Edel SE & Co. KGaA

Earnings Release • Apr 3, 2000

News Details

Ad-hoc | 3 April 2000 09:43

Ad hoc-Service: edel music AG English

Ad hoc-announcement edited and sent by DGAP. The sender is responsible for the contents of this announcement. —————————————————————————— edel music AG 1999 result – Sales of 450.9 million DEM – EBITDA of11,4 million DEM – Negative EBIT of 5,3 million DEM – edel group well positioned for extraordinary further growth – Acquisition of internet Music Company Talent Net, Inc. – Projections for 2000 still valid Hamburg, 3. April 2000 – edel music AG, the largest European independent music group, achieved sales of 450,9 million DEM in 1999, a significant increase against the 284,4 million DEM of 1998. This figure was achieved through approximately 20% internal growth, with the remainder largely coming from the first time consolidation of PIAS (Play it again Sam Group) for the second half of 1999. Even though most of the European markets are stagnating, this shows that edel’s strategy is still able to generate substantial growth against the general trend. In line with the profit warning of November 1999 in which edel announced the delay of certain album releases with owned repertoire and high profit margins, the groups earnings before interest, taxes, depreciation and amortisation were 11,4 million DEM, while EBIT was negative at 5,3 million DEM. Net loss under US-GAAP accounted for 10,8 million DEM due to the negative impact of changed tax rules. In 1999, edel developed into a network of strong independent companies. edel’s growth and acquisition strategy is focused on two key objectives: Covering the most important world-wide music markets and covering all aspects of the recorded music business. In order to be less dependent on single artists edel broadened both the value chain as well as its repertoire basis in 1999. In the US, the acquisition of RED gives edel control over distribution. As a consequence, the US business is expected to grow aggressively, edel also expanded strongly in Western Europe, especially in Scandinavia with the acquisition of Mega Scandinavia, Megasong Publishing and K-Tel Finland, and the participation in Playground Music. The acquisition of 74.9% of Play it again Sam (PIAS) also brought edel a strong position in the Benelux, France and the UK markets where the group had been relatively under-represented. PIAS also enhances edel music AG’s position in the “alternative” music genre, whilst the formation of edel Publishing broadened the base of the business and, through the Deston Songs joint venture, secured the songwriting talents of Desmond Child who is one of today’s most successful song writers. Furthermore, edel looked for niche markets to sustain its growth rate. As part of this strategy, edel media & entertainment (eme) formed a separate children’s division, looking to build on the co-operation agreements with EM.TV and Disney. The acquisition of a majority share in ABCD/Eddy Ouwens Productions brought a valuable source of licensing material as well as great expertise in the compilation area. edel also took a 16% stake in the music broadcaster and soon-to-be “Internet Portal” VIVA. edel believes that this will be an extraordinarily valuable equity investment, particularly in the light of VIVA’S expected IPO. It also expanded edel’s business into the audio-visual field, something that was built on with the acquisition of a majority stake in Eagle Rock. The recent participation in Roadrunner/Arcade Music Group as well as the acquisition of a majority stake of the UK company 3 MV by PIAS marks the most recent developments. The single biggest challenge for the music industry today is the Internet. edel embraces the new technologies and is on the forefront of the providers of musical content for Internet usage and will announce its full Internet plans within a month. As part of the group’s content strategy, edel music AG has acquired 100% of Talent Net. Inc., New York, an Internet showcase for new and developing artists under the domain Billboardtalentnet.com. Currently, Billboardtalentnet.com has an artist base of more than 2000 acts that feature at least 3 songs each. At the moment, monthly user sessions are more than 100.000 with more than 2.2 million hits. edel will develop this site under the new brand Broadbandtalentnet.com into its Internet A&R base, and will give the acts free access to the site. Through a rating system and consumer driven charts, edel will select the artists viable for commercial success. At the same time, consumers will have the ability to gain access to musical content free of charge, with the core songs of more popular artists becoming available only against a fee or via the traditional purchase of a CD. edel music AG will also develop the existing relationships of Talent Net, Inc. with Cybermusic Asia, T-Online and numerous US partners. Finally, edel music AG will enhance the functionality of the site by developing a closed circuit system for edel group’s A&R staff. With the current network of companies in place and the integration process accelerating, edel music AG sticks to its projections for the year 2000 with sales well above 1 billion DEM and an EBIT of over 90 million DEM as announced in November 1999. With all these developments taking shape now, edel music AG is well positioned to become the strongest and most innovative independent music company world-wide. End of Message