Splendid Medien : Oddo Seydler: 2014 results slightly ahead of expectations (Buy: EUR 3,00)

ODDO

Splendid Medien AG

Equity flash - Trading Update

Media

BUY (BUY) | Target EUR 3.00 (EUR 3.00)

Est. change 2015e 2016e

Price (last closing price) : EUR 2.19 | Upside : 36%

$T ypCap$ 1628 1 0 4 2

EPS - -

2014 results slightly ahead of expectations; EBIT should double in 2015e

Wednesday, 01 April 2015

C a pit a l

S P M G Y | S P M E . D E

M arket Cap (EURm) 2 2

Ent erp rise value (EURm) 27

Ext rema 12 mo nt hs 52 - 52

Free Flo at (%) 3 4 .9 %

P e rf o rm a nc e ( %) 1m 3m 12m

A b so lut e 10 .4 13 .8 -18 .4

Perf . rel. " sect o r" 7.1 -4 .4 -3 7.2

Perf . rel. CDA X 5.1 -6 .9 -3 4 .6

P &L 12/15e 12/16e 12/17e

Sales (EURm) 63 71 76

EB ITDA (EURm) 2 3 .5 2 5.8 2 9 .2

EB IT (EURm) 4 .2 4 .8 6 .1

A t t r. net p ro f it (EURm) 3 .0 3 .4 3 .8

EPS (EUR) 0 .3 1 0 .3 5 0 .3 9

Divid end (EUR) 0 .10 0 .10 0 .10

P/ E (x) 7.2 6 .4 5.7

P/ B (x) 0 .8 0 .7 0 .7

Divid end yield (%) 5% 5% 5% FCF yield (%) 5% 7% 6% EV / Sales (x) 0 .4 0 .4 0 .4

EV / EB ITDA (x) 1.2 1.1 0 .9

EV / EB IT (x) 6 .4 5.7 4 .5

Gearing (%) -0 .3 -0 .3 -0 .2

Net Deb t / EB ITDA (x) -0 .4 -0 .3 -0 .3

N e xt E v e nt s

1Q15 result s M ay 2 0 15

2014 results

Splendid Medien AG released its 2014 figures which were slightly better than expected on the top line, EBIT and net income - beating guidance, our estimates and consensus. Group revenues amounted to EUR 66.0m reaching the upper range of its guidance (EUR 62-66m), and surpassing our estimate (EUR 62.3m) and consensus (EUR 63.8m). Group EBIT stood at EUR 2.0m also at the upper range of guidance (EUR 1.0-2.0m), topping our estimate (EUR 1.5m) and consensus (EUR 1.5m). Net income came in at EUR 0.9m again beating our estimate (EUR 0.5m) and consensus (EUR 0.6m).

On the segment level: Content generated revenues of EUR 61.1m (2013: EUR 50.8m). The increase is largely due to higher revenues generated by theatrical releases and the sale of TV licenses. Also attributable are the record figures from the Home Entertainment business vs 2013 results. Services revenues rose to EUR 4.9m (2013: EUR 4.2m). Operating cash flow increased by EUR 3.0m to EUR 21.7m (2013: EUR 18.7m). Capex rose to EUR 25.0m (2013: EUR 19.9m). The company will propose a DPS of EUR 0.05 (2013: EUR 0.10). The decline is understandable in our view due to EPS of EUR 0.09. From 2015e we expect the DPS will revert to EUR 0.10.

Outlook for 2015 and beyond

Management expects group revenues of EUR 57-62m and EBIT of EUR 3.5-4.5m. Thus, the mid-point of the EBIT guidance represents a doubling up of the 2014 level. Management assumes capex for film assets of EUR 23-27m. From 2016e we expect the bottom line to grow due to an increase in revenues. We consider the company's top line outlook as conservative; hence while we have lowered our revenue estimate to EUR 63.4m for 2015e to reflect the company's outlook, we remain slightly above the guidance; our EBIT of EUR 4.2m for 2015e, comfortably in middle of the guidance range (margin: 6.7% vs. 2.8% in

2014). From 2016e we expect the EBIT margin to expand further (8% in 2017e). Assuming more box office hits from the theatrical releases, we expect the top line to also rise again in

2016e.

Firmly reiterate BUY - PT at EUR 3.00

The stock's momentum has turned positive and should remain so, as we expect news flow to remain positive. After updating our figures, we derive a FVpS of EUR 3.94. For the time being we leave our PT unchanged at EUR 3.00. In case of a stronger-than-expected stock momentum, we will update our PT accordingly. Currently the upside potential is ~36%. We firmly reiterate our BUY recommendation.

