RNS Number:2412K
RTL Group
19 September 2001
RTL Group (RTL.L)
RTL Group, Europe's leading broadcaster and content provider, announces its
unaudited interim results to 30 June 2001
EUR million Half Year Pro forma Half Change
to 30 June Year (%)
2001 to 30 June 2000
(unaudited)
Revenue 2,000 1,943 +3
Adjusted EBITA 273 321 (15)
Restructuring (22) - -
Broadband/ RTL Shop (16) - -
Reported EBITA 235 321 (27)
Adjusted EBITA margin 13.7 16.5 -
Reported EBITA margin (%) 11.8 16.5 -
Net result pre non-cash goodwill (38) 87 -
impairment
Non cash goodwill impairment (1) (2,276) - n.m.
Net financial income (53) 6 -
Income tax expense (130) (137) -
Reported net result (2,314) 87 n.m.
Adjusted earnings per share (EUR)(2) 0.48 1.20 -
Business Headlines
Core businesses performing strongly in difficult advertising market conditions
* TV audience and advertising revenue share up in most of our markets,
especially in the core markets Germany and France
* Group revenue up 3% with German and French TV underlying revenue up 3%
and 9% respectively
Management focused on efficiency of businesses
* Operating cost base re-aligned to reflect current market conditions
* Focus on and investment in creativity in international production arm
* Downsizing of US drama business alongside goodwill impairment of Pearson
TV (now FremantleMedia)
* Successful turnaround by new management at RTL Radio France
(1) Impairment of goodwill relates to the acquisition of the Pearson TV (now
FremantleMedia) in 2000.
(2) The adjusted earnings per share of EUR 0.48 represent net earnings adjusted
for EUR 2,438m relating to the amortisation and impairment of goodwill (first
half 2000: EUR 161 million) and EUR 49 million deducted relating to gain or
loss for sale of subsidiaries, joint ventures and other investments, net of tax
(first half 2000: EUR 63 million).
Didier Bellens, Chief Executive Officer (CEO) of RTL Group:
"Our core business has proved its strength in the first half of 2001. Building
on our brands and our content, we have outperformed in our main markets in
terms of audience and market share. This, combined with our ongoing drive to
control costs and build synergies between our operations, leaves us well
positioned to achieve our strategic objectives. With our strong financial
position and unique pan-European and integrated portfolio, we are in pole
position in our industry to benefit when the advertising market conditions
improve.
Because of the low forward visibility in the advertising markets, the Board of
Directors has decided to postpone an equity issue by RTL Group as originally
proposed last year. It remains the intention to increase RTL Group's free
float to not less than 15%."
In its trading update issued in July 2001, RTL Group forecast an EBITA for
2001 of 10% to 15% below the 2000 pro forma level of EUR 555 million. This
estimate was before taking into account the restructuring of the US business,
which was anticipated to cost EUR 22 million, as well as investments in new
businesses - homeshopping and broadband activities in Germany - of EUR 27
million.
Since July, markets have continued to decline and visibility has not improved.
The phasing of the recovery cannot therefore be predicted with certainty.
Under current conditions, the decline in EBITA could therefore be greater than
the level indicated in July.
A meeting will be held for analysts and investors at 09.15h London time on
Wednesday, September 19, 2001, at Pearson TV (now FremantleMedia), 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 20 7691 6830 Rollo Head/ Julius Duncan
Markus Payer - Tel: +352 421 42 5020 Alice Macandrew/ Katie Lang
Financial review
Revenue Half year to Half year to Per cent change 2000 full year
EUR m 30 June 30 June 2000 (%) (pro forma,
2001 (pro forma, unaudited)
unaudited)
Television 1,462 1,416 3 2,862
Content 522 461 13 1,090
Radio 98 123 (20) 244
New Media 38 9 >100 38
Other 53 47 13 101
Eliminations (173) (113) 53 (291)
Group 2,000 1,943 3 4,044
revenue
EBITA Half year to Half year to Per cent change 2000 full year
EUR m 30 June 30 June 2000 (%) (pro forma,
2001 (pro forma, unaudited)
unaudited)
Television 222 235 (6) 408
Content 35 68 (49) 126
Radio 19 39 (51) 75
New Media (27) (8) >100 (37)
Other (14) (13) 8 (9)
Eliminations - - - (8)
Reported Group 235 321 (27) 555
EBITA
Adjustments for :
Restructuring 22 - -
RTL Shop and 16 - -
Broadband
Adjusted Group 273 321 (15) 555
EBITA
Despite difficult market conditions in many European countries, RTL Group
revenue rose by 3% to EUR 2,000 million. This was driven by gains in the
television and content segments, particularly German and French TV. Underlying
revenue growth, stripping out changes in scope(3), was flat.
