Splendid Medien : FY15 above expectations; outlook for 2016 matches our forecasts (BUY: EUR 3,50)

b8d67b0a-4fe4-4c66-af7a-8fd79e0bbbd4.pdf

Splendid Medien AG

First Take - Full-year earnings

Broadcasting | Germany

Est.chg	2016e	2017e
EPS	0.0%	0.0%

Buy  | Target price : 3.50 EUR

Price : 2.94 EUR | Upside : 19 %

$T ypCap$ 1583 1 1 1 x 6425 2

S

FY15 above expectations; outlook for 2016 matches our forecasts

Thursday 07 April 2016 EBIT bang in line; net income beat market expectations

3.0

2.8

2.6

2.4

2.2

2.0

1.8

1.6

1.4

1.2

1.0

Mrz 13Jun 13Sep 13Dez 13Mrz 14Jun 14Sep 14Dez 14Mrz 15Jun 15Sep 15Dez 15Mrz 16Jun 16

Splendid Medien AG Splendid Medien AG Relative to Media (Rebased)

Capital SPM GY | SPME.DE

Splendid Medien AG released its 2015 figures which were slightly better than expected at the net income level, beating our estimates and consensus. Group revenues amounted to € 56.8m reaching the lower end of group guidance (€ 57-62m), slightly below our estimate (€ 57.4m) and consensus (€ 58.0m). Group EBIT stood at € 3.7m, also at the lower end of group guidance (€ 3.5-4.5m), matching our and consensus' estimate (both€ 3.7m). Net income came in at € 2.9m beating our estimate as well as consensus (both € 2.6m). The main reason for higher-than-expected net income is lower- than-anticipated tax expenses (€ -0.2m vs. € -0.5m expected).

Market Cap (EURm)	29
Enterprise value (EURm)	34
Extrema 12 months	2.10	2.94	Operating cash flow increased to € 22.1m after € 21.7m in FY14. Capex amounted to € 20.0m
Free Float (%)	32.3	(2014: € 25m). The company will propose a DPS of EUR 0.10 (2014: EUR 0.05) which we
Performance (%)	1m	3m	12m
Absolute	19.9	27.1	33.4	FY15 key figures vs. market expectations
Perf. rel. Country Index	23.9	36.2	60.5
Perf. rel. Media	20.8	30.4	48.6
P&L	12/15	12/16e	12/17e
Sales (EURm)	56.8	70.7	76.1
EBITDA (EURm)	23.7	25.9	29.0
Current EBIT (EURm)	3.4	4.9	5.9
Attr. net profit (EURm)	2.9	3.7	4.1	Source : Oddo Seydler Bank AG, Company Data, Factset
Adjusted EPS (EUR)	0.30	0.37	0.42

Breaking it down by segment: Content generated revenues of € 52.2 (2014: € 61.1m); the decline yoy is as expected given that € 2014 was a record year in terms of revenues (especially due to the strong film pipeline both in theatrical releases as well as Home Entertainment). Service revenues declined to € 4.6m (2014: € 4.9m).

anticipated (Oddo Seydler : € 0.10).

FY15	Oddo Seydler	Consensus	FY14
Sales	56.8	57.4	58.0	66.0
EBIT	3.7	3.7	3.7	2.0
Net income	2.9	2.6	2.6	0.9
EPS	0.30	0.27	0.27	0.09

Dividend (EUR) 0.10 0.10 0.10

P/E (x) 7.7 7.9 6.9

P/B (x) 0.8 0.9 0.8

Dividend Yield (%) 4.3 3.4 3.4

FCF yield (%) 11.9 4.9 13.9

EV/Sales (x) 0.52 0.49 0.41

EV/EBITDA (x) 1.3 1.3 1.1

EV/Current EBIT (x) 8.8 6.9 5.3

Gearing (%) 26 18 7

Net Debt/EBITDA(x) 0.3 0.2 0.1

Next Events

Outlook FY16 in line with our estimates

In a recent call with management we discussed the guidance for 2016: i) group revenues: € 64- 69m, ii) Joker revenues: € 9-11m, iii) EBIT: € 4-5m with H1 down yoy but still in positive territory, iv) CAPEX in films: € 23-27m.

