Quarterly Report • Nov 10, 2017
Quarterly Report
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Media SE
Quarterly Statement for the Third Quarter and the First Nine Months of 2017
ProSiebenSat.1 Group concluded the first nine months of the year 2017 with a revenue growth of 8% to EUR 2,755 million. At the same time, the Group also achieved another rise in relevant earnings figures, with adjusted EBITDA increasing by 6% to EUR 661 million and adjusted net income growing by 7% to EUR 331 million (previous year: EUR 311 million). Once again, the Commerce portfolio was the largest growth driver. At the end of the first half of the year, ProSiebenSat.1 generated 52% of its revenues outside the TV advertising business (previous year: 46%). The Company employs 6,446 people on average. The most important revenue market is Germany. Here, the ProSiebenSat.1 share has been included into the German equity index DAX since March 2016.
ProSiebenSat.1 Group is one of the most successful independent media companies in Europe with a strong presence in the TV and digital market. Advertising-financed free TV is the Group's core business. Here, the Group is a leading player on the German TV market. At the same time, the Group is pushing ahead with its digital transformation and diversifying its portfolio. To achieve this, the Group is making use of its competitive edge and leveraging synergies by linking the wide reaching TV repertoire to digital entertainment offerings. Already today, ProSiebenSat.1 is Germany's leading video marketer on the Internet and one of the most successful providers of digital entertainment. However, the Internet is changing not only the entertainment industry, but other areas as well. For instance, digital media is also influencing consumer behavior. This is why ProSiebenSat.1 has built up a successful commerce business of digital platforms in recent years that is now the Group's largest growth driver. This broadcasting, digital entertainment and commerce portfolio is supplemented by an international production and distribution network. Thus, ProSiebenSat.1 has a broadly diversified revenue and earnings base.
| Revenues | ||||
|---|---|---|---|---|
| EUR m | ||||
| Q1–Q3 2017 |
2,755 | |||
| Q1–Q3 2016 |
2,545 | |||
| 0 | 1,000 | 2,000 | 3,000 |
| Recurring EBITDA1 | ||||||
|---|---|---|---|---|---|---|
| EUR m | ||||||
| Q1–Q3 2017 |
661 | |||||
| Q1–Q3 2016 |
626 | |||||
| 0 | 100 | 200 | 300 400 500 600 |
All information relates to continuing operations.
1 From 01/01/2017 renaming from recurring EBITDA in adjusted EBITDA.
| +17% | Revenues EUR 3,799 million |
Mid single-digit increase |
|---|---|---|
| +3% | Broadcasting German-speaking EUR 2,210 million |
Stable |
| +19% | Digital Entertainment EUR 442 million |
Stable |
| +65% | Digital Ventures & Commerce EUR 768 million |
Significant increase |
| +38% | Content Production & Global Sales EUR 362 million |
Mid single-digit decrease |
| +10% | Recurring EBITDA1 EUR 1,018 million |
Slight increase |
| +3% | Broadcasting German-speaking EUR 760 million |
Stable |
| –1% | Digital Entertainment EUR 37 million |
Significant decrease |
| +33% | Digital Ventures & Commerce EUR 180 million |
Significant increase |
| +87% | Content Production & Global Sales EUR 47 million |
Mid to high single-digit decrease |
| +10% | Underlying net income1 EUR 513 million |
Slight increase |
| 1.9 | Leverage ratio | 1.5–2.5 |
| 28.0% | German TV audience market2 |
Leading market position at a high level |
| All information relates to continuing operations. | 1 From 01/01/2017 renaming in adjusted EBITDA and adjusted net income respectively. The Annual Report 2016 comprises more detailed information on pages 73 and 74. 2 Relevant target group of 14- to 49-year-olds. |
ProSiebenSat.1 Group operates advertising-financed free TV stations in Germany, Austria and Switzerland and offers these in both SD and HD quality (Fig. 1). In Germany, the free TV stations of ProSiebenSat.1 Group and RTL Mediengruppe Deutschland have the greatest reach (viewers aged 14 to 49).
| Audience shares of ProSiebenSat.1 Group by country (Fig. 1) | ||||||
|---|---|---|---|---|---|---|
| in percent | Q3 2017 | Q3 2016 | Q1 –Q3 2017 | Q1 – Q3 2016 | ||
| Germany | 26.3 | 27.5 | 26.7 | 27.8 | ||
| Austria | 27.8 | 22.7 | 27.4 | 23.0 | ||
| Switzerland | 17.8 | 17.2 | 17.3 | 17.4 |
Figures are based on 24 hours (Mon–Sun). Germany: SAT.1, ProSieben, kabel eins, sixx, SAT.1 Gold, ProSieben MAXX, kabel eins Doku (since 09/22/2016); advertising-relevant target group adults 14–49. Source: AGF in cooperation with GfK/TV Scope 6.1/SevenOne Media Committees Representation. Austria: Basis: Austria, all levels; period: 01/01 –09/30/2017 (final weighting); adults 12–49; SAT.1 Österreich, ProSieben Austria, kabel eins Austria, PULS 4, sixx Austria, ProSieben MAXX Austria, SAT.1 Gold Österreich, kabel eins Doku Österreich (from 09/22/2016), ATV + ATV 2 (from 04/07/2017 at ProSiebenSat.1 PULS 4, previously an independent group). Source: AGTT/GfK: Fernsehforschung/Evogenius Reporting (KR) Switzerland: SAT.1 Schweiz, ProSieben Schweiz, kabel eins Schweiz, sixx Schweiz, SAT.1 Gold Schweiz, ProSieben MAXX Schweiz, Puls 8 (since 10/08/2015); advertising-relevant target group adults 15–49; market shares relate to the German-speaking part of Switzerland D–CH. Source: Mediapulse TV Panel.
In the core market Germany, ProSiebenSat.1 Group is the market leader with its seven free TV stations. As expected, the competitive environment in the German free TV market has intensified: ProSieben and SAT.1 still count among the stations with the greatest reach. However, numerous new special-interest stations have emerged in recent years. Against this background, the combined market share of the broadcasting group amounted to 26.3% among viewers aged between 14 and 49 years in the third quarter of 2017 (previous year: 27.5%). The stations marketed by IP Deutschland (RTL, VOX, n-tv, Super RTL, RTL Nitro and RTLplus) had a market share of 24.7% (previous year: 24.4%).
| Audience shares of ProSiebenSat.1 stations in Germany (Fig. 2) | ||
|---|---|---|
| Target group 14– to 49-year-olds | ||
| in percent | Q3 2017 | Q3 2016 |
| SAT.1 | 8.0 | 8.6 |
| ProSieben | 8.9 | 9.9 |
| kabel eins | 4.8 | 5.1 |
| sixx | 1.2 | 1.4 |
| SAT.1 Gold | 1.6 | 1.5 |
| ProSieben MAXX | 1.5 | 1.1 |
| kabel eins Doku1 | 0.4 | –/– |
| Relevant target groups | ||
| in percent | Q3 2017 | Q3 2016 |
| SAT.1: Adults 14- to 59-year-olds | 8.0 | 8.5 |
| ProSieben: Adults 14- to 39-year-olds | 11.9 | 13.5 |
| kabel eins: Adults 14- to 49-year-olds | 4.8 | 5.1 |
| sixx: Women 14- to 39-year-olds | 1.7 | 2.2 |
| SAT.1 Gold: Women 40- to 64-year-olds | 2.6 | 2.8 |
| ProSieben MAXX: Men 14- to 39-year-olds | 3.0 | 2.1 |
| kabel eins Doku1 : Men 40- to 64-year-olds |
0.5 | –/– |
1 Since September 22, 2016.
Figures are based on 24 hours (Mon–Sun). SAT.1, ProSieben, kabel eins, sixx, SAT.1 Gold, ProSieben MAXX, kabel eins Doku. Source: AGF in cooperation with GfK/TV Scope 6.1/SevenOne Media Committees Representation.
Business Development
The Group will release further information on the reworking of its new segment structure at its Capital Markets Day
on December 6, 2017.
In April 2017, ProSiebenSat.1 Group acquired ATV, an Austrian broadcasting group. Against this backdrop, ProSiebenSat.1 PULS 4 in Austria increased its combined audience share among 12- to 49-year-olds to 27.8% (previous year: 22.7%). The ATV and ATV2 stations accounted for a combined market share of 5.1%. ProSiebenSat.1's stations in Switzerland increased their combined market share among viewers aged between 15 and 49 years to 17.8% in the third quarter of 2017 (previous year: 17.2%).
ProSiebenSat.1 pursues a complementary multi-station strategy. With this multi-channel approach, the Group gains new audiences and at the same time provides the advertising industry additional environments for addressing target groups. As well as expanding the TV offering, the Group has established a successful portfolio of digital platforms that it will link more closely with the TV business in the future. Based on the most recent data published by Arbeitsgemeinschaft Online Forschung (AGOF) in August 2017, the websites managed by SevenOne Media, a ProSiebenSat.1 advertising sales company, reached around 37 million unique users in Germany (previous month: around 36 million unique users). The multi-channel network (MCN) Studio71 is one of the largest MCNs in the world with around 22 billion video views in the third quarter of 2017 (previous year: around 16 billion video views).
Due to cross-media marketing models on TV and digital platforms, the Group strengthens audience loyalty and extends its reach. At the same time, digitalization is enabling additional revenue models. For instance, in the free TV business, ProSiebenSat.1 participates in the technical service fees that end customers pay to the respective providers for programs in HD quality. The number of HD users has been increasing continuously since 2012 and amounted to 8.4 million users in the third quarter of 2017 (previous year: 6.9 million). The pay-video-on-demand (Pay-VoD) portal maxdome also generates revenues from subscriptions (SVoD) and pay-per-view. maxdome is one of the top three online video libraries in Germany and has more than 1 million users.
For the third quarter of 2017, the institutes of the Joint Economic Analysis Group anticipate real economic growth of 0.5% compared to the previous quarter. The German economy grew by 0.6% in the second quarter (Fig. 3).
In the first half of 2017, significant growth momentum came from private consumption, which benefited from favorable labor market and income conditions. In real terms, it increased by 1.7% compared to the same period of the previous year. This trend is expected to continue in the third quarter. One indicator is retail revenues, which grew by 3.0% in real terms from January to August; they account for around a quarter of private consumption. The online and mail order business developed particularly dynamically (+8.8% in real terms). In addition, construction and equipment investments are also likely to continue supporting the German economy.
Future Business and Industry Environment, page 24.
Group Earnings, page 10.
Future Business and Industry Environment, page 24. Company Outlook, page 25.
From ProSiebenSat.1's perspective, the overall net advertising market's performance was down for the third quarter and the nine-month period compared to the previous year. This is due in particular to sector-specific effects: For example, important industries for the TV advertising market are being subjected to increasing consolidation and rising cost pressure this year. Due to the current diesel issue, for instance, TV advertising investments in the automotive sector are falling short of the previous year. Furthermore, the declining TV advertising market shares of ProSiebenSat.1 Group had an impact on the TV advertising revenues of the Group. The internalization of Parship and ElitePartner also influenced ProSiebenSat.1's revenues performance: As a result of acquisition, the TV adverting revenues of the PARSHIP ELITE Group, previously recognized as external revenues, are now recognized as internal revenues.
Despite good general economic conditions, the German TV advertising market declined in the third quarter of 2017, as expected: According to Nielsen Media Research, gross TV advertising investment fell by 2.5% to EUR 3.161 billion (previous year: EUR 3.241 billion). On a nine-month basis,
the market proved stable at EUR 10.135 billion (previous year: EUR 10.107 billion).
According to Nielsen Media Research, ProSiebenSat.1 is market leader in the German TV advertising market (Fig. 4 and Fig. 5) and generated gross TV advertising revenues of EUR 1.303 billion in the third quarter of 2017 (previous year: EUR 1.448 billion). On a nine-month basis, the Company generated gross advertising revenues of EUR 4.171 billion (previous year: EUR 4.359 billion). This resulted in an advertising market share of 41.2% in both the third quarter and the first nine months (Q3 2016: 44.7%; Q1 – Q3 2016: 43.1%).
| TV advertising markets in Germany, Austria and Switzerland on a gross basis (Fig. 4) | |||||||
|---|---|---|---|---|---|---|---|
| in percent | Development of the TV advertising market in Q3 2017 Change against previous year |
Market shares ProSiebenSat.1 Q3 2017 |
Market shares ProSiebenSat.1 Q3 2016 |
||||
| Germany | –2.5 | 41.2 | 44.7 | ||||
| Austria | +7.0 | 41.8 | 37.8 | ||||
| Switzerland | +2.9 | 27.7 | 26.4 |
| in percent | Development of the TV advertising market in Q1–Q3 2017 Change against previous year |
Market shares ProSiebenSat.1 Q1 –Q3 2017 |
Market shares ProSiebenSat.1 Q1 – Q3 2016 |
|---|---|---|---|
| Germany | +0.3 | 41.2 | 43.1 |
| Austria | +5.1 | 40.2 | 36.7 |
| Switzerland | –2.0 | 28.2 | 27.0 |
| Germany: Gross, Nielsen Media. Austria: Gross, Media Focus. |
Switzerland: The market shares relate to the German-speaking part of Switzerland, gross, Media Focus.
in percent, Q3 2016 figures in parentheses EL Cartel 7.9 (7.3) Public stations 3.4 (3.3) Others 14.0 (13.2) SevenOne Media 41.2 (44.7) IP Deutschland 33.5 (31.6) Source: Nielsen Media Research.
TV is the medium with the highest reach in Germany and therefore has the greatest relevance in comparison to other media for the advertising industry. In the third quarter of 2017, 45.1% of gross advertising investment went on TV advertising (previous year: 46.6%) (Fig. 6). This figure was at 46.6% in the first nine months of the year (previous year: 47.1%).
Nielsen Media Research designates gross figures for the online advertising market in Germany excluding, among others, Google/YouTube, Facebook.
The advertising budgets for in-stream video ads in Germany continue to develop dynamically: The gross market volume increased by 18.2% to EUR 143.9 million in the third quarter of 2017 (previous year: EUR 121.7 million), by 9.0% to EUR 440.5 million in the first nine months of the year (previous year: EUR 404.2 million). These are a form of Internet video advertising shown before, after or during a video stream. By selling them, ProSiebenSat.1 Group generated gross revenues of EUR 66.9 million in the third quarter (previous year: EUR 52.7 million). This corresponds to a year-onyear increase of 26.9% and a leading market share of 46.5% (previous year: 43.3%) (Fig. 7). In the first nine months of the year, the Group generated EUR 194.5 million (previous year: EUR 168.1 million) from the sale of in-stream video ads; this results in an advertising market share of 44.2% (41.6%). Overall, investments in online forms of advertising rose by 1.5% to EUR 807.3 million in the third quarter (previous year: EUR 795.0 million). From January to September 2017, they amounted to EUR 2.424 billion (previous year: EUR 2.376 billion). In addition to in-stream videos, the online advertising market also includes display ads such as traditional banners and buttons.
