Quarterly Statement as of September 30, 2017

Transcription

1 Quarterly Statement as of September 30,

2 Group Key Figures in millions Q3/2017 Q3/2016 Change 9M/2017 9M/2016 Change Group Segments 3) Revenues Liquidity and financial position Share-related key figures 7) Average number of employees 15,879 15, % 15,745 15, % No audit review was carried out with regard to the financial information contained in the Quarterly Statement. 1) Based on the operating business (without the segment Services/Holding). 2) Explanations with respect to the relevant key performance indicators on page 35 of the Annual Report ) Adaption of segment names to Classifieds Media (Classified Ad Models), News Media (Paid Models) and Marketing Media (Marketing Models), cf. page 4. 4) Referring to the new headquarter building in Berlin as well as to the sale of the office building complex in Hamburg. 5) Capital expenditures on intangible assets, property, plant and equipment, and investment property. 6) As of September 30, 2017 and December 31, 2016, respectively. 7) Quotations based on XETRA closing prices. 8) Calculation based on average weighted shares outstanding in the reporting period (107.9 million; PY: million). 9) Based on shares outstanding as of September 30, 2017, excluding treasury shares (107.9 million; PY: million).

3 Business performance and position of the Group At a glance Development of revenues and earnings Axel Springer looks back on a very successful nine months of During the reporting period, total revenues of 2,554.7 million were 7.0 % higher than the figure for the prior year. Adjusted for consolidation and currency effects, they increased by 5.7 %. Once again, growth was driven particularly by our digital Classifieds Media. EBITDA exceeded the previous year s figure of million ( million) by 13.0 %. A significant increase in the Classifieds Media and News Media segments compensated for the fall in revenue in the other two segments. At million, the EBIT was 12.5 % above the prior-year value ( million). The adjusted earnings per share increased by 16.1 % to 1.98 (PY: 1.71). Based on the development in the third quarter we continue to maintain our forecast for the whole year 2017 unchanged, which we have increased for EBITDA, EBIT and adjusted earnings per share with the publication of the interim results. Outlook for 2017 For the 2017 fiscal year, we expect Group revenues to increase by an amount in the mid single-digit percentage range. We assume that the planned increase in advertising revenues will overcompensate the slight decline in circulation revenues and the decline in other revenues. For EBITDA, we expect to see an increase in the high single-digit percentage range since the interim results were reported, after an increase in the medium to high single-digit percentage range had been anticipated. An increase in EBITDA in the Classifieds Media and Marketing Media segment is expected, while earnings in the News Media segment are expected to be roughly on par with the prior-year level. For the Services/Holding segment an EBITDA below the prior-year level is expected. For EBIT, we expect an increase in the medium to high single-digit percentage range due to higher depreciation, amortization and impairments, after an increase in the mid single-digit percentage range had been anticipated. For the adjusted earnings per share we also expect an increase in the high single-digit-percentage range, after an increase in the medium to high single-digit percentage range had been anticipated. Business performance In January 2017, the Awin Group (formerly zanox Group) in which Axel Springer holds a majority stake, acquired 100 % of the shares in ShareASale, a leading affiliate network in the US. The preliminary acquisition costs amounted to 44.0 million and in addition to the purchase price paid in the financial year, included an earnings performance-related contingent purchase price liability of 9.5 million. In June 2017, Axel Springer Digital Classifieds France signed a purchase agreement with the French media holding Spir Communication SA ( Spir ) for the acquisition of the Spir subsidiary Concept Multimédia for a purchase price of 105 million in consideration of purchase price adjustments still to be determined depending on the net debt and net current assets. The transaction continues to be subject to approval by the French cartel authority. In particular, Concept Multimédia, headquartered in Aixen-Provence and Paris, runs under the core brand of Logic-Immo.com a real estate portal in France as well as additional online portals for luxury real estate and new builds. Logic-Immo.com reached 2.9 million users in January In July 2017 we signed contracts for the sale of the new building Axel-Springer-Neubau in Berlin, which is currently under construction and the Axel-Springer- Passage for a sales price in the amount of 755 million. The sale of the Axel-Springer-Passage, which opened in 2004, is expected to be completed by the end of 2017 with payment of the purchase price of 330 million (prior to tax payments of approx. 85 million) and the handover of the building (residual book value around 2

