DEAG Deutsche Entertainment AG Annual Report 2000

Transcription

DEAG
Deutsche Entertainment AG
Annual Report 2000
the deag group at a glance
Sales (in DM millions)
Domestic (in DM millions)
Foreign (in DM millions)
EBITDA (in DM millions)
as % of sales
EBIT (in DM millions)
as % of sales
Cash flow (in DM millions)
Bank debts ratio
Balance sheet total (in DM millions)
Equity (in DM millions)
as % of balance sheet total
Earnings per share in DM (diluted)
Earnings per share in € (diluted)
Employees (full-time)
2000
1999
Changes
1999 / 2000
506.0
437.2
68.8
38.8
7.7
11.5
2.3
7.3
4.0
370.2
96.1
26.0
0.73
0.37
1,879
170.0
154.3
15.7
13.4
7.9
10.0
5.9
4.3
3.3
159.0
35.6
22.4
0.36
0.19
296
336.0
282.9
53.1
25.4
- 0.2
1.5
- 3.6
3.0
0.7
211.2
60.5
3.6
0.37
0.18
1,583
Repayment of debt in years calculated by: Financial debts
Cash flow
The DEAG share compared with NEMAX All Share
200
175
150
125
100
75
50
Jan. 1, 2000
This annual report contains the consolidated financial statements according to IAS for
Deutsche Entertainment AG, the management report and the Group management report for
the 2000 financial year as well as additional voluntary comments.
Dec. 31, 2000
You can request the consolidated financial statements of Deutsche Entertainment AG awarded
an unrestricted audit certificate by our auditors as well as the German version of this annual
report free of charge from:
at a glance
This annual report is also available in German.
The English version is a translation from the German version.
2
the deag group at a glance
Deutsche Entertainment Aktiengesellschaft
Investor Relations
Kurfürstendamm 63
D-10707 Berlin
table of contents
Foreword of the Board of Management
4-5
Development of our business divisions
6 - 13
Theatres
Artists & Tours
Urban Entertainment
6-7
8-9
10 - 11
Media & Commerce
12 - 13
The DEAG share in the financial year 2000
14 - 15
Management report and Group management report
16 - 25
Business performance of the DEAG Group
Asset and capital structure of the DEAG Group
Group financing
16 - 17
18
19
Key financial ratios
Development of personnel
Situation of DEAG Deutsche Entertainment AG
Report on risk management
20
20 - 21
21 - 22
23 - 24
Risk of future development
Dependency report
24
25
Outlook 2001
25
Consolidated financial statements of
26 - 52
Remarks on financial reporting
Consolidated balance sheet
27
28
Consolidated profit and loss account
Consolidated cash flow statement
29
30
Development of equity in the Group
Development of fixed assets in the Group
Notes
Auditor’s opinion
Annual financial statements as of December 31, 2000
of Deutsche Entertainment AG (abridged version)
Report of the Supervisory Board
Personal data regarding the Board of Management
31
32
33 - 49
50
51 - 52
53
54 - 55
and Supervisory Board
Future-oriented statements
56
Financial calendar 2001
56
Imprint
57
contents
table of contents
3
from left to right
Dietmar Glodde
Peter L. H. Schwenkow
Dr. Martin Fabel
Markus Fabis
2000 financial year: a milestone for deag.
Dear shareholders and business partners,
Commerce. Each of these fields requires different areas of expertise,
involves different customer wishes and entails different growth prospects.
We are delighted to be able to report that the DEAG Group ended the
2000 financial year with record results.
In the year under review we achieved the targets set in all divisions with
the exception of the Artists & Tours. The competition will only become
less intensive in the Artists & Tours division in 2001 as a result of the
Group earnings before interest, tax and depreciation (EBITDA) were up
190 % to DM 38.8 million. Group net income for the year was up by DM
conclusion of the concentration process.
3.5 million to DM 5.2 million. That amounts to annual growth of 206 %.
Sales were up 198 % to DM 506 million. These increases demonstrate
once more that the DEAG Group is able to achieve its own high targets.
In addition, the year 2000 was for the DEAG Group very much a year of
innovation and expansion. It was a year in which we were able to realise growth opportunities of strategic and long-term significance.
We can report with pride that since going public in September 1998 we
have fully achieved the sales targets we set ourselves and the results that
Borne by a strategic orientation aimed at establishing a leading service
presence at all value-added levels between artist and visitor and at bonding and utilisation of content, we were able in 2000 to bring to a successful conclusion the following substantial measures toward implementing our growth strategy:
analysts were expecting for the tenth successive quarter.
( )
To achieve the
possible you must
constantly attempt
the impossible.
In the 2000 financial year, the DEAG share was
one of the few on the Neuer Markt that were
quoted at markedly higher than the issue price
(over 100 % above it). This trend in our view
reflects the special confidence investors have in
our group.
What is the secret of this success?
We can first report that our traditional business activities have progressed highly satisfactorily. This traditional activity is in the core business
divisions Theatres, Artists & Tours, Urban Entertainment and Media &
foreword
4
foreword
• the acquisition of profitable parts of STELLA assets per April 1, 2000,
and successful implementation of company reorganisation within a
nine-month period;
• preparations for the stock market flotation of the new STELLA Entertainment AG, which is just short of completion, and the sale of 24 % of
shares in the new STELLA Entertainment to a group of investors;
• the acquisition of a 90 % stake in Good News Productions AG, the leading live entertainment company in Switzerland, as of July 1, 2000;
• the one-third holding in START Ticket (soon to be Qivive AG), a joint
and equal venture with Lufthansa AG and Axel Springer Verlag, for
which there are also firm plans to go public in the course of the 2001
preneurial challenges that lie ahead. After the tempestuous growth that
followed DEAG’s September 1998 stock market flotation we plan in the
months ahead to concentrate on boosting efficiency in our existing
financial year;
business divisions. We are working on the assumption that additional
sources of earnings and clear cost synergies can be realised now that we
are in a position, to choose, on account of our size, between a large number of options.
• the expansion of our highly profitable catering activities by setting up
a 50-50 joint venture with Lufthansa Airport Gastronomie GmbH, one of
the leading catering companies in Germany;
• the globalisation of our Artists & Tours business division by the
establishment of DEAG Global Entertainment AG in Switzerland and
the acquisition of a 70 % stake in Entertainment One AG of Switzerland, which jointly
Organization and
( )
swift integration
lay the groundwork
for dynamic and
with Marcel Avram, formerly of Mama Concerts, will in future be the platform for our
international Artists & Tours activities.
qualified growth
In addition, we will continue to sound out possible fields for expansion
and strategic options. Whenever an entrepreneurial opportunity arises
for DEAG, we will pursue it resolutely.
Content, content and content is another task for the 2001 financial year.
You do not need prophetical skills to foresee that the demand for content is set to grow enormously around the world. That is why we will
be working intensively on our core business content to bind it to us,
develop it and, finally, utilise it.
The individual transactions are outlined in
detail both in the segment reports and in the
We took a first step in this direction jointly
management report. The Board of Management is convinced that these
significant strategic course settings established a superb starting point
for future growth. Our objective continues to be to make the DEAG
with Richard Ogden, setting up in London in
Summer 2000 Richard Ogden Management
Ltd., an agency specialised in managing
Group one of the most creative and leading European live entertainment
enterprises.
artists.
A second, important keyword alongside
( )
It is not a matter
of predicting the
future but of being
prepared for it.
To keep pace with the corporate changes that have taken place, we
embarked in the 2000 financial year on a fundamental reorganisation of
content is convergence. Sales channels are being digitalised and newly
developed, and previously separate techniques are being networked with
our internal administration, especially in the areas of finance, accounting, controlling and data processing, costing roughly DM 0.6 million.
These measures will be completed in full in the second quarter of 2001.
each other. We are already well positioned in this sector with the equal
shares that we, Lufthansa AG and Axel Springer Verlag hold in the joint
venture START Ticket GmbH, the future Qivive AG.
They were accompanied by changes on the board.
By colleague consensus, the Board of Management underwent a clear
In view of this strategic course, we are convinced we will achieve in the 2001
financial year sales growth of 34 % to DM 680 million, an EBITDA of DM
rejuvenation during the 2000 financial year. On July 1, 2000, Markus
Fabis and Dr. Martin Fabel joined the board. Markus Fabis took over res-
45 million, up 16 %, and earnings per share (EPS) of DM 1.95 (+ 170 %).
ponsibility for Finance and Personnel from Thomas Nedtwig, who took
on the same job at STELLA Entertainment AG, while Dr. Martin Fabel
took on the newly-created board responsibility for Media & Commerce.
The DEAG Group’s strong presence at all relevant levels along the valueadded chain of live entertainment, combined with constantly growing
demand for leisure activities, make DEAG in our view as a growth share
A further newcomer is Dietmar Glodde, who joined the board on Octo-
with high assets. It is better equipped than almost any European competitor to face tomorrow’s challenges.
ber 1, 2000 and is in charge of operations. Frank Reinhardt, previously
in charge of Urban Entertainment, and Klaus Ulrich, previously responsible for Artists & Tours, left the board.
This new board stands for a young and dynamic DEAG. The Board of
Management realignment laid the personnel groundwork for dealing
successfully, energetically and in a future-related manner with the entre-
In conclusion, we should like to thank our staff for their contribution
toward our corporate success in 2000. We thank our shareholders and
business partners for the confidence they have shown in DEAG’s ability
to perform. You can rest assured that we will continue to pursue with
entrepreneurial passion and imagination our objective of increasing
resolutely the DEAG Group’s assets and growth prospects.
foreword
5
highlights: deag makes the stella star shine.
The Theatres segment was the focal point of public interest in 2000. The
spectacular takeover in the first quarter of 2000 for DM 40 million of the
viewed in a dim light by German public opinion, and insolvency only
reinforced this view. Communicative efforts were and continue to be
profitable parts of the STELLA musicals group, which was insolvent but
was acquired without inherited liabilities, was one of the largest acquisitions in DEAG’s history. With STELLA in its portfolio, DEAG doubled
needed to push STELLA’s positive achievements and successes to the
foreground. DEAG’s aim was to strengthen the company’s profitable core
business, producing musicals.
sales and markedly increased earnings.
In addition to cutting fixed costs, DEAG implemented a program to
Having acquired the musicals, the management’s most pressing task was
to unlock synergy potential swiftly, to motivate STELLA staff for the
common future and, finally, to implement a lean organisational structure
led by a management team work in a profit-driven fashion. The result is
make the musicals more attractive. It is based primarily on musicals no
longer running seemingly forever. They now run for shorter periods at
different locations, making full use of regional visitor interest. As shown
by the announcement of plans to end shows of Disney’s "Beauty and the
an impressive achievement: a turnaround in just nine months, a professional team and a convincing musical concept.
Beast” in Stuttgart on December 22, 2000 and move "Cats” from Hamburg to Stuttgart, additional revenues can be generated by means of pull
effects.
Musical productions DEAG took over included "Cats” and "The Phantom
of the Opera” in Hamburg, Disney’s "Beauty and the Beast” and "Dance
up. The realignment of the Hamburg Operettenhaus as a premiere theatre with "Fosse” as its first show and the agreement to perform "Mozart!”
at the Neue Flora testify to the success of the new strategy.
numerous other national and international bidders. Since the insolvency
phase, rental, license and leasing agreements have been renegotiated,
saving DM 22 million in the 2000 financial year.
Despite the proven attraction of STELLA musicals (nearly 20 % of Ger-
to successfully consolidate its market position. Together with its existing
concerts, variety theatres and venues business, DEAG with its profitable
STELLA units last year alone attracted a customer base of nearly seven
million visitors. The purchasing power thereby attained enables DEAG to
make services such as its sales network available to third parties and so
mans plan to visit a STELLA musical in 2001), the musical company was
open up further sources of revenue.
theatres
6
Within the shortest of periods new musical productions have been lined
of the Vampires” in Stuttgart, "Starlight Express” in Bochum and Disney’s
"The Hunchback of Notre Dame” in Berlin. These units were consolidated on April 1, 2000, as well as the travel unit STELLA Musicalreisen
(SMR) and the in-house artists’ training facility STELLA Academy. In the
insolvency proceedings, DEAG with its promising concept prevailed over
theatres
In acquiring STELLA, DEAG has also achieved the critical size it needed
“It is an addiction,
but a nice one.“
( )
Andrea Rau from Bochum
after watching the musical
STARLIGHT EXPRESS for
the 600th time.
“and I am going on to
Attendance at the musicals increased in 2000 to 72 % of economic
utilisation, beyond the break even point. With sales of DM 250 million,
access to the capital market opens up
new prospects of financing further
STELLA accounts for almost 50 % of DEAG sales. DEAG’s profits were
cut by DM 7 million by one-off costs in connection with the acquisition
of the musical activities and by one-off restructuring expenditure at
growth. Furthermore, it guarantees longterm product supply and generation.
STELLA. However, with EBITDA of DM 25 million, STELLA makes a substantial contribution toward DEAG’s profits.
In the Theatres segment, a further increase in the number of visitors was
recorded at the three variety theatres in Berlin (Wintergarten Varieté),
The way into the future was set with STELLA’s upcoming listing. This
involved the acquisition of 79 % of the equity of Hegener + Glaser AG,
a company listed on the regulated market (Geregelter Markt) at the
Düsseldorf (Roncalli’s Apollo Varieté) and Stuttgart (Friedrichsbau
Varieté). The increase was due in part to the growing number of galas,
totalling 60 in 2000 against 43 the previous year, and in part to the
introduction of further product variations, such as the monthly Swing It!
Munich and Hamburg stock exchanges.
At the extraordinary general meeting of Hegener + Glaser AG held in
Hamburg on December 29, 2000, shareholders agreed to a change of
name to STELLA Entertainment AG and to investment in the musical
carry on.“
Night in the Wintergarten Varieté. It is deliberately aimed at a younger
target group, entertained after the Friday evening show firstly in the Hinterhof by typical 1930s-style scenes and then dances to the music of a
superb swing orchestra such as that of jazz legend Coco Schumann.
business in the form of a capital increase by means of cash and non-cash
capital contributions. DEAG is confident that once all legal deadlines
have elapsed, the share will be listed in the regulated market in the 2001
financial year. A SMAX listing is planned as soon as possible to offer
investors a higher degree of transparency in view of the stricter rules that
First-rate international artists were again signed up for over 1,200 shows. Highlights included performances by ventriloquist George Schlick,
jazz professor Judy Niemack, TV star Karsten Speck, artist duo Vis Versa
and the Savoy Dance Orchestra with singer Robin Merrill. High-quality
shows and new product innovations led to capacity, which was already
apply there.
high, being further increased.
This move has enabled DEAG to refinance the DM 40 million it paid for
STELLA now it has sold about 24 % of its shareholding to long-term
institutional investors. DEAG will retain a share of over 50 % and a
Due to intensified cooperation between musical and variety theatres,
DEAG’s position in the Berlin and Stuttgart regional markets was further
improved. Joint utilisation of marketing and sales systems is set to
majority in STELLA Entertainment AG. STELLA Entertainment AG’s
achieve further positive effects both regionally and nationally.
theatres
7
f a s t m o v e r : d e a g e x p a n d s i n t e r n a t i o n a l l y.