Marcus Silbe (Analyst)

[phone]

[e-mail]

Please notice the information on the preparation of this document, the disclaimer, the advice regarding possible conflicts of interests, and the mandatory information required by § 34b WpHG (Securities Trading Law) at the end of this document. This financial analysis in accordance with § 34b WpHG is exclusively intended for distribution to individuals that buy or sell financial instruments at their own account or at the account of others in connection with their trading activities, occupation, or employment.

Splendid Medien AG

Wednesday, 01 April 2015

Profit and loss account

IFRS EURm 2012 2013 2014 2015E 2016E 2017E

Sales 50.11 54.94 66.03 63.35 70.67 76.08

YoY grow th 78.1% 9.6% 20.2% -4.1% 11.5% 7.6%

Cost of revenues -30.16 -34.29 -43.25 -36.24 -40.28 -43.36

as % of sales -60.2% -62.4% -65.5% -57.2% -57.0% -57.0%

Total output 19.95 20.65 22.78 27.12 30.39 32.71

as % of sales 39.8% 37.6% 34.5% 42.8% 43.0% 43.0%

General & administrative expenses -7.36 -7.17 -7.10 -7.60 -8.48 -9.13

as % of sales -14.7% -14.3% -14.2% -15.2% -16.9% -18.2%

Sales & marketing -11.15 -13.44 -16.12 -16.47 -18.37 -19.02

as % of sales -22.2% -26.8% -32.2% -32.9% -36.7% -38.0%

Other operating income 3.04 4.43 2.46 2.53 2.83 3.04 as % of sales 6.1% 8.8% 4.9% 5.1% 5.6% 6.1% Other operating expenses -0.22 -0.16 -0.17 -1.33 -1.55 -1.67