4 135 million). Blackstone Real Estate Partners Europe V and QUINCAP Investment Partners will become the new owners. Even after the execution of sale, we shall use a major part of the Passage as a tenant until the end of The sale of the Axel Springer new building is subject to the completion of the construction project (total capital expenditures of around 300 million). The purchase price is 425 million (prior to tax payments of 30 million). The sale is expected to be executed by the end of Axel Springer will lease the new building from 2020 on a long-term lease. In September, Axel Springer announced the repositioning of their media brand publishing structure (among others BILD, WELT) and the marketing and sales activities in the German market. In order to make even better use of the different potential of print and digital offerings, two separate publishing areas are created to which the respective brands and teams are assigned. For this purpose, the digital activities of the media brands are bundled with digital marketing within Media Impact, customer service and IT on the one hand, and print offers including print marketing, distribution and printing plants on the other. The reorganization is related exclusively to the publishing areas; the editorial offices shall continue to work fully integrated via all channels digital, TV and print. With effect from October 1, 2017, Axel Springer and United Internet have merged their companies Awin and affilinet to build a joint affiliate network and strengthen their competitive position in the affiliate marketing sector. After the contribution of 100 % of the affilinet shares by United Internet to AWIN AG, United Internet holds 20 % of the Awin Group (including affilinet). Prior to this, Axel Springer took over, under an option agreement, the shares (47.5 %) in AWIN AG still held by the Swisscom Schweiz AG for a purchase price of 62.4 million. The consolidation of expertise, skills and reaches of Awin and affilinet allows for the expansion of new revenue models and creates the prerequisite for preparing a stock market launch of the company. Financial performance of the Group During the reporting period, revenues were 2,554.7 million and therefore 7.0 % above the prioryear figure ( 2,386.8 million). The revenue development is partly affected by consolidation effects, especially due to the consolidation of emarketer and Land & Leisure. Adjusted for consolidation and currency effects, Axel Springer reported an increase in revenues of 5.7 %. The digital share of revenues was 70.6 % (PY: 66.8 %). Organic revenue development for digital media is illustrated in the table below. Consolidation and currency effects have been adjusted. Revenue Development Digital Media, organic yoy 9M/2017 Q3/2017 Digital Media 11.7 % 13.6 % International revenues increased from 1,141.4 million by 10.3 % to 1,259.1 million and thus amounted to 49.3 % (PY: 47.8 %) of Axel Springer revenues. EBITDA rose compared to the prior year, by 13.0 % to million (PY: million). The EBITDA margin increased to 18.5 % (PY: 17.6 %). EBITDA for digital media increased by 24.4 % from million to million. Based on the operating business, the digital business share in EBITDA therefore amounted to 77.1 % (PY: 72.4 %). EBIT rose compared to the prior year, by 12.5 % to million (PY: million). 3

5 Net income developed as follows: Net Income millions 9M/2017 9M/2016 Change Net income % Net income, adjusted 1) % Adjusted net income 1) from continuing operations attributable to shareholders of % Earnings per share, adjusted (in ) 1) 2) % Earnings per share (in ) 2) % Financial performance of the operating segments We have changed the names of our segments to Classifieds Media (formerly Classified Ad Models), News Media (formerly Paid Models) and Marketing Media (formerly Marketing Models). The composition of the segments remains unchanged. Classifieds Media In the Classifieds Media segment all business models are summarized, which generate their revenues mainly in the online classified advertising. The segment is sub-divided into Jobs, Real Estate, and General/Other. Key Figures Classifieds Media millions 9M/2017 9M/2016 Change Revenues % 1) Explanations with respect to the relevant key performance indicators see page 35 of the Annual Report ) Calculation based on average weighted shares outstanding in the reporting period (107.9 million; PY: million). During the reporting period, the non-recurring effects included, among others, expenses relating to the Management Board remuneration program 2016 (LTIP) of 8.9 million (PY: 2.2 million) and other effects from business combinations of 7.5 million (PY: 11.7 million), primarily resulting from subsequent effects from purchase price allocations. In the previous year, non-recurring effects mainly included income from the sale or the contribution of business activities and real estate of million and were in particular related to the establishment of Ringier Axel Springer Schweiz AG, the sale of CarWale and the sale of the remaining part of the office building complex in Hamburg. Jobs % Real Estate % General/Other % EBITDA 1) % EBITDA margin 41.3 % 40.5 % 1) Segment EBITDA includes non-allocated costs of 6.8 million (PY: 5.0 million). 4