Advertising market data from Nielsen Media Research are important indicators for an objective assessment of the advertising market's development. However, gross data allow only limited conclusions to be drawn about actual advertising revenues as they do not take into account discounts, self-promotion or agency commission. In addition, the figures for TV also include spots from media-for-revenue-share and media-for-equity transactions. Furthermore, major digital players from the US are not reflected in the Nielsen figures.
The revenue and earnings performance is in line with our most recently adjusted expectations. Thus, despite the restrained development of the TV advertising market, ProSiebenSat.1 Group closed the third quarter of 2017 with 3% growth in revenues to EUR 883 million (previous year: EUR 857 million). As expected, adjusted EBITDA was stable and amounted to EUR 202 million (previous year: EUR 202 million). Against the background of the performance of the TV advertising business,
Business Development of the Segments, page 15.
ProSiebenSat.1 Group adjusted its forecast for the TV advertising market in August. For the third quarter, ProSiebenSat.1 forecasted a decline in revenues by a mid single-digit percentage in the Broadcasting German-speaking segment. At the same time, the Company continued to grow dynamically in areas outside of TV advertising.
Our vision is to position ProSiebenSat.1 as a leading omnichannel entertainment & commerce brand powerhouse with an international presence. Thus, ProSiebenSat.1 Group is consistently pushing ahead with its transformation from a traditional TV company into a digital group with a diversified business portfolio. By providing channels in HD quality, for example, the Group has developed an additional business model in the free TV segment with considerable revenue growth which is independent from economic conditions. The increasing importance of digital transmission is offering us new refinancing models and growth opportunities. ProSiebenSat.1 is therefore pursuing a digital entertainment strategy and also offers viewers content online or on demand. However, our media usage behavior is not only changing as a result of digitalization but the considerable relevance of the Internet is influencing consumer behavior as a whole as well. This is reflected in the fact that nearly 50% of all Germans have purchased a product on the Internet as a result of TV advertising. This is why ProSiebenSat.1 is investing in commerce portals which address a broad mass market and whose product areas are particularly suited to video advertising. The Company measures the success of this strategy on the basis of revenue and earnings increases in its segments.
At the end of the quarter, the Company generated 77% of its growth targets 2018 (Fig. 8). The main growth driver was the Digital Commerce & Ventures segment. In the third quarter of 2017, ProSiebenSat.1 generated 46% or EUR 404 million of its consolidated revenues from video advertising on TV (previous year: 50% or EUR 425 million). The German market accounted for 87% of this figure (previous year: 89%).
| Revenues growth targets 2018 (Fig. 8) | ||||||||
|---|---|---|---|---|---|---|---|---|
| in EUR m | ||||||||
| 5,000 | ||||||||
| 4,500 | 4,506 | |||||||
| 4,000 | 470 | |||||||
| 3,799 | 362 | 1.172 | ||||||
| 3,500 | 3,261 | 768 | ||||||
| 3,000 | 2,876 | 262 | ||||||
| 2,500 | 2,356 | 2,605 124 |
202 611 |
465 | 442 | 563 | ||
| 2,000 | 95 335 |
484 | 371 2,152 |
2,210 | 2,301 | |||
| 1,500 | 1,926 | 1,998 | 2,063 | |||||
| 1,000 | ||||||||
| 1,500 | ||||||||
| 1,500 | ||||||||
| 2012 | 2013 | 2014 | 2015 | 2016 | 20181 | |||
| Degree of achievement Q3 2017 |
Broadcasting German-speaking |
Digital Entertainment |
Digital Ventures & Commerce |
Content Production & Global Sales |
ProSiebenSat.1 Group |
|||
| EUR m | 269 | 212 | 861 | 287 | 1,653 | |||
| in percent | 72 | 63 | 81 | 77 | 77 | |||
| ——— = Content Production & Global Sales ——— = Digital Ventures & Commerce ——— = Digital Entertainment |
——— = Broadcasting German-speaking ——— = Digital & Adjacent |
1 Growth targets | External segment revenues and Group revenues from continuing activities. |
While macroeconomic conditions and industry-specific and structural effects may significantly influence our business performance, exchange rate fluctuations have no material impact on the Group's financial situation. Although ProSiebenSat.1 is international, the Company generates the majority of its revenues in Germany and thus in the eurozone (Fig. 9). Further details, in particular on using derivative financial instruments, can be found in the Annual Report 2016 on page 159.
ProSiebenSat.1 practices active portfolio management aimed at leveraging synergies by connecting the business areas and particularly TV and digital offerings. The Group regularly analyzes its portfolio and assesses potential synergies. Divestments are also part of this M&A strategy: Against this background, the Group sold its shares in eTRAVELi Holding AB to the international financial investor CVC Capital Partners in June 2017. The transaction was concluded in the third quarter of 2017, since then, the entity is no longer included in the scope of consolidation. In addition, ProSiebenSat.1 sold most of the media-for-equity portfolio to Lexington Partners, a US private equity fund and concluded the sale in the third quarter of 2017. A selection of minority interests belonging to SevenVentures and other Group entities were transferred to Crosslantic Capital, a newly established fund, within this context. At this, Seven Ventures as a strategic media partner has a minority stake of about 24.5%. Since the third quarter, the Consolidated Financial Statement doesn't comprise a majority of the investments.
Notes, Note 3 "Acquisitions, disposals and other transactions with subsidiaries," page 34.
At the same time, ProSiebenSat.1 has further strengthened the Group's portfolio with strategic acquisitions and in June 2017, took over the majority interest in Jochen Schweizer GmbH, a leading provider of experience gifts in Germany, Austria and Switzerland. With effect as of October 16, 2017, the ProSiebenSat.1 Group holds 90% of the newly founded Jochen Schweizer mydays Holding GmbH. The expansion of the commerce portfolio by the brand and competence of Jochen Schweizer and its omnichannel positioning complements the existing ProSiebenSat.1 business and provides the basis for further growth and synergies.
| Reconciliation of the income statement (Fig. 10) | ||||||
|---|---|---|---|---|---|---|
| -------------------------------------------------- | -- | -- | -- | -- | -- | -- |
| in EUR m | Q3 2017 IFRS |
Adjust ments |
Q3 2017 Adjusted |
|---|---|---|---|
| Revenues | 883 | –/– | 883 |
| Total costs | –1,016 | –295 | –721 |
| thereof operating costs | –685 | –/– | –685 |
| thereof depreciation and amortization1 | –108 | –72 | –36 |
| Other operating income | 307 | 302 | 5 |
| Operating result (EBIT) | 174 | 7 | 166 |
| Financial result | –41 | –21 | –21 |
| Profit before income taxes | 132 | –13 | 145 |
| Income taxes | –5 | 35 | –41 |
| Consolidated net profit from continuing operations | 127 | 22 | 104 |
| Earnings from discontinued operations after taxes | –/– | –/– | –/– |
| CONSOLIDATED NET PROFIT | 127 | 22 | 104 |
| Attributable to shareholders of ProSiebenSat.1 Media SE | 122 | 24 | 992 |
| Non-controlling interests | 4 | –2 | 6 |
| Profit before income taxes | 132 | –13 | 145 |
| Financial result | –41 | –21 | -21 |
| Operating result (EBIT) | 174 | 7 | 166 |
| Depreciation. amortization and impairments | –108 | –72 | -36 |
| thereof purchase price allocations | –45 | –45 | -/- |
| EBITDA | 281 | 79 | 2023 |
1 Depreciation/amortization and impairment of other intangible assets and property, plant and equipment.
ProSiebenSat.1 Group also uses non-IFRS figures in the form of the adjusted net income (2) and adjusted EBITDA (3) At the beginning of financial year 2017, ProSiebenSat.1 publishes a full income statement adjusted for certain influencing factors. This publication takes into account the development of reporting practices for non-IFRS figures and more stringent regulatory transparency requirements in this area. The Annual Report 2016 comprises more detailed information on pages 73 and 74.
Business Development of the Segments, page 15.
Notes, Note 3 "Acquisitions, disposals and other transactions with subsidiaries," page 34.
Consolidated revenues amounted to EUR 883 million in the third quarter of 2017 (previous year: EUR 857 million). As expected, advertising revenues in the Broadcasting German-speaking segment fell short of the previous year, so consolidated revenues grew by just 3% year-on-year.
Other operating income amounted to EUR 307 million (previous year: EUR 7 million). The increase reflects the gross proceeds of EUR 302 million from the sale of etraveli. In this context, selling costs of EUR 8 million accrued. They are reported in total costs.
Total costs increased by 40% or EUR 289 million in the third quarter of 2017 and amounted to EUR 1,016 million (Fig. 10). This includes consumption of programming assets totaling EUR 383 million (previous year: EUR 203 million). In the third quarter of 2017, ProSiebenSat.1 Group reevaluated its programming assets. This reevaluation was strategic and went beyond the common analysis as part of the regular impairment test. In this context, ProSiebenSat.1 identified a need to impair programming assets by around EUR 170 million.
Depreciation and amortization recognized as part of total costs increased by EUR 56 million to EUR 108 million. This was mainly due to impairments on brands.
Operating costs amounted to EUR 685 million (previous year: EUR 658 million). This equates to an increase of 4% compared to the third quarter of 2016. Operating costs are the relevant cost item for calculating adjusted EBITDA (Fig. 12).
Total costs (Fig. 11)
| Q3 2017 | 722 | 133 138 |
22 1,016 |
||
|---|---|---|---|---|---|
| 477 | 132 116 3 |
||||
| Q3 2016 | 727 | ||||
| 0 | 250 | 500 | 750 | 1,000 |
Cost of sales Selling expenses Administrative expenses Other operating expenses Cost of sales Selling expenses Administrative expenses Other operating expenses
Adjusted EBITDA developed stably and amounted to EUR 202 million (previous year: EUR 202 million). The corresponding adjusted EBITDA margin was 22.9% (previous year: 23.5%). In contrast, Group EBITDA was a considerable 49% up on the previous year at EUR 281 million (previous year: EUR 188 million). This figure is characterized by reconciling items totaling EUR 79 million (previous year: EUR –13 million), which comprise the following (Fig. 13): While the sale of etraveli resulted in a gross deconsolidation profit of EUR 302 million in the Digital Ventures & Commerce segment, the strategic reevaluation of parts of the programming assets led to expenses of EUR 170 million in the Broadcasting German-speaking segment. Expenses in connection with reorganizations amounted to EUR 20 million (previous year: EUR 7 million). They primarily reflect the reorganization of maxdome in the Digital Entertainment segment. Costs in the amount of EUR 12 million also resulted from M&A projects (previous year: EUR 3 million) that were mainly attributable to the Digital Ventures & Commerce segment. Other EBITDA effects amounted to EUR 21 million (previous year: EUR 3 million) and, among others, include positive valuation effects on cash-settled share-based payments (Group Share Plan) of EUR 5 million and expenses for building provisions for impending losses and other expenses.
| Reconciliation of adjusted EBITDA (Fig. 13) | ||
|---|---|---|
| in EUR m | Q3 2017 | Q3 2016 |
| Profit before income taxes | 132 | 102 |
| Financial result | –41 | –35 |
| Operating profit (EBIT) | 174 | 137 |
| Depreciation, amortization and impairments1 | –108 | –52 |
| thereof from purchase price allocations | –45 | –14 |
| EBITDA | 281 | 188 |
| Reconciling items (net)2 | 79 | –13 |
| Adjusted EBITDA | 202 | 202 |
1 Depreciation/amortization and impairment of other intangible assets and property, plant and equipment.
2 Expense adjustments of EUR 223 million (previous year: EUR 17 million) less income adjustments of EUR 302 million
(previous year: EUR 3 million).
The financial result amounted to minus EUR 41 million (previous year: EUR –35 million) and is characterized by opposite developments: In the third quarter of this year, the Group reported impairments and reversals on financial assets of minus EUR 9 million (net) (previous year: EUR –11 million). These primarily resulted from an impairment of shares in Mad Rabbit and Cove Pictures. In contrast, the previous year's figure includes impairments on financial investments
Further information on the Group Share Plan can be found in the
Annual Report 2016.
Business Development of the Segments, page 15.
of minus EUR 18 million. These primarily resulted from an impairment of shares in Aliph Com Inc. (Jawbone). In the third quarter of 2017, there was a positive valuation effect of EUR 5 million from the media-for-equity portfolio. This was offset by a positive valuation effect on shares in Stylight GmbH of EUR 9 million in the third quarter of 2016; the previously held shares in Stylight increased in value in connection with the majority acquisition in July 2016. In addition, the Group reported valuation adjustments of put option liabilities of minus EUR 9 million (previous year: EUR -5 million) in the third quarter of 2017.
While the other financial result improved to minus EUR 9 million for the reasons mentioned above (previous year: EUR –14 million), interest expenses increased to EUR 31 million (previous year: EUR 20 million). This is attributable to additions to provisions for interest on taxes, these are adjusted in the calculation of adjusted net income.
The developments described above resulted in pre-tax profit of EUR 132 million (previous year: EUR 102 million). Consolidated net profit from continuing operations amounted to EUR 127 million, corresponding to an increase of 82% or EUR 57 million. At the same time, consolidated net profit after non-controlling interests rose to EUR 122 million (previous year: EUR 68 million). The significant rise in these earnings figures reflects primarily the effects from the disposal of etraveli. Adjusted net income remained almost stable and amounted to EUR 99 million (previous year: EUR 98 million). Basic underlying earnings per share declined by 5% to EUR 0.43 (previous year: EUR 0.46).
| Reconciliation of adjusted net income from continuing operations (Fig. 14) | ||
|---|---|---|
| in EUR m | Q3 2017 | Q3 2016 |
| Consolidated net profit after non-controlling interests | 122 | 68 |
| Deconsolidation of etraveli | –302 | –/– |
| Valuation effects from the Company's strategic realignments of Business Units | 170 | –/– |
| Other EBITDA adjustments | 53 | 13 |
| Amortization from purchase price allocations1 | 46 | 14 |
| Impairments on other financial investments | 4 | 18 |
| Remeasurement of interests accounted for using the equity method in connection with initial consolidations |
0 | –9 |
| Put options/earn-outs | 8 | 5 |
| Valuation effects from financial derivatives | 0 | 1 |
| Reassessment of tax risks | 12 | 1 |
| Other effects2 | 21 | 0 |
| Tax effects | –35 | –14 |
| Minority interests | –2 | 0 |
| Adjusted net income | 99 | 98 |
1 Incl. effects on associates consolidated using the equity method.
2 Other effects comprises valuation effects relating to strategic investments in the Digital Ventures & Commerce segment amounting to minus EUR 5 million (previous year: EUR 0 million) and impairments on leasehold improvements and other intangible assets in the amount of EUR 26 million (previous year: EUR 4 million)due to reorganizations in the Digital Entertainment segment.
Notes, Note 3 "Acquisitions, disposals and other transactions with subsidiaries," page 34.
