NINE-MONTHS REPORT 2005

Transcription

1 NINE-MONTHS REPORT

2 NINE-MONTHS REPORT Nine-Months Report Consolidated Income Statement Consolidated Cash Flow Statement Changes in Group Equity Consolidated Balance Sheet Segment Report Number of shares for members of the board Contact NINE-MONTHS REPORT

3 NINE-MONTHS REPORT Dear Shareholders, The business trend over the first nine months shows that is on the right road. The restructuring of our portal operations over the past few months, with the aim of focusing on individual thematic areas with responsible channel managers, is already bearing fruit. During the first nine months of the current financial year sales of EUR 38.9 million were achieved. Group sales thus increased by 11.1 percent compared to the previous year (EUR 35 million). In the third quarter of alone, sales were increased by 16.0 percent to EUR 12.3 million compared to the same period the previous year. For the first time, also achieved a positive result before taxes in what is typically a rather weak third quarter due to seasonal factors, amounting to EUR 0.01 million following a loss of EUR 1.8 million during the same period the previous year. Earnings before interest, taxes, depreciation and amortization (EBITDA) also increased noticeably in the third quarter of to EUR 0.3 million (previous year EUR -1.5 million). In the first nine months of the current financial year, achieved earnings before taxes (EBT) of EUR 0.2 million following a loss of EUR 2.4 million during the same period the previous year. Earnings before interest, taxes, depreciation and amortization (EBITDA) improved during the first nine months of to EUR 0.85 million (previous year EUR -1.5 million). Only the earnings before interest and taxes (EBIT) remained negative (EUR -0.5 million) due to depreciation and amortization, although also improved considerably (previous year EUR -2.9 million). Market Trend All in all, EUR 279 million (gross) was spent on online marketing in Germany in the first nine months of financial year. This means that so far in the current year, the German online advertising market has grown by 36.8% compared with the EUR 204 million that were generated in the same period last year. As a result, the online advertising segment accounted for 2.0% of total advertising spending as at September 31,. Altogether, then, the online sector in Germany has been posting significant growth rates for several months now. In the third quarter of the current financial year, the online advertising industry generated a total income of EUR 101 million. This represents growth of 55% over the same quarter last year (EUR 65 million). Altogether, the Internet is used by 35.5 million people (users in the last three months), or some 55% of the population as a whole. In the ranking list of marketing groups, TOMORROW FO- CUS AG occupies second place with its 14.7 million unique users, ahead of Web.de (12.42 million) and behind InteractiveMedia (17.12 million). This confirms TOMORROW FOCUS AG s leading position in the portal and online marketing segments. MSN.de (9.25 million unique users), CHIP Online (3.89 million unique users) and FOCUS Online (2.95 million unique users) are very well placed in the top-20 ranking list of online offerings by average monthly reach. In the USA, online advertising now accounts for a market share of some 6%. There, sales of between USD 10 and 12 billion are expected for as a whole. This represents growth of around 25% compared with financial year In the UK, too, the growth has acquired an astonishing dynamism: in the first six months of, spending on online advertising increased by 62%. This has taken the market share to 5.8%, considerably higher than analysts had expected. By the mid-year point in, total online spending in the UK had reached GBP 490 million, 20% more than total sales in financial year 2003 (source: IAB, September ). Analysts are expecting online sales to break through the billion-pound barrier in as a whole. This astonishing trend can be attributed primarily to the rapid spread of broadband connections. The advertising industry is reacting to this with higher budgets, since it is proven that broadband users invest more time and money online. Innovations in the Internet advertising industry are making new, creative ad formats such NINE-MONTHS REPORT 3.

4 NINE-MONTHS REPORT as video streaming, interactive formats and the personalization of users possible. Commercial advertising clients are recognizing the dynamism of Internet advertising and are reacting to the increasing sensitivity of users market awareness with higher spending. Appealing to customers in direct, interactive form is far more efficient than offline advertising. This realization is now gaining more and more ground in Germany. Share Price Trading with shares remains quiet. The price reached in the previous quarter could not be maintained. The share lost some 4% in Xetra trading and closed at EUR 2.32 and at EUR 2.29 on the trading floor in Frankfurt. The trading volume came to around 346,000 shares traded in September, which corresponds to an average turnover of some 16,000 shares per day. Price trend compared with the peer group 9/1/ 9/5/ 9/7/ 9/9/ 9/13/ 9/15/ 9/19/ 9/21/ 9/23/ 9/27/ 9/29/ Price trend compared with the indices 9/1/ 9/5/ 9/7/ 9/9/ 9/13/ 9/15/ 9/19/ 9/21/ 9/23/ 9/27/ 9/29/ NINE-MONTHS REPORT 4.