as % of sales -0.4% -0.3% -0.3% -2.1% -2.2% -2.2%

Operating profit 4.28 4.32 1.86 4.24 4.81 6.09

as % of sales 8.5% 7.9% 2.8% 6.7% 6.8% 8.0%

Currency effects -0.08 -0.23 0.14 0.00 0.00 0.00

EBIT (reported) 4.20 4.08 2.00 4.24 4.81 6.09

as % of sales 8.4% 7.4% 3.0% 6.7% 6.8% 8.0%

Net financial results -0.84 -0.68 -0.59 -0.60 -0.60 -0.60

EBT (Earnings before income taxes) 3.36 3.40 1.41 3.64 4.21 5.49

as % of sales 6.7% 6.2% 2.1% 5.8% 6.0% 7.2%

Income taxes (incl. other taxes) 0.23 0.26 -0.51 -0.64 -0.82 -1.70

as % of EBT 6.8% 7.5% -36.4% -17.5% -19.4% -31.1%

Net income 3.58 3.66 0.90 3.01 3.39 3.78

Minorities 0.00 0.00 0.00 0.00 0.00 0.00

Net income attributable to shareholders 3.59 3.66 0.90 3.01 3.39 3.78

as % of sales 7.2% 6.7% 1.4% 4.7% 4.8% 5.0%

Shares outstanding (in m) 9.79 9.79 9.79 9.79 9.79 9.79

Basic earnings per share (EUR) 0.37 0.37 0.09 0.31 0.35 0.39

Source: Company Data, Oddo Seydler Bank AG

Splendid Medien AG

Wednesday, 01 April 2015

Balance Sheet

IFRS EURm 2012 2013 2014 2015E 2016E 2017E

Assets

Non-current assets 26.88 31.11 35.37 41.44 46.38 49.72

as % of total assets 47.2% 49.0% 48.9% 57.8% 62.1% 62.3%

Intagible assets 0.41 0.36 0.35 0.51 0.66 0.76

Goodwill 0.33 0.33 0.33 0.33 0.33 0.33

Property, plant and equipment 0.77 0.80 1.22 1.29 1.35 1.40

Film assets 18.90 23.28 26.73 33.17 37.90 41.09

Advanced payments 0.00 0.00 0.00 0.00 0.00 0.00

Deferred tax assets 5.65 5.91 6.00 5.40 5.40 5.40

Other assets 0.05 0.06 0.01 0.01 0.01 0.01

Other long-term receivables 0.78 0.38 0.73 0.73 0.73 0.73

Current assets 30.02 32.39 36.91 30.19 28.31 30.07

as % of total assets 52.8% 51.0% 51.1% 42.2% 37.9% 37.7%

Inventories 2.29 2.00 2.39 1.90 2.12 2.28

Accounts receivable, other receivables and other assets

17.27 22.11 27.05 20.30 17.67 18.92

Current tax assets 0.07 0.07 0.04 0.04 0.04 0.04

Assets held for sale 0.00 0.00 0.00 0.00 0.00 0.00

Cash and cash equivalents 10.40 8.21 7.44 7.95 8.49 8.83

Total assets 56.91 63.50 72.28 71.63 74.69 79.79

Shareholders´ equity and liabilities

Shareholders´ equity	22.79	25.45	25.11	27.63	30.04	32.84
as % of total equity and liabilities	40.1%	40.1%	34.7%	38.6%	40.2%	41.2%
Subscribed capital	9.79	9.79	9.79	9.79	9.79	9.79
Capital reserve	0.40	0.40	0.40	0.40	0.40	0.40
Retained profits	0.00	0.00	0.00	0.00	0.00	0.00
Net retained earnings	12.60	15.27	14.93	17.45	19.86	22.66
Other reserves (incl. currency effects)	0.00	0.00	0.00	0.00	0.00	0.00
Equity attributable to shareholders	22.78	25.46	25.12	27.63	30.04	32.85
Minorities	0.01	-0.01	-0.01	-0.01	-0.01	-0.01
Current provisions and liabilities	28.76	33.92	43.50	40.33	40.98	43.28
as % of total equity and liabilities	50.5%	53.4%	60.2%	56.3%	54.9%	54.2%
Financial lease	0.06	0.07	0.12	0.12	0.12	0.12
Financial liabilities	7.69	9.77	13.65	13.65	13.65	13.65
Current provisions	7.00	7.32	7.49	8.36	8.78	9.22
Advance payments received	0.97	0.62	3.57	3.57	3.57	3.57
Accounts payable	10.87	12.61	14.46	10.41	10.65	12.51
Current income tax liabilities	0.31	0.22	0.25	0.25	0.25	0.25
Other current liabilities	1.87	3.31	3.96	3.96	3.96	3.96
Debts related to assets held for sale	0.00	0.00	0.00	0.00	0.00	0.00
Non-current provisions and liabilities	5.35	4.13	3.67	3.67	3.67	3.67
as % of total equity and liabilities	9.4%	6.5%	5.1%	5.1%	4.9%	4.6%
Provisions for pensions	0.00	0.00	0.00	0.00	0.00	0.00
Financial liabilities	4.67	3.86	3.04	3.04	3.04	3.04
Financial lease	0.16	0.15	0.27	0.27	0.27	0.27
Deferred tax liabilities	0.41	0.02	0.05	0.05	0.05	0.05
Other payables and liabilities	0.10	0.10	0.31	0.31	0.31	0.31
Total equity and liabilities	56.91	63.50	72.28	71.63	74.69	79.79
Source: Company Data, Oddo Seydler Bank AG

Splendid Medien AG

Wednesday, 01 April 2015

Cash flow statement

Net income	IFRS	EURm	2012	2013	2014	2015E	2016E	2017E
Net income	4.20	4.08	2.00	4.24	4.81	6.09
Depreciation and amortisation	12.32	15.93	22.00	19.24	20.97	23.07
Other transactions incl. non-cash	-0.15	-1.32	-1.39	-0.64	-1.42	-2.30
Change in Working Capital	-2.05	0.10	-0.86	4.07	3.07	0.87

Cash flow from operating activities 14.32	18.79	21.75	26.92	27.43	27.72
CAPEX	-19.53	-21.27	-24.69	-25.91	-25.91	-26.41
Other investing activities	0.13	0.04	0.10	0.00	0.00	0.00

Cash flow from investing activities -19.40 -21.23 -24.59 -25.91 -25.91 -26.41

Change in debt 2.40 1.24 3.04 0.00 0.00 0.00

Repayment of liabilities under finance lease 0.00 0.00 0.00 0.00 0.00 0.00

Paid interests 0.00 0.00 0.00 0.00 0.00 0.00

Net proceeds from capital increase & right capital 0.00 0.00 0.00 0.00 0.00 0.00

Dividend payments -0.98 -1.00 -0.98 -0.49 -0.98 -0.98

Cash flow from financing activities 1.42 0.25 2.06 -0.49 -0.98 -0.98

Total change in cash and cash equivalents -3.66 -2.19 -0.79 0.52 0.53 0.34

Changes in cash due to changes in consolidation 0.00 0.00 0.00 0.00 0.00 0.00

Cash and cash equivalents at the start of the period

14.06 10.40 8.21 7.44 7.95 8.49

Cash and cash equivalents at year´s end 10.40 8.21 7.42 7.95 8.49 8.83

Adjusted cash and cash equivalents 10.40 8.21 7.44 7.95 8.49 8.83

Current account 0.00 0.00 0.01 0.00 0.00 0.00

Source: Company Data, Oddo Seydler Bank AG

Splendid Medien AG

Wednesday, 01 April 2015

Disclaimer and statement according to § 34b German Securities Trading Act ("Wertpapierhandelsgesetz") in combination with the provisions on financial analysis ("Finanzanalyseverordnung" FinAnV)

