Prosieben Sat 1 Media

Good morning, ladies and gentlemen. Welcome to the Q2 2020 H1 results call of ProSieben Sat1 Media SE. This conference is being recorded. Today's call is hosted by Mr. Dirk Boikentlender. Please go ahead, sir.

Good morning, ladies and gentlemen, and welcome also from my side to our Q2 2020 results conference call. Today's call is hosted by Rainer Bougeon, Chairman of the Executive Board and Group CFO, as well as Ralf Gehrig, our Deputy CFO of the Group. As always, Rainer and Ralf will first lead you through the presentation and provide an update on the operational development, as well as the Group's financial performance. The presentation will be followed by a Q&A session. Weblinks, dial-ins, and the presentation material were made available via email sent out this morning. With these opening remarks, I now hand over to Rainer.

Thank you, Dirk. Good morning also from my side, and thank you for joining today's Analyst and Investor Call. Today will be about, presumed at once, result in the second quarter and the first half of 2020. COVID-19 is still a quite predominant element of our lives, socially as well as economically. But the situation is clearly brightened compared to the last time we spoke. As discussed in our Q1 call, my executive board colleagues, Christine Scheffler, Wolfgang Link and I had implemented an immediate action plan early on to mitigate the COVID-19 impact on our company. We have thus provided for a stable liquidity and financing situation and first results of our cost management actions are already visible. And the good news is that after the easing of the lockdown measures in our core markets, Germany, Austria and Switzerland, signs of recovery are increasing in the economy. as well as in our advertising business. I will follow up on this with more details a little bit later. First, let's see what we have on our agenda for today. We will start with a quick overview of the status quo in Germany and the conditions under which we are currently operating our business. We then continue with our group financials regarding the first six months and the past quarter. All developments came in as expected, thus it will come as no surprise that the COVID-19 effects hit us in Quota 2. And we will finish this presentation with an operational update on some of our key projects, reflecting how we push our strategy forward. And of course, I will also comment on a first outlook regarding July and August. Our crystal ball for the months after is still unclear. Let's start on slide number three. How has the COVID-19 pandemic been developing in Germany? Daily new infections had its peak in March and April. Since then, the infection rate has been significantly slowing down. As already mentioned in our Q1 call, the German government is doing a great job in managing this crisis and keeping the situation under control. This is certainly due to the well-equipped health system also in international comparison, and due to the sound budgetary management of the past years. The government was thus able to quickly offer a far-reaching financial support package, including a VAT reduction until the end of the year. All this has been leading to a more optimistic economic picture today. After easing the lockdown measures in May, the mood amongst German consumers and executives has brightened. According to the IFO Institute, business expectations among German companies rose from its 69.5 points low in April to 97 points by the end of July. Consumer mood in Germany is also recovering thanks to the rapid reopening of the German economy and society. both economic and income expectations, as well as propensity to buy, are rising. As a result, GFK consumer climate index forecast a figure of minus 9.6 points for July. This is nine points higher than its level in June. In short, In our core markets of Germany, Austria and Switzerland, the crisis has been managed very well so far and economic indicators are beginning to brighten. This also supports the recovery of the advertising business. We are seeing the first positive trend in July and expect July advertising revenues to decline by slightly less than 20% compared to the previous year and that's a much smaller decline than in the past quarter. And there are also signs of a further improvement in August. We see currently an improvement to around minus 10% compared to last year. But please have in mind that July and August are very small months. Most relevant are the months from September to December. We are thus moving in the right direction. We do not depend on export business and are therefore less vulnerable to the continuing economic upheavals overseas. Nevertheless, it is clear that all forecasts have to be treated with caution as everything depends on the further development of the pandemic. But now let's dive deeper into our development in the second quarter and first half of 2020. On slide four, you can see that we have positive and negative developments across our segments in a COVID-19 influenced environment. On the one hand, we see positive impacts for some of our assets. The last few months have shown that television usage has increased strongly, both in our linear and nonlinear platforms. Because we offer exactly what viewers are looking for, regular, reliable infotainment and big entertainment, And this is reflected by an increased reach and viewing time in the last month. Total video view time, which means minutes that viewers consume our content on all our platforms, rose by a strong 7% in the second quarter. We see equal growth rates in terms of daily TV consumption and daily net viewers. Especially important, we increased our primetime market share in the first six months, for the fourth consecutive half year, and we all know that prime time is the most valuable TV time slot for advertisers. This clearly shows that our focus on local and live, especially at prime time, pays off. Also, our digital offerings are gaining viewers, which is underlined by 4% more unique users for our channel website. And our Digital Studio 71 records excellent figures with its influencers and web content. We see a plus of 22% in video views in the second quarter compared to the previous year. Overall, we are reaching a total of 11.8 billion video views. But like all other media companies, we are in a paradoxical situation. While our content offerings were extremely successful these past months, advertisers had postponed their campaigns or reduced their spending due to the COVID-19 impact on their own business. You can see on the slide that in the second quarter, TV was facing advertising reductions of up to 80% depending on the respective industries with the tourism sector unsurprisingly showing the sharpest decline. And as you will see later on, In our financial, this trend, of course, also impacted our advertising revenues considerably. But our sales colleagues have been working tirelessly since the beginning of the crisis to stay close to the customers, to find individual solutions for them, and to put together appropriate advertising packages for their situation. After the VAT reduction, for example, they have targeted precisely those companies that want to pass on the tax reduction to their customers and communicate this via advertising. In general, we are also seeing that the strength and cooperation between our sales colleagues and the program teams under one roof within the 7.1 Entertainment Group is starting to pay off. Besides the advertising business, also our production segment suffered from the COVID-19 related lockdown measures. Postponements or cancellations of scheduled productions across the globe resulted in 28% fewer hours that the Red Arrow colleagues produced during the second quarter compared to the previous year. In this challenging environment, we clearly benefited from our diversified portfolio thanks to Newcomb Group. Some examples. The online beauty provider Flaconi increased its revenues in the second quarter by a very strong 68% year-on-year. In our matchmaking service, Parship Group proves especially resilient with the first-time customers' revenues growing by 46%. With these positive developments, we were able to compensate for the most difficult situation in Newcom Group companies, such as Silver Tours, Jochen Schweitzer My Days, and Around Home. These businesses were significantly affected due to lockdown effects on the traveling and experiences industry. With this, I hand over to my deputy, CFO Ralf Gierig, who will provide deeper insights into the financial implications of these developments and discuss our group financials with you.