5 NINE-MONTHS REPORT Income and Sales Development achieved EUR 38.9 million in sales during the first nine months of the current financial year. Group sales thus increased by 11.1 percent compared to the previous year (EUR 35 million). In the third quarter of alone, sales were increased by 16.0 percent to EUR 12.3 million compared to the same period the previous year. Results, Costs and Investments For the first time, also achieved a positive result before taxes in what is typically a rather weak third quarter due to seasonal factors, amounting to EUR 0.01 million following a loss of EUR 1.8 million during the same period the previous year. Earnings before interest, taxes, depreciation and amortization (EBITDA) also increased noticeably in the third quarter of to EUR 0.3 million (previous year EUR -1.5 million). In the first nine months of the current financial year, achieved earnings before taxes (EBT) of EUR 0.2 million following a loss of EUR 2.4 million during the same period the previous year. Earnings before interest, taxes, depreciation and amortization (EBITDA) improved during the first nine months of to EUR 0.85 million (previous year EUR -1.5 million). Material costs amounted to EUR 19.1 million as at the balance sheet date September 30,, compared with EUR 17.3 million in the previous year. In the third quarter, materials costs increased only slightly from EUR 5.3 million to EUR 5.5 million, an increase of 7.8%. Personnel expenses decreased in the first nine months of the year from EUR 11.7 million to EUR 11 million. Quarterly personnel expenses came to EUR 3.6 million, compared with EUR 4.1 million in the same period last year. At the end of September, employed 213 people, with BELLEVUE AND MORE AG, Playboy Deutschland Publishing GmbH and Cellular GmbH employees being included on a pro rata basis. invested around EUR 2.8 million in the first nine months of the current financial year. This sum includes EUR 1.0 million invested in intangible assets, EUR 0.2 million in fixed assets and EUR 1.6 million in financial assets. Consolidation Entity and Consolidation Method In s consolidated financial statements for the period January 1 to September 30,, the consolidation entity consisted of five German subsidiaries and three joint ventures. COMPANY Share of capital in % Method of inclusion in the consolidated financial statements of TFAG TOMORROW FOCUS Technologies GmbH 100 Full consolidation TOMORROW FOCUS Portal GmbH 100 Full consolidation TOMORROW Technologies GmbH 100 Full consolidation TOMORROW Ventures GmbH 100 Full consolidation Travelnet Cruise GmbH 100 Full consolidation Bellevue and More GmbH 42 On a quota basis Playboy Deutschland Publishing GmbH 50 On a quota basis Cellular GmbH 50 On a quota basis NINE-MONTHS REPORT 5.