Numerous activities, startups and acquisitions in the Artists & Tours segment led to DEAG achieving market leadership in Europe as a live enter-
Despite the successful presentation of the above-mentioned well-known
international artists, DEAG was not able to achieve its target result in the
tainment provider in 2000, two years sooner than planned in 1999.
division. This was due to increased prices in the past year as a result of
the strong competition arising as part of a pent up process of concentration. This concentration process is now complete and pressure on margins
Absolute top acts were the Tina Turner, Bon Jovi and another successful
world tour by Sarah Brightman.
In Autumn 2000, the European and world tour of waltz king André
Rieu got under way. It is the most extensive, longest-term tour contract
that DEAG has ever signed, an exclusive, four-year contract covering
all 200 concerts André Rieu is to give in Europe. The comprehensive
contract package also provides for galas, sponsoring and concerts
recorded for TV.
is expected to decrease. Furthermore, acquisition and integration costs of
the resulting participations for 2000 had a one-off negative impact.
Another spectacular acquisition, finalised in July 2000, was a 90 % stake
in the Swiss Good News Productions AG. Good News, founded in 1970,
In addition to other leading stars such as Britney Spears, Sting, Joe
is the clear market leader for live entertainment in Switzerland with
roughly 100 events and 800,000 visitors a year, and top acts such as Joe
Cocker, Bob Dylan, Tom Jones, Pearl Jam, Elton John, Udo Jürgens or
Santana. The basis of its market leadership is an exclusive contract, held
since 1982, to stage concerts, dance shows and operas at Zurich’s Hallen-
Cocker, BAP, Ricky Martin, Iron Maiden, Oasis, Fury in the Slaughterhouse, Destiny’s Child, Hans Klok or Elton John the number of events
stadion, the largest multi-purpose arena in Switzerland holding up to
12,000 spectators.
was boosted by a large number of profitable appearances at smaller
venues by bands such as the Gregorians, Van Morrison, Papa Roach,
Amanda Marshall, Queensryche or Tanzzkantine. In all, nearly 2.7 million
DEAG is thus also opening up considerable expertise and substantial
synergy potential. In the Swiss market, Good News covers the entire
visitors saw nearly 700 shows that formed part of over 100 tours.
value-added chain from event organisation and venue management to
artists & tours
8
artists & tours
sponsoring, marketing and ticketing, and does so either
itself or via cooperations.
( )
An audience of
2.7 million watched
700 shows on more
than 100 tours.
Holding AG in Switzerland, which holds a 70 % stake in
concert organiser Marcel Avram’s Entertainment One. In
By setting up a management company, DEAG succeeded
for the first time in August 2000 in lengthening its value-added chain
securing the services of Marcel Avram, DEAG has made
another major move toward global player status. Marcel
Avram has decades of experience as an international producer and tour
towards the direction of artists. It now holds a 45 % stake in Richard Ogden
Management (R.O.M.), managed by Richard Ogden, long-time manager of
organiser for international stars. As a result, DEAG can not only secure
the services of well-known artists for concerts in its existing established
Paul McCartney and former Senior Vice President of Sony Music Europe.
Now it has acquired the services of a manager with long experience in
markets but has an opportunity to engage in a wider range of international activities. Within the framework of its expansion strategy, DEAG
has thus succeeded in taking another important partner on board.
this sector, DEAG can in future work even more closely with artists. The
task of the London-based company is to manage, i.e. support artists in
contract negotiations with record companies, producers, agents, organizers, the media and commercial sponsors and then with building up their
careers worldwide. For the first time, DEAG now takes part in all stages
The MTV Hard Pop Days represents a first festival series for DEAG.
Young bands, mainly German, performed at six venues in one day,
delighting a total of roughly 54,000 visitors. This lucrative sector is to be
extended in the year ahead. First steps have already been taken with an
of exploiting an artist’s rights. First contracts have already been signed
with successful international artists such as Bomfunk MC’s, Vanessa Mae
event lined up on the EuroSpeedway Lausitz.
and Nerina Pallot.
A crucial step in the direction of international tours was successfully
Now that DEAG has undertaken major acquisitions in the Artists & Tours
segment, this segment accounts for roughly 30 % of DEAG sales. DEAG’s
market leadership in Europe is thus assured and forms an excellent basis
taken in December 2000 with the establishment of Global Entertainment
for steady growth in future.
artists & tours
9
complete service provider: deag uses synergy from partnerships.
A range of activities in 2000 can also be reported in the Urban Entertainment segment, which comprises all local services for live concerts,
Having acquired the Jahrhunderthalle from Hoechst AG on November 1,
1999, DEAG can now look back on a successful 2000 season with the
such as local organisation, venue management and security.
new management team. For one, the Jahrhunderthalle, previously a wellknown, successful venue for classical
Local concert organisers in the two
German key markets Berlin and North
Rhine-Westphalia again presented
several highlights. Outstanding artists
and bands included the Bloodhound
Gang, Eros Ramazzotti, Sasha, AC/DC,
Ayman, Van Morrison, the Buena Vista
Social Club and A-ha.
In all, over 1.7 million people attended
(
over 500 events in this sector. This sensational, roughly 40 % increase in numbers over the previous year is
based on a further increase in the number of visitors to DEAG venues, and
in particular to events held at the Jahrhunderthalle in Frankfurt.
)
music and rock & pop concerts, has
increasingly been able to demonstrate
its suitability as a conference and
convention venue, as evidenced by a
large number of company and general
meetings.
For another, success was due in part
to the cooperation agreed in April
with IMG Artists, one of the largest
and leading international artists’
agencies for classical music and ballet. IMG Artists arrranged for firstrate international artists to take part in the four series of subscription
events. Back in February, DEAG signed a long-term lease agreement for
urban entertainment
10
urban entertainment
the Loreley Freilichtbühne in St. Goarshausen. Designed as an
amphitheatre picturesquely overlooking the Rhine River, the 18,000-
tence and critical mass thus acquired led last year to DEAG’s first major
cooperation. In August, DEAG announced the establishment of a catering
seater venue was the scene of a number of highlight events such as a
Kelly Family concert or Mozart’s Magic Flute in the first open-air season.
joint venture with LSG-Airport Gastronomiegesellschaft mbH (LAG), a
subsidiary of LSG Lufthansa Service Holding AG that benefits from con-
As the 16th venue in its portfolio, DEAG signed in June a long-term
exclusive agreement to hold concerts and festivals with the EuroSpeed-
siderable purchasing advantages and know-how in the up-market catering systems sector. As a catering service provider the joint venture will
handle all catering requirements for DEAG Group theatres and venues.
way Lausitz. Located roughly 130 km southeast of Berlin in Brandenburg
state, the EuroSpeedway Lausitz has four different racetracks, and with a
The security services sector developed according to plan, but the pressure
capacity of 120,000 it can hold more visitors than any other sports venue
in Europe. In September 2001, the German 500, the CART series champ
race, will be held for the first time in Europe on the EuroSpeedway Lausitz. In addition to a 25.1 % holding, DEAG is in charge of overall staging of the event, of its entertainment elements and of marketing and
of competition in North Rhine-Westphalia was extremely high, so that
DEAG disposed of some of its activities. It now aims for close cooperation
with established firms that have the relevant market competence and
expertise. At the same time, DEAG is retaining its security business,
which it sees as an indispensable part of its value-added chain. By virtue
ticketing. Advance bookings have begun and look highly promising.
of the size it has reached, DEAG now enjoys a strong negotiating position.
In future, further synergy potential can be expected to be harnessed step
by step in the most varied sectors, with a positive effect on the Group’s
earnings structure.
With a total of 17 venues in 2000, DEAG established itself as market
leader in venue management in the German-speaking region. The compe-
urban entertainment
11
strength in numbers: deag concludes profitable joint ventures.
Media & Commerce handles the exploitation of content from other DEAG
license package was awarded. It includes extensive rights in connection
divisions in the form of sponsoring, merchandising, ticketing, e-commerce
or TV marketing. In 2000, the emphasis was on the further development of
a number of projects relating to specific start-ups or joint ventures.
with DEAG’s variety theatres, venues and tours business and is to be
exploited jointly with Sunburst by a joint venture, Real Merchandising.
Existing marketing and sponsoring activities were further expanded.
What will surely be the most significant and largest-scale joint venture
was agreed in July with Axel Springer Verlag AG and Lufthansa sub-
They included, for example, the large-scale sponsorship deal agreed with
debitel for the Tina Turner tour or the opening of the STELLA Entertainment distribution network for outside musicals such as "Tabaluga und
Lilli”. On account of DEAG’s size, due in particular to the STELLA musicals take-over, four spin-offs were implemented in the Media & Com-
sidiary START AMADEUS GmbH. The three equal partners are planning
on the basis of START Ticket GmbH to set up a multimedia marketplace
for events, travel and other leisure activities.
merce segment.
system interface an uncomplicated way in which both organisers and
retail customers can book tickets or travel services such as hotel bookings
etc. The participation of Axel Springer Verlag ensures extensive media
coverage. The joint venture, which is now to trade as Qivive AG, plans
The aim is to establish a leisure brand that combines under a uniform
media & commerce
In merchandising, DEAG became a licensor for the first time, signing a
long-term agreement with Sunburst AG as part of which an attractive
12
media & commerce
to go public on the Neuer Markt in the
2001 financial year. DEAG is currently
engaged in transferring the majority of
its ticketing activities to the Qivive
system platform.
A further promising 50-50 joint venture
(
“A mouse click instead of a queue!
I have never bought my concert
tickets so quickly. Onto the internet
and within seconds my Bon Jovi
)
was concluded with film and TV production company MME (Me, Myself & Eye
GmbH). ShowNet.de, the first German
full-service live music portal, was launched at the international music trade fair
tickets were ordered!“
Systemwise that will pave the way for
Popkomm in August 2000. ShowNet
Claudia M. from Berlin
DEAG to transform ticketing, which
offers music-loving users exclusive editoday is a simple sales logistics distributorial information and wide-ranging
tion instrument, into an effective
e-commerce options (tickets, merchandicommunications tool for one-to-one marketing, encompassing a fully
sing, CDs), plus attractive community features (chat channels on events
electronic circuit of valuable customer data ranging from event advertising and booking and billing to checking admission to the venue.
Successfully establishing Qivive will pose a major challenge to DEAG
this year.
and artists, fan newsgroups). The fundamental challenge in 2001 will be
to interlock these spin-offs closely with DEAG’s core operative business,
and in particular to make e-business activities an integral part of corporate processes.
media & commerce
13
our share: better than the market as a whole.
Positive development
by intensifying its investor and public relations activities. Special
emphasis was placed on the fact that DEAG is a reliable and serious cor-
The DEAG share price moved largely in keeping with the market in 2000.
That said, DEAG successfully resisted the negative trend on the Neuer
poration that has so far always achieved, if not exceeded, its forecasts.
Markt toward the end of the year. Numerous acquisitions and joint ventures bore out DEAG’s growth strategy and reflected, in a share price
Since mid-October, the DEAG share has thus been a market outperformer.
The price may have slipped a little at year’s end, but we are working on
the assumption that the positive trend so far will continue in the current
financial year, as evidenced by a January high of € 33.55.
increase, investors’ confidence in the company and its management.
At the beginning of March the share price reached a historic high of
€ 45.20, which can be attributed to the acquisition of STELLA’s profitable assets. Investors thus honored the enormous potential that this acquisition brought DEAG’s way. From March onward, the entire Neuer Markt
headed downhill. The DEAG share was no exception, being hit by a
downturn in the market price.
After the share had reached a low of € 21.80 at the end of May, the price
recovered to € 35 in the wake of a positive business trend. That was due
in part to the cooperation agreement with EuroSpeedway Lausitz, to the
90 % takeover of Swiss News Productions AG and to the announcement
of plans to float STELLA Entertainment. After the market began to stabilise from April to August, a further downturn on the Neuer Markt
became apparent from September. DEAG succeeded in bucking this trend
After a generally difficult stock market year in 2000, especially on the
Neuer Markt, analysts are expecting a markedly positive trend by the
second half of 2001 at the latest. Our business prospects are good, what
with the swifter pace of growth and the increase in value as a result of
the flotation of START Ticket, in which DEAG holds a one-third stake,
and that, subject to overall economic conditions, should make a clearly
positive mark on our share price.
Open communication strengthens investor confidence
DEAG attaches great importance to open communications with the capital market. Numerous voluntary communications in addition to the
quarterly reports for the first to the third quarter, the annual financial
the deag share
14
the deag share
The curve shows the development of the DEAG share from Mid-September to the beginning of October 2000.
report and ad hoc announcements in compliance with §15 of the German
Securities Trading Act (WpHG) testified to this policy of open communications. They included regular road shows held in Germany and elsewhere
last year, a total of eight analysts’ and press conferences, quarterly conference calls, participation in investor fairs and almost weekly one-toones with financial analysts or institutional investors.
DEAG also sets great store by its website www.deag.de/ir, which places a
great deal of useful information at the disposal of private investors in
particular. Reports can be downloaded and detailed explanations in the
ad hoc announcement and press releases, research, facts and figures or
interviews and speeches areas
provide sound support for investors’ decisions. The monthly
investor relations newsletter,
available by e-mail sub-
Conversion to the EURO (€)
Since the introduction of the EURO on January 1, 1999, the DEAG share
has been traded and quoted in EURO on the Neuer Markt. Conversion of
the equity capital was undertaken in accordance with the resolution of
the Annual General Meeting on May 26, 1999. As part of the conversion,
amounts were rounded up to the nearest Euro cent, increasing equity
capital from corporate funds by € 968,426.53.
DEAG: key figures
Earnings (IAS) (in € per share)
Equity capital (in € per share)
No. of shares issued1)
Highest / lowest price
Year-end price 12/31/00
Market capitalization
at highest / lowest price
scription, has established itself
among private investors in
particular as a reliable and
interesting source of information. We are planning to
increase our investor relations
activities further in the 2001 financial year so as to fit in even better with
the needs of analysts and investor groups.
1)
2000
1999
0.37
6.43
7,642,459
€ 45.20 / € 19.50
€ 19.50
0.19
2.78
6,550,200
€ 44 / € 22.90
€ 32.30
€ 296 million / € 149 million
€ 288 million / € 149 million
On June 30, 2000, 1,092,259 individual shares were issued from the approved capital.
the deag share
15
management report and group management report
business performance of the deag group
In the 2000 financial year, the DEAG Group successfully strengthened its
competitive position. As a result of implementing important strategic
decisions, the assumption of STELLA assets and the acquisition of a 90 %
share in Good News Productions AG, the DEAG Group has now reached
sufficient size to secure a leading role in national and international competition in the growing live entertainment market.