EBITA has been impacted by the downturn of advertising markets in Europe.
Before restructuring costs of EUR 22 million and investments in broadband and
RTL Shop amounting to EUR 16 million, EBITA decreased to EUR 273 million from
EUR 321 million a year earlier. EBITA margin before restructuring and RTL Shop
as well as broadband investments declined to 13.7% from 16.5%. Taking these
impacts into account, EBITA margin was 11.8%.
RTL Group's TV revenue rose 3% over the period to EUR 1,462 million, fuelled
by particularly strong performances of the key broadcasting operations, RTL
Television in Germany and M6 in France. EBITA for the TV business fell 6%
compared to 2000 due to difficult market conditions in the UK and the
Netherlands, increased programme spend at Channel 5 and start-up losses for
RTL Shop. The television business continued to be the biggest contributor to
Group revenue, at 73% of total revenue.
(3) Mainly due to the first time consolidation of Talkback Production in the UK
as well as of smaller TV and content participations and the increase of the
participation in M6 which is proportionally consolidated from 42.2 to 43.8%.
Content revenue was up 13% to EUR 522 million in the first six months of 2001
from EUR 461 million for the same period in 2000. EBITA in the business fell
to EUR 35 million from EUR 68 million, primarily due to the restructuring cost
in the US operations of EUR 22 million as well as increased investments in the
development of new formats.
Following a deterioration of equity market valuations and the restructuring of
the US business, management conducted a detailed review of the carrying value
of the Pearson TV (now FremantleMedia) assets acquired in July 2000. Following
the completion of this review, a one-off non-cash goodwill impairment
adjustment of EUR 2,276 million has been recorded.
Group Radio revenue declined to EUR 98 million from EUR 123 million in the
half year to 30 June 2000. EBITA fell to EUR 19 million from EUR 39 million
due primarily to the performance of RTL Radio in France. RTL Group's smaller
French stations, Fun Radio and RTL2, increased both revenues and EBITA.
New Media revenue in the first six months of the year was EUR 38 million,
matching the revenue earned in the full year to December 2000, and
significantly up on the EUR 9 million levels of the half year to June 2000.
EBITA loss was EUR 27 million.
Group operating expense, excluding goodwill amortisation and impairment,
increased 11% from EUR 1,701 million in 2000 to EUR 1,888 million in 2001.
Stripping out the effects of scope changes, increased operating expenses in
the new media segment and restructuring, the underlying increase in operating
expenses was 4.5%.
The gain from the sale of subsidiaries, joint ventures and other investments
was EUR 75 million. The main gain related to the sale of RTL Group's 5%
participation in the German pay-TV channel Premiere to the channel's majority
shareholder, Kirch Group.
The tax expense was EUR 104 million on continuing operations and EUR 26
million on the sale of the Premiere participation. This corresponds to an
effective tax rate of 36%, down from 41% for the first half 2000.
The net interest expense in the first six months of 2001 was EUR 14 million.
The level of net debt decreased from EUR 643 million as at 31 December 2000(4)
to EUR 619 million at 30 June 2001. The reduction is mainly due to the sale of
the 5% in Premiere, which resulted in a total cash inflow of EUR 122 million.
The negative financial result other than interest is primarily due to a
write-down of financial assets, in particular investments in dotcom companies,
RTV shares and loans.
The net loss for the six months before goodwill impairment was EUR 38 million.
The net loss including a non-cash goodwill impairment of EUR 2,276 million in
respect of the Pearson TV (now FremantleMedia) acquisition was EUR 2,314
million. This compared to a profit of EUR 87 million for the first half of
2000.
The adjusted earnings per share of EUR 0.48 (first half 2000: EUR 1.20)
represent net earnings adjusted for EUR 2,438 million relating to the
amortisation of goodwill (EUR 162 million, compared to EUR 161 million in the
first half 2000) and the impairment of goodwill (EUR 2,314 million). The
impairment of goodwill has been added back and EUR 49 million deducted
relating to gain or loss from sale of subsidiaries, joint ventures and other
investments, net of tax (first half 2000: EUR 63 million).