6 Revenues in the Classifieds Media segment increased compared the prior-year period by 15.5 % to million (PY: million). Alongside an operative improvement, particularly from job and real estate portals, consolidation effects primarily had an influence due to the incorporation of Land & Leisure in the General/Other sub-segment. Adjusted for consolidation and currency effects, the increase was 12.9 %. The currency effects mainly pertained to the job portal activities in the UK. The job portals achieved a sales increase of 15.3 %, adjusted for consolidation and currency effects the increase was 17.5 %. Once again, business in continental Europe primarily contributed to growth, but activities in the UK also slightly accelerated their growth. The real estate portals showed an increase of 6.8 %. Consolidation effects from the sale of software business at SeLoger in the previous year had an effect here. Adjusted for these effects, the growth was at 11.6 %. The strongest growth was recorded in the Immowelt Group. In the subsegment General/Other, the revenue increase was 28.1 %, primarily due to consolidation effects in group. Adjusted for consolidation and currency effects, revenues increased by 5.5 %. EBIT in the Classifieds Media segment increased by 15.6 % from million to million. Depreciation, amortization, impairments, and write-ups increased by 36.0 % to 36.1 million (PY: 26.6 million). Key Figures Classifieds Media 3 rd Quarter millions Q3/2017 Q3/2016 Change Revenues % Jobs % Real Estate % General/Other % EBITDA 1) % EBITDA margin 42.4 % 40.8 % EBITDA of the segment increased considerably by 17.7 % to million (PY: million). A significant part of this increase can be attributed to operational improvements in earnings. Adjusted for consolidation and currency effects, the increase was 15.4 %. The margin of 41.3 % was slightly above the prior year s value (40.5 %). The EBITDA for the job portals increased by 14.0 % compared to the prior year. As in the case of revenues, the increase is primarily attributable to business in continental Europe. Real estate portals recorded an EBITDA increase of 20.6 %, mainly due to improvements in earnings at the Immowelt Group. The sub-segment General/Other reported the highest EBITDA growth with 23.3 %, which is in particular attributable to consolidation effects in Group. Adjusted for consolidation and currency effects, the increase was 7.9 %. 1) Segment EBITDA includes non-allocated costs of 2.6 million (PY: 2.3 million). News Media The News Media segment mainly comprises the BILD and WELT Group in the national segment, and in the international area the content-driven and increasingly digital media offerings in Europe and the USA. 5

7 Key Figures News Media millions 9M/2017 9M/2016 Change Revenues 1, , % National % International % The national advertising revenues rose by 2.5 % in the first nine months supported by a BILD special edition in the second quarter for the 65 th anniversary of BILD with a circulation of 41 million that was distributed to almost all German households. In the third quarter, advertising revenues rose by as much as 7.3 %, conditioned by strong digital growth and a slight increase in print advertising revenues. The national circulation revenues, due to the general market environment, were 5.7 % below the prior-year value. Revenues in News Media International increased above all due to the initial consolidation of emarketer in the previous year by 17.4 % to million. Adjusted for consolidation and currency effects, they were 5.7 % above the prior-year value. While the development of digital offerings continued to be good, particularly for Business Insider, most of the print activities recorded declining revenues due to market conditions. The digital proportion of revenues from News Media International was 60.2 %. EBITDA % EBITDA margin 15.1 % 12.5 % At million, EBITDA was 23.2 % above the prior-year figure ( million). Both international and national businesses contributed to the significant increase in earnings, reinforced by the initial consolidation of emarketer in the previous year. Adjusted for consolidation and currency effects, the increase was still 15.1 %. Compared to the same period last year, the segment margin increased from 12.5 % to 15.1 %. Revenues in the News Media segment were 1,095.3 million which is 1.9 % above the prior-year value ( 1,075.1 million). The digital proportion of revenues was 32.5 %. At million, revenues in the News Media National were 2.7 % below the prior-year value. Here, the digital proportion of revenues is 22.7 %. EBIT in the News Media segment increased by 25.6 % from million to million. Depreciation, amortization, impairments, and write-ups increased by 12.0 % from 23.0 million to 25.7 million. 6

