RTL Group, Europe’s leading broadcaster and content provider, announces its interim results to 30 June 2003.
Interim results highlights
| EUR million |
Half year |
Half year |
Change |
| Revenue |
2,212 |
2,102 |
5.2 |
| Reported EBITA 1 |
253 |
181 |
39.8 |
| Adjusted EBITA |
287 |
197 |
45.7 |
| Reported net result |
25 |
17 |
47.1 |
| Adjusted EPS 2 |
1.09 |
0.86 |
26.7 |
| Reported EBITA |
253 |
181 |
39.8 |
| Restructuring charges |
(29) |
(6) |
|
| Start up losses 3 |
(5) |
(10) |
|
| Adjusted EBITA |
287 |
197 |
45.7 |
| Reported EBITA margin (%) |
11.4 |
8.6 |
|
| Adjusted EBITA margin (%) |
13.0 |
9.4 |
|
| Reported EBITA |
253 |
181 |
39.8 |
| Amortisation and impairment of goodwill |
(143) |
(115) |
24.3 |
| Gain from sale of subsidiairies, joint ventures and other investments |
1 |
- |
|
| Net financial expense |
(26) |
(8) |
|
| Income tax expense 4 |
(53) |
(37) |
|
| Minority interest |
(7) |
(4) |
|
| Reported net result |
25 |
17 |
47.1 |
| Adjusted EPS |
1.09 |
0.86 |
26.7 |
Business Headlines
Strong performance in weak advertising markets
Results improvement reflects strong market position
Focus remains on building long term value
Gerhard Zeiler, Chief Executive Officer (CEO) of RTL Group said:
“As we promised when we announced our 2002 results in March, RTL Group has continued to progress in tough markets by outperforming competitors, showing strong, sometimes even record, performances in audience shares and increasing advertising and non-advertising revenue whilst actively managing the cost base.
Looking ahead, we are becoming slightly more positive about the immediate future, although visibility remains limited, with second half performance likely to be in line with the first half.
There are signs, especially in the German market, that the bottom of the advertising recession has been reached and maybe passed.
Our strategy remains consistent. We will continue to extend our portfolio where possibilities to do so occur, for example in Spain and Central and Eastern Europe.
RTL Group companies have continued to improve their position in relation to many of our competitors across Europe, and we intend to maintain that progress.”
A conference call will be held for analysts and investors today at 10.00 am (CET). To participate in the conference call dial +49 69 2711 0400 quoting RTL Group and chairperson Gerhard Zeiler. The call will be available on replay until 4 September by dialling +49 69 920 56 444.
1 EBITA represents earnings before interest and income tax expense excluding amortisation and impairment of goodwill and gain from sale of subsidiaries, joint ventures and other investments
2 Adjusted earnings per share represents net profit for the period adjusted by amortisation and impairment of goodwill and gain or loss from sale of subsidiaries, joint ventures and other investments, net of income taxes
3 RTL shop only
4 2002 income tax expense reduced by release of tax provision
5 RTL Group estimate
Financial review
| Revenue EUR million |
Half year to |
Half year to |
Per cent |
Year to |
| Television |
1,610 |
1,508 |
6.8 |
3,062 |
| Content |
608 |
586 |
3.8 |
1,308 |
| Radio |
117 |
109 |
7.3 |
233 |
| Other |
34 |
48 |
(29.2) |
75 |
| Eliminations |
(157) |
(149) |
5.4 |
(316) |
| Group revenue |
2,212 |
2,102 |
5.2 |
4,362 |
| EBITA EUR million |
Half year to |
Half year to |
Per cent |
Year to |
| Television |
198 |
147 |
34.7 |
329 |
|
Content |
43 |
43 |
- |
83 |
|
Radio |
25 |
18 |
38.9 |
41 |
|
Other |
(13) |
(27) |
51.9 |
(29) |
|
Reported Group |
253 |
181 |
39.8 |
424 |
|
Adjustments for: |
|
|
|
|
|
Restructuring charges |
29 |
6 |
|
38 |
|
Start up losses |
5 |
10 |
|
15 |
|
Adjusted Group |
287 |
197 |
45.7 |
477 |
The New Media segment has been folded back into the respective core television and radio segments, to better reflect the close relationship between these activities, in particular in merchandising and telephony revenue. Comparatives have been re-stated accordingly.