6 NINE-MONTHS REPORT In a contract dated July 29,, TOMORROW FOCUS Technologies GmbH (TFT) set up Travelnet Cruise GmbH in order to increase its market presence in the area of the conception and marketing of software products and IT services. Travelnet Cruise GmbH is at the time of the release of the quarterly financial statements a wholly owned subsidiary of TFT. With the partnership agreement of August 3,, the company Claudio Medien GmbH was set up. Besides TFAG, which has 15% of the shares, FOCUS Magazin Verlag GmbH (75%) and Der Hörverlag GmbH (10%) also have a stake in the company. Claudio Medien GmbH does not comply with the conditions for an associated company as stipulated in the regulations of IAS 28 and is therefore treated as a holding in compliance with IAS 39. BUSINESS TREND BY SEGMENT Portal has geared itself towards increasing online advertising sales and has pressed ahead further with its restructuring in the Portal segment. Channel managers in the Health, Finance and Travel segments will be responsible for these growth areas and will expand them further. In addition, a media partnership between TOMORROW FOCUS AG and ISA, the merger of the publishing groups Georg von Holtzbrinck, Dr. Ippen and WAZ Mediengruppe, was launched. Among other things, the inventory of vehicles offered by the high-reach car exchange autoanzeigen.de was integrated into FOCUS Online ( As of the reporting date of September 30,, TOMORROW FOCUS AG achieved EUR 22.9 million in sales in the core portal business, since among other things sales resulting from online marketing, content and mobile services were combined, which represents an increase of 6.5 percent (previous year: EUR 21.5 million). Revenues of EUR 7.8 million were recorded in portal operations in the third quarter, which means an increase of 18 percent was achieved, compared to the same period the previous year (EUR 6.6 million). In online advertising alone, revenue again increased by 28.6 percent. Since online advertising is continuing to increase in importance in Germany, the earnings contribution of the portal operations is also continuing to show sustained positive development: as of the reporting date of September 30, TO- MORROW FOCUS AG is showing earnings before interest, taxes, depreciation and amortization (EBITDA) in the portals segment of EUR 2.4 million (+134 percent compared to the previous year) and earnings before taxes (EBT) of EUR 1.5 million (previous year EUR -0.2 million). In the third quarter alone, earnings before taxes, interest and depreciation amounted to EUR 0.9 million (previous year EUR -0.6 million) and earnings before taxes (EBT) were EUR 0.6 million (previous year EUR -1.0 million). PORTAL SEGMENT Change In m In m In m In % Online sales Print sales Other TOTAL The allocation of sales was again changed slightly, compared with the Q2/ report, to achieve an even clearer delimitation of the business segments. Online sales include all online ad revenues, mobile services, content production, content syndication and marketing revenue. The high-margin sales from online marketing are showing an increase of 20.3%, while the less lucrative print sales decreased by 85.2%. NINE-MONTHS REPORT 6.

7 NINE-MONTHS REPORT Technology was able to further expand its existing business operations in the cruise segment as a result of TOMORROW FOCUS Technologies GmbH s acquisition of the business operations of IDF Europe GmbH and the full integration of this Hamburg-based on-board entertainment specialist. Thanks to this strategic acquisition, TOMORROW FOCUS AG is now combining its own all-digital system travelnet with the on-board system CIN and taking on IDF s existing customer relationships. These include renowned customers such as Carnival/Cunard (Queen Mary II) and other globally active cruise liner operators. TOMORROW FOCUS Technologies and Lufthansa Systems have already canvassed successfully for their first order. The MS Europa, the world s only 5-star plus cruise liner and the flagship of Hapag-Lloyd Kreuzfahrten GmbH, is being fitted out with the on-board entertainment system CruiseNet from TOMORROW FOCUS Technology GmbH. This is the first all-digital solution to bundle digitally all of the services on offer, including television and telephone. The Technology Division reported total sales of EUR 2.5 million in the third quarter of, which is the same level as the previous year. In the first nine months of the current financial year, total sales amounted to EUR 10.2 million (previous year EUR 7.9 million). Earnings before taxes after nine months was at EUR -0.2 million following EUR -0.5 million the previous financial year. At the quarterly level, earnings before taxes improved from EUR -0.3 million to EUR -0.2 million. According to plan, earnings were burdened by EUR 0.2 million from start-up losses following the takeover of the business operations of IDF Europe GmbH. Participations Activities in the participations segment continued to show a positive trend despite declining development in print advertising. Together with subsidiaries BELLEVUE AND MORE and PLAYBOY, achieved sales of EUR 10.2 million compared to EUR 10.8 million the previous year. Due to the drop in the consolidation rate for BELLEVUE AND MORE GmbH from 50 percent to 41.7 percent during the course of the entrance of Verlagsgruppe Handelsblatt, the sales contribution is respectively lower by comparison. During the third quarter of the current financial year, revenue increased from EUR 3.3 million in the same period the previous year to EUR 3.5 million in the third quarter of. Earnings before taxes (EBT) were increased by 82.4 percent over the first nine months of the current financial year from EUR 0.6 million to EUR 1.1 million. Earnings before taxes increased by more than 230 percent in the third quarter to EUR 0.3 million (previous year EUR 0.1 million). The company s presentation method, which goes well beyond the information required under IAS 34, is being retained in its quarterly reports for the sake of better comparability and analysis. Matters of Special Importance for the Financial and Earnings Situation EUR 2.8 million in one-off sales shown in the technical segment resulted from a long-term software leasing agreement. This agreement does not affect technical segment business in any way because TFT can use the software again at any time. The agreement has no effect on results in because the capitalized value was written off at the same time. Since January 1, regular depreciation of goodwill has been discontinued in accordance with IFRS 3. The increase in goodwill shown in the balance sheet results from the acquisition of assets from the company IDF Gesellschaft für Multimedia Anwendungen (IDF) through the contract signed with TFT on July 25,. The purchase price was a six-figure sum. NINE-MONTHS REPORT 7.