Notes, Note 7
| in EUR m | Q1 –Q3 2017 IFRS |
Adjust ments |
Q1 –Q3 2017 Adjusted |
|---|---|---|---|
| Revenues | 2,755 | –/– | 2,755 |
| Total costs | –2,584 | –370 | –2,213 |
| thereof operating costs | –2,108 | –/– | –2,108 |
| thereof depreciation and amortization1 | –215 | –110 | –105 |
| Other operating income | 316 | 302 | 14 |
| Operating result (EBIT) | 487 | –69 | 556 |
| Financial result | –79 | –16 | –62 |
| Profit before income taxes | 408 | –85 | 493 |
| Income taxes | –94 | 52 | –146 |
| Consolidated net profit from continuing operations | 315 | –33 | 347 |
| Earnings from discontinued operations after taxes | –/– | –/– | –/– |
| CONSOLIDATED NET PROFIT | 315 | –33 | 347 |
| Attributable to shareholders of ProSiebenSat.1 Media SE | 304 | –28 | 3312 |
| Non-controlling interests | 11 | –5 | 16 |
| Profit before income taxes | 408 | –85 | 493 |
| Financial result | –79 | –16 | –62 |
| Operating result (EBIT) | 487 | –69 | 556 |
| Depreciation. amortization and impairments | –215 | –110 | –105 |
| thereof purchase price allocations | –72 | –72 | –/– |
| EBITDA | 702 | 41 | 6613 |
1 Depreciation/amortization and impairment of other intangible assets and property, plant and equipment.
ProSiebenSat.1 Group also uses non-IFRS figures in the form of the adjusted net income (2) and adjusted EBITDA (3) At the beginning of financial year 2017, ProSiebenSat.1 publishes a full income statement adjusted for certain influencing factors. This publication takes into account the development of reporting practices for non-IFRS figures and more stringent regulatory transparency requirements in this area. The Annual Report 2016 comprises more detailed information on pages 73 and 74.
Business Development of the Segments, page 15. The effects of the third quarter of 2017 influenced the earnings performance over the first nine months of the year: On a nine-month basis, the Group increased its total revenues by 8% or EUR 210 million to EUR 2,755 million. Operating costs rose by 9% and amounted to EUR 2,108 million (previous year: EUR 1,932 million). Against this backdrop, adjusted EBITDA increased by 6% to EUR 661 million (previous year: EUR 626 million).
EBITDA grew by 15% and amounted to EUR 702 million (previous year: EUR 608 million); this includes reconciling items of EUR 41 million (previous year: EUR –18 million). The positive effect from the sale of etraveli is offset by reconciling expenses of EUR 261 million (previous year: EUR 28 million). These include the consumption of programming assets of EUR 170 million in the context of the strategic reevaluation. On the other hand, expenses of EUR 40 million (previous year: EUR 9 million) resulted from reorganizations. These are primarily attributable to the Broadcasting German-speaking and Digital Entertainment segments and are mainly due to unscheduled consumption of programming assets in connection with the acquisition and reorganization of the Austrian broadcasting group ATV and the reorganization of maxdome. M&A projects also resulted in costs of EUR 21 million (previous year: EUR 11 million), particularly in the Digital Ventures & Commerce segment. Other EBITDA effects amounted to EUR 29 million (previous year: EUR –2 million) and, among others, include positive valuation effects on cash-settled share-based payments of EUR 3 million and expenses for building provisions for impending losses and other expenses.
| Reconciliation of adjusted EBITDA (Fig. 16) | ||
|---|---|---|
| in EUR m | Q1 –Q3 2017 Q1–Q3 2016 | |
| Profit before income taxes | 408 | 401 |
| Financial result | –79 | –69 |
| Operating profit (EBIT) | 487 | 470 |
| Depreciation, amortization and impairments1 | –215 | –138 |
| thereof from purchase price allocations | –72 | –39 |
| EBITDA | 702 | 608 |
| Reconciling items (net)2 | 41 | –18 |
| Adjusted EBITDA | 661 | 626 |
1 Depreciation/amortization and impairment of other intangible assets and property, plant and equipment.
2 Expense adjustments of EUR 261 million (previous year: EUR 28 million) less income adjustments of EUR 302 million
(previous year: EUR 10 million).
While the pre-tax profit remained almost stable at EUR 408 million (previous year: EUR 401 million), consolidated net profit from continuing operations grew by a significant 14% to EUR 315 million year-on-year (previous year: EUR 275 million). This reflects the income tax expenses of EUR 94 million in the first nine months of 2017 (previous year: EUR 126 million) at a tax rate of 23% (previous year: 32%). The lower tax rate particularly reflects the sale of etraveli in the third quarter of 2017.
| in EUR m | Q1 –Q3 2017 Q1–Q3 2016 | |
|---|---|---|
| Consolidated net profit after non-controlling interests | 304 | 271 |
| Deconsolidation of etraveli | –302 | –/– |
| Valuation effects from the Company's strategic realignments of Business Units | 170 | –/– |
| Other EBITDA adjustments | 90 | 18 |
| Amortization from purchase price allocations1 | 76 | 39 |
| Impairments on other financial investments | 22 | 26 |
| Remeasurement of interests accounted for using the equity method in connection with initial consolidations |
0 | –9 |
| Valuation adjustments to shares in ZeniMax Media Inc. | –/– | –30 |
| Put options/earn-outs | 5 | 9 |
| Valuation effects from financial derivatives | 0 | 8 |
| Reassessment of tax risks | 13 | 1 |
| Other effects2 | 11 | –1 |
| Tax effects | –52 | –19 |
| Minority interests | –5 | –2 |
| Adjusted net income | 331 | 311 |
1 Incl. effects on associates consolidated using the equity method.
2 Other effects comprises valuation effects relating to strategic investments in the Digital Ventures & Commerce segment amounting to minus EUR 27 million (previous year: EUR –6 million) and impairments on leasehold improvements and other intangible assets in the amount of EUR 38 million (previous year: EUR 4 million) due to reorganisations in the Digital Entertainment segment.
The framework of definitions for the calculation of adjusted figures was revised as part of the ongoing review of the Group-wide management system. For example, the Group sees valuation effects relating to strategic realignments of business units, i.e. the level below the Group's operating segments, as an influencing factor that interferes with the
assessment of the Company's operating performance. Given the primary relationship of these strategic realignments with the underlying business objective or strategy, the Group's significant non-IFRS figures adjusted EBITDA and adjusted net income are now adjusted accordingly, starting from this quarter.
"Segment reporting," page 33.
Future Business and Industry Environment,
Development of Economy and Advertising Market,
page 24.
page 5.
In the third quarter of 2017, external revenues in the Broadcasting German-speaking segment amounted to EUR 460 million. This equates to a decrease of 3% or EUR 12 million compared to the previous year. The development of revenues reflects the decline inTV advertising revenues in Germany. However, TV advertising revenues in Austria grew partly as a result of acquisitions. In April, ProSiebenSat.1 Group acquired ATV, an Austrian broadcasting group. At the same time, distribution revenues developed dynamically in the third quarter of 2017.
The segment's internal revenues further grew and amounted to EUR 29 million (previous year: EUR 24 million). This resulted from commercial relationships between the TV and commerce business, which increase the revenues of internal advertising customers.
Adjusted EBITDA decreased by 3% or EUR 4 million to EUR 143 million. The corresponding adjusted EBITDA margin remained close to the previous year's level at 29.2% (previous year: 29.5%). In contrast, EBITDA reduced significantly as a result of reconciling items and amounted to minus EUR 51 million (previous year: EUR 140 million). This was caused by expenses in the context of the strategic reevaluation of parts of the programming assets, which led to an unscheduled consumption of EUR 170 million.
The development of revenues and costs also impacts the nine-month period: From January to September, external segment revenues amounted to EUR 1,490 million, which was almost on a par with the previous year (previous year: EUR 1,506 million). Adjusted EBITDA increased by 2% or EUR 9 million to EUR 488 million. The adjusted EBITDA margin amounted to 30.7% (previous year: 30.4%). However, EBITDA decreased by 43% to EUR 270 million (previous year: EUR 473 million). In addition to the items above, the first nine months of the year also include reconciling
Notes, Note 2 "Segment reporting," page 33.
items that were particularly due to reorganizations in connection with the acquisition of ATV in the first quarter of 2017.
| in EUR m | Q3 2017 | Q3 2016 | Q1 –Q3 2017 | Q1 – Q3 2016 |
|---|---|---|---|---|
| Segment revenues | 488 | 496 | 1,590 | 1,575 |
| External revenues | 460 | 472 | 1,490 | 1,506 |
| Internal revenues | 29 | 24 | 100 | 69 |
| EBITDA | –51 | 140 | 270 | 473 |
| Adjusted EBITDA | 143 | 147 | 488 | 479 |
| Adjusted EBITDA margin1 (in%) |
29.2 | 29.5 | 30.7 | 30.4 |
The Digital Entertainment segment saw a decline in external revenues by 3% to EUR 96 million in the third quarter of 2017 (previous year: EUR 99 million). This was due in particular to declining revenues in the music and event business (Adjacent) as a result of the further persistently challenging market environment. In addition, the revenues from the VoD portal maxdome were down on the previous year. In contrast, revenues in the Ad-VoD business developed positively. The main growth drivers were the MCN Studio71 and the area of digital advertising technology (AdTech) with the firms Virtual Minds and SMARTSTREAM.TV.
Adjusted EBITDA decreased to minus EUR 2 million (previous year: EUR 4 million) as a result of the revenue development. The corresponding adjusted EBITDA margin was minus 1.8% (previous year: 3.9%). EBITDA also decreased and amounted to minus EUR 21 million (previous year: EUR 6 million). Primarily, this includes expenses in connection with the reorganization at maxdome.
In the first nine months of the year, external revenues in the Digital Entertainment segment amounted to EUR 301 million, which was almost on a par with the previous year (previous year: EUR 304 million). Earnings figures declined at the same time: In the nine-month period, adjusted EBITDA amounted to EUR 3 million after EUR 19 million in the previous year. The corresponding adjusted EBITDA margin of the segment decreased to 1.0% (previous year: 6.1%). EBITDA amounted to minus EUR 17 million (previous year: EUR 24 million). The decline in earnings reflects the development of revenues in individual business areas.
| Key figures Digital Entertainment segment (Fig. 22) | |||||||
|---|---|---|---|---|---|---|---|
| in EUR m | Q3 2017 | Q3 2016 | Q1 –Q3 2017 | Q1 – Q3 2016 | |||
| Segment revenues | 103 | 104 | 320 | 319 | |||
| External revenues | 96 | 99 | 301 | 304 | |||
| Internal revenues | 7 | 5 | 19 | 15 | |||
| EBITDA | –21 | 6 | –17 | 24 | |||
| Adjusted EBITDA | –2 | 4 | 3 | 19 | |||
| Adjusted EBITDA margin1 (in%) |
–1.8 | 3.9 | 1.0 | 6.1 | |||
| 1 Based on segment revenues. |
External revenues in the Digital Ventures & Commerce segment continued to grow significantly (+25%) and amounted to EUR 226 million in the third quarter of 2017 (previous year: EUR 181 million). Revenues increased mainly due to acquisitions compared to the third quarter of 2016. Strongest growth drivers were the Online Dating vertical and Lifestyle Commerce vertical: In addition to the initial consolidation of the provider of health products WindStar, the dating portals Parship and ElitePartner contributed to growth since October 2016. In addition, Flaconi and
Notes, Note 2 "Segment reporting," page 33.
Amorelie also contributed to the Group's organic growth. Revenues in the Ventures business with the business models media-for-revenue-share and media-for-equity saw solid growth slightly above the previous year's level. However, revenues in the Online Travel vertical decreased; this was mainly due to the deconsolidation of the online travel agency etraveli in the third quarter of 2017. Overall, however, the revenues from the PARSHIP ELITE Group significantly overcompensated the impacts of the deconsolidation of eTRAVELi Holding AB.
Compared to the third quarter of 2016, this dynamic revenue growth led to a 20% increase in adjusted EBITDA to EUR 48 million (previous year: EUR 40 million). The adjusted EBITDA margin was 20.9% (previous year: 21.9%). EBITDA increased by EUR 304 million to EUR 341 million. This includes reconciling income from the sale of etraveli in the third quarter of 2017.
The segment's revenues and earnings also grew by double digits in the first nine months of the year, this reflects the development of the third quarter. External revenues rose by 42% to EUR 683 million (previous year: EUR 483 million). Adjusted EBITDA increased by 32% to EUR 139 million (previous year: EUR 105 million) while the adjusted EBITDA margin amounted to 20.3% (previous year: 21.3%). EBITDA grew by EUR 324 million to EUR 421 million (previous year: EUR 97 million).
| Key figures Digital Ventures & Commerce segment (Fig. 23) | ||||||||
|---|---|---|---|---|---|---|---|---|
| in EUR m | Q3 2017 | Q3 2016 | Q1 –Q3 2017 | Q1 – Q3 2016 | ||||
| Segment revenues | 227 | 181 | 687 | 494 | ||||
| External revenues | 226 | 181 | 683 | 483 | ||||
| Internal revenues | 1 | 0 | 3 | 12 | ||||
| EBITDA | 341 | 36 | 421 | 97 | ||||
| Adjusted EBITDA | 48 | 40 | 139 | 105 | ||||
| Adjusted EBITDA margin1 (in%) |
20.9 | 21.9 | 20.3 | 21.3 | ||||
| 1 Based on segment revenues. |
In the Content Production & Global Sales segment, external revenues decreased by 6% to EUR 93 million (previous year: EUR 100 million). This is particularly due to the production business in the US market, which is subject to market-based fluctuations. In contrast, the British Red Arrow production subsidiary Endor Productions and the German production business with RedSeven Entertainment developed positively. In addition, the global sales business saw growth compared to the same period of the previous year.
Despite the slight decline in revenues, the operating earnings figures increased. This was due to temporary effects at exploitation rights of licenses in the sales business, among others. Adjusted EBITDA increased by 27% or EUR 3 million to EUR 14 million. The adjusted EBITDA margin grew to 13.4% (previous year: 10.1%). Compared to the third quarter of 2016, EBITDA increased by 16% to EUR 13 million (previous year: EUR 11 million).
In the first months of the year, external revenues rose by 9% to EUR 261 million (previous year: EUR 240 million). On the one hand, this is due to higher revenues in the sales business. On the other hand, Red Arrow production subsidiaries such as Endor Productions in Great Britain and the acquired US production company 44 Blue Studios developed dynamically. However, other production subsidiaries partly remained below the previous year's level. Adjusted EBITDA increased by 31% or EUR 8 million to EUR 35 million. The corresponding adjusted EBITDA margin rose to 11.1% (previous year: 9.4%). EBITDA grew by 36% or EUR 9 million to EUR 34 million.