(4) After restatement of the impact of IAS 39
Television
Revenue 6 months to 6 months to Per cent change 2000 full year
EUR million 30 June 30 June 2000 (pro forma,
2001 (pro forma, unaudited)
unaudited)
Germany 894 836 7 1,715
- RTL Television/VOX 863 814 6 1,650
- Others 31 22 41 65
France 209 185 13 370
- M6 181 159 14 320
- VCF 28 26 8 50
Netherlands 149 175 (15) 334
- HMG 149 175 (15) 334
United Kingdom 139 151 (8) 307
- Channel 5 105 113 (7) 234
- Pearson TV 34 38 (11) 73
Broadcasting
Others 71 69 3 136
Television revenue 1,462 1,416 3 2,862
EBITA 6 months to 6 months to Per cent change 2000 full year
EUR million 30 June 30 June 2000 (pro forma,
2001 (pro forma, unaudited)
unaudited)
Germany 163 155 5 285
- RTL Television/ 152 141 8 251
VOX
- RTL II 8 13 (38) 29
- Others 3 1 >100 5
France 53 43 23 83
- M6 51 42 21 81
- Others 2 1 100 2
Netherlands 10 16 (38) 28
- HMG 10 16 (38) 28
United Kingdom (11) 13 (>100) 3
- Channel 5 (18) 6 (>100) (6)
- Pearson TV 7 7 - 9
Broadcasting
Others 7 8 (13) 9
Television EBITA 222 235 (6) 408
TV channels in Germany bucked the difficult market conditions in the first six
months of 2001 to post a 7% rise in consolidated revenues to EUR 894 million
across the group of channels (RTL, VOX, Super RTL) (5), up from EUR 836 million
in 2000. Underlying revenue was up 3%. This increase was matched by a 5% rise
in EBITA from EUR 155 million in 2000 to EUR 163 million after RTL Shop, which
was launched in March 2001, with start up losses of EUR 12 million.
(5) RTL II is consolidated at equity.
While the German television market saw a cumulative fall in gross advertising
spend of 1.6% over the first half 2001, the RTL Group channels further
strengthened their market position by gaining both advertising and audience
market share. The channels' share of gross advertising spend rose to 41.9%, up
from 38.4% in 2000, while their audience share of the 14-49 target group
reached 30.4%, up from 29.9% the previous year. These results reflect the
ratings success of strong formats like "Who Wants to be a Millionaire" with a
peak of over 14 million viewers, "Good Times, Bad Times" with a peak of over
5.7 million viewers and sporting events like "Formula 1".
In March 2001, RTL Group launched the German TV homeshopping channel RTL Shop.
The shareholders in the new channel are RTL Television (55%), RTL's online and
interactive subsidiary, RTL New Media (25%), and the French TV group M6 (20%)
in which RTL Group holds a 43.8% stake.
M6 in France strengthened its position as the second most popular channel over
the six months to 30 June 2001 through the success of formats like "Loft
Story". RTL Group's share of revenue rose 14% to EUR 181 million while EBITA
rose 21% to EUR 51 million. Underlying revenue was up 10%, underlying EBITA up
17%. The channel outperformed its peers by growing audience share (15-49) from
18.1% to 19.9% and pushing its share of advertising spend to 23.1% from 21.2%
against a market that fell 3.9% year-on-year.
Channel 5 succeeded in holding its advertising market share of 6.1% in a
market that was significantly impacted by the advertising downturn, down 9.6%
year-on-year. Investment in programming was up by 17% in the first six months,
in line with the long-term aim of increasing audience share.
HMG channels in the Netherlands lost 2.3% audience share and 3.6% share of
advertising spend in a market that fell 7% year-on-year. The rebranding of
Veronica as Yorin resulted in an initial loss of momentum that should pick up
again as the new brand becomes established. RTL5 increased its share of
advertising spend and audience share by 0.3 percentage points.
Other markets including Belgium, Luxembourg and Hungary broadly maintained
revenue and EBITA performance compared to the same period last year.