RTL Group´s revenue rose by 5.2 per cent to EUR 2,212 million due to strong business performances across the operations, higher non-advertising revenue and scope changes. Underlying revenue excluding the effects of the first time consolidation of TPS in France (through M6), the increase of RTL Group’s shareholding in M6 as well as the first time proportionate consolidation of the German news channel n-tv as from 1 April 2003 was up 2.6 per cent. Advertising revenue increased 6.0 per cent year on year, revenue from diversification activities 4.0 per cent, contributing 38.2 per cent to total revenue. Group operating expenses were up 0.3 per cent to EUR 1,991 million from EUR 1,985 million as at 30 June 2002. Excluding the effects of scope changes, restructuring charges, non-recurring items and start up losses, the operating expense base was down 2.4 per cent.
Before restructuring charges (EUR 29 million) and start up losses (EUR 5 million), adjusted EBITA was EUR 287 million. The adjusted EBITA margin increased to 13.0 per cent from 9.4 per cent at June 2002.
RTL Group’s TV revenue rose 6.8 per cent over the period to EUR 1,610 million due to strong performances at RTL Television and VOX in Germany and M6 in France with underlying TV revenue up 3.8 per cent. EBITA went up 34.7 per cent to EUR 198 million.
Content revenue was up 3.8 per cent to EUR 608 million from EUR 586 million in the first six months of 2002. EBITA was stable at EUR 43 million despite including the effects of further write-downs on trading rights (EUR 17 million).
Radio revenue increased to EUR 117 million from EUR 109 million in 2002. EBITA was up to EUR 25 million from EUR 18 million, mainly due to the higher advertising revenue in our main market, France.
A goodwill impairment of EUR 35 million was recorded against the carrying value of RTL Group’s transmission businesses following the loss of customers in the first half of 2003. The regular goodwill amortisation charge as at 30 June 2003 was EUR 108 million (EUR 115 million on 30 June 2002).
The net interest expense in the first six months of 2003 was EUR 21 million. This included interest charges on certain rights acquisitions as well as interest income on tax receivables. The level of net debt decreased from EUR 755 million as at 31 December 2002 to EUR 580 million as a result of strong operating cash conversion, active working capital management and tax reimbursements.
The tax expense on continuing operations was EUR 53 million, representing an effective tax rate of 32 per cent (35 per cent at 30 June 2002).
The net profit for the six months to 30 June 2003 rose to EUR 25 million, up from EUR 17 million for the first half of 2002.
The adjusted earnings per share (EPS), stripping out amortisation and impairment of goodwill as well as gain or loss on sale of subsidiaries, joint ventures and other investments, net of income taxes, increased by 27 per cent to EUR 1.09 per share, from EUR 0.86 per share as at 30 June 2002.
Television
| Revenue in EUR million |
6 months to |
6 months to |
Per cent |
Year to |
|
Germany |
946 |
911 |
3.8 |
1,830 |
|
- RTL Television / VOX / |
805 |
767 |
5.0 |
1,541 |
|
- RTL Shop |
48 |
32 |
50.0 |
72 |
|
- Content |
26 |
45 |
(42.2) |
73 |
|
- New Media activities |
35 |
37 |
(5.4) |
77 |
|
- Others |
32 |
30 |
6.7 |
67 |
|
France |
292 |
215 |
35.8 |
450 |
|
- M6 |
292 |
215 |
35.8 |
450 |
|
Netherlands and |
218 |
210 |
3.8 |
426 |
|
- HMG |
163 |
159 |
2.5 |
324 |
|
- RTL Tvi |
55 |
51 |
7.8 |
102 |
|
United Kingdom |
118 |
121 |
(2.5) |
259 |
|
- five |
118 |
121 |
(2.5) |
259 |
|
Technical Services |
36 |
51 |
(29.4) |
97 |
|
|
|
|
|
|
|
Television revenue |
1,610 |
1,508 |
6.8 |
3,062 |
| EBITA in EUR million |
6 months to |
6 months to |
Per cent |
Year to |
|
Germany |
127 |
99 |
28.3 |
237 |
|
- RTL Television / VOX / |
115 |
97 |
18.6 |
231 |
|
- RTL Shop |
(5) |
(10) |
50.0 |
(15) |
|
- Content |
1 |
6 |
(83.3) |
5 |
|
- New Media activities |
9 |
(14) |
n.a. |
(16) |
|
- Others |
7 |
20 |
