Brandora Logo


EM.TV with significant increase in earnings

EM.TV - November 2006
 
  • EBITDA more than doubled at Euro 20.4 million after nine months
  • Nine month Group sales advance by 22 percent to Euro 179,4 million
  • Nine month Group sales advance by 22 percent to Euro 179,4 million
  • Dynamic development maintained in the Sports segment
  • Group objectives reinforced for the whole of 2006

In the third quarter of 2006 – a seasonally weaker period – the EM.TV Group achieved a significant increase in sales and earnings in comparison with the third quarter of the previous year. Group sales in the first nine months rose by 22 percent to Euro 179.4 million and EBITDA more than doubled in comparison with the previous year, reaching a level of Euro 20.4 million. The media company closed the third quarter and also the first nine month with positive earnings after taxes. The Sports segment in particular continued its dynamic development. There is no longer an earnings risk from sports betting. The Management Board reinforces the sales and earnings objectives already notified for the whole of 2006.

erner E. Klatten, Chairman of the Board of EM.TV AG: "Based on the first nine months, the EM.TV Group is on the way to achieving its financial objectives for the whole year. Above all, it is gratifying to report that the Sports segment is developing extremely positively. Our sports companies have managed to achieve an expansion path by means of highly competitive and efficient platforms and services".

Development of consolidated sales and earnings

  • Group sales amounted to Euro 179.4 million in the first nine months of 2006 compared with Euro 146.5 million in the same period of the previous year. This was equivalent to a growth rate of 22.5 percent. The initial full consolidation of Creation Club (CC) GmbH and the Australian production company Flying Bark Productions PTY Ltd. also contributed to this increase in sales.
  • At Euro 57.5 million (+24.7 percent), sales in the third quarter were also significantly higher than in the comparative quarter of the previous year (Euro 46.1 million). This increase was mainly attributable to a sustained business upturn in the Sports segment which had already commenced in the second quarter.
  • More than doubling in comparison with the previous year (Euro 8.8 million), Group earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to Euro 20.4 million in the first nine months with a generally moderate increase in costs. In the third quarter, there was a significant improvement from Euro -3.5 million to Euro 6.5 million in comparison with the same quarter of the previous year.
  • Earnings before interest and taxes (EBIT) amounted to Euro 6.8 million in the nine month period compared to a loss of Euro 2.4 million in the same period of 2005.
  • At Euro -7.2 million, net financial result from January to September 2006 were substantially lower than in the same period in 2005 (Euro -3.9 million). This was mainly attributable to a special accounting charge of Euro 3.1 million in connection with the premature repayment of the 8% bond with warrants attached of 2004/2009 which was made at the end of the second quarter.
  • The EM.TV Group achieved earnings before taxes (EBT) of Euro -2.4 million compared with Euro -6.4 million in the corresponding period of the previous year. These results include special charges of approximately Euro 5 million in connection with the repayment of the bond with warrants attached and includes a write-down of a minority interest holding made in the first quarter.
  • Earnings of Euro 0.2 million after taxes and minority interests were achieved in the first nine months compared with Euro -4.5 million in the same period of the previous year. Earnings of Euro 0.1 million after taxes and minority interests were made in the third quarter (compared with Euro -4.6 million in the same quarter of the previous year).

Consolidated balance sheet and cash flow

  • The balance sheet total of the EM.TV Group amounted to Euro 372.6 million at the end of the third quarter and was therefore Euro 56.4 million higher than the equivalent amount at December 31, 2005 (Euro 316.2 million). The increase in the balance sheet total was mainly attributable to the reorganization of the Group’s finances made in the second quarter with the issue of the 5.25% convertible bond 2006/2013.
  • In comparison with the position at the end of 2005, the consolidated equity increased by Euro 25.8 million to Euro 179.4 million at September 30, 2006. The equity ratio reached a sound level of 48.1 percent compared with 48.6 percent at the end of 2005.
  • The cash flow from operating activities of the EM.TV Group amounted to Euro 40.0 million in the first nine months of the year (2005: Euro -3.9 million). The cash flow for the reporting period amounted to Euro 78.2 million (compared with Euro -51.2 million in the first nine months of 2005).

Development of the business segments

    <)
  • Sales increased dynamically in the Sports segment in the first nine months of 2006 (the TV-Station DSF, the production company PLAZAMEDIA including Creation Club, Online-platform Sport1, merchandising and marketing rights to the 2006 FIFA World Cup™ and advanced by 22.2 percent from Euro 128.1 million in the comparable period of the previous year to Euro 156.5 million in the current year. All the sports companies contributed to this growth, with the upward trend in the second quarter thereby continuing in the period from July to September. Earnings achieved by the Sports segment after nine months amounted to Euro 10.5 million and were therefore significantly higher than the comparable amount in the previous year (Euro 6.3 million). The earnings contribution in the third quarter of 2006 amounted to Euro 5.3 million compared with Euro -3.2 million in the third quarter of 2005.
  • The Entertainment segment (the production, marketing and sale of characters and programs for children and youths) reached a sales level of Euro 22.8 million from January to September 2006 (2005: Euro 17.3 million). The program supply contract already booked with ZDF in the first quarter continued as the major impulse for the increase in sales together with the initial full-consolidation of the production subsidiary Flying Bark Productions (formerly Yoram Gross-EM.TV). The earnings in the Entertainment segment amounted to Euro 2.4 million after nine months compared with a loss of Euro 1.7 million in the comparable period of 2005.
  • The segment results from the "Others" sector (mainly EM.TV AG as the holding company) amounted to Euro -5.9 million after nine months, thereby improving by 14.5 percent in comparison with the same period of the previous year (Euro -6.9 million).

Prospects for the whole of 2006

In the light of the operational development being in line with expectations in the first nine months of the year, the Management Board reinforces its objectives for the whole of 2006:

  • consolidated sales of approximately Euro 250 million, equivalent to a growth rate of approximately 19 percent in comparison with 2005;
  • a consolidated EBITDA of Euro 27 to 30 million equivalent to an increase of at least 27 percent;
  • a consolidated EBIT between Euro 8 and 10 million, equivalent to an increase of at least 40 percent.

With these objectives for the year, it should be borne in mind that the fourth quarter is normally a strong quarter for the business conducted by EM.TV.

In the report on the second quarter of 2006, EM.TV drew attention to a sales and earnings risk in the Sports segment on account of the legal disputes regarding the future of sports betting offers in Germany. This risk no longer applies on the basis of the present legal and economic development of the aforesaid dispute and the attainment of additional sales by the sports companies in other sectors.