The power of television

Transcription

1 The power of television Capital Markets Day October 13, 2016 Financials Dr. Gunnar Wiedenfels

2 We have made significant progress since last year s Capital Markets Day Revenue growth 1) Rec. EBITDA increase 1) Underlying net income growth 1) +16% +9% +7% DAX inclusion Strong growth of acquired assets 2) Dividends paid Dividend Yield: 4.6% 3) March 2016 >+50% EUR 386m 1) H LTM vs. LTM H (Group) 2) Weighted average CAGR of acquisitions announced since August 2015 including Verivox (August 2015), Etraveli (November 2015), CDS (August 2015), Virtual Minds (September 2015), Smartstream (September 2015), Karga7 (November 2015) and Dorsey Pictures (January 2016) 3) Dividend yield based on share price of EUR on June 30, 2016 (AGM) 2

3 We maintained a superior margin profile while establishing a dynamically growing digital business with limited M&A spend EBITDA margin 1) Digital Entertainment, Digital Ventures & Commerce revenues, M&A spend 35% [in %] 2,000 [in EUR m] 30% 1,500 25% 20% 12%pts 1,000 15% % ProSiebenSat.1 Media Group European FTA Broadcasters (average) E 2017E 2018 target Combined revenues Digital Entertainment, Digital Ventures & Commerce M&A spend Digital Entertainment, Digital Ventures & Commerce Strong margin expansion achieved between 2009 and 2011 and lead maintained Build-up of digital portfolio with limited M&A spend between 2010 and 2014/15 Continued strong digital growth targeted organically and from recent larger acquisitions 1) Based on recurring EBITDA for ProSiebenSat.1 Media SE as reported including discontinued operations, peer group margin equally weighted 3

4 Changing business mix affects margin profile but drives profit growth 3,750 Group LTM revenues CAGR +10% [in EUR m] [in EUR m, %] 1,000 Group LTM rec. EBITDA/rec. EBITDA margin 40% CAGR +7% Mix effect 35% 3,250 2,750 2,250 1, Revenues Recurring EBITDA (left scale) Recurring EBITDA margin (right scale) 30% 25% 20% 15% 10% 5% 0% Continuing operations 4

5 We have substantially increased earnings and dividend while maintaining financial leverage within target range Underlying net income, dividend Financial leverage [in EUR m] [net debt/recurring EBITDA] CAGR 1) +14%/+12% 380 ~290 2) x 2.5x 2.0x 1.5x x x x Underlying net income Dividend payment Upper end (2.5x) Financial leverage Lower end (1.5x) 1) Underlying net income CAGR %, dividend CAGR % 2) Normalized dividend estimate based on average dividend pay-out ratio of c. 82%, actual dividend payout of EUR 1,201.4m included disposal related dividend increase 5

6 At the same time, we have successfully diversified our revenue base and will continue to do so 2012 H LTM 2018 target [in %] [in %] [in %] 23% 43% 57% >50% <50% 77% TV advertising revenues Revenues outside traditional TV ad revenues Continuing operations 6

7 Inter-company collaboration and realization of synergies drives future growth and profitability of all business segments of the Group Increasing share of TV content produced by Red Arrow Digital content production Delivering audience share and net reach Increasing available TV ad inventory Addressable TV ad opportunity External TV ad revenue growth Maintaining high degree of program efficiency Red Arrow Broadcasting Investments in TV channels, program, TV advertising technology and HbbTV Distribution business Digital Entertainment and Ventures & Commerce activities Channel launches drive HD/mobile/OTT distribution revenue growth Strong and sustainable support for Broadcasting profitability Utilization of TV ad inventory Accelerated growth of Digital Entertainment and Ventures & Commerce assets Elimination of marketing costs drives Group profits Cash flows from new assets support content investments in Broadcasting business 7

8 TV synergies at work +32% Revenue growth after acquisition 1) External marketing spend as percentage of revenues after acquisition 2) -11%pts 1) CAGR LTM at closing H LTM 2) External marketing costs excluding internal TV advertising costs H LTM vs. LTM before closing 8