(65.0) |
32 |
|
France |
64 |
45 |
42.2 |
82 |
|
- M6 |
63 |
44 |
43.2 |
80 |
|
- RTL 9 |
1 |
1 |
- |
2 |
|
Netherlands and |
22 |
(3) |
n.a. |
(7) |
|
- HMG |
10 |
(8) |
n.a. |
(17) |
|
- RTL Tvi |
12 |
5 |
>100.0 |
10 |
|
United Kingdom |
1 |
(3) |
n.a. |
(2) |
|
- five |
1 |
(3) |
n.a. |
(2) |
|
Technical Services |
(3) |
7 |
n.a. |
15 |
|
Others |
(13) |
2 |
n.a. |
4 |
|
|
|
|
|
|
|
Reported Television |
198 |
147 |
34.7 |
329 |
|
Adjustments for: |
|
|
|
|
|
Restructuring charges |
26 |
4 |
|
30 |
|
Start up losses |
5 |
10 |
|
15 |
|
|
|
|
|
|
|
Adjusted Television |
229 |
161 |
42.2 |
374 |
The gross TV advertising spend in Germany decreased by 0.3 percent (source: AC Nielsen S+P) in the first half of 2003, against a fall of 7.2 per cent over the same period in 2002. RTL Group estimate that the net advertising market fell 5.5 per cent during the first half of 2003 and believe that the market has now bottomed out.
The RTL family of channels in Germany further strengthened its market position. Its share of gross advertising spend rose to 44.9 per cent, up from 40.5 per cent in 2002 and its share of the 14-49 target age group increased to 33.7 per cent from 29.6 per cent. This was a result of programme successes and slightly easier comparatives with the Winter Olympics and World Cup on competitor channels in 2002. In addition, the RTL family in Germany increased its diversification revenue, driven, in part, by the phenomenal success of the format “Deutschland sucht den Superstar”.
RTL Television continued to attract mass audiences, reflected in the fact that 64 of the top 100 shows in the total market were RTL TV shows, rising to 85 out of the top 100 in the target audience group 14-49. The audience share in the 14-49 target group of 18.9 per cent was the highest achieved since the first half of 1996. The highlight was “Deutschland sucht den Superstar” with the final attracting an audience of up to 15 million viewers and a total of more than 27 million telephone calls. Other highlights continued to be sporting events such as “Formula 1” with up to 11.5 million viewers, the “70’s” and“80’s” shows and “RTL Aktuell”, the most watched news programme (22.1 per cent share) in the 14-49 target age group. Films such as “Erin Brockovich” and “Gladiator” have also been successful, attracting audience shares of 36.7 and 37.3 per cent respectively.
VOX has, once again, delivered exceptional results. The programme grid continues to be based on successful formats such as “CSI: Crime Scene Investigation” and “Crossing Jordan” as well as home-grown formats such as “Voxtours” and“Wolkenlos” (“Clear Skies”). The continued programme investment and strong market position has enabled VOX to drive up both advertising market share and audience share by 0.7 and 0.5 percentage points respectively over the same period last year.
The presentation of German television has been changed compared to prior years with the inclusion of both TV content and new media activities as this more accurately reflects management responsibilities. The main content activity that has changed segments compared to prior years is Universum Film. Comparatives have been re-stated accordingly. The consolidated revenue of the family rose to EUR 946 million (RTL, VOX, Super RTL, RTL Shop, n-tv)6, from EUR 911 million in 2002. RTL Germany generated an EBITA of EUR 127 million, up from EUR 99 million as at 30 June 2002.
The French gross TV advertising market rose 6.4 per cent in the first six months of 2003 (source: SECODIP). The success of formats like “The Bachelor” and “IQ Test” helped M6 to consolidate its position as the second most watched channel in France among viewers under age 50. M6 achieved an audience share of 18.4 per cent of housewives under 50, down compared with 2002 (19.8 per cent) due to tough comparatives, and an advertising market share of 22.9 per cent. Although this is slightly down on last year, net advertising income rose 4.5 per cent compared to TF1’s increase of 2.6 per cent.