Given that the new guidance perfectly fits our current estimates for 2016, the new outlook does not provide much of a trigger for the stock. Nonetheless, the management still expects the company to grow in all key areas yoy. We stick to our estimates as follows: i) group revenues of € 70.7m (main reason why we are above company guidance is our more bullish approach in terms of the planned theatrical releases for 2016e), ii) Joker revenues of € 10m, iii) EBIT of € 4.9m, iv) CAPEX to reach € 25.1m. All in all, the company beat bottom line market expectations due to some tax effects, while the operational development was bang in line. The outlook for 2016 is on a similar trend. Although our tax expenses were too high in 2015, we did not update them at this stage, leaving room for another bottom line beat for 2016 (Oddo Seydler: € 3.7m; consensus: € 3.7m).

Stock momentum should remain positive; upside potential of ~30%

The stock's momentum has turned positive and should remain so, as we expect newsflow to remain positive over the course of the year. Since H1 figures will not be positive yoy, the stock trading levels could stabilise in this range over the next few months. As Q3 is traditionally a strong quarter for Splendid, we expect that the stock will pick up prior to the earnings release. We therefore leave our PT unchanged at € 3.50, presenting an upside potential of ~30%.

Marcus Silbe, CEFA (Analyst)

[phone]

[e-mail]

Page 1/4

Conflict of interests:

Oddo Securities, a division of Oddo et Cie, limited sharepartnership - Bank authorised by ACPR. Oddo & Cie and/or one of its subsidiaries could be in a conflict of interest situation with one or several of the groups mentioned in this publication. Please refer to the conflict of interests section at the end of this document.