Group Earnings, page 10.
| Key figures Content Production & Global Sales segment (Fig. 24) | |||||||
|---|---|---|---|---|---|---|---|
| in EUR m | Q3 2017 | Q3 2016 | Q1 –Q3 2017 | Q1 – Q3 2016 | |||
| Segment revenues | 106 | 111 | 313 | 284 | |||
| External revenues | 93 | 100 | 261 | 240 | |||
| Internal revenues | 12 | 11 | 52 | 44 | |||
| EBITDA | 13 | 11 | 34 | 25 | |||
| Adjusted EBITDA | 14 | 11 | 35 | 27 | |||
| Adjusted EBITDA margin1 (in%) |
13.4 | 10.1 | 11.1 | 9.4 | |||
| 1 Based on segment revenues. |
As of September 30, 2017, ProSiebenSat.1 Group's debt capital had a share of 82% in total assets (December 31, 2016: 78%; September 30, 2016: 87%). At 63% or EUR 3,185 million, the majority of debt capital was attributable to the Group's non-current and current financial liabilities (December 31, 2016: 62%; September 30, 2016: 61%).
ProSiebenSat.1 uses various financing instruments and practices active financial management. In April 2017, the Group extended the duration of the term loan and the revolving credit facility (RCF) until April 2022 and at the same time increased the nominal volume of the RCF by EUR 150 million to EUR 750 million. In addition, ProSiebenSat.1 Group adjusted other contract terms. In the context of these refinancing measures, the previous financial covenant was also eliminated.
Interest payable on the term loan and the RCF is variable and based on Euribor money market rates plus an additional credit margin. ProSiebenSat.1 Group hedges potential risks from changes in variable interest rates with derivative financial instruments in the form of interest rate swaps and interest rate options. The proportion of fixed interest was approximately 98% of the entire long-term financing portfolio as of September 30, 2017 (December 31, 2016: approx. 98%; September 30, 2016: 100%). The average fixed rate of the interest rate swaps was 1.88% per annum as of September 30, 2017. The average interest rate ceiling of the interest rate caps was 0% per annum.
Net financial debt amounted to EUR 1,865 million (December 31, 2016: EUR 1,913 million; September 30, 2016: EUR 2,419 million). The leverage ratio, which is the ratio of net debt to adjusted EBITDA over the last twelve months (LTM adjusted EBITDA), was 1.8 and thus within the target range (December 31, 2016: 1.9; September 30, 2016: 2.5) of between 1.5 and 2.5 at the end of the relevant year. This development primarily reflects the net proceeds from the sale of etraveli in August 2017 of EUR 469 million, minus the dividend payment in May 2017 of EUR 435 million (previous year: EUR 386 million). The leverage ratio is a key indicator for Group-wide financial and investment planning.
| in EUR m | |||||||
|---|---|---|---|---|---|---|---|
| 09/30/2017 | 1,865 | ||||||
| 12/31/2016 | 1,913 | ||||||
| 09/30/2016 | 2,419 | ||||||
| 0 | 500 | 1,000 | 1,500 | 2,000 | 2,500 | 3,000 |
i Ratings represent an independent assessment of an entity's credit quality. However, rating agencies do not take ProSiebenSat.1 Group's loan agreement or notes into account in
their credit ratings. Analysis of Assets and Capital Structure, page 21.
i Further information on the different financing instruments can be found on pages 126 and 127 of the Annual Report 2016.
The target range may be exceeded for a short period of time as a result of fluctuations during the year.
| 0 | 0.5 | 1.0 | 1.5 | 2.0 | 2.5 | |
|---|---|---|---|---|---|---|
| 2.5 | ||||||
| 09/30/2016 | ||||||
| 12/31/2016 | 1.9 | |||||
| 09/30/2017 | 1.8 | |||||
| in EUR m | ||||||
1 After reclassification of cash and cash equivalents of held-for-sale businesses in the travel portfolio. Net financial debt is defined as total borrowings minus cash and cash equivalents and certain current financial assets. The leverage ratio is derived by calculating the ratio of net financial debt to adjusted EBITDA of the last twelve months (LTM adjusted EBITDA).
| Statement of cash flows (Fig. 27) | ||||
|---|---|---|---|---|
| in EUR m | Q3 2017 | Q3 2016 | Q1–Q3 2017 | Q1– Q3 2016 |
| Result from continuing operations | 127 | 70 | 315 | 275 |
| Result from discontinued operations | –/– | –/– | –/– | –42 |
| Cash flow from operating activities of continuing operations |
308 | 326 | 957 | 1,001 |
| Cash flow from operating activities of discontinued operations |
–/– | –/– | –/– | –42 |
| Cash flow from investing activities of continuing operations |
213 | –344 | –472 | –1,022 |
| Free cash flow of continuing operations | 521 | –18 | 484 | –21 |
| Free cash flow of discontinued operations | –/– | –/– | –/– | –42 |
| Free cash flow (total) | 521 | –18 | 484 | –63 |
| Cash flow from financing activities of continuing operations |
–9 | –343 | –414 | –359 |
| Effect of foreign exchange rate changes on cash and cash equivalents |
–3 | –1 | –9 | –4 |
| Change in cash and cash equivalents total | 510 | –362 | 62 | –425 |
| Cash and cash equivalents at beginning of reporting period | 8241 | 672 | 1,271 | 734 |
| Cash and cash equivalents available for sale at the end of the reporting period |
13 | –/– | 13 | –/– |
| Cash and cash equivalents at end of reporting period2 | 1,320 | 309 | 1,320 | 309 |
1 Includes cash and cash equivalents of companies held-for-sale.
2 Cash and cash equivalents shown in the statement of cash flows correspond to the cash and cash equivalents reported
on the statement of financial position as of the respective closing date.
Cash flow from operating activities amounted to EUR 308 million in the third quarter of 2017 (previous year: EUR 326 million). The 6% decrease is characterized by the earnings performance. Working capital developed in the other direction, increasing to EUR 3 million (previous year: EUR –7 million). Lower receivable portfolios and changes in program liabilities in particular had a positive impact here.
In the first nine months of 2017, operating cash flow decreased by 4% and amounted to EUR 957 million (previous year: EUR 1,001 million). This is primarily due to changes in working capital totaling minus EUR 80 million (previous year: EUR –32 million). This was mainly due to increases in receivable portfolios and changes in program liabilities. This was offset by the development of operative earnings and a decline in interest payments of EUR 48 million (previous year: EUR 70 million).
Cash flow from investing activities resulted in cash flows of EUR 213 million in the third quarter (previous year: EUR –344 million) and minus EUR 472 million in the first nine months of 2017 (previous year: EUR – 1,022 million). Cash flows were as follows:
In the third quarter of 2017, cash inflow from the sale of consolidated subsidiaries amounted to EUR 470 million (previous year: EUR –4 million). It includes the net cash inflow from the sale of etraveli of EUR 469 million.
Cash outflow from additions to the scope of consolidation amounted to EUR 0 million in the third quarter of 2017 (previous year: EUR 83 million). In the first nine months, the corresponding cash outflow amounted to EUR 91 million (previous year: EUR 157 million). In the first nine months of the year, cash flow above all includes deferred purchase price payments for the production companies Kinetic Content and Left/Right and the purchase price payment for the acquisition of the ATV broadcasting group of EUR 28 million. The comparatively higher previous year figures reflect the acquisition of 44 Blue and Stylight in the third quarter of 2016 and the acquisition of Dorsey Pictures and deferred purchase price payments for SMARTSTREAM.TV and etraveli in the first nine months of the year.
The cash outflow for the acquisition of programming rights amounted to EUR 250 million in the third quarter of 2017 (previous year: EUR 239 million). This is an increase of 5% or EUR 11 million compared to the previous year. In the first nine months of the year, cash outflows increased by 2% to EUR 774 million (previous year: EUR 757 million). Programming investments were mostly attributable to the Broadcasting German-speaking segment (Q3 2017: 99%; Q1 –Q3 2017: 97%) and were shared between licensed programs (Q3 2017: 58%; Q1 –Q3 2017: 62%) and commissioned productions (Q3 2017: 41%; Q1 –Q3 2017: 37%).
Investments in property, plant and equipment amounted to EUR 10 million in the third quarter (previous year: EUR 8 million) and EUR 27 million in the first nine months of the year (previous year: EUR 19 million). Most of this was attributable to the Broadcasting German-speaking segment (Q3 2017: 71%; Q1 –Q3 2017: 67%) and was related to technical facilities and leasehold improvements at the Unterföhring site. In the third quarter, a total of EUR 34 million went into other intangible assets (previous year: EUR 30 million). In the first nine months of the year, cash outflows amounted to EUR 83 million (previous year: EUR 84 million). The Group invested in other intangible assets primarily in the Digital Entertainment segment (Q3 2017: 51%; Q1 –Q3 2017: 46%).
Assets resulting from initial consolidations are not reported as segment-specific investments. Funds used for the acquisition of the initially consolidated entities are shown as "cash outflow from additions to the scope of consolidation."
are a focal point in investing activities. In addition to the purchasing of licensed formats and commissioned productions, in-house formats secure the Group's programming supply. They are based on the development and implementation of own ideas and, unlike commissioned productions, are produced primarily for broadcasting in the near future. For this reason, they are recognized immediately as an expense in cost of sales and are not considered as an investment.
Programming investments
Free cash flow: Total cash and cash equivalents generated in operating business less the balance of cash used and generated in the context of investing activities. Free cash flow before M&A: Free cash flow adjusted for cash used and generated by M&A transactions (excl. transaction costs) related to majority acquisitions that are carried out and planned and the purchase and sale of investments accounted for using the equity method.
The free cash flow for the third quarter of 2017 amounted to EUR 521 million (previous year: EUR –18 million). Before M&A measures, the figure was EUR 47 million (previous year: EUR 56 million). In the first nine months of the year, the free cash flow amounted to EUR 484 million (previous year: EUR –21 million) and the free cash flow before M&A measures to EUR 117 million (previous year: EUR 151 million). The main reason for the high free cash flow is the cash inflow from the sale of etraveli.
Cash flow from financing activities increased by EUR 334 million to minus EUR 9 million in the third quarter. The comparatively high previous year figure was influenced by the dividend payment for the financial year 2015 — due to the late Annual General Meeting in the third quarter and by net cash inflow from the drawing of EUR 50 million from the RCF. In the first nine months of the year, cash flow from financing activities amounted to minus EUR 414 million (previous year: EUR –359 million). The year-on-year deviation is mainly due to the EUR 49 million higher dividend payment for the financial year 2016 and the above drawing from the RCF. This was offset by a capital increase at Studio71. At the beginning of the year, the Group added a further two partners, TF1 Group and Mediaset, to its MCN and generated an inflow of EUR 51 million.
The Group has a comfortable level of liquidity. Based on the cash flows described above, cash and cash equivalents increased to EUR 1,320 million as of September 30, 2017, compared to EUR 309 million as of September 30, 2016. As of December 31, 2016, cash and cash equivalents amounted to EUR 1,271 million. Within the Group's financial year, the fourth quarter is usually the period with the highest cash flow.
Total assets fell by 6% to EUR 6,194 million as of September 30, 2017 (December 31, 2016: EUR 6,603 million). This decline is primarily attributable to the disposal of eTRAVELi Holding AB as of August 3, 2017. As of the reporting date, ProSiebenSat.1 Group also put further entities from the travel portfolio up for sale in an attempt to streamline the portfolio. This is why the corresponding assets and liabilities are reported separately as assets held for sale and related liabilities in the consolidated statement of financial position. Accordingly, various items of the statement of financial position decreased for this reason. With an equity ratio of 18%, ProSiebenSat.1 Group has a solid asset and capital structure.
Current and non-current assets: Goodwill amounted to EUR 1,714 million (December 31, 2016: EUR 1,860 million) and accounted for 28% of total assets (December 31, 2016: 28%). Other intangible assets declined by 16% to EUR 685 million (December 31, 2016: EUR 817 million). The decline is primarily due to the sale of etraveli and the planned disposal of other assets in the travel portfolio.
Other non-current financial and non-financial assets amounted to EUR 197 million as of September 30, 2017 (December 31, 2016: EUR 342 million). This 42% decline is primarily attributable to valuation effects from currency hedging instruments. Other current financial and non-financial assets also decreased within this context and amounted to EUR 128 million (December 31, 2016: EUR 148 million). In addition, current trade receivables decreased by EUR 19 million to EUR 427 million (December 31, 2016: EUR 446 million).
Programming assets amounted to EUR 1,232 million (December 31, 2016: EUR 1,312 million). Along with goodwill, programming assets are among the most important assets; their share in total assets of 20% remained unchanged compared to the end of 2016.
Compared to the end of 2016, cash and cash equivalents increased by 4% to EUR 1,320 million (December 31, 2016: EUR 1,271 million). This primarily reflects the net proceeds from the sale of etraveli of EUR 469 million. The dividend payments of EUR 435 million in May 2017 had an opposite effect.
Equity: Equity fell by 21% to EUR 1,129 million (December 31, 2016: EUR 1,432 million). On the one hand, this is attributable to the dividend distribution of EUR 435 million in May 2017 (previous year: EUR 386 million). On the other hand, the decreasing effects of currency hedging recognized outside profit or loss had an impact. These effects were partially offset by the positive consolidated net profit of EUR 315 million. This resulted in an equity ratio of 18% (December 31, 2016: 22%).
Current and non-current liabilities: Debt capital did not change significantly compared to the closing date in 2016. Liabilities and provisions totaled EUR 5,065 million as of September 30, 2017 (December 31, 2016: EUR 5,172 million), including in particular non-current and current financial liabilities totaling EUR 3,185 million (December 31, 2016: EUR 3,185 million).
We estimate that there are currently no risks that, individually or in combination with other risks, could have a material or lasting adverse effect on the earnings, financial position and performance. The identified risks pose no threat to the Company as a going concern, even looking into the future. As of the date this statement was prepared, the Executive Board still considers the overall risk situation as limited and manageable.
Impact of General Conditions on the Business Performance, page 7.
In the Half-Year Financial Report 2017 ProSiebenSat.1 assessed the overall risk for the Group as slightly increased compared to the end of 2016, as the Group had identified a slight increase of risks in the categories "sales risks," "content risks" and "compliance risks" combined with a decline in the "external risks" category. In the third quarter, individual risks changed as follows compared to June 30, 2017: The risk from selling advertising time (sales risks) increased as a result of the adjusted guidance for the TV advertising market announced on August 28, 2017. We now believe the risk is likely to occur. We continue to classify the risk impact as very high and the significance of the risk as high. For changes in tax risks (compliance risks), please refer to note 7 "Contingent liabilities and other financial liabilities," page 39. Overall, we therefore continue to assess the overall risk situation as slightly increased compared to December 31, 2016. There were no fundamental changes in the overall risk situation compared to the end of 2016. We still rate the majority of the issues presented in the latest Annual Report as a slight risk.
| Development of risk clusters and the overall risk situation of the Group as of September 30, 2017 (Fig. 31) | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Change Q3 2017 vs. FY 2016 | |||||||||
| External risks |
Sales risks |
Content risks |
Techno logical risks |
Personnel risks |
Investment risks |
Financial risks |
Compliance risks |
Other risks |
Overall risk situation |
| unchanged | slightly increased increased slightly decreased decreased |
The opportunity situation has not changed compared to the end of 2016. The risks and opportunities identified as significant are described in the Annual Report 2016 from page 148. The organizational requirements for risk and opportunity management are also explained here. The Annual Report was published on March 16, 2017, and is available at: annual-report2016.prosiebensat1.com. We also refer to the remarks on the predictive statements in the Quarterly Statement on page 25.