DEAG Group sales rose in the 2000 financial year by TDM 336,088 to
TDM 506,057. With a share of 49.4 % in consolidated sales representing
TDM 250,164, the largest contribution came from STELLA musical
activities consolidated in the Broadway Musical Management Group.
The operating result EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization) increased from TDM 13,390 to TDM
38,784 and consolidated earnings rose from TDM 1,713 to TDM 5,191.
Diluted earnings per share amount to DM 0.73 or €. 0.37. The number
of employees at the end of the financial year was 1,879, an increase
of 1,583.
Our four Group divisions are organised as follows:
THEATRES
URBAN ENTERTAINMENT
In this segment, we have brought together the Broadway Berlin
Gesellschaft für Musical- und Eventmarketing mbH, Berlin, our variety
theatres Wintergarten Varieté Theater Betriebsgesellschaft GmbH, Berlin,
and Friedrichsbau Varieté Stuttgart Betriebs- und Verwaltungs GmbH,
Stuttgart, as well as our 50 % participation in the Apollo Varieté Betriebs
GmbH, Düsseldorf, as an intermediate holding company.
In this segment, Concert Concept Veranstaltungs GmbH, Berlin, is the
intermediate holding company, and it directly holds all segment shares
in affiliated and associated companies.
Furthermore, we have also assigned musical activities acquired on April
1, 2000 to this segment. Measured against almost all significant items of
the consolidated balance sheet and consolidated profit and loss account
the Theatres segment is now the most financially important business
division of the Group.
ARTISTS & TOURS
The Artists & Tours segment is our second largest segment at the end of
the 2000 financial year in terms of sales. Coco Tours Veranstaltungs
GmbH, Berlin, acts here as the intermediate holding company.
The division also includes Balou Entertainment Konzertagentur GmbH &
Co. KG, Cologne, and La Isla Entertainment S.L., Palma de Mallorca,
Spain, as subsidiaries. Furthermore, it also includes our 50 % participation in Marshall Arts Ltd., London, Great Britain, and our 50 % participation in Palast Management und Veranstaltungs GmbH, Berlin. In 2000,
we acquired a 90 % share in Good News AG, Glattbrugg. The segment
was further strengthened by the acquisition of a 100 % share in
Millennium Concerts GmbH, Munich.
Our share held in associated companies is 33.3 % in each case. In addition to Concert Concept Veranstaltungs GmbH itself, as a local concert
promoter, this segment also includes our other regional event and venue
activities, in particular Musikkontor NRW Veranstaltungs GmbH,
Aachen, the Kultur-und Kongresszentrum Jahrhunderthalle GmbH and
Gastronomie Jahrhunderthalle Betriebsführungsgesellschaft mbH (for the
Jahrhunderthalle in Frankfurt am Main), as well as VELOMAX Berlin
Hallenbetriebs GmbH, Berlin.
Furthermore, we have also assigned our security services in this segment.
Covered by intensive competition last year we sold our regional activities in North Rhine Westfalia.
MEDIA & COMMERCE
In this segment, we have established EMC GmbH, Berlin (formerly
Give and Take Handelshaus für Kultur, Sponsoring und Marketing
GmbH, Berlin) as an intermediate holding company. This segment also
includes bravo charlie Vermögensverwaltungs AG, Berlin.
This segment also includes activities developed in cooperation with our
partners in merchandising (Real Merchandising GmbH), in ticketing
(START Ticket GmbH) and in the internet (ShowNet GmbH).
management report
16
The development of sales in the business divisions is as follows:
in TDM
2000
274,363
161,767
62,973
898
Theatres
Artists & Tours
Urban Entertainment
Media & Commerce
Sales growth in the Theatres segment relates, at TDM 250,164, almost
completely to the acquired musical activities. However, the varieties consolidated in this segment again generated clearly increased sales. In the
Artists & Tours division the increase in sales resulted primarily from the
initial inclusion of the Good News Group as of July 1, 2000 and
Millennium Concerts as of October 1, 2000, in our consolidated statements.
Furthermore, sales of our British affiliate Marshall Arts contributed to the
consolidated sales for the first time proportionally for the entire year.
Coco Tours as the holding company of the segment also increased sales
1999
Change
19,376
113,254
48,186
1,281
+ 254,987
+ 48,513
+ 14,787
- 383
considerably by 9.3 %. The Urban Entertainment division showed a
sustained increase in sales primarily resulting from internal growth. The
local concert promoter and venues consolidated in this segment increased
the number of visitors significantly. This refers in particular to the
Jahrhunderthalle Frankfurt, Velomax, Concert Concept and Musikkontor
NRW. The decline in sales in the Media & Commerce division is a result
of our business policy to develop our relevant activities together with
our partners. Several spin-offs resulted from this and consequently the
principal operating companies in this segment are accounted for at
equity.
The operating result (EBITDA) in the individual business divisions developed as follows:
in TDM
2000
26,604
- 5,068
5,512
284
Theatres
Artists & Tours
Urban Entertainment
Media & Commerce
1999
Change
2,040
6,364
7,251
- 552
+ 24,564
- 11,432
- 1,739
+ 836
As with sales, a share of approx. 90 % relates to the acquired STELLA
activities for EBITDA in the Theatres Group division. In the Artists &
Tours division, the Good News Group had a considerably positive impact.
The negative segment EBITDA results from a competition-related aggressive price policy for tours in 1999 and 2000 as well as the acquisitionrelated restructuring and integration costs. As DEAG has now acquired
two market leaders in concert promotion with the Good News Group and
Marcel Avram’s Entertainment One, this price policy has, to a large
extent, been concluded, probably squeezing margins in this segment for
the last time in 2000.
of the depreciation of the financial year and consolidation-related
goodwills for TDM 4,355. The negative result from investments of TDM
1,051 relates to the result from our associated company ShowNet GmbH,
Berlin at TDM 1,038.
In the Urban Entertainment segment, a decline in the EBITDA by 24 %
was recorded. Nevertheless, the quality of the earnings increased as non
recurring negative effects caused by the disposal of two affiliates also
had to be taken into account.
Expenditure for taxes on income fell sharply by TDM 4,504 in comparison with the previous year. The main reason is the effects of tax loss
carry forward, particularly in the holding company, and a tax benefit
coming up in connection with tax restructuring in the Group.
Depreciation in the Group totals TDM 27,304 in comparison with TDM
3,381 in the previous year. Musical productions account for TDM 19,007
The consolidated profit/loss for the year without minority interests totals
TDM 5,138, compared with TDM 1,772 in the previous year.
Earnings from interest, down by TDM 1,529, are due primarily to the
acquisition financing of STELLA assets and to the increased amount due
to banks (+ TDM 9,646), with almost unchanged interest rates year on
year. The income from the investment of our liquid funds had a marginally positive impact.
17
asset and capital structure of the deag group
The balance sheet ratios reflect the strong growth of the Group.
With an increase of TDM 211,183 to TDM 370,228, the balance sheet total
has more than doubled. On the assets side, the consolidated fixed assets
increased by TDM 111,681 as a result of investments of TDM 146,401 in
comparison with depreciation of TDM 27,304, disposals of TDM 7,239
and the impact of the change of the Group’s scope of consolidation to
the amount of TDM -177 net.
Investments are as follows:
in TDM
Intangible assets
Musical productions
Property, Plant and Equipment
Financial assets
Total investments
TDM 54,343 of the investments in intangible assets are allocated to Good
News Productions AG, TDM 2,092 to Hegener + Glaser GmbH and TDM
5,880 to other intangible assets, particularly software. Musical productions relate to the investments made in Broadway Musical Management
GmbH for musicals acquired as a result of insolvency.
Investments in tangible assets relate to land, property and rented buildings (TDM 2,038), investments in technical equipment, office furniture
and equipment (TDM 10,764) and advances paid on fixed assets and
assets under construction (TDM 4,773). Investments in financial assets
include TDM 6,805 non-cash contributions allocated to our participation in START Ticket GmbH and TDM 2,132 allocated to other participations.
Fixed assets account for 38.6 % of the balance sheet total and 67.8 % of
this is covered by equity. In the Group balance sheet, the share of current assets increased by 81.9 % to TDM 223,437. This was due to the
increased business volume resulting from the inclusion of STELLA and
Good News AG. At TDM 24,000, the securities valued in line with IAS 25
and held for sale later continue to have an impact.
18
62,315
57,574
17,575
8,937
146,401
TDM 12,000 is reported in other assets which we acquired in December
as a loan as part of the acquisition of the 70 % share in Entertainment
One AG, Switzerland. The share of the liquid funds increased by TDM
35,997 due to increased bank deposits from advance sales. Group equity
increased by TDM 60,574 and accounts for 26 % (previous year: 22.4 %)
of the balance sheet total. The development of equity is shown separately
in the consolidated financial statements. Accruals rose by TDM 7,594,
particularly due to increased accrued taxes for deferred taxes from differences in the valuation between tax-related principles of statement presentation and the international accounting principles.
Group liabilities increased by TDM 105,211, 47.9 % of the balance sheet
total. In addition to the rise as a result of the increased business volume,
the amount contributed by short-term liabilities from the financing of
STELLA assets is TDM 40,000.
At the time of the preparation of the balance sheet, this amount had been
reduced from current liquidity to TDM 35,000. In view of the planned
IPO of STELLA and the disposal of up to 24 % of the shares to investors,
the amount due will be paid off completely.
group financing
Cash flow increased by 68 % to TDM 7,282. The increase reflects the
improvement in performance as a result of the initial consolidation of
Good News AG and STELLA. Taking into account the change in net current assets, the inflow of funds amounts to TDM 67,795.
In the 2000 financial year, TDM 40,000 short-term liabilities were borrowed for the acquisition of STELLA activities. These funds are to be
repaid by the sale of shares in a subsidiary. The contracts relating to this
were largely concluded on December 31, 2000.
Payments for investments total TDM 146,401. Taking into account disinvestments and income from interest, the outflow of funds for investments amounts to TDM 137,047.
In view of the considerable growth and restructuring measures implemented as well as the corresponding outflow of funds for investments
and expenditure relating to acquisitions and restructuring, the shortterm external debt from working capital financing also increased by
TDM 14,946. In the first quarter of 2001, the Group increased its working
capital lines by a further TDM 5,000.
The inflow of funds from financing activities increased by TDM 90,871
to TDM 105,163. This increase was due to access to paid-up capital of the
Group as a result of the capital increase against non-cash contributions
on the occasion of the acquisition of the 90 % share in Good News AG
at TDM 55,279, after deduction of TDM 2,410 for costs for the procurement of capital.
At TDM 43,500, the financing of the acquisition of STELLA assets continued to contribute to the increase in the inflow of funds. Compared with
the inflow of funds, the expenditure on interest was TDM 4,057 higher.
As of December 31, 2000, the Group has liquid funds amounting to TDM
86,720, which primarily relate to advanced sales and credits in trust of
TDM 13,793.
Cash flow statement of the DEAG Group
The Board of Management anticipates a marked improvement in internal
financing for the 2001 financial year, particularly as a result of the continued positive development of the musical and tours business.
According to the Board of Management, the resultant cash flow and the
expected inflow of funds from the sale of shares and the cash capital
increase for Hegener + Glaser AG in connection with the contribution of
Broadway Musical Management GmbH will ensure an improvement of
the liquidity position of DEAG and the Group and will also secure financing in the 2001 financial year.
Summary
2000
in TDM
1999
in TDM
Cash flow
7,282
4,337
Net cash from operating activities
Net cash used in activities
Net cash from financing activities
Net increase in liquid funds
67,795
- 137,047
105,163
35,911
8,727
- 12,369
14,292
10,650
Effects of exchange rate changes
Liquid funds at beginning of year
86
50,723
- 156
40,229
Liquid funds at end of year
86,720
50,723
19
key financial ratios
The Group’s financial targets relate primarily to return on capital, capital structure and external debt.
At 5.6 %, the total return on capital related to profit/loss for the year
(previous year: 9.3 %) has not yet reached the target of 10.0 % set by the
Board of Management. This is due to strong growth since the IPO, particularly in the past financial year.
In business terms, high growth momentum almost always results in a
negative impact on original profitability as a result of one-off expenditure.
The Board of Management is convinced that the growth-related earnings
potential is already heading in the right direction in terms of total return
on capital for the coming financial year.
The total return on capital in the Group for the 2000 financial year developed year on year as follows:
Calculation of the total return on capital
Profit/loss for the year
+ Depreciation on goodwill
+ Earnings from interest
+ Expenses for income taxes
Adjusted profit/loss for the year
Consolidated balance sheet total at the start of the financial year
Consolidated balance sheet total at the end of the financial year
Average assets
14,837
Total return on capital = -------264,636
The equity ratio is 26 %, after 22.4 % in the previous year, an increase
of 3.6 percentage points. This is due on the one hand to extraordinarily
high balance sheet total increase as a result of the acquisition of STELLA
assets and the corresponding expansion of business volume.
On the other hand, it is due to the initial full consolidation of Good News
AG which was acquired through a share exchange and is to be consoli-
2000
in TDM
1999
in TDM
5,191
1,713
4,355
3,176
2,115
14,837
2,381
1,647
6,619
12,360
159,045
370,228
264,636
105,314
159,045
132,179
5.6 %
9.3 %
dated according to the purchase method in line with IAS 22 and IAS 27.
This led to a net increase in the paid capital of the shareholders of DM
55.3 million. According to the targets set by the Board of Management,
the dynamic indebtedness is not to be more than 4–5 times that of
annual cash flow. This repayment factor for the amount due to banks is
4.0 years (previous year: 4.6 years) is on target, notwithstanding the
sustained and growth-related investment activities.
development of personnel
As of December 31, 2000, DEAG had 1,879 full-time employees in the
Group, 1,583 more than in the previous year. With regard to this increase,
the change in the scope of consolidation due to the acquisition and disposal of subsidiaries accounts for 1,527 employees.
20
As of December 31, 2000, the managing holding company had hired 39
full-time employees, 12 more than in the previous year. The increase
primarily reflects the expansion of central administration as part of our
growth strategy.
In the past financial year, personnel costs developed year on year as follows:
DEAG Group
2000
in TDM
1999
in TDM
Remuneration
Social security contributions
107,327
18,384
125,711
17,207
2,742
19,949
1,086
404
127,201
470
188
20,607
Increase from the change in the scope of consolidation
Remuneration
Total
With regard to the marked increase in personnel expenditure of TDM
106,594, STELLA accounts for TDM 96,836, its inclusion showing in the
consolidated financial statements no legal change in the composition of
the Group. As part of our growth strategy, we plan to link our remuneration policy in a more performance-oriented manner, with greater trans-
parency and more strongly related to achieving targets. Furthermore, in
central purchasing, acquisition of artists and retail activities areas in the
individual subsidiaries, specific process and organisation analyses will be
carried out to further improve the competitiveness of the business processes.
situation of deag deutsche entertainment ag
earnings situation
DEAG Deutsche Entertainment AG is the managing holding company of
the DEAG Group. It provides management and other central services and
consultancy for its Group and affiliated companies but also for external
business partners. The holding company also manages the company
financing within the Group. The most significant income items are the
earnings from dividends and profit transfer agreements with subsidiaries
or affiliated companies and the earnings from the acquisition or disposal of investments.
