Luxembourg: 17 March 2004. RTL Group, Europe’s leading broadcaster and content provider, announces its audited results for the year ended 31 December 2003 EUR, million Year to 31 Year to 31 Per cent December December change 2003 2002 (%) Revenue 4,452 4,362 2.1 Reported EBITA1 487 424 14.9 Restructuring charges 40 38 Non recurring items 20 - Start up losses2 14 15 Adjusted EBITA 561 477 17.6 Reported EBITA margin (%) 10.9 9.7 n.a. Adjusted EBITA margin (%) 12.6 10.9 n.a. Reported EBITA 487 424 14.9 Amortisation and impairment of (317) (298) goodwill Gain/(loss) from sale of 3(5) subsidiaries, joint ventures and other investments Net financial expense (55) (83) Income tax expense3 (95) (85) Minority interest (9) (9) Profit/ (loss) for the year 14 (56) Reported EPS EUR 0.09 (0.37) Adjusted EPS EUR 2.14 1.61 32.9 Proposed/paid dividend per share 0.80 0.70 14.3 EUR Business Headlines Improved operating performance • Reported EBITA up almost 15 per cent to EUR 487 million. This includes a provision amounting to EUR 20 million relating to the arbitration court decision against Antena 3. Excluding this impact, EBITA rose to EUR 507 million, up 20% with all profit centres increasing their contribution • Record EBITA at RTL Television and M6 • Five EBITA positive for the first time since launch in 1997 • Increased audience and advertising market share in most markets 1 EBITA represents earnings before interest and income tax expense excluding amortisation and impairment of goodwill and gain from sale of subsidiaries, joint ventures and other investments 2 RTL Shop, Plug TV, Croatia and RTL FM (2002 RTL Shop only) 3 2002 income tax expense reduced by release of tax provision 2 • Increasing contribution to revenue and profit from non-advertising related activities • Diversification success and cost control lifted group EBITA margin to 10.9 per cent from 9.7 per cent Turnaround of under performing businesses • HMG back on track, EUR 25 million EBITA contribution • Antena 3 restructuring and repositioning underway. Strategic developments • TV Licence to operate in Croatia won in September • Technical services division re-structured with integration of CBC into RTL Television and sale of LPC in March 2004 • Corporate centre restructuring completed Robust finances and strong cash generation • Underlying cost base down 3.3 per cent • EBITA cash conversion of 105 per cent • Net debt more than halved to EUR 298 million (from EUR 755 million) as result of strong cash conversion, tax repayments and active working capital management • Proposed dividend increase of 14.3 per cent to EUR 0.80 per share, sustainable dividend policy paying out 35-50 per cent of earnings4 Gerhard Zeiler, Chief executive RTL Group, said: “In 2003 we continued to deliver on our strategic goals and are proud of the improved results despite advertising market conditions which remained tough. We have focused keenly on diversification and our success in driving revenue and profit from non-advertising related activities is apparent in these numbers. We will continue to pursue these revenues, and to maintain tight cost control in 2004. On the back of these results we now have the opportunity to focus more attention on enhancing our portfolio either through internal or external growth. Going into 2004 we continue to remain cautious on how advertising market conditions will develop. Whilst there are the first signs of growth in some of our markets, visibility remains limited and weak consumer confidence and retail sales remain a concern. We are focused on developing, or maintaining, leadership positions in the markets in which we operate, in terms of both audience and advertising market share. Our success is based on the creativity of our people and the strength of our programming schedules. The RTL Group strategy remains consistent and based upon three themes -geographic expansion, growth and exploitation of diversification revenue streams and development 4 Earnings for dividend payout ratio calculation defined as profit/(loss) for the year before amortisation and impairment of goodwill, gain or loss from sale of subsidiaries, joint-ventures, associates and other investments, net of taxes, and extraordinary items. www.rtlgroup.com 3 of the family of channels concept to counter increasing audience fragmentation. We are confident that, as in the past, this strategy will prove itself to be a successful one.” For further information, please contact : Andrew Buckhurst Head of External Communications and Investor Relations 00 352 2486 5136/5075 [email protected] Finsbury Julius Duncan / Katie Lang www.rtlgroup.com 4 Financial review Revenue Year to Year to Per cent EUR million 31 December 31 December Change 2003 2002 (restated) Television 3,184 3,061 4.0 Content 1,294 1,308 (1.1) Radio 241 234 3.0 Other 70 76 (7.9) Eliminations (337) (317) 6.3 Total 4,452 4,362 2.1 Reported Reported: Reported: EBITA Margin EBITA Margin EBITA 2003 2002 2003 (%) 2002 (%) In EUR million (restated) Television 383 329 12.0 10.7 Content 86 79 6.6 6.0 Radio 48 41 19.9 17.5 Other (30) (25) - - Total 487 424 10.9 9.7 Adjusted Restructuring Start up Adjusted Adjusted Adjusted Adjusted EBITA costs and losses EBITA EBITA EBITA EBITA In EUR million one-off costs 2003 2003 2002 Margin Margin 2003 2003 (%) 2002 (%) Television 52 11 446 376 14.0 12.3 Content 2 - 88 89 6.8 6.8 Radio 2 3 53 41 22.0 17.5 Other 4 - (26) (29) - - Total 60 14 561 477 12.6 10.9 The advertising market across Europe remained lacklustre throughout 2003. The UK and Dutch advertising markets were up 0.9 per cent and 0.6 per cent respectively with the French television advertising market up approximately 3 per cent whilst Germany was down by an estimated 2 per cent on a net basis. Germany has now recorded three years of negative growth resulting in a total television advertising market that is now at a similar level to 1998. Despite these difficult conditions the Group’s television businesses have, in most cases, outperformed their competitors growing both audience and advertising market shares. The diversification businesses, which are not related to the advertising market, showed strong growth in the year, reducing the Group’s reliance on the volatile advertising markets and increasing profits. RTL Group revenue increased by 2.1 per cent to EUR 4,452 million (2002: EUR 4,362 million). On a like-for-like basis (excluding portfolio changes), it was flat. The most significant portfolio changes were the first time full year proportionate consolidation of TPS through M6 and the proportionate consolidation of n-tv (from 1 April 2003). Underlying television revenue grew by 0.9 per cent, radio by 2.9 per cent with content down by 1.0 per cent. The share of advertising revenue, as a percentage of total revenue, was 61 per cent (2002: 62 per cent). www.rtlgroup.com 5 Reported EBITA increased by 14.9 per cent to EUR 487 million. Stripping out restructuring costs, other one-off costs and start-up losses, EBITA was up by 17.6 per cent to EUR 561 million. Profitability grew across the board as a result of revenue increases and cost containment measures. At a divisional level the main improvements were from RTL TV, M6, HMG and Five, which was profitable in the full year for the first time since launch in 1997. The diversification businesses, including new media were also significant contributors. Group operating expenses decreased to EUR 4,037 million from EUR 4,055 million, down 0.4 per cent. Stripping out the effects of portfolio changes, restructuring costs and start-up businesses, the underlying operating expenses fell 3.3 per cent. Net interest expense fell to EUR 35 million (2002: EUR 36 million). This includes interest charges on certain rights acquisitions as well as interest income on the tax receivables. The financial results other than interest include a write-down on Viventures, an investment fund primarily focused on start up internet companies. The largest item included within these results, amounting to EUR 14 million, relates to fair value adjustments on derivatives. The underlying amortisation and impairment of goodwill charge was EUR 215 million (2002: EUR 228 million). In 2003 RTL Group recorded a goodwill impairment of EUR 102 million (2002: EUR 70 million) against the carrying value of its transmission and sport rights businesses. The gain from sale of subsidiaries, joint ventures and other investments arises primarily on the sale of Via Digital, a small holding in Groupe AB and VCF (via Sportfive). Tax expense increased to EUR 95 million (2002: EUR 85 million), with an effective tax rate, including prior year adjustments, of approximately 27 per cent (2002: 28 per cent). The effective rate takes into account the non-deductibility of goodwill, local and tax- GAAP adjustments, prior-year adjustments as well as tax losses in Luxembourg, the US and in the United Kingdom for which tax assets have not been recognised as it is not probable that future taxable profits in these countries will be available for offset against deferred tax assets. The net profit for the year was EUR 14 million (2002: net loss 56 million). Reported earnings per share, based upon 153,618,853 shares, was 0.09 EUR per share (2002: minus 0.37 EUR per share). Adjusted earnings per share, taking into account the impact of goodwill amortisation and gain or loss from sale of subsidiaries, joint ventures and other investments, net of income taxes increased to EUR 2.14 (2002: EUR 1.61).