8 Key Figures News Media 3 rd Quarter Key Figures Marketing Media millions Q3/2017 Q3/2016 Change Revenues % millions 9M/2017 9M/2016 Change Revenues % Reach Based Marketing % National % Performance Marketing % EBITDA 1) % International % EBITDA margin 8.4 % 9.5 % EBITDA % EBITDA margin 14.7 % 13.9 % Marketing Media In the Marketing Media segment, idealo, aufeminin and the Bonial Group, among others, are pooled in the reach-based marketing segment, whereas performancebased marketing consists of the Awin Group (formerly zanox Group). 1) Segment EBITDA includes non-allocated costs of 6.6 million (PY: 5.8 million). Revenues in the Marketing Media segment increased by 9.6 % to million (PY: million). Adjusted for consolidation and currency effects, the increase was 11.8 %. Revenues in Reach Based Marketing increased by 10.4 % to million. Adjusted for consolidation and currency effects, which primarily resulted from the sale of Smarthouse Media in the prior year, growth was 13.5 %. Revenues in Performance Marketing increased by 9.3 % to million. This revenue growth was positively influenced by the initial consolidation of ShareASale since January This was partly offset by currency effects in respect of the British Pound in particular. Adjusted for consolidation and currency effects, growth was 11.0 %. 7

9 EBITDA in the segment of 56.3 million was slightly ( 2.8 %) below the prior-year value ( 57.9 million). In the third quarter, an increase of EBITDA by 39.6 % was achieved, among other things, as a result of an improvement in the development of idealo and aufeminin compared to the first half-year. In the reporting period the EBITDA margin in the segment was 8.4 % (PY: 9.5 %). EBIT in the Marketing Media segment decreased by 9.2 % from 47.5 million to 43.1 million. Depreciation, amortization, impairments, and write-ups increased in the reporting period by 26.2 % to 13.2 million (PY: 10.5 million). Services/Holding Group services, which also include the three domestic printing plants, as well as holding functions, are reported within the Services/Holding segment. The Group services are purchased by internal, Group-wide customers at standard market prices. Key Figures Services/Holding millions 9M/2017 9M/2016 Change Revenues % EBITDA Key Figures Marketing Media 3 rd Quarter millions Q3/2017 Q3/2016 Change Revenues % Revenues in the Services/Holding segment decreased by 20.1 % due to market conditions compared to the comparable prior-year period, and amounted to 44.6 million (PY: 55.8 million). Reach Based Marketing % Performance Marketing % EBITDA 1) % At 55.6 million, EBITDA was below the prior-year level ( 34.3 million). The reasons for this development were a number of factors, including higher stock option costs, lower revenues in the structurally declining printing plants business, increased capital expenditures in IT infrastructure and higher restructuring expenses. EBITDA margin 7.2 % 5.8 % EBIT in the Services/Holding segment was 80.6 million (PY: 61.5 million). Depreciation, amortization, impairments, and write-ups of 25.0 million were slightly below the prior-year value ( 27.2 million). Key Figures Services/Holding 3 rd Quarter 1) Segment EBITDA includes non-allocated costs of 2.2 million (PY: 2.3 million). millions Q3/2017 Q3/2016 Change Revenues % EBITDA