This report has been prepared independently of the company analysed by Oddo Seydler Bank AG and/ or its cooperation partners and the analyst(s) mentioned on the front page (hereafter all are jointly and/or individually called the 'author'). None of Oddo Seydler Bank AG or its cooperation partners, the Company or its shareholders has indep endently verified any of the information given in this document.
Section 34b of the German Securities Trading Act in combination with the FinAnV requires an enterprise preparing a security analysis to point out possible conflicts of interest with respect t o the company that is the subject of the analysis.
Oddo Seydler Bank AG is a subsidiary of Oddo & Cie, Paris (hereafter ´Oddo´, together 'Oddo Group'). However, Oddo Seydler Bank AG (hereafter ´Oddo Seydler´) provides its research work independent from O ddo. Oddo Group is offering a wide range of Services not only including investment banking services and liquidity providing services (designated sponsoring). Oddo Group may possess relations to the covered companies as follows (additional information and disclosures will be made available upon request):
a. Oddo Group holds more than 5% interest in the capital stock of the company that is subject of the analysis.
b. Oddo Group was a participant in the management of a (co)consortium in a selling agent function for the issuance of financial instruments, which themselves or their issuer is the subject of this financial analysis within the last twelve months.
c. Oddo Group has provided investment banking and/or consulting services during the last 12 months for the company analysed for which compensation has been or will be paid for.
d. Oddo Group acts as designated sponsor for the company's securities on the basis of an existing designated sponsorship contract. The services include the provision of bid and ask offers. Due to the designated sponsoring
service agreement Oddo Group may regularly possess shares of the company and receives a compensation and/ or provision for its services.
e. The designated sponsor service agreement includes a contractually agreed provision for research services.
f. Oddo Seydler and the analysed company have a contractual agreement about the preparation of research reports.
Oddo Seydler receives a compensation in return.
g. Oddo Group has a significant financial interest in relation to the company that is subject of this analysis.
In this report, the following conflicts of interests are given at the time, when the report has been published: d, f
Oddo Group and/or its employees or clients may take positions in, and may make purchases and/ or sales as princip al or agent in the securities or related financial instruments discussed in this analysis. Oddo Group may provide investment banking, consulting, and/ or other services to and/ or serve as directors of the companies referred to in this analysis. No part of the authors compensation was, is or will be directly or indirectly related to the recommendations or views expressed.

Recommendation System:

Oddo Seydler uses a 3-level absolute share rating system. The ratings pertain to a time horizon of up to 12 months:
BUY: The expected performance of the share price is above +10%.
HOLD: The expected performance of the share price is between 0% and +10%. SELL: The expected performance of the share price is below 0%.
This rating system is only a guideline. Therefore, deviations from this system may apply. Recommendation history over the last 12 months for the company analysed in this report:

Date	Recommendation	Price at change date	Price target
02 April 2014	BUY	EUR 2.72	EUR 3.50
15 May 2014	BUY	EUR 2.75	EUR 3.50
07 August 2014	BUY	EUR 2.68	EUR 3.50
16 September 2014	BUY	EUR 2.32	EUR 3.50
01 October 2014	BUY	EUR 2.39	EUR 3.00
13 November 2014	BUY	EUR 2.00	EUR 3.00
01 April 2015	BUY	EUR 2.19	EUR 3.00

The following valuation methods are used when valuing companies: Multiplier models (price/earnings, price/cash flow, price/book value, EV/Sales, EV/EBIT, EV/EBITA, EV/EBITDA), peer group comparisons, historical valuation approaches,

Splendid Medien AG

Wednesday, 01 April 2015

discounting models (DCF, DDM), break-up value approaches or asset valuation approaches. The valuation models are dependent upon macroeconomic measures such as interest, currencies, raw materials and assumptions concerning the economy. In addition, market moods influence the valuation of compa nies.
The figures taken from the income statement, the cash flow statement and the balance sheet upon which the evaluation of companies is based are estimates referring to given dates and therefore subject to risks. These may change at any time without prior notice.
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Splendid Medien AG

Wednesday, 01 April 2015

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