Content
EUR million 6 months to 6 months to Per cent change 2000 full year
30 June 30 June 2000 (pro forma,
2001 (pro forma, unaudited)
unaudited)
Content revenue 522 461 13 1,090
Reported content 35 68 (49) 126
EBITA
Adjustments for:
Restructuring 22 - -
Adjusted content 57 68 (16) 126
EBITA
Content revenue was up 13% to EUR 522 million in the first six months of 2001
from EUR 461 million for the same period in 2000. Underlying revenue grew by
8%, after stripping out the impact of the acquisition of Talkback Production
in the UK, which was fully consolidated from July 2000 onwards. Before
restructuring provisions amounting to EUR 22 million which relate to the US
operations, EBITA fell to EUR 57 million from EUR 68 million in 2000, mainly
due to increased development investment and to the effect in 2000 of the sale
of programme to RTV.
The restructuring of the US business followed an extensive review that
centered around a management decision to move away from international drama to
focus on light entertainment. This was driven by changing viewer tastes in
Europe towards locally produced reality and gameshow programmes, as well as
consolidation in the US industry. This restructuring has resulted in a charge
of EUR 22 million.
RTL Group's production businesses, Pearson TV (now FremantleMedia) worldwide
production and UFA Berlin, performed in line with expectations. UFA Sports
generated an EBITA in the first six months of 2001 of more than EUR 16 million
due to the World Cup qualification matches and the performance of German clubs
in European championships.
In May 2001, RTL Group, Groupe Canal+ and Groupe Jean-Claude Darmon signed an
agreement to merge their sports rights activities. The deal will create a
leading TV and marketing sports rights group, jointly controlled by RTL Group
and Groupe Canal+. It brings together UFA Sports, the sports rights and full
range marketing business of RTL Group, Sport+, the sports rights trading
subsidiary of Groupe Canal+, and Groupe Jean-Claude Darmon in which RTL Group
has a 28% interest. The new group combines annual revenues of over EUR 570
million and EBITA of EUR 49 million (based on pro forma figures for 2000). The
transaction is subject to regulatory approvals.
Radio
Revenue 6 months to 6 months to Per cent change 2000 full year
EUR million 30 June 30 June 2000 (pro forma,
2001 (pro forma, unaudited)
unaudited)
France 86 111 (23) 219
- RTL 61 90 (32) 171
- RTL2 14 12 17 26
- Fun 11 9 22 22
Germany 7 6 17 13
Netherlands 4 4 - 8
United 1 2 (50) 4
Kingdom
Total Radio 98 123 (20) 244
EBITA 6 months to 6 months to Per cent change 2000 full year
EUR million 30 June 30 June 2000 (pro forma,
2001 (pro forma, unaudited)
unaudited)
France 16 36 (56) 71
- RTL 9 32 (72) 63
- RTL2 5 4 25 8
- Fun 2 0 n.m. 0
Germany 2 1 +100 2
Netherlands 2 2 - 2
United -1 0 n.m. 0
Kingdom
Total Radio 19 39 (51) 75
RTL Group's radio revenue declined by 20% to EUR 98 million, from EUR 123
million in the six months ended June 2000, and EBITA fell to EUR 19 million
from EUR 39 million due primarily to the performance of RTL Radio in France.
RTL Radio remains France's number one station with audience share of 13.3%(6),
up 10% from the audience share in January 2001. This improvement follows the
decisive action taken at the end of 2000 which installed new management and
programming to address declining audience share, develop new revenue streams
and control costs. RTL Group remains confident that audience share will
continue to improve in the medium term. RTL Group's other French radio
stations, RTL2 and Fun Radio, showed improvement in audience share and
advertising market share with Fun Radio improving its audience share to 5.3%
from 4.6%. Revenue at RTL2 increased by 17% to EUR 14 million, and EBITA by
25% to EUR 5 million. At Fun Radio revenue increased by 22% to EUR 11 million
and the youth station made an EBITA contribution of EUR 2 million. The station
broke even for the same period a year ago. RTL Group's radio interests in
Germany and the Netherlands also performed well raising revenues and EBITA.
(6) Mediametrie figures July 16
New Media
EUR million 6 months 6 months to 30 June 2000 (pro Per cent 2000 full year
to forma, unaudited) change (pro forma,
30 June unaudited)
2001
New media 38 9 >100 38
revenue
New media (27) (8) (>100) (37)
EBITA
RTL Group continued to enhance its strong position within European new media
over the period and reached 5.2 million unique visitors and 330 million page
impressions in June. New Media revenue in the first six months of the year was
EUR 38 million, matching the revenue earned in the full year to December 2000.
RTL Group's New Media business comprises Internet, mobile phone, interactive
television, videotext, audiotext and merchandising activities.
