PRESS INFORMATION



 
 


 

RTL Group announces its pro forma preliminary results to December 2000

RTL Group, Europe’s leading broadcaster and content provider, announces its pro forma preliminary results (unaudited) to 31 December 2000 [1]


EUR
Pro forma year

to 31 Dec 2000

Pro forma year

to 31 Dec 1999

Change

Revenue [2]
4,044 m
3,539 m
+14.3%

EBITA [3]
555 m
429 m
+29.4%

EBITA margin
13.7%
12.1%
+13.2%

Net result
67 m
170 m
-60.6%

Diluted Earnings per Share
0.42
1.08
-60.6%

Diluted Adjusted earnings per share
1.87
1.67
+12.0%

Dividend per Share
0.85
0.75
+13.3%

Financial Highlights

· Double digit revenue growth, up 14.3% to EUR 4,044 million (1999: EUR 3,539 million);

· EBITA up 29.4% to EUR 555 million (1999: EUR 429 million) driven by strong EBITA growth in TV (up 50.0%);

· EBITA, stripping out new media activities, up 38.0% to EUR 592 million;

· TV EBITA margin up to 14.3% (1999: 11.3%); radio EBITA margin up to 30.7% (1999: 25.2%);

· Full year dividend of EUR 0.85, up 13.3% .

Footnote 1: The unaudited pro forma financial information has been prepared using consistent Group accounting policies, to illustrate the effects on the profit and loss account and balance sheet of RTL Group, of combining CLT-UFA and Pearson Television into RTL Group. For the purpose of the pro forma financial information the combination is assumed to have occurred on 1 January 1999. The pro forma results for 2000 are based on a full 12 months’ trading for all those companies that became part of RTL Group as at the lisiting in London in July 2000. The 1999 comparatives are based on the pro forma financial information included in the Company’s Listing Particulars dated 24 July 2000, restated to reflect specific changes in the basis of preparation as set out on pages 14 and 15.

Footnote 2: This does not include the revenues of RTLII in Germany, RTL Klub in Hungary, Groupe Jean-Claude Darmon and RTL 9 in France, all of which are at equity consolidated, nor the revenues of the Group’s investment in Antena 3 which is not consolidated.

Footnote 3: EBITA represents earnings before interest, financial results other than interest, income tax expense, amortisation of goodwill and gain or loss from sale of subsidiaries, joint-ventures and other investments.

Operational highlights

· Significant contribution of established TV operations: EBITA margin of RTL Television in Germany up to 17.2% from 14.0%; EBITA margin of M6 in France up to 25.3% from 20.6%;

· Improvement of newer TV broadcasters Channel 5, VOX, RTL Klub;

· Further consolidation of interests in RTL Television (100%), VOX (99.7%), M6 (43.8%), Holland Media Group HMG (100%), Channel 5 (64.6%) and Antena 3 (17.2%);

· Well-positioned for content growth: increased investments in new formats and programmes and acquisition of award-winning Talkback Productions;

· Success in new media: prudent investments, leveraging existing strengths to drive page impressions to 270 million per month (up 700%).

· RTL NEWMEDIA prepares entry to interactive TV.

Didier Bellens, Chief Executive Officer (CEO) of RTL Group, said: "RTL Group has had a successful year, especially in our key broadcasting businesses in Germany and France. We have grown our operations, controlled our costs and increased our margins, and we believe we are better placed than most of our competitors to withstand the current uncertainties in advertising markets around Europe.

Combined with the effects of restructuring Pearson Television North America and a decrease in the audience of RTL Radio in France, market conditions at present lead us to expect a comparatively flat earnings performance in 2001.

Nevertheless, we will continue to build brands and audiences and identify opportunities in new markets. We have further room to explore synergies, not only between content and broadcasting, but also between territories and between businesses, and we will continue to build our new media enterprises in support of our main activities. We are confident that our core businesses remain strong and well positioned for future growth."

A meeting will be held for analysts and investors at 09.15h London time on Wednesday, March 21, 2001, at Pearson Television, Stephen Street, London W1. This meeting will be webcast live and can be accessed through RTL Group’s website, www.rtlgroup.com, and Finsbury’s website, www.finsbury.com.