10 Financial position and liquidity Through the sale of the Axel Springer Passage to be completed by the end of the year, the carrying amounts of million (property, plant and equipment) and 29.8 million (investment property) were reclassified to the balance sheet item assets held for sale. Equity amounted to 2,503.3 million and was therefore below that of the year-end figure for 2016 ( 2,638.6 million). In addition to the dividend distribution to Axel Springer SE shareholders, the decrease resulted particularly from the currency translation of consolidated financial statements. In contrast to this, the consolidated net income generated had an increasing effect. The increase in non-current provisions and liabilities was, in particular, attributable to the increase in our financing volumes within the context of the reorganization of our promissory notes (Schuldschein) in May The reduction in current provisions and liabilities was mainly due to payments related to the exercise of option rights to acquire remaining non-controlling interests in Immoweb (14.5 % of 20.0 %), Onet (25 %) and Awin (47.5 %). Cash and cash equivalents increased to million (December 31, 2016: million). The optimization of the financing conditions of our existing Schuldschein by means of partial termination, transformation and new subscription in May 2017, resulted in an increase of financial liabilities to 1,476.0 million (December 31, 2016: 1,259.3 million). The net debt amounted to 1,225.2 million (December 31, 2016: 1,035.2 million). As of September 30, 2017, million (December 31, 2016: million) of the existing long-term credit facility ( 1,500.0 million) were utilized. Furthermore, there were promissory notes of 1,008.5 million (December 31, 2016: million). Cash flow from operating activities in the first nine months of the reporting period amounted to million and was therefore significantly above the amount for the prior-year period ( million). The development was due in particular to the positive development of operating results, higher payments from long-term compensation programs and restructuring programs in the previous year, as well as tax refunds received in the reporting period for previous years. Cash flow from investing activities amounted to million (PY: 8.7 million) and comprised in addition to the increased capital expenditures in intangible assets and property, plant and equipment, and in our new building in Berlin, mainly payments (less cash acquired) for the acquisition of shares of ShareASale and payments due to the exercise of option rights to acquire non-controlling interests in Immoweb and Onet. In the previous year, payments made in connection with the sale of the remaining part of the office building complex in Hamburg were included, as well as payments received from the early repayment of the vendor loan granted to FUNKE Mediengruppe, payments received in connection with the sale of 2.3 % of our shares in Do an TV Holding, and the purchase price (after deducting taxes) from the sale of our shares in CarWale. In contrast to this, there were capital expenditures in intangible assets and property, plant and equipment and payments (less cash acquired) for the acquisition of shares in consolidated subsidiaries and business units (mainly for emarketer and Land & Leisure) in the previous year. The cash flow from financing activities of 46.5 million (PY: million) was particularly attributed to the payment of the dividend to the shareholders of Axel Springer SE, payments due to the exercise of option rights to acquire the remaining non-controlling interests in AWIN AG, as well as the assumption of financial liabilities in connection with the reorganization of our promissory notes in May

11 New accounting standards In the reporting period, we have continued our impact analysis with respect to the new revenue recognition standard (IFRS 15). The general changes expected from IFRS 15 are described in our Annual Report 2016 on pages Our analysis particularly focused on contracts in which a principal-agent activity could lead to a new classification due to the specifications of the standard. Consequently, each identified separate performance obligation is to be assessed whether it is controlled prior to the transfer to the costumer. As supporting indicators for the assessment only the primary responsibility for the provision of the service, the inventory risk, and the competency for pricing are to be considered; a potentially existing default risk shall not be relevant. After having conducted a detailed contract analysis, we came to the conclusion that, taking into account the newly implemented control principle and the modified indicators, the contracts of our business model in the Performance Marketing division need to be accounted for as agent relationships starting from financial year 2018 onwards. As a result of these changes, consolidated revenues as well as purchased goods and services will decrease from January 1, 2018 onwards. On the basis of the existing contracts in the Performance Marketing sub-segment as of the reporting date (excluding the acquisition of affilinet which was completed on October 1, 2017), revenues in Performance Marketing will likely decrease by approximately 75 %. Our group key performance indicators EBITDA and EBIT as well as balance sheet presentation will not be effected. The group EBITDA margin and the EBITDA margin for the Marketing Media segment will improve accordingly. In addition, during the reporting period we undertook a Group-wide determination of the probable impact of the new lease accounting standard (IFRS 16). We plan an early application of the standard on January 1, The fundamental changes due to the future lease accounting are described on page 119 of the Annual Report Based on the lease conditions existing at the reporting date (including the effects of the lease-back agreed after the sale of the Axel-Springer-Passage), we currently assume that the change in the recognition of leasing expenses will lead to an increase of Group EBITDA 2018 by approx. 60 to 65 million and Group EBIT 2018 by approx. 5 to 10 million. The increase in Group EBITDA 2018 is expected to be distributed across the operating segments as follows: News Media (approx. 35 %), Classifieds Media (approx. 30 %), Marketing Media (approx. 20 %). Taking into account the interest expenses to be recognized in the financial result from the compounding of the lease liabilities, this results in a negative effect on the consolidated net income 2018 in the low single-digit million-euro range. Net debt is expected to increase by approximately 235 to 255 million as a result of recognizing lease liabilities in At the same time, the free cash flow will increase by around 50 to 60 million in 2018, due to the future recognition of lease payments in cash flow from financing activities. Explanations with respect to the relevant key performance indicators In accordance with the International Financial Reporting Standards (IFRS), the performance indicators used in this Quarterly Statement, EBITDA (earnings before interest, taxes, depreciation, and amortization), EBITDA margin, EBIT (earnings before interest and taxes), adjusted net income, adjusted earnings per share, free cash flow, net debt / liquidity and equity ratio are undefined performance indicators to be regarded as additional information. The definitions in the 2016 Annual Report on page 35 apply unchanged. 10