RTL Group continues its approach of controlled investment in New Media,
building on strong brands like RTL (www.rtl.de) and M6 (www.m6.fr).
Accordingly New Media EBITA loss for the first half of the year was limited to
EUR 27 million. This is not comparable to the first six months in 2000 because
the new media activities were developed during that period.
In February 2001, Bertelsmann and RTL Group announced the decision to bundle
their interactive television and broadband activities. As a result, RTL Group
took over Bertelsmann Broadband Group for EUR 12.8 million. It is being
integrated into RTL NEW MEDIA, a subsidiary of RTL Television in Cologne.
Net debt / cash position
EUR million Year to 30 June Year to December
2001 2000
Cash and cash equivalents 288 218
Loans receivable 134 110
Marketable securities and other short term 133 119
investments(7)
Loans and bank overdraft (1,174) (1,090)
(Net debt) / cash position (619) (643)
In June 2001 Moody's assigned RTL Group short term debt ratings of P2 and long
term issuer ratings of A3. Standard & Poors assigned a short term rating of A2
and a long term issuer rating of single A minus with stable outlook. These
ratings were assigned in advance of the EUR 1,000 million commercial paper
programme and reflect current levels of profitability and cashflow generation.
A EUR 1,000 million commercial paper programme was launched in June 2001. A
EUR 900 million credit facility was arranged with Commerzbank and BNP/ Paribas
in August 2001 for general corporate purposes. This replaces the existing
CLT-UFA facility of EUR 500 million.
(7) The marketable securities for the year ended 31 December 2000 have been
restated to reflect the adoption of IAS 39 with effect from 1 January 2001, so
as to ensure the net debt at 30 June 2001 and 31 December 2000 are directly
comparable.
Share Capital
On completion of the merger which created RTL Group, the Company and its
corpo-rate shareholders entered into an agreement (the Shareholders'
Agreement) which sets out the understanding of the parties in relation to
their shareholdings in, and the future management of, the Company. The parties
agreed to use all reasonable efforts to ensure that the Company is included in
a FTSE UK Index. Further, the Shareholders' Agreement provides that the
shareholder parties intend that the free float be increased to not less than
15% of the RTL Group shares in the medium term (these obligations being
subject to certain qualifications).
The Shareholders' Agreement further provided that, within 14 months of the
date of the London listing of RTL Group on 25 July 2000, 2,295,750 shares
would be offered to the public by the Company, subject to market conditions.
The Board of Directors has considered that current market conditions are not
favourable to an offering and has therefore decided, in accordance with the
Shareholders' Agreement and on the basis of an opinion issued by an
independent advisor, to postpone an equity issue by RTL Group as originally
proposed last year. The Company and its advisors will continue to monitor
market conditions on a regular basis and proceed with an offering in
fulfilment of the obligations under the Shareholders' Agreement as soon as
market conditions allow.
The parties to the Shareholders' Agreement confirm their commitment thereunder
to maintain the primary listing of RTL Group in London and their intention to
achieve a free float of not less than 15 percent in the medium term.
Consolidated income statement
for the period ended 30 June 2001
in EUR million
2001 2000 Proforma 2000 2000 2000
Proforma Legal
Note Half year Half year Half year Full Year Full Year
(Unaudited) (Unaudited)
Revenue 2 2,000 1,943 777 4,044 2,854
Other
operating
income 115 69 31 110 73
Consumption of
current programme
rights (669) (669) (223) (1,384) (931)
Depreciation,
amortisation
and impairment (171) (121) (48) (339) (273)
Other operating
expense (1,048) (911) (413) (1,900) (1,382)
Amortisation
and impairment
of goodwill (2,438) (161) (34) (317) (172)
Gain from sale
of subsidiaries,
joint ventures
and other investments 75 63 31 88 57
Profit / (loss)
from operating
activities (2,136) 213 121 302 226
Share of results
of associates 8 10 4 24 17
Earnings before
interest and
taxes ("EBIT") (2,128) 223 125 326 243
--------------------------------------------------------------------------------
EBITA 2 235 321 128 555 358
Amortisation
and impairment
of goodwill (2,438) (161) (34) (317) (172)
Gain from sale of
subsidiaries, joint
ventures and other
investments 75 63 31 88 57
Earnings before
interest and
taxes ("EBIT") (2,128) 223 125 326 243
--------------------------------------------------------------------------------
Net interest
income / (expense) (14) (7) 10 (36) (15)
Financial results
other than interest (39) 13 23 3 10
Profit / (loss)
before taxes 3 (2,181) 229 158 293 238
Income tax expense (130) (137) (60) (218) (142)
Profit / (loss) from
ordinary activities (2,311) 92 98 75 96
Minority interest (3) (5) (7) (8) (19)
Net profit / (loss)
for the period/year (2,314) 87 91 67 77
Earnings per
share (in EUR)
- Basic (15.06) 0.56 1.46 0.43 0.76
- Diluted (15.06) 0.55 1.46 0.42 0.76
Adjusted earnings
per share (in EUR)
- Basic 0.48 1.20 1.51 1.91 1.89
- Diluted 0.48 1.17 1.51 1.87 1.89
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 for sale of subsidiaries, joint
ventures and other investments, net of tax.