Enquiries:


Media:

Media and investors:

RTL Group

Finsbury - Tel: +44 (0) 20 7251 3801

Roy Addison - Tel: +44 (0) 20 7691 6830

Markus Payer - Tel: +352 421 425 130


Rollo Head

Julius Duncan

Financial Review


Revenue

In EUR million

Year to

December 2000

Year to

December 1999

Per cent

Change


Television
2,862
2,397
+19.4%

Content
1,090
1,036
+5.2%

Radio
244
234
+4.3%

New Media
38
0
NA

Other
101
90
+12.2%

Eliminations
-291
-218
NA

Total
4,044
3,539
14.3%


EBITA

In EUR million

Year to

December 2000

Year to

December 1999

Per cent

Change


Television
408
272
+50.0%

Content
126
125
+0.8%

Radio
75
59
+27.1%

New Media
-37
0
NA

Other
-9
-15
+40.0%

Eliminations
-8
-12
NA

Total
555
429
29.4%

RTL Group’s revenues reached a record level of EUR 4,044 million in 2000, up 14.3% compared to EUR 3,539 million for the previous year. Underlying revenue growth, stripping out the effect of portfolio changes (mainly VOX and Talkback), was 6.4% year-on-year.

EBITA increased by 29.4% to EUR 555 million. The EBITA margin (EBITA to revenues) over the year improved to 13.7%, compared with 12.1% in 1999.

These results were driven by strong performances in the established TV businesses and by the reduction of the losses incurred in newer channels VOX, Channel 5 and RTL Klub. German and French TV contributed 51.6% of RTL Group’s revenues and 66.3% of the EBITA.

Radio continued to deliver strong EBITA margins with our key French operations delivering margins over 30%. The members of the French radio family RTL, RTL2 and FUN Radio each increased their revenues and EBITA.

Revenues in the content business grew 5.2% to EUR 1,090 million. EBITA was flat at EUR 126 million. The EBITA margin in the content segment was 11.6% compared to 12.1% in the previous year. Earnings were impacted primarily by increased costs for the creation of new formats at Pearson TV and also by geographic expansion of production into Poland, India and Indonesia. The production business benefited from the acquisition of the worldwide rights to the US gameshow format, Greed, in the second quarter of 2000. Within eight months, we were producing Greed in 13 different territories.

In new media, our strategy of leveraging the strong existing businesses in the Group while keeping investments to prudent levels paid off. The Group experienced an outstanding success in terms of audience reach with nearly 4 million unique visitors in January 2001. Total revenue was EUR 38 million with EBITA loss of EUR 37 million.

Group operating costs increased from EUR 3,182 million to EUR 3,623 million, up 13.9%, due primarily to the first time consolidation of VOX and Talkback; underlying increase in costs was 5.6%.

The gain or loss from sale of subsidiaries, joint-ventures and other investments decreased significantly compared to 1999 when CLT-UFA benefited from the sale of its 45% stake in German pay-TV channel Premiere.

Net interest expense reflects the shift from a net cash to a net debt position resulting primarily from acquisitions made in 2000. The net cash position at the beginning of 2000 was EUR 393 million while the net debt position at the end of 2000 was EUR 791 million.

Tax expense decreased to EUR 218 million, with an effective tax rate of 41.8% on operating income.

Net profit for the year decreased to EUR 67 million from EUR 170 million due to the effect of the Premiere sale in 1999 which was EUR 227 million after tax. This was partially offset by an increase of profitability of the business.

Diluted earnings per share were EUR 0.42 (1999: EUR 1.08) and adjusted earnings per share [4] EUR 1.87 (1999: EUR 1.67). The proposed dividend is EUR 0.85 per share, in addition to the pre-merger one-time dividend of 0.45 per share approved by the Board of Directors on July 25, 2000.

[4] Adjusted earnings per share represent net earnings adjusted for amortisation of goodwill and gain or loss from sale of subsidiaries, joint-ventures and other investments, net of tax.

Operational Review

1. Television


Revenue

In EUR million

Year to

December 2000

Year to

December 1999

Per cent

Change


Germany
1,715
1,404
+22%

- RTL Television
1,475
1,342
+10%

- VOX
175
0
NA

- Super-RTL
45
40
+13%

- Other
20
22
-9%

France
370
302
+23%

- M6
320
253
+26%

- VCF
50
49
+2%

Netherlands
334
320
+4%

- HMG
334
320
+4%

United Kingdom
307
255
+20%

- Channel 5
234
190
+23%

- P TV Broadcasting
73
65
+12%

Others
136
116
+17%

Television
2,862
2,397
+19%


EBITA

In EUR million

Year to

December 2000

Year to

December 1999

Per cent

Change


Germany
285
198
44%

- RTL Television
254
188
35%

- RTLII
29
10
190%

- VOX
-3
-5
40%

- Super-RTL
3
2
50%

- Other
2
3
-33%

France
83
55
51%

- M6
81
52
56%

- RTL9
1
1
0%

- VCF
1
2
-50%

Netherlands
28
20
40%

- HMG
28
20
40%

United Kingdom
3
-3
NA

- Channel 5
-6
-10
40%

- P TV Broadcasting
9
7
29%

Others
9
2
350%

Television
408
272
50%

RTL Group’s television business was the largest contributor to revenues thanks to its market leading channel brands and favourable advertising markets. Revenues in the television business grew by 19.4%; stripping out the contribution of VOX, growth was 12.1%. This growth was fuelled by strong performances at RTL Television, M6 and Channel 5. RTL Group’s TV stations continued to control costs tightly and developed greater cooperation both domestically and across borders.

