The Annual Financial Statements of ProSiebenSat.1 Media SE are prepared in accordance with the provisions of the German Commercial Code and the supplementary provisions of the German Stock Corporation Act and the Articles of Association.
BUSINESS AND ECONOMIC ENVIRONMENT
ProSiebenSat.1 Media SE is a management holding company with own operating activities. It is responsible for management functions such as corporate strategy and risk management for ProSiebenSat.1 Group, investment administration and central financing tasks, and other service functions. Furthermore, ProSiebenSat.1 Media SE is the tax group parent for the majority of the domestic subsidiaries. Its material income results from subsidiaries’ profit transfer agreements. In addition, revenues are generated in particular from internal services and the sale of ancillary programming rights.
ProSiebenSat.1 Media SE is not controlled through individual performance indicators but integrated in the Groups overall control.
The economic environment of ProSiebenSat.1 Media SE essentially corresponds to that of ProSiebenSat.1 Group and is described in detail in the section of the Group’s environment.
ProSiebenSat.1 Media SE as the parent company of ProSiebenSat.1 Group is integrated into the Group-wide risk management system. Further information and the description of the internal control system for ProSiebenSat.1 Media SE, required under section 289 (4) HGB, are presented in the Risk Report.
The Management Declaration according to section 289a HGB is publicly available on the Company’s website and can be viewed in this Annual Report.
SIGNIFICANT EVENTS IN 2018
At the Annual General Meeting of ProSiebenSat.1 Media SE on May 16, 2018, the shareholders resolved to allocate EUR 200 million of the distributable profit for financial year 2017 to other retained earnings. They also resolved on a dividend payment of EUR 1.93 per eligible share, with the total payout amounting to EUR 442 million.
At the beginning of the year, the Group restructured its portfolio on the basis of a three-pillar strategy. The aim is to leverage additional synergies, pool resources and increase the efficiency of the Group. These reorganization measures involved personnel adjustments, so the number of employees at ProSiebenSat.1 Media SE also declined.
The Group also refocused its programming strategy. For a modern and future-ready entertainment-business, ProSiebenSat.1 Group will among other things invest additionally in local content. In parallel to an increased local focus in the programming strategy, the Group has reviewed its existing US studio contracts. As a result of this review ProSiebenSat.1 Media SE as the purchasing agent for programming assets recognized provisions for onerous contracts of EUR 176 million as of December 31, 2018.
ProSiebenSat.1 Group practices active portfolio management. Another step toward the enhancement of the commerce business in 2018 was the partnership with General Atlantic. General Atlantic acquired a 25.1% stake in NCG - NUCOM Group SE, Unterföhring and is one of the world’s leading growth capital investors. The gain on disposal from the transaction for ProSiebenSat.1 Media SE amounted to EUR 108 million. In NuCom Group, ProSiebenSat.1 Group bundles strategic investments in largely digital commerce platforms, including Verivox Holding, Parship Elite Group and Jochen Schweizer mydays Group.
In August 2018, ProSiebenSat.1 Media SE concluded a long-term lease for the new “Campus West.” The lease runs until 2038 and results in a significant increase in off-balance-sheet obligations.
EARNINGS OF PROSIEBENSAT.1 MEDIA SE
|
2018 |
2017 |
Revenues |
102 |
116 |
Other operating income |
181 |
82 |
Programming and material expenses |
226 |
62 |
Personnel expenses |
97 |
100 |
Depreciation |
14 |
15 |
Other operating expenses |
151 |
141 |
Operating expenses |
488 |
319 |
Investment income |
521 |
871 |
Financial result |
– 56 |
– 77 |
Taxes |
138 |
160 |
Income after taxes |
122 |
513 |
Other taxes |
0 |
0 |
Profit of the year |
122 |
513 |
ProSiebenSat.1 Media SE’s revenues decreased by EUR 14 million to EUR 102 million in financial year 2018. This development resulted primarily from declining revenues from the sale of ancillary programming rights and from lower revenues from barter transactions.
Other operating income rose by EUR 99 million year-on-year to EUR 181 million. This was due in particular to the income from the sale of shares in NCG - NUCOM Group SE to General Atlantic in April 2018.
Operating expenses amounted to EUR 488 million (previous year: EUR 319 million). The sharp rise in programming and material expenses was caused by the recognition of provisions for onerous contracts in connection with the change of strategy for programming assets. In contrast, personnel expenses decreased slightly because the performance-based compensation components declined significantly. The increase in other operating expenses is due in particular to higher legal and consulting costs in connection with the reorganization and an increase in expenses for IT services.
The investment result, consisting of income from profit transfer agreements and investment income less expenses from loss absorption, decreased by 40% or EUR 350 million to EUR 521 million. Income from profit transfer agreements of EUR 530 million (previous year: EUR 912 million) and investment income of EUR 14 million (previous year: EUR 0 million) was partly offset by expenses from loss absorption of EUR 23 million (previous year: EUR 42 million). The prior year figure was strongly influenced by a high disposal gain from the sale of Etraveli.
In financial year 2018, the financial result, consisting of interest income netted against interest expenses including write-down of financial assets, improved by EUR 21 million to minus EUR 56 million (previous year: EUR –77 million).
Tax expenses amounted to EUR 138 million compared to EUR 160 million in the previous year.
In financial year 2018, the developments described resulted in profit for the year of EUR 122 million. This represents a year-on-year decrease of 76% or EUR 391 million.