Consolidated balance sheet
as at 30 June 2001
in EUR million
2001 2000 2000 2000
Proforma Proforma/
Legal
Half Half year Half year Full year
year (Unaudited) (Unaudited)
Non-current assets
Programme and sport rights 421 387 143 415
Goodwill 3,309 5,745 1,152 5,730
Other intangible assets 26 27 9 27
Property, plant and equipment 369 371 140 382
Investments in associates 46 36 24 59
Loans and other financial assets 885 773 170 1,036
Deferred tax assets 131 164 81 102
5,187 7,503 1,719 7,751
Current assets
Programme rights 1,047 984 429 1,087
Other inventories 16 8 4 7
Income tax receivable 157 204 99 182
Accounts receivable 1,186 1,109 439 1,208
Marketable securities and other 133 110 67 81
short-term investments
Cash and cash equivalents 288 891 613 218
2,827 3,306 1,651 2,783
Current liabilities
Loans and bank overdrafts 746 621 233 755
Income tax payable 111 467 218 104
Accounts payable 1,457 1,524 688 1,576
2,314 2,612 1,139 2,435
Net current assets 513 694 512 348
Non-current liabilities
Loans 428 385 93 335
Accounts payable 211 171 4 194
Provisions 228 241 116 249
Deferred tax liabilities 114 49 22 53
981 846 235 831
Net assets 4,719 7,351 1,996 7,268
Shareholders' equity 4,704 7,339 1,993 7,254
Minority interest 15 12 3 14
4,719 7,351 1,996 7,268
Consolidated cash flow statement
for the period ended 30 June 2001
in EUR million
2001 2000 2000 2000 2000
Proforma Proforma Legal
Half Half year Half year Full Full
year (Unaudited) (Unaudited) Year Year
Cash flows from operating
activities
Profit / (loss) from ordinary (2,311) 92 98 293 96
activities
Adjustments for :
- Depreciation and amortisation 316 265 75 610 401
- Value adjustments, impairment 2,343 64 29 121 94
and provisions
- Gain on disposal of assets (77) (100) (67) (138) (99)
- Financial results including 33 4 (13) 14 (1)
share of results of associates
Working capital changes 27 110 58 (36) (154)
Income taxes paid 31 72 28 (464) (315)
Other movements - (4) 2 6 (1)
Net cash from operating 362 503 210 406 21
activities
Cash flows from investing
activities
Acquisitions of :
- programme and sport rights (136) (166) (41) (348) (214)
- subsidiaries and joint 5 (781) (427) (789) (217)
ventures net of cash acquired
- other intangible and tangible (40) (48) (16) (113) (79)
assets
- other investments and (134) (113) (89) (517) (371)
financial assets
(305) (1,108) (573) (1,767) (881)
Proceeds from the sale of 5 62 29 68 33
intangible and tangible assets
Disposal of subsidiaries and 10 4 2 6 2
joint ventures net of cash
disposed of
Proceeds from the sale of other 137 603 517 657 569
investments and financial assets
Interest received 18 41 29 70 58
170 710 577 801 662
Net cash from / (used in) (135) (398) 4 (966) (219)
investing activities
Cash flows from financing
activities
Interest paid (36) (69) (20) (125) (75)
Proceeds from loans 481 320 72 387 156
Disposal of treasury shares - 23 12 23 11
Reimbursement of loans (416) (418) (298) (531) (411)
Net change in bank overdraft (47) (120) (59) 33 94
Dividends paid (134) (57) (55) (122) (109)
Net cash used in financing (152) (321) (348) (335) (334)
activities
Net increase/(decrease) in cash 75 (216) (134) (895) (532)
and cash equivalents
Cash and cash equivalents at 218 1,106 748 1,106 748
beginning of year
Effect of exchange rate (5) 1 7 2
fluctuation on cash held
Cash and cash equivalents at end 288 891 614 218 218
of year
Notes to the interim consolidated financial statements
1. Basis of preparation
RTL Group S.A., the parent company, is domiciled and incorporated in
Luxembourg. These interim consolidated financial statements are presented in
accordance with the requirements of the London Stock Exchange as well as of
IAS 34 Interim Financial Reporting. The accounting policies used in the
preparation of the interim financial statements are consistent with those used
in the annual financial statements for the year ended 31 December 2000 and
comply with the International Accounting Standards (IAS) issued by the
International Accounting Standards Board ("IASB").