8 NINE-MONTHS REPORT To ensure comparability of long- and short-term liquid funds with the previous year, securities (other loans) and, in the previous year, the short-term loan to an associated company must be added to the cash and cash equivalent total shown in the balance sheet. Description Value in m Value in m Balance sheet total Securities 1.6 Loans redeemable at short notice TOTAL LIQUID ASSETS (long- and short-term) The reduction in liquidity compared to the same quarter in the previous year is due mainly to investment in online portals at the end of 2004, to a new evaluation and counting system, to self-constructed software in the technical segment, and to the purchase of assets from IDF by TFT. The number of diluted shares is 69,525 higher than that of undiluted shares. This difference is due to the number of employee stock options outstanding as at September 30,. They are unlikely to be exercised before 2006 but as they would improve earnings per share, they are not, in accordance with IAS 33.40, taken into account in calculating diluted earnings per share. Accounting principles The quarterly report was drawn up in accordance with IAS 34. According to IASC regulations, consolidated financial statements to September 30, were drawn up in compliance with International Financial Reporting Standards (IFRS). Accounting and Valuation Methods Individual accounts for associated companies are drawn up as at the reporting date for the consolidated financial statements. To draw up consolidated financial statements, the Management Board must use best-possible estimates and assumptions on the basis of the latest current information that have an influence on the stated asset and liability values and details of contingent assets and liabilities on the reporting date and influence balance sheet income and expenditure in the reporting period. Actual subsequent results may differ from these estimates. NINE-MONTHS REPORT 8.

9 NINE-MONTHS REPORT Outlook Following a successful third quarter, the Management Board of is confident that results for the year as a whole will be better than had previously been expected. The Management Board of TOMORROW FOCUS AG initiated comprehensive benchmarking analyses in the third quarter. Numerous measures to increase efficiency were adopted in the Sales, Technology and Portals segments, and their implementation will begin before the end of the year. Market research activities were intensified with a survey of almost 5,000 users, which was carried out in order to ascertain the future requirements of successful online products. It succeeded in uncovering new reach potential and defining additional marketable space. The objective is to offset the necessary investments in the Portal segment by increasing efficiency within the organization and reducing personnel and material costs so that earnings are not affected. In the seasonally strong fourth quarter, assuming a continuation of the positive trend on the online advertising market, significantly increased advertising budgets will contribute to a successful business trend. At the same time, the company is taking account of the expected market trend by intensifying its activities to expand the Portal segment. Furthermore, M & A strategies for expanding business operations are currently being examined. In addition to this, the fast-growing market for cruise liners holds out future growth prospects for the Technology segment. The company is confident that its first order, equipping the MS Europa, will lead to follow-up orders. The Management Board Munich, November NINE-MONTHS REPORT 9.

10 CONSOLIDATED INCOME STATEMENT Consolidated Income Statement from January 1 to September 30, Sales 38,892 34,992 12,321 10,635 Other operating income 1,602 1, Changes in inventories for finished goods and work in progress Own work capitalized 455 1, Cost of materials -19,114-17,345-5,485-5,277 Personnel expenses -10,954-11,715-3,752-4,061 Amortisation and depreciation of fixed intangible and tangible assets -1,340-1, Amortization of goodwill Other operating expenses -10,021-10,510-3,112-3,731 Operating result , ,976 Earnings from loans (financial assets) Earnings from financial investment and similar Expenditure on financial investment and similar Earning before taxes 162-2, ,789 Income taxes Deferred taxes Other taxes Annual consolidated surplus (foregoing year: deficit) 894-2, ,175 Loss carried forward -103, ,532 Net accumulated deficit -102, ,364 Earnings per share (basic and diluted) Euro 0,02 Euro -0,07 Average number of basic shares outstanding 42,856,475 42,856,475 Average number of diluted shares outstanding 42,926,000 42,926,000 NINE-MONTHS REPORT 10.