The earnings structure in comparison with the previous year is as follows:
January 1 to
December 31, 2000
in TDM
January 1 to
December 31, 1999
in TDM
350
3,669
10,269
- 11,553
0
2,735
5,000
9,718
683
- 3,050
- 2,537
9,814
Operating expenses
- 8,616
- 5,899
Result of portfolio management
- 5,880
3,915
- 2,410
- 3,973
1,904
- 10,359
0
508
- 2,340
2,083
Profit and loss account on the
basis of commercial law principles
Sales
Income from profit transfer agreements
Income from investments
Expenditure on profit transfer agreements
Depreciation on investments
Operating result
Extraordinary earnings – stock market listing of Good News AG
Earnings from interest
Income tax
Net loss of the year (last year: Net income for the year)
21
Sales refer to consultancy services to an external corporate group.
Income from profit transfer agreements relates to Wintergarten Varieté
Betriebs GmbH (TDM 1,480), Concert Concept Veranstaltungs GmbH
(TDM 1,732) and Friedrichsbau Varieté Stuttgart Betriebs- und
Verwaltungs GmbH (TDM 458).
turing of the Board of Management (TDM 2,522). Extraordinary earnings
relate completely to the external costs for the capital increase incurred
through the acquisition of Good News Productions AG. The marked fall
in the interest result year on year is due to the increased amount due to
banks and acquisition financing for the STELLA assets.
The income from investments relates to the dividends of Good News
Productions AG (TDM 5,198), Broadway Musical Management GmbH
(TDM 4,212) and Apollo Varieté Betriebs GmbH (TDM 1,072). Expenditure
on profit transfer agreements relates to the profit and loss pooling of
Coco Tours Veranstaltungs GmbH.
Income from income tax relates to the amount due from taxes or income
from the liquidation for accruals from the previous year totalling TDM
2,171, compared with investment income tax payments of TDM 264 and
other taxes amounting to TDM 3. Net loss of the year at DEAG Deutsche
Entertainment AG resulted primarily from the deferral in the realisation
of income from the sale of 24 % of shares in Hegener + Glaser AG. The
resulting income will be realised in the 2001 financial year and is partially tax-free due to tax losses carried forward.
At TDM 2,717, higher operating expenses relate primarily to the increased
personnel expenses due to higher numbers of employees and the restruc-
assets and capital
The balance sheet total was up by 70.2 %, totalling TDM 104,940. Fixed
assets showed an increase of TDM 18,315. Tangible assets increased by
TDM 670 as a result of additions to intangible assets, particularly for
commercial software amounting to TDM 162 and tangible assets, particularly for office and business equipment amounting to TDM 840,
compared with the planned depreciation of TDM 330 and disposals of
TDM 2.
Financial assets increased by TDM 17,724 as a result of additions to
shares in associated companies of TDM 7,667 and investments totalling
TDM 10,025. In contrast, a participation of TDM 17 was sold. Additions
to the shares in associated companies relate to the 79.21 % share in
Hegener + Glaser AG (future STELLA Entertainment AG) at TDM 6,782,
Broadway Musical Management GmbH at TDM 10,050, the 90 % participation in Good News AG acquired through a share exchange at TDM 2,761
and the acquisition of Millennium Concerts GmbH at TDM 400.
Additions to the investments relate to our share in Start Ticket GmbH
(future Qivive AG) (TDM 10,000) and our share in EIB Entertainment
Insurance Brokers GmbH (TDM 25).
The change in the equity of the holding company was as follows:
Changes in equity of
DEAG Deutsche Entertainment AG
December 31, 2000
TDM
Capital increase of 1,092,259 shares
Net loss of the year
Changes in equity
The equity ratio is 28.3%, compared with 61.5% in the previous year. The
reason for the clear decline, is the increase in the balance sheet total by
1.7 times year on year as a result of the acquisitions and the considerable
expansion of the business division related to this.
With the exception of the acquisition of the STELLA assets, the remaining
acquisitions have been covered by internal financing. The increase in
amounts due to banks amounting to TDM 11,766 relates exclusively to
22
2,136
- 10,359
- 8,223
the working capital financing as a result of the considerable expansion
of the business division in the whole Group.
The short-term liabilities, balanced against short-term repayments and
pre-payments, increased by TDM 27,280. This is due to debt from the
financing of STELLA assets reported as short-term liabilities to the
amount of TDM 43,500, which were already reduced to TDM 35,000 by
January 31, 2001 and the increased financing of the Group companies.
report on risk management
According to § 91 para. 2 of the German Stock Corporation Act, the
Board of Management is obliged to initiate appropriate measures, in particular a monitoring system so that developments threatening the continued existence of the company can be identified at an early stage. Risks
are an inherent part of corporate business.
Fast growth and successful activity require strategic and operating
risks to be identified, assessed and reported. Risk management is
always a proactive business and the responsibility of all employees. In
the 2000 financial year, we have continued to develop our system for
early identification of corporate risks, particularly those threatening
the existence of the company. As part of this process, the Board of
Management assumes an active role. All major business activities from
the various divisions are discussed and documented in two to three
Board meetings per month and clear responsibilities for processing
have been assigned.
In the strategic and operating Controlling division, 2000 saw fundamental improvements to the integration of operating and strategic planning
and controlling processes in order to ensure that the management is
informed about business developments in a timely manner. In Finance
and Accounting, the internal control system was improved with guidelines,
especially for payment processing.
General corporate risks
To minimise risks that exist due to contracts, taxation and employment
legislation, we call upon the advice of both our own specialist personnel
as well as external experts in our decision making process and when
planning business processes. If risks are unavoidable then we endeavour
to obtain appropriate insurance cover, particularly for risks associated
with events.
With economic considerations in mind, risks associated with currencies
are taken into account by covering the necessary foreign currency with
regard to the future. When making a decision on the length of interest
rate commitment, interest risks are reduced or covered.
In order to guarantee the performance of our employees is both professional and complies with legal requirements, there are guidelines as well
as directives in the key divisions (e.g. Payment Processing, Purchasing,
Human Resources, Business Travel). In addition we carry out internal and
external training and educational events. In the IT division, we utilise
only standard software. Technical development, including data protection is done by qualified personnel using the in-house software division
at STELLA.
Specific corporate and industry risks
Early on the objective was diversification in order to distribute the risks
at the DEAG Group throughout the entire entertainment range.
Nonetheless, in addition to general business risks, there are also specific
corporate and industry risks:
Dependency on qualified personnel
To a certain extent, successful implementation of the corporate objectives
is dependent on the ability to continually find highly qualified staff in
the Management, Customer Service and Marketing divisions and to keep
them. There is strong need for qualified personnel in the industry, with
the resulting comparatively high fluctuation rate.
The Chairman of the Board of Management, Mr. Peter Schwenkow, as the
personal contact for artists and others from the worlds of culture and
finance, has been responsible for the success of the company to a large
extent.
The company’s dependence on Peter Schwenkow is being reduced as a
result of the restructuring of the Board of Management, particularly due
to the appointment of Dietmar Glodde as the new COO. The company is
producing a dependency report with regard to the business relationship
with the shareholder Peter Schwenkow, in accordance with § 312 of the
German Corporation Stock Act.
Dependency on business connections
A percentage of the company’s business success and corporate risks
depend to a certain extent on the selection of artists engaged for an event
and other productions. Thus decisive factors include business connections,
experience, the skill and the feel for being able to select artists and productions from the world-wide selection that will appeal to public taste
and which are suitable for generating high attendance figures.
The wrong decision when selecting artists and productions or when
agreeing fees and licences can potentially damage the future performance
of the company.
Short-term fluctuations in attendance figures
The corporate success of the DEAG Group is largely determined by attendance figures. Experience tells us that the number of attendees fluctuates
seasonally and is dependent on the weather with open-air events and
Indoor events. Whilst the usual seasonal fluctuations simply negatively
impact sales and income development for a period of less than twelve
23
months, unusually long and pleasant summers can result in sales and
income slumps in individual divisions, particularly musicals and variety
shows. In comparison, there are also opportunities to generate better
earnings at open-air events.
been sufficient in cases of claims. However, it can not be ruled out that
the insurance cover proves insufficient in individual cases or that certain
types of insurance cease to be offered by the insurer. The Board of
Management is convinced that effective risk management is possible
with the existing system.
Potential liability risk
The company has taken out various insurance policies (e.g. against lack of
audience interest, cancellation of events, damage to persons or property
during a performance etc.). To date this insurance amounts have always
On the basis of this system, the management receives notification in time
of any risks arising in order to be able to implement corresponding
measures to monitor the risk. The intention is to continue to develop the
system in future.
risk of future development
According to § 289 para. 1 of the German Commercial Code, we are obligated to report any risks associated with future development. This management report and the further information on the financial year contain
assumptions and estimates based on the future that are associated with risks
which can result in the actual results deviating from our expectations.
Such risks result in particular from an altered market environment,
increasing competitiveness with existing and new competitors, interest
and currency risks as well as other political and national economic
events that can neither be predicted nor influenced.
In the context of our report on the risks of future development, the Board
of Management would like to point out the following facts:
In connection with the acquisition of STELLA assets, DEAG decided to
float the acquired musical business. To do this, 79.21 % of the shares in
Hegener + Glaser AG, Munich were acquired. The company is listed on
the regulated market on the Bavarian stock exchange in Munich and the
Hamburg stock exchange. At an extraordinary general meeting of
Hegener + Glaser AG on December 29, 2000, a resolution was adopted to
transfer the musical activities into Hegener + Glaser AG in the context
of a mixed cash and non-cash capital increase.
The value of the musical business, consisting of a management company
and six musical operating companies was calculated by experts to be DM
77.0 million. External shareholders were offered the opportunity to take
24
part in the capital increase at a 1:8 ratio at a subscription price of € 9.70.
Furthermore, it was decided the change the name of the company to
STELLA Entertainment AG. Independent of the IPO, in December 2000,
DEAG concluded purchase contracts with investors covering a total 20 %
and another pre-contract covering 4 % of the share capital of Hegener +
Glaser AG.
Subsequent to the general meeting, four shareholders submitted actions
for nullification against the resolutions of the general meeting. The case
is scheduled for March 29, 2001. The Board of Management and DEAG’s
trial lawyers are convinced that this matter can be settled in the hearing
on March 29, 2001, but can not guarantee this.
In the annual financial statements of DEAG in accordance with German
Commercial Code principles, the whole issue has not impacted earnings.
This income will be realised after the capital increase has been carried
out and is partially tax-free because of the taxation losses carried forward at DEAG Deutsche Entertainment AG.
In the international consolidated financial statements made according to
IAS 25, it is required to report securities, acquired with the intention of
selling them, in the balance sheet at the market value and to include the
resultant effects on earnings. The market value to be used is considered
the purchase price objectively agreed between contractual partners. In
the consolidated financial statements, income realised in this context is
treated as earnings from balance sheet valuation measures.
dependancy report
According to estimates by the Board of Management, it is again not
possible in the 2000 financial year to rule out with certainty Deutsche
Entertainment AG being seen as a company that is practically dependent
on the shareholder Peter Schwenkow, Berlin. In accordance with § 312 of
the German Stock Corporation Act the Board of Management has produced a dependency report covering direct and indirect relations with
Peter Schwenkow.
At the end of the report, the Board of Management declares that, as far as
they were aware at the time a legal transaction was made, the company
received appropriate payment for this legal transaction and was not disadvantaged in any way. No steps were taken nor avoided on the request
of or in the interest of Mr. Schwenkow. In the context of the audit of the
annual financial statements, the report was audited by our auditors.
The result of the audit showed that
- the actual information contained in the report is correct,
- the company performance for the legal transactions mentioned in
the report was not inappropriately high and that disadvantages
were compensated for,
- the measures mentioned in the report show that there is no reason
for any assessment significantly different from that of the Board of
Management.
outlook 2001
The 2001 financial year is the year of increasing efficiency. This is because the DEAG Group has positioned itself excellently both strategically
and organisationally compared with national and above all with international competitors since its IPO, particularly in the last financial year.
disinvestments will no longer apply, market entry costs in the 2000
financial year of approximately DM 15.0 million and efficient original
operations, we expect earnings per share (EPS) to be DM 1.95 DM i.e.
€ 1.0 euro.
Finally, the main corporate objective is the long-term increase in enterprise value in terms of increased earnings power on a sustained basis and
not short-term success. This is particularly relevant for a company on the
Neuer Markt.
Furthermore, we believe that the STELLA Entertainment AG IPO will take
place in the 2001 financial year and that the sale of up to 24 % of the
shares in DEAG to an investment group will be legally concluded.
Due to the courses set for the 2001 financial year that were achieved in
the past financial year, in particular the full consolidation of STELLA for
twelve months instead of for nine months, the full consolidation of Good
News AG for twelve months instead of for six months and the integration
of Entertainment One AG together with Marcel Avram from January 1,
2001, a 34 % growth rate is expected for sales and for EBITDA, 16 %.
In addition to this positive development, contributions are also expected
from the artist management agency jointly founded with Richard Ogden
in London, Richard Ogden Management Ltd., as well from the joint venture in the Catering division with LSG-Airport Gastronomiegesellschaft
mbH, a subsidiary of LSG Lufthansa Service Holding AG. Because of the
strategically important preparations made for the long-term future and
taking into account the fact that one-off expenditure for acquisitions and
Peter L. H. Schwenkow
Dietmar Glodde
In connection with this, there is also set to be a reduction in existing
short-term liabilities from the acquisition of STELLA assets, currently at
DM 35.0 million, and an improvement of the interest result of approximately DM 1.2 million.
Proposal for appropriation of earnings for
Our proposal to the Annual General Meeting is to carry forward the
balance sheet loss of DEAG Deutsche Entertainment AG.
Berlin, March 2001
DEAG Deutsche Entertainment Aktiengesellschaft
Board of Management
Dr. Martin Fabel
Markus Fabis
25
consolidated financial statements
Consolidated financial statements for the financial year from January 1, 2000 to December 31, 2000
Remarks on financial reporting
Consolidated balance sheet
Consolidated profit and loss account
Consolidated cash flow statement
Development of equity in the Group
Development of fixed assets in the Group
Notes
Auditor’s opinion
Annual financial statements as of December 31, 2000 of
Deutsche Entertainment AG (abridged version)
financial statement
26
remarks on financial reporting
The Board of Management of Deutsche Entertainment AG is responsible
for drawing up individual financial statements and the consolidated
financial statements as well as information contained in the management
report and the Group management report.
In addition to the individual financial statements for Deutsche
Entertainment AG in accordance with the German Commercial Code
(HGB), the Board of Management has produced consolidated financial
statements in line with the requirements of the International Accounting
Standards Committee, London (IASC).