M6 has continued to develop its diversification businesses, reflected in the expansion of M6 Interactions (Music, DVD, publications, events, film distribution), Homeshopping and M6 Web (encompassing internet and telephony), with revenue up by more than 20 per cent. TPS increased the number of subscribers to more than 1.4 million (including 246,000 subscribers to the premium channels on cable). As a result, it recorded a positive EBITA in the first six months of the year (but, due the cyclical nature of the business, continues to expect a loss for the full year).
RTL Group’s share of M6’s revenue went up 35.8 per cent to EUR 292 million, which also includes the first time proportionate consolidation of TPS. RTL Group’s share of M6’s EBITA rose 43.2 per cent to EUR 63 million.
In the UK, the TV advertising market was flat (source: BARB) in the first 6 months of 2003. In June, the market softened further, with negative growth continuing over the summer months. In a highly competitive market, five has succeeded in driving its advertising market share up to 7.9 per cent, from 7.3 per cent a year earlier, up 8% year on year. In addition, five was the only terrestrial television station to show audience improvement with a share up at 6.5 per cent from 6.4 per cent. Programme highlights included “CSI : Crime Scene Investigation” and the spin-off series “CSI Miami” both of which have recorded audience shares of up to 12 per cent. Other successes have been built upon a very strong film schedule with “The Matrix”, “Three Kings” and “Erin Brockovich” amongst the highlights so far this year.
RTL Group’s share of five’s revenue has decreased to EUR 118 million due solely to the strengthening of the EUR against the British pound. Excluding the currency translation effect, revenue at five has increased almost 7 per cent year on year. five recorded a small profit at EBITA, of EUR 1 million, against a loss of EUR 3 million a year earlier. five successfully re-negotiated its ITC licence terms, significantly reducing the licence fee as from 1 April 2003.
The HMG channels in the Netherlands increased their audience share in the target group to 31.6 per cent, up from 28.7 per cent in the first six months of 2002. The advertising market share went up by 1 per cent to 38.7 per cent (source: Intomart, BBC). RTL 4 further extended its market leadership position with an audience share of 19.5 per cent7. The strong performance resulted from formats such as “Idols”, “Goede Tijden, Slechte Tijden”, “RTL Boulevard”, “Medicopter”, “Formula 1” and “Bobo‘s in the Bush”. Revenue increased to EUR 163 million or 2.5 per cent, while EBITA rose to EUR 10 million from a loss of EUR 8 million. Included in the EBITA is the reversal of a provision for specific risks of EUR 8 million as well as restructuring costs of EUR 7 million principally relating to the re-housing programme.
RTL Tvi/Club RTL in Belgium maintained their leadership position, recording audience and advertising market shares of 29.8 and 67.3 per cent respectively. Revenue was up at EUR 55 million with EBITA also improving to EUR 12 million reflecting an out performance in strong advertising market conditions.
The results of Antena 3 in Spain, which are included in “others”, were impacted by significant restructuring charges. We have great faith in the new management team, under Maurizio Carlotti, who have initiated a turnaround and repositioning of the station with the full support of both RTL Group and our partners Planeta. The core business of Antena 3 remains strong with audience and advertising market shares of 19.5 per cent and 24.8 per cent respectively. ...
Content
| in EUR million |
6 months to |
6 months to |
Per cent |
Year to |
|
Revenue |
608 |
586 |
3.8 |
1,308 |
|
Of which: |
388 |
362 |
7.2 |
819 |
|
Sportfive |
127 |
133 |
(4.5) |
296 |
|
Other content businesses |
24 |
24 |
- |
50 |
|
CLT-UFA International |
69 |
67 |
3.0 |
143 |
|
|
|
|
|
|
|
EBITA |
63 |
43 |
46.5 |
89 |
|
Of which: |
49 |
37 |
32.4 |
92 |
|
Sportfive |
5 |
5 |
- |
18 |
|
Other content businesses |
- |
- |
- |
(3) |
|
CLT-UFA International |
9 |
1 |
>100.0 |
(18) |
|
|
|
|
|
|
|
Adjustments for: |
|
|
|
|
|
One-off items |
(20) |
- |
n.a. |
(6) |
|
|
|
|
|
|
|
Reported Content EBITA |
43 |
43 |
- |
83 |
Content revenue was slightly up at EUR 608 million, from EUR 586 million in 2002. Reported EBITA was stable at EUR 43 million despite further one-off impairments in 2003 against the distribution rights of both FremantleMedia and CUI totalling EUR 17 million.
