2008 key results (excluding Home of Hardware*):
Revenues of 941.1m (2007: 937.2m)
EBITDA negative 57.0m (2007: positive 83.6m)
Q4 2008 key results (excluding Home of Hardware*):
Revenues of 236.1m (Q4 2007: 261.3m)
EBITDA negative 44.5m (Q4 2007: positive 13.5m)
2.399m subscribers as of 31 December (Q3 2008: 2.411m)
Net loss (including Home of Hardware, discontinued operations)
Full year 2008: net loss of 269.4m (2007: 51.6m)
Q4 2008: net loss of 114.3m (Q4 2007: 23.5m)
Net debt of 318.1m as of 31/12/2008 (30/9/2008: 307.0m)
Outlook:
Subscriber base expected to be broadly flat in the first half of 2009 and growth to commence in Q3 2009 after relaunch and new marketing initiatives
In 2009, negative cash flow in a range of 250m to 275m and significant EBITDA loss expected
Targeted EBITDA and cash flow break-even on a monthly basis during Q4 2010 but negative for full year 2010
Premiere targets to be net income and cash flow positive for the 2011 year and onwards
Munich, 16 February 2009. Full year 2008 revenues of Premiere increased slightly to 941.1m (2007: 937.2m). Including Home of Hardware, total revenues were 1,017.1m, consistent with guidance given in November 2008 of at least 1,015m. Operating expenses rose to 998.1m (2007: 853.6m), mainly due to higher programming costs for the Bundesliga, higher expenses for transmission and lower other operating income compared to 2007. EBITDA was negative 57.0m (2007: positive 83.6m) excluding Home of Hardware and negative 59.5m if included.
The financial result was negative 59.5m (2007: negative 39.5m), income taxes rose to 48.8m (2007: 2.2m), mainly comprising deferred taxes. As a result, net income including Home of Hardware (discontinued operations) was negative 269.4m (2007: negative 51.6m). Cash flow from operating activities amounted to negative 108.1m (2007: negative 34.4m). Net debt at the end of Q4 2008 was 318.1m (Q3 2008: 307.0m). Results for 2008 were negatively impacted by the security breach in the Nagravision encryption system, which was not finally resolved until 10 November 2008, and the uncertainty as to whether Premiere would have the rights to broadcast Bundesliga from the 2009/2010 season onwards which was confirmed on 28 November 2008.
In Q4 2008, Premiere posted total revenues of 236.1m (Q4 2007: 261.3m). Operating costs rose to 280.5m (Q4 2007: 247.8m). EBITDA was negative 44.5m (Q4 2007: positive 13.5m). Net income was negative 114.3m (Q4 2007: negative 23.5m). Operating cash-flow in the fourth quarter 2008 was negative 9.8m (Q4 2007: positive 24.3m).
Premiere had a total of 2.399m direct subscribers at the end of Q4 2008 (31/12/2007: 2.534m). Compared to Q3 2008 (2.411m), the subscriber base has declined by 12k, with net growth of 21k in monthly contract subscribers more than offset by 33k net loss of Flex subscribers. Premiere added 153k new direct subscribers during Q4 2008, 25 percent more than Q4 2007. Of the 153k additions, 147k were monthly contract subscribers, up 56k or 60 percent versus Q4 2007, and 6k were Flex and prepaid additions. Due to the non-renewal of Flex offers, churn for Q4 2008 at 23.1 percent was up compared to Q3 2008 (21.4 percent). ARPU in Q4 2008 was 23.86, down slightly compared to Q3 2008 (23.92). At year end 2008, Premiere had 691k wholesale subscribers (Q4 2007: 790k).
Mark Williams, CEO of Premiere AG: 2008 was a very difficult year, during which we suffered a large financial loss and a liquidity crisis which threatened the companys existence. The long-term financing structure agreed in December with News Corp and our bank syndicate was key to our survival. The most critical step now is the approval of the required capital increase by shareholders at the extraordinary general meeting on
26 February and the completion of the rights issue expected during the first half 2009. For the first half of this year we are focused on developing detailed operational plans for an aggressive push in the second half.
Outlook
Premiere expects the subscriber base to be broadly flat in the first half of 2009 and growth to commence in Q3 2009 following relaunch and new marketing initiatives.
The increase in program revenues in 2009 is expected to be limited to approximately 50m because growth initiatives cannot commence until the second half of the year after the capital raising is completed. Total revenue will grow by less than 50m in 2009 because one time revenues in 2008 such as the sale of FIFA Worldcup 2010 rights are not expected to recur in 2009. Additional expenditure in 2009 will comprise additional costs of Bundesliga and sports programming, an increase in other programming costs, additional sales and marketing costs and higher transmission and other costs. No significant other income is expected in 2009. As a result, the company expects a negative cash flow in the range of 250m to 275m and a significant EBITDA loss in 2009.
Premiere targets to achieve EBITDA and cash flow break even on a monthly basis during Q4 2010 but for the full year both figures are expected to be negative. Premiere targets to be net income and cash flow positive for the 2011 year and onwards.
Contact for press:
Torsten Fricke
Vice President Corporate Communications
Tel.: +49 89/99 58-63 50
torsten.fricke@premiere.de
Contact for investors and analysts:
Christine Scheil
Vice President Investor Relations
Tel.: +49 89/99 58-10 10
christine.scheil@premiere.de
* Premiere sold its stake in Home of Hardware (HoH) in December 2008. HoH has been classified as a discontinued operation in accordance with IFRS 5. Therefore revenues and expenses of HoH are not part of the statement of operations and have been excluded.
This press release contains statements regarding future developments that have been based on current evaluations and have been made to best of the knowledge of the management of Premiere AG. Such statements with regard to future developments are subject to known and unknown risks, uncertainties and other factors that could cause the profit situation, profitability, value development or the performance of Premiere AG or the success of the media industry to diverge from those profit situations, profitability, value development or performance results that are assumed expressly or implied or described in these statements regarding the future. Considering these risks, uncertainties and well as other factors, readers of these documents should not rely in an incommensurate manner on these statements dealing with future developments. Premiere AG has no obligation to behave in keeping with such statements regarding future developments or to alter its behavior to accommodate future events and developments.
