the
previous year and equates to growth of 12.2 %. This was due to higher consolidated net profit,
which had a positive effect on cash flow from operating activities. In addition to the good earnings
performance, the lower interest payments and the positive changes in working capital were crucial for the increase. The decrease in interest payments to EUR 137.0 million (previous
year: EUR 160.0 million) is attributable to the reduction of loans and borrowings in the second
quarter in connection with the sale of the Northern European activities and lower interest rates
overall. The change in
Cash flow from investing activities: Investing activities of continued operations resulted in outflows of EUR 1.018 billion, an increase of 7.7 % or EUR 72.4 million compared to 2012. The core area of investing activities within the ProSiebenSat.1 Group is the acquisition of programming rights. The Group secures attractive programs through three different channels: by purchasing licensed formats, through commissioned productions and through in-house formats that are based on the development and implementation of own ideas. In contrast to commissioned productions, in-house formats are primarily produced with a view to being broadcast in the near future. For this reason, they are recognized immediately as an expense in the cost of sales and do not constitute investments. Commissioned and in-house productions sharpen the station profile and contribute to improving Group-wide cost efficiency and using synergies effectively. For this reason, the expansion of the Red Arrow Entertainment Group, which after acquisitions in the USA and the UK in particular in recent years is now focusing more on organic growth in the core markets, is an important step. In the reporting period, cash outflow for the acquisition of programming rights amounted to EUR 860.2 million, up 2.0 % or EUR 16.9 million (previous year: EUR 843.3 million). Programming investments were made predominantly for the acquisition of licensed programming and were almost exclusively attributable to the Broadcasting German- speaking segment at EUR 857.5 million or 99.7 % (previous year: EUR 842.7 million or 99.9 %.
In addition, in the 2013 financial year, ProSiebenSat.1 made investments of EUR 61.8 million in intangible assets (+3.3 % year-on-year) and EUR 32.0 million in property, plant and equipment (+12.1 % year-on-year). With a share of at 59.2 %, the majority of investments in intangible assets were made in the Digital & Adjacent segment (previous year: 65.7 %). They mainly went into the acquisition of marketing licenses in the context of mandate business, software, and IT, and online games licenses. With a share of 88.6 %, investments made in property, plant and equipment predominantly were in the Broadcasting German-speaking segment (previous year: 91.1 %). They mainly related to improvements to the building structure at ProSiebenSat.1 Media AG and the extension of the playout center.
The stated cash flows from investing activities had the following breakdown by segment: 95.3 % (previous year: 95.2 %) of investments in programming assets, intangible assets and property, plant and equipment were made in the Broadcasting German-speaking segment, the largest segment of the Group in terms of revenues. The Digital & Adjacent and Content Production & Global Sales segments had a share of 4.2 % (previous year: 4.4 %) and 0.5 % (previous year: 0.4 %) of the investments respectively.
Assets resulting from first-time consolidations are not reported as segment-specific investments. Funds used for the acquisition of the first-time consolidated companies are shown as cash outflow from additions to the scope of consolidation.
Cash outflow from additions to the scope of consolidation more than doubled in 2013 and increased to EUR 56.6 million (previous year: EUR 27.1 million). The cash outflow is mainly related to the acquisition of the majority interests in SilverTours GmbH as well as mydays Holding GmbH and their first-time consolidation. The ProSiebenSat.1 Group strategically strengthened the ventures activities of the Digital & Adjacent segment in particular. Acquisitions in the program production and ventures businesses, which contributed to the good development of operating cashflow in 2013, had been the focus in the previous year. In particular, there was the acquisition of majority interests in the American production company Left/Right and in the British production firms CPL Productions, Endor Productions and NERD TV by the Red Arrow Entertainment Group, which thus strengthened its presence in the key markets of the USA and UK. Besides, the ProSiebenSat.1 Group expanded its ventures business in 2012 with the search engine marketing company Booming, the price comparison platform preis24.de and the travel agency Tropo. In addition to strategic investments, ProSiebenSat.1 secures access to new market through participations in the form of media-for-equity deals. By this, the Group provides media services, but not making any larger cash investments.
The ProSiebenSat.1 Group generated a cash inflow of EUR 1.312 billion from the disposal of the Northern European activities in April 2013. The net cash inflow is presented as cash flow from investing activities of discontinued operations.
Free cash flow:
Cash flow from financing activities: In the last financial year, cash outflow from financing activities was EUR 1.953 billion after EUR 30.9 million in the previous year. The high cash outflow was due to the payment of the dividend for the 2012 financial year amounting to EUR 1.201 billion in July 2013. In addition, the partial prepayment of the syndicated term loan of EUR 500.0 million in the second quarter of 2013 in connection with the disposal of the Northern European activities had a significant effect. Furthermore, the cash drawings of the revolving credit facilities were fully repaid in the fourth quarter.
Cash and cash equivalents: In the 2013 financial year, the overall cash flows described resulted in a decrease of cash and cash equivalents compared to the previous year’s reporting date. At EUR 395.7 million (previous year: EUR 702.3 million), cash and cash equivalents were 43.7 % or EUR 306.5 million below the previous year’s figure. In the fourth quarter the Group generated cash and cash equivalents totaling EUR 194.3 million (previous year: EUR 286.4 million). Thus, the ProSiebenSat.1 Group still has a comfortable level of liquidity. Furthermore, a revolving credit facility (RCF) amounting to EUR 600.0 million is available for the Group.