Development of Economy and Advertising Market, page 5.
The leading German market research institutions expect the German economy to continue its robust upward trend over the rest of 2017. The economic research institutes of the Joint Economic Analysis Group anticipate growth in gross domestic product (GDP) of 1.9% (previously 1.5%). Private consumption is expected to grow by 1.8%. The growth rates that have been forecast for 2018 are similarly high. For the eurozone, the International Monetary Fund (IMF) anticipates growth of 2.1% for 2017 (previously: 1.9%); the global economy is likely to expand by 3.6% (previously: 3.5%). However, at the same time there are significant geopolitical uncertainty factors such as the conflict in North Korea, ongoing Brexit negotiations and the unclear course of the US administration.
Development of Economy and Advertising Market, page 5. Company Outlook, page 25.
The German net TV advertising market did not benefit from the positive macroeconomic data in the first nine months of 2017. This is due to sector-specific effects. Against this backdrop, agency groups expect the German TV advertising market to achieve net growth of between 1.0% and 2.9% in 2017 (WARC: +2.9%, ZenithOptimedia: +1.0%, Magna Global: +1.5%).
The current slowdown is not affecting the TV advertising market in Germany alone, but the entire European advertising market. The major advertising agencies WPP and Havas already revised their revenue forecasts in August 2017. The agency groups thus expect the German overall advertising market to record net growth of a low single-digit percentage in 2017 (WARC: 2.2%, Zenith-Optimedia: +1.3%, Magna Global: 2.2%). The online advertising market is expected to grow by just under 8% (WARC: 6.8%, ZenithOptimedia: 8.1%, Magna Global: 8.5%).
in percent, change vs. previous year
2017 2018 Sources:
GER: Joint Economic Analysis Group (Gemeinschaftsdiagnose), Fall 2017 AT: European Commission, European Economic Forecast Spring 2017 CH: SECO, economic forecast by Federal Government's Expert Group, September 2017.
1 ZenithOptimedia, Advertising Expenditure Forecasts September 2017, figures adjusted on a net basis, nonetheless methodological differences between different countries and sources.
We published the Company Outlook for 2017 at the Annual Press Conference on February 23, 2017, and in the Annual Report 2016 on March 16, 2017. The Company outlined its individual targets and planning assumptions in detail on pages 172 to 175 of the Annual Report 2016.
In the first six weeks of the fourth quarter 2017, the Group's TV advertising business developed positively as expected and has grown by a mid-single digit percentage compared to the previous year. An overall statement regarding the TV advertising business in the fourth quarter will however only be possible after the end of the month of December which shows strong comparable figures versus the previous year for ProSiebenSat.1.
The Content Production & Global Sales segment is expected to record a double-digit percentage decrease in revenues in the fourth quarter compared to the previous year's period. Main reasons for this development are strong comparison figures as well as shifts of some productions to the next year. Furthermore, the structural challenges for parts of the Digital Entertainment segment are continuing. In combination with a planned increase in programming costs in the Broadcasting German-speaking segment in the fourth quarter, ProSiebenSat.1 currently expects that both adjusted EBITDA (Q4 2016: EUR 392 million) and adjusted net income (Q4 2016: EUR 226 million) for the Group will be below the respective previous year's figure in the fourth quarter.
Therefore, ProSiebenSat.1 adjusts its financial outlook for the full year 2017 and now anticipates Group revenues to grow by a mid single-digit percentage range (2016: EUR 3,799 million). Previously, ProSiebenSat.1 expected an increase at least at a high single-digit percentage. Besides the expected revenue development in the fourth quarter 2017, this adjustment reflects the respective slight decrease in revenues in the Broadcasting German-speaking and Digital Entertainment segments in the first nine months as well as the deconsolidation effects from the disposal of etraveli.
Against the backdrop of the expected earnings development in the fourth quarter, ProSiebenSat.1 now anticipates for the full year a more moderate earnings improvement than before and expects the Group's adjusted EBITDA (2016: EUR 1,018 million) and adjusted net income (2016: EUR 536 million) to slightly exceed the previous year's level, respectively.
Previously, ProSiebenSat.1 expected both the Group's adjusted EBITDA and adjusted net income for the full year to exceed the previous year's level.
ProSiebenSat.1 confirms the communicated dividend policy with a distribution ratio of 80% to 90% of adjusted net income and the target range for the leverage ratio (1.5 – 2.5).
In the third quarter of 2017, ProSiebenSat.1 Group launched a review of its segment structure. The aim is to align the Company to a dynamically shifting media landscape. The top priority is a three-pillar structure combining the Broadcasting German-speaking and Digital Entertainment segments into one joint Entertainment segment. In the medium term, this will entail the realization of appreciable cost synergies.
Further information on the current forecasts for all relevant financial and non-financial performance indicators can be found on page 3 of this report.
Our forecasts are based on current assessments of future developments. In this context, we draw on our budget and comprehensive market and competitive analyses. However, forecasts naturally entail certain insecurities, which could lead to positive or negative deviations from planning. If imponderables occur or if the assumptions on which the forward-looking statements are made do not apply, actual results may deviate materially from the statements made or the results implicitly expressed. Developments that could negatively impact this forecast include, for example, lower
economic momentum than expected at the time the statement was prepared. These and other factors are explained in detail in the Risk and Opportunity Report of the Annual Report 2016 and in this Quarterly Statement. We also report on additional growth potential. Opportunities that we have not yet or not fully budgeted for could arise from corporate strategy decisions, for example. Significant events after the end of the period are explained in the Notes, Note 11. The publication date of the Quarterly Statement is November 9, 2017.
| Income Statement of ProSiebenSat.1 Group (Fig. 34) | |||||
|---|---|---|---|---|---|
| In EUR m | Q3 2017 | Q3 2016 | Q1 –Q3 2017 | Q1 –Q3 2016 | |
| CONTINUING OPERATIONS | |||||
| 1. Revenues | 883 | 857 | 2,755 | 2,545 | |
| 2. Cost of sales | –722 | – 477 | –1,720 | –1,392 | |
| 3. Gross profit | 160 | 380 | 1,034 | 1,152 | |
| 4. Selling expenses | –133 | –132 | – 421 | –354 | |
| 5. Administrative expenses | –138 | –116 | – 416 | –344 | |
| 6. Other operating expenses | –22 | –3 | –27 | – 8 | |
| 7. Other operating income | 307 | 7 | 316 | 23 | |
| 8. Operating result | 174 | 137 | 487 | 470 | |
| 9. | Interest and similar income | 1 | 1 | 2 | 3 |
| 10. | Interest and similar expenses | –31 | –20 | – 68 | – 68 |
| 11. Interest result | –30 | –19 | – 66 | – 65 | |
| 12. Result from investments accounted for using the equity method | –2 | –1 | – 5 | 1 | |
| 13. Other financial result | – 9 | –14 | –7 | – 5 | |
| 14. Financial result | – 41 | –35 | –79 | – 69 | |
| 15. Result before income taxes | 132 | 102 | 408 | 401 | |
| 16. Income taxes | – 5 | –32 | – 94 | –126 | |
| 17. Result for the period from continuing operations | 127 | 70 | 315 | 275 | |
| DISCONTINUED OPERATIONS | |||||
| 18. Result from discontinued operations (net of income taxes) | –/– | –/– | –/– | – 42 | |
| RESULT FOR THE PERIOD | 127 | 70 | 315 | 232 | |
| Attributable to shareholders of ProSiebenSat.1 Media SE | 122 | 68 | 304 | 228 | |
| Non-controlling interests | 4 | 2 | 11 | 4 | |
| in EUR | |||||
| Earnings per share | |||||
| Basic earnings per share | 0.53 | 0.32 | 1.33 | 1.06 | |
| Diluted earnings per share | 0.51 | 0.32 | 1.32 | 1.05 | |
| Earnings per share from continuing operations | |||||
| Basic earnings per share | 0.53 | 0.32 | 1.33 | 1.26 | |
| Diluted earnings per share | 0.51 | 0.32 | 1.32 | 1.24 | |
| Earnings per share from discontinued operations | |||||
| Basic earnings per share | –/– | –/– | –/– | – 0.20 | |
| Diluted earnings per share | –/– | –/– | –/– | – 0.20 |
| Statement of Comprehensive Income of ProSiebenSat.1 Group (Fig. 35) | ||||
|---|---|---|---|---|
| In EUR m | Q3 2017 | Q3 2016 | Q1 –Q3 2017 | Q1 –Q3 2016 |
| Result for the period | 127 | 70 | 315 | 232 |
| Items subsequently reclassified to profit or loss | ||||
| Change in foreign currency translation adjustment1 | – 6 | – 8 | –35 | –22 |
| Changes in fair value of cash flow hedges | – 57 | –33 | –179 | – 52 |
| Deferred tax on other comprehensive income | 16 | 9 | 50 | 15 |
| Deconsolidation reclassifications | 8 | –/– | 8 | –/– |
| Items subsequently not reclassified to profit or loss | ||||
| Effects from valuation of pension obligations | –/– | –2 | –/– | –2 |
| Deferred tax on effects from valuation of pension obligations | –/– | 1 | –/– | 1 |
| Other comprehensive income for the period | –39 | –34 | –156 | – 61 |
| Total comprehensive income for the period | 87 | 36 | 159 | 172 |
| Attributable to Shareholders of ProSiebenSat.1 Media SE | 84 | 34 | 150 | 168 |
| Non-controlling interests | 3 | 2 | 9 | 4 |
1 Includes non-controlling interests from change in foreign currency translation adjustment in Q1 –Q3 2017 of minus 2 EUR m (Q1 –Q3 2016: 0 EUR m) and for Q3 2017 of minus 1 EUR m (Q3 2016: 0 EUR m). Furthermore the position includes amounts associated with assets and liabilities held for sale of 0 EUR m for Q1 –Q3 2017 (Q1 –Q3 2016: 0 EUR m) and 4 EUR m for the third quarter 2017 (Q3 2016: 0 EUR m).
| In EUR m | 09/30/2017 | 12/31/2016 | |
|---|---|---|---|
| A. Non-current assets | |||
| I. Goodwill | 1,714 | 1,860 | |
| II. Other intangible assets | 685 | 817 | |
| III. Property, plant and equipment | 193 | 216 | |
| IV. Investments accounted for using the equity method | 123 | 109 | |
| V. Non-current financial assets | 193 | 331 | |
| VI. Programming assets | 1,081 | 1,166 | |
| VII. Other receivables and non-current assets | 4 | 11 | |
| VIII. Deferred tax assets | 25 | 30 | |
| 4,018 | 4,540 | ||
| B. Current assets | |||
| I. Programming assets | 151 | 146 | |
| II. Inventories | 43 | 29 | |
| III. Current financial assets | 58 | 91 | |
| IV. Trade receivables | 427 | 446 | |
| V. Current tax assets | 76 | 23 | |
| VI. Other receivables and current assets | 70 | 57 | |
| VII. Cash and cash equivalents | 1,320 | 1,271 | |
| VIII. Assets held for sale | 31 | –/– | |
| 2,176 | 2,064 | ||
| Total assets | 6,194 | 6,603 | |
| In EUR m | 09/30/2017 | 12/31/2016 | |
|---|---|---|---|
| A. Equity | |||
| I. Subscribed capital | 233 | 233 | |
| II. Capital reserves | 1,055 | 1,054 | |
| III. Consolidated equity generated | – 89 | 42 | |
| IV. Treasury shares | –14 | –14 | |
| V. Accumulated other comprehensive income | 18 | 171 | |
| VI. Other equity | –103 | –79 | |
| Total equity attributable to shareholders of ProSiebenSat.1 Media SE | 1,101 | 1,408 | |
| VII. Non-controlling interests | 28 | 24 | |
| 1,129 | 1,432 | ||
| B. Non-current liabilities | |||
| I. Non-current financial debt | 3,180 | 3,178 | |
| II. Other non-current financial liabilities | 424 | 406 | |
| III. Trade payables | 51 | 70 | |
| IV. Other non-current liabilities | 11 | 16 | |
| V. Provisions for pensions | 27 | 26 | |
| VI. Other non-current provisions | 43 | 42 | |
| VII. Deferred tax liabilities | 247 | 335 | |
| 3,983 | 4,073 | ||
| C. Current liabilities | |||
| I. Current financial debt | 5 | 7 | |
| II. Other current financial liabilities | 95 | 102 | |
| III. Trade payables | 530 | 527 | |
| IV. Other current liabilities | 260 | 303 | |
| V. Provisions for taxes | 60 | 76 | |
| VI. Other current provisions | 111 | 83 | |
| VII. Liabilities associated with assets held for sale | 20 | –/– | |
| 1,081 | 1,099 | ||
| Total equity and liabilities | 6,194 | 6,603 |
| In EUR m | Q3 2017 | Q3 2016 | Q1 –Q3 2017 | Q1 –Q3 2016 |
|---|---|---|---|---|
| Result from continuing operations | 127 | 70 | 315 | 275 |
| Result from discontinued operations (net of income taxes) | –/– | –/– | –/– | – 42 |
| Result for the period | 127 | 70 | 315 | 232 |
| Income taxes | 5 | 32 | 94 | 126 |
| Financial result | 41 | 35 | 79 | 69 |
| Depreciation/amortization and impairment of other intangible and tangible assets |
108 | 52 | 215 | 138 |
| Consumption/reversal of impairment of programming assets | 382 | 204 | 834 | 650 |
| Change in provisions for pensions and other provisions | 13 | 1 | 4 | 5 |
| Gain/loss on the sale of assets | –303 | 1 | –300 | – 5 |
| Other non-cash income/expenses | 0 | 3 | 3 | –2 |
| Change in working capital | 3 | –7 | – 80 | –32 |
| Dividends received | 0 | 0 | 7 | 6 |
| Income tax paid | – 58 | – 52 | –166 | –162 |
| Interest paid | –10 | –12 | – 48 | –70 |
| Interest received | 0 | 1 | 1 | 3 |
| Cash flow from operating activities of continuing operations | 308 | 326 | 957 | 1,001 |
| Cash flow from operating activities of discontinued operations | –/– | –/– | –/– | – 42 |
| Cash flow from operating activities total | 308 | 326 | 957 | 959 |
| Proceeds from disposal of non-current assets | 35 | 30 | 36 | 31 |
| Payments for the acquisition of other intangible and tangible assets | – 43 | –38 | –111 | –104 |
| Payments for the acquisition of financial assets | – 6 | –18 | –24 | –35 |
| Proceeds from disposal of programming assets | 7 | 7 | 19 | 11 |
| Payments for the acquisition of programming assets | –250 | –239 | –774 | –757 |
| Proceeds from the repayment of external loan receivables | 1 | 0 | 1 | 0 |