9 TV synergies, accelerated revenue growth and operating leverage drive profitability of acquired assets 18% External recurring EBITDA margin improvement in first year after acquisition and respective invested capital allocation 16% +15%pts 14% 12% 10% 8% +11%pts +10%pts 6% +5%pts 4% 2% 0% Digital Ventures & Commerce Digital Entertainment Content Production & Global Sales ProSiebenSat.1 Group Share of invested capital 63% 27% 10% 100% Note: Slide shows assets with at least one-year ownership period as per H1 2016; total invested capital of EUR 586m, Etraveli acquisition not included as only acquired in December ) External recurring EBITDA margin improvement excluding internal TV advertising costs 9

10 M&A has already delivered superior FCF ROIs with strong evidence for further improvement 10% 8% 6% 4% FCF/dividend yield 1), FCF ROI 2) Revenue CAGRs since acquisition by asset/digital vertical [in %] [in %] [in %] ~6% ~5% >8% Red Arrow Lifestyle Commerce AdVoD +79% +75% +71% 16% 14% 12% 10% FCF ROI of assets at least two years in the portfolio 3) 8% 6% ~10% ~15% 2% Online Travel +54% 4% 0% P7S1 FCF yield 2016E P7S1 dividend yield 2016E FCF ROI M&A 2016E Online Price Comparison +36% 0% 50% 100% 2% 0% FCF ROI 1st year after acquisition FCF ROI 2nd year after acquisition 1) Source: Bloomberg consensus estimates as of October 6, ) FCF-ROI calculated as proportional FCF 2016 estimate (proportional to ownership share) divided by invested cash to date based on active portfolio (incl. IC loans and capital increases), excluding Games (deconsolidated end of Q2 2016). FCF as external FCF excluding internal TV media expenses, as per 2016 estimates (Red Arrow entities/smartstream FCF on entity basis) 3) Relates to total invested capital of EUR 201m for assets which have been in the portfolio for at least two years 10

11 We increase our 2018 Group revenue and recurring EBITDA growth target by EUR 300m and EUR 50m, respectively Actuals Current target New target [in EUR m] Δ CAGR Δ CAGR Revenues Group 2,356 4,206 +1, % 4,506 +2, % Broadcasting German-speaking 1,926 2, % 2, % thereof Distribution % % Digital & Adjacent 335 1,535 +1, % 1,735 +1, % Digital Entertainment 227./../../ % Digital Ventures & Commerce 108./../../. 1,172 +1, % Content Production & Global Sales % % Recurring EBITDA Group 745 1, % 1, % 11

12 We have established a well-diversified Digital Entertainment, Ventures and Commerce portfolio Digital Entertainment Digital Ventures & Commerce [H LTM revenues in EUR m] [H LTM revenues in EUR m] H LTM (reported) H LTM (pro forma including 2016 M&A and Games deconsolidation) AdVoD maxdome Online Games Adjacent 1) 0 LTM H (reported) Online Travel Online Dating SevenVentures H LTM (pro forma 2) including 2016 M&A) Online Price Comparison Lifestyle Commerce 1) Pro-forma revenues adjusted for Online Games disposal as well as remaining consolidation effects from acquisition of CDS, Virtual Minds and Smartstream 2) Pro-forma revenues including Parship Elite Group, Windstar and Stylight acquisition as well as remaining consolidation effects from acquisition of Verivox and Etraveli 12

13 Targeted revenue split and margin levels of our Digital Entertainment and Digital Ventures & Commerce segments [in EUR m] Pro-forma revenues H LTM Targeted rev. CAGR H LTM-2018 Rec. EBITDA margin target range 2018 AdVoD % 10-15% PayVoD % single-digit Adjacent % >25% Digital Entertainment segment 1) % 10-15% Online Travel % 15-20% Online Price Comparison % 20-30% Online Dating % 25-30% Lifestyle Commerce % 5-15% SevenVentures % >50% Digital Ventures & Commerce segment 2) % 20-25% 1) Pro-forma revenues adjusted for Online Games disposal as well as remaining consolidation effects from acquisition of CDS, Virtual Minds and Smartstream 2) Pro-forma revenues including Parship Elite Group, Windstar and Stylight acquisition as well as remaining consolidation effects from acquisition of Verivox and Etraveli 13