The underlying results of FremantleMedia reflect the outstanding success and roll out of the“Pop Idol” format around the world, including at RTL Group stations in Germany, Belgium, France and the Netherlands. Despite the continued harsh environment for production businesses and the one-off impairment, FremantleMedia maintained stable EBITA results. European markets are weak, due to the cutbacks by broadcasters in programme budgets and pressure on production margins. A compensating factor has been the growth in FremantleMedias’ US business. Spin-off shows such as “MIT” in the UK and “American Juniors” in the US have also been successfully launched.
Sportfive was affected by continued price pressure on sport rights as well as seasonality effects. RTL Group’s share of the Sportfive results is under IFRS. Sportfive, which is listed on the Paris Stock exchange, will shortly report its own results under local GAAP.
Radio
| Revenue in EUR million |
6 months to |
6 months to |
Per cent |
Year to |
| France |
101 |
92 |
9.8 |
199 |
| Germany |
6 |
7 |
(14.3) |
13 |
| Netherlands |
3 |
4 |
(25.0) |
9 |
| Belgium |
7 |
6 |
16.7 |
12 |
| Total Radio |
117 |
109 |
7.3 |
233 |
| EBITA EUR million |
6 months to |
6 months to |
Per cent |
Year to |
| France |
18 |
14 |
28.6 |
32 |
| Germany |
4 |
1 |
>100.0 |
1 |
| Netherlands |
(1) |
1 |
n.a. |
3 |
| Belgium |
4 |
2 |
100.0 |
5 |
| Reported Radio EBITA |
25 |
18 |
38.9 |
41 |
RTL Group’s radio revenue increased by 7.3 per cent to EUR 117 million with EBITA increasing to EUR 25 million. This is primarily due to the excellent results achieved in France by both the main RTL station and Fun Radio.
RTL Radio maintained its market leadership position as number one commercial station with an audience share of 11.5 per cent8, - a lead of 3.7 points over its nearest commercial rival. RTL Group’s other French radio stations, RTL2 and Fun Radio, maintained relatively stable audience shares at 2.6 per cent and 3.6 per cent respectively.
In Germany, RTL radio continued to consolidate and integrate the businesses acquired last year from Holtzbrinck, and started to implement a strategy based on regional focus and formats.
In the Netherlands, we were successful in obtaining two radio licences – one renews the licence and extends the reach of Yorin FM with a second new licence obtained at the same time. The new formats will be officially launched during the autumn.
Goodwill amortisation / impairment
The underlying goodwill amortisation charge on 30 June 2003 was EUR 108 million (EUR 115 million on 30 June 2002). In addition, RTL Group recorded a goodwill impairment of EUR 35 million against the carrying value of its transmission businesses following the loss of customers in the first half of 2003.
Interest /Financial results other than interest
The net interest expense in the first six months of 2003 was EUR 21 million. This included interest charges on certain rights acquisitions as well as interest income on tax receivables.
The financial results other than interest include a write-down of EUR 4 million on the 5 per cent holding of RTL Group in the Spanish Pay-TV operator Via Digital. This holding has been swapped against Sogecable shares in July and then sold on the market.
Net debt / cash position
| In EUR million |
30 June |
31 December |
| Gross balance sheet debt |
1,084 |
1,274 |
| Less: Loans receivable 9 |
(193) |
(201) |
| Adjusted gross financial debt |
891 |
1,073 |
| Less: cash and cash equivalents |
(272) |
(269) |
| Less: marketable securities |
(39) |
(49) |
| (Net debt) / cash position |
(580) |
(755) |
The net debt position decreased from EUR 755 million to EUR 580 million, due primarily to strong cash conversion, limited investments and tax reimbursements. EBITA to operating cash conversion was 116 per cent, reflecting the continued tight management of working capital and investments in property, plant and equipment and the monetisation of the non-current programme rights. The cash used for acquisitions was EUR 15 million, mainly for the purchase of M6 shares. The financing cash flow comprises the dividend payment by RTL Group in respect of 2002 of EUR 0.7 per share, or EUR 107 million.
6 RTL II is equity accounted for
7 shoppers, 18-49, 18:00 – 24:00
8 Mediametrie figures 15 July 2003
9 Loans receivable relate to the Five and TPS (via M6) financing