Page 2/4

SPME.DE | SPM GY Broadcasting | Germany	Buy Upside	19.25%		Price TP	2.9 3.5	4EUR 0EUR
PER SHARE DATA (EUR)	12/11	12/12	12/13	12/14	12/15	12/16e	12/17e
Adjusted EPS	0.52	0.37	0.37	0.09	0.30	0.37	0.42
Reported EPS	0.52	0.37	0.37	0.09	0.30	0.37	0.42
Growth in EPS(%)	-	-30.3%	2.1%	-75.4%	ns	24.5%	13.5%
Net dividend per share	0.10	0.00	0.00	0.05	0.10	0.10	0.10
FCF to equity per share	0.43	-0.53	-0.25	-0.30	0.27	0.14	0.41
Book value per share	2.06	2.33	2.60	2.57	2.82	3.19	3.51
Number of shares market cap	9.79	9.79	9.79	9.79	9.79	9.79	9.79
Number of diluted shares	9.79	9.79	9.79	9.79	9.79	9.79	9.79
VALUATION	12/11	12/12	12/13	12/14	12/15	12/16e	12/17e
12m highest price	1.45	2.56	3.00	2.94	2.75	2.94
12m lowest price	0.59	1.32	2.10	1.65	1.92	2.10
(*) Reference price	1.09	2.02	2.46	2.41	2.31	2.94	2.94
Capitalization	11	20	24	24	23	29	29
Restated Net debt	-4.1	2.0	5.4	9.3	7.1	5.6	2.6
Minorities (fair value)	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Financial fixed assets (fair value)	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Provisions	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Enterprise Value	6.6	22	30	33	30	34	31
P/E (x)	2.1	5.5	6.6	26	7.7	7.9	6.9
P/CF (x)	0.8	1.2	1.3	1.0	1.0	1.1	1.1
Net Yield (%)	9.1%	0.0%	0.0%	2.1%	4.3%	3.4%	3.4%
FCF yield (%)	39.4%	ns	ns	ns	11.9%	4.9%	13.9%
P/B incl. GW (x)	0.53	0.87	0.95	0.94	0.82	0.92	0.84
P/B excl. GW (x)	0.53	0.87	0.95	0.94	0.82	0.92	0.84
EV/Sales (x)	0.16	0.43	0.54	0.50	0.52	0.49	0.41
EV/EBITDA (x)	0.4	1.3	1.5	1.4	1.3	1.3	1.1
EV/EBIT (x) (*) historical average price	1.6	5.1	6.8	18	8.8	6.9	5.3
PROFIT AND LOSS (EURm)	12/11	12/12	12/13	12/14	12/15	12/16e	12/17e
Sales	41.8	50	55	66	57	71	76
EBITDA	15.5	16.6	20.2	23.9	23.7	25.9	29.0
Depreciations	-11.3	-12.3	-15.9	-22.0	-20.4	-21.0	-23.1
Current EBIT	4.2	4.3	4.3	1.9	3.4	4.9	5.9
Published EBIT	4.6	4.2	4.1	2.0	3.7	4.9	5.9
Net financial income	-0.9	-0.8	-0.7	-0.6	-0.6	-0.6	-0.6
Corporate Tax	1.4	0.2	0.3	-0.5	-0.2	-0.7	-1.2
Net income of equity-accounted companies	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Profit/loss of discontinued activities (after tax)	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Minority interests	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Attributable net profit	5.1	3.6	3.7	0.9	2.9	3.7	4.1
Adjusted attributable net profit	5.1	3.6	3.7	0.9	2.9	3.7	4.1
BALANCE SHEET (EURm)	12/11	12/12	12/13	12/14	12/15	12/16e	12/17e
Goodwill	0.3	0.3	0.3	0.3	0.3	0.3	0.3
Other intangible assets	0.4	0.4	0.4	0.3	0.3	0.2	0.1
Tangible fixed assets	11	20	24	28	26	30	33
WCR	8.5	7.4	11	11	13	12	9.6
Financial assets	4.9	6.5	6.3	6.7	6.7	6.1	6.1
Ordinary shareholders equity	20	23	25	25	28	31	34
Minority interests	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Shareholders equity	20	23	25	25	28	31	34
Non-current provisions	8.9	9.5	11	12	11	11	12
Net debt	-4.1	2.0	5.4	9.3	7.1	5.6	2.6
CASH FLOW STATEMENT (EURm)	12/11	12/12	12/13	12/14	12/15	12/16e	12/17e
EBITDA	15.5	16.6	20.2	23.9	23.7	25.9	29.0
Change in WCR	1.8	-2.1	0.1	-0.9	-1.0	1.1	2.4
Interests & taxes	-0.9	-1.2	-1.1	-1.2	-1.0	-1.3	-1.8
Others	-0.4	0.9	-0.4	-0.1	0.3	0.8	0.0
Operating Cash flow	16.0	14.3	18.8	21.7	22.1	26.5	29.6
CAPEX	-11.7	-19.5	-21.3	-24.7	-19.4	-25.1	-25.6
Free cash-flow	4.2	-5.2	-2.5	-2.9	2.7	1.4	4.0
Acquisitions / disposals	0.0	0.1	0.0	0.1	0.0	0.0	0.0
Dividends	0.0	-1.0	-1.0	-1.0	-0.5	0.0	-1.0
Net capital increase	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Others	0.2	2.4	1.2	3.0	-1.8	0.0	0.0
Change in net debt	4.2	-6.1	-3.4	-3.8	2.2	1.4	3.0
GROWTH MARGINS PRODUCTIVITY	12/11	12/12	12/13	12/14	12/15	12/16e	12/17e
Sales growth	-	19.8%	9.6%	20.2%	-14.0%	24.4%	7.6%
Lfl sales growth	-	19.8%	9.6%	20.2%	-14.0%	24.4%	7.6%
Current EBIT growth	-	2.2%	0.8%	-56.9%	81.1%	47.0%	20.0%
Growth in EPS(%)	-	-30.3%	2.1%	-75.4%	ns	24.5%	13.5%
Net margin	12.3%	7.1%	6.7%	1.4%	5.2%	5.2%	5.5%
EBITDA margin	37.0%	33.1%	36.9%	36.1%	41.8%	36.7%	38.1%
Current EBIT margin	10.0%	8.5%	7.9%	2.8%	5.9%	7.0%	7.8%
CAPEX / Sales	-28.1%	-39.0%	-38.7%	-37.4%	-34.1%	-35.5%	-33.6%
WCR / Sales	20.3%	14.8%	19.2%	16.2%	22.1%	16.5%	12.7%
Tax Rate	-36.4%	-6.8%	-7.5%	36.4%	6.5%	15.9%	22.2%
Normative tax rate	30.0%	30.0%	30.0%	30.0%	30.0%	30.0%	30.0%
Asset Turnover	-	2.1	1.7	1.8	1.5	1.7	1.8
ROCE post-tax (normative tax rate)	-	12.5%	9.6%	3.5%	6.0%	8.6%	9.8%
ROCE post-tax hors GW (normative tax rate)	-	12.7%	9.7%	3.5%	6.1%	8.6%	9.9%
ROE	-	16.7%	15.2%	3.6%	11.1%	12.4%	12.6%
DEBT RATIOS	12/11	12/12	12/13	12/14	12/15	12/16e	12/17e
Gearing	-21%	9%	21%	37%	26%	18%	7%
Net Debt / Market Cap	-0.39	0.10	0.22	0.39	0.31	0.19	0.09
Net debt / EBITDA	ns	0.12	0.27	0.39	0.30	0.21	0.09
EBITDA / net financial charges	18.0	19.7	29.7	40.3	41.0	43.2	48.3