As of December 31, 2013, total assets amounted to EUR 3.556 billion (December 31, 2012: EUR 5.413 billion). This equates to a decline of 34.3 % or EUR 1.857 billion compared to the previous year’s reporting date. The main reasons for this are the deconsolidation of the Northern European operations, the loan repayment of EUR 500.0 million in the second quarter, and the high dividend payment of EUR 1.201 billion in the third quarter of 2013. The aforementioned effects resulted in structural changes in the Group’s balance sheet. An increase in intangible assets due to acquisitions had an opposite effect.
The assets and liabilities of the held-for-sale operations in Eastern Europe are reported in the corresponding current balance sheet items as of December 31, 2013. The assets and liabilities of these business activities were reclassified to the respective “Assets held for sale” and “Liabilities associated with assets held for sale” items. The comparative figures as of December 31, 2012, additionally include the assets and liabilities of the sold Northern European operations. The Northern European subsidiaries were deconsolidated with the completion of the sale in April 2013.
Significant individual value changes to balance sheet items compared to December 31, 2012, are described below.
Non-current and current assets: Compared to the previous year’s reporting date, intangible
assets increased by 9.6 % to EUR 1.165 billion (December 31, 2012: EUR 1.063 billion). This was
primarily due to the first-time consolidations of SilverTours GmbH (operator of the website
de) and mydays. The share of intangible assets in total assets thus increased
to 32.7 % (December 31, 2012: 19.6 %). Alongside intangible assets,
Trade receivables: Trade receivables increased by 21.4 % to EUR 326.3 million (December 31, 2012: EUR 268.7 million). The increase primarily arose from the Broadcasting German-speaking segment. Current other financial and non-financial assets fell by 57.1 % or EUR 56.2 million to EUR 42.2 million. The decline is mainly due to the lower market values of derivative financial instruments.
Cash and cash equivalents decreased to EUR 395.7 million. The EUR 306.5 million or 43.7 % decline was due to early repayment of loans amounting to EUR 500.0 million, the payment of the dividend of EUR 1.201 billion and the full repayment of the cash drawings on the revolving credit facilities. In contrast, higher cash flow from operating activities and the net cash inflow from the sale of the Northern European operations of EUR 1.312 billion had a positive effect.
Shareholders’ equity: Compared to December 31, 2012, shareholders’ equity decreased by 61.1 % or EUR 916.7 million to EUR 584.1 million (December 31, 2012: EUR 1.501 billion). On the one hand, this is due firstly to the EUR 1.201 billion dividend payment in the reporting year. Moreover, foreign exchange rate effects connected to the sold Northern European and held-for-sale Eastern European operations caused shareholders’ equity to decline. This was countered by the improved earnings situation and positive effects from the measurement of interest rate hedges. Accordingly, the equity ratio declined to 16.4 % (December 31, 2012: 27.7 %). Even in view of the described equity effects, the Group maintains a solid financial position.
Non-current and current liabilities and provisions: As a result of lower non-current and current loans and borrowings, the non-current and current liabilities and provisions decreased by 24.0 % or EUR 939.8 million to EUR 2.972 billion. A portion of the proceeds from the disposal of the Northern European activities was used to repay loans and borrowings amounting to EUR 500.0 million. In addition, cash drawings on the revolving credit facilities were repaid in full. Moreover, in the course of the deconsolidation of the Northern European operations, liabilities and provisions associated with assets held for sale decreased by around EUR 270 million. Non-current and current other financial liabilities also declined by 11.8 % or EUR 41.6 million to EUR 311.4 million (December 31, 2012: EUR 353.1 million). The decline is primarily due to positive effects from the measurement of interest rate hedges and the revaluation of put options. This was countered by effects from the measurement of foreign currency transactions. Compared to December 31, 2012, non-current and current other liabilities posted an increase by 9.9 % or EUR 20.6 million to EUR 227.6 million. This development is attributable to higher personnel-related liabilities, advance payments received and other tax liabilities.
Non-current and current trade payables increased by 15.8 % or EUR 50.9 million to EUR 373.1 million. The increase is largely attributable to the Content Production & Global Sales segment.
Non-current and current provisions amounted to EUR 96.1 million and were thus 5.5 % higher than in the previous year (December 31, 2012: EUR 91.1 million). The largest provisions item remains the EUR 55.4 million for other current provisions compared with EUR 52.2 million on December 31, 2012 (+6.1 %). The main reason for the growth is an increase in the provision in connection with additional payments to bestseller authors to EUR 13.8 million (December 31, 2012: EUR 6.1 million).
As of December 31, 2013, there were no other major structural or quantitative balance sheet changes year on year.
When applying accounting principles, recognizing income and expenses and preparing balance sheet reports, assumptions and estimates need to be made to a certain extent.
Detailed information on the use of assumptions and estimates are shown in Note 6 of the consolidated financial statements.