11 CONSOLIDATED CASH FLOW STATEMENT Consolidated Cash Flow Statement from January 1 to September 30, CASH FLOW FROM OPERATING ACTIVITIES Adjustment for partial disposal Belevue Total + Net income for the year ,832 Adjustments to reconcile the net loss for the year with income/expenses: - Interest income Interest expenses Depreciation on intangible assets 1,340 1,340 1,466 - Appreciation and unrealised gains on securities held to maturity unrealised losses on financial assets valued at par Change in deferred taxes Increase in pension accruals Operating result before changes in net current assets: 773 1,465 -/+ Profit/Loss from the disposal of fixed assets Incomings from asset retirement 3, /+ Increase/decrease of assets not assignable to investment or finance activities -2, ,811 4,471 +/- Increase/decrease of liabilities not assignable to investment or finance activities -1, ,928-1,731 - Change in receivables/payables vis-à-vis affiliated companies and associated companies Cash received from ordinary activities -1,068 1,975 - Interest expenditure -5-9 = Net cash flow from operating activities CASH FLOW FROM INVESTING ACTIVITIES + Incomings from disposals of fixed assets from property, plant and equipment and intangible assets Payments made for investments in property, plant and equipment and intangible assets -1,211-1,211-2,367 + Incomings from loan repayment by affiliated companies ,473 - Pay offs in capital assets -1,624-1,624-1,549 + Incoming payments from disposals of financial assets 1,522 1, Payment from interests Payment from the sale of an associated company s shares less transferred cash and cash equivalents = Net cash flow from investing activities ,535 NINE-MONTHS REPORT 11.

12 CONSOLIDATED CASH FLOW STATEMENT Consolidated Cash Flow Statement from January 1 to September 30, CASH FLOW FROM FINANCING ACTIVITIES Adjustment for partial disposal Bellevue Summe + Incomings to capital reserve 0 0 4,049 + Incomings to capital reserves after stock exchange admission costs 0 0 8,241 + Payments made from buyback of interest-bearing loans = Net cash and cash equivalents used for financing activities 0 12,286 Net increase/decrease of cash and cash equivalents -1,151-1,748 + Cash and cash equivalents at the start of the fiscal year 23,930 6,648 = Cash and cash equivalents at the end of the fiscal year 22,779 4,900 The cash and cash equivalents in the beginning and at the end of the fiscal year were calculated excluding securities classified as current assets and prior to deducting short-term bank liabilities NINE-MONTHS REPORT 12.

13 CONSOLIDATED CASH FLOW STATEMENT Statement of changes in group equity from January 1 to September 30, SUBSCRIBED CAPITAL CAPITAL RESERVE ACCUMULATED PROFITS TOTAL December 31, ,807 94,480-37,218 96,069 Other effects not affecting operating result Net loss for the year ,813-62,813 December 31, ,807 94, ,293 32,994 Net income for the year December 31, ,807 94, ,532 32,755 Approved capital increase 3,850 8, ,512 Conditional capital increase / stock option plan Capital increase costs Net income for the year 0 0-2,979-2,979 December 31, , , ,511 42,066 Annual surplus for 1st quarter Annual surplus for 2nd quarter Annual surplus for 3rd quarter September 30, 42, , ,617 42,960 NINE-MONTHS REPORT 13.

14 CONSOLIDATED BALANCE SHEET Consolidated Balance Sheet as of September 30, ASSETS FIXED ASSETS Intangible assets Franchises, industrial rights and similar rights and assets and licenses in such rights and assets 2,926 3,022 3,135 Internally developed software 1,930 4,487 4,829 Goodwill 3,803 3,975 3,868 Payments on account Property, plant and equipment 8,681 11,528 11,837 Other equipment, furniture and fixtures Financial assets Investment holdings Loans to companies in which participations are held Long-term investments Other loans 1,632 1,653 1,647 Receivables 1, ,665 Trade receivables 2, Receivables from affiliated companies , Deferred taxes 7,406 6,659 6,556 CURRENT ASSETS Inventories 21,336 21,534 20,980 Raw materials, consumables and supplies Work in progress Finished goods and goods for resale Receivables and other assets Trade receivables 6,814 4,355 6,517 Receivables from long-term construction contracts Receivables from affiliated companies 1,468 22,531 1,462 Receivables from companies in which participations are held Receivables from tax on income Sundry other assets 1, ,422 10,318 28,227 10,136 Cash and cash equivalents 22,779 4,900 23,930 Total current assets 33,624 33,362 34,585 Balance sheet total 54,960 55,166 55,565 NINE-MONTHS REPORT 14.

