This section is part of the audited Combined Management Report.

Development of Stock Markets

The 2018 trading year was characterized by high volatility. It was a patchy year for investments, due in particular to the geopolitical uncertainties caused by the trade conflict between the USA and China, the concern about the UK exiting the European Union without a deal and the threat of a debt crisis in Italy. Against this back-drop, the German leading index, the DAX, closed the 2018 trading year at 10,559 points, representing a decrease of 18%. The DAX peaked in January at 13,560 points. The MDAX developed virtually in parallel: It closed at 21,588 points, down 18% against the final trading day of 2017. The relevant sector index for European media stocks, the EURO STOXX Media, closed at 209 points, representing a decrease of 9%.

ProSiebenSat.1 Media SE on the Capital Market

The ProSiebenSat.1 Media SE share (ISIN: DE000PSM7770; WKN: PSM777) ended the year 2018 at EUR 15.55 and was thus below the level (–46%) achieved on the last day of trading in 2017 (December 29, 2017: EUR 28.71). At the end of 2018, the weighting in the MDAX was 1.7%.

031 / PRICE PERFORMANCE OF THE PROSIEBENSAT.1 MEDIA SE SHARE

031 / Price Performance of the ProSiebenSat.1 Media SE Share (Line chart)

In particular, the lower valuation of the entire European media sector influenced the performance of the ProSiebenSat.1 Group share in 2018. Due to changing media usage and the general uncertainty regarding the TV advertising business, some analysts regarded the stock more critically than in the previous year.

Although the ProSiebenSat.1 Media SE share performed well in the first two months of 2018, it was characterized by a significant downward trend from the start of March onwards. On March 6, Deutsche Börse AG announced that it would be replacing the ProSiebenSat.1 Media SE share with Covestro AG with effect from March 19 and consequently removing it from the leading index, the DAX. The associated adjustments in index funds influenced the share’s price performance and trading volume. In addition, the short attack by the Viceroy Research Group took effect on the same day and resulted in a substantial decline in the share price. ProSiebenSat.1 Group responded in detail to the allegations published in Viceroy Research’s report and rejected the note as false and misleading. The Munich public prosecution department has opened preliminary investigations on suspicion of market manipulation and the German financial supervisory authority BaFin is also examining whether this is a case of illegal market manipulation.

Deutsche Börse AG regularly reviews the composition of the stock market indices every September on the basis of the quantitative criteria of market capitalization and liquidity. Four times a year, there is also the chance of a fast entry or exit if certain rankings in terms of these criteria are achieved or not achieved. One of these review dates was March 5, 2018. On this date, Covestro AG was ranked 25 among the largest stocks listed on the German stock exchange in terms of both the criteria of market capitalization and liquidity and was therefore added to the DAX. ProSiebenSat.1 Media SE was the weakest stock in terms of market capitalization on this date and was removed from the DAX with effect as of March 19, 2018, and is now represented on the MDAX.

032 / KEY FIGURES FOR THE PROSIEBENSAT.1 MEDIA SE SHARE1

 

 

2018

2017

2016

2015

2014

1

The share capital of ProSiebenSat.1 Media SE amounts to EUR 233,000,000.00. As a result of a capital increase, it rose from EUR 218,797,200.00 to a nominal amount of EUR 233,000,000.00 with effect from November 7, 2016. In this capital increase, ProSiebenSat.1 Media SE made partial use of the company's Authorized Capital and issued 14,202,800 new, registered shares. On August 16, 2013, the 109,398,600 bearer preference shares that existed at that time had already been converted into registered common shares, with the effect that the share capital then totaling EUR 218,797,200.00 consisted of 218,797,200 registered common shares with a nominal share in the share capital of EUR 1.00 each. Today, all (233,000,000) of the company's registered common shares are now tradable, i.e. both the formerly unlisted registered common shares and the registered common shares resulting from the conversion of the bearer preference shares. Until August 16, 2013, only the bearer preference shares of the company were publicly traded.

2

Including treasury shares.

3

Dividend proposal, see chapter Company Outlook.

4

For the financial year 2017, basic earnings per share were determined on the basis of adjusted net income from continuing operations. For reasons of comparison, the previous year’s figure has been adjusted accordingly (previously: EUR 2.37). Further information on reporting and accounting policies is contained in the Strategy and Management System section of the Annual Report.

5

The calculation is based on underlying net income from continuing operations.

6

Underlying net income renamed as adjusted net income since January 1, 2017.