| Cash flows from obtaining control of subsidiaries or other business (net of cash and cash equivalents acquired) |
0 | – 83 | – 91 | –157 |
| Cash flows from losing control of subsidiaries or other business (net of cash and cash equivalents disposed of) |
470 | – 4 | 470 | –10 |
| Cash flow from investing activities total | 213 | –344 | – 472 | –1,022 |
| Free cash flow of continuing operations | 521 | –18 | 484 | –21 |
| Free cash flow of discontinued operations | –/– | –/– | –/– | – 42 |
| Free cash flow | 521 | –18 | 484 | – 63 |
| Dividends paid | –/– | –386 | – 435 | –386 |
| Repayment of interest-bearing liabilities | 0 | –100 | –7 | –101 |
| Proceeds from issuance of interest-bearing liabilities | 1 | 150 | 6 | 150 |
| Repayment of finance lease liabilities | – 4 | – 4 | –11 | –11 |
| Proceeds from the sale of treasury shares | 1 | 0 | 1 | 6 |
| Proceeds from the sale of shares in other entities without change in control | 0 | –/– | 52 | –/– |
| Payments for shares in other entities without change in control | – 5 | 0 | – 5 | –2 |
| Proceeds from non-controlling interests | 1 | 0 | 1 | 1 |
| Payments in connection with refinancing measures | –/– | –/– | – 4 | –/– |
| Dividend payments to non-controlling interests | –3 | –3 | –12 | –16 |
| Cash flow from financing activities total | – 9 | –343 | – 414 | –359 |
| Effect of foreign exchange rate changes on cash and cash equivalents | –3 | –1 | – 9 | – 4 |
| Change in cash and cash equivalents total | 510 | –362 | 62 | – 425 |
| Cash and cash equivalents at beginning of reporting period | 8241 | 672 | 1,271 | 734 |
| Cash and cash equivalents at end of reporting period | 1,3331 | 309 | 1,3331 | 309 |
| Cash and cash equivalents classified under assets held for sale at end of reporting period |
13 | –/– | 13 | –/– |
| Cash and cash equivalents of continuing operations at end of reporting period (statement of financial position) |
1,320 | 309 | 1,320 | 309 |
| 1 Includes the cash and cash equivalents of the companies held for sale |
| Accumulated other comprehensive income | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| In EUR m | Sub scribed capital |
Capital reserves |
Consoli dated equity generated |
Trea sury shares |
Foreign currency translation adjust ment |
Fair value changes of cash flow hedges |
Valuation of provisions for pensions |
De ferred Other taxes equity |
Total equity attributable to shareholders of ProSiebenSat.1 Media SE |
Non con trolling interests |
Total equity |
|
| December 31, 2015 | 219 | 600 | 26 | –20 | 22 | 185 | – 8 | – 50 | – 54 | 922 | 21 | 943 |
| Result for the period | –/– | –/– | 228 | –/– | –/– | –/– | –/– | –/– | –/– | 228 | 4 | 232 |
| Other comprehensive income |
–/– | –/– | –/– | –/– | –22 | – 52 | –2 | 15 | –/– | – 61 | 0 | – 61 |
| Total comprehensive income |
–/– | –/– | 228 | –/– | –22 | – 52 | –2 | 15 | –/– | 168 | 4 | 172 |
| Dividends | –/– | –/– | –386 | –/– | –/– | –/– | –/– | –/– | –/– | –386 | –16 | – 402 |
| Share-based payments |
–/– | – 57 | –/– | 6 | –/– | –/– | –/– | –/– | –/– | – 51 | –/– | – 51 |
| Other changes | –/– | 2 | 0 | 0 | –/– | –/– | –/– | –/– | –16 | –14 | 11 | –3 |
| September 30, 2016 | 219 | 545 | –132 | –14 | 1 | 133 | –10 | –34 | –70 | 637 | 21 | 658 |
| Accumulated other comprehensive income | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| In EUR m | Consoli Sub dated scribed Capital equity capital reserves generated |
Trea sury shares |
Foreign currency translation adjust ment |
Fair value changes of cash flow hedges |
Valuation of provisions for pensions |
De ferred taxes |
Other equity |
Total equity attributable to shareholders of ProSiebenSat.1 Media SE |
Non con trolling interests |
Total equity |
||
| December 31, 2016 | 233 | 1,054 | 42 | –14 | 18 | 221 | – 9 | – 59 | –79 | 1,408 | 24 | 1,432 |
| Result for the period | –/– | –/– | 304 | –/– | –/– | –/– | –/– | –/– | –/– | 304 | 11 | 315 |
| Other comprehensive income |
–/– | –/– | –/– | –/– | –33 | –179 | –/– | 50 | –/– | –162 | –2 | –164 |
| Deconsolidation reclassifications |
–/– | –/– | –/– | –/– | 8 | –/– | –/– | –/– | –/– | 8 | –/– | 8 |
| Total comprehensive income |
–/– | –/– | 304 | –/– | –25 | –179 | –/– | 50 | –/– | 150 | 9 | 159 |
| Dividends | –/– | –/– | – 435 | –/– | –/– | –/– | –/– | –/– | –/– | – 435 | –12 | – 447 |
| Share-based payments |
–/– | 2 | –/– | 0 | –/– | –/– | –/– | –/– | –/– | 2 | –/– | 2 |
| Other changes | –/– | 0 | 0 | –/– | –/– | –/– | –/– | –/– | –24 | –24 | 7 | –17 |
| September 30, 2017 | 233 | 1,055 | – 89 | –14 | – 6 | 42 | – 9 | – 9 | –103 | 1,101 | 28 | 1,129 |
The Interim Consolidated Financial Statements of ProSiebenSat.1 Media SE and its subsidiaries (together "the Company", "the Group" or "ProSiebenSat.1 Group") as of September 30, 2017, have been prepared in compliance with the IFRS applicable to interim financial reporting, as published by IASB and adopted by the EU, and should be read in conjunction with the Consolidated Financial Statements as of December 31, 2016.
The accounting and valuation principles applied to the Interim Consolidated Financial Statements as of September 30, 2017 are identical with those underlying the Consolidated Financial Statements for the financial year 2016.
The Group's core business is subject to significant seasonal fluctuations. The results generated in the first nine months of the financial year 2017 therefore do not necessarily allow for predictions on the further development of business.
The way in which hedge ineffectiveness is reported in the Income Statement has been changed. They are now shown in other financial results (see note 11 "Interest Result" in the Notes to the Consolidated Financial Statements as of December 31, 2016). Due to rounding, some of the figures in this Interim Consolidated Financial Statements may not add up exactly to the stated sum or indicated percentage values may not exactly reflect the corresponding absolute figures.
With regard to the appropriation of the net profit, the Annual General Meeting of ProSiebenSat.1 Media SE on May 12, 2017 resolved the allocation to the revenue reserve in the amount of EUR 800 million and the distribution of a dividend for the financial year 2016 in the amount of EUR 1.90 per share. The total dividend payment amounted to EUR 435 million and was disbursed on May 17, 2017.
ProSiebenSat.1 Group is currently in the process of implementing new accounting standards, which have been adopted by the IASB (cf. Annual Report 2016, pp. 265 – 267). In detail, these are the standards IFRS 9 "Financial Instruments", IFRS 15 "Revenue from Contracts with Customers" and IFRS 16 "Leases". With the exception of IFRS 16, the standards have already been implemented in European Law by the European Commission.
In a group-wide project, the Company is currently analyzing the effects of the initial application of IFRS 9 on the Consolidated Financial Statements as of December 31, 2018 or on the intra-year quarterly reporting. To date, the following decisions have been made regarding the transition:
The relevant provisions of IFRS 9 will be applied for the first time from January 1, 2018. According to the current status of the project, the Group will record any resulting effects as of the reporting date in the consolidated equity generated. The corresponding figures for financial year 2017 are not expected to be adjusted. ProSiebenSat.1 Group is currently analyzing the quantitative effects, which — according to current knowledge — are expected due to the earlier recognition of impairments on cash and cash equivalents, receivables and positive contract balances pursuant to IFRS 15 in the context of the so-called "expected loss model". Reliable quantitative data are not yet available at this time; currently, one-off adjustment effects are expected in the high single-digit million range. Past modifications of financial liabilities are also expected to have an impact.
The Group will probably not apply the hedge accounting provisions of IFRS 9 from January 1, 2018, but will instead avail itself of the choice to continue accounting pursuant to IAS 39.
ProSiebenSat.1 Group will probably fully apply the revenue recognition provision of IFRS 15 with retrospective effect. The quantitative effect resulting from the transition will be recognized as of January 1, 2017 in the generated consolidated equity. The clarifications regarding IFRS 15 in European law, which have been published by the IASB in April 2016, have yet to be implemented, which is expected to be done in the fourth quarter of 2017. Based on the current contract portfolio, the implementation is not expected to have any major effects on the Group's earnings, financial & asset position.
Subject to the timely endorsement of IFRS 16 in European law, the Group plans to implement its regulations early, beginning from financial year 2018. Pursuant to IFRS 16.C5(b), the transition will take place by recognizing the cumulative and quantitative transition effects as of January 1, 2018 in the generated consolidated equity. The financial information for the financial year 2017 is not expected to be adjusted in the Consolidated Financial Statements 2018 pursuant to IFRS 16.C7.
As things stand, the Group is expected to apply the relief regulations of IFRS 16.C3(b) when transitioning to IFRS 16, and will not review contracts, which pursuant to IAS 17 "Leases" in conjunction with IFRIC 4 "Determining whether an Arrangement contains a Lease" are not classified as leases, based on the definition of a lease in IFRS 16. This primarily affects the Group's existing satellite, transponder and cable feed agreements, which under the regulations of IAS 17 in conjunction with IFRIC 4 were classified as service agreements — the accounting treatment of existing agreements will not be affected.
ProSiebenSat.1 Group is currently implementing a group-wide IT system, which is expected to be used for IFRS 16 leases accounting; given the ongoing system implementation, reliable quantitative results are not yet available at this time. ProSiebenSat.1 Group will publish them in its Consolidated Financial Statements as of December 31, 2017.
tainment", "Digital Ventures & Commerce" and "Content Production & Global Sales". In the third quarter, the ProSiebenSat.1 Group reviewed the Group segment structure and is expected to change its reporting into three report segments in the coming financial year (see outlook within the management report). The segments "Broadcasting German-speaking" and "Digital Entertainment" are to be put together in addition to further individual adjustments.
The following table contains the segment information of ProSiebenSat.1 Group:
| Segment information of ProSiebenSat.1 Group Q3 (Fig. 40) | |||||||
|---|---|---|---|---|---|---|---|
| Segment Broadcasting German-speaking |
Segment Digital Entertainment |
Segment Digital Ventures & Commerce |
Segment Content Production & Global Sales |
Total Segments |
Other/ Eliminiations |
Total consolidated interim financial statements |
|
| in EUR m | Q3 2017 | Q3 2017 | Q3 2017 | Q3 2017 | Q3 2017 | Q3 2017 | Q3 2017 |
| Revenues | 488 | 103 | 227 | 106 | 924 | – 42 | 883 |
| External revenues | 460 | 96 | 226 | 93 | 875 | 7 | 883 |
| Internal revenues | 29 | 7 | 1 | 12 | 49 | – 49 | –/– |
| EBITDA1 | – 51 | –21 | 341 | 13 | 281 | 0 | 281 |
| Adjusted EBITDA | 143 | –2 | 48 | 14 | 203 | 0 | 202 |
| 1 This information is provided on a voluntary basis as part of segment reporting. |
| Segment Broadcasting German-speaking |
Segment Digital Entertainment |
Segment Digital Ventures & Commerce |
Segment Content Production & Global Sales |
Total Segments |
Other/ Eliminiations |
Total consolidated interim financial statements |
|
|---|---|---|---|---|---|---|---|
| in EUR m | Q3 2016 | Q3 2016 | Q3 2016 | Q3 2016 | Q3 2016 | Q3 2016 | Q3 2016 |
| Revenues | 496 | 104 | 181 | 111 | 892 | –35 | 857 |
| External revenues | 472 | 99 | 181 | 100 | 851 | 5 | 857 |
| Internal revenues | 24 | 5 | 0 | 11 | 41 | – 41 | –/– |
| EBITDA1 | 140 | 6 | 36 | 11 | 194 | – 5 | 188 |
| Adjusted EBITDA | 147 | 4 | 40 | 11 | 202 | 0 | 202 |
| 1 This information is provided on a voluntary basis as part of segment reporting. |
| Segment Broadcasting German-speaking |
Segment Digital Entertainment |
Segment Digital Ventures & Commerce |
Segment Content Production & Global Sales |
Total Segments |
Other/ Eliminiations |
Total consolidated interim financial statements |
|
|---|---|---|---|---|---|---|---|
| in EUR m | Q1 –Q3 2017 | Q1 –Q3 2017 | Q1 –Q3 2017 | Q1 –Q3 2017 | Q1 –Q3 2017 | Q1 –Q3 2017 | Q1 –Q3 2017 |
| Revenues | 1,590 | 320 | 687 | 313 | 2,910 | –155 | 2,755 |
| External revenues | 1,490 | 301 | 683 | 261 | 2,736 | 19 | 2,755 |
| Internal revenues | 100 | 19 | 3 | 52 | 174 | –174 | –/– |
| EBITDA1 | 270 | –17 | 421 | 34 | 708 | – 6 | 702 |
| Adjusted EBITDA | 488 | 3 | 139 | 35 | 666 | – 5 | 661 |
| 1 This information is provided on a voluntary basis as part of segment reporting. |
| Segment Broadcasting German-speaking |
Segment Digital Entertainment |
Segment Digital Ventures & Commerce |
Segment Content Production & Global Sales |
Total Segments |
Other/ Eliminiations |
Total consolidated interim financial statements |
|
|---|---|---|---|---|---|---|---|
| in EUR m | Q1 –Q3 2016 | Q1 –Q3 2016 | Q1 –Q3 2016 | Q1 –Q3 2016 | Q1 –Q3 2016 | Q1 –Q3 2016 | Q1 –Q3 2016 |
| Revenues | 1,575 | 319 | 494 | 284 | 2,672 | –128 | 2,545 |
| External revenues | 1,506 | 304 | 483 | 240 | 2,533 | 12 | 2,545 |
| Internal revenues | 69 | 15 | 12 | 44 | 140 | –140 | –/– |
| EBITDA1 | 473 | 24 | 97 | 25 | 618 | –10 | 608 |
| Adjusted EBITDA | 479 | 19 | 105 | 27 | 630 | – 4 | 626 |
1 This information is provided on a voluntary basis as part of segment reporting.
The Executive Board, as the chief operating decision-maker, measures the success of the segments by means of a segment profit figure referred to as "adjusted EBITDA" in internal management and reporting since January 1, 2017.