The management report and the Group management report were produced
in compliance with German Commercial Code regulations and the applicable International Accounting Standards (IAS).
Consolidated financial statements have not been prepared in line with
German Commercial Code principles since the 1999 financial year, as the
Board of Management has made use of the exemption rule of § 292a
German Commercial Code. In accordance with the resolution of the
Annual General Meeting, the Supervisory Board appointed Deloitte &
Touche GmbH, Wirtschaftsprüfungsgesellschaft, Berlin as independent
auditors to audit the individual and consolidated financial statements
and the management report and Group management report.
At the balance sheet meeting, the Supervisory Board discussed the individual and consolidated financial statements, the management report
and the Group management report as well as the respective audit reports
in some detail with the auditor. The result of this audit can be found in
the report by the Supervisory Board.
With the consolidated financial statements, the management report and
the Group management report, there is a reliable and internationally
comparable basis for the valuation of the entire Group and its potential
which is available to our shareholders and all other interested parties.
27
consolidated balance sheet
Notes
Dec. 31, 2000
in TDM
Dec. 31, 1999
in TDM
Intangible assets
Musical productions
Property, plant and equipment
Financial assets
Fixed assets
15
17
16
18
80,338
38,567
16,178
7,679
142,762
26,781
0
4,162
138
31,081
Inventories
Trade account receivables
Receivables due from related parties
Other receivables and other assets
Securities
Liquid assets
Deferred taxes
Current assets
19
20
20
20
20
21
23
15,405
25,281
333
64,273
24,000
86,720
7,425
223,437
16,593
13,139
2,853
39,437
0
50,723
75
122,820
Pre-paid expenses
22
4,029
5,144
370,228
159,045
Notes
Dec. 31, 2000
in TDM
Dec. 31, 1999
in TDM
24
24
24
24
14,947
79,286
94,233
1,902
96,135
12,811
26,153
38,964
-3,403
35,561
3,056
223
Assets
Total assets
Equity and liabilities
Deutsche Entertainment AG subscribed capital (7,642,459 no par value individual shares)
Deutsche Entertainment AG capital reserve
Paid-up capital of shareholders of Deutsche Entertainment AG
Capital earnings as of 12/31
Shareholders’ equity of Deutsche Entertainment AG
Minority interests
Accrued taxes
Other accruals
Accruals
25
26
16,892
35,704
52,596
5,418
39,584
45,002
Amounts due to banks
Trade accounts payables
Liabilities due to associated companies and persons
Other liabilities
Liabilities
27
28
29,388
37,582
45,348
64,908
177,226
19,742
23,380
248
28,645
72,015
Deferred income
30
41,215
6,244
370,228
159,045
Total equity and liabilities
28
29
consolidated profit and loss account
Income situation
Jan. 1, to Dec. 31, 2000
in TDM
Jan. 1, to Dec. 31, 2000
in TDM
506,057
180
506,237
169,969
- 606
169,363
6
- 244,347
261,890
- 142,852
26,511
7
9
10
- 127,201
43,222
- 138,814
- 313
38,784
- 20,607
26,001
- 18,514
-1
13,390
- 8,297
- 19,007
11,480
- 3,381
0
10,009
Notes
Sales
Changes in inventories
Total operating performance
Production, material and licence expenses
Gross profit
Personnel expenses
Other operating income
Other operating expenses
Other taxes
Earnings before interest, taxes, depreciation and amortisation (EBITDA)
Amortisation/Depreciation of intangible and tangible assets
Depreciation of musical productions
Earnings before interest and taxes (EBIT)
Investment result
Net interest income
Earnings from ordinary operations
11
12
- 1,051
- 3,176
7,253
29
- 1,647
8,391
Taxes on income
Net profit for the year
13
- 2,115
5,138
- 6,619
1,772
53
5,191
- 59
1,713
Earnings per share in DM (diluted)
0,73
0,36
Earnings per share in € (diluted)
0,37
0,19
Minority interests
Group result
29
consolidated cash flow statement
in TDM
Group result
Depreciation and amortisation
Result from valuation in accordance with IAS 25
Result from valuation in accordance with IAS 40
Changes to accruals from contractual guarantees
Minority interests
Deferred taxes (net)
Result from valuation of associated companies
Cash flow
Net interest income
Changes in inventories
Changes to receivables, other assets and pre-paid expenses
Changes to accruals
Changes to liabilities without financial debts
Net cash from operating activities
Outflows for investments in
Intangible assets
Tangible assets
Musical production
Acquisition of participations
Changes to the scope of consolidation
Disposal of assets
Interest income
Net cash used in investment activities
Capital increase at Deutsche Entertainment AG
Paid-up share capital in accordance with IAS 22
Financing the acquisition of STELLA assets
Costs of raising capital
Changes to financial debts
Interest expenditure
Minority interests
Net cash from financing activities
Net increase in liquid funds
Effects exchange rate changes
Liquid funds at beginning of year
Liquid funds at end of year
* thereof trustee accounts TDM 13.793
30
Dec. 31, 2000
Dec. 31, 1999
5,191
27,304
- 18,982
- 3,750
- 5,329
-53
1,850
1,051
7,282
1,713
3,381
0
0
- 2,835
59
1,978
41
4,337
3,176
1,189
360
3,723
52,065
67,795
1,647
- 15,122
- 20,855
19,707
19,013
8,727
- 62,315
- 17,575
- 57,574
- 8,858
- 1,159
7,472
2,962
- 137,047
- 230
- 730
0
0
- 12,865
1,022
434
- 12,369
2,136
55,543
43,500
- 2,410
9,646
- 6,138
2,886
105,163
0
0
0
0
16,303
- 2,081
70
14,292
35,911
86
50,723
86,720
10,650
- 156
40,229
50,723
development of equity in the group
DEAG
DEAG
subscribed Capital reserve
Number of
in TDM
shares issued capital in TDM
Balance as of Dec 31, 1998
2,183,400
10,917
28,047
Conversion of capital into in euro
Unappropriated profit available for distribution
Changes from
currency conversion
Balance as of Dec. 31, 1999
4,366,800
0
1,894
0
- 1 ,894
0
0
6,550,200
0
12,811
0
26,153
1,092,259
0
0
2,136
0
0
55,543
- 2,410
0
0
7,642,459
0
14,947
0
79,286
Capital increase
to acquisitions
Changes from
currency conversion
Balance as of Dec 31, 1998
Conversion of capital into in euro
Changes from
currency conversion
Capital increase
to acquisitions
Changes from
currency conversion
Generated capital
as of Jan. 1
in TDM
Currency
adjustment items
in TDM
Consolidated
earnings
in TDM
Share capital
in TDM
- 4,975
0
0
33,989
0
0
0
0
0
1,713
0
1,713
0
- 4,975
-141
- 141
0
1,713
- 141
35,561
0
0
0
0
0
0
0
0
5,191
57,679
-2,410
5,191
0
- 4,975
114
- 27
0
6,904
114
96,135
Minority interests, which are to be reported separately to outside capital and share capital according to IAS 27.26, composed as follows:
in TDM
Minority interests in paid-up capital
Minority interests in result
223
2,886
- 53
3,056
31
development of fixed assets in the group
Intangible
assets
Land and
buildings
Technical
plant and
machines
Balance Jan. 1, 2000
31,160
7,493
1,461
4,679
185
Additions
Disposals
Transfers
Currency effects
Changes to the
scope of consolidation
Balance Dec. 31, 2000
62,315
- 4,588
0
12
2,038
- 1,837
1,946
0
433
- 44
49
1
10,331
- 280
- 1,833
10
518
89,417
- 21
9,619
290
2,190
- 296
12,611
Intangible
assets
Land and
buildings
Technical
plant and
machines
Balance Jan. 1, 2000
4,379
6,519
950
2,087
100
Additions
Disposals
Transfers
Currency effects
Changes to the
scope of consolidation
Balance Dec. 31, 2000
5,415
- 712
0
0
159
- 1,831
1,871
0
347
- 10
21
-4
2,376
- 251
1,447
-1
-3
9,079
-6
6,712
29
1,333
Stated value Dec. 31, 2000
80,338
2,907
Stated value Dec. 31, 1999
26,781
974
Acquisition
costs in TDM
Depreciation
in TDM
32
Other plant,
office and
business fittings
Financial
assets
Fixed
assets
0
138
45,116
4,773
-7
- 178
0
57,574
0
0
0
8,937
- 1,395
0
0
146,401
- 8,151
- 16
23
0
4,773
0
57,574
0
7,680
491
183,864
Musical
Advances production
Financial
assets
Fixed
assets
0
0
14,035
0
0
100
0
19,007
0
0
0
0
0
0
0
27,304
- 2,804
3,239
-5
- 688
4,970
0
0
0
19,007
0
0
- 668
41,101
857
7,641
4,773
38,567
7,680
142,763
511
2,592
85
0
138
31,081
Other plant,
office and
business fittings
Musical
Advances production
notes
1. basis of presentation
The consolidated financial statements of Deutsche Entertainment AG
(DEAG) as of December 31, 2000 are prepared applying § 292 a German
Commercial Code in accordance with the regulations of the International
Accounting Standards Committee (IASC), London, as valid on the balance
sheet date. They comply with the European Union directive concerning
consolidated accounting (European directive 83/349/EEC).
companies included are drawn up on the balance sheet date for consolidated financial statements.
Valuations based on fiscal regulations are not included in the consolidated financial statements. In accordance with the IAS rules, the transition
of valuations occurred outside the commercial individual accounts, at
Group level in Financial Statements II.
The consolidated financial statements are based on the annual financial
statements of consolidated companies. These are prepared according to
constantly and uniformly applied statement presentation principles and
valuation principles and applying the German Commercial Code (HGB)
and the German Stock Corporation Act (AktG). In the case of foreign
companies, they are drawn up in accordance with the relevant national
regulations.
Items combined in the balance sheet and in the Group profit and loss
account for greater clarity are explained in the notes. The break-down of
the balance sheet and the Group profit and loss account complies with
the regulations of IAS 1. According to IAS 1, a distinction is made between
long-term and short-term loans. In this context, short-term is taken as
meaning liabilities and accruals due within one year.
Existing options are exercised to produce extensive compliance with
IAS at the level of the commercial annual financial statements. Any
differences in statement reporting and valuation are explained in the
notes. There have been no changes to the statement reporting and valuation principles since the previous year. Individual financial statements of
When producing the consolidated financial statements, it is necessary to
make estimates and assumptions to a very limited degree. These can
impact the level and recognition of reported assets and debts, income
and expenditure as well as contingent liabilities. Real values can subsequently deviate from these estimates.
2. consolidation principles
Scope of consolidation
The consolidated financial statements include Deutsche Entertainment
AG and subsidiaries under its uniform management or where DEAG has
the majority of the voting rights, either indirectly or directly. Companies
bought or sold over the course of the financial year are included from
the time of acquisition and up to the date of disposal respectively. The
scope of consolidation includes thirty-three fully consolidated domestic
and foreign companies as of December 31, 2000. In total, eight joint
ventures are proportionally consolidated, six participations are valued as
associated companies according to the equity method. Two participations
are reported at acquisition cost.
In addition to Deutsche Entertainment AG as the parent company, the following companies are included in the in the consolidated financial statements at the
balance sheet date, in accordance with the regulations of full consolidation:
Companies
Broadway Berlin Gesellschaft für Musical and Eventmarketing mbH, Berlin
with the following subsidiaries:
Wintergarten Varieté Theater Betriebs GmbH, Berlin
Friedrichsbau Varieté Betriebs- and Verwaltungs GmbH, Stuttgart
Broadway Musical Management GmbH, Hamburg
Musical Betriebsgesellschaft Neue Flora GmbH, Hamburg
Musical Betriebsgesellschaft Operettenhaus GmbH, Hamburg
Musical Betriebsgesellschaft Starlight Express Theater GmbH, Bochum
Musical Betriebsgesellschaft Stuttgart International GmbH, Stuttgart
Shareholding
100 %
100
100
100
100
100
100
100
%
%
%
%
%
%
%
33
Companies
Musical Betriebsgesellschaft Potsdamer Platz GmbH, Berlin
Betriebsgesellschaft Music-Hall GmbH, Stuttgart
SMR STELLA Musical Reisen GmbH, Hamburg
STELLA Academy GmbH, Hamburg
Adagio Gastronomie GmbH
Hegener + Glaser AG
Concert Concept Veranstaltungs GmbH, Berlin
Berlin Ticket Theaterkassen GmbH, Berlin
Berlin Ticket Telefonischer Kartenservice GmbH, Berlin
Unicorn Entertainment Services GmbH, Berlin
Kultur- and Kongresszentrum Jahrhunderthalle GmbH, Frankfurt/Main
Gastronomie Jahrhunderthalle Betriebsführungsgesellschaft mbH, Frankfurt/Main
LSG Event GmbH, Frankfurt/Main
Musikkontor NRW Veranstaltungs GmbH, Aachen
B.E.S.T. Veranstaltungsdienste GmbH, Berlin
Coco Tours Veranstaltungs GmbH
Balou Entertainment Konzertagentur mbH, Cologne
Millennium Concerts Konzertagentur GmbH, Munich
B+R Event AG, Glattbrugg, Switzerland
EM Event Marketing AG, Glattbrugg, Switzerland
Fortissimo AG, Glattbrugg, Switzerland
La Isla Entertainment S.L., Palma de Mallorca, Spain
Good News Productions AG, Glattbrugg, Switzerland
Entertainment Media & Commerce GmbH (previously Give & Take), Berlin
with the subsidiary:
bravo charlie Vermögensverwaltungs AG, Berlin
Shareholding
100
100
100
100
75
55,29
100
%
%
%
%
%
%
%
100 %
100 %
100 %
100 %
100 %
100 %
70 %
51 %
100 %
100
100
100
100
100
100
90
100
%
%
%
%
%
%
%
%
100 %
The following companies are operated as joint ventures and incorporated according to the share of capital held directly or indirectly by
Deutsche Entertainment AG in accordance with the regulations on proportional consolidation:
Companies
Marshall Arts Ltd., London, Great Britain
Ticketnet Ltd, London, Great Britain
Palast Management and Veranstaltungs GmbH, Berlin
Waldbühne Schwarzenberg Betriebsgesellschaft mbH, Berlin
Apollo Varieté Betriebs GmbH, Düsseldorf
City Werbeconcept Gesellschaft für Werbung and Plakatierung mbH, Berlin
Velomax Berlin Hallen Betriebs GmbH, Berlin
CEG Veranstaltungsconcept and Verwaltungs GmbH, Berlin
34
Shareholding
50
50
50
50
50
50
33,3
33,3
%
%
%
%
%
%
%
%
The following companies are included at equity in the consolidated financial statements:
Companies
ECM Urban Entertainment Center Management GmbH, Berlin
Double e GmbH, Berlin
ShowNet GmbH, Berlin
EIB Entertainment Insurance Brokers GmbH, Hamburg
Real Merchandising GmbH, Berlin
START Ticket GmbH; Bad Homburg
Shareholding
50
50
50
50
49
33,3
%
%
%
%
%
%
In comparison with the previous year, the scope of consolidation changed as follows:
Addition from acquisition
100 % of the shares in Millennium Concerts GmbH, Munich
100 % of the shares in SMR STELLA Musical Reisen GmbH, Hamburg
90 % of the shares in Good News AG, Glattbrugg/Opfikon, Switzerland
100 % of the shares in EM Event Marketing AG, Glattbrugg/Opfikon, Switzerland
100 % of the shares in B+R Event AG, Glattbrugg/Opfikon, Switzerland
100 % of the shares in Fortissimo AG, Glattbrugg/Opfikon, Switzerland
55,29 % of the shares in Hegener + Glaser AG, Munich
25 % of the shares in Palast Management GmbH, Berlin
33 % of the shares in START Ticket GmbH, Bad Homburg
Addition from incorporation
100 % of the shares in Musical Betriebsgesellschaft Neue Flora GmbH, Hamburg
100 % of the shares in Musical Betriebsgesellschaft Operettenhaus GmbH, Hamburg
100 % of the shares in Musical Betriebsgesellschaft Starlight Express Theater GmbH, Bochum
100 % of the shares in Musical Betriebsgesellschaft Stuttgart International GmbH, Stuttgart
100 % of the shares in Musical Betriebsgesellschaft Potsdamer Platz GmbH, Berlin
100 % of the shares in Musical Betriebsgesellschaft Music- Hall GmbH, Stuttgart
100 % of the shares in STELLA Academy GmbH, Hamburg
75 % of the shares in Adagio Gastronomie GmbH, Berlin
50 % of the shares in EIB European Insurance Brokers GmbH, Hamburg
50 % of the shares in ECM Entertainment Center Management GmbH, Berlin
50 % of the shares in ShowNet GmbH, Berlin
Balance sheet date
of initial consolidation
10/01/2000
04/01/2000
07/01/2000
07/01/2000
07/01/2000
07/01/2000
09/01/2000
01/01/2000
12/31/2000
Balance sheet date
of initial consolidation
04/01/2000
04/01/2000
04/01/2000
04/01/2000
04/01/2000
04/01/2000
04/01/2000
10/01/2000
01/01/2000
01/01/2000
07/01/2000
The changes to the scope of consolidation as a result of disposals were as follows:
Disposal by sale and other disposals
SSS Special Security Service GmbH, Bonn
ASK Gesellschaft für Alarm-, Sicherheits- and Kommunikationssysteme GmbH, Düren
CTS Betriebs GmbH, Berlin
Balance sheet date
of disposal
07/01/2000
07/01/2000
07/01/2000
35
Changes to the scope of consolidation due to the acquisition of 90 % of
the shares in Good New AG produced a significant impact.