Costs that incur unevenly during the financial year are anticipated or
deferred in the interim report only if it would be also appropriate to
anticipate or defer such costs at the end of the financial year.
Income tax expense is recognised based on the best estimate of the weighted
average annual income tax rate expected for the full financial year. The
estimated average annual tax rate used for 2001 is 36 per cent (the estimated
tax rate used for the first half-year of 2000 was 41 per cent).
These interim financial statements should be read in conjunction with the 2000
consolidated financial statements.
To comply with the requirements of IAS 34 and the UKLA, the interim financial
statements include statutory consolidated results for the six months ended 30
June 2000 and 2001 as well as for the 12 months ended 31 December 2000. In
addition, management prepared pro forma financial information for the six
months to 30 June 2000, as in the opinion of management the pro forma
financial information provides a more representative picture of the financial
performance of the group during that period and as such a more appropriate
benchmark for comparison against the 2001 performance.
The statutory and pro forma numbers for the period ended 30 June 2000 are
unaudited
Application of IAS 39
With effect from 1 January 2001, the Group applied IAS 39 Financial
Instruments: Recognition and Measurement. The application of IAS 39 has
resulted in the Group recognising available-for-sale assets at fair value,
changing its method of accounting for hedging transactions and recognising all
derivative financial instruments and assets or liabilities (including
derivative assets and liabilities that were previously held off-balance sheet)
at fair value.
This change has been accounted for by adjusting the opening balance of
retained earnings. Comparatives have not been restated.
The effect of adopting IAS 39 is summarised below:
In EUR millions
Hedging Revaluation Total
--------------------------------------------------------------------------------
Adjustment to opening retained earnings 55 70 125
--------------------------------------------------------------------------------
Fair value adjustments of
available-for-sale assets and
cash flow hedges 7 (175) (168)
Transfer of realised gains
to the income statement (9) (33) (42)
--------------------------------------------------------------------------------
Fair value adjustments of available-for-sale
financial instruments and of cash
flow hedges at 30 June 2001 53 (138) (85)
================================================================================
The table above shows the impact on the opening balance sheet of EUR 125
million relating to the fair value of cash flow hedges, largely in respect of
off-balance sheet commitments, and the revaluation of available for sale
securities. The fair value adjustment for the period mainly relates to
available-for-sale assets.
For the six months ended 30 June 2001 the net profit increased by EUR 42
million as a result of the adoption of IAS 39. Its adoption had no effect on
the net profit for 2000.
Pro forma financial information
On 24/25 July 2000, CLT-UFA and Pearson Television combined into Audiofina
(re-named RTL Group). Following the combination, RTL Group holds, inter alia,
100% of CLT-UFA Holding (which in turn holds 99.6 per cent of CLT-UFA), 100
per cent of Pearson Television companies and 28 per cent in Groupe Jean-Claude
Darmon.
As the combination was completed part way through the financial year ended 31
December 2000, the statutory consolidated results for six months ended 30 June
2000 only provide a partial picture of the financial performance of the Group
during that period. Accordingly the pro forma financial information for the
six months ended 30 June 2000 has been prepared to illustrate the effects of
the combination as if it had occurred on 1 January 2000.
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 2000.
The pro forma results for the six months ended 30 June 2000 are based on a
full 6 months' trading for all those companies that became part of the RTL
Group as at the flotation in July 2000. The figures have been restated from
the half-year numbers reported on 13 September 2000 to reflect specific
changes incorporated in the pro forma financial information reported in the
2000 Annual Report.
Due its nature, pro forma financial information may not give a true
presentation of the profits and shareholders' equity that would have been
reported if the combination had occurred on 1 January 2000.