RTL Television, the RTL flagship channel in Germany, was market leader for the eighth consecutive year in the important 14-49 age category with an audience share of 17.3%. This was well ahead of its nearest rivals, despite the positive influence of the Olympic Games and the Euro 2000 football championship on public television audience share. With its broad range of quality programmes, RTL dominated the top 100 list of most widely viewed broadcasts of the year with 57 entries. Over the year, RTL recorded 36 audiences of over 10 million viewers. The Formula One Brazilian Grand Prix achieved the biggest RTL Television audience of the year, pulling in a total of 14 million viewers. RTL’s most successful gameshow format Wer wird Millionär (Who Wants to Be a Millionaire) attracted an average of more than 9 million viewers in the 14-49 age category. RTL Television saw its revenues rise 9.9% to EUR 1,475 million over the year and contributed EUR 254 million to EBITA, up 35.1% from EUR 188 million in 1999.

RTL II focused on a younger target audience through formats like Big Brother. This led to a 24% increase among the 14-29 age category from 5.7% to 7.1%. The channel’s contribution to the Group’s EBITA almost tripled to EUR 29 million.

VOX had a breakthrough year in 2000. With audiences holding firm and revenue increasing by 15%, it was slightly loss-making in the second half of the year.

M6 in France maintained its position as the second most popular channel for the 4-49 age category with an audience share of 17.9% and a high proportion of in-house produced formats. M6’s revenues were up 26% over the year to EUR 320 million.

Channel 5 flourished in a competitive marketplace, increasing its audience share to 5.7% from 5.4% in 1999, making it the UK’s fastest growing terrestrial channel with revenues up 23 % to EUR 234 million and a reduced EBITA loss to EUR 6 million, down from EUR 10 million in 1999.

RTL Klub in Hungary reached EBITA breakeven and consolidated its market leadership in the fourth year after its launch in 1997.

2. Radio


Revenue

In EUR million

Year to

December 2000

Year to

December 1999

Per cent

change


France
219
209
5%

- RTL
171
169
1%

- RTL2
26
22
18%

- Fun Radio
22
18
22%

Germany
13
12
8%

Netherlands
8
8
NA

United Kingdom
4
5
-20%

Radio
244
234
4%


EBITA

In EUR million

Year to

December 2000

Year to

December 1999

Per cent

Change


France
71
57
25%

- RTL
63
55
15%

- RTL2
8
6
33%

- Fun Radio
0
-4
NA

Germany
2
2
NA

Netherlands
2
2
NA

United Kingdom
0
-2
NA

Radio
75
59
27%

Revenues in the radio segment rose by 4.3% in 2000 to EUR 244 million while EBITA was up 27.1% to EUR 75 million from EUR 59 million in the previous year.

RTL Radio in France remains the country’s number one station despite experiencing a sharp downturn in audience share, particularly in the fourth quarter of 2000, due to unsuccessful changes in its programme schedule. Decisive action was taken, and after a change in the radio station’s management, the Group is confident that a recovery in audience share will result in the medium term. Due to the time lag between audience losses and related decreases in revenue, the financial impact is more likely to occur during 2001. For 2000 as a whole, RTL Radio’s share of the radio advertising market remained robust at 22.3%, and its contribution to the Group’s EBITA rose from EUR 55 million to EUR 63 million.

FUN Radio, the French dance station, achieved a turnaround in performance, reporting a small positive EBITA compared to a loss of EUR 4 million in 1999. FUN Radio’s share of the radio advertising market remained at 3.2%.

3. Content


In EUR million
Year to

December 2000

Year to

December 1999

Per cent

change


Revenue
1,090
1,036
5%


EBITA
126
125
0%

Content revenues were up by 5% to EUR 1,090 million in 2000 from EUR 1,036 million in 1999. Stripping out the effects of Talkback, the production company acquired by RTL Group in the first half of 2000, the revenues grew by 1%. EBITA in the content division remained flat at EUR 126 million primarily due to increased costs being incurred in developing new formats but also to the expansion of the production business to new markets in Poland, India and Indonesia. This investment in new formats doubled to to EUR 8 million in 2000 and is set to double again in 2001.