Recommendation and target price changes history over the last 12 months for the company analysed in this report

Date Reco Price Target (EUR) Price (EUR)

Risk of conflict of interest :

Investment banking and/or Distribution
Has Oddo Group, or Oddo & Cie, or Oddo Seydler managed or co-managed in the past 12 months a public offering of securities for the subject company/ies?	No
Has Oddo Group, or Oddo & Cie, or Oddo Seydler received compensation for investment banking services from the subject company/ies in the past 12 months or expects to receive or intends to seek compensation for investment banking services from the subject company/ies in the last 12 months?	No
Research contract between Oddo group & the issuer
Oddo & Cie and the issuer have agreed that Oddo & Cie will produce and disseminate investment recommendations on the said issuer as a service to the issuer	Yes
Liquidity provider agreement and market-making
At the date of the distribution of this report, does Oddo Group, or Oddo & Cie, or Oddo Seydler act as a market maker or has Oddo Group or Oddo & Cie, or Oddo Seydler signed a liquidity provider agreement with the subject company/ies?	Yes
Significant equity stake
Does Oddo Group, or Oddo & Cie, or Oddo Seydler own 5% or more of any class of common equity securities of the subject company/ies?	No
Does the subject company beneficially own 5% or more of any class of common equity of Oddo & Cie or its affiliates?	No
Disclosure to Company
Has a copy of this report ; with the target price and/or rating removed, been presented to the subject company/ies prior to its distribution, for the sole purpose of verifying the accuracy of factual statements ?	No
Have the conclusions of this report been amended following disclosure to the company/ies and prior its distribution?	No
Additional material conflicts
Is Oddo Group, or Oddo & Cie, or Oddo Seydler aware of any additional material conflict of interest?	No

Page 3/4

Statement of conflict of interests of all companies mentioned in this document may be consulted on Oddo & Cie's: www.oddosecurities.com

Disclaimer:

Disclaimer for Distribution by Oddo & Cie to Non-United States Investors:

This research publication is produced by Oddo Securities ("Oddo Securities"), a division of Oddo & Cie ("ODDO"), which is licensed by the Autorité de Contrôle Prudentiel et de Résolution (ACPR) and regulated by the Autorité des Marchés Financiers ("AMF"), and/or by ODDO SEYDLER BANK AG ("Oddo Seydler"), a German subsidiary of ODDO, regulated by Bundesanstalt für Finanzdienstleistungsaufsicht ("BaFin").

The research, when distributed outside of the U.S., is intended exclusively for non-U.S. customers of ODDO and cannot be divulged to a third-party without prior written consent of ODDO. This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment.

This research has been prepared in accordance with regulatory provisions designed to promote the independence of investment research. "Chinese walls" (information barriers) have been implemented to avert the unauthorized dissemination of confidential information and to prevent and manage situations of conflict of interest. This research has been prepared in accordance with French and German regulatory provisions designed to promote the independence of investment research.