Share capital at closing date

EUR

233,000,000

233,000,000

233,000,000

218,797,200

218,797,200

Number of shares as of closing date

Shares

233,000,0002

233,000,0002

233,000,0002

218,797,2002

218,797,2002

Free float market capitalization at end of financial year (according to Deutsche Börse)

EUR m

3,734

6,502

8,149

10,214

7,271

Close at end of financial year (XETRA)

EUR

15.55

28.71

36.61

46.77

34.83

High (XETRA)

EUR

32.78

41.51

48.66

50.70

35.55

Low (XETRA)

EUR

15.16

24.28

31.80

33.31

28.35

Dividend per entitled share

EUR

-/-3

1.93

1.90

1.80

1.60

Total dividend

EUR m

-/-3

442

435

386

341.9

Adjusted earnings per share (from continuing operations)

EUR

2.36

2.404

2.474

2.185

1.965

Adjusted net income6

EUR m

541

550

536

466

419

Weighted average number of shares issued

Shares

228,702,815

228,854,304

216,755,645

213,776,180

213,315,036

Dividend yield per share on basis of closing price

Percent

-/-3

6.7

5.2

3.8

4.6

Total XETRA trading volume

Million shares

357.4

348.0

231.2

158.9

179.9

On May 9, 2018, ProSiebenSat.1 Group published its figures for the first quarter. The announced shift of earnings contributions into the fourth quarter was a factor which led to reluctance on the capital market. The ex- of EUR 1.93 on May 16, 2018, also had a negative impact on the share price performance.

At the start of November, ProSiebenSat.1 Group adjusted the financial outlook for full-year 2018, announced an investment program for the next approximately five years, and said that it would reduce the pay-out ratio to 50% of from 2019. This, along with the publication of the financial figures for the third quarter, resulted in further price losses. In contrast, the stock received some slight support from the strategy update presented on Capital Markets Day (CMD) on November 14, 2018, and the announcement of a share buyback program of up to EUR 250 million with a term of 12 to 24 months. The buyback program started on November 9 and until its conclusion on December 11 comprised 6 tranches with a total volume of EUR 50 million.

At the end of the period under review, a total of 21 brokerage firms and financial institutions actively analyzed the ProSiebenSat.1 Media SE share and published research reports. At the end of 2018, 29% of analysts recommended the ProSiebenSat.1 Media SE share as a buy, while 52% were in favor of holding the share and 19% issued a sell recommendation. The analysts’ median price target was EUR 21.

033 / Analysts’ Recommendations in %

033 / Analysts’ Recommendations in % (Pie chart)

As of December 31, 2018.

ANNUAL GENERAL MEETING FOR THE FINANCIAL YEAR 2017

The Annual General Meeting of ProSiebenSat.1 Media SE for the financial year 2017 took place on May 16, 2018. Around 870 participants attended the Annual General Meeting. Attendance was approximately 64% of share capital.

The shareholders resolved on a dividend payment of EUR 1.93 per dividend entitled share for the financial year 2017 (previous year: EUR 1.90). The total dividend pay-out amounts to approximately EUR 442 million, resulting in a pay-out ratio of 80.3% of adjusted net income. The dividend was paid on May 22, 2018. In addition, the Annual General Meeting approved the new remuneration system for Executive Board members by a clear majority. Another item on the agenda was the supplementary Supervisory Board elections. The shareholders elected Marjorie Kaplan, a self-employed entrepreneur and member of the Supervisory Board of The Grierson Trust, to the Supervisory Board of ProSiebenSat.1 Media SE. Marjorie Kaplan is taking over from Antoinette (Annet) P. Aris, who resigned with effect from the end of the Annual General Meeting. The Annual General Meeting also granted discharge to the Executive Board and Supervisory Board for the financial year 2017.

The designated CEO Max Conze appeared before the shareholders for the first time at the Annual General Meeting in order to introduce himself. Max Conze officially assumed the role of Chairman of the Executive Board of ProSiebenSat.1 Group as of June 1. He followed Thomas Ebeling, who had left the Group on February 22.

SHAREHOLDER STRUCTURE OF PROSIEBENSAT.1 MEDIA SE

The shareholder structure is relatively unchanged compared to December 31, 2017. The shares are mostly held by institutional investors in the US, the UK and Germany. 23.2% of the shares are held by private shareholders. In total, 97.0% were held in as of December 31, 2018 (December 31, 2017: 98.3%). The remaining 3.0% are held by the Group (December 31, 2017: 1.7%).

Dividend
The share of the profit of a stock corporation distributed to the shareholders. The amount of the dividend is proposed by the Executive Board and approved by the Annual General Meeting. The dividend depends, among other things, on the profitability, economic situation and dividend policy of the company. The basis of assessment for the distribution is the profit calculated according to commercial law.
Glossary
Adjusted net income
Adjusted net income is the net result attributable to shareholders of ProSiebenSat.1 Media SE before the amortization and impairments from purchase price allocations, adjusted for the reconciling items as outlined above as well as additional reconciling items.
These include valuation effects recognized in other financial result, valuation effects of put-options and earn-out liabilities, as well as valuation effects from interest rate hedging transactions. Moreover, the tax effects resulting from such adjustments are also adjusted.
Glossary
Free float
The equity share of a stock corporation that is not in fixed ownership. According to Deutsche Börse AG's definition, blocks of shares of less than five percent belong to the free float. This excludes blocks of shares held by asset managers, funds, fiduciary and pension companies.
Glossary