Pearson Television, the largest content company in RTL Group, produced more than 200 different shows over the year, licensed over 10,000 hours of programming to broadcasters and sold television series and films in over 100 territories. This included more than 7,000 hours of original production in 33 different countries across a wide-range of genres. The acquisition in June 2000 of 100 per cent of Talkback Productions in the UK greatly enhanced Pearson TV’s reputation for quality programme-making. Pearson TV won a prestigious US International Emmy award with Talkback’s popular comedy show Smack the Pony – one of over 20 international awards that Pearson TV won in 2000.

UFA Film + TV Produktion in Germany was integrated with Pearson TV in 2000. The integrated unit now provides programming to all the main broadcasters, from traditional game shows like Die Quiz Show and Jeder Gegen Jeden to drama series like Balko and daily soaps like Gute Zeiten, schlechte Zeiten.

In addition, RTL Group combined Pearson TV’s international distribution and North American production businesses. The US business continued to produce such long-running successes as The Price Is Right, now in its 28th season at CBS. The company also produced the final series of Baywatch in 2000 at the end of its 11th season.

UFA Sports, one of the leading European distributors of television and marketing rights for sporting events, extended its portfolio of TV and sponsoring rights in 2000 to include more than 250 European soccer clubs and over 40 national federations. French sports rights company Groupe Jean-Claude Darmon in which RTL Group holds a 28% interest continued to develop its relationship with football clubs and federations in France, Italy and Africa.

4. New Media

RTL Group has achieved considerable success in new media by leveraging its existing strength in broadcasting and production with limited start-up losses of EUR 37 million. The Group has established itself as one of the most successful online players in European broadcasting. By the end of 2000, our 80 websites drove page impressions up more than 700% from the beginning of the year to 270 million per month.

This increase in traffic was mirrored by an acceleration in revenues, which almost doubled in the second half of 2000 from EUR 13 million to EUR 25 million, bringing revenue for the year to EUR 38 million. EBITA loss was EUR 37 million.

RTL World (rtl.de), operated by RTL NEWMEDIA, a fully-owned subsidiary of RTL Television in Germany, contributed 70% of the page impressions for the Group and within eight months of its launch in April 2000 became by far the most successful general interest site in Germany. The integration of Bertelsmann Broadband Group into RTL NEWMEDIA at the beginning of 2001 was another important step in developing the Group’s activities in interactive television and broadband services.

IP-Web.net, was launched in 2000 and is the leading pan-European network for the sale of online advertising. It combines eight online sales houses belonging to IP, RTL Group’s international advertising sales business, and markets over 85 branded RTL and third-party sites throughout Europe.

Results and Notes


Pro forma consolidated income statement (unaudited)


for the year ended 31 December 2000


In million EUR

2000

1999

(as restated)


Revenue

4,044

3,539

Other operating income

110

76

Consumption of current programme rights

(1,384)

(1,299)

Depreciation, amortisation and impairment

(339)

(286)

Other operating expenses

(1,900)

(1,597)

Amortisation of goodwill

(317)

(314)

Gain from sale of subsidiaries, joint-ventures and other investments

88

437

Profit from operating activities

302

556


Share of results of associates

24

(4)

Earnings before interest and taxes ("EBIT")

326

552


EBITA

555

429

Amortisation of goodwill

(317)

(314)

Gain from sale of subsidiaries, joint-ventures and other investments

88

437

Earnings before interest and taxes ("EBIT")

326

552


Interest expense (net)

(36)

(7)

Financial results other than interest

3

36

Profit before taxes

293

581


Income tax expense

(218)

(407)

Profit from ordinary activities

75

174


Minority interest

(8)

(4)

Net profit for the year

67

170


Earnings per share (euro)


- Basic

0.43

1.10

- Diluted

0.42

1.08


Adjusted earnings per share (euro)


- Basic

1.91

1.70

- Diluted

1.87

1.67

For the purpose of the pro forma accounts, the number of issued and fully paid ordinary shares is 154,787,554. The number of authorised ordinary shares is 157,883,305 as Pearson plc has the right to acquire a further 2 per cent of the share capital of RTL Group under certain conditions.

The adjusted earnings per share represent net earnings adjusted for amortisation of goodwill and gain or loss from sale of subsidiaries, joint-ventures and other investments, net of tax.

EBITA represents earnings before interest, financial results other than interest, income tax expense, amortisation of goodwill and gain or loss from sale of subsidiaries, joint-ventures and other investments.