At the time of publication of this document, ODDO and/or Oddo Seydler, and/or one of its subsidiaries may have a conflict of interest with the issuer(s) mentioned. While all reasonable effort has been made to ensure that the information contained is not untrue or misleading at the time of publication, no representation is made as to its accuracy or completeness and it should not be relied upon as such. Past performances offer no guarantee as to future performances. All opinions expressed in the present document reflect the current context and which is subject to change without notice. The views expressed in this research report accurately reflect the analyst's personal views about the subject securities and/or issuers and no part of his compensation was, is, or will be directly or indirectly related to the specific views contained in the research report.

This research report does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Clients should consider whether any advice or recommendation in this research is suitable for their particular circumstances and, if appropriate, seek professional advice, including tax advice.

Disclaimer for Distribution by Oddo New York to United States Investors:

This research publication is produced by Oddo Securities, a division of ODDO and/or by Oddo Seydler.

This research is distributed to U.S. investors exclusively by Oddo New York Corporation ("ONY"), MEMBER: FINRA/SIPC, and is intended exclusively for U.S. customers of ONY and cannot be divulged to a third-party without prior written consent of ONY. This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment.

This research has been prepared in accordance with regulatory provisions designed to promote the independence of investment research. "Chinese walls" (information barriers) have been implemented to avert the unauthorized dissemination of confidential information and to prevent and manage situations of conflict of interest. This research has been prepared in accordance with French and German regulatory provisions designed to promote the independence of investment research.

At the time of publication of this document, ODDO and/or Oddo Seydler, and/or one of its subsidiaries may have a conflict of interest with the issuer(s) mentioned. While all reasonable effort has been made to ensure that the information contained is not untrue or misleading at the time of publication, no representation is made as to its accuracy or completeness and it should not be relied upon as such. Past performances offer no guarantee as to future performances. All opinions expressed in the present document reflect the current context and which is subject to change without notice.

Rule 15a-6 Disclosure:

Under Rule 15a-6(a)(3), any transactions conducted by ODDO and/or Oddo Seydler, and/or one of its subsidiaries with U.S. persons in the securities described in this foreign research must be effected through ONY. As a member of FINRA, ONY has reviewed this material for distribution to U.S. persons as required by FINRA Rules 2241(h) applicable to dissemination of research produced by its affiliate ODDO.

FINRA Disclosures:

• Neither ONY, ODDO, nor Oddo Securities, nor Oddo Seydler beneficially owns 1% or more of any class of common equity securities of the subject company.

• The research analyst of Oddo Securities or Oddo Seydler, at the time of publication of this research report, is not aware, nor does he know or have reason to know of any actual, material conflict of interest of himself, ODDO, Oddo Securities, Oddo Seydler or ONY, except those mentioned in the paragraph entitled "Risk of Conflict of Interest."

• Oddo Securities or ODDO or Oddo Seydler may receive or seek compensation for investment banking services in the next 3 months from the subject company of this research report, but ONY would not participate in those arrangements.

• Neither ONY, ODDO, Oddo Securities, nor Oddo Seydler has received compensation from the subject company in the past 12 months for providing investment banking services except those mentioned in the paragraph of "Risk of Conflict of Interest".

• Neither ONY., ODDO, Oddo Securities nor Oddo Seydler has managed or co-managed a public offering of securities for the subject company in the past 12 months except those mentioned in the paragraph of "Risk of Conflict of Interest" .

• ONY does not make (and never has made) markets and, accordingly, was not making a market in the subject company's securities at the time that this research report was published.

Regulation AC:

ONY is exempt from the certification requirements of Regulation AC for its distribution to a U.S. person in the United States of this research report that is prepared by an Oddo Securities research analyst because ODDO has no officers or persons performing similar functions or employees in common with ONY and ONY maintains and enforces written policies and procedures reasonably designed to prevent it, any controlling persons, officers or persons performing similar functions, and employees of ONY from influencing the activities of the third party research analyst and the content of research reports prepared by the third party research analyst.

Page 4/4

Contact Information of firm distributing research to U.S. investors: Oddo New York Corporation, MEMBER: FINRA/SIPC, is a wholly owned subsidiary of Oddo & Cie; Philippe Bouclainville, President ([e-mail]) 150 East 52nd Street New York, NY 10022 212-481-4002.