14 Today s low profitable or loss-making digital assets will turn into profit contributors Pro-forma revenues H LTM Targeted CAGR until 2018 Mid-term rec. EBITDA margin potential Main drivers of profitability maxdome (PayVoD) Studio71 global 1) (part of AdVoD) Beauty & Accessories (part of Lifestyle Commerce) % 5-15% % 5-10% % 5-15% Utilization of B2B distribution deals Exploitation of concept sales potential Investment in own IP through strong synergies with Red Arrow and TV Internationalization Broadened revenue streams Further branded entertainment sales Growth of premium content ownership Scale and operating leverage Expansion of product categories Further improvement of KPIs through efficiency measures More than EUR 250m revenues today without profit contribution planned to be profitable by ) Including remaining consolidation effects from acquisition of CDS 14

15 Our TV advertising outlook and new financial targets are supported by a sound macro-economic environment in Germany German unemployment rate continues to improve Steady increase in private consumption in Germany TV ad market forecast appears well based given German macro 13% 450 5% 12% 11% 400 4% +4.1% 10% 3% +2.2% +2-3% 9% 8% 7% 6% 5% % 1% 0% +1.4% +0.4% +0.3% +1.6% +1.8% +1.3% +1.5% E 2017E 2018E 4% Unemployment rate Germany in % Private consumption Germany in EUR bn German GDP growth Lower end German TV ad market estimate German TV ad market growth estimate Upper end German TV ad market estimate Source: Bloomberg, ZAW (German TV ad market growth ), ProSiebenSat.1 (German TV ad market growth estimate 2016E-2018E) 15

16 Summary of 2018 financial targets and financial policies Group revenues EUR 4,506m (+EUR 2,150m vs. 2012) Group rec. EBITDA EUR 1,145m (+EUR 400m vs. 2012) Underlying net income/fcf growth Dividend pay-out ratio Financial leverage target range High single-digit CAGR % of underlying net income x net debt/rec. EBITDA 1) Acquisition strategy Bolt-on and media investments 1) Financial leverage target range is for year-end, intra-year financial leverage may differ due to seasonality 16

17 Our financial profile creates potential to deleverage or acquire further assets in the amount of EUR m per annum Net debt, recurring EBITDA Annual debt financing headroom at maintained financial leverage based on: Rec. EBITDA increase of existing operations FCF not distributed as dividend (based on prior year s underlying net income) Acquired rec. EBITDA Revenues and cost synergies from acquired assets Less payments of up to ~EUR 40m p.a. for put option/earn-out liabilities by 2018 [in EUR m] 3,000 2,500 2,000 1,500 1,000 1,400 1,200 1, EUR m p.a Financial leverage (net debt/recurring EBITDA) 1) 2.0x 1.8x 1.8x 2.1x ~2.5x ~2.2x ~2.0x E 2017E 2018E Net financial debt (left scale) Recurring EBITDA (right scale) 1) 2017E and 2018E financial leverage based on mid-term recurring EBITDA target to 2018, 17

18 We will continue to target above-average total shareholder return based on strong EPS growth and attractive dividend yield EPS growth, dividend yield 20% 15% 10% 5% 11% 4% 13% 3% 10% 17% 5% 12% Total shareholder return 1) of >+25% p.a. since 2012 We target continued highsingle-digit EPS growth and further attractive dividend payments by % 0% EPS growth Dividend yield Continuing operations 1) Based on Bloomberg TSR calculation, dividends reinvested in security, December 28, 2012 to October 6,

19 We confirm our overall positive outlook for 2016 Group revenue growth to exceed +15% (previous target +10%) German TV ad market to grow 2% plus in 2016 P7S1 TV ad revenue growth slightly below market Digital Entertainment and Digital Ventures & Commerce with double-digit revenue growth Recurring EBITDA & underlying net income above prior year 19

20 Equity story in a nutshell P7S1 is delivering substantial transformation along with strong financial KPIs Revenue and earnings growth is driven by strong execution in all segments P7S1 is set to create substantial value from M&A due to tangible synergies Idle TV ad inventory allows for strong cash-free marketing support of digital assets We target further strong growth of revenues, rec. EBITDA, net income and dividends As a result, P7S1 targets 10-15% total return 1) while maintaining its financial policies 1) Total of EPS growth and dividend yield 20