of the assets from the insolvency estate of what was STELLA AG does not
represent any change to the scope of consolidation in a legal sense.
Effective July 1, 2000, DEAG AG acquired 90 % of the shares in Good
News AG as part of a share swap. The remaining changes did not have a
material impact on the consolidated financial statements. The acquisition
However, due to its economic significance, any amounts relating to
STELLA activities are reported in the corresponding notes on material
positions on the balance sheet and the statement of earnings.
The acquisition of Good News Productions AG impacted the asset and income situation as follows:
Acquired net assets
in TDM
Fixed assets
Trade receivables
Other assets
Liquid assets
Pre-paid expenses
Accruals
Trade account payables
Other liabilities
Deferred income
Goodwill
825
1,659
1,007
22,488
144
314
771
1,456
19,181
4,401
54,343
Total impact
Acquisition-related outflow of funds
Changes to net liquidity
58,744
0
22,488
Goodwill relates to the difference between acquired net assets and the market value of the 1,092,259 shares issued for this purpose. According to
IAS 22, the difference impacted the paid-up capital of the Group by the same amount.
Of consolidated sales, sales of TDM 30,188 relate to the period that the
Good News Group was included in the scope of consolidation. Earnings
after tax relating to the Good News Group amount to TDM 3,510 for the
period of inclusion. The changes to the scope of consolidation from disposals did not have a material impact on Group assets.
The following effects were produced with regard to the income situation:
in TDM
Loss in the individual financial statement from sale of participation
Extra earnings in the Group
Deconsolidation earnings in the Group
In addition to changes to the scope of consolidation, the acquisition of
the material assets of STELLA AG significantly impacted the asset and
income situation. As of April 1,2000, net assets worth TDM 40,000
36
-2,785
554
-2,231
were acquired for the equivalent amount in cash from the insolvency
estate of what was STELLA AG. The acquisition was fully financed by
outside capital.
At the balance sheet date, joint ventures impacted Group assets and debts, income and expenses as follows:
in TDM
Consolidation-related goodwill
Fixed assets
Current assets
Accruals
Financial debts
Other liabilities
Net assets
9,723
386
14,889
3,014
793
11,149
10,042
Methods of consolidation
With capital consolidation, the acquisition costs of participations are set
off against equity at the time of incorporation or acquisition of the subsidiary in question.
Depreciation of subsidiaries value-adjusted over the previous years was
not included again for the purposes of consolidation. Ancillary costs in
connection with the acquisition of participations reported as assets in the
individual financial statements, are included in the Group as expenditure.
Inter-group profit and losses from the sale of participations within the
Group are not included.
Differences from the capital consolidation are posted as goodwill in the
Deutsche Entertainment AG consolidated balance sheets, to the extent
that there are non-appropriable hidden reserves or charges for individual
in TDM
Income
Expenses
Goodwill depreciation
Net income for the year
54,772
- 53,756
- 1,167
- 151
assets or debts. With indirect participations, goodwill is calculated in the
context of proportional consolidation. Goodwill is written of by the
straight-line method over the scheduled useful life of eight to twenty
years. In individual cases, goodwill was written off fully in the year of its
accrual.
Receivables and corresponding liabilities/accruals between the consolidated companies are offset against each other. Interim earnings from
inter-Group services were eliminated. The participation in an associated
company valued by the equity method, is booked at the proportional
equity in accordance with the book value method.
In the context of proportional consolidation, the respective assets and
debts were included in the consolidated financial statements according
to the share of the capital held by the parent company. Consolidation
follows the same method.
3. foreign currency translation
In the individual financial statements, short-term receivables and liabilities as well cash at banks in foreign currencies are translated into
Deutschmarks using the middle rate on the balance sheet date. Business
activities in Euro are translated at the official translation rate of DM
1,95583 = EUR 1.
We regard our subsidiaries in Switzerland and Great Britain as independent companies active in their own economic areas and each with their
own currency.
Currency translations for foreign financial statements into Deutschmarks takes place in accordance with IAS 21 on the basis of the concept of a working currency at the middle rates on the balance sheet
date.
The working currency is the relevant national currency. Differences due
to changes in exchange rates arising when valuing net assets against
values from the previous year are not treated as income. Currency differences are reported as a special item in the equity position.
4. summery of significant accounting
Notes on the balance sheet
Intangible assets purchased for cash are reported in the assets section of
the balance sheet at acquisition cost and, where depreciable, are written
off according to their scheduled economic useful life on a straight-line
basis. Intangible assets produced in the company are not capitalised.
Acquired goodwill in connection with acquisitions are reported as
assets on the balance sheet and written off using the straight-line
method in accordance with IAS 22. Useful life is taken to be eight to
twenty years.
principles
Tangible assets are valued at acquisition or production costs plus ancillary costs, less rebates and in the case of depreciable goods less depreciation due to wear and tear. The costs of financing are not capitalised.
Depreciation is booked applying the straight-line method and according
to scheduled useful life, unless actual usage makes diminishing balance
depreciation more appropriate. Moveable assets with acquisition costs of
up to DM 800 (low-value assets) were written off in full in the year of
acquisition.
Any necessary maintenance costs are shown as expenditure, provided
they do not represent any significant alteration or extension to the possibilities of usage.
37
Scheduled depreciation of property, plant and equipment and the musical productions is based in principle on the following useful lifes:
Musical productions
Buildings
Technical plant and machines
Operating and office equipment
Tangible assets used on the basis of leasing contracts are reported as
assets and written off in accordance with IAS 17 if the conditions of
”Capital Leasing” are met. In 2000, there were no items to be posted as
assets in accordance with the regulations of 17.
Capitalised musical productions relate to production costs that have arisen
for the musicals to be staged. The amounts reported as assets are written
off over the scheduled residual run of the musicals and thereby pro rata
tempores. From the reported book value on the balance sheet date, TDM
9,515 relate to the musical ”Starlight Express”, TDM 12,329 to the musical ”The Hunchback of Notre Dame” and TDM 13,760 to ”Dance of the
Vampires”. Distribution costs and outside capital interest were not reported
as assets.
Shares in non-consolidated companies are reported in the balance sheet
at acquisition cost. In accordance with IAS 28, shares in associated companies are reported in the balance sheet at the proportional nominal
value of the shares plus the proportional results less dividends received.
For the allocation of differential amounts from the initial consolidation
the same principles apply as for full consolidation. The valuation of
inventories was done at acquisition costs. If the value to be used on the
balance sheet date is below the acquisition cost, the corresponding value
adjustments are made.
Since January 1, 1996, deferred taxes have been based on different tax
amounts from assets and liabilities in the commercial balance sheet and
tax statement, on circumstances in the context of the Financial Statements II, on consolidation methods and on realisable losses carried forward. Adjustments were not made for previous years.
Deferred taxes on the asset side are shown separately in the balance sheet.
Deferred taxes on the liabilities side are included in accrued taxes. Liabilities are entered on the liabilities side at nominal value or the repayment
amount, if greater. Advances received include pre-payments from local
concert organisers for artists fees and for galas. Advance payments relate
to concerts after the balance sheet date. Valuation is at nominal value.
Deferred income includes income from pre-paid ticket sales for concerts
and theatres as well as variety performances after the balance sheet date.
The amount reported is at nominal value.
According to IAS 25, short-term financial investments are valued at the
market value. Short-term financial investments are assets, which can be
realised at any time because of their nature and are not intended to be
held for more than one year. The market value used is the amount that a
contractual buyer is prepared to pay.
Receivables, other assets and liquid funds are reported in the balance
sheet at nominal value. Any necessary individual value adjustments,
which depend on potential risk of default, are taken into account.
Income from the valuation of the market value are reported in accordance with IAS 25.42, affecting earnings accordingly. When preparing
the consolidated financial statements, we have already applied IAS 40
”Investment Properties” voluntarily. It is mandatory to apply the standard
for financial years beginning after December 31, 2000.
Pre-paid expenses and deferred income were reported with amounts paid
in advance. Accruals are reported at the amount estimated by sound
commercial judgement to be needed on the balance sheet date to cover
future payment obligations, identifiable risks and uncertain obligations.
According to IAS 40, land and buildings (referred to as investment properties) can be reported in the balance sheet at market value. Statement
presentation of this kind calls for any profit from value increases to be
reported, affecting income accordingly.
Note on profit and loss account
Moreover, as a consolidated holding company DEAG also generated sales
in the 2000 financial year as in previous years.
Sales includes all income for payment already received. Performance for
a concert, a show or a tour is considered rendered at the end of the concert or show. With a tour, this is proportional for concerts already held.
Revenue recognition is booked when performance has been rendered.
Interest and other costs on loans are booked as current expenditure.
38
2 to 5 years
7 years
5 years
3 to 8 years
In particular, sales include amounts connected with consultancy and
management services provided outside the Group. Sales also include
amounts relating to external Group transactions in the participation division. This relates to income of TDM 24,000 resulting from the application of IAS 25.
5. segment reporting
In accordance with the rules of IAS 14, individual financial statements
are split into segments according to divisions and regions of operation,
with presentation based on our internal reporting. Segment reporting is
to clarify earnings power and future prospects for individual business
activities within the Group. The DEAG Group divides its business activities into four segments, described in the management report in detail.
Segmentdata
Theatres
2000
1999
in TDM
Sales
Other revenue
- thereof internal revenue
Total income
Artists & Tours
2000
1999
Urban Entertainment
2000
1999
Media & Commerce
2000
1999
274,363
16,806
50
291,169
19,376
4,572
140
23,948
161,767
2,238
1,430
164,005
113,254
6,682
940
119,936
62,973
23,414
2,690
86,387
48,186
15,704
4,493
63,890
898
2,339
31
3,237
1,281
41
90
1,322
Segment result (EBIT)
4,537
1,218
- 8,920
4,999
4,457
6,090
282
- 555
Result of associated companies
Interest result
Minority interests
0
- 861
138
0
- 60
0
0
224
- 355
0
- 636
0
1
1,425
270
0
- 1,425
- 59
- 1,052
10
0
29
- 34
0
Depreciation
- of goodwill
- of other fixed assets
Book value of segment assets
Segment loans
investments
Full-time employees as of Dec. 31, 2000
600
21,467
125,124
107,654
75,494
1,677
530
292
8,150
8,199
220
186
3,435
417
109,097
111,891
886
38
1,241
124
70,956
72,515
9,327
25
320
735
62,457
58,445
490
118
610
551
68,647
55,736
715
386
0
2
1,182
2,575
1,322
6
0
3
579
1,179
100
5
Return on sales
Return on net assets
1.7 %
6.3 %
26.0 % > 100 %
- 5.5 %
4.4 %
< 0 % > 100 %
7.1 %
> 100 %
12.6 %
47.2 %
Notes on segments
Segment data was determined as follows:
Internal sales relate to payments between Group companies within a segment. The exchange of performance between segments and between segments and the holding company is adjusted in the consolidation column.
Moreover, the consolidation column also contains DEAG holding company performance. Performance is calculated on the basis of prices in
31.4 % - 43.3 %
> 100 % < 0 %
line with the market and corresponds to prices charged to third parties.
The segment earnings (EBIT) include depreciation of goodwill and other
fixed assets as well as income from the liquidation of contractual
warrantee accruals.
Investments include tangible assets, intangible assets and external participation values. Return on sales is calculated from segment earnings
(EBIT) divided by segment sales. Return on net assets is determined from
segment earnings (EBIT) divided by net assets.
39
Transition from segment data to Group data
in TDM
Sales
Other income
Thereof internal sales
Total income
Total for Segmente
2000
1999
500,001 182,096
44,797
26,999
4,201
5,663
544,798 209,095
Consolidation
2000
1999
506,057
43,222
0
549,279
169,969
26,001
0
195,970
Segment earnings (EBIT)
Income and expenses not allocated (incl. consolidation effects)
Operating result (EBIT excluding extraordinary income)
356
11,124
11,480
11,752
- 1,743
10,009
Result of associated companies
Interest result
Result from ordinary operations
-1,051
- 3,176
7,253
29
- 1,647
8,391
Income tax
Extraordinary income
Net income/loss for the year
- 2,115
0
5,138
- 6,618
0
1,772
53
5,191
- 59
1,713
Minority interests
Consolidated earnings
6,056 - 12,127
- 1,575
- 998
- 4,201 - 5,663
4,481 - 13,125
Group
2000
1999
The transition statements shows the elimination of internal Group sales, receivables and liabilities, expenses and income as well as DEAG Holding
income and expenses.
