This section is part of the audited Combined Management Report.
Development of Stock Markets
The 2018 trading year was characterized by high volatility. It was a patchy year for investments, due in particular to the geopolitical uncertainties caused by the trade conflict between the USA and China, the concern about the UK exiting the European Union without a deal and the threat of a debt crisis in Italy. Against this back-drop, the German leading index, the DAX, closed the 2018 trading year at 10,559 points, representing a decrease of 18%. The DAX peaked in January at 13,560 points. The MDAX developed virtually in parallel: It closed at 21,588 points, down 18% against the final trading day of 2017. The relevant sector index for European media stocks, the EURO STOXX Media, closed at 209 points, representing a decrease of 9%.
ProSiebenSat.1 Media SE on the Capital Market
The ProSiebenSat.1 Media SE share (ISIN: DE000PSM7770; WKN: PSM777) ended the year 2018 at EUR 15.55 and was thus below the level (–46%) achieved on the last day of trading in 2017 (December 29, 2017: EUR 28.71). At the end of 2018, the weighting in the MDAX was 1.7%.
In particular, the lower valuation of the entire European media sector influenced the performance of the ProSiebenSat.1 Group share in 2018. Due to changing media usage and the general uncertainty regarding the TV advertising business, some analysts regarded the stock more critically than in the previous year.
Although the ProSiebenSat.1 Media SE share performed well in the first two months of 2018, it was characterized by a significant downward trend from the start of March onwards. On March 6, Deutsche Börse AG announced that it would be replacing the ProSiebenSat.1 Media SE share with Covestro AG with effect from March 19 and consequently removing it from the leading index, the DAX. The associated adjustments in index funds influenced the share’s price performance and trading volume. In addition, the short attack by the Viceroy Research Group took effect on the same day and resulted in a substantial decline in the share price. ProSiebenSat.1 Group responded in detail to the allegations published in Viceroy Research’s report and rejected the note as false and misleading. The Munich public prosecution department has opened preliminary investigations on suspicion of market manipulation and the German financial supervisory authority BaFin is also examining whether this is a case of illegal market manipulation.
Deutsche Börse AG regularly reviews the composition of the stock market indices every September on the basis of the quantitative criteria of market capitalization and liquidity. Four times a year, there is also the chance of a fast entry or exit if certain rankings in terms of these criteria are achieved or not achieved. One of these review dates was March 5, 2018. On this date, Covestro AG was ranked 25 among the largest stocks listed on the German stock exchange in terms of both the criteria of market capitalization and liquidity and was therefore added to the DAX. ProSiebenSat.1 Media SE was the weakest stock in terms of market capitalization on this date and was removed from the DAX with effect as of March 19, 2018, and is now represented on the MDAX.
On May 9, 2018, ProSiebenSat.1 Group published its figures for the first quarter. The announced shift of earnings contributions into the fourth quarter was a factor which led to reluctance on the capital market. The ex- of EUR 1.93 on May 16, 2018, also had a negative impact on the share price performance.
At the start of November, ProSiebenSat.1 Group adjusted the financial outlook for full-year 2018, announced an investment program for the next approximately five years, and said that it would reduce the pay-out ratio to 50% of from 2019. This, along with the publication of the financial figures for the third quarter, resulted in further price losses. In contrast, the stock received some slight support from the strategy update presented on Capital Markets Day (CMD) on November 14, 2018, and the announcement of a share buyback program of up to EUR 250 million with a term of 12 to 24 months. The buyback program started on November 9 and until its conclusion on December 11 comprised 6 tranches with a total volume of EUR 50 million.
At the end of the period under review, a total of 21 brokerage firms and financial institutions actively analyzed the ProSiebenSat.1 Media SE share and published research reports. At the end of 2018, 29% of analysts recommended the ProSiebenSat.1 Media SE share as a buy, while 52% were in favor of holding the share and 19% issued a sell recommendation. The analysts’ median price target was EUR 21.
ANNUAL GENERAL MEETING FOR THE FINANCIAL YEAR 2017
The Annual General Meeting of ProSiebenSat.1 Media SE for the financial year 2017 took place on May 16, 2018. Around 870 participants attended the Annual General Meeting. Attendance was approximately 64% of share capital.
The shareholders resolved on a dividend payment of EUR 1.93 per dividend entitled share for the financial year 2017 (previous year: EUR 1.90). The total dividend pay-out amounts to approximately EUR 442 million, resulting in a pay-out ratio of 80.3% of adjusted net income. The dividend was paid on May 22, 2018. In addition, the Annual General Meeting approved the new remuneration system for Executive Board members by a clear majority. Another item on the agenda was the supplementary Supervisory Board elections. The shareholders elected Marjorie Kaplan, a self-employed entrepreneur and member of the Supervisory Board of The Grierson Trust, to the Supervisory Board of ProSiebenSat.1 Media SE. Marjorie Kaplan is taking over from Antoinette (Annet) P. Aris, who resigned with effect from the end of the Annual General Meeting. The Annual General Meeting also granted discharge to the Executive Board and Supervisory Board for the financial year 2017.
The designated CEO Max Conze appeared before the shareholders for the first time at the Annual General Meeting in order to introduce himself. Max Conze officially assumed the role of Chairman of the Executive Board of ProSiebenSat.1 Group as of June 1. He followed Thomas Ebeling, who had left the Group on February 22.
SHAREHOLDER STRUCTURE OF PROSIEBENSAT.1 MEDIA SE
The shareholder structure is relatively unchanged compared to December 31, 2017. The shares are mostly held by institutional investors in the US, the UK and Germany. 23.2% of the shares are held by private shareholders. In total, 97.0% were held in as of December 31, 2018 (December 31, 2017: 98.3%). The remaining 3.0% are held by the Group (December 31, 2017: 1.7%).
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.