12 Consolidated Statement of Financial Position millions ASSETS 09/30/ /31/2016 Non-current assets 5, ,393.0 Current assets 1, ,063.2 Total assets 6, ,

13 millions EQUITY AND LIABILITIES 09/30/ /31/2016 Equity 2, ,638.6 Non-current provisions and liabilities 2, ,427.2 Current provisions and liabilities 1, ,390.4 Total equity and liabilities 6, ,

14 Consolidated Income Statement millions Consolidated Income Statement Q3/2017 Q3/2016 9M/2017 9M/2016 Net income Basic/diluted earnings per share (in )

15 Consolidated Statement of Cash Flows millions 9M/2017 9M/2016 Net income Cash flow from operating activities Cash flow from investing activities Cash flow from financing activities Cash flow-related changes in cash and cash equivalents Cash and cash equivalents at end of period

16 Consolidated Segment Report Operating segments Classifieds Media 1) News Media 1) Marketing Media 1) Services/Holding Consolidated totals millions Q3/2017 Q3/2016 Q3/2017 Q3/2016 Q3/2017 Q3/2016 Q3/2017 Q3/2016 Q3/2017 Q3/2016 Revenues EBITDA 2) EBITDA margin 2) 42.4% 40.8% 14.7% 13.9% 7.2% 5.8% 18.2% 18.2% EBIT 3) Net income ) For a description of the segments, see page 4 of the quarterly statement. 2) Adjusted for non-recurring effects (see Annual Report 2016 p. 35). 3) Adjusted for non-recurring effects and amortization and impairments from purchase price allocations (see Annual Report 2016 p. 35). Geographical information Germany Other countries Consolidated totals millions Q3/2017 Q3/2016 Q3/2017 Q3/2016 Q3/2017 Q3/

17 Operating segments Classifieds Media 1) News Media 1) Marketing Media 1) Services/Holding Consolidated totals millions 9M/2017 9M/2016 9M/2017 9M/2016 9M/2017 9M/2016 9M/2017 9M/2016 9M/2017 9M/2016 Revenues , , , ,386.8 EBITDA 2) EBITDA margin 2) 41.3% 40.5% 15.1% 12.5% 8.4% 9.5% 18.5% 17.6% EBIT 3) Net income ) For a description of the segments, see page 4 of the quarterly statement. 2) Adjusted for non-recurring effects (see Annual Report 2016 p. 35). 3) Adjusted for non-recurring effects and amortization and impairments from purchase price allocations (see Annual Report 2016 p. 35). Geographical information Germany Other countries Consolidated totals millions 9M/2017 9M/2016 9M/2017 9M/2016 9M/2017 9M/

18 Additional Information Financial calendar 2018 Contacts Additional information about is available on the Internet at The quarterly statement is also available in the original German. 17