Other information
in TDM
40
Group
2000
1999
Book value of segment assets
Shares in associated companies
Assets not allocated
Consolidated assets
297,860 148,333
6,993
108
65,375
11,115
370,228 159,556
Segment loans
Non-allocated loans
280,565
- 9,529
137,629
- 20,613
Consolidated loans
271,036
117,016
Net assets
99,192
42,540
Full-time employees as of Dec. 31, 2000
Return on sales
Return on net assets
1,879
2,3 %
11,6 %
296
5,9 %
23,5 %
The return on sales at the Group level is calculated from the operating
result (EBIT before extraordinary income) divided by consolidated sales.
The return on net assets for the Group is calculated from the operating
result (EBIT before extraordinary income) divided by consolidated net
assets. The regional breakdown of segment data is shown below. The
Group companies are the Good News Group in Switzerland and Marshall
Arts Ltd. (Great Britain), acquired in 2000.
2000
1999
Sales from the Artists & Tours segment
thereof:
Marshall Arts (Great Britain)
Good News AG (Switzerland)
161,767
113,254
38,568
30,188
15,696
0
Book value of Artists & Tours segment assets
thereof:
Marshall Arts (Great Britain)
Good News AG (Switzerland)
109,097
70,956
5,686
23,635
10,659
0
in TDM
6. material expenses
The total cost of materials amounts to TDM 244,347 (previous year: TDM
143,458). TDM 15,101 (previous year: TDM 40,895) relates to materials
used and TDM 229,246 (previous year: 102,563) to purchased services in
connection with events held. The increase in material costs is, at TDM
49,951, mainly the result of the acquired musical activities of STELLA,
thereof TDM 36,741 relating to license expenditure.
7. personnel expenses
Personnel costs rose by TDM 106,595 in 2000. The increase was due solely to the acquisition of the musical theaters.
Overall personnel costs are broken down as follows:
in TDM
Remuneration
- thereof pensions
2000
1999
108,413
18,789
0
127,202
17,677
2,930
0
20,607
From the TDM 106,594 increase in personnel expenditure, TDM 96,836 relate to STELLA.
41
8. average number of employees over the year
“Heads“
Theatres
Artists & Tours
Urban Entertainment
Media & Commerce
Holding (DEAG)
Group
2000
in TDM
1999
in TDM
1,893
34
387
4
38
2,357
186
25
386
5
24
626
As of December 31, 2000, the Group employed 1,879 full time employees (FTE; Dec. 31, 1999: 296).
9. other operating income
Other operating income amounts to TDM 43,222 (previous year: TDM
26,001). The most significant items relate to income from the liquidation
of accruals at TDM 6,526 (previous year: TDM 11,358), insurance payments at TDM 105 (previous year: TDM 5,551), profit contribution and
contribution to the costs at TDM 11,182 (previous year: TDM 1,388), rental
income from subletting at TDM 919 (previous year: TDM 1,277), income
from the disposal of fixed assets at TDM 5,761 (previous year: TDM 847),
income from canteen at TDM 1,678 (previous year: TDM 0), contributions from collaborations and advertising at TDM 5,102 (previous year:
TDM 340), income from the valuation of assets in accordance with IAS
40 at TDM 3,750 (previous year: TDM 0), other consolidation effects at
TDM 2,744 (previous year: TDM 730) and other operating income at TDM
5,455 (previous year: TDM 4,107).
The TDM 5,326 item shown in the reporting year from the liquidation of
accruals relates to accruals for contractual guarantee obligations in
connection with an acquisition performed in 1999. At the time of acquisition, the contractually assumed risks were valued by the contractual
parties. At the balance sheet date, we have performed a revaluation
from the point of view of continuity and based on new information.
This resulted in the accruals of TDM 5,326 being liquidated.
TDM 16,049 is allocated to STELLA.
10. other operating expenses
Other operating expenditure at TDM 138,812 (previous year: TDM
18,476) include rent and associated costs at TDM 21,039 (previous year:
TDM 6,424), consultancy fees at TDM 6,690 (previous year: TDM 2,734),
sales and advertising costs at TDM 50,382 (previous year: TDM 2,646),
insurance premiums at TDM 1,573 (previous year: TDM 736), travel
expenses at TDM 4,059 (previous year: TDM 1,245), communication costs
at TDM 2,426 (previous year: TDM 1,013), losses from the disposal of
fixed assets at TDM 2,884 (previous year: TDM 867), value adjustments
on inventories at TDM 4,555 (previous year: TDM 1,723), expenditure
outside the period at TDM 567 (previous year: TDM 678), repairs and
maintenance at TDM 6,664 (previous year: TDM 1,245), other consolidation effects at TDM 1,792 (previous year: TDM 378), other personnel
costs at TDM 3,000 (previous year: TDM 78), canteen materials at TDM
1,203 (previous year: 0 TDM) and other operating expenditure at TDM
3,1978 (previous year: TDM 5,561).
TDM 92,187 is allocated to STELLA.
11 . i n v e s t m e n t r e s u l t
The reported amount of TDM – 1,051 (previous year: TDM 29) mainly relates to the proportional earnings from ShowNet GmbH, Berlin at TDM –1,038,
reported in the consolidated financial statements as an associated company.
42
12. net interest income
Earnings from interest include:
in TDM
Other interest and similar income
Interest and similar expenses
2000
1999
2,962
- 6,138
- 3,176
434
- 2,081
- 1,647
Higher interest expenses of TDM 1,529 resulted largely from higher indebtedness.
13. taxes on income
The determination of the taxes on income position in line with IAS 12
covers the calculation on deferred taxes on different valuations of assets
and liabilities in the commercial and tax balance sheet, consolidation
procedures and on loss carry forwards which can be realised. A discount
is made on prepaid taxes if the realisation of the expected tax advantages
is considered improbable.
According to origin, taxes on income break down as follows:
in TDM
Taxes paid/owed
Germany
Switzerland
Great Britain
Deferred taxes
from loss carry forwards
from consolidation adjustments
Total
The tax rate of 29.2 % is subject to various factors described below.
In Germany as a result of existing profit transfer agreements, the resulting losses were used optimally in regards of taxation, with no taxes
being paid on earnings. The tax amount resulted almost entirely from
corporate tax credit due to the change in company form.
The tax incurred in Switzerland relates to the earnings from ordinary
operations from the Good News Group acquired by us in 2000. Deferred
taxes assumed tax rate 40 % on the loss carry forward of DEAG was
calculated in line with IAS 12 using the future tax rates. It is assumed
2000
1999
1,205
- 1,473
3
- 4,640
0
0
6,223
- 8,073
- 1,553
- 425
- 2,115
- 6,618
here that this loss carry forward is utilised completely over the next
three years.
At TDM 9,200 deferred taxes from consolidation procedures relates to
deferred taxes on the liabilities side and TDM 1,127 on the assets side. In
addition there is an increase due to the depreciation in goodwill in the
consolidated earnings.
This does not produce a deduction against tax and at the same time
according to IAS 12.15 cannot be included in the deferred taxes position
due to the differences in the time period.
43
14. earnings per share
Earnings per share is calculated by dividing the unappropriated profit
available for distribution by the weighted number of outstanding shares.
As of December 31, 2000 and December 31, 1999 there were no shares
outstanding to potentially dilute the earnings per share.
The calculation of the number of shares to determine undiluted earnings per share according to IAS 33 is as follows:
Shares
Number of shares on January 1, 2000
Issue of new bearer shares on July 1, 2000
Number of share on December 31, 2000
Weighted average of shares (previous year: 4,730,700 shares)
6,550,200
1,092,259
7,642,459
7,071,330
15. intangible assets
The classification and development of intangible assets can be seen from the consolidated schedule of assets.
The book values are divided as follows:
in TDM
Licenses, trade marks and patents
Goodwill
Advances paid
Total
The increase in goodwill results from the acquisition of stakes in the
Good News Group, Millennium Concerts, Hegener + Glaser AG and Palast
Management Veranstaltungs GmbH, Berlin. Additions of derivative
goodwill in the initial consolidation total TDM 56,998 (previous year:
TDM 10,607).
December 31, 2000
December 31, 1999
2,365
77,456
517
80,338
213
26,567
1
26,781
This was offset by disposals of TDM 2,801 in the framework of the
deconsolidation of Special Security Services GmbH. Total depreciation
on goodwill resulting from consolidation amounted to TDM 4,355
(previous year: TDM 2,381).
For STELLA there are pro rata book values of TDM 3,133.
1 6 . p ro p e r t y, p l a n t a n d e q u i p m e n t
The breakdown and development of property, plant and equipment can
be seen from the consolidated schedule of assets. In the financial year
2000, investments totalling TDM 17,575 (previous year: TDM 730) were
made in property, plant and equipment.
They concern
- TDM 2,038 on land/buildings
44
- TDM 433 on technical equipment and machinery
- TDM 10,331 on other equipment, office and business equipment
- TDM 4,773 on advances paid on fixed assets and assets under
construction
As of December 31, 2000 there were property, plant and equipment
totalling TDM 11,130 from the acquired STELLA activities.
17. musical productions
With the acquisition of the STELLA activities, musical productions have
been capitalised for the first time. Due to the material nature and independent character this position is booked separately.
The net book value of TDM 38,567 posted as of December 31, 2000
includes the following:
- TDM 9,515 for the musical "Starlight Express"
- TDM 12,329 on Disney's "The Hunchback of Notre Dame"
- TDM 13,760 on "Dance of the Vampires".
18. financial assets
The development of financial assets is shown in the consolidated
schedule of assets. TDM 6,993 (previous year: TDM 108) are shares in
associated companies and TDM 686 (previous year: TDM 30) two parti-
cipations which were not booked at equity since they are not material to
the Group's assets, liabilities and net income.
19. inventories
in TDM
Raw materials, supplies and purchased goods
Work in progress
Finished products and goods
Advances made
Inventories
December 31, 2000
December 31, 1999
29
250
1,567
13,559
15,405
0
355
372
15,866
16,593
Incomplete projects include personnel costs and other costs for projects in 2001.
20. other receivables, other current assets and securities
Other current assets includes at nominal value amounts due to our contract partner of TDM 15,167 (previous year: TDM 26,333) in the
"Jahrhunderthalle" project. This position concerns outstanding payments
of the contractually warranted risk compensation. This amount due is to
be paid by October 31, 2001.
investments in securities and land are value at market value in line with
IAS 25 and IAS 40 respectively. The market value for the valuation of the
short-term financial investments has been determined on the basis of
contracts agreed and provisional agreements. This produces the market
value of the sales revenues to be generated.
Amounts due to the tax authorities of TDM 7,706 and loan claims of
TDM 12,946 are booked. There are amounts due from insurance companies from insurance claims totalling TDM 843 (previous year: TDM
2,385) which are also booked under other current assets.
The change in market value, i.e. the difference between acquisition costs
and the current value has been booked as TDM 27,750, a figure which
impacts the profit and loss account.
Receivables include TDM 946 of long-term receivables with a remaining
term of more than one year (previous year: TDM 12,89). In the consolidated financial statements of the financial year short-term financial
Of this TDM 24,000 is for securities and TDM 3,750 for land. Set off
against this is expenditure from the sale of the respective assets of TDM
5,018. After deferred taxes this has a net result of TDM 13,639. In matters
of realisation, refer to our remarks in the management report.
21. liquid assets
Liquid funds include moneys for outstanding artists tax from the Rolling
Stones tour in 1998 (TDM 13,793). These are held in USD in trustee
accounts (restricted cash). The corresponding liabilities are booked under
other liabilities in DM. In line with contracts made the currency risk from
this position is to be covered by the Rolling Stones. The group is also set
to receive interest income from the USD investments.
45
22. pre-paid expenses
In the prepaid expenses position the insurance premiums, rents paid in the reporting year and prepaid third-party tickets are booked. The total
amount impacts the statement of earnings in the 2001 financial year.
23. deferred taxes
Last year there were prepaid taxes of TDM 75 resulting exclusively from
matters relating to consolidation. In the current year prepaid taxes von
TDM 6,223 resulting from the loss carry forward deferred taxation are to
be booked, plus TDM 1,127 from matters relating to consolidation.
24. shareholders’ equity
At the same time the shares were converted from a notional value of DM
5.00 to EUR 1.00. Share capital is now divided into 7,642,459 shares.
ments concerns a TDM 55,543 difference from the consolidation of the
acquisition of Good News AG at the current value (IAS 22), reduced by
the costs of procuring capital of TDM 2,410 (SIC 17). The capital generated
includes results posted in the past for companies included in the scope
of consolidation of the consolidated financial statements and the consolidated earnings of the current financial year. As of December 31, 2000,
authorised capital totalled € 2,182,841.
The capital reserve contains the premium from the issue of shares by
Deutsche Entertainment AG, reduced by the capital increase from company funds to adjust the share capital due to the conversion to the Euro.
The addition of TDM 53,133 booked in the consolidated financial state-
The currency adjustment position relates to the changes of the foreign
exchange rates in translating the annual financial statements of foreign
company. The change in equity capital is shown in the schedule of consolidated equity.
The share capital of Deutsche Entertainment AG totals € 7,642,459. By
resolution of the annual general meeting on May 26, 1999 the share
capital was increased by € 968,426.53 from company funds to round off
the share amount to full cents per share.
25. accrued taxes
Accruals relates to expected taxes for the 1999 financial year and for the previous year. There are also deferred taxes totalling TDM 9,700 relating
entirely to matters of consolidation.
26. other accruals
46
Other Accruals include the contractual warranties from the acquisition of
the Jahrhunderthalle at TDM 12,000 (previous year: TDM 21,489), the
shortfall at concert concept resulting from subletting their premises of
TDM 898 (previous year: TDM 1,098) and outstanding invoices, risks
from ongoing operations and personnel expenses. As at the balance sheet
date TDM 12,306 of the posted accruals concern the business operations
of the STELLA Group.
as at December 31, 2000 and the differences from the period before April
1, 2000 were not completely clarified. Income and expenses in the BMM
statement of earnings were fully reconciled. As at the balance sheet date
of December 31, 2000 there was a liability of DM 2.7 million in the BMM
financial accounting where it was not possible to book individual positions. For reasons of prudence this amount was booked as an accrual in
the BMM balance sheet.
To continue the musical business Broadway Musical Management GmbH
(BMM) also acquired the ticket sales system Ticket Plus from the liquidator from the insolvency proceedings. Due to the fact that the liquidator did not reconcile this sales system with the financial account of the
"old STELLA " for the 1999 financial year and the period of insolvency
up to March 31, 2000, there was no general reconciliation of the system
The liquidator confirmed to us that he has receivables totalling no
more than DM 1.5 million. As of the date for the preparation of the
annual financial statements, no concrete claims to this accrual had
been made. With the nature of the business of BMM it is clear that
only short-term claims can be asserted. Accruals of TDM 6,000 are due
in periods after 2001.