3
The transition from segment values to the corresponding group values is shown below:
| in EUR m | Q3 2017 | Q3 2016 | Q1 –Q3 2017 | Q1 –Q3 2016 |
|---|---|---|---|---|
| Adjusted EBITDA of reportable segments | 203 | 202 | 666 | 630 |
| Other / Eliminations | 0 | 0 | – 5 | – 4 |
| Adjusted EBITDA of the Group | 202 | 202 | 661 | 626 |
| Reconciling Items | 79 | –13 | 41 | –18 |
| Financial result | – 41 | –35 | –79 | – 69 |
| Depreciation and amortization | – 50 | – 46 | –152 | –125 |
| Impairment | – 57 | – 6 | – 63 | –13 |
| Consolidated profit before taxes | 132 | 102 | 408 | 401 |
Entity-wide disclosures for ProSiebenSat.1 Group are provided below:
| Entity-wide disclosures (Fig. 43) | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Geographical breakdown | GER | US | AT/CH | Scandinavia | UK | Other | Total consolidated interim financial statements |
|||||||
| in EUR m | Q3 2017 |
Q3 2016 |
Q3 2017 |
Q3 2016 |
Q3 2017 |
Q3 2016 |
Q3 2017 |
Q3 2016 |
Q3 2017 |
Q3 2016 |
Q3 2017 |
Q3 2016 |
Q3 2017 |
Q3 2016 |
| External Revenues | 694 | 652 | 100 | 110 | 60 | 55 | 14 | 29 | 12 | 9 | 4 | 2 | 883 | 857 |
| Geographical breakdown | GER | US | AT/CH | Scandinavia | UK | Other | Total consolidated interim financial statements |
|||||||
| in EUR m | Q1 –Q3 2017 |
Q1 –Q3 2016 |
Q1 –Q3 2017 |
Q1 –Q3 2016 |
Q1 –Q3 2017 |
Q1 –Q3 2016 |
Q1 –Q3 2017 |
Q1 –Q3 2016 |
Q1 –Q3 2017 |
Q1 –Q3 2016 |
Q1 –Q3 2017 |
Q1 –Q3 2016 |
Q1 –Q3 2017 |
Q1 –Q3 2016 |
| External Revenues | 2,139 | 1,966 | 281 | 255 | 196 | 182 | 103 | 111 | 24 | 25 | 11 | 6 | 2,755 | 2,545 |
and net current assets in the amount of in EUR minus 4 million.
Acquisition of 100 percent of shares in ATV broadcasting group With effect as of April 6, 2017, ProSiebenSat.1 Group has acquired a 100.0 percent share in ATV Privat TV GmbH & Co KG, Vienna, Austria, and of ATV Privat TV GmbH, Vienna, Austria, thus gaining control. ATV is an Austrian broadcasting group, operating the Austrian TV channels ATV and ATV2. The Companies are allocated to the "Broadcasting German-speaking" segment (see
costs of EUR 1 million were recognized in the Income Statement. The purchase price pursuant to IFRS 3 amounts to EUR 24 million and consists of a base purchase price of EUR 28 million and standard adjustment to the assumed net financial resources
note 2 "Segment reporting"). In the context of the companies' acquisition, incidental acquisition
The following table shows the fair values of the identified acquired assets and of the assumed liabilities in connection with the acquisition, each as of the time of acquisition. Due to the ongoing purchase price negotiation, the following amounts have been measured provisionally, pending the finalization of a full independent purchase price allocation by an audit firm.
transactions relating to subsidiaries
| in EUR m | Fair value at acquisition |
|---|---|
| Other intangible assets | 12 |
| thereof assets identified in the context of the purchase price allocation | 12 |
| Property, plant and equipment | 1 |
| Non-current assets | 13 |
| Trade receivables | 3 |
| Other current receivables and assets | 6 |
| Cash and cash equivalents | 1 |
| Current assets | 10 |
| Trade payables | 7 |
| Other provisions | 121 |
| Other liabilities | 4 |
| Current liabilities and provisions | 23 |
| Net assets | 0 |
| Purchase price pursuant to IFRS 3 | 24 |
| Goodwill | 24 |
1 Provisions for the provisional purchase price allocation were adjusted by EUR 2 million to the extent that they had not been adjusted to the income statement. Goodwill increased accordingly by this amount.
The identified goodwill is tax-deductible over 15 years and is recognized in Euro as the functional currency. It represents special synergy potentials from the expansion of business activities on the Austrian TV market. It is therefore allocated to the cash-generating "Broadcasting Germanspeaking" segment.
In the context of the provisional purchase price allocation, a brand with an indefinite useful life and a fair value of EUR 12 million was applied separately from the goodwill.
Including the companies from the start of the financial year until initial consolidation in April 2017 would have had the following effect on the earnings, financial & asset position of ProSiebenSat.1 Group: Additional revenues of EUR 7 million and earnings after taxes in the amount of minus EUR 13 million. Between the initial consolidation and September 30, 2017, the companies contributed revenues of EUR 13 million and earnings after taxes in the amount of minus EUR 4 million to the consolidated net profit.
By signing the agreements on June 19, 2017 all Scandinavian travel activities under the etraveli brand that had been allocated to the Segment Digital Ventures & Commerce (see note 2 "Segment Reporting") were sold by ProSiebenSat.1 Group. The total underlying enterprise value of said transaction amounted to EUR 508 million. The disposal followed a strategic review of the Group's online travel business with the aim of creating a structural focus on the Group's segments. The sale was formally and legally closed on August 3, 2017. Due to the loss of control associated with the transaction, the relevant entities were deconsolidated as of said date. The disposal had the following effects on the Group's earnings, financial position & performance:
transactions relating to subsidiaries
| Effects of deconsolidation on the Group (Fig. 45) | |
|---|---|
| Values as of the deconsolidation |
|
| in EUR m | date |
| Purchase price | 538 |
| Cash purchase price | 538 |
| Disposal costs | – 8 |
| Purchase price minus disposal costs | 530 |
| Cash purchase price | 538 |
| Outgoing cash and cash equivalents | – 69 |
| Net cash inflow | 469 |
| Goodwill | 151 |
| Intangible assets | 47 |
| Property, plant and equipment | 2 |
| Other assets (incl. deferred tax assets) | 50 |
| Cash and cash equivalents | 69 |
| Currency effects included in other comprehensive results | 8 |
| Provisions | – 4 |
| Deferred tax liabilities | –22 |
| Other liabilities | – 65 |
| Net assets | 236 |
| Deconsolidation result | 294 |
The reported deconsolidation profit from selling the subsidiaries amounts to EUR 294 million and is fully ascribed to the shareholders of ProSiebenSat.1 Media SE.
As of the deconsolidation date, currency effects attributable to the discontinued operations in an amount of EUR 8 million were deleted at fair value from the other comprehensive results. The disposal costs of EUR 8 million primarily comprise consulting services in the context of the sale process.
Non-current assets held for sale (or groups of assets or debt held for sale) are assets which can be sold in their current state, and where a sale is highly probable within the coming year. They are valued at the lower of its carrying amount and fair value less costs to sell, unless IFRS 5 is not applicable to the valuation. In line with IFRS 5.40, the previous year's balance sheet figures are not adjusted.
Due to a planned portfolio adjustment, as of September 30, 2017, ProSiebenSat.1 Group has made additional companies from the travel portfolio available for negotiation. Negative revaluation effects in the amount of EUR 16 million were recorded in this context, largely attributable to brands with an indefinite useful life. The affected companies are part of the segment Digital Ventures & Commerce. Pursuant to IFRS 5, assets held for sale in this context as well as associated liabilities are reported separately in the balance sheet, together with the assets and liabilities that were reclassified already as of June 30, 2017 following the disposal of the minority holdings in a private equity fund largely recognized pursuant to IAS 39. Following the partial completion of the latter transaction in July 2017 and the associated disposal of the corresponding equity interests, the economic closing of the remaining part and a book value of EUR 3 million will be carried out in the fourth quarter 2017
As of the reporting date, the assets held for sale / the associated liabilities are distributed among the following main items:
4 Major changes in the statement of financial position
| Assets and liabilities held for sale (Fig. 46) | |
|---|---|
| in EUR m | September 30, 2017 |
| Other intangible assets | 6 |
| Property, plant and equipment | 0 |
| Non-current financial assets | 3 |
| Other assets (incl. deferred tax assets) | 9 |
| Cash and cash equivalents | 13 |
| Total assets held for sale | 31 |
| Trade payables | 13 |
| Other assets and provisions (incl. deferred tax liabilities) | 7 |
| Total liabilities associated with assets held for sale | 20 |
| Net assets | 11 |
4
With economic effect as of January 11, 2017, the media groups TF1 SA, Boulogne-Billancourt, France (TF1) and Reti Televisive Italiane S.p.A., Milan, Italy (Mediaset) each took out a minority interest in ProSiebenSat.1 Digital Content LP (Studio71) in the context of a capital increase. With economic effect as of February 17, 2017, TF1 increased its minority interest in Studio71 via another capital increase. 69 percent of the shares in Studio71 remain with ProSiebenSat.1 Group. Put options have been stipulated with both TF1 and Mediaset regarding the buyback. Due to ProSiebenSat.1 Group is under the unconditional obligation to satisfy such put options when exercised, the consolidation ratio remains at 100.0 percent.
In the third quarter of financial year 2017, impairments of other intangible assets in the segment Digital Ventures & Commerce were recognized in relation to earlier purchase price. The main impairments are associated with customer relationships in the amount of EUR 4 million and a brand with a definite useful life in the amount of EUR 13 million in the Commerce portfolio that were recognized as part of an impairment test pursuant to IAS 36. The carrying amount of the relevant cash-generating unit was compared to the recoverable amount representing the higher value of the fair value less costs to sell and value in use. The impairments were recognized within the functional costs. In addition, in the context of the assets held for sale of certain asset of the travel-portfolio (see note 3 "Acquisitions, disposals and other transactions in connection with subsidiaries"), a brand with an indefinite useful life was impaired by EUR 16 million. The impairment was recognized within other operating expenses.
Following a strategic reorientation of the business activities of the subsidiary maxdome GmbH, which has been allocated to the segment Digital Entertainment, ProSiebenSat.1 Group recognized impairments on inventories und intangible assets in a total amount of EUR 4 million in the third quarter of financial year 2017. In addition, an impairment test pursuant to IAS 36 was performed. Additional assets in the cash-generating unit maxdome were impaired by EUR 33 million in this context. The impairments were allocated to the cash-generating unit based on relative carrying values. The programming assets attributable to the unit in the amount of EUR 14 million, intangible assets and relevant advances in a total amount of EUR 17 million as well as tangible fixed assets in the amount of EUR 1 million were impaired. All impairments in this context were recognized within the functional costs as well as within other operating expenses.
The ProSiebenSat.1 Group has adjusted the strategic reevaluation of parts of its programming assets in the Broadcasting German-speaking segment in the third quarter of the 2017 financial year. As part of this, a major diversification of the Group's program structure is to be achieved in order to reduce the US fiction share in the program in the medium term. As part of this, the program portfolio was extensively adjusted. Based on the completed reevaluation in the third quarter of financial year 2017, the Group has recorded an impairment on asset-level in the amount of EUR 170 million. The impairment was recognized within the functional cost and other operating expenses.
The Group's relevant nominal tax rate remains unchanged at 28.0 percent. The effective Group tax rate of 23.0 percent anticipated for the entire financial year (previous year: 31.5%) was used as the basis for determining the Group's tax expenditures for the first nine months of 2017. The resulting difference from the nominal tax rate is largely due to the recognition of tax-free capital gains, in particular from the disposal of eTRAVELi Holding AB (see note 3 "Acquisitions, disposals and other transactions in connection with subsidiaries"), as well as taxes for previous assessment periods as well as non-deductible business expenses.
5
The following tables presents the underlying parameters for calculating the result per share:
| in EUR m | Q3 2017 | Q3 2016 | Q1 –Q3 2017 | Q1 –Q3 2016 |
|---|---|---|---|---|
| Result attributable to the shareholders of ProSiebenSat.1 Media SE (basic) |
122 | 68 | 304 | 228 |
| Thereof from continuing operations (basic) | 122 | 68 | 304 | 271 |
| Thereof from discontinued operations (basic) | –/– | –/– | –/– | – 42 |
| Valuation effects of share-based payments after taxes | – 5 | 0 | –2 | –3 |
| Result attributable to the shareholders of ProSiebenSat.1 Media SE (diluted) |
117 | 68 | 302 | 225 |
| Thereof from continuing operations (diluted) | 117 | 68 | 302 | 268 |
| Thereof from discontinued operations (diluted) | –/– | –/– | –/– | – 42 |
| Numbers of shares included in calculating earnings per share (Fig. 48) | ||||
| Shares | Q3 2017 | Q3 2016 | Q1 –Q3 2017 | Q1 –Q3 2016 |
| Weighted average number of shares outstanding (basic) |
228,859,760 | 214,573,846 | 228,836,336 | 214,469,856 |
| Dilution effect based on stock options and rights to shares |
547,758 | 607,705 | 547,758 | 607,705 |
| Weighted average number of shares outstanding |
The Group share plans (see note 9 "Share-based payment") contain an option for ProSiebenSat.1 Media SE to determine the type of settlement using either equity or cash. Due to the dilution effect in the third quarter of 2016 and 2017 as well as in the first nine months of 2016 and 2017, plans for calculating the result per share pursuant to IAS 33.58 in contrast to IFRS 2 are treated as if they were performed by way of shares.
(diluted) 229,407,518 215,181,550 229,384,094 215,077,561
In the context of the tax audit of ProSiebenSat.1 Group for the years 2004 to 2012, which has been ongoing since 2010/2013, the German tax authorities questioned the accuracy of the taxation treatment of the programming assets of ProSiebenSat.1 Group in June 2017. This relates in particular to the presentation of programming assets as current assets and the determination of consumption. Technical discussions with the fiscal administration are still ongoing. In particular, there is no written statement of the tax authorities that describes their view of the correct taxable adjustments. It therefore still remains unclear at this time if and to what extent the accounting would have to be changed in principle and in terms of the valuation method. ProSiebenSat.1 Group considers its accounting practice — which previously had indeed been accepted by the tax authorities — lawful. ProSiebenSat.1 Group therefore reserves the right to appeal any potential tax assessments. According to our current knowledge, we believe that the risk provisioning is adequate in the amount of a very low double-digit million amount. Due to the reasons mentioned, it is possible that the actual amount deviates.
As of September 30, 2017, there have been no other major changes to the contingent liabilities recognized in the Consolidated Financial Statements as of December 31, 2016.