ProSiebenSat.1 Media SE had no material off-balance-sheet financing instruments during the period under review.
ProSiebenSat.1 Media SE has concluded rental contracts for property at the Unterföhring site classified as operating leases under the German Commercial Code (HGB). These contracts will expire in 2019 at the earliest and 2038 at the latest.
NET ASSETS OF PROSIEBENSAT.1 MEDIA SE
|
12/31/2018 |
12/31/2017 |
ASSETS |
|
|
Intangible assets |
3 |
7 |
Property, plant and equipment |
50 |
55 |
Financial assets |
7,578 |
7,364 |
Non-current assets |
7,631 |
7,425 |
Receivables and other current assets |
946 |
1,328 |
Cash, cash at banks |
731 |
1,277 |
Current assets |
1,677 |
2,605 |
Prepaid expenses |
3 |
3 |
Active difference resulting from offsetting |
1 |
0 |
TOTAL ASSETS |
9,311 |
10,034 |
|
|
|
LIABILITIES AND EQUITY |
|
|
Equity |
2,928 |
3,297 |
Provisions |
365 |
218 |
Liabilities |
6,018 |
6,489 |
Deferred tax liabilities |
0 |
29 |
TOTAL LIABILITIES AND EQUITY |
9,311 |
10,034 |
As of December 31, 2018, the total assets of ProSiebenSat.1 Media SE decreased by 7% or EUR 723 million to EUR 9,311 million.
Fixed assets increased by 3% or EUR 206 million year-on-year to EUR 7,631 million. The increase primarily resulted from the capital increases at direct subsidiaries in the period under review.
Current assets decreased by 36% or EUR 928 million to EUR 1,677 million. This decline is firstly attributable to the EUR 444 million drop in receivables from affiliated companies which is mainly due to the lower profit transfers. Secondly, cash and cash equivalents fell by EUR 546 million because of the dividend payment of EUR 442 million as well as the share buyback of EUR 50 million. Other assets developed in the opposite direction, increasing by EUR 60 million due to a EUR 46 million increase in tax receivables.
As of December 31, 2018, the equity of ProSiebenSat.1 Media SE decreased by 11% or EUR 369 million to EUR 2,928 million. The equity ratio was therefore 31% (previous year: 33%). The lower equity base resulted from the dividend distribution in May 2018 of EUR 442 million (previous year: EUR 435 million) and the share buyback of EUR 50 million (previous year: EUR 0 million). In contrast, the profit for the year of EUR 122 million generated in the financial year 2018 had an opposite effect.
Provisions increased by EUR 147 million to EUR 365 million. This was due to the recognition of provisions for onerous contracts for the future acquisition of programming assets.
Amounting to EUR 6,018 million as of December 31, 2018, liabilities were EUR 471 million lower than the previous year’s figure of EUR 6,489 million. This development primarily reflects the lower intragroup liabilities from cash pooling.
FINANCIAL POSITION OF PROSIEBENSAT.1 MEDIA SE
Cash management is performed centrally with Group cash flows being pooled by an implemented cash pooling system at ProSiebenSat.1 Media SE as the holding company. Therefore the cash flows of ProSiebenSat.1 Group as a whole affect the liquidity of ProSiebenSat.1 Media SE to a large degree.
For Group companies, especially the German TV stations, ProSiebenSat.1 Media SE acts as purchasing agent for programming assets. In financial year 2018, EUR 564 million (previous year: EUR 594 million) was spent on investments in programming assets. In the past financial year, the inflow from the internal transfer of programming assets to Group companies amounted to EUR 561 million (previous year: EUR 541 million). As of December 31, 2018, the total future financial obligations from programming purchase agreements already concluded amounted to EUR 2,295 million (previous year: EUR 2,345 million).
In the period under review, cash outflows for purchases of tangible fixed assets at ProSiebenSat.1 Media SE amounted to EUR 11 million. This represents a year-on-year decrease of EUR 15 million.
A total net amount of EUR 118 million (previous year: EUR 270 million) was spent on contributions to the capital reserve at direct subsidiaries and on company acquisitions and company disposals in financial year 2018.
For further information on the balance sheet and income statement, refer to the Notes to the Annual Financial Statements of ProSiebenSat.1 Media SE.
Development of Employee Numbers
In financial year 2018, an average of 697 people were employed at ProSiebenSat.1 Media SE, comprising 609 employees and 88 apprentices, trainees and interns. In the previous year, on average 790 people were employed at ProSiebenSat.1 Media SE, 94 of whom were apprentices, trainees and interns.
Risks and Opportunities
The business performance of ProSiebenSat.1 Media SE is fundamentally subject to the same risks and opportunities as ProSiebenSat.1 Group. ProSiebenSat.1 Media SE participates in the risks of its subsidiaries and investments in line with its respective ownership interest. The risks and opportunities are described in the Risk and Opportunity Report.
Outlook
Because of the interrelations between ProSiebenSat.1 Media SE and its subsidiaries, the outlook for ProSiebenSat.1 Group also largely reflects the expectations of ProSiebenSat.1 Media SE. The earnings development of ProSiebenSat.1 Media SE should remain in alignment with the development of the Group in the future, since the results of the subsidiaries will influence the investment result to a large degree. The control through performance indicators takes place on Group level. Therefore, the remarks in the Company Outlook also apply to ProSiebenSat.1 Media SE. We assume that the investment result will still have a substantial influence on the profit of ProSiebenSat.1 Media SE.