Forecast for 2019

In accordance with the outlook for 2019 which the ProSiebenSat.1 Group presented at the Capital Markets Day in November 2018, the Group still aims for revenue growth in the mid single-digit percentage range and an margin between 22% and 25% on a whole-year basis. This target includes at least stable or only slightly declining TV advertising revenues in the Entertainment segment and is based on a stable macro environment. Should the general conditions deteriorate beyond the assumptions made, this would have a negative impact on profitability in the Entertainment segment and at Group level.

As already announced at the Capital Markets Day, the planned investments recognized as expense in the Entertainment segment will impact the Group’s profitability and earnings performance on a full-year basis. These investments will be spread primarily across the first three quarters, with a focus on the second and third quarter, and will lead to declines in earnings in each case. Provided stable to only slightly declining TV advertising revenues in the Entertainment segment, as already communicated, the ProSiebenSat.1 Group still anticipates that the impact of the planned investments recognized as expense on adjusted of the Group in the full-year 2019 will restrict to a mid double-digit million EUR amount compared to the previous year. In addition, the investments in the joint streaming platform with Discovery Communications will burden the financial and net result.

At segment level on a full-year basis, the ProSiebenSat.1 Group anticipates the revenues in the Entertainment segment to be approximately in line with those of the previous year, provided stable to only slightly declining TV advertising revenues as well as an offsetting positive development of other Entertainment revenues. In the Content Production & Global Sales segment as well as in the Commerce segment, the Group anticipates a dynamic growth (both reported and organic) in each case. The Commerce segment is even expected to achieve significant double-digit percentage revenue growth on a full-year basis. The Group will benefit here accordingly from the initial consolidation of the matchmaking provider eHarmony and of Aroundhome.

104 / Explanatory notes on the forecast

Due to adjustments in the target parameters of Executive Board compensation and changes in the management system, has been taken up compared to previous year new in the catalogue of most important financial performance indicators. The information provided refers to the plans adopted by the Executive Board and Supervisory Board. Our statements are also based on current general economic and sector-specific data at the time this report was prepared.

The , i.e. the ratio of net financial liabilities to LTM adjusted EBITDA of the Group, should be within the range of 1.5 and 2.5 at the year-end of 2019. At the year-end of 2018, the leverage ratio was 2.1 (previous year: 1.6).

105 / EXPECTED GROUP KEY FIGURES IN 2019

 

2018

Forecast for 2019

1

In comparison to the Annual Report 2017 newly included figure; see Strategy and Management System.

Revenues (in EUR m)

4,009

Increase in mid single-digit percentage range

Adjusted EBITDA margin (in %)

25.3%

22 – 25%

Adjusted net income
(conversion rate of adjusted EBITDA to adjusted net income in %)

53.4%

~50%

Leverage ratio
(net financial liabilities/LTM adjusted EBITDA)

2.1 x

1.5 – 2.5 x

Free cash flow before M&A1
(in EUR m)

244

Stable

106 / EXPECTED SEGMENT KEY FIGURES IN 2019 in EUR m

 

2018

Forecast for 2019

1

Under the condition of stable or only slightly declining TV advertising revenues as well as a contrary positive development of other Entertainment revenues.

Entertainment1

 

 

External revenues

2,626

Stable

Adjusted EBITDA

881

Significant decrease

Content Production & Global Sales

 

 

External revenues

552

Significant increase

Adjusted EBITDA

31

Significant increase

Commerce

 

 

External revenues

831

Significant increase

Adjusted EBITDA

103

Significant increase

We also still expect to maintain our leading position with regard to audience shares in the advertising-relevant target group of 14- to 49-year-olds at a high level.