15 CONSOLIDATED BALANCE SHEET Consolidated Balance Sheet as of September 30, EQUITY AND LIABILITIES EQUITY AND RESERVES Subscribed capital 42,856 42,856 42,856 Capital reserve 102, , ,721 Net accumulated deficit -102, , ,511 Total equity 42,960 42,213 42,066 LONG-TERM LIABILITIES Provisions for pensions and similar obligations Liabilities to affiliated companies in which participations are held Total long-term liabilities SHORT-TERM LIABILITIES Interest-bearing loans Liabilities to banks Payments received on account of orders Trade payables 7,156 7,504 7,532 Other provisions Liabilities to affiliated companies 1, Liabilities to companies in which the company has a participating interest Liabilities of taxes on income Sundry other liabilities 3,035 3,274 3,784 Total short-term liabilities 11,991 12,441 13,490 Total liabilities 12,000 12,953 13,499 Balance sheet total 54,960 55,166 55,565 NINE-MONTHS REPORT 15.

16 SEGMENT REPORT Segment Report from January 1 to September 30, Segment Report Portal Technology Equity Investments External sales 20,941 22,087 3,328 6,785 10,723 10,020 Internal sales ,574 3, ,530 22,937 7,902 10,242 10,826 10,181 Earnings from business activities before depreciation (EBITDA) 5% 1,009 10% 2, ,029 1,164 Depreciation 1, Segment results (EBIT) , ,058 Financial results Earnings before taxes (EBT) , ,087 Tax result , Result for the period , Segment Report Administration Consolidation Group External sales ,992 38,892 Internal sales ,563-5, ,563-5,107 34,992 38,892 Earnings from business activities before depreciation (EBITDA) -2,419-2, , Depreciation ,466 1,340 Segment results (EBIT) -2,478-2, , Financial results Earnings before taxes (EBT) -1,913-1, , Tax result Result for the period -1,913-2, , NINE-MONTHS REPORT 16.

17 SEGMENT REPORT Segment report quarterly comparison Segment report quarterly comparison Q1 Portal Technology Equity Investments Q2 Q3 External sales 6,829 7,813 7,445 3,879 1,476 1,430 3,217 3,357 3,446 Internal sales ,254 1,160 1, Q1 Q2 Q3 Q1 Q2 Q3 7,088 8,076 7,773 5,133 2,636 2,473 3,261 3,427 3,493 Earnings from business activities before depreciation (EBITDA) Depreciation Segment results (EBIT) Financial results Earnings before taxes (EBT) Tax result , Result for the period Segment report quarterly comparison Administration Consolidation Group Q1 Q2 Q3 External sales ,925 12,646 4,876 Internal sales ,776-1,703-1, Q1 Q2 Q3 Q1 Q2 Q ,776-1,703-1,628 13,925 12,646 4,876 Earnings from business activities before depreciation (EBITDA) Depreciation Segment results (EBIT) Financial results Earnings before taxes (EBT) Tax result Result for the period NINE-MONTHS REPORT 17.

18 NUMBER OF SHARES FOR MEMBERS OF THE BOARD Number of shares for members of the board, September 30, Management Board Members Shareholdings Stefan Winners, Chief Executive Officer 13,000 Enrico Just, Chief Financial Officer 60,000 Christoph Schuh, Chief Marketing Officer 90,000 Supervisory Board Members Shareholdings Dr. Paul-Bernhard Kallen 200,000 Dr. Andreas Rittstieg Helmut Markwort 1,616,550 Jean-Paul Schmetz 80,000 Prof. Dr. Stefan Leberfinger 200,000 Martin Weiss 53,000 NINE-MONTHS REPORT 18.

19 CORPORATE CALENDAR Contact Investor Relations Ariane Meynert Phone: (0) 89/ Fax: (0) 89/ P.O. Box Munich Visitors address: Steinhauserstraße Publishing Details Published by:, Munich Editor: Ariane Meynert Layout: TOMORROW FOCUS Technologies NINE-MONTHS REPORT 19.