Pro forma consolidated balance sheet (unaudited)


As at 31 December 2000


In million EUR

2000

1999

(as restated)


Non-current assets


Programme and sport rights

415

351

Goodwill

5,730

5,145

Other intangible assets

27

29

Property, plant and equipment

382

363

Investments in associates

59

46

Loans and other financial assets

1,036

607

Deferred tax assets

102

141

7,751

6,682


Current assets


Programme rights

1,087

908

Other inventories

7

3

Income tax receivable

182

177

Accounts receivable

1,208

1,012

Marketable securities and other short term investments

81

487

Cash and cash equivalents

218

1,106

2,783

3,693


Current liabilities


Loans and bank overdraft

755

794

Income tax payable

104

376

Accounts payable

1,576

1,203

2,435

2,373


Net current assets

348

1,320


Non-current liabilities


Loans

335

406

Accounts payable

194

72

Provisions

249

246

Deferred tax liabilities

53

54

831

778


Net assets

7,268

7,224


Shareholders’ equity

7,254

7,166


Minority interest

14

58

7,268

7,224

Pro forma Financial Information

Context

On 7 April 2000, Bertelsmann AG (Bertelsmann), Groupe Bruxelles Lambert / Electrafina (GBL) and Pearson plc announced that they had agreed to combine CLT-UFA and Pearson Television into Audiofina. On 24 July, the General Meeting of Shareholders of Audiofina approved the contribution in kind by BWTV of 50 per cent of the shares of CLT-UFA Holding and the issue of 57,332,170 new Audiofina shares. On 25 July, the General Meeting of Shareholders of Audiofina approved the contribution in kind by Pearson plc of Pearson Television and the issue of up to 34,053,283 new Audiofina shares. On the same day, the name of Audiofina was changed to RTL Group. On 4 September 2000, the Extraordinary Meeting of Shareholders of RTL Group approved the contribution in kind by Pearson plc of its interests in Antena 3 and Via Digital.

Through the combination, RTL Group became the parent company of the new Group which manages all its media operations. RTL Group holds inter alia 100 per cent of CLT-UFA Holding (which in turn holds 99.3 per cent of CLT-UFA), 100 per cent of Pearson Television companies and 28 per cent in Groupe Jean-Claude Darmon.

Basis of Preparation of the Pro forma Financial Information

The pro forma financial information has been prepared using consistent accounting policies to those of the group to illustrate the effects on the income statement and balance sheet of RTL Group of combining CLT-UFA and Pearson Television into RTL Group. For the purpose of the pro forma financial information the combination is assumed to have occurred on 1 January 1999.

The pro forma results for 2000 are based on a full 12 months’ trading for all those companies that became part of the RTL Group as at the flotation in July 2000. The 1999 comparatives are based on the pro forma financial information included in the Company’s Listing Particulars dated 24 July 2000, restated to reflect specific changes set out below.

The following changes have been adopted for the purpose of presenting the pro forma financial information for the year ended 31 December 1999 in order to ensure consistency with the 31 December 2000 presentation. These changes have resulted in a restatement of the pro forma financial information for the year ended 31 December 1999 included in the Listing Particulars.

Overall, the adjustments have an immaterial impact at the level of net profit and lead to a reduction in the net assets of EUR 147 million. The changes have been classified within one of three categories shown below:

Goodwill

The following adjustments have been recorded in respect of goodwill, the impact of which is to reduce net goodwill in the balance sheet at 31 December 1999 and the corresponding amortisation charge.

Finalisation of the Pearson Television Fair Value Exercise.

Change in accounting treatment for the acquisition in 2000 of the 11% of RTL Television and 1% of CLT-UFA shares

The exclusion of the cash based acquisition of 6.4% of Channel 5 shares by CLT-UFA in February 2000, as this acquisition was not part of the assets contributed under the combination.

Taxation

Adjustments have been made to the deferred tax assets and liabilities after a full review of the Group’s tax position following the combination. This has a negative impact on the net earnings of EUR 25 million.

Reclassifications

A number of reclassifications have been made in both the income statement and balance sheet, which have no impact on net assets, including:

An adjustment of EUR 12 million to eliminate interest income on shareholder loans to Channel 5 against the offsetting interest expense reflected in results from associates caption.

A reclassification of EUR 8 million from financial results and other interests to other operating income in respect of dividend income from non-consolidated subsidiaries and foreign exchange net gains from operational activities.

A reclassification of net monies held on behalf of RTL Group by GBL in 1999 from accounts receivable and accounts payable to cash on hand and at bank.

A reclassification of certain programme rights from non-current to current assets.

A full elimination of intra group trading between group companies.