DIVIDEND PROPOSAL

In November 2018, ProSiebenSat.1 Group presented a “Total Shareholder Return” concept (based on the average annual shareholder return). In this context, the Group presented an adjustment of its policy: From financial year 2018, we will pay out 50% of as a dividend (previously 80% to 90%). The Group will primarily use the funds thus released for earnings-increasing investments in organic and inorganic growth. The Executive Board is therefore advising the Supervisory Board to propose a dividend of the amount of 50% of adjusted net income or respectively of EUR 1.19 per share (previous year: EUR 1.93) to the Annual General Meeting for the financial year 2018. This corresponds to a dividend yield of 8% (previous year: 6.7%) of the closing price of the ProSiebenSat.1 Media SE share at the end of 2018.

Mid-term financial targets

Over the next around five years, the ProSiebenSat.1 Group intends to increase revenues to EUR 6 billion (2018: EUR 4,009 million) and adjusted EBITDA to EUR 1.5 billion (2018: EUR 1,013 million). We want to increase the share of revenues of the non-advertising business (2018: 44%) and the digital business (2018: 29%) each to over 50%. The financial targets reflect our strategy of expanding the entire Group into a diversified and fast-growing digital corporation.

107 / Predictive statements

Forecasts are based on current assessments of future developments. In this context, we draw on our budget planning and comprehensive market and competitive analyses. The forecast values are calculated in accordance with the reporting principles used in the financial statements and are consistent with the adjustments described in the Management Report. However, forecasts naturally entail some uncertainties that could lead to positive or negative deviations from planning. If imponderables occur or if the assumptions on which the predictive statements are made no longer 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 this report was prepared. These and other factors are explained in detail in the Risk and Opportunity Report. There 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. Potential risks are accounted for regularly and systematically as part of the Group-wide risk management process. Significant events after the end of the reporting period are explained in the Notes, Note 37 “Events after the reporting period”, page 230. The publication date of the Annual Report 2018 is March 21, 2019.

108 / Overall Assessment of Future Development — Management View

Last year, we gave the starting signal for the realignment of the ProSiebenSat.1 Group. In 2019, our full focus is to position our Entertainment business on a more local, more digital and more synergetic basis, to grow organically, and especially to strengthen our Commerce portfolio with acquisitions. For the full year, the Group anticipates revenue growth in the mid single-digit percentage range and an adjusted EBITDA margin between 22% and 25%. Over the next around five years, the ProSiebenSat.1 Group intends to increase revenues to EUR 6 billion (2018: EUR 4,009 million) and adjusted EBITDA to EUR 1.5 billion (2018: EUR 1,013 million).

Adjusted EBITDA
Adjusted EBITDA stands for adjusted earnings before interest, taxes, depreciation and amortization.
It describes earnings before interest, taxes, depreciation and amortization, adjusted for certain influencing factors (reconciling items).
Glossary
EBITDA
Abbreviation for Earnings before Interest, Taxes, Depreciation and Amortization.
Glossary
Free Cash flow before M&A
Free cash flow adjusted for cash used and generated by M&A transactions (excl. trans-action costs) related to majority acquisitions that are carried out and planned, the purchase and sale of investments accounted for using the equity method and other investments with the exception of media-for-equity investments.
Glossary
Leverage ratio
Common key ratio for measuring the debt position. It is calculated as the ratio of net financial debt to adjusted EBITDA of the last twelve months.
Glossary
Dividend
The share of the profit of a stock corporation distributed to the shareholders. The amount of the dividend is proposed by the Executive Board and approved by the Annual General Meeting. The dividend depends, among other things, on the profitability, economic situation and dividend policy of the company. The basis of assessment for the distribution is the profit calculated according to commercial law.
Glossary
Adjusted net income
Adjusted net income is the net result attributable to shareholders of ProSiebenSat.1 Media SE before the amortization and impairments from purchase price allocations, adjusted for the reconciling items as outlined above as well as additional reconciling items.
These include valuation effects recognized in other financial result, valuation effects of put-options and earn-out liabilities, as well as valuation effects from interest rate hedging transactions. Moreover, the tax effects resulting from such adjustments are also adjusted.
Glossary