Excellent performance from the production business underpinned an increase of more than 150% in gross revenues to €41.5m. Prime contributors to the balance of revenues come from:
■
The release of Rockstars zähmt man nicht;
■
The series You are Wanted, developed for Amazon. Season 1 was released in March 2017 and season 2 was completed by December 2017 and released in May 2018;
■
Hot Dog (film developed during 2017, released in January 2018);
■
A Jar Full of Life (developed in 2017, released in March 2018); and
■
Beat (series developed for Amazon).
The company also recorded its first (undisclosed) revenues from the nascent PANTAFLIX VOD platform. The cost of production for this much-increased slate of programmes was €15m, up from €3.6m in 2016, and operational costs rose 140% y-o-y to €8.9m due to increasing headcount (from an average of 91 in 2016 to 154 in 2017) and investment across the business, with particular emphasis on the VOD platform. The increase in opex also included the non-recurring effects of the two capital raises completed over the course of the year.
Despite the increasing levels of investment into the VOD platform, EBITDA almost doubled to €17.5m, and the company reported its first year of operating profit since 2014. However, a large swing in the recognition of tax charges relating to internally generated intangibles pushed the company to a net loss of €0.3m for the period. Despite the increased operating profitability, cash conversion decreased to 42%% (FY16: 126%) with operating cash flow of €7.4m decreasing 37% on last year. However, including the two capital raises (€23m in total), the company moved from an overall net debt position in 2016 to €12m net cash at year-end 2017.
Exhibit 1: Summary of results
€m |
2015 |
2016 |
2017 |
Income Statement |
|
|
|
Revenue |
13.7 |
15.1 |
28.1 |
Increase in working capital |
|
|
10.8 |
Other own work capitalised |
0.0 |
0.4 |
0.3 |
Other operating income |
6.6 |
0.9 |
2.4 |
Gross revenues |
20.3 |
16.5 |
41.5 |
Cost of purchased services |
(9.2) |
(3.6) |
(15.0) |
Gross profit |
11.1 |
12.9 |
26.5 |
Opex |
(2.3) |
(3.7) |
(8.9) |
D&A |
(9.4) |
(10.9) |
(15.3) |
EBIT |
(0.5) |
(1.7) |
2.2 |
EBITDA |
8.8 |
9.2 |
17.5 |
Profit Before Tax (as reported) |
(0.4) |
(1.6) |
2.2 |
Net income (as reported) |
(0.4) |
(1.7) |
(0.3) |
EPS (as reported) (€) |
(0.35) |
(1.52) |
(0.26) |
Balance Sheet |
|
|
|
Total non-current assets |
1.1 |
7.6 |
4.5 |
Total current assets |
12.4 |
10.4 |
41.4 |
Total assets |
13.5 |
18.1 |
46.0 |
Total current liabilities |
(8.7) |
(14.8) |
(16.9) |
Total non-current liabilities |
(0.1) |
(0.2) |
(2.3) |
Total liabilities |
(8.7) |
(14.8) |
(16.9) |
Total Equity |
4.8 |
3.1 |
26.1 |
Cash flow Statement |
|
|
|
Net cash from operating activities |
10.7 |
11.7 |
7.4 |
Net cash from investing activities |
(10.3) |
(17.4) |
(14.7) |
Net Cash from financing activities |
6.0 |
0.0 |
23.4 |
Net cash flow |
6.4 |
(5.7) |
16.1 |
Net cash/(debt) at end of year |
1.8 |
(3.9) |
12.2 |
Operational update: New name, new CEO
The production pipeline appears similarly strong in 2018, with the Q218 releases of season 2 of You are Wanted, Hot Dog (which opened at the top of the German box office charts in January), Beat and A Jar Full of Life. The group has c 30 projects in development and expects to deliver for December 2018 release 100 Things (for Warner Bros) and Resistance (an international co-production with Rocket Science), and is collaborating on the international adaptation of The Magic Flute.
While the production business continues to expand, having delivered its strongest results to date, it is the more scalable VOD platform that will determine the mid/long-term prospects for the business. This is evident from the change of company name during 2017, in addition to the promotion of Stefan Langefeld from COO of the platform business to group CEO in April 2018, replacing Dan Maag, who will continue to lead the group’s production activities.
The roll-out to new geographies continues, with the service now available in c 50 countries around the world, including North America, Europe, and the key markets in Asia and Australasia. The app is also now available on the Amazon Fire TV Stick. The company has also announced new content deals with StudioCanal (global) and Disney (in Germany and Austria), which increases both the volume and quality of content available to users.
Marketing, focused on German, Turkish, English and Polish expatriates groups, started in Q118 in target markets and management points to a ‘six-figure’ user base, which is growing quickly. While visibility on the financial KPIs relating to the VOD platform remains limited, management has confirmed that additional metrics will be introduced later this year.
The separate Chinese venture, which launched in Mandarin in March last year, is progressing more slowly than initially expected, with bottlenecks in content being released from Chinese partners.