The following changes have been adopted for the purpose of presenting the pro
forma financial information for the six months ended 30 June 2000 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 six
months ended 30 June 2000 previously released.
Overall, the adjustments have an immaterial impact at the level of net profit
and lead to a reduction in the net assets of EUR 82 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 30 June 2000
and the corresponding amortisation charge.
1. Finalisation of the Pearson Television Fair Value Exercise.
2. Change in accounting treatment for the acquisition in 2000 of the 11 per
cent of RTL Television and 1 per cent of CLT-UFA shares.
Taxation
Adjustments have been made to the deferred tax assets and liabilities
following a full review of the Group's tax position following the combination.
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 2 million to eliminate interest income on shareholder
loans to Channel 5 against the offsetting interest expense reflected in
results from associates caption.
1. A reclassification of EUR 9 million from financial results other than
interest to other operating income in respect of dividend income from
non-consolidated subsidiaries and foreign exchange net losses from
operational activities.
2. A reclassification of certain programme rights from non-current to current
assets.
3. A full elimination of intra group trading between group companies.
4. A reclassification from minority interest to shareholder's equity in order
to eliminate the effect of the acquisition of the 11 per cent of RTL
Television and the acquisition of the minority interest on the Dutch IP
sales house (IPN).
2. Segmental information
Business Segments
in EUR million Revenue from external Inter-segment Total EBITA
customers revenue Revenue
Television
2001 Half Year 1,433 29 1,462 222
2000 Half Year 1,403 13 1,416 235
Proforma
Content
2001 Half Year 411 111 522 35
2000 Half Year 390 71 461 68
Proforma
Radio
2001 Half Year 98 - 98 19
2000 Half Year 123 - 123 39
Proforma
New Media
2001 Half Year 36 2 38 (27)
2000 Half Year 10 (1) 9 (8)
Proforma
Other
2001 Half Year 22 31 53 (14)
2000 Half Year 17 30 47 (13)
Proforma
Eliminations
2001 Half Year - (173) (173) -
2000 Half Year - (113) (113) -
Proforma
Total
2001 Half Year 2,000 - 2,000 235
2000 Half Year 1,943 - 1,943 321
Proforma
Geographical Segments
in EUR million Revenue EBITA
Germany
2001 Half Year 1,060 171
2000 Half Year Proforma 998 174
France
2001 Half Year 295 58
2000 Half Year Proforma 295 52
Netherlands
2001 Half Year 156 11
2000 Half Year Proforma 178 18
UK
2001 Half Year 397 (1)
2000 Half Year Proforma 389 52
Other regions
2001 Half Year 92 (4)
2000 Half Year Proforma 83 25
Consolidated
2001 Half Year 2,000 235
2000 Half Year Proforma 1,943 321
3. Loss before taxes
The following items of unusual nature have been charged during the interim
period.
* Goodwill impairment of 2,276 million in respect of the Pearson
Television acquisition in 2000.
* Restructuring charge of EUR 22 million in respect of rationalising
Pearson TV's North American operations, consisting primarily of severance
payments as well as inventory write downs and property exit costs. The
costs for restructuring were recorded under other operating expenses.
* EUR 14 million of impairment of financial assets, mainly in respect of
the portfolio of investments in dotcom companies acquired by RTL Group.
These costs were recorded under financial results other than interest.
* Write-down of the value of RTV shares by EUR 12 million to the market
value of the company which is listed on the "Neuer Markt". These costs
were recorded under financial results other than interest.
4. Acquisition - Pearson TV (now FremantleMedia)
Goodwill amortisation expense for the six months ended 30 June 2001 amounts to
EUR 2,438 million (30 June 2000 - pro forma EUR 161 million). This includes
goodwill impairment in respect of Pearson TV of EUR 2,276 million primarily
due to a deterioration of the equity market valuations and the restructuring
of the US drama business, used as a basis for determining the 2000 purchase
price, in the period post acquisition.
As permitted by IAS 22 ("Business Combinations"), a hindsight adjustment
amounting to EUR 31 million has been added to the goodwill arising on the
acquisition of Pearson TV. This largely relates to the write down of programme
rights and advances amounting to EUR 46 million offset by liabilities that
have been waived following the acquisition amounting to EUR 11 million.
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