The other financial obligations are comprised as follows:
| Other financial obligations (Fig. 49) | |||||||
|---|---|---|---|---|---|---|---|
| in EUR m | September 30, 2017 | December 31, 2016 | |||||
| Procurement commitments for programming assets | 2,892 | 3,244 | |||||
| Distribution | 200 | 187 | |||||
| Leasing and rental obligations | 95 | 111 | |||||
| Other financial liabilities | 183 | 162 | |||||
| Total | 3,370 | 3,704 |
The following table shows the carrying amounts and the fair values of all categories of financial assets and financial liabilities of ProSiebenSat.1 Group and allocates the financial assets and financial liabilities, which have been valued at their fair value, to the fair value hierarchy levels.
| Presented in the Statement of Financial Position as |
Carry ing amount |
Category | Fair Value | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| in EUR m | At fair value through profit and loss |
Hedging instru ments |
Loans and receiv ables |
Available for-sale |
Other financial liabilities |
Level 1 | Level 2 | Level 3 | Total | ||
| Financial assets | |||||||||||
| Measured at fair value | |||||||||||
| Financial assets designated at fair value |
Non-current financial assets |
22 | 22 | –/– | –/– | –/– | –/– | 22 | –/– | –/– | 22 |
| Other equity instruments |
Non-current financial assets |
96 | 96 | –/– | –/– | –/– | –/– | –/– | –/– | 96 | 96 |
| Derivatives for which hedge accounting is not applied |
Current and non-current financial assets |
11 | 11 | –/– | –/– | –/– | –/– | –/– | 1 | 10 | 11 |
| Hedge derivatives | Current and non-current financial assets |
89 | –/– | 89 | –/– | –/– | –/– | –/– | 89 | –/– | 89 |
| Not measured at fair value |
|||||||||||
| Cash and cash equivalents 1 |
Cash and cash equivalents |
1,320 | –/– | –/– | 1,320 | –/– | –/– | ||||
| Loans and receivables 1 |
Current and non-current financial assets |
459 | –/– | –/– | 459 | –/– | –/– | ||||
| Total | 1,998 | 129 | 89 | 1,780 | –/– | –/– | 22 | 90 | 106 | 218 | |
| Financial liabilities | |||||||||||
| Measured at fair value | |||||||||||
| Liabilities from put options and earn-outs |
Other financial liabilities |
356 | 356 | –/– | –/– | –/– | –/– | –/– | –/– | 356 | 356 |
| Derivatives for which hedge accounting is not applied |
Other financial liabilities |
29 | 29 | –/– | –/– | –/– | –/– | –/– | 29 | –/– | 29 |
| Hedge derivatives | Other financial liabilities |
35 | –/– | 35 | –/– | –/– | –/– | –/– | 35 | –/– | 35 |
| Not measured at fair value |
|||||||||||
| Loans and borrowings | Financial Debt | 2,090 | –/– | –/– | –/– | –/– | 2,090 | –/– | 2,104 | –/– | 2,104 |
| Notes | Financial Debt | 596 | –/– | –/– | –/– | –/– | 596 | 632 | –/– | –/– | 632 |
| Promissory notes | Financial Debt | 498 | –/– | –/– | –/– | –/– | 498 | –/– | 494 | –/– | 494 |
| Liabilities from finance leases |
Other financial liabilities |
62 | –/– | –/– | –/– | –/– | 62 | –/– | 65 | –/– | 65 |
| Other Financial liabilities at (amortised) cost1 |
Other financial liabilities and trade payables |
620 | –/– | –/– | –/– | –/– | 620 | ||||
| Total | 4,285 | 383 | 35 | –/– | –/– | 3,867 | 632 | 2,727 | 356 | 3,714 | |
| 1 The carrying amount is an appropriate approximator for fair value. |
| Presented in the Statement of Financial Position as |
Carry ing amount |
Category | Fair Value | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| in EUR m | At fair value through profit and loss |
Hedging instru ments |
Loans and receiv ables |
Available for-sale |
Other financial liabilities |
Level 1 | Level 2 | Level 3 | Total | ||
| Financial assets | |||||||||||
| Measured at fair value | |||||||||||
| Financial assets designated at fair value |
Non-current financial assets |
21 | 21 | –/– | –/– | –/– | –/– | 21 | –/– | –/– | 21 |
| Other equity instruments |
Non-current financial assets |
99 | 99 | –/– | –/– | –/– | –/– | –/– | –/– | 99 | 99 |
| Derivatives for which hedge accounting is not applied |
Current and non-current financial assets |
18 | 18 | –/– | –/– | –/– | –/– | –/– | 11 | 7 | 18 |
| Hedge derivatives | Current and non-current financial assets |
246 | –/– | 246 | –/– | –/– | –/– | –/– | 246 | –/– | 246 |
| Not measured at fair value |
|||||||||||
| Cash and cash equivalents1 |
Cash and cash equivalents |
1,271 | –/– | –/– | 1,271 | –/– | –/– | ||||
| Loans and receivables1 |
Current and non-current financial assets |
484 | –/– | –/– | 484 | –/– | –/– | ||||
| Total | 2,140 | 138 | 246 | 1,755 | –/– | –/– | 21 | 257 | 106 | 384 | |
| Financial liabilities | |||||||||||
| Measured at fair value | |||||||||||
| Liabilities from put options and earn-outs |
Other financial liabilities |
363 | 363 | –/– | –/– | –/– | –/– | –/– | –/– | 363 | 363 |
| Derivatives for which hedge accounting is not applied |
Other financial liabilities |
32 | 32 | –/– | –/– | –/– | –/– | –/– | 32 | –/– | 32 |
| Not measured at fair value |
|||||||||||
| Loans and borrowings | Financial Debt | 2,091 | –/– | –/– | –/– | –/– | 2,091 | –/– | 2,118 | –/– | 2,118 |
| Notes | Financial Debt | 596 | –/– | –/– | –/– | –/– | 596 | 637 | –/– | –/– | 637 |
| Promissory notes | Financial Debt | 498 | –/– | –/– | –/– | –/– | 498 | –/– | 488 | –/– | 488 |
| Liabilities from finance leases |
Other financial liabilities |
72 | –/– | –/– | –/– | –/– | 72 | –/– | 77 | –/– | 77 |
| Other financial liabilities at (amortised) cost1 |
Other financial liabilities and trade payables |
640 | –/– | –/– | –/– | –/– | 640 | ||||
| Total | 4,291 | 395 | –/– | –/– | –/– | 3,896 | 637 | 2,715 | 363 | 3,715 | |
| 1 The carrying amount is an appropriate approximator for fair value. |
The following table shows the reconciliation of the items regularly measured at fair value and assigned to Level 3 as of the closing date:
| Reconciliation of level 3 fair values (Fig. 52) | ||||
|---|---|---|---|---|
| in EUR m | Derivatives, for which hedge accounting is not applied |
Liabilities from put options and earn-outs |
||
| January 1, 2017 | 7 | 363 | ||
| Results included in income statement as well as in other comprehensive income (unrealized)1 |
–/– | –7 | ||
| Additions from acquisitions | 4 | 22 | ||
| Disposals/Payments | –/– | –78 | ||
| Other changes | –/– | 56 | ||
| September 30, 2017 | 10 | 356 | ||
| 1 This item includes compounding effects and further valuation adjustments. |
The position "Other changes" essentially comprises effects from share changes.
ProSiebenSat.1 Group pursues an active financial management and exploited the attractive environment on the financial markets. For example in April 2017, the Group extended the maturity of the syndicated credit agreement — consisting of a term loan of EUR 2.1 billion and a revolving credit facility — by two years until April 2022. In this context, the revolving credit facility was increased by EUR 150 million to EUR 750 million, but not drawn during the first nine months of 2017. The previous financial covenant ceased to apply in the context of the refinancing measures.
The Group Share Plan 2013, which expired at the end of the financial year 2016, was fully paid out in the second quarter of 2017 in the amount of EUR 13.6 million. In addition, the plan conditions for the Group share plans remain unchanged and continue to be in line with the information shown in the Consolidated Notes and in the summarized Management Report as of December 31, 2016.
The performance share units issued under the other group share plans, 7,845 units of the Group Share Plan 2014, 15,993 units of the Group Share Plan 2015 and 32,488 units of the Group Share Plan 2016 expired in the first nine months of the financial year 2017.
In the first nine months of the financial year 2017, 78,780 share options from the LTIP 2010 (cycle 2011) were exercised.
As of January 1, 2017, Sabine Eckhardt was appointed to the ProSiebenSat.1 Media SE Executive Board as Chief Commercial Officer (CCO). Dr. Gunnar Wiedenfels resigned at his own request from the Executive Board as of March 31, 2017. Dr. Jan Kemper was appointed to the Executive Board as Chief Financial Officer (CFO) as of June 1, 2017.
Dr. Ralf Schremper (Chief Investment Officer) left the Executive Board of ProSiebenSat.1 Media SE as of July 31, 3017. Dr. Jan Kemper has taken over the Group's M&A department from August 1, 2017
During the first nine months of the financial year 2017, revenues from the sale of goods and rendering of services from transactions with related entities amounted to EUR 94 million (previous year: EUR 90 million). As of September 30, 2017, receivables from the respective entities amounted to EUR 30 million (December 31, 2016: EUR 23 million).
In the first nine months of the financial year 2017, the Group received goods and services from its related parties and accordingly recognized expenses amounting to EUR 22 million (previous year: EUR 19 million). Liabilities to these entities amounted to EUR 14 million as of September 30, 2017 (December 31, 2016: EUR 10 million).
In the first nine months of financial year 2017, the Supervisory Board members acquired 8,386 shares in the Company. Thomas Ebeling acquired 10,000 shares in the third quarter of financial year 2017. Dr. Gunnar Wiedenfels sold 5,000 shares in the first six months of the financial year 2017.
In the context of the master agreement with Heilpflanzenwohl AG, Pfaffikon, Switzerland (see note 32 "Related parties" in the Notes to the Consolidated Financial Statements as of December 31, 2016), advertising services with a gross media volume of EUR 11 million (previous year: EUR 0 million) were rendered in the reporting period.
There have been no other major changes or transactions in the third quarter of financial year 2017 compared to the facts regarding related parties as reported in the Notes to the Consolidated Financial Statements for financial year 2016.
Effective as of October 16, 2017, ProSiebenSat.1 Group holds 90 percent in Jochen Schweizer mydays Holding GmbH, Unterföhring, through its associated company ProSieben Travel GmbH, Unterföhring. In the context of the transaction, the 100 percent holding mydays Holding GmbH, Munich, together with its subsidiary, was incorporated into the newly established Jochen Schweizer mydays Holding GmbH. 83 percent in Jochen Schweizer GmbH, Munich, were acquired through the newly established company. With a share swap, the remaining 17-percent minority shareholdings of the existing shareholders of Jochen Schweizer GmbH were exchanged for 10-percent minority shareholdings in Jochen Schweizer mydays Holding GmbH. As a result, as of October 16, 2017, ProSieben Travel GmbH holds 90 percent in newly established Jochen Schweizer mydays Holding GmbH. The acquired company and its subsidiaries are allocated to the segment Digital Ventures & Commerce (see note 2 "Segment Reporting"). The acquired company operates online portals selling experience gift vouchers. The purchase price pursuant to IFRS 3 is comprised of a cash purchase price of EUR 80 million and a put option for the existing shareholder of Jochen Schweizer GmbH for the sale of the remaining 10 percent of shares, due not before 2020. Since ProSiebenSat.1 Group is under the unconditional obligation to satisfy such put options when exercised, the consolidation ratio remains at 100.0% due to the present ownership as of October 16, 2017.
By agreement dated November 6, 2017 and effective as of November 7, 2017, ProSiebenSat.1 Group acquired a share of 62.5% in Gravitas Ventures, LLC, Los Angeles, USA and thus gained control over this entity. The entity is allocated to the Content Production & Global Sales segment (see Note 2 "Segment reporting"). Gravitas Ventures is a global film distributor. The purchase price according to IFRS 3 comprises a cash purchase price of USD 35 million (EUR 31 million) and a contractually agreed purchase price adjustment. In addition, a put option was agreed with the existing shareholders for the acquisition of a further 37.5% of the shares maturing no earlier than 2022. As ProSiebenSat.1 Group has an unconditional obligation to meet the terms of the put option on exercise, the consolidation percentage used on the basis of the present ownership was 100.0% as of November 7, 2017.
Between the end of the third quarter 2017 and November 8, 2017 — the release date of this quarterly statement for publication and submission to the Supervisory Board — no other reportable events occurred which are of material significance for the earnings, financial & asset position of ProSiebenSat.1 Group or of ProSiebenSat.1 Media SE.
November 8, 2017 The Executive Board
Press
ProSiebenSat.1 Media SE Corporate Communications Medienallee 7 85774 Unterföhring Tel. +49 [89] 95 07 — 11 45 Fax +49 [89] 95 07 — 11 59 E-Mail: [email protected]
Photocredits: Title © Enno Kapitza
ProSiebenSat.1 Media SE Investor Relations Medienallee 7 85774 Unterföhring Tel. +49 [89] 95 07 — 15 02 Fax +49 [89] 95 07 — 15 21 E-Mail: [email protected] Published by
ProSiebenSat.1 Media SE Medienallee 7 85774 Unterföhring Tel. +49 [89] 95 07 — 10 Fax +49 [89] 95 07 — 11 21
ProSiebenSat.1 Media SE Corporate Communications
hw.design, Munich, Germany
| 12/06/2017 | Capital Markets Day |
|---|---|
| 02/22/2018 | Press Conference/IR Conference on Figures 2017 Press Release, Press Conference in Munich, Conference Call with analysts and investors |
| 03/15/2018 | Publication of the Annual Report 2017 |
| 05/09/2018 | Publication of the Quarterly Statement for the First Quarter of 2018 Press Release, Conference Call with analysts and investors, Conference Call with journalists |
| 05/16/2018 | Annual General Meeting 2018 |
| 08/02/2018 | Publication of the Half-Yearly Financial Report of 2018 Press Release, Conference Call with analysts and investors, Conference Call with journalists |
| 11/08/2018 | Publication of the Quarterly Statement for the Third Quarter of 2018 Press Release, Conference Call with analysts and investors, Conference Call with journalists |
This and other publications are available on the Internet, along with information about ProSiebenSat.1 Group, at www.ProSiebenSat1.com
This report contains forward-looking statements regarding ProSiebenSat.1 Media SE and ProSiebenSat.1 Group. Such statements may be identified by the use of such terms as "expects," "intends," "plans," "assumes," "pursues the goal," and similar wording. Various factors, many of which are outside the control of ProSiebenSat.1 Media SE, could affect the Company's business activities, success, business strategy and results. Forward-looking statements are not historical facts, and therefore incorporate known and unknown risks, uncertainties and other important factors that might cause actual results to differ from expectations. These forward-looking statements are based on current plans, goals, estimates and projections, and take account of knowledge only up to and including the date of preparation of this report. Given these risks, uncertainties and other important factors, ProSiebenSat.1 Media SE undertakes no obligation, and has no intent, to revise such forward-looking statements or update them to reflect future events and developments. Although every effort has been made to ensure that the provided information and facts are correct, and that the opinions and expectations reflected here are reasonable, ProSiebenSat.1 Media SE assumes no liability and offers no warranty as to the completeness, correctness, adequacy and/or accuracy of any information or opinions contained herein.
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