27. amounts due to banks
Amounts due to banks cover only current account liabilities with banks. The agreed rates of interest are between 5.5 % and 8.0 %. Terms of up to
one year have been agreed.
28. trade accounts payables
Trade payables continue to include advance payments received of TDM
7,032 (previous year: TDM 9,864). These relate to guarantee payments made
by local organisers for tours in 2001 and advance payments for future gala
events by variety companies. All the liabilities are due within a year.
29. other liabilities
TDM 20,840 (previous year: TDM 20,613) of other liabilities relate to tax
liabilities and TDM 3,151 (previous year: TDM 441) liabilities for social
security costs. There is a tax liability of TDM 13,793 for taxes for the
Rolling Stones tour in 1998. All liabilities are due within one year.
30. deferred income
This position shows moneys taken from customers for concert and theatre tickets for events in 2000.
47
31. financial instruments
According to IAS 32 financing instruments are contractual financial
transactions which include a claim to cash. As of the balance sheet date,
the balance sheet contains only primary financial instruments in the
form of currency receivables and trade payables, which contain not only
a credit and default risk, but also a currency risk.
The credit or default risk results from the danger that the business partners
do not fulfil their obligations. As offsetting with our customers is ruled out,
the total currency receivables represent the maximum default risk. The
currency risk concerns the potential diminution of value of a receivable
or the potential increase of an amount due as a result of changes in currency rates.
Closed positions are considered to be receivables in a particular currency which are matched by an equivalent payable in terms of time
and amount.
The balance sheet shows the following totals:
in TDM
December 31, 2000
Foreign currency risks in receivables
Foreign currency risks in payables
Closed positions
Remaining currency risk carried by the company
6,950
0
0
6,950
32. contingent liabilities not included in the balance sheet
Contingent liabilities from guaranties, almost entirely made to third parties are:
in TDM
Guarantees
The guarantees chiefly relate to obligations to banks.
48
December 31, 2000
December 31, 1999
6,838
3,753
33. other financial obligations
In addition to the accruals and liabilities in the balance sheet and the contingent liabilities, there are the following financial obligations:
in TDM
2001
2002-2005
Total
Obligations
Rent
Leasing
Licenses
Total
84,868
0
84,868
34,512
138,994
173,506
1,246
3,523
4,769
1,080
3,242
4,322
121,706
145,759
267,465
34. litigation risks
Deutsche Entertainment AG and its subsidiaries are currently involved in
various cases to recover receivables and to assert licenses and trade marks.
According to the Board of Management, the risks regarding the outcome
of the litigations are in each case less than 50 %. Appropriate value
adjustments and accruals for cost risks have been made. The total value
of the cases being pursued is DM 1.0 million.
Pursuant to the provisions of the agreements with the Rolling Stones,
Coco Tours Veranstaltungs GmbH is conducting a suit against the
German tax authorities to assert exemption from artists tax pursuant to
§ 50 a of the German Income Tax Act.
The cost risk is being borne by the Rolling Stones. The tax amounts have
been booked in full under other liabilities.
35. information on the supervisory board
and the board of management
in TDM
2000
1999
Remuneration of the Supervisory Board
Remuneration of the Board of Management
108
3,426
108
2,190
For retired board members there were payments of TDM 1,377.
36. events after the balance sheet date
After the balance sheet date there were no events of material importance.
Berlin, March 2001
Board of Management
49
audit opinion
We have awarded the following unrestricted audit certificate with a supplementary note, signed on March 29, 2000, for the consolidated financial
statements and the management report of DEAG Deutsche Entertainment GmbH and the Group for the financial year from January 1, to December
31, 2000, as set out in appendix 1:
auditor’s opinion
"We audited the consolidated financial statements produced by DEAG
Deutsche Entertainment AG, Berlin consisting of balance sheet, statement of earnings, statement of changes to the scope of consolidation,
cash flow statement and notes for the financial year from January 1,
2000 to December 31, 2000. The company Board of Management is
responsible for the preparation and content to the consolidated financial
statements. It is our responsibility to assess, on the basis of the audit that
we perform, whether the consolidated financial statements comply with
the International Accounting Standards (IAS).
We have performed our audit of the consolidated financial statements in
accordance with German auditing regulations and in line with the
German principles set by the German Institute of Auditors (IDW) relating
to correct auditing as well as in accordance with the International
Standards on Auditing (ISA). These standards require that the audit be
planned and performed in such a way that it is possible to judge with
sufficient confidence whether the consolidated financial statements are
free of any material misstatements.
When determining the audit approach, knowledge about business activities and the economic and legal environment of the Group is taken into
account along with expectations relating to potential errors. In the context of the audit, evidence for amounts and disclosures in the consolidated
financial statements are assessed on the basis of random samples. The
audit includes assessment of the principles of statement presentations
and the key estimates by the Board of Management as well as
acknowledgement of the overall presentation of the consolidated financial
statements. We are of the opinion that our audit provides a sufficiently
sound basis for our assessment.
50
ment of cash contributions as well as registration of the corresponding
capital increase in the German Register of Companies. Furthermore, one
contract contains a right of recission to June 2001. In another contract
it is not possible to make a conclusive assessment with regard to the
extent of agreed payment.
- it is not possible to sufficiently report the balance and entirety of
receivables acquired from a ticket sales systems and other assets, accruals
and liabilities. Amounts booked and still unsettled are shown as balanced
with approximately 2,7 million in accruals. For reporting, explanation
and impact of these circumstances we refer to the illustration by the
Board of Management in the notes and the management report of DEAG
Deutsche Entertainment AG and the Group.
Our audit, which applies to the management report produced by the
Board of Management for the financial year from January 1, 2000 to
December 31, 2000 covering DEAG Deutsche Entertainment AG and the
Group, has found no grounds for objection. We believe that the management report of DEAG Deutsche Entertainment AG and the Group together with other information from the consolidated financial statements
offers an accurate depiction of the situation of DEAG Deutsche
Entertainment AG and the Group and accurately represents the risks of
future development.
We believe that the consolidated financial statements, in accordance
with the IAS, present a true and fair view of assets, the financial and
income situation of the Group as well as flow of liquid funds for the
financial year.
Furthermore, we confirm that the consolidated financial statements and
the management report by DEAG Deutsche Entertainment AG and the
Group for the financial year from January 1, 2000 to December 31, 2000
satisfy the requirements for exempting the company from producing
consolidated financial statements and a Group management report
according to German law. The audit of compliance of the consolidated
accounting with the 7th EU directive relating to exemption from consolidated accounting obligation according to German Commercial Code was
carried out on the basis of the guidelines through DRS 1 ’Exemption of
consolidated financial statements according to § 292a German
Commercial Code’.”
Without limiting this assessment, we refer to the following:
Berlin, March 29, 2001
- as of December 31, 2000, minority interests, acquired with the intention
of selling them later, are reported under current assets securities and are
included in the balance sheet at the market value to be settled on the
basis of concluded contracts, in accordance with IAS 25. The validity of
the contracts depends on a non-cash contribution being made and pay-
Deloitte & Touche GmbH
Wirtschaftsprüfungsgesellschaft
signed Corzilius
Wirtschaftsprüfer
signed Lammers
Wirtschaftsprüferin
annual financial statements as of december 31, 2000
of deutsche entertainment ag (abriged version)
short version of the balance sheet
December 31, 2000
in TDM
December 31, 1999
in TDM
Intangible assets and Property, Plant and Equipment
Financial assets
Fixed assets
948
22,760
23,708
278
5,035
5,313
Receivables, prepaid expenses and securities
Liquid funds
Current assets
79,921
1,311
81,232
56,342
13
56,355
104,940
61,668
December 31, 2000
in TDM
December 31, 1999
in TDM
14,947
26,153
- 11,380
29,720
12,811
26,153
- 1,021
37,943
3,699
2,357
24,276
47,245
71,521
12,510
8,858
21,368
104,940
61,668
Assets
Total assets
Equity and Liabilities
Shareholders’ equity
Capital reserve
Equity
Accruals
Amounts due to banks
Other liabilities
Liabilities
Total liabilities
51
short version profit and loss account
in TDM
January 1 to December 31, 2000
January 1 to December 31, 1999
Sales
Personnel expenses
Depreciation
Other operating income
Other operating expenses
Operating result
350
- 6,746
- 330
7,026
- 8,566
- 8,266
5,000
- 4,224
- 69
2,749
- 6,890
- 3,434
Earnings from investments
Earnings from interest
Results of ordinary operations
2,386
- 3,973
- 9,853
7,351
508
4,425
Extraordinary income
Taxes on income and other taxes
Net loss of the year (previous year: Net income for the year)
- 2,410
1,904
- 10,359
0
- 2,342
2,083
Loss carried forward
- 1,021
- 11,380
- 3,104
- 1,021
For a copy of the annual financial statements of DEAG Deutsche Entertainment Aktiengesellschaft with the audit certificate of Deloitte & Touche
GmbH, Certified Public Accountants, please contact the Investor Relations department.
52
report of the supervisory board
Throughout the last financial year the Supervisory Board closely studied
the situation and development of the company. On the basis of the Board
of Management's written and verbal reports, the Supervisory Board
constantly monitored the Company. The Supervisory Board did not form
any committees. At six meetings the Supervisory Board discussed in
detail the business situation, planned investments, in particular relating
to the expansion strategy of the company, scheduled disposals, financial
planning, the development of costs and earnings and examined these
matters with the Board of Management. All business transactions requiring
the consent of the Supervisory Board according to the articles of association were closely studied in the meetings.
The Supervisory Board thus confirmed the proper management of the
company.
As mandated by the Supervisory Board the annual financial statements,
the consolidated financial statements and the management report and
Group management report for the 2000 financial year were audited by
Deloitte & Touche GmbH, Certified Public Accountants, Berlin, and given
an unrestricted audit certificate. The consolidated financial statements
contain a supplementary note. The auditors attended the meeting in which
these reports were examined by the Supervisory Board and reported on
the key results of the audit.
According to the concluding result of the examination by the
Supervisory Board no objections remain which must be raised. The
annual financial statements are approved. The financial statements are
thus complete. The consolidated financial statements and the Group
management report were examined by the Supervisory Board. The
Supervisory Board supports the proposal made by the Board of
Management for the distribution of profits.
The Board of Management submitted the report pursuant to § 312 of the
German Stock Corporation Act on relations to group companies which
had been examined by the auditor. The Supervisory Board agrees to the
results of the audit which ends with the unrestricted audit certificate:
"According to our audit which we have conducted in accordance with
professional standards, we confirm that
1. the actual information of the report is correct,
2. with the transactions reported in the report, the performance of
the company was not unreasonably high nor that disadvantages
have been compensated,
3. with the measures taken in the report that are no circumstances
which would be in favour of a materially different assessment
than that of the Board of Management."
With effect from July 1, 2000 the Supervisory Board appointed Mr Markus
Alexander Fabis, with responsibility for Finances and Personnel and Dr.
Martin Fabel, with responsibility for Media & Commerce to the Board of
Management. With effect from October 1, 2000 it also appointed Mr Dietmar
Glodde to the Board of Management, with responsibility for Operations.
With effect from October 15, 2000 Mr Frank Reinhardt and with effect
from December 31, 2000 Mr Thomas Nedtwig and Mr Klaus Ulrich retired
from the Board of Management. The Supervisory Board would like to
thank them for their work.
Berlin, March 2001
The Supervisory Board
Signed Prof. Dr. Peter Raue
Chairman
report of the supervisory board
53
personal data regarding the board of management
and the supervisory board
Board of Management
Name
Residence
Profession
Responsibility in the Group
Other Supervisory Board positions
Positions in the Group
DEAG shares held on
December 31, 2000
Peter L.H. Schwenkow
Berlin
Chairman of the Board of Management
Strategic Development
Chairman of the Supervisory Board at Hegener + Glaser Aktiengesellschaft,
Munich; appointment as Vice Chairman of Qivive AG Supervisory Board
2,603,911 shares
Name
Residence
Profession
DEAG shares held on
December 31, 2000
Dr. Martin Fabel
Berlin
Member of the Board of Management
Media & Commerce
appointed as member of Qivive AG Supervisory Board
DEAG shares held on
December 31, 2000
2,660 shares
DEAG shares held on
December 31, 2000
personal data
2,660 shares
Name
Residence
Profession
Name
Residence
Profession
54
Dietmar Glodde
Berlin
Operations
appointed for Entertainment One AG,
Switzerland
Markus Alexander Fabis
Groß Glienicke
Finances and Personnel
appointed for DEAG Global Entertainment AG,
Switzerland
2,660 shares
Supervisory Board
Name
Residence
Position in the Supervisory Board
Profession
Prof. Dr. Peter Raue
Berlin
Chairman
Lawyer and notary
Member of the Supervisory Board at Hebbel Theater GmbH, Berlin
DEAG shares held on
December 31, 2000
-
Name
Residence
Profession
Willy Weck
Ingolstadt
Member of the Supervisory Board
Managing Director
Mediamarket SpA, Italy
DEAG shares held on
December 31, 2000
-
Name
Residence
Profession
Michael von Sperber
Wulfsen
Vice Chairman
Auditor, tax consultant, lawyer
-
DEAG shares held on
December 31, 2000
-
-
-
personal data
55
future-oriented statements
We would like to point out that the annual report contains future-oriented
statements and other forecasts relating to the future development of
DEAG and the Group.
point in time. Should the assumptions on which the forecasts are based
on not be valid or the risks described in the risk report actually occur,
then the actual results could deviate from the results currently expected.
This information and the forecasts represent estimates by the Board of
Management, made of the basis of all information available at the current
DEAG does not undertake to update or revise publicly deviations in
the results.
financial calendar 2001
March
March
May
July
August
November
29,
30,
22,
05,
23,
22,
2001:
2001:
2001:
2001:
2001:
2001:
Balance sheet press conference
DVFA conference on the 2000 financial year
Interim report 1Q 2001
Annual General Meeting
In the 2000 financial year DEAG operated with the artists shown, either directly or indirectly via subsidiaries or cooperation partners as sole or joint
tour agent/promoter, national and/or local concert promoter.
56
imprint
Produced by:
Edited by:
Corporate Communications Department
Graphic design and production:
Mattheis Werbeatelier, Berlin
Photos:
Bildschön Claudia Buhmann Fotografie,
DEAG Deutsche Entertainment
Aktiengesellschaft
Kurfürstendamm 63
D-10707 Berlin
Tel: +49 (0) 30 810 75 0
Fax: +49 (0) 30 810 75 519
internet: http://www.deag.de
Deutsche Entertainment AG | Kurfürstendamm 63 | D-10707 Berlin
tel +49(0)30 810 75-0 | fax +49(0)30 810 75-519 | [email protected] | www.deag.de

DEAG Deutsche Entertainment AG Annual Report 2000

Transcription

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